40-F - MGA - Equibles

United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 40-F

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

☒	ANNUAL REPORT PURSUANT TO SECTION 13(a) or 15(d) of THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021	Commission File Number <br>001-11444
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Magna International Inc.

(Exact name of Registrant as specified in its charter)

Not Applicable

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

Province of Ontario, Canada

(Province of other jurisdiction of incorporation or organization)

3714

(Primary Standard Industrial Classification Code number (if applicable)

Not Applicable

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

337 Magna Drive, Aurora, Ontario, Canada L4G 7K1 (905) 726-2462

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

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

Telephone 212-299-5600

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

of agent for service in the United States)

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

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

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

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

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

☒<br>Annual Information Form	☒<br>Audited Annual Financial Statements

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report. 297,871,976 Common Shares .

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.

Emerging Growth Company ☐

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

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

Auditor Name: Deloitte LLP	Auditor Location: Toronto, Canada	Auditor Firm ID: 1208
1.	ANNUAL INFORMATION FORM
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The Registrant’s Annual Information Form for the year ended December 31, 2021 is attached as Exhibit 1 (the “Annual Information Form”) to this annual report on Form 40-F and is incorporated by reference herein.

2.	AUDITED ANNUAL FINANCIAL STATEMENTS

The Registrant’s consolidated audited financial statements as at and for the fiscal years ended December 31, 2021 and December 31, 2020, including the Report of Independent Registered Public Accounting Firm, prepared by Deloitte LLP (“Deloitte”) with respect thereto, are included in Exhibit 2 attached to this annual report on Form 40-F and are incorporated by reference herein.

3.	MANAGEMENT’S DISCUSSION AND ANALYSIS

The Registrant’s Management’s Discussion and Analysis of Operations and Financial Position for the year ended December 31, 2021 is included in Exhibit 3 attached to this annual report on Form 40-F and is incorporated by reference herein.

4.	WEBSITE INFORMATION

Notwithstanding any reference to the Registrant’s website on the World Wide Web in the Annual Information Form or in the documents attached or incorporated as exhibits hereto, the information contained in the Registrant’s website, or any other site on the World Wide Web referred to in the Registrant’s website, is not a part of this annual report on Form 40-F and, therefore, is not filed with the Commission.

5.	FORWARD-LOOKING STATEMENTS

The Registrant has made in the documents filed as part of this annual report on Form 40-F, and from time to time may otherwise make “forward-looking statements”, within the meaning of Section 21E under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Section 27A of the U.S. Securities Act of 1933, and related assumptions concerning its operations, economic performance and financial matters. Actual results or events could differ materially from those set forth in, or implied by, the forward-looking statements and the related assumptions due to a variety of factors. Reference is made to the section titled “Forward-Looking Statements” on page 2 of the Annual Information Form for a discussion of such factors.

6.	CONTROLS AND PROCEDURES

The Registrant’s Chief Executive Officer and its Executive Vice-President and Chief Financial Officer are responsible for establishing and maintaining the Registrant’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) and internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).

Disclosure Controls and Procedures

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

Internal Control Over Financial Reporting

Management of the Registrant is responsible for establishing and maintaining adequate internal control over financial reporting for the Registrant. Internal control over financial reporting is a process designed to provide reasonable, but not absolute, assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with U.S. GAAP. Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis. Additionally, projections of any evaluation of the effectiveness of internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. The Registrant’s management used the Committee of Sponsoring Organizations of the Treadway Commission [“COSO”] Internal Control-Integrated Framework (2013) to evaluate the effectiveness of internal control over financial reporting. Based on this evaluation, the Registrant’s Chief Executive Officer and Chief Financial Officer have assessed the effectiveness of the internal control over financial reporting and concluded that, as at December 31, 2021, such internal control over financial reporting is effective. The Registrant’s internal control over financial reporting as of December 31, 2021 has been audited by Deloitte, the Independent Registered Public Accounting Firm who also audited the Registrant’s consolidated financial statements for the year ended December 31, 2021. Deloitte expressed an unqualified opinion on the effectiveness of the Registrant’s internal control over financial reporting. This report precedes the Registrant’s audited consolidated financial statements for the year ended December 31, 2021, included in Exhibit 2 attached to this annual report on Form 40-F.

Changes in Internal Controls Over Financial Reporting

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

7.	AUDIT COMMITTEE MEMBERS AND AUDIT COMMITTEE FINANCIAL EXPERT

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

The Registrant’s Board of Directors has determined that each of Mr. MacLellan, the Chair of the Audit Committee, and Mr. Bowie, Ms. Maher and Ms. Niekamp, is an “audit committee financial expert” and that each member of the Audit Committee is “independent” and “financially literate”, as such terms are defined in the listing standards of the New York Stock Exchange and Exchange Act Rule 10A-3.

8.	CODE OF ETHICS

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

9.	CORPORATE GOVERNANCE

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

10.	PRINCIPAL ACCOUNTANT FEES AND SERVICES

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

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

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

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

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

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

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

•	the services are consistent with applicable auditor independence rules;
•	the independent auditor is best positioned to provide the most effective and efficient service, for reasons such as its familiarity with the Registrant’s business, people, culture, accounting systems and risk profile; and
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•	the services enhance the Registrant’s ability to manage or control risks and improve audit quality<br>.
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None of the services provided by Deloitte in 2021 were treated as exempt from pre-approval pursuant to the de minimis provision of paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

11.	TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

For the tabular disclosure regarding the Registrant’s known contractual obligations, with amounts aggregated by the type of contractual obligation, see pages 20 and 21 of the Management’s Discussion and Analysis, included in Exhibit 3 to this annual report on Form 40-F.

12.	INTERACTIVE DATA FILE

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

UNDERTAKING AND CONSENT TO SERVICE OF PROCESS

A.	Undertaking

Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.

B.	Consent to Service of Process

A Form F-X signed by the Registrant and its agent for service of process was previously filed with the Commission.

SIGNATURES

Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized.

Registrant:	MAGNA INTERNATIONAL INC.
By (Signature and Title):	/s/ “Bassem Shakeel”
	Bassem A. Shakeel,
	Vice-President and Corporate Secretary
Date:	March 25, 2022.

EXHIBIT INDEX

Exhibit 1	Annual Information Form of the Registrant dated March 24, 2022.
Exhibit 2	Registrant’s audited financial statements as at and for the two-year period ended December 31, 2021
Exhibit 3	Registrant’s Management’s Discussion and Analysis of Results of Operations and Financial Position for the year ended December 31, 2021
Exhibit 4	Consent of Deloitte LLP.
Exhibit 99.1	Certificate of Principal Executive Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (S. Kotagiri).
Exhibit 99.2	Certificate of Principal Financial Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (P. McCann).
Exhibit 99.3	Certificate of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (S. Kotagiri).
Exhibit 99.4	Certificate of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (P. McCann).
Exhibit 101	Interactive Data File.
Exhibit 104	Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

EX-1

Exhibit 1

LOGO

Contents

Annual Information Form

2	Forward-Looking Statements
4	Corporate Structure
4	About Magna
6	Our Industry
9	Our Business & Strategy
18	Risk Factors
25	Description of the Business
38	Innovation and Research & Development
42	Capital Structure, Financings & Credit Ratings
45	Directors & Executive Officers
48	Legal Proceedings
49	Other Information
50	Schedules
A-1	Appendix 1 – Sustainability Report FY 2021

Important Information About this Document

This Annual Information Form (“AIF”) provides information about Magna International Inc. (“Magna”), including its industry, corporate structure, strategy, risk factors relating to its business and operations, products and services, sustainability activities, and other information related to its business activities.

Readers should note that in this AIF:

•	we use the terms “you” and “your” to refer to the shareholder, while “we”, “us”, “our”, “company” and “Magna” refer to Magna International Inc. and,<br>where applicable, its subsidiaries;
•	we use the term “Executive Management” to refer to our Chief Executive Officer, together with our President and all other corporate Executive Vice-Presidents;
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•	we use the term “Operating Group management” to refer to our management within each of the product-based business units corresponding to the capabilities described in “Section 6 – Description of<br>the Business – Products & Services” in this AIF;
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•	dollar amounts in this AIF are stated in U.S. dollars, unless otherwise indicated;
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•	a reference to “fiscal year” is a reference to the fiscal or financial year from January 1 to December 31 of the year stated;
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•	sales figures disclosed have been prepared in accordance with United States Generally Accepted Accounting Principles (U.S. GAAP);
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•	where we have referred to specific customers or competitors, the reference includes the customers’ or competitors’ operating divisions and subsidiaries, unless otherwise stated;
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•	facility and employee figures include certain equity-accounted operations, unless otherwise indicated;
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•	references to our “Circular” refer to our Management Information Circular/Proxy Statement dated March 24, 2022 for our virtual-only 2022 Annual and Special Meeting of Shareholders to be held on<br>May 3, 2022 (the “Meeting”); and
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•	information is current as of March 16, 2022, unless otherwise indicated
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Forward-Looking Statements

We disclose “forward-looking information” or “forward-looking statements” (collectively, “forward-looking statements”) to provide information about management’s current expectations and plans. Such forward-looking statements may not be appropriate for other purposes.

Forward-looking statements may include financial and other projections, as well as statements regarding our future plans, objectives or economic performance, or the assumptions underlying any of the foregoing, and other statements that are not recitations of historical fact. We use words such as “may”, “would”, “could”, “should”, “will”, “likely”, “expect”, “anticipate”, “believe”, “intend”, “plan”, “aim”, “forecast”, “outlook”, “project”, “estimate”, “target” and similar expressions suggesting future outcomes or events to identify forward-looking statements.

Forward-looking statements in this AIF include, but are not limited to, statements relating to:

•	implementation of our business strategy, including: increasing capital deployment toward high-growth areas aligned with the “Car of the Future”; driving operational excellence; and unlocking new business<br>models and markets;
•	implementation of our segment-specific strategic initiatives;
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•	our approach to capital structure, including future returns of capital to our shareholders through dividends and share repurchases;
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•	implementation of our sustainability strategy and initiatives and achievement of sustainability targets/commitments; and
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•	estimates of future environmental clean-up and remediation costs
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While we believe we have a reasonable basis for making such forward-looking statements, they are not a guarantee of future performance or outcomes. Whether actual results and developments conform to our expectations and predictions is subject to a number of risks, assumptions and uncertainties, many of which are beyond our control, and the effects of which can be difficult to predict, including, without limitation:

2 Annual Information Form

Risks Related to the Automotive Industry

•	economic cyclicality;
•	regional production volume declines, including as a result of the semiconductor shortage, the COVID-19 pandemic and Russia’s invasion of Ukraine;
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•	intense competition;
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•	potential restrictions on free trade;
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•	trade disputes/tariffs;
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Customer and Supplier Related Risks

•	concentration of sales with six customers;
•	inability to significantly grow our business with Asian customers;
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•	emergence of potentially disruptive Electric Vehicle OEMs, including risks related to limited revenues/operating history of new OEM entrants;
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•	OEM consolidation and cooperation;
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•	shifts in market shares among vehicles or vehicle segments;
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•	shifts in consumer “take rates” for products we sell;
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•	dependence on outsourcing;
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•	quarterly sales fluctuations;
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•	potential loss of any material purchase orders;
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•	a deterioration of the financial condition of our supply base, including as a result of the COVID-19 pandemic, inflationary pressures, the semiconductor chip shortage or<br>otherwise;
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Manufacturing/Operational Risks

•	risks arising from Russia’s invasion of Ukraine;
•	the impact of the semiconductor chip shortage on customer production volumes and on the efficiency of our operations;
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•	COVID-19-related risks;
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•	supply disruptions and applicable costs related to supply disruption mitigation initiatives, including as a result of the semiconductor chip shortage;
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•	regional energy shortages/disruptions;
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•	product and new facility launch risks;
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•	operational underperformance;
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•	restructuring costs;
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•	impairment charges;
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•	labour disruptions;
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•	climate change risks;
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•	skilled labour attraction/retention;
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•	leadership succession;
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IT Security/Cybersecurity Risks

•	IT/cybersecurity breach;
•	product cybersecurity breach;
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Pricing/Cost Risks

•	inflationary pressures;
•	pricing risks following time of quote or award of new business;
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•	price concessions;
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•	commodity price volatility;
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•	declines in scrap steel/aluminum prices;
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Warranty/Recall Risks

•	costs related to repair or replacement of defective products, including due to a recall;
•	warranty or recall costs that exceed warranty provision or insurance coverage limits;
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•	product liability claims;
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Acquisition Risks

•	competition for strategic acquisition targets;
•	inherent merger and acquisition risks;
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•	acquisition integration risk;
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Other Business Risks

•	risks related to conducting business through joint ventures;
•	our ability to consistently develop and commercialize innovative products or processes;
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•	intellectual property risks;
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•	our investments in technology companies;
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•	our changing business risk profile as a result of increased investment in electrification and autonomous/assisted driving, including: higher R&D engineering costs, and challenges in quoting for profitable returns on<br>products for which we may not have significant quoting experience;
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•	risks of conducting business in foreign markets;
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•	fluctuations in relative currency values;
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•	an increase in our pension funding obligations;
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•	tax risks;
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•	reduced financial flexibility as a result of an economic shock;
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•	inability to achieve future investment returns that equal or exceed past returns;
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•	changes in credit ratings assigned to us;
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•	the unpredictability of, and fluctuation in, the trading price of our Common Shares;
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•	a reduction or suspension of our dividend;
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Legal, Regulatory and Other Risks

•	antitrust risk;
•	legal claims and/or regulatory actions against us;
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•	changes in laws and regulations, including those related to vehicle emissions or made as a result of the COVID-19 pandemic; and
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•	environmental compliance costs.
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In evaluating forward-looking statements or forward-looking information, we caution readers not to place undue reliance on any forward- looking statement, and readers should specifically consider the various factors which could cause actual events or results to differ materially from those indicated by such forward-looking statements, including the risks, assumptions and uncertainties above that are discussed in greater detail in this AIF under “Section 5 – Risk Factors”.

Magna InternationalInc. 3

1.	Corporate Structure

Issuer

Magna was originally incorporated under the laws of the Province of Ontario, Canada on November 16, 1961. Our charter documents currently consist of amended and restated articles of incorporation dated December 31, 2017, which were issued pursuant to the Business Corporations Act (Ontario).

Our registered and head office is located at 337 Magna Drive, Aurora, Ontario, Canada L4G 7K1. Our Common Shares trade on the Toronto Stock Exchange (MG) and the New York Stock Exchange (MGA). For a list of our principal subsidiaries and investments, please refer to Schedule A.

2.	About Magna

Overview

Magna is more than one of the world’s largest Tier 1 suppliers in the automotive space. We are a mobility technology company with more than 158,000 entrepreneurial-minded employees, 343 manufacturing and assembly operations and 91 product development, engineering and sales (“PDE&S”) centres in 28 countries, as follows.

LOGO

We have complete vehicle engineering and contract manufacturing expertise, as well as product capabilities which include body, chassis, exterior, seating, powertrain, active driver assistance, electronics, mechatronics, mirrors, lighting and roof systems. Magna also has electronic and software capabilities across many of these areas.

Our business is managed under operating segments which have been determined on the basis of technological opportunities, product similarities, as well as market and operating factors. Our internal financial reporting is aligned with the way our business is managed. Accordingly, we present key internal operating performance measures for the following reporting segments to our chief operating decision maker to use in the assessment of operating performance, allocation of resources, and to help plan our long-term strategic direction and future global growth:

•	Body Exteriors & Structures
•	Power & Vision
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•	Seating Systems
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•	Complete Vehicles
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4 Annual Information Form

Our Corporate Culture

At Magna’s foundation is an entrepreneurial, decentralized, fair enterprise culture, the key elements of which are as follows:

Entrepreneurialism and Decentralization

We follow a corporate policy of functional and operational decentralization, which we believe increases flexibility, customer responsiveness and productivity.

•	Our manufacturing and assembly operations are conducted through “Divisions”, each of which is an<br>autonomous business unit operating within pre-determined guidelines. Each Division is a separate profit centre under the authority of a general manager who has the discretion to determine rates of pay, hours<br>of work and sources of supply, within the framework of our Employee’s Charter, our Global Labour Standards Policy and our Operational Principles (each as described below), as well as our corporate policies.
•	Divisions are aligned globally by product area in Operating Groups. Operating Group management is responsible for<br>overseeing the Divisions within its product area(s), including approval of Divisional business plans and preparation of Group business plans for presentation to Executive Management. Our Operating Groups are aligned under four reporting segments<br>overseen by members of Executive Management to ensure that the Operating Groups are: taking advantage of cross-Group synergies; sharing research and development and best practices; and consistently approaching technology trends that impact their<br>business and our customers.
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•	Our Executive Management team, led by our CEO, interfaces with the investment community and is responsible for<br>our long-term strategic planning and future growth, as well as monitoring the performance of Operating Group management. In addition, our Executive Management: allocates capital; oversees mergers, acquisitions and strategic alliances; manages global<br>marketing and customer strategies; develops employee policies and programs; manages leadership training, development and succession planning; oversees our sustainability strategy and provides support for global sustainability initiatives; and<br>develops common finance, internal controls, compliance, IT, quality, environmental, health & safety, ergonomics and other policies, programs or global standards.
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Employee’s Charter & Global Labour Standards Policy

We are committed to operating our business in a way that is based on fairness and concern for our employees. Our Employee’s Charter sets out key principles outlining this commitment. Our Global Labour Standards Policy further articulates our Fair Enterprise Culture and provides a framework for our commitment to fundamental human rights and international labour relations. See “Appendix 1 – Sustainability Report – Section 4.2 Fairness and Concern for Employees” for a description of our human resource principles, including our Employee’s Charter, as well as the details of our Global Labour Standards Policy and the key commitments that it sets out.

Operational Excellence and World Class Manufacturing

As part of our strategic priority of achieving Operational Excellence, including our efforts to implement next generation World Class Manufacturing in our facilities globally, each facility is required to adhere to a set of Operational Principles that define a set of common goals and recommended tools/business practices in the following areas: Employee Focus; Safe and Healthful Work Environment; Pride in Craftsmanship and Total Quality; Integrity and Respect; Operational Effectiveness; Scrap and Waste Elimination; Operational Availability; Communication; and Recognition and Rewards. The Magna Operational Principles are linked to our MAFACT assessment system (detailed in “Section 6 – Description of the Business – Manufacturing & Engineering” in this AIF) to allow our operations to continually measure their progress in achieving World Class Manufacturing.

Incentive-Based Management Compensation

We maintain an incentive-based compensation system for management, which directly links short-term incentive compensation to the operational performance of an applicable business unit, as measured by profitability. In the case of our Divisions and Operating Groups, the short-term incentive formula also takes into account capital efficiency through a charge for funds employed. Incentive Compensation for Operating Group management includes long-term equity incentives tied to stock market performance of our shares and, for certain senior leaders, performance-based incentives tied to Group-specific financial metrics, while compensation for Executive Management takes capital efficiency into account through equity compensation linked to return on invested capital, and also addresses sensitivity to stock market performance through equity compensation linked to total shareholder return relative to a group of industry peers. Our approach to executive compensation is described in further detail in the sections of our Circular titled “Compensation and Performance Report” and “Compensation Discussion & Analysis”.

Sustainability

We are committed to being a responsible corporate citizen that conducts business in a manner that balances profits, people and planet. Magna accepts the reality of climate change and the importance of addressing sustainability in our operations. To this end, we are committed to achieving carbon neutrality with respect to Scope 1 and Scope 2 emissions by 2025 for our European operations, and by 2030 globally. For a full discussion of our sustainability strategy, initiatives and achievements to date, see “Appendix 1 – Sustainability Report”.

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3.	Our Industry

General

The global automotive industry is a complex, high-tech manufacturing industry. Tier 1 automotive suppliers (“Tier 1 Suppliers”) design, engineer and manufacture components, assemblies, systems, subsystems and modules for original equipment manufacturers (“OEMs” or “automobile manufacturers”) of vehicles and light trucks. Tier 1 Suppliers source subcomponents from Tier 2 and other sub-suppliers, which are integrated into the products sold by the Tier 1 Suppliers directly to OEMs.

The global automotive industry is cyclical and is sensitive to a broad range of macroeconomic, political and other trends as discussed in “Section 4 – Our Business & Strategy” in this AIF. Throughout 2021, the automotive industry experienced several significant supply constraints and, in particular, a semiconductor chip shortage which negatively impacted global light vehicle production and is expected to continue throughout 2022. The automotive industry also faced a number of macroeconomic challenges in 2021, including: regional COVID-19 spikes, elevated levels of inflation, regional energy shortages, rising energy and commodity prices, and higher labour costs. These macroeconomic conditions are continuing in 2022 and, in some cases, have been exacerbated by Russia’s invasion of Ukraine in February 2022. See “Section 4 – Our Business & Strategy – Macroeconomic, Political and Other Trends” and “Industry Trends” for details of how these trends affect Magna and the automotive industry. See also “Industry Trends” in our Management’s Discussion & Analysis of Results of Operations and Financial Position for the year ended December 31, 2021 (“MD&A”).

Automotive Production Markets

OEMs have historically built their vehicles in the regions where those vehicles are primarily sold and, as a result, many OEMs have established manufacturing facilities in multiple countries. Since OEMs typically use lean manufacturing and supply chain management techniques in their operations, many Tier 1 Supplier facilities are generally located relatively close to OEM facilities to reduce the cost and risks associated with longer supply chains. See “Section 6 – Description of the Business – Manufacturing & Engineering” of this AIF for details of Magna’s global manufacturing footprint.

China, Europe, North America, Japan, India and South Korea represent the largest automotive production markets in the world, accounting for approximately 90% of vehicles produced globally. China’s approximate 32% share of global production led all markets in 2021. The local demand for vehicles in China, India and certain markets outside of North America and Western Europe has increased over time. This increasing local demand has helped boost the local automotive industry in these countries and attracted investments in manufacturing from North American, European and Asian-based automobile manufacturers, through stand-alone investments and/or joint ventures with local partners. In the case of China, the increasing migration of component system and vehicle design, development and engineering, especially for battery Electric Vehicles (“EVs”), is expected to further benefit the automotive industry in that market.

Customers

OEMs produced over 77 million light vehicles in 2021, a slight increase over 2020 production, but significantly below pre-pandemic levels (91 million in 2019). The top 15 OEMs, representing 79% or approximately 61 million vehicles based on 2021 light vehicle production, were:

1. Toyota Motor Corporation	9. Suzuki Motor Corporation
2. Volkswagen Group	10. BMW AG
3. Renault-Nissan-Mitsubishi Alliance	11. Daimler AG
4. Hyundai Motor Group	12. Zhejiang Geely Holding Group
5. Stellantis N.V.	13. SAIC-GM-Wuling Automobile*
6. General Motors Company	14. Chang’an Automobile (Group) Co., Ltd.
7. Honda Motor Company	15. Great Wall Motors
8. Ford Motor Company

Source: IHS Markit

*	A joint venture between SAIC Motor, General Motors, and Liuzhou Wuling Motors Co Ltd.

The considerable growth of the Chinese automotive market over the past decade has led to the significant growth of a number of Chinese OEMs, including Geely, SAIC, Chang’an and Great Wall, as listed above. In addition, the growing trend toward vehicle electrification has led to the emergence of potentially-disruptive EV OEMs, particularly in China. See “Section 5 – Risk Factors – Emergence of Potentially Disruptive EV OEMs” in this AIF.

For a list of our top customers on a consolidated basis and within each reporting segment, see “Section 6 – Description of the Business – Products & Services” in this AIF.

Competition

In spite of high barriers to entry in many product areas, as well as the highly capital intensive nature of the global Tier 1 automotive supply industry, competition is fierce and intensifying from many different sources. For most of our Operating Groups, competition comes primarily

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from automobile manufacturers and from other “traditional” Tier 1 Suppliers, including ones in which one or more automobile manufacturers may have direct or indirect investments. However, with the growing importance of electrification and electronics in the automotive value chain, a number of electronics and semiconductor companies have entered or expanded their presence in the automotive industry, becoming direct competitors to Tier 1 Suppliers, including us. Additionally, disruptive technology innovators are changing the competitive landscape of the automotive industry through the development of high-value product and service offerings, particularly in areas related to vehicle electrification, vehicle autonomy, new mobility and connectivity. As a result of these trends, some suppliers seek to enhance their competitive positioning by entering into strategic partnerships, joint ventures or collaborations with technology and software companies. Lastly, competition has also intensified as automobile manufacturers have reduced the number of their Tier 1 Suppliers in connection with their strategy to increase the number and range of vehicles built from high-volume global platforms.

The basis on which automobile manufacturers select automotive suppliers for particular programs is determined by a number of factors, which may include: price; overall relationship, including historical performance with respect to innovation, quality and timeliness of delivery; manufacturing footprint; proprietary technologies; financial strength; ability to test and validate new technologies for application in the automotive industry; scope of in-house engineering and tooling capabilities; carbon footprint and alignment with the customer’s sustainability goals/targets; existing agreements; and other factors.

The number of competitors that are asked by automobile manufacturers to bid on any individual product has been reduced in many cases. We expect further reductions as a result of the increasing preference of automobile manufacturers to deal with fewer suppliers and reward those suppliers with earlier and deeper involvement.

Based on 2020 global automotive parts sales to OEMs, the top 10 Tier 1 Suppliers globally were:

Supplier	Key Automotive Products**	Supplier	Key Automotive Products**
1. Robert Bosch	Powertrain solutions, chassis systems control, electrical drives, car multimedia, electronics,<br>aftermarket products, steering, connected mobility solutions	6. Continental Corporation	Autonomous mobility and safety, vehicle networking and information, powertrain, tires, rubber, electric mobility, connected mobility
2. Denso Corporation*	Thermal systems, powertrain systems, electrification systems, mobility systems, sensor system & semiconductors	7. Hyundai Mobis*	In-vehicle infotainment (IVI) systems, braking, steering,<br>lamps, safety, suspension, autonomous driving, electrification systems, advanced driver assistance systems
3. ZF Friedrichshafen AG	Electrified powertrain, chassis, driveline, braking systems,<br>e-Mobility steering, electronics & advanced driver assistance systems, active & passive safety systems	8. Faurecia S.A.	Seating, interiors, clean mobility (exhaust systems), smart cockpit electronics & software integration
4. Magna International Inc.	Body and chassis, exteriors, powertrain, electronics, mirrors and<br>lighting, mechatronics, seating systems, vehicle engineering and manufacturing, roof systems	9. Lear Corporation	Seating, electrical distribution and connection systems, electronic systems, software and connected<br>services, electronic control modules, electrification products, connectivity products
5. Aisin Seiki Co.*	Powertrain, chassis and vehicle safety systems, body, vehicle navigation systems	10. Valeo S.A.*	Comfort and driving assistance systems, powertrain systems, thermal systems, visibility systems,<br>aftermarket products and services

Source: Automotive News (supplement) (June 28, 2021)

*	OEM subsidiary or OEM investee.
**	Key automotive product descriptions are based on information from each Tier 1 Supplier’s website.<br>
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While no single Tier 1 Supplier currently supplies a full range of products which compete with ours, a number of Tier 1 Suppliers can produce some or many of the same types of components, assemblies, modules and systems that we currently produce. Some of our competitors may have greater technical or other resources than we do and some of them may be stronger in markets in which we operate. A list of our key competitors within each product capability in our reporting segments can be found in “Section 6 – Description of the Business – Products & Services” in this AIF. See also the risk factors related to “Intense Competition” and “Technology and Innovation” in “Section 5 – Risk Factors” in this AIF.

Magna’s Foundational Strengths

We believe that we possess a number of foundational strengths that give us a competitive advantage as a Tier 1 Supplier, including our:

•	decentralized operating model and entrepreneurial culture;
•	manufacturing expertise;
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•	complete vehicle and broad systems engineering expertise
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•	strong balance sheet and emphasis on disciplined, profitable growth;
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•	depth of talent;
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•	global scale;
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•	focus on innovation and our “start-up” mindset, as well as a<br>strategic portfolio of product groups that enable us to provide innovative, complete vehicle solutions to our customers, while:
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•	generating cash to fund investments in high-growth areas; and
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•	enabling access to new business models and/or new customers.
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4.	Our Business & Strategy

Business Drivers

Our business and operating results are primarily dependent on the levels of North American, European and Chinese car and light truck production by our customers. Ordinarily, OEM vehicle production levels are aligned with vehicle sales levels and thus affected by changes in such levels. While we supply systems and components to every major OEM, we do not supply systems and components for every vehicle, nor is the value of our content consistent from one vehicle to the next. As a result, customer and program mix relative to market trends, as well as the value of our content on specific vehicle production programs, are important drivers of our performance. Key factors impacting production volumes, product/customer mix, content and legislative/regulatory trends are listed below.

Growth Driver	Factors Potentially Impacting Growth Driver
Vehicle Production Volumes	• Vehicle sales levels, which are affected<br>by:<br> <br><br> <br>• General macroeconomic<br>and political conditions<br> <br><br><br><br>• Consumer confidence levels, which may be affected by consumer perceptions and general trends<br>related to the job, housing and stock markets, as well as elevated levels of inflation, and other macroeconomic and political factors, including COVID-19<br><br><br><br> <br>• Interest rates and/or<br>availability of credit<br> <br><br><br><br>• Fuel and energy prices<br> <br><br><br><br>• Relative currency values<br> <br><br><br><br>• Regulatory restrictions on the use of vehicles in certain megacities<br><br><br><br><br><br>• COVID-19, including due to mandatory lockdowns/stay-at-home orders which restrict consumers’ ability to purchase vehicles<br> <br><br><br><br>• Supply chains and infrastructure, including current supply chain disruptions due to the shortage<br>of semiconductor chips, and labour shortages in the automotive value chain<br> <br><br><br><br>• Energy supply disruptions or shortages that could result in unplanned production shutdowns of some<br>of our, our sub-suppliers’ and customers’ manufacturing facilities<br> <br><br><br><br>• Free trade arrangements, trade disputes and tariffs<br><br><br><br> <br>• Availability and relative<br>cost of skilled labour<br> <br><br><br><br>• Labour disruptions<br> <br><br><br><br>• Commodities prices<br> <br><br><br><br>• Relative currency values<br> <br><br><br><br>• Regulatory considerations, including environmental, emissions and safety standards<br><br><br><br><br><br>• COVID-19, including due to mandatory lockdowns/stay-at-home orders which:<br> <br><br><br><br>• restrict production;<br> <br><br><br><br>• cause elevated employee absenteeism; and<br><br><br><br> <br>• lead to supply chain<br>disruptions
Customer and Program<br>Mix	• OEM outsourcing strategy, as well as their supplier preferences and relationships<br><br><br><br> <br>• OEM decisions to allocate<br>production inputs that are in limited supply, such as semiconductor chips, to certain programs and not others<br> <br><br><br><br>• Business relations between us and each of our OEM customers<br><br><br><br> <br>• Our ability to supply<br>products from multiple production locations for global vehicle platforms<br> <br><br><br><br>• Our capital allocation decisions<br><br><br><br> <br>• Competitiveness of our<br>products<br> <br><br> <br>• Exclusivity of<br>our products due to certain intellectual property rights<br> <br><br><br><br>• OEM consolidation and cooperation
Magna Content on Specific<br> Programs or Platforms	• OEM outsourcing strategy and supplier<br>preferences<br> <br><br> <br>• Our ability<br>to supply products from multiple production locations for global vehicle platforms<br> <br><br><br><br>• Our capital allocation decisions<br><br><br><br> <br>• Technological, visual, haptic<br>and other features/attributes of our products compared to competing products or the overall cost of such products to the end consumer<br> <br><br><br><br>• Pricing of our products relative to competing products<br><br><br><br> <br>• Perception/reputation for<br>product quality, as well as timeliness of delivery<br> <br><br><br><br>• Our product engineering capabilities<br><br><br><br> <br>• Our ability to finance pre-production engineering costs<br> <br><br><br><br>• The scope of our authority relative to the OEM, regarding sourcing of sub-components or products which are incorporated into the systems which we supply<br> <br><br><br><br>• Consumer “take rates” for products we sell<br><br><br><br> <br>• Collaboration among our<br>Operating Groups

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Growth Driver	Factors Potentially Impacting Growth Driver
Legislative/regulatory trends promoting sustainability and safety	• Regulatory vigour in mandating higher<br>fuel efficiency, lower carbon emissions and/or enhanced safety features<br> <br><br><br><br>• Rise in the number of national/subnational jurisdictions committing to, or accelerating existing<br>commitments to, phase-out of the sale or registration of new Internal Combustion (ICE) engines over the medium- to long term, which could accelerate OEM development of<br>non-ICE vehicles

Growth Driver

Factors Potentially Impacting Growth Driver

Legislative/regulatory trends promoting sustainability and safety

• Regulatory vigour in mandating higher fuel efficiency, lower carbon emissions and/or enhanced safety features • Rise in the number of national/subnational jurisdictions committing to, or accelerating existing commitments to, phase-out of the sale or registration of new Internal Combustion (ICE) engines over the medium- to long term, which could accelerate OEM development of non-ICE vehicles

Macroeconomic, Political and Other Trends

The global automotive industry is cyclical and, as noted above, vehicle production and/or sales may be affected by a broad range of macroeconomic, political and other factors. Some such factors which are currently affecting the industry are discussed below.

Macroeconomic, Political & Other Trends	Description	Potential Impact on Magna
Impact of global semiconductor chip shortage	• Global<br>shortage of semiconductor chips since 2020 has materially adversely affected global automotive production volumes<br> <br><br><br><br>• Shortage expected to continue impacting vehicle production volumes in 2022 and could worsen as a<br>result of Russia’s invasion of Ukraine<br> <br><br><br><br>• OEMs actions in response to the shortage have included: unplanned shutdowns of production lines<br>and/or plants; reductions in vehicle production plans; and changes to product mix	• Lower sales<br><br><br><br> <br>• Operational inefficiencies<br>due to production lines being “stopped/ restarted” unexpectedly based on OEM production priorities<br> <br><br><br><br>• Higher inventory levels<br> <br><br><br><br>• Increased costs, including premium freight costs and other unrecoverable costs<br><br><br><br> <br>• Pricing pressures from sub-suppliers negatively impacted by production inefficiencies, premium freight costs and/or other costs and surcharges<br> <br><br><br><br>• Challenges in retaining employees due to production volatility<br><br><br><br> <br>• Financial stress on supply<br>base
Russian Invasion of Ukraine (2022)	• Actions<br>imposed on Russia by U.S., Canada, U.K., the European Union member states and other countries, including:<br> <br><br><br><br>• Imposition of sanctions targeting certain Russian leadership and other individuals<br><br><br><br> <br>• Restrictions on certain<br>sectors of the Russian economy<br> <br><br><br><br>• Expulsion of some Russian banks from the SWIFT global banking system<br><br><br><br> <br>• Potential risks relating to<br>Russian counter-sanctions or other measures, such as penalties on Russian domiciled companies and their management, as well as imposition of state management on such companies and/or expropriation of foreign companies’ assets in Russia	• Lower sales for Magna manufacturing<br>operations:<br> <br><br> <br>• in Russia if<br>OEM customers suspend Russia production or stop selling vehicles in Russia; and/or<br> <br><br><br><br>• elsewhere if OEM customers suspend production in manufacturing operations that rely on the supply<br>of parts from Russia and/or Ukraine<br> <br><br><br><br>• Potential exacerbation of current risks, including:<br><br><br><br> <br>• disruption of vehicle<br>production and supply chains;<br> <br><br><br><br>• worsening the current semiconductor chip shortage since Russia and Ukraine are critical suppliers<br>of neon gas and palladium used in chip production;<br> <br><br><br><br>• higher energy prices, particularly oil and natural gas; and<br><br><br><br> <br>• constraints on the supply of<br>aluminum, palladium or other commodity metals required in automotive production<br> <br><br><br><br>• Potential restructuring costs

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Macroeconomic, Political & Other Trends	Description	Potential Impact on Magna
Impact of COVID-19 pandemic	• Emergence and spread of new, more<br>highly-transmissible variants of the virus which could result in governmental regulation such as mandatory lockdowns/stay-at-home orders or other restrictions, as is<br>currently the case in parts of China<br> <br><br><br><br>• Potential deterioration of economic conditions, resulting in lower consumer confidence which<br>typically translates into lower vehicle sales and production levels<br> <br><br><br><br>• Continued disruptions to the ability to conduct business in ordinary course, including due to<br>travel and in-person meeting restrictions	• Potential reductions of our customers’ production including as a result of<br>intermittent shutdowns of any of our customers’, suppliers’ or our own facilities<br> <br><br><br><br>• Potential for lower vehicle sales as a result of restrictions on consumers’ ability to<br>purchase vehicles, and thus lower production volumes<br> <br><br><br><br>• Elevated levels of absenteeism or potential shortages of employees to staff our facilities, or the<br>facilities of our customers or suppliers<br> <br><br><br><br>• Prolonged disruptions of critical materials or components<br><br><br><br> <br>• Potential for premium freight<br>costs or increased costs arising from other supplier mitigation activities for products shipped from impacted areas<br> <br><br><br><br>• Potential for higher inventory levels in the event of customer and/or supplier shutdowns<br><br><br><br> <br>• Financial stress on supply<br>base<br> <br><br> <br>• Potential medium-to longer term societal changes that expand work-from- home practices and reduce consumer reliance on vehicles; and/or increased reluctance to use modes of public transport and/or shared<br>mobility
Elevated Levels of Inflation	• Global markets currently experiencing increasing inflation<br><br><br><br> <br>• Inflationary pressures<br>expected to continue in 2022	• Higher<br>(and potentially unrecoverable from customers) operating costs, including for: commodies; freight; energy and labour<br> <br><br><br><br>• Sub-supplier pricing pressures which may not be<br>recoverable through continuous improvement, customer price increases or otherwise
Regional Energy Shortages/Disruptions	• Energy shortages in certain regions due<br>to economic recovery, weather events and the transition to renewable energy generation<br> <br><br><br><br>• An increase in costs for, and potential disruption in the supply of, natural gas supply as a<br>result of Russia’s invasion of Ukraine	• Increased operating costs in certain regions<br><br><br><br> <br>• Potential unplanned<br>production shutdowns of some of our, our sub- suppliers’ and/or customers’ facilities
Economic/political uncertainty	• Deterioration of consumer confidence, including as a result of:<br><br><br><br> <br>• Impact of elevated levels of<br>inflation<br> <br><br> <br>• Direct/indirect<br>impacts of Russia’s invasion of Ukraine, including: economic sanctions and other restrictive measures taken against Russia<br> <br><br><br><br>• Potential economic impact of rising long-term interest rates<br><br><br><br> <br>• Impact of COVID-19 on household income and employment levels may affect consumer confidence	• Potential<br>for lower vehicle sales, and thus lower production volumes<br> <br><br><br><br>• Planning and investment uncertainty<br><br><br><br> <br>• Increasing risk of pricing<br>pressure from OEMs and increasing financial stress on supply base<br> <br><br><br><br>• Potential impact on our sales and profits

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Macroeconomic, Political & Other Trends	Description	Potential Impact on Magna
Accelerating focus on impact of climate change	• Governmental authorities, customers,<br>equity investors, lenders, rating agencies, employees and other stakeholders increasing scrutiny of companies’ impact on and resilience to climate change<br> <br><br><br><br>• Focus on energy reduction and transition to renewable / carbon neutral energy sources<br><br><br><br> <br>• Increasing expectations<br>regarding disclosures of ESG metrics<br> <br><br><br><br>• Growth in investment demand for companies demonstrating sustainable strategy and operations<br><br><br><br> <br>• Heightened focus and concern<br>on risk of supply chain disruptions from climate-related events, such as Texas ice storm in February 2021	• Opportunities from product strategy aligned with sustainable goals<br><br><br><br> <br>• Potential energy reduction<br>opportunities could reduce operating costs<br> <br><br><br><br>• Carbon neutrality strategies/ commitments could require increased capital spending and/or involve<br>higher operating costs, including higher costs to purchase renewable energy and/or carbon offsets<br> <br><br><br><br>• Potential for increased / decreased demand for Magna’s Common Shares, based on market views<br>as to sustainability of the company<br> <br><br><br><br>• Climate-related events can disrupt automotive supply chains, transportation routes and electricity<br>grids
Localization of production	• Pressure<br>on OEMs to localize production of vehicles in markets in which they are sold<br> <br><br><br><br>• Potential to reduce costs and mitigate risks associated with longer supply chains	• Planning and investment<br>uncertainty<br> <br><br> <br>• May result in<br>new opportunities for Magna in markets where we have available capacity or are well established<br> <br><br><br><br>• Could also result in duplication of capacity across markets

Industry Trends

The automotive industry is being defined by a number of global megatrends that have shaped our long-term strategy, including:

	Megatrend	Impact on Automotive
Society	Demographic Change & Individualism	Product design will be influenced by aging population and growing individualization.
	Digital Transformation	Connectivity and digitization<br>impact both product and process. New vehicle architectures that connect the subsystems along with software functionality creates additional value to products. Process is also impacted due to increased digitization, driven by increased requirements<br>for productivity and quality.
	Health & Well-Being	ADAS and autonomy take rates<br>will be driven both by consumer preferences as well as regulatory requirements tied to increased safety.
Mobility	Urbanization	Continued growth in urban<br>population will lead to changes in mobility as a result of increased density and congestion with an increase in electric vehicle adoption and new transport modalities.
	New Mobility	Emerging new mobility eco-system offers a range of potential opportunities for new products and services.
Economy	Natural Resources, Energy & Environmental	Increased focus on the environment and climate change will drive growth rates for electrification.

These global megatrends and other factors are driving a number of industry trends, which are discussed below together with their potential impact on Magna.

Automotive Industry Trends	Description	Potential Impact on Magna
Continuing focus on reducing vehicle’s energy consumption and CO2 emissions	• Sustainability considerations and regulatory action, resulting in push for more efficient, cleaner<br>and smaller-displacement engines<br> <br><br><br><br>• Increasing trend toward electrified vehicles drives demand for solutions to help extend driving<br>range from single battery charge	• Continuing opportunities to support OEM customers’ efforts through lightweighting, more<br>efficient drivetrains, electrification and active aerodynamics

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Automotive Industry Trends	Description	Potential Impact on Magna
Accelerating demand for electric, hybrid vehicles and investment in vehicle electrification	• Sustainability considerations and regulatory actions, including mandatory phase-outs of the sale<br>or registration of new ICE vehicles in the future, driving increased emphasis on electrified powertrains<br> <br><br><br><br>• Increased interest in electrified solutions, especially in Europe and China<br><br><br><br> <br>• Growing proportion of SUVs<br>and CUVs may facilitate increased electrification<br> <br><br><br><br>• Significant development and engineering costs for OEMs may drive increased outsourcing to<br>suppliers and increased collaboration among OEMs	• Opportunities to grow Magna content and sales in areas such as drivetrain products and battery<br>enclosures<br> <br><br> <br>• Strong level<br>of investment required to grow or maintain market share<br> <br><br><br><br>• Pricing pressure on, and migration of value away from, traditional products in order for OEMs to<br>accommodate cost of battery systems and electrified products<br> <br><br><br><br>• Quoting risk and technology risks, as well as lack of warranty experience with electrified<br>products<br> <br><br> <br>• Increased<br>competition, including from new market entrants providing electrified solutions<br> <br><br><br><br>• Potential risk of OEMs in-sourcing a greater proportion of<br>EV components and systems production<br> <br><br><br><br>• Potential long-term displacement of some mechanical products where there are alternative<br>electrified solutions
Continued growth in demand for driver assistance/active safety systems, with longer- term potential for growth in autonomous driving capabilities	• Growth in demand for driver assistance<br>features/active safety systems<br> <br><br><br><br>• Driven by tightening safety regulations and continued growth in demand for luxury segment<br>vehicles	• Opportunity to grow Magna content and sales, particularly in ADAS products<br><br><br><br> <br>• Continued expenditures for<br>growth in ADAS required to develop Magna’s autonomous driving capabilities could impact short term financial performance<br> <br><br><br><br>• Quoting risk and technology risks, as well as lack of warranty experience with ADAS products<br><br><br><br> <br>• Potential challenges in<br>attracting and retaining highly skilled engineering and software personnel
Disruption by new industry entrants offering “mobility as a service” (“MaaS”)	• Growth of ride hailing and ride sharing services in urban areas<br><br><br><br> <br>• Potential substitute for<br>personal mobility vehicles, particularly in congested urban centres<br> <br><br><br><br>• May result in lower production volumes of vehicles from traditional OEMs	• Alternative revenue streams or new business opportunities for full-vehicle engineering and<br>manufacturing, as well as additional service offerings<br> <br><br><br><br>• Potential loss of business with traditional OEMs, to the extent MaaS adversely impacts OEMs<br><br><br><br> <br>• Potential risks relating to<br>conducting business with new Maas entrants that may have limited operating history, as well as financial, capital or other resources<br> <br><br><br><br>• Uncertainty with respect to volume of new Maas product offerings creates risks relating to<br>recovery of engineering/capital investments

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Automotive Industry Trends	Description	Potential Impact on Magna
Emergence of Potentially Disruptive EV OEMs	• Accelerating trend towards vehicle electrification has led to the emergence of EV-focused OEMs, including in China	• Potential<br>for cooperative relationships and new business opportunities with new EV entrants<br> <br><br><br><br>• Potential risks relating to conducting business with emergent OEMs that may have limited:<br>operating history, as well as financial, capital or other resources<br> <br><br><br><br>• Uncertainty regarding consumer acceptance of EVs, particularly those made by new OEMs<br><br><br><br> <br>• Uncertainty regarding which<br>emergent OEMs will succeed in the long-term creates potential customer and/or partnership risk<br> <br><br><br><br>• Failure to grow with those emergent OEMs that achieve commercial success could impact our<br>long-term strategy
Accelerating demand for connected vehicles	• Pervasiveness of digitalization in<br>consumer’s daily lives is driving growing demand to include connectivity features in vehicles<br> <br><br><br><br>• Personalization of end user functionality in vehicle experience increasingly attractive to<br>consumers<br> <br><br> <br>• Growth in<br>vehicle architectures that connect subsystems and include software functionality	• Opportunities to grow Magna high-value content, particularly given our systems<br>capabilities<br> <br><br> <br>• Potential<br>for establishment of new business models, including software as a service<br> <br><br><br><br>• Potential challenges in attracting and retaining highly skilled engineers and software<br>personnel<br> <br><br> <br>• Potential<br>product cybersecurity risks related to vehicles connected to external networks, which could impact consumer adoption of connectivity related products/systems
Significant R&D spending	• Large-scale OEM and Tier 1 Supplier investments to comply with tightening emissions<br>regulations<br> <br><br> <br>• Significant<br>spending by OEMs, new market entrants and Tier 1 Suppliers on vehicle autonomy systems and new mobility solutions<br> <br><br><br><br>• Significant development and engineering costs for OEMs may drive increased collaboration among<br>OEMs	• Pricing<br>pressure on, and migration of value away from, traditional products in order for OEMs to accommodate cost of electrification, as well as active safety/ autonomous features<br> <br><br><br><br>• OEM inability to achieve planned sales volumes for electrified vehicles could impact<br>suppliers’ ability to recover pre-production costs<br> <br><br><br><br>• Technical challenges to commercialize new technologies in ADAS<br><br><br><br> <br>• Intense competition from<br>established and new market entrants<br> <br><br><br><br>• Risks related to establishing and maintaining intellectual property rights, including potential<br>challenges to intellectual property ownership
Continuing elevated product warranty expectations and product recall levels	• Over the<br>last decade, OEMs have become more inclined to recall vehicles with potentially faulty products<br> <br><br><br><br>• Increased frequency and severity of recalls, together with other factors, have impacted coverage<br>and pricing for recall insurance	• Increased OEM pricing pressure,<br>including pressure to assume incremental warranty costs<br> <br><br><br><br>• Increasing product recall claims and related product replacement cost risk, even where root cause<br>not agreed with OEM<br> <br><br><br><br>• Higher self-insured retentions and, reduced coverage limits on recall insurance, as well as<br>increased reluctance by certain sub- suppliers to absorb full cost of warranty/ recall relating to failure of their components, create greater net exposure

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Automotive Industry Trends	Description	Potential Impact on Magna
OEM cooperative alliances / consolidation	• Joint platform development and cost sharing<br><br><br><br> <br>• Joint purchasing	• Increased<br>OEM pricing pressure<br> <br><br><br><br>• Increase in sales, where Magna has strong relationship with lead OEM<br><br><br><br> <br>• Decrease in sales, where<br>Magna has weaker relationship with lead OEM
Long-term growth of Chinese OEMs and suppliers	• Aided by China’s accelerated focus<br>on vehicle electrification<br> <br><br><br><br>• Chinese OEMs may have low cost base which could provide advantage for expansion into global<br>markets<br> <br><br> <br>• Large number of<br>Chinese OEMs and excess production capacity could result in consolidation	• New business opportunities, including drivetrain, electronics and ADAS products,<br>and full vehicle engineering and assembly<br> <br><br><br><br>• Potential loss of business with traditional OEMs, to the extent new OEMs adversely impact<br>traditional OEMs<br> <br><br><br><br>• Potential for new partnerships and collaborations
Chinese policies aimed at growing high-value domestic development/production	• Chinese government plans to increase engineering, development and manufacturing of high-value,<br>high-tech products in China	• Increased<br>localization of engineering, development and manufacturing<br> <br><br><br><br>• Uncertainty regarding whether Chinese domestic companies will be preferred over foreign-owned<br>companies operating in China<br> <br><br><br><br>• Potential for increased export control restrictions in the U.S. and Western Europe relating to<br>strategically important and/or technologically advanced products and technology
Emergence of new “best-cost” automotive markets	• New<br>“best-cost” automotive markets (e.g. Morocco and Vietnam), which are close to larger established manufacturing markets (France/Spain and China, respectively)	• Potential new “best-cost”<br>market for engineering talent<br> <br><br><br><br>• Increased level of investment in new markets required<br><br><br><br> <br>• Various risks of doing<br>business in foreign markets

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Our Corporate Strategy

We have distilled the impacts of the global megatrends into four long-term strategic factors which we see defining the “Car of the Future” – electrification, autonomy, new mobility and connectivity. We believe we are well-positioned to capitalize on opportunities in each area:

We possess an enhanced e-Powertrain portfolio with a range of products that addresses the roadmap for the transition to Electric Vehicles and has allowed us to win new EV business.
We possess full ADAS capability and complete ADAS system expertise. We take a systems level approach in developing ADAS building blocks for OEM customers with a focus up to level 2+/3 ADAS<br>capabilities.
We have expanded our collaboration ecosystem, continue to look at opportunities to leverage new business models, and are a key enabler of OEM customers and new entrants in the New Mobility space.
We possess software-enabled functionality in our electronic control unit-related products. This functionality helps optimize performance and efficiency in connected products, such as our<br>connected powertrains, which can obtain route and other information through cloud connectivity to identify optimal routes to avoid traffic and increase fuel savings.

We have developed our corporate strategy to realize the opportunities from these trends. Key elements of such strategy include:

1. Increasing capital deployment toward high-growth areas aligned with the “ Car of the Future”

We are proactively managing our portfolio and evolving our product mix based on alignment with the Car of the Future. We seek to grow our business and capabilities in areas which are positively impacted by the global megatrends discussed earlier. Examples of such areas include powertrain electrification, ADAS systems and battery enclosures, as well as our contract vehicle manufacturing operations. As illustrated below, we believe that a substantial proportion of our product areas are not adversely impacted by the global megatrends, including our body, chassis, lighting, active aerodynamics, dual clutch transmissions, mirrors, mechatronics and seating products. The strong returns and cash flow from these product areas enable us to fund the R&D and capital investments required to realize the opportunities in high- growth products which are benefiting directly from the global megatrends.

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16 Annual Information Form

tank systems. Despite their declining long-term strategic importance, our assets and expertise associated with these products remain relevant to, and can be redeployed for, growing product areas aligned with the Car of the Future.

2. Driving OperationalExcellence

We are committed to manufacturing excellence. We continue to elevate our approach to manufacturing by implementing “factory of the future” initiatives including: enhanced use of big data and analytics; advanced robotics; additive manufacturing; and augmented reality. The ultimate goal is to achieve greater profitability through further enhanced quality, production efficiency, reduction of floor space and improved return on investments. Critical elements of our approach to operational excellence include our World Class Manufacturing initiatives and MAFACT operating system, which are discussed in “Section 6 – Description of the Business – Manufacturing & Engineering” in this AIF. Additionally, our Sustainability strategy dovetails with our efforts around operational excellence, due to the focus on energy optimization and minimization of both water withdrawals, as well as waste streams to landfill. Details of our approach to Sustainability, including energy, water and waste reduction targets, can be found in our Sustainability Report, which is Appendix 1 to this AIF.

3. Unlocking New Business Models and Markets

The new mobility landscape, which is generally urban, electrified, autonomous and connected, is creating new business models and markets. We believe that our systems and complete vehicle knowledge, including elements of our portfolio such as electric vehicle ADAS platforms, provide us with an advantage in pursuing such opportunities. In addition, our ability to use capital efficiently, launch programs reliably and help speed products to market, makes Magna a key enabler of new entrants, as demonstrated by our arrangements with Fisker.

We had a number of strategic highlights in 2021:

Electrification — we continue to advance our position in electrification in order to capitalize on the global shift towards vehicle electrification, including:

•	completing our joint venture transaction with LG Electronics to manufacture<br>e-motors, inverters, on-board chargers, and, for some customers, complete e-drive systems;
•	winning two additional integrated e-drive programs, including both<br>primary and secondary drive systems;
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•	being awarded a new program from Daimler for a family of dual-clutch transmissions, including both traditional<br>and hybrid variants; and
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•	launching the company’s first battery enclosures business for General Motors on a new electric vehicle<br>model.
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New OEMs — the global shift to electrification has fostered the emergence of a number of new, EV-focused OEMs. We continue to pursue opportunities and grow its business with such OEMs. Significant 2021 achievements include:

•	the launch of the Arcfox α-S, through the company’s complete<br>vehicle manufacturing joint venture operation with BJEV; and
•	signing a long-term manufacturing agreement for the production of the Fisker Ocean SUV at the company’s<br>assembly facility in Graz, Austria, with manufacturing scheduled to begin in November of 2022;
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Advanced Driver Assistance Systems(“ADAS”) — Magna continues to progress with development of its advanced driver assistance systems business, as evidenced by:

•	the award of a new program for advanced front cameras from a European-based global OEM;
•	the addition of more than 120 employees from Optimus Ride, to enhance Magna’s capabilities in ADAS; and<br>
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•	the award of an industry-first integrated driver and occupant monitoring system with a German-based automaker.<br>
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5. Risk Factors

The industry in which we compete and the business we conduct are subject to a number of risks and uncertainties. Our short and medium-term operational success, as well as our ability to create long-term value through our corporate strategy, are subject to a number of risks and uncertainties. These risks and uncertainties, together with a number of assumptions, underlie the forward-looking statements made in this AIF. In order to fully understand these risks, uncertainties and assumptions, you should carefully consider the following risk factors in addition to other information included in this AIF:

Risks Related to the Automotive Industry

•	Economic Cyclicality: The global automotive industry is cyclical, with the potential for regional<br>differences in timing of expansion and contraction of economic cycles. A worsening of economic, political, or other conditions in North America, Europe or China, including as a result of the COVID-19 pandemic,<br>increasing inflation (particularly fuel and energy prices), rising interest rates, and/or military conflict such as the Russian invasion of Ukraine, may result in lower consumer confidence, which typically translates into lower vehicle sales and<br>production levels. A significant decline in vehicle production volumes from current levels could have a material adverse effect on our profitability and financial condition.
•	Regional Volumes Declines: North America, Europe and China are key automotive producing regions for<br>us, and our operating results are primarily dependent on car and light truck production by our customers in these regions. A significant or sustained decline in vehicle production volumes in any or all of these geographic regions could have a<br>material adverse effect on our operations, sales and profitability.
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•	Intense Competition: The automotive supply industry is highly competitive and becoming more so.<br>Some of our competitors have higher or more rapidly growing market share than we do in certain product or geographic markets. Additionally, a number of established electronics and semiconductor companies have entered or expanded their presence in<br>the automotive industry, while disruptive technology innovators have been introducing novel product and service solutions which traditional automotive suppliers may not be able to match. Failure to successfully compete with existing or new<br>competitors, including failure to grow our electronics or EV content at or above the rate of growth of vehicle production, could affect our ability to fully implement our corporate strategy.
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•	Trade Agreements: The global growth of the automotive industry has been aided by the free movement<br>of goods, services, people and capital through bilateral and regional trade agreements, particularly in North America and Europe. Introduction of measures which impede free trade could have a material adverse effect on our operations and<br>profitability.
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•	Trade Disputes/Tariffs: International trade disputes could, among other things, reduce demand for<br>and production of vehicles, disrupt global supply chains, distort commodity pricing, impair the ability of automotive suppliers and vehicle manufacturers to make efficient long-term investment decisions, create volatility in relative foreign<br>exchange rates, and contribute to stock market volatility. The imposition of sanctions, tariffs and/or escalation of trade disputes which interfere with automotive supply chains could have an adverse effect on our operations and profitability.<br>
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Customer and Supplier Related Risks

•	Customer Concentration: Although we supply parts to all of the leading OEMs, a significant majority<br>of our sales are to six customers: BMW, Daimler, General Motors, Stellantis, Ford and Volkswagen. In light of the amount of business we currently have with these six customers, our opportunities for incremental growth with them may be limited. While<br>we continue to diversify our business, including to derive increased revenue from emergent EV-focused OEMs and through new business models, there is no assurance we will be successful. Shifts in market share<br>away from our top customers could have a material adverse effect on our profitability.
•	Growth with Asian OEMs: The amount of business we have with Japanese, Korean and Chinese-based OEMs<br>generally lags with that of our six largest customers, due in part to the existing relationships between such Asian OEMs and their preferred suppliers. Our inability to significantly grow our business with Asian-based OEMs could have an adverse<br>effect on our profitability.
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•	Emergence of Potentially Disruptive EV OEMs: With the accelerating trend toward vehicle<br>electrification, a number of potentially disruptive, EV-focused OEMs have emerged, particularly in China. It is too early to predict which of these emergent EV-focused<br>OEMs will succeed in the long-term, whether independently or through cooperative relationships with each other or with any of our traditional OEM customers. Vehicle electrification is an important component of our strategy, including through product<br>areas such as electric drive systems and battery enclosures, as well as services such as complete vehicle engineering and contract vehicle manufacturing. While we are developing business relationships with some of the emergent EV-focused OEMs, we do not have relations with all, nor are such relationships as well established as those with our traditional customers. The failure to sufficiently grow our sales to emergent OEMs which achieve<br>significant commercial success could adversely impact our long-term strategy. At the same time, conducting business with recently established OEMs poses risks and challenges, including due to their limited operating history and/or financial, capital<br>or other resources, which may elevate counterparty risk. Additionally, there is uncertainty regarding consumer/market acceptance of the vehicles of such new OEMs. It remains too early to determine whether our commercial experience with such<br>emergent EV-focused OEMs will be similar to our experience with established OEMs.
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•	Customer Consolidation and Cooperation: There have been a number of examples of OEM consolidation<br>in recent years, including the 2021 merger of PSA and FCA to form Stellantis. Additionally, competing OEMs are increasingly cooperating and collaborating in different ways to save costs, including through joint purchasing activities, platform<br>sharing, powertrain sharing, joint R&D and regional joint ventures. While OEM consolidation and cooperation may present opportunities, they also present a risk that we could lose future business or experience even greater pricing pressure on<br>certain production programs, either of which could have an adverse effect on our profitability.
•	Market Shifts: While we supply parts for a wide variety of vehicles produced globally, we do not<br>supply parts for all vehicles produced, nor is the number or value of parts evenly distributed among the vehicles for which we do supply parts. Shifts in market shares away from vehicles on which we have significant content, as well as vehicle<br>segments in which our sales may be more heavily concentrated, could have a material adverse effect on our profitability.
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•	Consumer Take Rate Shifts: Shifts in consumer preferences may impact “take rates” for<br>certain types of products we sell. Examples of such products include: manual and dual-clutch transmissions; all-wheel drive systems; power liftgates; active aerodynamics systems; advanced driver assistance<br>systems; and complete vehicles with certain option packages or option choices. Where shifts in consumer preferences result in higher “take rates” for products that we do not sell or for products we sell at a lower margin, our profitability<br>may be adversely affected.
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•	Dependence on Outsourcing: We depend on outsourcing by OEMs. A reduction in outsourcing by<br>OEMs or the loss of any material production or assembly programs combined with the failure to secure alternative programs with sufficient volumes and margins, could have a material adverse effect on our profitability.
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•	Quarterly Sales Fluctuations: Our business is generally not seasonal, but our sales and profits are<br>closely related to our automotive customers’ vehicle production schedules. Our largest customers typically shut down vehicle production for brief periods which fall during our third and fourth fiscal quarters. These scheduled shutdowns of our<br>customers’ production facilities could cause our sales and profitability to fluctuate when comparing fiscal quarters within any given year.
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•	Customer Purchase Orders: Contracts from our customers consist of blanket purchase orders which<br>generally provide for the supply of a customer’s annual requirements rather than a specific quantity of products, and can be terminated by a customer at any time. If a purchase order is terminated, we may have various pre-production, tooling, engineering and other costs which we may not recover from our customer and which could have an adverse effect on our profitability.
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•	Supply Base Condition: We rely on a number of suppliers to supply us with a wide range of<br>components required in connection with our business. The financial health of automotive suppliers is impacted by a number of factors, including economic conditions and production volumes. A significant worsening of economic conditions or reduction<br>in production volumes, including as a result of the COVID-19 pandemic, the semiconductor chip shortage, inflationary pressures or otherwise, could deteriorate the financial condition of our supply base, which<br>could lead to, among other things: increased credit risk for us; disruptions in the supply of critical components to us or our customers; and/or temporary shut-downs of one of our production lines or the production lines of one of our customers; all<br>of which could have a material adverse effect on our profitability.
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Manufacturing/Operational Risks

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Russian Invasion of Ukraine: In response to Russia’s invasion of Ukraine, a number of countries, including the U.S, Canada, U.K., and European Union member states, have taken actions against Russia, such as: imposition of sanctions targeting certain Russian leadership and other individuals; restrictions on certain sectors of the Russian economy; expulsion of some Russian banks from the SWIFT global banking payment system; and other measures, with further restrictions likely as the conflict continues. Magna currently has 6 manufacturing facilities in Russia primarily supplying VW and Hyundai, with 2021 sales of approximately $370 million. To the extent that VW, Hyundai and/or our other OEM customers in Russia suspend Russian production, and/or to the extent any of our OEM customers suspend production elsewhere or cease selling vehicles in the Russian market, Magna’s sales would be adversely affected. Additionally, the conflict and restrictive measures against Russia could exacerbate a number of risks described elsewhere in these Risk Factors, including: disruption of vehicle production and supply chains; worsening the current semiconductor chip shortage since Russia and Ukraine are critical suppliers of neon gas and palladium used in chip production; exacerbating energy shortages or driving energy prices higher, particularly oil and natural gas; constraining the supply of aluminum, palladium or other commodity metals required in automotive production; increasing cybersecurity threats. Additional risks may arise from retaliatory measures introduced by the Russian Federation in response to sanctions, including imposition of penalties on Russian domiciled companies and their management, as well as imposition of state management on such companies and/or expropriation of foreign companies’ assets in Russia.

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Semiconductor Chip Shortages and Price Increases: The global shortage of semiconductor chips had a material adverse effect on global automotive production volumes in 2021, is expected to continue impacting volumes in 2022 and could worsen as a result of Russia’s invasion of Ukraine. In response to the semiconductor chip shortage, OEMs continue to take actions such as: unplanned shutdowns of production lines and/or plants; reductions in their vehicle production plans; and changes to their product mix. Such OEM responses can result in a number of direct and indirect consequences for Tier 1 suppliers like us, including: lower sales; significant production inefficiencies due to production lines being stopped/restarted unexpectedly based on OEMs’ production priorities; higher

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<br>inventory levels; premium freight costs to expedite shipments; other unrecoverable costs; and increased challenges in retaining employees through production disruptions. The current shortage of<br>semiconductor chips has also resulted in elevated prices for this critical automotive component. Tier 1 suppliers may face price increases from sub-suppliers that have been negatively impacted by production<br>inefficiencies, premium freight costs and/or other costs and surcharges related to the semiconductor chip shortage. It remains unclear when supply and demand for automotive semiconductor chips will fully rebalance. A worsening or prolongation of the<br>semiconductor chip shortage could have a material adverse effect on our operations, sales and profitability.
•	COVID-19: The development and spread of<br>highly-transmissible COVID-19 variants such as the “Omicron” variant creates continued risk of further disruptions to the automotive industry, including through further mandatory lockowns/stay-at-home orders or other restrictions, as is currently the case in parts of China. These orders may: restrict consumers’ ability to purchase vehicles;<br>restrict production; cause elevated employee absenteeism; result in us incurring significant unrecoverable costs; and lead to supply chain disruptions. Over the medium-to long term, the pandemic may result in<br>societal changes that impact the automotive industry, positively or negatively, including as a result of: expanded work-from-home practices that reduce consumers’ reliance on vehicles; and/or increased reluctance by people to utilize modes of<br>public transit and/or shared mobility. Prolonged production shutdowns and/or restrictions on consumers’ ability to purchase vehicles due to COVID-19 lockdowns in the short-term, or long-term changes in<br>consumers’ vehicle purchasing behaviour, could have a material adverse effect on our operations, sales and profitability.
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•	Supply Disruptions: Events which prevent us from supplying products to our customers could result<br>in a range of potential adverse consequences, including: material price increases; elevated, unrecoverable costs such as those for premium freight or re-sourcing of supply; penalties or business interruption<br>claims by our customers; loss of future business; and reputational damage. In addition to the global semiconductor chip shortage, OEMs and Tier 1 automotive suppliers could also experience supply disruptions or constraints on other critical<br>manufacturing inputs, such as steel and/or aluminum. The impacts of prolonged supply disruptions or constraints could have a material adverse effect on our operations and profitability.
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•	Regional Energy Shortages: Parts of the world are experiencing energy shortages which appear to be<br>related to a resurgence in demand due to economic recovery, regulatory restrictions, weather events and challenges related to the transition to renewable energy generation. Prices for energy inputs critical to manufacturing, such as natural gas and<br>electricity, rose dramatically in parts of Europe and Asia in 2021 and may continue to increase in these or other markets. Russia’s invasion of Ukraine could disrupt natural gas supplies from Russia to Europe and/or cause elevated prices to<br>rise further. Prolonged energy disruptions and/or significant energy price increases could have an adverse effect on our operations and profitability.
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•	Product Launch: The launch of production is a complex process, the success of which depends on a<br>wide range of factors, including: the timing and frequency of design changes by our customers relative to start of production; production readiness of our and our customers’ and suppliers’ manufacturing facilities; robustness of<br>manufacturing processes; launch volumes; quality and production readiness of tooling and equipment; employees; and initial product quality. Our failure to successfully launch material new or takeover business could have a material adverse effect on<br>our profitability and reputation.
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•	Operational Underperformance: From time to time, we may have operating divisions which are not<br>performing at expected levels of profitability. The size and complexity of automotive manufacturing operations often makes it difficult to achieve a quick turnaround of underperforming divisions. Significant underperformance in our operating<br>divisions could have a material adverse effect on our profitability and operations.
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•	Restructuring Costs: We may sell some product lines and/or downsize, close or sell some of our<br>operating divisions. By taking such actions, we may incur restructuring, downsizing and/or other significant non-recurring costs. These costs may be higher in some countries than others and could have a<br>material adverse effect on our profitability.
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•	Impairments: We have recorded significant impairment charges related to equity interests in joint<br>ventures, goodwill and long-lived assets in the past and may do so again in the future. The early termination, loss, renegotiation of the terms of, or delay in the implementation of, any significant production contract could be indicators of<br>impairment, as may the technological obsolescence of any of our products or production assets or volumes that are lower than previously expected. In conducting our impairment analysis, we make forward-looking assumptions regarding: the impact of<br>turnaround plans on underperforming operations; new business opportunities; program price and cost assumptions on current and future business; the timing and success of new program launches; and forecast production volumes. To the extent such<br>forward-looking assumptions are not met, any resulting impairment loss could have a material adverse effect on our profitability.
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•	Labour Disruptions: Some of our manufacturing facilities are unionized, as are many manufacturing<br>facilities of our customers and suppliers. While unionized facilities are subject to the risk of labour disruptions from time to time, we cannot predict whether or when any labour disruption may arise, or how long such a disruption could last. A<br>significant labour disruption could lead to a lengthy shutdown of our or our customers’ and/or our suppliers’ production lines, which could have a material adverse effect on our operations and profitability.
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•	Climate Change Risks: Extreme weather events such as floods and windstorms and other natural<br>disasters such as earthquakes caused by climate could cause catastrophic destruction to some of our or our sub-suppliers’ facilities, which could in turn disrupt our production and/or prevent us from<br>supplying products to our customers. Shortages of seating foam and resin due to the February 2021 Texas ice storm are recent examples of the impact of an extreme weather event. While we conduct risk assessments of our facilities and have implemented<br>mitigation strategies to address, where practical, physical risks related to extreme weather events or natural disasters,
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<br>the frequency and severity of any such event can vary by region and cannot be predicted. A catastrophic destruction of our or our sub-supplier facilities<br>could have a material adverse effect on our operations and profitability.
•	Skilled Labour Attraction/Retention: Our business is based on successfully attracting, training and<br>developing employees at all levels of the company from “shop-floor” to Executive Management. The markets for highly skilled workers, as well as talented professionals and leaders in our industry are extremely competitive, particularly in<br>the major global automotive and technology centres in which many of our operations are located. The inability to meet our needs for skilled workers and talented professionals and leaders, whether through recruitment or internal training and<br>development activities could impact our ability to profitably conduct business and/or effectively implement our strategy.
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•	Leadership Succession: Effective succession planning programs and practices are a critical element<br>of our overall talent management strategy. We experienced a significant number of planned retirements in the last few years, and may experience similar waves in future years. We maintain a leadership development and succession program that has<br>facilitated seamless leadership transitions to date. However, the failure to ensure effective knowledge transfers and seamless leadership transitions involving key professionals and leaders could also impact our ability to profitably conduct<br>business and/or effectively implement our strategy.
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IT Security/Cybersecurity Risks

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IT/Cybersecurity Breach: Although we have established and continue to enhance security controls intended to protect our IT systems and infrastructure, there is no guarantee that such security measures will be effective in preventing unauthorized physical access or cyber-attacks. A significant breach of our IT systems could: result in theft of funds; cause disruptions in our manufacturing operations; lead to the loss, destruction or inappropriate use of sensitive data; or result in theft of our, our customers’ or our suppliers’ intellectual property or confidential information. The occurrence of any of the foregoing could adversely affect our operations and/or reputation, and could lead to claims against us that could have a material adverse effect on our profitability.

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Product Cybersecurity: The risk of vehicle cyber attacks has risen with the proliferation of technology designed to connect vehicles to external networks. Although vehicle and systems-level cybersecurity controls and protections are typically managed and/or specified by our OEM customers, we cannot provide assurance that such controls and protections will be effective in preventing cyber intrusion through one of our products. Furthermore, an OEM customer may still seek to hold us financially responsible, even where the OEM specified the cybersecurity controls and protections. Any such cyber intrusion could cause reputational damage and lead to claims against us that have an adverse effect on our profitability.

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Pricing/Cost Risks

•	Inflationary Pressures: Global economies are currently experiencing elevated inflation which could<br>curtail levels of economic activity, including in our primary production markets. During 2021, we experienced higher commodity, freight and energy costs, as well as wage pressures related to labour shortages in some markets. Inflationary pressures<br>are expected to continue in 2022 and would be exacerbated by shortages or disruptions to inputs required for automotive production, including semiconductor chips, steel and aluminum. Tier 1 Suppliers may also experience price increases or surcharges<br>from sub-suppliers in connection with the inflationary pressures they face. The inability to offset inflationary price increases through continuous improvement actions, price increases to our customers or<br>modifications to our own products or otherwise, could have an adverse effect on our profitability.
•	Quote/Pricing Assumptions: The time between award of new production business and start of<br>production typically ranges between two and four years. Since product pricing is typically determined at the time of award, we are subject to significant pricing risk due to changes in input costs and quote assumptions between the time of award and<br>start of production. This risk is elevated in a rising inflation environment, as is currently the case globally. The inability to quote effectively, or the occurrence of a material change in input cost or other quote assumptions between program<br>award and production, could have an adverse effect on our profitability.
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•	Customer Pricing Pressure/Contractual Arrangements: We face ongoing pricing pressure from OEMs,<br>including through: quoting pre-requirements; long-term supply agreements with mutually agreed price reductions over the life of the agreement; non-contractual annual<br>price concession demands; pressure to absorb costs related to product design, engineering and tooling, and/or amortize such costs through the piece price for the product; pressure to assume incremental warranty costs; and OEM refusal to fully offset<br>inflationary price increases. OEMs possess significant leverage over their suppliers due to their purchasing power and the highly competitive nature of the automotive supply industry. As a result of the broad portfolio of parts we supply to our six<br>largest OEM customers, such customers may be able to exert greater leverage over us as compared to our competitors. We attempt to offset price concessions and costs in a number of ways, including through negotiations with our customers, improved<br>operating efficiencies and cost reduction efforts. Our inability to fully offset price concessions, absorb design, engineering and tooling costs, and/or fully recover such costs over the life of production, could have a material adverse effect on<br>our profitability. Moreover, while we attempt to negotiate contractual terms with our suppliers that align with the contractual terms between us and our OEM customers, we may not always be successful in doing so. Any such gaps between our customer<br>and supplier contract terms could, in certain circumstances, have an adverse effect on our profitability.
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•	Commodity Price Volatility: Prices for certain key raw materials and commodities used in our parts,<br>including steel, aluminum and resin, can be volatile. To the extent we are unable to offset commodity price increases by: passing such increases to our customers,
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engineering products with reduced commodity content, implementing hedging strategies, or otherwise, such additional commodity costs could have an adverse effect on our profitability.

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Scrap Steel/Aluminum Price Volatility: Some of our manufacturing facilities generate a significant amount of scrap steel or scrap aluminum in their manufacturing processes, but recover some of the value through the sale of such scrap. Scrap steel and scrap aluminum prices can also be volatile and don’t necessarily move in the same direction as steel or aluminum prices. Declines in scrap steel/aluminum prices from time to time could have an adverse effect on our profitability.

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Warranty/Recall Risks

•	Repair/Replacement Costs: We are responsible for repair and replacement costs of defective products<br>we supply to our customers. Certain of our products, such as transmissions, typically have a higher unit and labour service cost in the event of replacement. Other products, such as side door latches, are supplied in multiples of two or four for a<br>single vehicle, which could result in significant cost in the event all need to be replaced. Our OEM customers and/or government regulators have the ability to initiate recalls of safety products, which will also place us at risk for the<br>administrative costs of the recall, even in situations where we dispute the need for a recall or the responsibility for any alleged defect. An increase in the number of repair/replacement claims could lead to higher self-insured retentions and<br>reduced insurance coverage limits. The obligation to repair or replace defective products could have a material adverse effect on our operations and profitability. To the extent such obligation arises as a result of a product recall, we may face<br>reputational damage, and the combination of administrative and product replacement costs could have a material adverse effect on our profitability.
•	Warranty Provisions: In certain circumstances, we are at risk for warranty, product liability and<br>recall costs, and are currently experiencing increased customer pressure to assume greater warranty responsibility. Certain customers seek to impose partial responsibility for warranty costs where the underlying root cause of a product or system<br>failure cannot be determined. Warranty provisions for our products are based on our best estimate of the amounts necessary to settle existing or probable claims related to product defects. In addition, warranty provisions for our powertrain systems,<br>electronics and complete vehicle programs are also established on the basis of our or our customers’ warranty experience with the applicable type of product and, in some cases, the terms in the applicable customer agreements. Actual warranty<br>experience which results in costs that exceed our warranty provisions, could have a material adverse effect on our profitability.
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•	Product Liability: We cannot guarantee that the design, engineering, testing, validation and<br>manufacturing measures we employ to ensure high-quality products will be completely effective, particularly as electronic content and product complexity increases. In the event that our products fail to perform as expected and such failure results<br>in, or is alleged to result in, bodily injury and/or property damage or other losses, product liability claims may be brought against us. The defense of product liability claims, particularly class action claims in North America, may be costly and<br>judgements against us could impair our reputation and have a material adverse effect on our profitability.
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Acquisition Risks

•	Acquisition of Strategic Targets: We intend to continue to pursue acquisitions in those product<br>areas which we have identified as key to our long-term corporate strategy. However, as a result of intense competition in these strategic areas, we may not be able to acquire the targets which we need to achieve our strategic objectives.<br>
•	Inherent Merger and Acquisition Risks: Acquisitions are subject to a range of inherent risks,<br>including the assumption of incremental regulatory/compliance, pricing, supply chain, commodities, labour relations, litigation, environmental, pensions, warranty, recall, IT, tax or other risks. While the conduct of due diligence on an acquisition<br>target is intended to mitigate such risks, these efforts may not always prove to be sufficient in identifying all risks and liabilities related to the acquisition, including as a result of: limited access to information; time constraints for<br>conducting due diligence; inability to access target company facilities and/or personnel; or other limitations in the due diligence process. Additionally, we may identify risks and liabilities that we are not able to sufficiently mitigate through<br>appropriate contractual or other protections. The realization of any such risks could have a material adverse effect on our profitability.
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•	Acquisition Integration and Synergies: We may not be able to successfully integrate or achieve<br>anticipated synergies from those acquisitions which we do complete and/or such acquisitions may be dilutive in the short to medium term. Either of these outcomes could have a material adverse effect on our profitability.
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Other Business Risks

•

Joint Ventures: We conduct certain of our operations through joint ventures under contractual arrangements under which we share management responsibilities with one or more partners. Joint venture operations carry a range of risks, including those relating to: failure of our joint venture partner(s) to satisfy contractual obligations; potential conflicts between us and our joint venture partner(s); strategic objectives of joint venture partners that may differ from our own; potential delays in decision-making; a limited ability to implement some or all of our policies, practices and controls, or to control legal and regulatory compliance, within the joint venture(s); and other risks inherent to non-wholly-owned operations. The likelihood of such occurrences and their potential effect on us vary depending on the joint venture arrangement, however, the occurrence of any such risks could have an adverse effect on our operations, profitability and reputation.

22 Annual Information Form

•	Technology and Innovation: While we continue to invest in technology and innovation which we<br>believe will be critical to our long-term growth, the automotive industry is experiencing rapid technological change and significant disruption. Our ability to anticipate changes in technology and to successfully develop and introduce new and<br>enhanced products and/or manufacturing processes on a timely basis will be a significant factor in our ability to remain competitive. If we are unsuccessful or are less successful than our competitors in consistently developing innovative products<br>and/or processes, we may be placed at a competitive disadvantage and may not be able to recover some or all of our investments and costs, which could have a material adverse effect on our profitability and financial condition and ability to fully<br>implement our corporate strategy.
•	Intellectual Property: We own intellectual property that is important to our business and product<br>portfolio. Our intellectual property is an important factor in protecting our innovation activities and maintaining our competitive advantage. From time to time, our intellectual property rights may be challenged, including through the assertion of<br>intellectual property infringement claims which could result in us: being prevented from selling certain products; having to license the infringed product/technology; and/or incurring monetary damages. The foregoing consequences could have an<br>adverse effect on our sales, profitability and ability to fully implement our corporate strategy.
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•	Investments in Technology Companies: In addition to our development activities, we have invested in<br>various technology companies and funds that invest in such companies. Such investments are an important element of our long-term strategy and we may make further investments in such companies. Investing in such companies involves a high degree of<br>risk, including the potential loss of some or all of our investment value. There is currently no public market for the shares or units of some of these investments and, as a result, we may be unable to monetize such investments in the future.<br>Investments in companies or funds which are currently or subsequently become publicly traded are marked-to-market quarterly, which may result in us recording unrealized<br>gains or losses in any given quarter. The realization of any of the foregoing investment-related risks could have an adverse effect on our profitability and financial condition.
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•	Evolving Business Risk Profile: The risk profile of our business continues to evolve with the<br>increasing importance to us of product areas such as electrified powertrains, ADAS and electronics, as well as future mobility business models. As our business evolves, we may face new or heightened risks, including: forecasting and planning risks<br>related to penetration rates of EVs, as well as take-rates for ADAS systems or features offered to consumers as optional items; reduction in demand for certain products which are unique to internal combustion engine vehicles; challenges in quoting<br>for profitable returns on products with leading-edge technologies for which we may not have significant quoting experience; rigorous testing and validation requirements from OEM customers for complex new products; increased warranty and recall risks<br>on new products and leading-edge technologies; increased product liability risks; heightened risk of technological obsolescence of some of our products, processes and/or assets; and difficulties in attracting or retaining employees with critical<br>skills in high-demand areas. Realization of one or more such risks could have a material adverse effect on our operations, profitability or financial condition.
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•	Risks of Doing Business in Foreign Markets: The establishment of manufacturing operations in new<br>markets carries a number of potential risks, including those relating to: political, civil and economic instability and uncertainty; military conflict; corruption risks; high inflation and our ability to recover inflation-related cost increases;<br>trade, customs and tax risks; potential sanctions and export control risk; expropriation risks; currency exchange rates; currency controls; limitations on the repatriation of funds; insufficient infrastructure; competition to attract and retain<br>qualified employees; and other risks associated with conducting business internationally. Expansion of our business in non-traditional markets is an element of our long-term strategy and, as a result, our<br>exposure to the risks described above may be greater in the future. The likelihood of such occurrences and their potential effect on us vary from country to country and are unpredictable, however, the occurrence of any such risks could have an<br>adverse effect on our operations, profitability and financial condition.
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•	Relative Foreign Exchange Rates: Our profitability is affected by movements of our U.S. dollar<br>reporting currency against the Canadian dollar, the euro, the Chinese renminbi and other currencies in which we generate revenues and incur expenses. Significant long-term fluctuations in relative currency values, in particular a significant change<br>in the relative values of the U.S. dollar, Canadian dollar, euro or Chinese renminbi, could have an adverse effect on our profitability and financial condition and any sustained change in such relative currency values could adversely impact our<br>competitiveness in certain geographic regions.
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•	Pension Risks: Some of our current and former employees in Canada, the United States and Germany<br>participate in defined benefit pension plans. Although such plans in North America have been closed to new participants, existing participants in Canada continue to accrue benefits. Our defined benefit pension plans in Germany are not funded and<br>plans in Canada and the United States may not be fully funded. Our pension funding obligations in North America could increase significantly due to a reduction in plan funding status caused by a variety of factors, including: weak performance of<br>capital markets; declining interest rates; failure to achieve sufficient investment returns; investment risks inherent in the investment portfolios of the plans; and other factors. A significant increase in our pension funding obligations could have<br>an adverse effect on our profitability and financial condition.
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•	Tax Risks: At any given time, we may face tax exposures arising out of changes in tax or transfer<br>pricing laws, tax reassessments or otherwise. To the extent we cannot implement measures to offset these exposures, they may have an adverse effect on our profitability. We have incurred losses in some countries which we may not be able to fully or<br>partially offset against income we have earned in those countries. In some cases, we may not be able to utilize these losses at all if we cannot generate profits in those countries and/or if we have ceased conducting business in those countries<br>altogether. Our inability to utilize tax losses could adversely affect our profitability.
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Magna InternationalInc. 23

•	Financial Flexibility: The occurrence of an economic shock not contemplated in our business plan, a<br>rapid deterioration of conditions or a prolonged recession could result in the depletion of our cash resources, which could have a material adverse effect on our operations and financial condition.
•	Returns on Capital Investments: In recent years, we have invested significant amounts of money in<br>our business through capital expenditures to support new facilities, expansion of existing facilities, purchases of production equipment and acquisitions. Returns achieved on such investments in the past are not necessarily indicative of the returns<br>we may achieve on future investments and our inability to achieve returns on future investments which equal or exceed returns on past investments could have a material adverse effect on our level of profitability.
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•	Credit Ratings Changes: There is no assurance that any credit rating currently assigned to us will<br>remain in effect for any period of time or that any rating will not be revised or withdrawn entirely by a rating agency in the future. A downgrade in the credit ratings assigned to us by one or more agencies could increase our cost of borrowing or<br>impact our ability to negotiate loans, which could have an adverse effect on our profitability, financial condition and the trading price of our Common Shares.
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•	Stock Price Fluctuation: Trading prices of our Common Shares cannot be predicted and may fluctuate<br>significantly due to a variety of factors, many of which are outside our control.
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•	Dividends: Our Board may in certain circumstances determine that it is in the best interests of the<br>company to reduce or suspend our dividend. In such event, the trading price of our Common Shares may be materially affected.
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Legal,Regulatory and Other Risks

•	Antitrust Proceedings: The automotive industry has in recent years been the subject of increased<br>government enforcement of antitrust and competition laws. Where wrongful conduct is found, the relevant antitrust authority can, depending on the jurisdiction, initiate administrative or criminal legal proceedings and impose administrative or<br>criminal fines, penalties or restitution payments. OEMs, car dealers and consumers may also be able to claim against antitrust violators through civil lawsuits. The company’s policy is to comply with all applicable laws, including antitrust and<br>competition laws, and has implemented a robust compliance training program to mitigate against the risk of an antitrust violation. However, in the event of an antitrust violation, Magna could suffer reputational damage and be subject to criminal or<br>administrative fines or penalties, restitution settlements, or civil damages that could have a material adverse effect on Magna’s profitability.
•	Legal and Regulatory Proceedings: From time to time, we may become involved in regulatory<br>proceedings, or become liable for legal, contractual and other claims by various parties, including customers, suppliers, former employees, class action plaintiffs and others. Depending on the nature or duration of any potential proceedings or<br>claims, we may incur substantial costs and expenses, be required to devote significant management time and resources to the matters, and suffer reputational damage as a result of regulatory proceedings. On an ongoing basis, we attempt to assess the<br>likelihood of any adverse judgements or outcomes to these proceedings or claims, although it is difficult to predict final outcomes with any degree of certainty. Except as disclosed from time to time in our consolidated financial statements and/or<br>our MD&A, we do not believe that any of the proceedings or claims to which we are currently a party will have a material adverse effect on our profitability; however, we cannot provide any assurance to this effect.
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•	Changes in Laws: A significant change in the current regulatory environment in our principal<br>markets, including changes in tax laws, laws related to the COVID-19 pandemic, laws related to vehicle emissions, and other laws which impose additional costs on automotive manufacturers or consumers, could<br>have an adverse effect on our profitability.
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•	Environmental Compliance: While we regularly attempt to estimate environmental clean-up liabilities, such an exercise is complex. In addition, environmental laws and regulations are complex, change frequently and have tended to become more stringent and expensive over time. In certain<br>circumstances, we could be named as a Potentially Responsible Party (“PRP”) with respect to a contaminated site. Costs associated with being a PRP could be material depending on site conditions and the number of participating PRPs. As a<br>result, we may incur material costs or liabilities significantly in excess of amounts we have reserved, which could have an adverse effect on our operations, profitability, financial condition or reputation.
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24 Annual Information Form

6.	Description of the Business

Geographic Markets & Customers

MajorCustomers

While we supply products and services to a large number of customers worldwide, sales to our six largest customers represented the following proportions of our consolidated sales in 2021 and 2020:

			Proportion of Magna Sales
Magna SalesRanking	OEM<br><br><br>Ranking^(1)^	Customer	(2021)	(2020)
1	12	BMW	16%	15%
2	10	Daimler	14%	14%
3	5	General Motors	13%	15%
4	8	Stellantis	13%	12%
5	7	Ford	12%	12%
6	2	Volkswagen	10%	11%
		Other	22%	21%
		TOTAL	100%	100%
(1)	Based on 2021 global light vehicle production.
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Customer Management Offices

We have a globally-structured sales, engineering and marketing team spread across multiple global locations where our customers maintain engineering, commercial and/or manufacturing facilities. The various internal operating divisions and subsidiaries of the automobile manufacturers normally initiate many of their own purchasing decisions. As a result, an automobile manufacturer may effectively constitute multiple customers.

Purchase Orders

Our sales are generated through customer requests to quote on particular products, as well as the tools and dies required to produce parts. Purchase orders for our products are typically for one or more models, and typically extend over the life of each model, which is generally four to seven years. However, purchase orders issued by our automobile manufacturer customers typically do not require them to purchase any minimum number of our products. Releases under such purchase orders, which authorize us to supply specific quantities of products, are issued for planning, raw material and production purposes, which is typically over a one to four month period in advance of anticipated delivery dates. The actual number of products that we supply under purchase orders in any given year is dependent upon the number of vehicles produced by the automobile manufacturers of the specific models in which those products are incorporated.

It has been our experience that once we receive purchase orders for products for a particular vehicle model or program, we will usually continue to supply those products until the end of that model or program, although most of our customers’ purchase orders allow them to terminate the purchase order for convenience. In addition, as part of our purchase contracts, we are generally required to supply service parts for up to 15 years after the end of production of any model, provided that we are the contracted supplier at the time production ceases. Automobile manufacturers could cease sourcing their production requirements from us for a number of reasons, including if we refuse to accept demands for price reductions or other concessions and if the vehicle is not meeting their sales targets. Should the latter occur, we are still required to provide service parts for up to 15 years, although we may be able to negotiate that this be supplied as a one-time up front purchase.

Manufacturing & Engineering

World Class Manufacturing

As part of our strategy of maintaining Operational Excellence, our goal is to be recognized as a leader in next generation “World Class Manufacturing”. Our global operating units strive toward this goal which aims to achieve “best in class” performance in all areas of manufacturing. In order to drive continuous improvement, we monitor our progress in achieving World Class Manufacturing by using an assessment process that is similar to the method used by our customers in their own plants and to evaluate their suppliers. Our assessment process, known as the Magna Factory Concept or “MAFACT”, is supplemented with elements we view as critical to achieving World Class Manufacturing in accordance with our Operational Principles. Best practices, “lessons learned” and key initiatives are shared among our global operating units.

Magna InternationalInc. 25

Factory of the Future (FOF) Technology

We continue to look at ways to integrate leading edge manufacturing trends into our operations, including Artificial Intelligence (AI) capabilities designed to, among other things: increase information available to human operators to enhance decision making; automate certain processes to increase efficiency and safety; and perform predictive maintenance on equipment. Specifically, a number of our global facilities have implemented a combination of new technological applications, software and processes in order to benefit from more efficient and effective factory solutions, which is known as our “Factory of the Future (FoF)” approach. A few examples are set out below.

LOGO

Advanced Robots Virtual 7.0%(3) Reality Centre Our Corporate R&D team has developed a core Advanced Robotics System for high volume production using state-of-the-art 2D/3D vision systems and advanced robotics trajectory planning with AI The system has been launched in ten Magna facilities with over 20 systems in high volume production. As part of our planned “scaled implementation” approach, the system is ready for larger scale deployment in other facilities across all Magna Operating Groups for cost optimization

Fenceless Robot System Our Corporate R&D team is working with several robotics companies, startups, research labs and universities to develop enabling technologies that can be scaled across Magna. Together with one of our Powertrain Divisions, we co-developed and implemented the first fenceless robot system for high volume production at Magna. The fenceless robot system can handle almost double the payload at 10 times the speed of other collaborative robotic systems in the market for boxes, baskets and trays. Elimination of fencing and guarding of robot cells takes up less floor space and allows freedom of movement and access for human workers The insight gained from the fenceless robot system is allowing Magna to co-develop, test and validate the next generation of fenceless robotics for high volume automotive production in a safe, collaborative and efficient way. Predictive Maintenance Our Exteriors facilities have actively implemented predictive maintenance of injection moulding machines. Data from a machine controller, as well as additional sensors, is collected and processed in real time. The data is then made available by way of a dashboard and automatic alerts allowing emerging maintenance issues to be pinpointed and addressed before they develop into larger issues. These activities allow for production and efficiency improvements, including reduced equipment downtime, as well as avoidance of unexpected equipment failures. Augmented/Virtual Reality Centre Located in Graz, Austria, the VR Centre is helping bring new technology to real product development Before a new production line is installed, the new building, infrastructure and technology are planned virtually Existing plants have also been digitized with the help of drones that scan the facility

Engineers also use Virtual Reality (VR) goggles in complete vehicle development, including vehicle styling and ergonomics

26 Annual Information Form

Facilities

As at December 31, 2021, we had the following manufacturing and PDE&S facilities in each designated geographic region:

LOGO

Our manufacturing and PDE&S facilities occupied approximately 80 million and 3.8 million square feet, respectively. These facilities were broken down between third party leases, and those owned by us as set out below. At this time, the largest percentage of properties leased (by square footage) from any single landlord is approximately 16%.

LOGO

Our facility leases typically have terms of at least five years with one or more options to renew. Among other terms, our leases typically require us to return the facilities to the condition in which we received them at start of the lease (reasonable wear and tear excepted). From time to time, the cost of doing so may be significant due to such factors as the length of the lease period, the nature of the manufacturing operations, the extent of modifications made to the leased properties over the term of the lease and other factors.

We are also subject to environmental laws and regulations both as tenant and owner of our properties. Our leases with third party landlords generally provide that we must maintain the leased properties in accordance with all applicable laws, including environmental laws. Magna routinely conducts Phase 1 Environmental Assessments, and if necessary Phase 2 Site Investigations, at manufacturing, assembly and warehousing locations prior to occupancy to identify any actual and potential pre-existing environmental concerns at leased or owned sites. Magna is responsible for addressing environmental impacts arising during our tenancy, including exacerbations of existing impacts as defined by lease terms or regulatory requirements. Our leases with third party landlords generally also contain indemnities in favour of the landlord with respect to environmental matters and those indemnities expire after a specified period following the termination of the leases.

Key Components and Raw Materials

Our key purchased components include: stampings, electronics, chips, molded parts, die casting, forging, coverstock, and wire harnesses. Our key purchased raw materials are steel, resin and aluminum. While we endeavour to purchase the majority of these components and raw materials from regional suppliers where we do business, factors such as price, quality, transportation costs, warehousing costs, duties, tariffs, availability of supply and timeliness of delivery have an impact on the decision to source from certain suppliers. We also purchase

Magna InternationalInc. 27

some key components and raw materials offshore when shortages occur or when we choose to source one supplier for a global program. Prices for our raw materials used in our production of parts, like steel, resin and aluminum, continue to be volatile.

Approximately two-thirds of our steel is acquired through resale programs operated by automobile manufacturers and the balance is generally acquired through annual or six month contracts. Under customer steel resale programs we are not exposed to steel price volatility, thus helping to manage our production costs. Certain of our operations generate steel and aluminum scrap, which we typically sell at prices that fluctuate with published market indices. Most of our resin purchases fluctuate directly with market indices, although we do participate in some customer resale programs on approximately one quarter of our resin purchases. The majority of our aluminum purchases fluctuate with market indices. In some cases, our customers direct us to buy certain other raw materials from specified suppliers, at specified prices, as is largely the case, for example, with leather we use for automotive seats. Consistent with lean manufacturing principles, we do not typically carry inventories of key raw materials or finished products significantly in excess of those reasonably required to meet production and shipping schedules. The automotive industry globally continues to experience a shortage of semiconductors, which is negatively impacting vehicle production and is resulting in a number of consequences for us, including: operational inefficiencies due to production lines being stopped/ restarted unexpectedly The risks related to the semiconductor chip shortage and potential future shortages/supply constraints of key commodities are discussed in greater detail under “Section 4 – Our Business & Strategy – Macroeconomic, Political and Other Trends” and “Section “Section 5 – Risk Factors”.

Products & Services

Top Programs

Our top fifteen programs/platforms based on 2021 production and vehicle assembly sales were:

Customer	Vehicle	Capabilities
		Body Exteriors<br><br><br>& Structures		Power & Vision					Seating<br><br><br>Systems	Complete<br><br><br>Vehicles
		Body<br>&<br>Chassis	Exteriors	Powertrain	Electronics	Mirrors	Lighting	Mechatronics	Seating	Vehicle<br>Engineering &<br><br><br>Manufacturing
General<br><br><br>Motors	Full-Size SUVs &<br> <br>Pick-up Trucks	∎	∎	∎	∎	∎	∎	∎
Daimler	Mercedes-Benz<br><br><br>G-Class	∎	∎	∎		∎	∎	∎		∎
BMW	BMW 5-Series	∎		∎		∎		∎		∎
Stellantis	Jeep Grand Cherokee	∎	∎	∎	∎	∎	∎	∎	∎
General Motors	GMC Acadia, Buick Enclave, Cadillac XT6, Chevrolet Blazer,<br>Chevrolet<br> <br>Traverse	∎	∎	∎	∎	∎	∎	∎	∎
Stellantis	Ram Pick-up	∎	∎	∎	∎	∎	∎	∎	∎
Ford	Ford Transit, Ford Tansit<br><br><br>Custom	∎	∎	∎	∎	∎		∎	∎
BMW	BMW X3	∎	∎	∎		∎		∎
Tata	Jaguar I-Pace	∎	∎							∎
BMW	BMW X5	∎	∎	∎		∎		∎	∎
Tata	Jaguar E-Pace	∎	∎							∎
Daimler	Mercedes-Benz GLE/GLE<br>Coupe, Mercedes-Benz<br> <br>GLS	∎	∎	∎		∎		∎
Ford	Ford Escape, Ford Kuga,<br><br><br>Lincoln Corsair	∎	∎	∎	∎	∎			∎
Stellantis	Jeep Wrangler	∎	∎	∎	∎	∎	∎	∎	∎
Ford	Ford Expedition, Lincoln Navigator		∎	∎	∎	∎		∎	∎

Note: Capabilities represented may not be on each vehicle or each trim level of each vehicle. Additionally, our capabilities in each product area range from components to full systems, only some of which may be represented on any particular program. Our Roof Systems capabilities are not present on the programs/platforms listed.

28 Annual Information Form

Product Portfolio

We continue to evolve our product portfolio consistent with the strategy described under Section 4 “Our Business & Strategy – Corporate Strategy” in this AIF. The development of innovative technologies and solutions which are responsive to the global megatrends defining the “Car of the Future” requires R&D spending, as well as capital investments and the acquisition of engineering talent with the necessary software and other expertise. We believe that the relatively stable profitability and cash generation from our “traditional” businesses provide us with the ability to fund the R&D and capital investment required to realize opportunities related to product areas such as electrification, ADAS and others aligned with the Car of the Future. Additionally, we believe that our comprehensive knowledge and understanding of the entire vehicle and the interaction of various complex vehicle systems provide us with unique advantages in executing our long term strategy. Consistent with such long-term strategy, key themes in our product portfolio include:

Optimizing Vehicle Weight, Powertrain Efficiency and Aerodynamics
We continue to support our OEM customers by offering solutions which enable them to deliver lighter vehicles, improved/ optimized powertrain efficiency and enhanced aerodynamics, including:
•	Lightweight Products & Materials: OEMs are focused on reducing<br>vehicle mass in order to: downsize engines, thereby reducing fuel consumption and tailpipe emissions for vehicles powered by internal combustion engines; and minimize power consumption/ maximize driving range for EVs. We believe that the breadth of<br>our engineering capabilities across all major sections of the vehicle, together with our full vehicle capabilities, provide us a competitive advantage in addressing OEMs’ lightweighting needs “holistically”. Moreover, our financial<br>strength has enabled us to fund continuous innovation related to advanced materials, multi-material joining processes, manufacturing processes and lightweight products.
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•	Efficient Transmissions/e-Drive Systems: Irrespective of a<br>vehicle’s power source – gas or diesel, hybrid or fully electric (battery or hydrogen fuel cell) – power needs to be transferred to the wheels through a transmission or e-drive system. Through<br>our powertrain business, we offer customers a range of efficient dual-clutch transmissions (“DCTs”), including traditional DCTs for vehicles with an Internal Combustion Engine (“ICE”), hybrid DCTs featuring an integrated electric<br>motor for start/stop or plug-in hybrid applications and dedicated hybrid transmissions used in applications with an electric motor. Additionally, we offer e-drive<br>systems for fully electrified powertrains.
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•	Pure EVs: Pure EVs share many components with vehicles powered by an ICE. At the same time, there<br>are many elements which are new or which need to be engineered differently for EVs. Multiple Magna Operating Groups are pursuing opportunities related to pure EVs, including:
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•	e-Drive systems, as discussed above, including through our Hasco joint<br>venture in China that commenced high-volume serial production of integrated e-Drive systems in 2022, and our newly established joint venture with LG Electronics.
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•	Lightweight seat structures optimized to accommodate EV chassis.
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•	Battery enclosures.
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•	EV complete vehicle engineering, including integration, validation and testing, as well as assembly.<br>
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•	Active Aerodynamics: Redirecting airflow to reduce air drag on vehicles assists in reducing fuel<br>consumption and thus CO2 emissions. Magna offers a growing range of active aerodynamics innovations, including active grille shutters, active air dams, active front deflectors, active liftgate<br>spoilers and active tailgate, as well as underbody panels.
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•	Innovative, Lightweight, Energy-efficient Lighting: OEMs continue to seek innovative forward and<br>rear-lighting solutions that allow increased styling flexibility, reduced weight compared to traditional lighting systems and energy efficiency. We continue to grow our lighting business – organically, as well as through joint ventures and<br>acquisitions.
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Development of Scalable Solutions for ADAS
---
Magna is pursuing profitable ADAS growth by offering scalable solutions focused on vehicle autonomy levels up to 2+/3*. Our current capabilities include:
*	SAE International (J3016) Autonomy Levels Classification
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Magna InternationalInc. 29

•	Full Suite of Sensing Technologies:

Camera: We are a market leader in camera-based ADAS based on sales. Our camera-based solutions consist of front and rear facing cameras, with image processing abilities to create a 360-degree surround view. Features enabled by these camera-based systems include automatic emergency braking, traffic sign and traffic light recognition, forward collision warning, lane keeping/lane departure assistance, adaptive cruise control, high beam assistance, pre-collision control, driver monitoring and others.

Radar: Working with a strategic technology partner, we have developed a scalable digital radar platform, consisting of mid – and long-range radars for a variety of automotive applications. Among other things, this radar platform provides higher resolution at longer ranges, as well as improved object detection and classification compared to current radars.

LiDAR: We have worked with a strategic technology partner to integrate their cost effective, solid-state LiDAR for highly automated driving applications. This LiDAR solution provides high-definition, three-dimensional, real-time images regardless of light and weather and enables object detection, classification and tracking at longer distances.

Scalable ADAS Domain Controller: We have developed a domain controller architecture that can support automakers to deliver a range of automated driving features and is scalable to Levels 2+/3. We are developing an ADAS system for the Fisker Ocean SUV that will be powered by our scalable domain controller architecture.

Integrated Driver and Occupant Monitoring System: We have developed an industry-first system solution for driver and occupant monitoring that will be featured on several models from a German OEM customer in 2024. The system fully integrates Magna’s high-resolution camera, infrared emitters and electronic control unit into the interior mirror of the vehicle, while advanced software actively monitoring the driver.

Incorporating Full Breadth of Magna Capabilities into New Mobility Solutions<br><br><br><br> <br>New mobility solutions involve the convergence of electrification and vehicle autonomy<br>trends. Over the medium- to long-term, new mobility solutions are expected to be lightweight zero/low emission (“ZLEV”) vehicles with leading-edge ADAS features. We possess broad capabilities to support new mobility, including<br>through:
•	Magna’s Powertrain and Complete Vehicles Operating Groups, which have significant expertise in alternative<br>energy propulsion and storage systems, respectively;
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•	electronics/ADAS features;
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•	our complete EV engineering, integration and testing capabilities;
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•	our ability to offer new mobility OEM customers such as Fisker an EV platform, electrical/electronic<br>architecture, complete vehicle engineering and manufacturing, as well as a complete ADAS system and other products; and
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•	our ability to offer customers a versatile test environment for highly automated vehicles, including the entire<br>test “chain” from virtual simulation to test rigs to trial runs on public roads.
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New mobility solutions may enable us to take advantage of our complete systems knowledge and draw-in expertise from across our entire product range, including:

Body Exteriors & Structures:

•	chassis architectures requiring leading-edge materials know-how;<br>
•	battery enclosures for EVs and hybrid-EVs;
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•	lightweight thermoplastic body panels and liftgates; and
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•	seamless sensor integration into the vehicle body.
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Power & Vision Systems:

•	highly integrated e-drive systems; and
•	full suite of sensing technologies, together with domain controllers.
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Seating Systems:

•	reconfigurable seating solutions that address automated, connected, electric and shared vehicle solutions.<br>

Complete Vehicles:

•	non-OEM branded (“white-label”) vehicles, engineered and<br>assembled by Magna.

Some of our recent innovations, initiatives and progress addressing powertrain electrification, vehicle autonomy and new mobility can be found in “Section 7 – Innovation and Research & Development – Innovations and Innovation Awards”.

Product Segments

A description of our product and service capabilities, processes, top customers and key competitors by reporting segment follow. Manufacturing facility and PDE&S Centres counts below include joint venture facilities.

30 Annual Information Form

Body Exteriors & Structures

Our Body Exteriors & Structures segment includes our body and chassis systems, exterior systems and roof systems operations.

151*	22*	21	65,150	$14.5B
Manufacturing Facilities	PDE&S Centres	Countries	Employees	2021 Sales
*	Figure includes certain manufacturing facilities and PDE&S centres shared with other reporting segments.<br>
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Top Segment Programs

Customer	Vehicle
1. General Motors	Full-Size SUVs & Pick-up Trucks
2. BMW	BMW X3
3. Stellantis	Ram Pick-Up Trucks
4. Stellantis	Jeep Grand Cherokee
5. Daimler	Mercedes-Benz GLE/GLE Coupe, Mercedes-Benz GLS

Segment Trends and Strategic Focus

Within our Body Exteriors & Structures segment, we aim to support our customers’ efforts to deliver vehicles which consume less fuel and produce lower CO2 emissions, particularly through reduced vehicle weight, aerodynamic enhancements and use of multi-materials. We currently offer our customers a broad range of lightweight product solutions, such as thermoplastic liftgates, as well as reduced-weight products formed through advanced manufacturing processes, such as hot stamping, high-pressure aluminum casting and multi-material joinery.

Product Capabilities

Body and Chassis

Products	Key Processes	Top Customers	Key Competitors
• body systems<br><br><br><br> <br>• chassis systems<br><br><br><br> <br>• battery enclosures<br><br><br><br> <br>• engineering and<br>testing	Forming technologies:<br> <br><br><br><br>• hydroforming<br> <br><br><br><br>• cold stamping, including high-strength steel & aluminum<br><br><br><br> <br>• hot stamping<br><br><br><br> <br>• roll forming<br><br><br><br> <br>• aluminum casting<br><br><br><br> <br>• advanced welding &<br>joining<br> <br><br> <br>• stretch bending<br>of aluminum extrusions<br> <br><br> <br>Finishing technologies:<br><br><br><br><br><br>• e-coating<br><br><br><br> <br>• heat treating<br><br><br><br> <br>• high temperature wax<br>coating<br> <br><br><br><br>• machining	• BMW<br> <br><br><br><br>• Daimler<br> <br><br><br><br>• Ford<br> <br><br><br><br>• General Motors<br> <br><br><br><br>• Stellantis<br> <br><br><br><br>• Volkswagen	• Benteler International AG<br><br><br><br><br><br>• F-Tech Inc.<br><br><br><br> <br>• Gestamp Automoción<br>S.L.<br> <br><br> <br>• Martinrea<br>International Inc.<br> <br><br> <br>• Minth<br>Group Ltd.<br> <br><br> <br>• Metalsa, S.A.<br>de C.V.<br> <br><br> <br>• Tower<br>International, Inc.

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Exteriors

Products	Key Processes	Top Customers	Key Competitors
• fascia & trim<br><br><br><br> <br>• front end modules<br><br><br><br> <br>• front integration panels<br><br><br><br> <br>• liftgate modules<br><br><br><br> <br>• active aerodynamics<br><br><br><br> <br>• engineered glass<br><br><br><br> <br>• running boards<br><br><br><br> <br>• truck bed access products<br><br><br><br> <br>• side doors	Molding technologies:<br> <br><br><br><br>• injection molding, such as two shot, structural, insert, injection compression for<br>thermoplastics & reaction injection molding<br> <br><br><br><br>• extrusion processes, such as co-extrusion, thermoset and<br>thermoplastic extrusion<br> <br><br><br><br>• compression-molding for thermosets<br><br><br><br> <br>• expanded polypropylene<br>foam<br> <br><br> <br>• metal<br>rollforming<br> <br><br> <br>• glass<br>encapsulation<br> <br><br> <br>• tooling<br><br><br><br> <br>Finishing processes:<br><br><br><br> <br>• painting<br><br><br><br> <br>• hardcoating<br><br><br><br> <br>• chrome plating<br><br><br><br> <br>• hot stamp foils<br><br><br><br> <br>• metal finishing<br><br><br><br> <br>• hydrographics<br><br><br><br> <br>• laser etching/engraving<br><br><br><br><br><br>• in-mold film<br><br><br><br> <br>Assembly processes:	• BMW<br><br><br><br> <br>• Ford<br><br><br><br> <br>• General Motors<br><br><br><br> <br>• Renault-Nissan-Mitsubishi<br><br><br><br> <br>• Stellantis<br><br><br><br> <br>• Volkswagen	• ABC Group<br><br><br><br> <br>• Flex-N-Gate Corporation<br> <br><br><br><br>• Plastic Omnium S.A.<br> <br><br><br><br>• Röchling Group<br> <br><br><br><br>• Samvardhana Motherson Peguform<br><br><br><br> <br>• SRG Global Inc.
	• adhesive bonding<br> <br><br><br><br>• infrared, ultrasonic, vibration, torsional and resistance implant welding<br><br><br><br> <br>• laser cutting and welding<br><br><br><br> <br>• manual and automated<br>assembly & sequencing

32 Annual Information Form

Power & Vision

Our Power and Vision segment comprises our global powertrain systems, electronics systems and mechatronics, mirrors & lighting operations.

109*	50*	21	47,400	$11.3B
Manufacturing Facilities	PDE&S Centres	Countries	Employees	2021 Sales
*	Figure includes certain manufacturing facilities and PDE&S centres shared with other reporting segments.<br>
---	---

Top Segment Programs

Customer	Vehicle
1. General Motors	Full-Size SUVs & Pick-up Trucks
2. Stellantis	Ram Pick-Up Trucks
3. BMW	BMW X1
4. Chery Automobile	Chery Tiggo 5X, Chery Tiggo 8/8 Plus
5. Daimler	Mercedes-Benz GLC/GLC Coupe

Segment Trends and Strategic Focus

In our Power and Vision segment, we seek to realize opportunities presented by trends toward electrification, advanced driver assistance systems and autonomous driving. We believe that our powertrain business is well-positioned to benefit from the shift toward electrification and we continue to invest in both transmissions and driveline products to further grow in areas such as 48V and high-voltage electric drive systems, including through products such as hybrid transmissions, electric rear drive axles and highly-integrated primary and secondary e-drive systems. Our Vision Systems business is currently the leading supplier of camera-based driver assistance systems and we continue to invest in advanced driver assistance technologies to expand the assisted and autonomous driving systems expertise we can offer customers. These investments include both in-house research and development, as well as venture capital investments in and strategic relationships with technology companies.

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Product Capabilities

Powertrain

Products	Key Processes	Top Customers	Key Competitors
• electric systems and components (hybrid and electric drive systems, motors,<br>inverters, onboard chargers, e-clutch)<br> <br><br><br><br>• transmission systems (dedicated hybrid, dual clutch, hybrid dual clutch, manual transmissions)<br><br><br><br> <br>• driveline systems (AWD/4WD<br>products, rear drive modules)<br> <br><br><br><br>• metal-forming solutions (transmission, engine, driveline components, engine drive plates and<br>accessories)<br> <br><br> <br>• engineering<br>services	• transmission and driveline assembly<br><br><br><br> <br>• high pressure die casting<br>with full foundry<br> <br><br><br><br>• flow-forming<br> <br><br><br><br>• stamping and spinning<br> <br><br><br><br>• steel & aluminum die forming<br><br><br><br> <br>• grob, roller die &<br>cam die spline forming<br> <br><br><br><br>• precision-heavy stamping<br> <br><br><br><br>• shaft spline rolling<br> <br><br><br><br>• aluminum die casting and precision machining<br><br><br><br> <br>• profilator processing<br><br><br><br><br><br>• in-die fine cutting<br><br><br><br> <br>• soft and hard processing of<br>gears and shafts<br> <br><br> <br>• CNC<br>machining & broaching<br> <br><br><br><br>• rotary swaging<br> <br><br><br><br>• heat treating<br> <br><br><br><br>• welding, including laser, electron beam (EB), capacitor discharge (CD), inertia,<br>resistance & metal inert gas (MIG)/tungsten inert gas (TIG)<br> <br><br><br><br>• manual and automated assembly<br><br><br><br> <br>• end-of-line testing, leak testing and balancing<br> <br><br><br><br>• electric traction motor manufacturing (including rotor and stator winding, assembly &<br>final test)<br> <br><br><br><br>• assembly & final test of automotive inverters,<br>DC-DC converters and on-board chargers	• BMW<br> <br><br><br><br>• Daimler<br> <br><br><br><br>• Ford<br> <br><br><br><br>• General Motors<br> <br><br><br><br>• Renault-Nissan-Mitsubishi<br> <br><br><br><br>• Stellantis<br> <br><br><br><br>• Volkswagen	• Aisin Group<br><br><br><br> <br>• BorgWarner Inc.<br><br><br><br> <br>• GKN plc<br><br><br><br> <br>• JATCO Ltd.<br><br><br><br><br><br>• Jing-Jin Electric Technologies Co., Ltd.<br><br><br><br> <br>• Linamar Corporation<br><br><br><br> <br>• Nidec Corporation<br><br><br><br> <br>• Robert Bosch GmbH<br><br><br><br> <br>• Valeo S.A.<br><br><br><br> <br>• ZF Group
	* through our joint venture with LG Electronics Inc.

34 Annual Information Form

Electronics

Products	Key Processes	Top Customers	Key Competitors
• advanced driver assistance systems (ADAS) technology and features<br><br><br>• ADAS sensors<br><br><br>• electronic control units	• surface mount placements of electronic components on printed circuit boards<br><br><br>• manual and automated assembly of electronic modules	• Daimler<br><br><br>• Ford<br><br><br>• General Motors<br><br><br>• Honda<br><br><br>• Mazda<br><br><br>• Stellantis	• Aptiv PLC<br><br><br>• Continental AG<br><br><br>• Robert Bosch GmbH<br><br><br>• Valeo S.A.<br><br><br>• Veoneer, Inc.<br><br><br>• ZF Group
Mirrors
Products	Key Processes	Top Customers	Key Competitors
• interior mirrors<br><br><br>• exterior mirrors<br><br><br>• camera and driver monitoring systems and electronics<br><br><br>• actuators<br><br><br>• door handles<br><br><br>• overhead consoles	• electronics integration<br><br><br>• injection molding<br><br><br>• painting<br><br><br>• manual and automated assembly	• BMW<br><br><br>• Daimler<br><br><br>• Ford<br><br><br>• General Motors<br><br><br>• Stellantis<br><br><br>• Volkswagen	• Ficosa International S.A.<br><br><br>• Gentex Corporation<br><br><br>• SMR Automotive
Lighting
Products	Key Processes	Top Customers	Key Competitors
• forward lighting<br><br><br>• rear lighting<br><br><br>• auxiliary lighting	• electronics integration<br><br><br>• injection molding<br><br><br>• manual and automated assembly	• BMW<br><br><br>• General Motors<br><br><br>• Renault-Nissan Mitsubishi<br><br><br>• Stellantis<br><br><br>• Volkswagen	• Hella KGaA Hueck & Co.<br><br><br>• Koito Manufacturing Co.<br><br><br>• Marelli Automotive Lighting<br><br><br>• Valeo S.A.
Mechatronics
Products	Key Processes	Top Customers	Key Competitors
• latching systems<br><br><br>• door modules<br><br><br>• window systems<br><br><br>• power closure systems<br><br><br>• hinges and wire forming	• light stamping<br><br><br>• injection molding<br><br><br>• manual and automated assembly	• BMW<br><br><br>• Daimler<br><br><br>• Ford<br><br><br>• General Motors<br><br><br>• Renault-Nissan- Mitsubishi<br><br><br>• Stellantis	• Brose Fahrzeugteile GmbH & Co. KG<br><br><br>• Inteva Products, LLC<br><br><br>• Kiekert AG

Roof Systems

Products	Key Processes	Top Customers	Key Competitors
• modular roofs<br><br><br><br> <br>• hard tops and soft tops<br><br><br><br> <br>• textile folding<br>roofs	• “cut and sew” of complete fabric covers<br><br><br><br> <br>• backlight gluing<br><br><br><br> <br>• manual and automated complete<br>retractable roof assembly	• BMW<br> <br><br><br><br>• Daimler<br> <br><br><br><br>• Renault-Nissan-Mitsubishi<br> <br><br><br><br>• Stellantis<br> <br><br><br><br>• Toyota	• Valmet Automotive Inc.<br><br><br><br> <br>• Webasto Group

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Seating Systems

Our Seating Systems segment comprises our global seating systems operations.

77	9*	18	30,200	$4.9B
Manufacturing Facilities	PDE&S Centres	Countries	Employees	2021 Sales
*	Figure includes certain PDE&S centres shared with other reporting segments.
---	---

Top Segment Programs

Customer	Vehicle
1. Stellantis	Jeep Grand Cherokee
2. BMW	X5
3. Ford	Ford Escape, Ford Kuga, Lincoln Corsair
4. Ford	Ford Expedition, Lincoln Navigator
5. Ford	Ford Transit, Ford Transit Custom

Segment Trends and Strategic Focus

Our Seating Systems group continues to grow organically by winning new business based on its reputation for delivering innovative seating solutions. Longer term, our Seating Systems group aims to capitalize on its strength in seat mechanisms, vertical integration and reconfigurable seating, specifically to supply reconfigurable seating solutions for applications such as car sharing and autonomous ride sharing; as well as seat products that are responsive to growing EV vehicle requirements, including lighter weight seats, and lower seat box height.

Product Capabilities

Seating Systems

Products	Key Processes	Top Customers	Key Competitors
• complete seating systems<br> <br><br><br><br>• seat structures, mechanism & hardware solutions<br><br><br><br> <br>• foam & trim<br>products	• traditional “cut and sew” technology<br><br><br><br> <br>• manual and automated<br>assembly<br> <br><br> <br>• patented EZ-Entry and seat stowing mechanisms systems<br> <br><br><br><br>• freeform trim technology	• BMW<br> <br><br><br><br>• Ford<br> <br><br><br><br>• Geely<br> <br><br><br><br>• General Motors<br> <br><br><br><br>• Stellantis<br> <br><br><br><br>• Volkswagen	• Adient<br>plc<br> <br><br> <br>• Faurecia S.A.<br><br><br><br> <br>• Lear<br>Corporation

36 Annual Information Form

Complete Vehicles

Our Complete Vehicles segment comprises our global complete vehicle engineering and manufacturing operations.

9*	25*	10	12,975	$6.1B
Manufacturing Facilities	PDE&S Centres	Countries	Employees	2021 Sales
*	Figure includes certain manufacturing facilities and PDE&S centres shared with other reporting segments.<br>
---	---

Segment Programs

Customer	Vehicle
1.<br>Daimler	Mercedes-Benz G-Class
2.<br>BMW	BMW 5-Series
3. Tata<br>Motors	Jaguar E-Pace
4. Tata<br>Motors	Jaguar I-Pace
5.<br>BMW	BMW Z4
6. Toyota	Toyota Supra

Segment Trends and Strategic Focus

Our Complete Vehicles business continues to provide OEM-level expertise to traditional customers seeking a trusted vehicle assembly outsource partner, as well as new market entrants seeking expertise for their traditional, electrified, autonomous and/or new mobility / MaaS concepts. Traditional OEMs currently represent the substantial majority of our Complete Vehicles group business customers. However, engineering sales with non-traditional customers, including Chinese OEMs, continue to grow. MaaS providers represent an important source of new opportunities since they typically do not have the vehicle development, engineering, integration and assembly capabilities of traditional OEMs and thus require outsource partners to commercialize their concepts. In this segment, we also focus on leveraging our expertise in alternative energy storage and propulsion systems by further strengthening and capitalizing on our know-how in different propulsion systems. In addition, we continue to focus on integration and testing of autonomous driving systems, and we support our customers with one of the most versatile test environments for highly automated vehicles.

Product Capabilities

VehicleEngineering & Manufacturing

Products	Key Processes	Top Customers	Key Competitors
• complete vehicle manufacturing<br><br><br><br> <br>• engineering services	• body-in-white<br><br><br><br> <br>• paint<br><br><br><br> <br>• assembly	• BMW<br><br><br><br> <br>• Daimler<br><br><br><br> <br>• Renault-Nissan-Mitsubishi<br><br><br><br> <br>• Tata Motors<br><br><br><br> <br>• VinFast	Traditional and New OEMs<br> <br><br><br><br>Contract Manufacturers<br> <br><br><br><br>• NEVS AB<br> <br><br><br><br>• Valmet Automotive<br> <br><br><br><br>• VDL Nedcar B.V.<br> <br><br><br><br>Engineering Services<br> <br><br><br><br>• Bertrandt Group<br> <br><br><br><br>• EDAG Engineering GmbH<br> <br><br><br><br>• IAV GmbH

Tooling & Engineering

As part of our production programs, we design, engineer and manufacture tooling for our own use, as well as for sale to our customers. However, a predominant amount of the tooling used in our production programs is purchased by us from third parties and sold to our customers on a pass-through basis. In addition, we manufacture tooling for our customers on a standalone basis, which is tooling sold separately and not part of a production arrangement. We also provide engineering services independent of our production programs, as well as for programs for which we have production sales.

Acquisitions and Divestitures

For further details of our acquisitions and divestitures in the last three fiscal years, refer to “Schedule B – Acquisitions and Divestitures”.

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7. Innovation and Research & Development

Focus on Innovation and Technology

We have historically emphasized technology development and product and process innovation as a key element of our corporate strategy. See “Section 4 – Our Business & Strategy – Our Corporate Strategy” for further details. We continue to invest significant resources to develop and commercialize innovative technologies, which will provide additional value to our customers. In addition, we aim to advance our sustainability goals through innovations in electrification, lightweighting, materials, fuel efficiency, and energy efficiency for both end-use products and our manufacturing processes.

We expect that our involvement with automobile manufacturers and new mobility partners in the development of innovative product and process technologies will increase as such manufacturers and partners further involve suppliers like us in the overall vehicle concept and development process.

Our Research and Development Process

Our R&D activities take place at our Division/Operating Group level and at the corporate level. Our Divisional/Operating Groups work with our customers to identify product and technology gaps. Magna’s Corporate R&D team, under the global direction of our Executive Vice- President and Chief Technology Officer, analyzes the key mega-trends that are expected to drive future mobility and automotive development. As part of these efforts, our Corporate R&D team engages with the advanced engineering and product development teams of our current and potential OEM customers to understand their product strategies and better align our own product strategy and technology development with customer needs.

All of our R&D projects follow an Innovation Development Process (IDP) process – a multi-stage process aimed at turning ideas into innovations that can ultimately be commercialized and scaled. The initial phase of the process is designed to foster the generation of ideas and includes, among other things: identification, understanding of and analysis of societal, digital, demographic, regulatory, industry and other trends which may create demand for and thus drive development of new automotive and mobility technologies; review of academic research; collecting and screening ideas submitted through innovation programs; and automotive customer input.

Concepts that progress past this initial stage are further evaluated, including with respect to: fit with our strategy regarding electrification, autonomy, new mobility, vehicle connectivity and advanced manufacturing; commercialization potential; and risks and challenges to further development. Selected innovations then progress through subsequent stages towards product or process realization, validation and eventually, product launch.

Our R&D initiatives are supported by and involve close collaboration with our Corporate R&D group. Our Division/Operating Group R&D teams work together with our Corporate R&D group on technology development, and where necessary specific working groups are established to discuss and develop technological solutions.

As a result of our innovation activities, we have developed a number of product, process and materials innovations, some of which are described in this Section 7 under “Innovations and Innovation Awards”.

As a key part of our own innovation efforts and to gain further access to innovative thinking outside of our company, we partner with start-ups and early stage companies, inventors, entrepreneurs, universities, technical institutions and the venture capital community to help bring innovative ideas to market. We also look for the best ideas from other industries and apply them to mobility – a process we call “auto-qualifying”. As part of our continuing efforts to develop innovative solutions to the technology challenges of new mobility and the automotive industry, in the last year we have considered thousands of potential innovations, which has led to several active projects. Such projects include: development of Driver Monitoring Systems and ADAS features; efficiency and performance technologies related to electric drives and power electronics; and advanced robotics, inspection systems and data analytics technologies supporting our World Class manufacturing.

Intellectual Property

We own and use numerous patents, trademarks, and other intellectual property in connection with our operations. In addition, certain of our Operating Groups license their technology to third parties on a limited basis. We also license and use, to a minor extent, patents owned by others. From time to time, claims of intellectual property infringement are made by us or against us. At present, we believe that the outcome of any pending claim, whether positive or negative, will not have a material adverse effect upon us. While in the aggregate our intellectual property and licenses are considered important in the operation of our business, we do not consider them of such importance that the expiry of any one patent or license would materially affect our business. See “Section 5 – Risk Factors – “Intellectual Property” in this AIF for a discussion of risks related to our intellectual property.

38 Annual Information Form

Innovations & Innovation Awards

We believe that innovation has been the foundation of Magna’s success and an important factor in our competitiveness, a key operational priority and a critical element of our corporate strategy. Our current strategic focus is aimed at responding to key industry trends, as discussed in “Section 4 – Our Business & Strategy – Our Corporate Strategy”. Some examples of recent innovations are as follows:

Innovations

ICON^TM^ DIGITAL RADAR Magna’s ICON Radar debuts on the all-electric Fisker Ocean SUV in 2022, marking the first application of a software-defined digital imaging radar for driver-assisted technology. The new digital radar technology, a collaboration between Magna and U.S.-based Uhnder, enhances a vehicle’s ability to “see” its surroundings and detect potential dangers, including identifying moving or standing objects, low-lying objects, and open pathways on crowded, multi-lane roads, at both short and long distances. The system continuously scans its surrounding environment to provide a high definition, four-dimensional (distance, height, depth and speed) view. We believe the digital code modulation and signal processing found in ICON Digital Radar radar helps address limitations associated with traditional analog radar by allowing for further and better object detection (higher resolution and contrast at longer ranges), programmability, and elimination of interference issues since no two digital radars would have the same code.

ETELLIGENT COMMAND^TM^ EtelligentCommand is a PHEV/HEV system featuring a Dedicated Hybrid Drive DHD Plus at the front and an eDrive Mid+ with torque vectoring at the rear, combined with advanced software and controls. Various driving modes are available on command to enhance performance and drivability and provide greater power handling and control. The Dedicated Hybrid Drive DHD Duo is a two e-motor single or multi speed system suitable for HEV application delivering greater performance, drivability and comfort even when driving in congested traffic. Additional efficiency increases are available through an optional voltage booster and innovative e-coupling technology for ICE disconnection.

ETELLIGENT FORCE^TM^ Magna’s EtelligentForce, is a battery electric 4WD powertrain system for pickup trucks and light commercial vehicles. The product features Magna’s eDrive technology at the front of the vehicle and its eBeam electric axle drive system in the rear. The system is designed to deliver the environmental benefits of an electric powertrain, while maintainining full vehicle capabilities without compromising payload or towing capacities of pickup trucks and light commercial vehicles. The system is designed for high-payload vehicles, capable of towing up to 14,500 pounds – on par with its ICE counterparts in this truck segment. It can provide a total peak power of up to 430 kW - 250kW from the rear eBeam and 180kW from the front eDrive. The solution also eliminates the need for architectural changes to the vehicle and is totally customizable for automakers to prioritize key performance attributes. Magna’s eBeam replaces traditional beam axles, accommodating existing suspension and brake systems, and avoiding the need for expensive redesign of existing truck platforms. These benefits help automakers simplify the transition toward electrification of these vehicle segments. In addition, with fewer moving parts than a traditional ICE powertrain, the EtelligentForce requires less maintenance – a direct benefit to truck owners over the life of the vehicle. The EtelligentForce, which is targeted for production in 2025, will be prepared for launch by a specialized team at Magna’s new EV centre in Troy, Michigan.

Magna InternationalInc. 39

ETELLIGENT REACH^TM^<br> <br><br> <br>Magna’s all-electric connected powertrain, the EtelligentReach, is the latest innovation set to debut on a new entrant vehicle in 2022. The complete system is comprised of two electric motors, inverters and gearboxes, and<br>leverages advanced software to maximize vehicle range and driving dynamics. eDrive technology advancements and the holistic vehicle development approach of the EtelligentReach achieve a range increase of up to 145 km/90 miles or 30% compared to<br>certain production BEV vehicles in this segment, which reduces range anxiety, and is a key differentiator in the growing electrification space. Magna’s approach optimizes the interaction of individual eDrive components and the entire vehicle<br>with a software package that manages multiple vehicle functions. On the new entrant vehicle, for example, EtelligentReach utilizes a functional, modular control unit that integrates various powertrain and chassis functions. This includes a vehicle<br>dynamics controller with a disconnect system which increases efficiency while reducing CO2 emissions, and a longitudinal torque vectoring function that can improve the safety margin by up to 10% by controlling each axle individually in all road<br>conditions, as well as significantly reduce steering effort during dynamic cornering. Drivers can select from several distinctive driving modes - further enhancing the driving experience. Additional efficiency<br>gains are achieved using silicon carbide within the inverter.
INTEGRATED DRIVER AND OCCUPANT MONITORING SYSTEM<br><br><br><br> <br>Magna’s industry-first system solution for<br>driver and occupant monitoring will debut on several models from a German OEM in 2024. The system reduces packaging complexities by fully integrating Magna’s high-resolution camera, infrared emitters and<br>electronic control unit into the interior mirror of the vehicle. Advanced software actively monitors the driver’s head, eye and body movement and sends customizable audible or visual alerts if signs of distracted behavior, drowsiness and/or<br>fatigue are detected. The system is also scalable to include features such as child presence detection, seat belt detection and identifying specific passengers to enable user preference memory settings.
3D SURROUND VIEW WITHNEXT-GEN CAMERAS AND ELECTRONIC CONTROL UNITS<br> <br><br><br><br>Beginning with 2022 model years and proliferating across multiple customers and vehicle platforms, Magna’s next generation cameras and domain controllers<br>will help make the benefits of 3D surround view – a driver-assistance technology currently found mainly in luxury-class vehicles – more readily available to<br>consumers. Magna’s multi-camera system provides a high-resolution, 360-degree field of view around the vehicle. The domain<br>controller then creates a 3D surround-view image by processing four camera images into a seamlessly stitched 3D view of vehicle surroundings.
BATTERY ENCLOSURES<br><br><br><br> <br>Magna’s battery enclosures will debut in 2022 on the<br>all-electric Ford F-150 Lightning and GMC Hummer EV, illustrating our ability to expand structural product opportunities as electrification grows. The enclosures, which<br>all electric vehicles require, house high-voltage batteries, electrical components, sensors and connectors, contributing to the structural and safety aspects of a vehicle’s frame and protecting critical<br>components from potential impact, heat and water. In addition, the use of lightweight aluminum helps minimize added mass from the vehicle’s battery.
FREEFORM^TM^ SEAT TRIM<br> <br><br> <br>Automakers<br>are increasingly distinguishing themselves through styling and Magna’s FreeForm^™^ seating technology supports these efforts. The<br>FreeForm^™^ first hit the market in 2020 on the Cadillac XT5 and is launching on three new vehicles in 2022, including a midsize crossover, a sedan and an<br>all-eletric SUV. The distinctive seat trim technology provides a clean, sculpted and seamless styling surface and allows a number of design possibilities, a key consideration in light of the rapidly evolving<br>mobility landscape and shift towards interiors and in-car experience. The seating technology has a number of benefits, including: the ability to achieve design details as sharp as a 1mm radius compared to 20-25mm for traditional cut and sew seats; improved back comfort due to the greater than 100mm of concavity; improved breathability compared to molded trim products due to the use of foam laminate; additional cabin<br>space due to draw capabilities of up to four inches; and a smooth surface and removable seat covers that facilitate cleaning and maintance including for new mobility scenarios such as ride sharing. In addition, FreeForm uses more sustainable<br>materials, including back seat panels that contain up to 50% proprietary polyols derived from recycled polyethylene terephthalate and a seating surface that contains up to 20% renewable materials from a<br>bio-feedstock.

40 Annual Information Form

High-Pressure Vacuum Diecast Front Subframe Engine Cradle Magna has developed the single largest one-piece high pressure vacuum die cast front engine cradle in the world. The engine cradle, which was named the 2021 Casting of the Year from the American Foundry Society, achieves a 29% weight savings compared to a multi-part stamped and welded steel assembly by eliminating 17 stamped parts. In addition to weight reduction, the reduced part count requires less resources for assembly, and the fewer assembly joints results in a stronger and better performing subframe. This improved dimensional stability helped our customer Honda’s 2021 Acura TLX achieve a “2021 Top Safety Pick+” status, the highest safety rating available, from the Insurance Institute for Highway Safety (IIHS). Development of the engine cradle, which spans 1.1 metres, required innovative gating techniques and thermal controls to preserve metal temperature during the metal solidification process to avoid shrinkage and defects.

Innovation Awards

A number of our product and process innovations have received accolades and awards in recent years. In 2021, Magna was:

•	a double honouree at the Consumer Electronics Show (CES) 2021 Innovation Awards from electrification innovations:<br>our etelligent Drive mid-power eDrive system, and our etelligent Drive AWD system for electrified vehicles.
•	awarded the 2021 Innovation of the Year award from German-based magazine Auto Bild Allrad. The award which<br>annually honours the most interesting new technological development related to vehicles with all-wheel drive, was given to Magna for developments in electromobility in the AWD sector.
---	---
•	the winner of the 2021 Enlighten Award in the sustainable product category for our Active Air Deflector.<br>
---	---

Magna was also a finalist for the 2021 Automotive News Pace Award for our etelligentReach, an innovative electric all-wheel drive system based on our latest generation of eDrive technologies. In addition, Magna was a finalist for the 2021 JEC Composites Innovations Awards in the Automotive and Road Transportation – Exterior category for our Composite Space Frame, a lightweight, integrated reinforcing technology using continuous fibre filament on tailgates and liftgates. The composite space frame was previously awarded a 2020 Automotive News Pace Award.

Magna InternationalInc. 41

8. Capital Structure, Financings & Credit Ratings

Capital Structure Approach

Our approach to capital structure remains unchanged from recent years. We aim to maintain the company’s financial flexibility in order to remain in a position to pursue opportunities and withstand an industry downturn. To do so, we are focused on:

•	maintaining sufficient liquidity, including committed lines of credit, to run our operations and continue<br>investing in our business through organic growth, innovation spending, and acquisitions that fit our product strategy;
•	preserving a strong investment grade credit rating of BBB+ or better, and an Adjusted Debt to Adjusted EBITDA<br>ratio that meets or exceeds the Moody’s Investors Service criteria for a strong investment grade credit rating;
---	---
•	growing dividends over time as earnings grow; and
---	---
•	returning excess cash to shareholders in the form of share repurchases.
---	---

Other core elements of our approach to capital structure and strategy include:

•	lowering our capital spending as a percentage of sales, thereby increasing free cash flow generation;<br>
•	utilizing share repurchases to deploy excess cash not needed for organic growth and acquisitions; and<br>
---	---
•	delivering strong Return on Invested Capital.
---	---

In light of the above strategy, we have made significant levels of investment in our business in recent years and have also returned significant amounts of capital to our shareholders in the form of dividends and share repurchases. We had an Adjusted Debt ratio of 1.54 times Adjusted EBITDA^(1)^ at the end of 2021 and aim to maintain such ratio in the range of 1.0 – 1.5 times Adjusted EBITDA.

Authorized Share Capital

Our authorized share capital consists of an unlimited number of Common Shares and 99,760,000 Preference Shares, issuable in series, all with no par value. As of March 16, 2022, the Record Date for our Meeting, a total of 294,982,137 Common Shares were issued and outstanding. No Preference Shares have been issued or are outstanding.

The following is a brief description of the significant attributes of our authorized share capital and is qualified in its entirety by reference to the detailed provisions in our charter documents, that set out the attributes of our Common Shares and our Preference Shares.

Common Shares

The holders of our Common Shares are entitled to:

•	one vote for each Common Share held at all meetings of our shareholders, other than meetings of the holders of<br>another class or series of shares;
•	receive any dividends that may be declared by our Board, subject to the preferential rights attaching to any<br>shares ranking in priority to our Common Shares; and
---	---
•	receive, after the payment of our liabilities and subject to the rights of the holders of any shares ranking in<br>priority to our Common Shares, all our property and assets available for distribution in the event of our liquidation, dissolution or winding-up, whether voluntary or involuntary, or any other distribution of<br>assets among our shareholders for the purpose of winding-up our affairs.
---	---

For further details of the market for our securities, refer to “Schedule C – Market for Securities”.

Preference Shares

Our Board may, without the approval of any of our shareholders, fix the number of shares in, and determine the attributes of, an individual series of Preference Shares and issue shares of such series from time to time. The shares of each such series will be entitled to a preference over our Common Shares, but will rank equally with the Preference Shares of every other series with respect to the payment of dividends and in the distribution of all our property and assets available for distribution in the event of our liquidation, dissolution or winding-up, whether voluntary or involuntary, or any other distribution of assets among our shareholders for the purpose of winding-up our affairs. No Preference Shares have been issued or are outstanding and we do not currently anticipate issuing any such shares. In the event we do issue Preference Shares in the future, we would expect to issue them solely for legitimate financing purposes and not to block a change of control transaction.

Amendments to Share Provisions and Other Matters

The provisions attaching to our Preference Shares, to a series of our Preference Shares and to our Common Shares may not be deleted or varied without the approval of the holders of the class or series concerned. In addition, no shares of a class ranking prior to or on a parity

(1)

Adjusted Debt is calculated by taking our long and short-term debt and operating lease liabilities and adding pension obligations and certain other Moody’s adjustments. Adjusted EBITDA is calculated by taking our trailing 12-month Earnings before Interest, Taxes, Depreciation and Amortization, as well as operating lease expense and interest income, and adding adjustments relating to pension obligations and unusual items. In each case, such adjustments reflect a methodology for calculating such ratios used by Moody’s.

42 Annual Information Form

with our Preference Shares, or our Common Shares, may be created without the approval of the holders of the class or each series of the class concerned. Any approval required to be given must be given by two-thirds of the votes cast by those present or voting at a meeting of the holders of the class or series concerned duly called for that purpose in addition to any other consent or approval required by law.

Dividends

The following table sets forth the cash dividends paid and payable on our Common Shares in respect of each quarter for the last three years.

LOGO

We intend to continue paying a quarterly dividend from our cash flow from operations, with the aim of regularly increasing the dividend consistent with our practice since 2010. The declaration and payment of dividends, including the dividend rate, is reviewed quarterly by our Board and is subject to the Board’s discretion taking into account our cash flow, capital requirements, our financial condition and other factors they consider relevant. See “Section 5 – Risk Factors”.

DividendReinvestment Plan (DRIP)

Since 1994, we have maintained a dividend reinvestment plan in which registered shareholders have the option to purchase additional Common Shares by investing the cash dividends paid on their shares.

Financings and Securities/Corporate Transactions

Senior Unsecured Notes

We currently have the following senior unsecured notes outstanding:

Issuance Date	Amount Issued	Interest Rate	Maturity Date
June 16, 2014	$ 750,000,000	3.625%	June 15, 2024
September 23, 2015	$ 650,000,000	4.150%	October 1, 2025
November 24, 2015	€ 550,000,000	1.900%	November 24, 2023
September 25, 2017	€ 600,000,000	1.500%	September 25, 2027
June 15, 2020	$ 750,000,000	2.450%	June 15, 2030

The prospectus supplements which describe each of the notes above have been filed and are available on SEDAR (www.sedar.com).

On February 28, 2022, we completed an early redemption of our outstanding Canadian dollar-denominated 3.100% senior unsecured notes due 2022. The Redemption Price for such Notes was approximately CAD$ $430 million in the aggregate, including accrued and unpaid interest on the Notes, up to but excluding, the Redemption Date.

Global Credit Facility

We maintain a $2.6 billion syndicated revolving credit facility that expires on June 24, 2026. The facility includes a $200 million Asian tranche, a $150 million Mexican tranche and a tranche for Canada, U.S. and Europe, which is fully transferable between jurisdictions and can be drawn in U.S. dollars, Canadian dollars or euros.

We also maintain a $750 million, 364-day syndicated revolving credit facility that expires on December 9, 2022, and can be drawn in U.S. dollars or Canadian dollars.

Magna InternationalInc. 43

Commercial Paper Programs

We maintain a euro-commercial paper program (the “ECP Program”) and a U.S. commercial paper program (the “USCP Program”), each backstopped by our Global Credit Facility. Under the ECP Program, one of our indirect wholly-owned subsidiaries may, from time to time, issue euro-commercial paper notes, subject to an aggregate maximum of €500 million or its equivalent in alternative currencies. Under the USCP Program, we may, from time to time, issue commercial paper notes, subject to an aggregate maximum of $1 billion or its equivalent in alternative currencies. As at December 31, 2021, we had no outstanding issues under the ECP Program or the USCP Program.

Normal Course Issuer Bid

On November 10, 2021, the Toronto Stock Exchange (“TSX”) accepted our Notice of Intention (the “Notice”) to Make a Normal Course Issuer Bid relating to the purchase of up to 29,948,000 Magna Common Shares (the “2022 Bid”), representing approximately 10% of our “public float” of Common Shares. The primary purposes of the 2022 Bid are purchases for cancellation, as well as purchases to fund our stock-based compensation awards or programs and/or our obligations to our deferred profit sharing plans. The 2022 Bid commenced on November 15, 2021 and will terminate no later than November 14, 2022.

Purchases of Common Shares under the 2022 Bid as of the date of this AIF have been made on the TSX or the NYSE at the prevailing market price at the time of purchase and in accordance with the rules and policies of the TSX or in compliance with Rule 10b-18 under the U.S. Securities Exchange Act of 1934, respectively, or through other published markets, or by such other means permitted by the TSX.

We have purchased the following Common Shares pursuant to the 2022 Bid as at March 16, 2022, and under our previous normal course issuer bid which commenced on November 15, 2020 and terminated on November 14, 2021 (“2021 Bid”):


Shares<br>purchased and cancelled	6,088,900	3,117,837
Shares<br>purchased and retained for stock-based compensation awards or programs and/or deferred profit sharing plans	165,773	200,686
Total	6,254,673	3,318,523

Ratings

As of the date of this AIF, we have been assigned the ratings in the table below:

Credit Rating Agency	Issuer<br><br><br>Rating	Senior Debt<br><br><br>Rating	Short-Term<br><br><br>Debt Rating	Outlook/<br><br><br>Trend
Dominion<br>Bond Rating Service (“DBRS”)^(1)^	A (low)	A (low)	R-1 (low)	Stable
Moody’s Investor Services (Moody’s)^(2)^	A3	A3	P-2	Stable
Standard & Poor’s (S&P)^(3)^	A-	A-	A-2	Stable

Notes:

(1)

DBRS’s issuer and senior debt ratings are based on its long-term rating scale that ranges from “AAA” to “D” which represents the range from an issuer with the highest credit quality to one that has filed under bankruptcy, insolvency or winding up legislation or failed to satisfy an obligation after exhausting grace periods. A rating in the “A” rating category is in the third highest category of the relevant scale of eight major categories and is considered by DBRS to be of good credit quality, with substantial capacity for payment of financial obligations. “High” and “low” grades are used to indicate the relative standing of credit within a particular rating category. The absence of one of these designations indicates a rating which is in the middle of the category, excluding the AAA and D categories for which the “high”, “middle” or “low” designations are not used. The DBRS rating trends provide guidance in respect of DBRS’ opinion regarding the outlook for the rating in question, with rating trends falling into one of three categories – “Positive”, “Stable” or “Negative”. The rating trend indicates the direction in which DBRS considers the rating is headed should present tendencies continue, or in some cases, unless challenges are addressed. A “Positive” or “Negative” does not necessarily indicate a rating change is imminent, but rather the trend represents an indication that there is a greater likelihood that the rating could change in the future versus if a “Stable” trend was assigned.

DBRS’s short-term debt rating is based on its commercial paper and short-term debt rating scale that ranges from “R-1 (high)” to “D” which represents the range from an issuer with the highest credit quality to one that has filed under bankruptcy, insolvency or winding up legislation or failed to satisfy an obligation after exhausting grace periods. A rating in the “R-1 (low)” category represents the third highest category of the relevant scale of ten major categories and is considered by DBRS to be of good credit quality, with substantial capacity for payment of financial obligations.

(2)

Moody’s senior unsecured issuer rating is an opinion as to our future relative creditworthiness. The credit rating is based on a rating scale that, for global automotive suppliers, ranges from “Aaa” to “C”, which represents the range from those obligations with minimal credit risk to those obligations that are in default with little prospect of recovery. Issuer’s in the “A” rating category are in the third highest category of the relevant scale of nine major categories and are considered by Moody’s to be subject to low credit risk. The determination of the overall rating assigned to a global automotive supplier is based on an assessment of an issuer’s performance in five broad weighted categories, some of which are further broken down into a number of weighted sub-factors each of which maps to a specific letter rating in the range above. The indicated rating category for each sub-factor (i.e., Aaa, Aa, etc.) is then converted into a numeric value, which is then multiplied by the weight for that sub-factor with the results then totaled to produce a composite weighted-factor score, that is itself then mapped back to an alphanumeric rating based on the ratings range from Aaa to C. Moody’s appends the numerical modifiers 1, 2, or 3 to each generic rating classification from Aa through Caa. The modifiers 1, 2 and 3 indicate that the obligation ranks in the higher end, mid-range or lower end of its generic rating category, respectively. The Moody’s rating outlook is an opinion regarding the likely direction of an issuer’s rating over the medium term, and fall into one of four categories: Positive, Negative, Stable or Developing.

(3)

S&P’s issuer credit rating is a current opinion of our overall financial capacity (i.e. credit worthiness) to pay our financial obligations in full and on time. This credit rating is based on a rating scale that ranges from “AAA” to “D”, which represents the range from extremely strong capacity to meet financial obligations to a failure to pay one or more financial obligations when it came due. An issuer with a long-term issuer rating in the “A” rating category is in the third highest category of the relevant scale of ten major categories and is considered by Standard & Poor’s to have a strong capacity to meet its financial commitments but is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than issuers in higher-rated categories. The ratings from “AA” to “CCC” may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories. The lack of one of these designations indicates a rating that is in the middle of the category. The S&P rating outlook assesses the potential direction of a credit rating over the intermediate term (typically six months to two years), but is not necessarily a precursor to a rating change.

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44 Annual Information Form

Credit ratings are intended to provide investors with an independent measure of the credit quality of debt and securities. The credit ratings assigned to us or our senior debt by the rating agencies are not recommendations to purchase, hold or sell our debt or securities, since such ratings do not address market price or suitability for a particular investor. There is no assurance that any rating will remain in effect for any given period of time or that any rating will not be revised or withdrawn entirely by a rating agency in the future, if in its judgement, circumstances warrant. See “Section 5 – Risk Factors – “Credit Ratings Changes” in this AIF. We have made payments in the ordinary course to the rating agencies listed above in connection with the assignment of ratings on our securities. In addition, we made payments to Moody’s and S&P in connection with the confirmation of our ratings in respect of the issuance of our Senior Notes and continued issuance of our ECP Program and USCP Program.

9. Directors & Executive Officers

Directors

Our Board currently consists of the following members:

Name & Municipality of Residence	Director Since	Principal Occupation
Peter G. Bowie<br><br><br>Ontario, Canada	May 10, 2012	Corporate Director
Mary S. Chan<br><br><br>New Jersey, U.S.A.	August 10, 2017	Managing Partner of VectoIQ LLP and Corporate Director
Hon. V. Peter Harder<br><br><br>Ontario, Canada	January 10, 2020	Senator and Corporate Director
Seetarama (Swamy) Kotagiri<br><br><br>Michigan, U.S.A.	January 1, 2021	Chief Executive Officer of Magna
Dr. Kurt J. Lauk<br><br><br>Baden-Württemberg, Germany	May 4, 2011	Co-Founder & President, Globe CP GmbH
Robert F. MacLellan<br><br><br>Ontario, Canada	May 10, 2018	Chairman, Northleaf Capital Partners and Corporate Director
Mary Lou Maher<br><br><br>Ontario, Canada	May 6, 2021	Corporate Director
Cynthia A. Niekamp^(1)^<br> <br>Michigan, U.S.A.	May 8, 2014	Corporate Director
William A. Ruh<br><br><br>New South Wales, Australia	May 11, 2017	Chief Executive Officer, Digital, Lendlease Group
Dr. Indira V. Samarasekera<br><br><br>British Columbia, Canada	May 8, 2014	Senior Advisor, Bennett Jones LLP and Corporate Director
Dr. Thomas Weber<br><br><br>Baden-Württemberg, Germany	January 1, 2022	Corporate Director
Lisa S. Westlake<br><br><br>Florida, U.S.A.	May 9, 2019	Corporate Director
William L. Young^(1)(2)^<br> <br>Massachusetts, U.S.A.	May 4, 2011	Corporate Director

Notes:

^(1)^	Retiring at the end of the current term on May 3, 2022.
^(2)^	Chairman of the Board.
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All of our directors were elected to their present terms of office by our shareholders at our Annual Meeting of Shareholders held on May 6, 2021, except Dr. Thomas Weber, who was appointed to the Board on January 1, 2022. The term of office for each director expires at the conclusion of the next annual meeting of our shareholders.

All of the directors have held the principal occupations identified above (or another position with the same employer) for not less than five years, except as follows:

•	Mr. Harder served as the Representative of the Government of Canada in the Senate from March 2016 to January<br>2020;
•	Ms. Maher was concurrently the Canadian Managing Partner, Quality and Risk, KPMG Canada and Global Head of<br>Inclusion and Diversity, KPMG International from October 2017 to February 2021. She was with KPMG since 1983 and had served in various executive and governance roles, including CFO and CHRO;
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Magna InternationalInc. 45

•	Mr. Ruh was Chief Executive Officer, Senior Vice-President and Chief Digital Officer, GE Digital from<br>September 2015 to December 2018; and
•	Ms. Westlake was Chief Human Resources Officer of IHS Markit Ltd. from April 2017 to August 2018 and Chief<br>Human Resources Officer of Moody’s Corporation from 2008 to 2017.
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With the exception of Mr. Kotagiri, our CEO, and Dr. Weber, a non-independent, non-executive director, all other directors have been determined by our Board to be “independent directors” within the meaning of such term under applicable law.

Board Committees

A copy of our Board Charter, Audit Committee Charter, as well as the charters of our other Board Committees are available on our website (www.magna.com), have been filed on SEDAR (www.sedar.com) and EDGAR (www.sec.gov/edgar) and are incorporated by reference into this AIF. Additional information about our Audit Committee is contained under “Corporate Governance – Report of the Audit Committee” in our Circular for our Meeting, which is incorporated by reference into this AIF.

Membership of these Committees as of the date of this AIF are as follows:

Name	Audit Committee	Corporate Governance,<br><br><br>Compensation &<br><br><br>Nominating Committee	Technology Committee
Peter G. Bowie^(1)^	∎
Mary S. Chan			∎
Hon. V. Peter Harder		∎
Dr. Kurt J. Lauk
Robert F. MacLellan^(1)^
Mary Lou Maher	∎
Cynthia A. Niekamp^(1)^	∎
William A. Ruh			∎
Dr. Indira V. Samarasekera
Dr. Thomas Weber			∎
Lisa S. Westlake		∎
William L. Young^(1)^
∎	Committee Member <br><br><br><br> Committee Chair
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Notes:
---
^(1)^	Ms. Niekamp and Mr. Young will retire at the end of their current term on May 3, 2022. Subject to<br>their re-election at our annual and special meeting of Shareholders on such date, the Board has selected Mr. MacLellan to succeed Mr. Young as Board Chair, and Mr. Bowie to succeed Mr. MacLellan as Audit Committee Chair.<br>
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Additional details regarding our Committee structure can be found in the “Corporate Governance” section of our Circular.

46 Annual Information Form

Executive Officers

Our executive officers currently consist of the following persons:

Name & Municipality of Residence	Principal Occupation
Seetarama (Swamy) Kotagiri<br><br><br>Michigan, U.S.A.	Chief Executive Officer (since January 2021)
Vincent J. Galifi<br><br><br>Ontario, Canada	President (since January 2022)
Patrick W.D. McCann<br><br><br>Ontario, Canada	Executive Vice-President and Chief Financial Officer (since January 2022)
Tommy J. Skudutis<br><br><br>Ontario, Canada	Executive Vice-President (since May 2018) and Chief Operating Officer (since May 2007)
Guenther F. Apfalter<br><br><br>Upper Austria, Austria	President, Magna Europe (since February 2011) and President, Magna Asia (since July 2020)
Bruce R. Cluney<br><br><br>Ontario, Canada	Executive Vice-President and Chief Legal Officer (since July 2020)
Matteo Del Sorbo<br><br><br>Ontario, Canada	Executive Vice-President, Magna New Mobility (since January 2022)
Uwe Geissinger<br><br><br>Hesse, Germany	Executive Vice-President, Operational Efficiency (since February 2021)
Anton Mayer<br><br><br>Lower Austria, Austria	Executive Vice-President and Chief Technology Officer (since January 2022)
Aaron D. McCarthy<br><br><br>Ontario, Canada	Executive Vice-President and Chief Human Resources Officer (since January 2019)
Boris Shulkin<br><br><br>Michigan, U.S.A.	Executive Vice-President, Technology & Investments (since February 2021)^(1)^
Eric J. Wilds<br><br><br>Michigan, U.S.A.	Executive Vice-President and Chief Sales & Marketing Officer (since January 2020)

NOTES:

^(1)^	Mr. Shulkin has been appointed Executive Vice-President and Chief Digital and Information Officer effective<br>April 1, 2022.

To the extent that our executive officers have not held the offices identified above for the last five years, they have held the following offices or positions with us and/or have had the following principal occupations during the last five years:

•	Prior to becoming our CEO, Mr. Kotagiri was President, Magna International from January 2020 to December<br>2020 and Executive Vice-President and Chief Technology Officer from January 2014 to January 2020. He also served as President, Power and Vision from May 2018 to December 2020 and as President, Magna Electronics from February 2016 to May 2018;<br>
•	Mr. Galifi was Executive Vice-President from September 1996 to December 2021, and Chief Financial Officer<br>from December 1997 to December 2021;
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•	Mr. McCann was Senior Vice-President, Finance from May 2019 to December 2021, and Vice-President, Cosma<br>Group from January 2016 to April 2019;
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•	Mr. Cluney was Executive Vice-President and General Counsel, Power and Vision from July 2018 to July 2020<br>and Vice-President, Secretary and General Counsel of Magna Closures / Magna Mirrors (now known as Mechatronics / Magna Mirrors / Magna Lighting) from January 2010 to July 2018;
---	---
•	Mr. Del Sorbo was Vice-President, Business Development from January 2020 to January 2022 and Vice-President,<br>Business Development – Exteriors, Seating, Mirrors, Closures and Cosma Groups from January 2017 to January 2020;
---	---
•	Mr. Geissinger was President, Magna Electronics and Senior Vice-President Operations, Power &<br>Vision Group from April 2019 to February 2021, and Senior Vice-President, Fluid Pressure & Controls Group from January 2017 to March 2019;
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•	Mr. Mayer was Executive Vice President, Research and Development from October 2021 to December 2021,<br>Executive Vice- President, Systems and Portfolio Strategy from February 2021 to September 2022, Senior Vice-President, Global Engineering at Magna Powertrain from November 2017 to February 2021 and Vice-President, Corporate Engineering and R&D<br>at Magna International from January 2010 to November 2017;
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•	Mr. McCarthy joined Magna in January 2016 as Vice-President, Human Resources, the Americas and India and<br>remained in this role until December 2018;
---	---
•	Mr. Shulkin was Senior Vice-President, Technology and Development from July 2020 to February 2021 and<br>Vice-President, Research and Development from May 2011 to July 2020; and
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Magna InternationalInc. 47

•	Mr. Wilds was Executive Vice-President, Strategic Growth Initiatives, Magna Powertrain and Magna Electronics<br>from April 2016 to December 2017 and Executive Vice President, Business Development & Strategy, Magna Power and Vision from January 2018 to January 2020.

Beneficial Ownership of Securities

As at March 16, 2022, we had 294,982,137 Common Shares issued and outstanding, All our directors and executive officers (as a group 24 persons) owned beneficially or exercised control or direction over 1,384,389 Common Shares representing approximately 0.5% of the class, as at March 16, 2022. Our issued and outstanding Common Shares are held as follows:

LOGO

10. Legal Proceedings

Antitrust Investigation

In September 2014, the Conselho Administrativo de Defesa Economica (“CADE”), Brazil’s Federal competition authority, attended at one of the company’s operating divisions in Brazil to obtain information in connection with an ongoing antitrust investigation relating to suppliers of automotive door latches and related products (“access mechanisms”). In May 2019, CADE informed the company that it completed its preliminary investigation and, based on a review of the evidence, had commenced a formal administrative proceeding into alleged anticompetitive behaviour relating to access mechanisms involving the company. Administrative proceedings of this nature can often continue for several years. At this time, management is unable to predict the duration or outcome of the Brazilian administrative proceeding, including whether any operating divisions of the company will be found liable for any violation of law or the extent or magnitude of any liability, if any. In the event that wrongful conduct is found, CADE may impose administrative penalties or fines taking into account several mitigating and aggravating factors. Administrative fines are tied to the sales in Brazil of the applicable Magna companies in the fiscal year prior to the commencement of the formal administrative proceeding.

Magna’s policy is to comply with all applicable laws, including antitrust and competition laws. Based on a previously completed global review of legacy antitrust risks which led to a September 2020 settlement with the European Commission where Magna received full immunity regarding two separate bilateral cartels involving the supply of closure systems, Magna does not currently anticipate any material liabilities. However, we could be subject to restitution settlements, civil proceedings, reputational damage and other consequences, including as a result of the matters specifically referred to above.

Other

In the ordinary course of business activities, we may become contingently liable for litigation and claims with customers, suppliers, former employees and other parties. In addition, we may be, or could become, liable to incur environmental remediation costs to bring environmental contamination levels back within acceptable legal limits. On an ongoing basis, we assess the potential of any adverse judgments or outcomes to these matters, as well as any associated probable costs and losses.

A determination of the provision required, if any, for these contingencies is made after analysis of each individual issue. The required provision may change in the future due to new developments in each matter or changes in approach, such as a change in settlement strategy in dealing with these matters.

Warranty, Product Liability and Recall Costs

In certain circumstances, we are at risk for warranty, product liability and recall costs, and are currently experiencing increased customer pressure to assume greater warranty responsibility. Certain customers seek to impose partial responsibility for the warranty costs where the underlying root cause of a product or system failure cannot be determined. Due to the nature of the costs, we make our best estimate of the expected future costs, however, the ultimate amount of such costs could be materially different. For most types of products, we only account for existing or probable claims on product defect issues when amounts related to such issues are probable and reasonably estimable. However, for certain complete vehicle assembly, powertrain systems, and

48 Annual Information Form

electronics contracts, we record an estimate of future warranty-related costs based on the terms of the specific customer agreements and/or our warranty experience.

Product liability and recall provisions are established based on our best estimate of the amounts necessary to settle existing claims, which typically take into account: the number of units that may be returned; the cost of the product being replaced; labour to remove and replace the defective part; and the customer’s administrative costs relating to the recall. In making this estimate, judgement is also required as to the ultimate negotiated sharing of the cost between us, the customer and, in some cases a supplier. Where applicable, insurance recoveries related to such provisions are also recorded.

11. Other Information

Additional Information

Our Circular contains the following additional information:

•	our directors’ and named executive officers’ remuneration and indebtedness;
•	our voting securities and their principal holders; and
---	---
•	securities authorized for issuance under our equity-based compensation plans.
---	---

Additional financial information about us is provided in our consolidated financial statement as at and for the year ended December 31, 2021 and in our MD&A. These documents and additional information about us may be found on SEDAR, at www.sedar.com, on EDGAR at www.sec.gov/edgar and on our website, at www.magna.com.

Interests of Management & Others in Material Transactions

Reference is made to “Interests of Management and Other Insiders in Certain Transactions” in our Circular for our Meeting, which is incorporated by reference into this AIF.

Transfer Agent & Registrar

The transfer agent and registrar for our Common Shares is Computershare Trust Company of Canada, at its principal offices in Toronto, Ontario. The co-transfer agent and co-registrar for our Common Shares in the United States is Computershare Trust Company, N.A., at its offices in Louisville, Kentucky.

Interests of Experts

Our independent auditor for the 2021 fiscal year is Deloitte LLP. Deloitte LLP is independent within the meaning of the Rules of Professional Conduct of the Chartered Professional Accountants of Ontario, and the applicable rules and regulations adopted by the SEC and the Public Company Accounting Oversight Board (United States) (PCAOB). Additional information regarding the fees paid to our independent auditors is contained under “Business of the Meeting – Reappointment of Deloitte as Magna’s Independent Auditors” in our Circular, which is incorporated by reference into this AIF.

Magna InternationalInc. 49

Schedules

Schedule A

PrincipalSubsidiaries and Investments

Subsidiaries

A list of our principal subsidiaries and each of their jurisdictions of incorporation as of December 31, 2021 is set out below. Our legal structure (including that of our subsidiaries) is not necessarily indicative of our operational structure.

Subsidiary^(1)(2)^
1305290<br>Ontario Inc.	100	%	Ontario
Magna<br>International Investments S.A.	100	%	Luxembourg
Magna<br>International Automotive Holding GmbH	100	%	Austria
Magna<br>Automotive Europe GmbH	100	%	Austria
Magna<br>Automotive Holding GmbH	100	%	Austria
Magna<br>Metalforming GmbH	100	%	Austria
Magna<br>Steyr AG & Co. KG	100	%	Austria
Magna<br>Powertrain GmbH & Co KG	100	%	Austria
Magna<br>Steyr Fahrzeugtechnik AG & Co. KG	100	%	Austria
Magna<br>Powertrain GmbH	100	%	Austria
Magna<br>Automotive Holding (Germany) GmbH	100	%	Germany
Magna<br>PT Holding GmbH	100	%	Germany
175<br>Holdings ULC	100	%	Alberta
Magna US<br>Holding, Inc.	100	%	Delaware
Cosma<br>International of America, Inc.	100	%	Michigan
Intier<br>Automotive of America, Inc.	100	%	Delaware
Intier<br>Automotive of America Holdings, Inc.	100	%	Delaware
Magna<br>Seating of America, Inc.	100	%	Delaware
Magna<br>Exteriors Holdings, Inc.	100	%	Delaware
Magna<br>Exteriors of America, Inc.	100	%	Delaware
Magna<br>Mirrors of America, Inc.	100	%	Michigan
Magna<br>International (Hong Kong) Limited	100	%	Hong Kong
Magna<br>Powertrain Inc.	100	%	Ontario
Magna<br>Seating Inc.	100	%	Ontario
Magna<br>Exteriors Inc.	100	%	Ontario
Magna<br>Powertrain de Mexico, S.A. de C.V.	100	%	Mexico
Magna<br>Treasury Services LP	100	%	Ontario
Magna<br>Internacional de Mexico, S.A. de C.V.	100	%	Mexico

Notes:

(1)

The table shows the percentages of the votes attached to all voting securities and of each class of non-voting securities, owned by us or over which control or direction is exercised by us. Parent/subsidiary relationships are identified by indentations. Percentages represent the total equity interest in a subsidiary, which is not necessarily indicative of percentage voting control.

(2)

Subsidiaries not shown each represent less than 10% of our total consolidated revenues and total consolidated assets (although not all subsidiaries shown necessarily each represent more than 10% of our total consolidated assets and total consolidated sales) and, if considered in aggregate as a single subsidiary, represent less than 20% of our total consolidated revenues and total consolidated assets.

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50 Annual Information Form

Investments

Our principal equity method investments are the following:

Joint Venture	Magna EquityOwnership %	Partner(s)	Reporting Segment
Litens Automotive Partnership	76.7% <br> <br>(non-controlling<br> <br>50% voting<br><br><br>interest)	Current and retired members of senior Litens management	Power & Vision
Hubei HAPM MAGNA Seating Systems Co., Ltd.	49.9%	Hubei Aviation Precision Machinery Co., Ltd.	Seating Systems
LG Magna<br>e-Powertrain Co.,Ltd.	49.0%	LG Electronics Inc.	Power & Vision

Magna InternationalInc. 51

Schedule B

Acquisitions and Divestitures

We have completed a number of acquisitions, divestitures, financings and securities/corporate transactions in the last three fiscal years, including those listed below. None of these acquisitions constitutes a “significant acquisition” within the meaning of such term in National Instrument 51-102 – Continuous Disclosure Obligations of the Canadian Securities Administrators. Additional information about the acquisitions and/or divestitures listed below can be found in Note 5 of our consolidated financial statement as at and for the year ended December 31, 2021, Notes 5 and 7 of our consolidated financial statement as at and for the year ended December 31, 2020, and Note 7 of our consolidated financial statement as at and for the year ended December 31, 2019.

Acquisitions

Year	Acquisition
2021	• Getrag Ford Transmission GmbH’s non-controlling interest in Getrag (Jiangxi) Transmission Co., Ltd., a Chinese joint venture controlled by Magna, and a facility in Europe<br> <br><br><br><br>• 65% equity interest and a controlling financial interest in Chongqing Hongli Zhixin Scientific<br>Technology Development Group LLC<br> <br><br><br><br>• Klein Automotive, a metalforming operation in Czechia
2020	Controlling interest in Getrag (Jiangxi) Transmission Co., Ltd joint venture
2019	VIZA GECA, S.L.

Divestitures

Year	Divestiture
2021	• Distribution to Ford Motor Company of<br>certain assets of Getrag Ford Transmission GmbH, a European joint venture with Ford, in connection with multiple agreements with Ford to operate certain businesses within the joint venture under separate ownership<br><br><br><br> <br>• Three Body<br>Exteriors & Structures operations in Germany
2020	None
2019	Fluid Pressure & Controls Business

52 Annual Information Form

Schedule C

Market for Securities

Our Common Shares are listed and posted for trading on the TSX under the trading symbol “MG”, and on the New York Stock Exchange under the trading symbol “MGA”.

The high and low sale prices and volume of shares traded for our Common Shares, as reported by the TSX and NYSE, respectively, for the months during the year ended December 31, 2021 were as follows:

Month	TSX High (C$)	TSX Low (C$)	TSX<br><br><br>Volume	NYSE High ($)	NYSE Low ($)	NYSE Volume
January	97.98	87.42	15,214,097	77.59	68.30	30,275,925
February	110.45	90.78	16,778,739	87.76	70.85	32,170,356
March	118.71	104.57	20,800,994	95.38	82.43	37,059,049
April	123.50	110.09	12,991,585	99.72	87.55	32,161,724
May	121.70	110.90	13,842,588	100.79	91.12	25,671,652
June	126.00	110.05	14,423,263	104.28	88.74	28,018,129
July	117.00	99.33	12,706,592	95.00	78.93	29,651,823
August	109.04	97.91	15,318,956	87.18	76.10	28,839,610
September	103.30	93.24	15,744,748	81.99	72.65	22,887,129
October	107.86	94.42	15,028,334	87.09	74.53	27,018,982
November	113.00	95.62	17,563,695	89.98	74.84	31,834,705
December	104.29	96.39	13,550,584	82.46	74.53	22,950,960

Magna InternationalInc. 53

Appendix 1

Sustainability

Report

FY 2021

LOGO

Magna InternationalInc. A-1

Contents

Sustainability Report

A-4	Summary Sustainability Metrics
A-5	Introduction
A-5	Sustainability Governance
A-8	Climate-Related Opportunities
A-13	Climate-Related Risks and Risk Mitigation
A-19	Non-Climate Elements of Sustainability
A-30	Sustainability Metrics

A-2 Annual Information Form

LOGO

Magna InternationalInc. A-3

Summary Sustainability Metrics

TOPIC	SASB CODE	METRIC	UNIT OF MEASURE	MAGNA 2021 DATA^(1)^	CHANGE FROM 2019 BASELINE(2)
	—	Scope 1&2 emissions	Metric Tons (t) CO2e	1,613,922 t	i 24.1%
Energy Management	TR-AP-130a.1	Aggregate amount of energy consumed	Gigajoules (GJ) MegaWatt hours (MWh)	19,493,920 GJ<br><br><br>5,414,978 MWh	i 15.3%
		% of energy consumed supplied from electrical grid	Percentage (%)	57.5%	h 2 bps
		% of energy consumed that is renewable energy	Percentage (%)	8.2%	—
	—	Energy intensity	MegaWatt hours (MWh) / Sales (USDm)	149 MWh /USDm	i 8.0%
		Energy intensity reduction	MegaWatt hours (MWh) / Sales (USDm)	Target:≥2% p.a.Actual: 4% 2021	—
Waste Management	TR-AP-150a.1	Aggregate amount of waste generated from manufacturing operations	Metric Tons (t)	1,144,018 t	—
		% of waste generated that is hazardous	Percentage (%)	7.0%	—
		% of waste generated that was recycled	Percentage (%)	88.4%	—
	—	% hazardous waste diverted from landfill	Percentage (%)	91.0%	—
		Waste diversion from landfill target	Percentage (%)	≥95% p.a.	—
Water Management	—	Annual water withdrawals	Megalitres (ML)	6,922 ML	i 9.2%
		Water reduction target	Percentage (%)	1.5% p.a.<br> <br>15% by 2030(vs.2019)	—
Environmental<br><br><br>Management	—	Annual remediation expenses	Reporting Currency (USD)	<$1.0m	No Change
		Aggregate remediation balance for known events	Reporting Currency (USD)	$14.1 m	h 4.5%
Competitive Behaviour	TR-AP-520a.1	Total amount of monetary losses incurred as a result of legal proceedings associated with anti-competitive behaviour regulations	Reporting Currency (USD)	NIL	NIL
Health and Safety	—	Accident frequency rate	1.0 = 1 injury / illness per 100<br>employees working<br> <br>40 hours/week, 50 weeks/year	0.49	i 52.9%
		Accident severity rate	10.0 = 10 lost work days / 100<br>employees working<br> <br>40 hours/week, 50 weeks/year	12.80	h 3.6%
Gender Diversity	—	% of employees who are women^(3)^	Percentage (%)	27%	—
		% women in Critical Positions	Percentage (%)	16%	—
		% Women on the Board of Magna	Percentage (%)	42%^(4)^	h 9 bps

Notes:

(1)	2021 data with respect to Water Withdrawals, Emissions, Energy Management, and Waste Management is preliminary.<br>
(2)	Items indicated by a dash were not tracked in 2019.
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(3)	Wholly-owned operations only.
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(4)	As of May 3, 2022, the percentage of women on the Board will be 36%, assuming election of all nominees for<br>Magna’s annual and special meeting of shareholders.
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A-4 Annual Information Form

Introduction

At Magna we are committed to making a difference through our products and processes, as well as care and concern for our people and the communities in which they live.

LOGO

Magna’s Climate Change Committment

We recognize the reality of climate change and its impact on the planet. As a result, we are focused on doing the right things today so that our corporate interests do not come at the expense of the viability of life for the generations that follow. Although combating climate change requires a collective global response, Magna is determined to play its part in addressing this existential threat to our planet. We took a significant step in 2021, targeting carbon neutrality (Scope 1 and Scope 2 emissions) in our European operations by 2025 and in our global operations by 2030. To date, nine of our Divisions globally have achieved carbon neutrality.

We believe our ambitous commitment makes us an industry leader in North America and aligns us with industry leaders in Europe. Moreover, we are focused on a science-based approach aligned with the objectives of the Paris Climate Agreement and intend to submit our emission reduction targets for official validation by the Science-based Targets initiative (SBTi) by the second quarter of 2023.

Our progress to date with respect to carbon neutrality is detailed in this Sustainability Report.

Approach to Sustainable Value Creation

Overall, our approach to sustainable value creation involves:

•	designing, engineering, manufacturing and delivering innovative product solutions for our customers, which<br>achieve shared goals of reduced weight, lower fuel consumption and reduced carbon emissions;
•	optimizing and innovating our manufacturing processes for resource and input efficiency, as well as product<br>quality;
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•	enhancing the energy efficiency of our plants to reduce Scope 1 greenhouse gas emissions;
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•	implementing our roadmap for the transition to 100% renewable energy to reduce our Scope 2 emissions;<br>
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•	working on a roadmap for engaging our supply chain regarding Scope 3 emissions;
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•	treating our employees fairly and looking out for their health, safety and general well-being; and<br>
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•	serving as a good community partner, particularly in the communities in which our employees live and work.<br>
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This Sustainability Report aims to provide our stakeholders with a better understanding of how we approach the creation of sustainable, long-term value and our management of sustainability- related risks. The report has been<br>structured to align with the Task Force on Climate-related Financial Disclosures (“TCFD”) framework, as well as the Sustainability Accounting Standards Board’s (“SASB”) Auto Parts accounting standard, where possible. While<br>this report may not currently provide stakeholders with all of the information sought through the TCFD and SASB frameworks; we continue to evolve and enhance our disclosure as our collection and validation of the applicable data improves. While the<br>TCFD and SASB Auto Parts frameworks primarily address climate-related factors, this Sustainability Report aims to go beyond such items to give stakeholders a better understanding of the broad range of initiatives that define our approach to<br>sustainable value creation.
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1.	Sustainability Governance
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1.1	Board Oversight
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Magna’s Board of Directors is the company’s highest decision-making body, except to the extent certain rights have been reserved for shareholders under applicable law or Magna’s articles of incorporation or by-laws. As such, the Board is responsible for the overall stewardship of the company by: supervising the management of the business and affairs of Magna in accordance with the legal requirements set out in applicable company law (Business Corporations Act (Ontario)), as well as other applicable law; and, jointly with Management,

Magna InternationalInc. A-5

seeking to create long-term shareholder value. The Board operates under a written Board Charter, in addition to applicable law, our articles of incorporation and by-laws. The Board Charter, which has been filed on SEDAR, and is available in the Leadership & Governance section of Magna’s website (www.magna.com), delineates Board oversight responsibilities including with respect to a number of areas relevant to sustainability such as: corporate culture; corporate governance; strategy; risk; shareholder engagement; and fundamental corporate actions.

The Board takes an integrated and coordinated approach to oversight (including climate-related issues). This includes oversight of the Company’s corporate culture, as well as its overall approach to corporate governance; capital allocation; major corporate policies; enterprise risk management, including sustainability risks; and shareholder engagement. Climate-related and other sustainability issues are typically considered by the Board at least annually through the Board’s strategic planning process. Typically, Magna’s Chief Technology Officer identifies material “megatrends” impacting the automotive industry, including automotive and mobility trends arising from climate-related issues. Significant opportunities and risks are then addressed by the CTO at the annual Board strategy meeting, while Operating Group Presidents address the opportunities and risks applicable to their respective business units at the annual business planning meeting. Guidance, feedback and other outputs from the strategy meeting are incorporated and integrated into business unit business plans for the next business planning meeting. Sustainability issues may also arise before the Board in connection with its oversight of fundamental corporate actions such as review/approval of material acquisitions/divestitures, three-year business plans and capital expenditures. Additionally, the Board annually monitors our progress in reducing our carbon footprint and reviews/approves the company’s material public disclosures, including our Annual Information Form / Annual Report on Form 40-F incorporating this Sustainability Report. In 2021, we announced our carbon neutrality targets, discussed above.

1.1.1	CGCNC Role

The Board carries out its duties in part through standing committees composed solely of independent directors. One such committee, the Corporate Governance, Compensation and Nominating Committee (“CGCNC”), supports the Board’s oversight of the company’s approach to sustainability and climate change issues, including by assessing Magna’s overall approach to reduce its carbon footprint, environmental compliance, occupational health and safety, as well as Magna’s actions to identify, monitor and mitigate any material risk exposures relating to such areas.

Like the Board, the CGCNC maintains a written charter which outlines its specific roles and responsibilities. The CGCNC Charter has been filed on SEDAR and is available in the Leadership & Governance section of Magna’s website (www.magna.com). Matters under the CGCNC’s responsibility include: corporate governance, sustainability, talent management and other matters. The scope of the CGCNC’s oversight role with respect to sustainability includes climate-related issues generally, as well as related elements such as environmental management and compliance. As Magna defines “sustainability” in a broad and inclusive manner to include areas that go beyond climate-related issues, the CGCNC’s role also extends to matters such as occupational health and safety, diversity and inclusion, as well as corporate social responsibility. The CGCNC periodically reviews Magna’s policies, practices and public disclosures relating to sustainability topics, and makes recommendations to the Board regarding such items. During 2021, the CGCNC received updates on Magna’s evolving sustainability strategy. The Committee also reviewed, provided input into and approved the organization’s Sustainability Report and presented its recommendations to the Board regarding the Board’s approval of the Sustainability Report. Additionally, the CGCNC received semi-annual reporting relating to the performance of Magna’s environmental compliance and management program.

1.1.2	Other Board Committees

In addition to the CGCNC, the Board maintains two other standing committees – the Audit Committee and the Technology Committee. While neither of these committees have specific sustainability responsibilities, each may have a role with respect to sustainability risks and opportunities that arise indirectly out of the committee’s primary role and responsibilities.

Magna’s Audit Committee supports the Board through its oversight of financial and audit-related matters, including financial risks and disclosures. To the extent that climate-related or other sustainability risks are or could be financially material, the Audit Committee would be involved through its consideration of the financial statement or other disclosure of the nature and scale of the risk.

The Technology Committee supports the Board’s overisight duties by advising it on technology trends, related opportunities and risks, R&D and innovation, and technology-focused acquisitions, as well as the alignment between the company’s technology and its strategic priorities. As such, the scope of the Technology Committee’s role includes products and processes that seek to realize opportunities created by climate-related challenges.

1.2	Management

Climate-related issues are part of the CEO’s responsibility. As Magna’s highest-ranking member of management, the CEO guides and directs Executive Management and Operating Group Presidents with respect to product portfolio and strategic planning, business planning, capital expenditures, innovation/R&D, manufacturing productivity and efficiency, as well as other critical areas, including the setting of the carbon neutrality targets (Scope 1 & Scope 2) announced by Magna in 2021. The CEO is also the highest executive responsible for customer management, shareholder engagement/investor relations, as well as talent management. The criticality of climate sustainability to the future of the automotive industry generally means that climate-related issues are interwoven through all of the foregoing areas of the

A-6 Annual Information Form

CEO’s responsibilities. At the same time, the importance of making demonstrable progress with climate sustainability goals requires CEO- level engagement and direction to ensure organizational alignment.

To assist our CEO, Magna has designated one of its Operating Group presidents as an executive “champion” for climate-related sustainability matters (the “Sustainability Champion”). The Sustainability Champion reports directly to Magna’s CEO on sustainability matters and helps coordinate and align sustainability priorities across the company’s other Operating Groups. Operating Group management is responsible for development of product strategies to address megatrends, industry trends, and business opportunities and risks, including those which arise due to climate-related challenges.

We also have a bottom-up sustainability structure with respresentatives at each of our three main management levels (Divisional, Operating Group and Corporate). Approximately 95% of our manufacturing Divisions have an energy management champion who works with members of our Global Energy Team to identify and implement high-priority energy management projects. The Global Energy Team functions across all of our Divisions and Operating Groups to share energy efficiency/management case studies and best practices. Each Operating Group has a sustainability team comprised of a range of product, process and functional skillsets, coordinated through a Group “lead”. Operating Group sustainability leads participate in a sustainability steering committee headed by the Sustainability Champion, which consists of cross-functional corporate leaders representing operational improvement, environmental, purchasing, energy, real estate, R&D, legal/ corporate secretarial and finance, with other functions as needed. In connection with our evolving sustainability strategy and our commitment to achieving the carbon neutrality targets set in 2021, our energy reduction progress and initiatives are reported to our Sustainability Champion, helping to increase the visibility of these initiatives across our Operating Groups through the Sustainability Champion’s regular interaction with other Operating Group Presidents.

A number of initiatives intended to help us achieve our carbon neutrality targets are well underway, including energy optimization initiatives at most of our operating Divisions and a phased in transition to renewable electricity globally. For us, carbon offsets are a last resort to offset Scope 1 emissions that cannot be displaced by other methods, not a primary means of achieving our targets.

CARBON NEUTRALITY PRIORITIES

LOGO

Our energy optimization activities are described in further detail in Section 2.4 of this Sustainability Report.

Aspects of sustainability beyond climate-change concerns are typically managed through a matrix structure in which corporate-wide functions support initiatives implemented or managed by Operating Groups and Divisions. Examples of functional areas managed in this manner include: environmental management and compliance; occupational health and safety; quality and operational improvement; talent management, including diversity and inclusion; cybersecurity; data privacy; as well as supply chain.

Magna InternationalInc. A-7

2.	Climate-Related Opportunities

2.1 Corporate Strategy

The automotive industry is being defined by a number of global megatrends that have shaped our long-term strategy, including:

	Megatrend	Impact on Automotive
	Demographic Change & Individualism	Product design will be influenced by aging population and growing individualization.
Society	Digital Transformation	Connectivity and digitization impact both product and process. New vehicle architectures that connect the subsystems along with software functionality creates additional value to products.<br>Process is also impacted due to increased digitization, driven by increased requirements for productivity and quality.
	Health & Well-Being	ADAS and autonomy take rates will be driven both by consumer preferences as well as regulatory requirements tied to increased safety.
Mobility	Urbanization	Continued growth in urban<br>population will lead to changes in mobility as a result of increased density and congestion with an increase in electric vehicle adoption and new transport modalities.
	New Mobility	Emerging new mobility eco-system offers a range of potential opportunities for new products and services.
Economy	Natural Resources, Energy & Environmental	Increased focus on the environment and climate change will drive growth rates for electrification.

We possess an enhanced e-Powertrain portfolio with a range<br>of products that addresses the roadmap for the transition to Electric Vehicles and has allowed us to win new EV business.
We possess full ADAS capability and complete ADAS system expertise. We take a systems level<br>approach in developing ADAS building blocks for OEM customers with a focus up to level 2+/3 ADAS capabilities.
We have expanded our collaboration ecosystem, continue to look for opportunities to leverage new<br>business models, and are a key enabler of OEM customers and new entrants in the New Mobility space.
We possess software-enabled functionality in our electronic control unit-related products. This<br>functionality helps optimize performance and efficiency in connected products, such as our connected powertrains, which can obtain route and other information through cloud connectivity to identify optimal routes to avoid traffic and increase fuel<br>savings.

We have developed our corporate strategy to realize the opportunities from these trends. Key elements of such strategy include:

Increasing capital deployment toward high-growth areas aligned with the “Car of the Future”

We are proactively managing our portfolio and evolving our product mix based on alignment with the Car of the Future. We seek to grow our business and capabilities in areas which are positively impacted by the megatrends discussed earlier. Examples of such areas include powertrain electrification, ADAS systems and battery enclosures, as well as our contract vehicle manufacturing operations. As illustrated below, we believe that a substantial proportion of our product areas are not adversely impacted by the global megatrends, including our body, chassis, lighting, active aerodynamics, dual clutch transmissions, mirrors, mechatronics and seating products. The strong returns and cash flow from these product areas enable us to fund the R&D and capital investments required to realize the opportunities in high-growth products which are benefiting directly from the global megatrends.

A-8 Annual Information Form

LOGO

Lastly, there are elements of our product portfolio which are negatively impacted by the global megatrends and are expected to be less directly relevant to the Car of the Future. Examples of such products include manual transmissions, mechanical AWD/4WD systems and fuel tank systems. Despite their declining long-term strategic importance, our assets and expertise associated with these products remain relevant to, and can be redeployed for, growing product areas aligned with the Car of the Future.

DrivingOperational Excellence

We are committed to manufacturing excellence. We continue to elevate our approach to manufacturing by implementing “factory of the future” initiatives including: enhanced use of big data and analytics; advanced robotics, additive manufacturing and augmented reality. The ultimate goal is to achieve greater profitability through further enhanced quality, production efficiency, reduction of floor space and improved return on investments. Critical elements of our approach to operational excellence include our World Class Manufacturing initiatives and MAFACT operating system, which are discussed in “Section 6 – Description of the Business – Manufacturing & Engineering” in our AIF. Additionally, our sustainability strategy dovetails with our efforts around operational excellence, due to the focus on energy optimization and minimization of both water withdrawals, as well as waste streams to landfill.

Unlocking New Business Models and Markets

Our long-term strategy is well-aligned with climate change-related trends impacting the automotive industry, including vehicle electrification, operational efficiency to minimize manufacturing inputs and waste outputs, as well as the pursuit of new mobility business models. We cannot determine for certain how quickly the market for the declining products in our portfolio may deteriorate, but products such as AWD/4WD systems appear to have continuing relevance for the next decade. However, we believe that our physical assets, human capital and know-how related to the mechanical solutions can be repurposed as vehicle development plans migrate toward electrified AWD/4WD solutions. We currently offer multiple alternatives to manual transmissions, including efficient dual-clutch, hybrid dual-clutch and dedicated hybrid transmissions, as well as complete e-drive systems, and expect to be able to continue growing our market share in the drivetrain market. Fuel tank systems are not a material part of our business, but also have continuing relevance for a number of years to come. The physical assets, human capital and know-how related to fuel tank systems could be repurposed for adjacent product areas such as vehicle hydrogen storage tank systems.

2.2 Products and Services

Consistent with the above long-term strategy, key climate change-relevant themes in our product portfolio include:

Magna InternationalInc. A-9

Optimizing Vehicle Weight, Powertrain Efficiency and Aerodynamics<br><br><br><br> <br>We continue to support our OEM customers by offering solutions which enable them to<br>deliver lighter vehicles, improved/optimized powertrain efficiency and enhanced aerodynamics, including:
•	Lightweight Products & Materials: OEMs are focused on reducing<br>vehicle mass in order to: downsize engines, thereby reducing fuel consumption and tailpipe emissions for vehicles powered by internal combustion engines; and minimize power consumption/ maximize driving range for EVs. We believe that the breadth of<br>our engineering capabilities across all major sections of the vehicle, together with our full vehicle capabilities, provide us a competitive advantage in addressing OEMs’ lightweighting needs “holistically”. Moreover, our financial<br>strength has enabled us to fund continuous innovation related to advanced materials, multi-material joining processes, manufacturing processes and lightweight products.
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•	Efficient Transmissions/e-Drive Systems: Irrespective of a<br>vehicle’s power source – gas or diesel, hybrid or fully electric (battery or hydrogen fuel cell) – power needs to be transferred to the wheels through a transmission or e-drive system. Through<br>our powertrain business, we offer customers a range of efficient dual-clutch transmissions (“DCTs”), including traditional DCTs for vehicles with an Internal Combustion Engine (“ICE”), hybrid DCTs featuring an integrated electric<br>motor for start/stop or plug-in hybrid applications and dedicated hybrid transmissions used in applications with an electric motor. Additionally, we offer e-drive<br>systems for fully electrified powertrains.
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•	Pure EVs: Pure EVs share many components with vehicles powered by an ICE. At the same time, there<br>are many elements which are new or which need to be engineered differently for EVs. Multiple Magna Operating Groups are pursuing opportunities related to pure EVs, including:
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•	e-Drive systems, as discussed above, including through our Hasco joint<br>venture in China that commenced high-volume serial production of integrated e-Drive systems in 2022, and our newly established joint venture with LG Electronics.
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•	Lightweight seat structures optimized to accommodate EV chassis.
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•	Battery enclosures.
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•	EV complete vehicle engineering, including integration, validation and testing, as well as assembly.<br>
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•	Active Aerodynamics: Redirecting airflow to reduce air drag on vehicles assists in reducing fuel<br>consumption and thus CO2 emissions. Magna offers a growing range of active aerodynamics innovations, including active grille shutters, active air dams, active front deflectors, active liftgate<br>spoilers and active tailgate, as well as underbody panels.
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•	Innovative, Lightweight, Energy-efficient Lighting: OEMs continue to seek innovative forward and<br>rear-lighting solutions that allow increased styling flexibility, reduced weight compared to traditional lighting systems and energy efficiency. We continue to grow our lighting business – organically, as well as through joint ventures and<br>acquisitions.
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	Incorporating Full Breadth of Magna Capabilities into New Mobility Solutions<br><br><br><br> <br>New mobility solutions involve the convergence of electrification and vehicle autonomy<br>trends. Over the medium- to long-term, new mobility solutions are expected to be lightweight zero/low emission (“ZLEV”) vehicles with leading-edge ADAS features. We possess broad capabilities to support new mobility, including through:
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• Magna’s Powertrain and Complete Vehicles<br>Operating Groups, which have significant expertise in alternative energy propulsion and storage systems, respectively;
•	electronics/ADAS features;
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•	our complete EV engineering, integration and testing capabilities;
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•	our ability to offer new mobility OEM customers such as Fisker an EV platform, electrical/electronic<br>architecture, complete vehicle engineering and manufacturing, as well as a complete ADAS system and other products; and
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•	our ability to offer customers a versatile test environment for highly automated vehicles, including the entire<br>test “chain” from virtual simulation to test rigs to trial runs on public roads.
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New mobility solutions may enable us to take advantage of our complete systems knowledge and draw-in expertise from across our entire product range, including:

Body Exteriors & Structures:

•	chassis architectures requiring leading-edge materials know-how;<br>
•	battery enclosures for EVs and hybrid-EVs;
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•	lightweight thermoplastic body panels and liftgates; and
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•	seamless sensor integration into the vehicle body.
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A-10 Annual Information Form

Power & Vision Systems:

•	highly integrated e-drive systems; and
•	full suite of sensing technologies, together with domain controllers.
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Seating Systems:

•	reconfigurable seating solutions that address automated, connected, electric and shared vehicle solutions.<br>

Complete Vehicles:

•	non-OEM branded (“white-label”) vehicles, engineered and<br>assembled by Magna.

For a complete discussion of our product portfolio, including the ways in which it addresses these areas, see “Section 6 – Description of the Business” in our AIF.

Section 2.3 Markets

The transition to a lower-carbon economy has provided, and is expected to continue to provide, opportunities to enter new product and service markets. Some recent new products developed to take advantage of opportunities from such transition include:

ETELLIGENT COMMAND^™^ EtelligentCommand is a PHEV/HEV system featuring a Dedicated Hybrid Drive DHD Plus at the front and an eDrive Mid+ with torque vectoring at the rear, combined with advanced software and controls. Various driving modes are available on command to enhance performance and drivability and provide greater power handling and control. The Dedicated Hybrid Drive DHD Duo is a two e-motor single or multi speed system suitable for HEV application delivering greater performance, drivability and comfort even when driving in congested traffic. Additional efficiency increases are available through an optional voltage booster and innovative e-coupling technology for ICE disconnection.

ETELLIGENT FORCE^™^ Magna’s EtelligentForce, is a battery electric 4WD powertrain system for pickup trucks and light commercial vehicles. The product features Magna’s eDrive technology at the front of the vehicle and its eBeam electric axle drive system in the rear. The system is designed to deliver the environmental benefits of an electric powertrain, while maintainining full vehicle capabilities without compromising payload or towing capacities of pickup trucks and light commercial vehicles. The system is designed for high-payload vehicles, capable of towing up to 14,500 pounds – on par with its ICE counterparts in this truck segment. It can provide a total peak power of up to 430 kW - 250kW from the rear eBeam and 180kW from the front eDrive. The solution also eliminates the need for architectural changes to the vehicle and is totally customizable for automakers to prioritize key performance attributes. Magna’s eBeam replaces traditional beam axles, accommodating existing suspension and brake systems, and avoiding the need for expensive redesign of existing truck platforms. These benefits help automakers simplify the transition toward electrification of these vehicle segments. In addition, with fewer moving parts than a traditional ICE powertrain, the EtelligentForce requires less maintenance – a direct benefit to truck owners over the life of the vehicle. The EtelligentForce, which is targeted for production in 2025, will be prepared for launch by a specialized team at Magna’s new EV centre in Troy, Michigan.

ETELLIGENT REACH^™^ Magna’s all-electric connected powertrain, the EtelligentReach, is the latest innovation set to debut on a new entrant vehicle in 2022. The complete system is comprised of two electric motors, inverters and gearboxes, and leverages advanced software to maximize vehicle range and driving dynamics. eDrive technology advancements and the holistic vehicle development approach of the EtelligentReach achieve a range increase of up to 145 km/90 miles or 30% compared to certain production BEV vehicles in this segment, which reduces range anxiety, and is a key differentiator in the growing electrification space. Magna’s approach optimizes the interaction of individual eDrive components and the entire vehicle with a software package that manages multiple vehicle functions. On the new entrant vehicle, for example, EtelligentReach utilizes a functional, modular control unit that integrates various powertrain and chassis functions. This includes a vehicle dynamics controller with a disconnect system which increases efficiency while reducing CO2 emissions, and a longitudinal torque vectoring function that can improve the safety margin by up to 10% by controlling each axle individually in all road conditions, as well as significantly reduce steering effort during dynamic cornering. Drivers can select from several distinctive driving modes - further enhancing the driving experience. Additional efficiency gains are achieved using silicon carbide within the inverter.

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BATTERY ENCLOSURES Magna’s battery enclosures will debut in 2022 on the all-electric Ford F-150 Lightning and GMC Hummer EV, illustrating our ability to expand structural product opportunities as electrification grows. The enclosures, which all electric vehicles require, house high-voltage batteries, electrical components, sensors and connectors, contributing to the structural and safety aspects of a vehicle’s frame and protecting critical components from potential impact, heat and water. In addition, the use of lightweight aluminum helps minimize added mass from the vehicle’s battery.

2.4 Resource Efficiency

2.4.1 Energy

Our aggregate global energy spend in 2021 amounted to approximately $419 million broken down by type as follows:

•	Electricity – approximately $346 million
•	Natural Gas – approximately $56 million
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•	Other (Propane; Liquid Petrol; Diesel; District Heat; Steam) – $17 million
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As part of our sustainability and operational efficiency efforts, we are focused on optimizing energy use, which may result in savings in overall energy costs. However, as we continue to forecast growth in Sales and number of facilities over the medium-term, we anticipate that our aggregate energy consumption may increase. Accordingly, we are focused on becoming more energy efficient (measured by energy consumption relative to Sales) so that, at minimum, our rate of increase in energy consumption slows. In connection with our efforts to promote energy efficiency, we developed interim 2021 energy reduction targets for each of our Operating Groups, which aggregated to approximately 2% of our annual energy purchase based on MWh per USD of sales. We reduced our MWh per USD of sales by 4% in 2021 (compared to 2020) For 2022, each Operating Group has established new energy reduction targets for 2022 that range from 2% to 3.5% compared to the prior year.

Approximately 95% of our Divisions have active energy teams pursuing energy efficiency measures in their respective Divisions. These teams are supported at the corporate level by a Global Energy Team which helps identify and promote energy reduction initiatives, including through: training courses designed to promote strategies for reduced energy use; regional benchmarking sessions; regular communication through newsletters; an internal energy savings collaboration site; and best practice sharing.

Some of the incremental changes made by our Divisions to their facilities and processes to reduce our energy consumption and improve energy efficiency include:

•	Installation of LED lighting;
•	Equipment start-up/shut-down/idling procedures to achieve energy-savings<br>during production downtimes;
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•	Compressed air leak identification and repair initiatives;
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•	Use of ceiling fans to blend air temperatures evenly within our operations;
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•	Computer-controlled utility and HVAC systems to allow for improved performance and energy reduction;<br>
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•	Installation of energy metering and monitoring systems;
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•	Door and dock seal repairs to reduce heat loss;
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•	High efficiency chiller and compressor upgrades;
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•	Integration of air economizers and heat recovery units into HVAC systems;
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•	Software-managed and occupancy-sensor-controlled lighting and energy efficient lighting retrofits;<br>
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•	Use of solar panels at certain facilities;
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•	Recovery of waste heat from certain processes for use in other areas;
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•	Installation of variable frequency drives on motors and pumps; and
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•	Participation in energy savings and incentives programs offered by utilities providers in some jurisdictions in<br>which we operate.
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Our efforts to reduce energy consumption and operate facilities on a more energy efficient basis forms part of our formal MAFACT system – the primary operational assessment audit tool used to support our World Class Manufacturing initiative. The MAFACT system establishes World Class standards for achieving operational efficiencies, identifies benchmarks and promotes best practice sharing among Divisions in Magna. The integration of energy management elements into a core operational assessment tool such as MAFACT is intended to reinforce the importance of energy management throughout the organization and help realize potential cost savings. In 2021, we completed energy projects across all of our Operating Groups which resulted in approximately 33,000 tons of CO2 equivalent in annual savings. Given the importance of energy optimization in meeting our carbon neutrality targets and to further incentivize our Divisions, we have established a separate approval category for energy efficiency and sustainability-related capital improvements. We have also developed a phased-in renewable energy strategy focused on Europe and the U.S. first, followed by the other markets in which we operate. In 2021, 100% of our energy purchase in Austria was from renewable energy sources and evidenced by renewable energy certificates. In the near – and medium-terms, adoption of renewable energy may increase our energy costs, but we are working to offset the impact of such increases through energy use reductions. While we currently have a few examples of renewable energy self-generation at certain of our facilities, self-generation is not a significant opportunity for us primarily since the vast majority of our facilities are leased.

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2.4.2 Water

We have implemented a 1.5% per year water reduction target, with the aim of reducing water use 15% by 2030, in each case referencing 2019 as the baseline year. While we are not a significant water user, achievement of water reductions would be expected to result in cost savings, potentially by offsetting (in whole or in part) any increase in the rates charged by applicable water utilities. Overall, we do not anticipate that any savings will be material.

2.4.3 Waste

We have also implemented a zero waste to landfill (“ZWTL”) target, with the aim of eliminating landfill-bound waste by 2022. Waste sent to landfill bears both an economic cost borne by us and an environmental cost borne by society as a whole. Although achievement of our ZWTL target will help reduce or eliminate the economic cost, we do not anticipate any such savings will be material.

2.5	Resilience

The automotive industry as a whole is investing in innovations aimed at adapting mobility products and service solutions to a lower carbon economy. The risk mitigation factors below in “Section 3 – Climate-Related Risks and Risk Mitigation” and initiatives to realize opportunities discussed in this Section of the Sustainability Report, together with factors addressed in “Section 4 – Our Business & Strategy” of our AIF, are expected to promote our ability to adapt and succeed in a lower carbon economy.

3.	Climate-Related Risks and Risk Mitigation

Magna maintains both top-down and bottom-up processes for identifying and assessing sustainability-related risks within the governance structure described in “Section 1 – Sustainability Governance at Magna” of this Sustainability Report. In order to fully understand the risks set out below, you should also carefully consider the risk factors set out in “Section 5 – Risk Factors” in our AIF.

3.1	Transition Risks and Risk Mitigation
3.1.1	Regulatory Policy Actions
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Applicable near-term policy actions related to climate change generally fall into one of the following categories, each of which may have an indirect effect on Magna:

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Average Fleet Emissions or Fuel Efficiency Regulations: governments in key auto producing regions have set challenging average vehicle fleet emissions or fuel efficiency targets which OEMs must meet, including the European Union, China and the U.S., as detailed below. We regularly monitor changes in regulation relating to emissions and fuel efficiency as part of our strategic planning processes:

European Union: E.U. regulations generally require OEMs to have achieved E.U. fleet-wide average emissions of 95g CO2/km by 2021, which corresponds to 4.1 litres/100 km of gas or 3.6 litres/100 km of diesel. Commencing in 2021, vehicle manufacturers with an average fleet economy in excess of the target must pay an excess emissions penalty for each vehicle registered within the E.U. The 2021 average emissions level forms the baseline for a further 15% fleet-wide average emissions reduction from 2025 onwards; and 37.5% from 2030 onwards. In addition, the E.U. is planning to aggressively increase such targets to a 55% reduction by 2030 and a 100% reduction by 2035, with the relevant (Euro 7) legislation currently expected to be passed in July 2022, with an implementation date of 2025. Penalties levied on non-compliant OEMs may be passed on to vehicle-buying consumers, which could impact demand for such vehicles and thus demand for Magna products supplied for such programs. Additionally, E.U. regulations contain incentives aimed at promoting the development of ZLEVs. The CO2 emissions targets applying to any particular OEM will be relaxed if its share of ZLEVs registered within the E.U. in any year exceeds 15% from 2025 onwards, and 35% from 2030 onwards.

*China:*In China, effective July 1, 2021, stringent China VI emissions regulations addressing particulate emissions were implemented, which could affect consumer demand for vehicles, or powertrain options for vehicles, that do meet the new emissions standard. For example, in 2019, one of our equity-accounted joint ventures in China experienced a significant drop in demand for one transmission model supplied to a Chinese OEM. One of the factors underlying the drop in demand was the fact that the transmission would not have met the China VI standard, had it been in effect at that time.

United States: In the U.S., the current administration issued an executive order with a non-binding target of 50% of all new vehicles sold in 2030 to be zero-emission vehicles, including battery electric, plug-in hybrid electric, or fuel cell electric vehicles. Subsequently, the U.S. Environmental Protection Agency (EPA) finalized new vehicle emissions standards for passenger cars and light-duty trucks with model years 2023-2026 which increase in stringency through that period, and would result in a fleetwide average fuel economy of approximately 40 mpg in 2026. More stringent emissions standards for model years 2027-2030 are expected to be introduced by the EPA in the near term. In addition, the U.S. National Highway Traffic Safety Administration (NHTSA) issued new corporate Average Fuel Economy (CAFE) standards - regulating how far our vehicles must travel on a gallon of fuel. The new CAFE standards for

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passenger cars and light trucks manufactured in model years 2024-2026, would increase fuel efficiency requirements by 8% annually (compared to 1.5% annually under previous standards) for model years 2024-2026 and increase the estimated fleetwide average fuel economy by 12 miles per gallon for model year 2026 vehicles, relative to model year 2021.

The tightening emissions standards in the European Union, China and the U.S. are intended to promote the transition to ZLEVs. OEMs have been spending significant sums in R&D in order to meet the higher regulatory standards. Although production of ZLEVs is accelerating due to regulatory requirements, to the extent that ZLEVs do not sell at the levels expected, production volumes may need to be reduced. Lower than forecast production poses a risk to our ability to recover pre-production expenses amortized in the piece- price of our product, as discussed above.

•	Phase-Out of New ICE Vehicles: In addition to more stringent fleet<br>emissions and fuel efficiency standards, the number of national and subnational jurisdictions committing to, or accelerating existing commitments to, phase-out of the sale or registration of new ICE engines is<br>growing. Several countries in Europe have set target dates by which only zero-emission passenger vehicle sales or registrations would be permitted, including:
•	2025: Netherlands; Norway
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•	2030: Denmark; Iceland; Ireland: Germany; Slovenia
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•	2035: Italy
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•	2040: France; Spain
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Moreover, once implemented, the new Euro 7 emissions standards discussed above, which would require 100% reduction in CO2 emissions would effectively ban the sale of new gasoline and diesel fueled vehicles in EU member countries by 2035.

The United Kingdom has accelerated its plans to phase out ICE passenger cars and vans, with all vehicles required to have a significant zero emissions capability (e.g. plug-in and full hybrids) from 2030, and be 100% zero emissions from 2035. Similarly, Canada has accelerated its mandatory phase out of ICE and diesel powered vehicles through a new regulation that requires all new sales of vehicles and light-duty trucks to be zero emissions by 2035; with interim targets for 2025 and 2030 expected to be introduced as well.

Given the long lead times for vehicle development such proposals and emerging regulation are expected to increasingly impact OEM and automotive supplier product planning and development this decade.

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Vehicle Restrictions in Congested Urban Centres: municipal governments in a number of cities around the world have introduced restrictions on personal-use vehicles in congested urban centres, in an effort to reduce CO2 emissions and improve urban air quality. Examples of the types of restrictions include: car-free zones; toll charges; and use restrictions by license plate. Continued expansion of such initiatives could reduce the demand for personal-use vehicles, which could affect our profitability. As a result of measurable air quality improvements in many cities during COVID-19-related mandatory lockdowns/stay-at-home orders, an expansion of restrictions on personal-use vehicles in urban centres is likely.

We attempt to mitigate applicable policy risks relating to climate change-related regulation in a number of ways, including:

•	monitoring and evaluating global regulatory developments;
•	early-stage interaction with our OEM customers to understand their product priorities and regulatory compliance<br>requirements;
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•	in-house R&D, combined with investment strategies in technological start-ups; and
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•	strategic planning processes at both Operating Group and Corporate levels, including Board oversight of strategic<br>plans.
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In terms of direct policy actions affecting our operations, we anticipate continued strengthening of environmental regulations related to industrial emissions and discharge of pollutants to air, water and ground. We currently face strict environmental regulations in the countries where we operate and have developed a global environmental management program in order to comply with or exceed regulatory standards. Our environmental management program is regularly updated to address changing environmental laws and regulations. Refer to “Section 4.1 – Environmental Stewardship” in this Sustainability Report for a description of the program.

In considering the potential impact of the above or other climate-related policy actions, readers are encouraged to review the following risk factors in “Section 5 – Risk Factors” in our AIF:

• Regional Volume Declines	• Market Shifts
• Consumer Take Rate Shifts	• Customer Purchase Orders
• Impairments	• Customer Pricing Pressure/Contractual Arrangements
• Changes in Laws	• Environmental Compliance

Over the medium-to long-term, carbon pricing initiatives may present a risk to our profitability. According to the World Bank, in 2021 there were 65 carbon pricing initiatives implemented or scheduled for implementation in 45 countries and 34 sub-national jurisdictions, which would cover emissions representing 21.5% of global GHG emissions. We are pursuing energy reduction measures and developing carbon neutrality strategies for our manufacturing facilities. However, over the medium- to long-term, carbon pricing initiatives could affect our profitability to the extent we are unable to implement cost-saving or energy reduction measures within a timeframe and/or at a cost which enables us to offset or avoid the cost of carbon pricing initiatives.

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3.1.2 Customer-Driven Policy Actions

A number of our OEM customers have set carbon-neutrality targets and are challenging Tier 1 Suppliers to support such targets. Some such OEM targets and expectations are more aggressive than our own carbon neutrality targets. In some cases, we are being asked to quote the supply of future programs based on 100% renewable energy use for production. Although we expect to meet or exceed our customers’ expectations, the inability to do so within the timeframes expected could result in the loss of some future business.

3.1.3 Climate-Related Litigation

We do not currently believe that climate-change related litigation represents a significant legal risk for us. However, if OEMs are adversely impacted by climate-change litigation, there is a possibility that Tier 1 automotive suppliers like Magna could face additional pricing pressure. Readers are encouraged to review the “Customer Pricing Pressure” risk factor in “Section 5 – Risk Factors” in our AIF.

3.1.4 Technology

Investments in automotive technologies that support the transition to ZLEVs can be significant, particularly in product areas such as battery systems for hybrid and EVs. While our product strategy does not currently include battery systems or other components which generate or store energy for ZLEVs, we have been awarded several battery enclosure programs and currently offer a range of electrified drivetrain products, hybrid dual-clutch transmissions (“HDTs”), dedicated hybrid transmissions (“DHTs”), as well as complete electric-drive (“e-Drive”) systems. We have also expanded our product offering into other areas relevant to ZLEVs, – for example, in conjunction with a joint venture partner, we can offer customers a complete EV platform. Our R&D spending for electrification solutions has been significant over the last few years and could continue to be in coming years as electrification-related technologies continue to evolve. Additionally, our OEM customers are making significant investments in the development of ZLEVs, which is impacting their profitability and could lead to increased pricing pressure on us.

As ZLEVs increase their proportion of the overall vehicle market over the medium – to long-term, we expect our sales of manual transmissions and traditional DCTs to decline, and sales of HDTs, DHTs and e-Drive systems to increase. The increasing adoption of electrified drivetrain solutions adversely impacts our AWD and 4WD businesses over the long-term, since it is possible to achieve AWD through the use of electric motors in hybrid or fully-electrified drivetrains. However, OEM product plans show mechanical AWD and 4WD programs extending out for approximately the next decade. We seek to offset displacement of mechanical AWD and 4WD systems through increased sales of electrified product offerings such as e-Drive systems.

Overall, we believe that the range of products we offer our OEM customers provides us with a competitive advantage and an effective hedge against the market uncertainties associated with the transition to ZLEVs. As illustrated below, a substantial majority of our products are “agnostic” with respect to the type of vehicle propulsion system used, and therefore remain relevant to ZLEVs:

LOGO

In the case of drivetrain products, we view the know-how gained from our mechanical drivetrain expertise as being critical to our ability to deliver innovative electrified solutions that meet our customers’ needs. In addition to continuing to offer a range of mechanical and electrified drivetrain products, we aim to mitigate technology transition risks through:

•	early-stage interaction with our OEM customers to understand their product priorities and regulatory compliance<br>requirements;
•	in-house R&D, combined with investment strategies in technological start-ups; and
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•	strategic planning processes at both Operating Group and Corporate levels, including Board oversight of strategic<br>plans.
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In considering the potential impact of the above or other climate-related policy actions, readers are encouraged to review the following risk factors in “Section 5 – Risk Factors” in our AIF:

• Intense Competition	• Changes in Laws
• Consumer “Take Rate” Shifts	• Market Shifts
• Emergence of potentially-disruptive EV OEMs	• Dependence on Outsourcing
• Customer Purchase Orders	• Impairments
• Restructuring Costs	• Customer Pricing Pressure/Contractual Arrangements
• Technology and Innovation	• Investments in Technology Companies
	• Intellectual Property Risks

3.1.5 Market

Some of the risks impacting the market for our products in the transition to a lower carbon economy are described above under “Section 3.1.1 – Regulatory Policy Actions” and “Section 3.1.4 – Technology”. Additionally, there are potential risks to the demand for personal mobility vehicles, and thus for our products, from technology-driven shared mobility solutions such as ride hailing and ride sharing. To date, such shared mobility solutions have not had a material impact on the demand for new vehicles and no such adverse effect is expected in the near- to medium-term. In any event, our own strategy related to new mobility seeks to mitigate risks to our business and realize opportunities based on the breadth of capabilities we can offer new mobility customers.

Additionally, in order to enhance our understanding of potential shifts in consumer behavior, we conduct our own analysis of various factors that are expected to drive future personal and shared mobility trends, including through:

•	monitoring and analysis of social, digital, demographic, regulatory, industry, geopolitical and other trends<br>which may create demand for and drive development of new automotive and mobility technologies;
•	review of academic research;
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•	collection and screening of ideas submitted through innovation programs; and
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•	early-stage interaction with our OEM customers and new mobility market entrants to understand their product<br>priorities.
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We do not currently anticipate long-term supply constraints on key commodities required by us in our business, including steel, aluminum or resin. However, production processes for steel and aluminum are carbon intensive, with relatively scarce supply of low-carbon alternatives. As the entire industry’s carbon-neutrality efforts increase, the price of low-carbon steel and aluminum may increase in the near- and medium-terms until the supply of low-carbon product is sufficient to meet growing demand. In the near- and medium-term, the increasing production of ZLEVs may also strain supplies of the rare earth minerals and other metals required for vehicle battery systems, which we do not supply, including nickel, cobalt and lithium used in EV batteries, copper for EV charging infrastructure and rare earth metals for EV motor magnets. However, such supply constraints could help spur the development of alternative battery technologies or low carbon fuels and/or promote technological breakthroughs that could facilitate market penetration of hydrogen fuel cell or other technologies. We intend to continue developing and offering solutions such as e-Drive systems which are neutral as to electric power source (battery or hydrogen fuel cell stack) in order to mitigate potential risks related to supply constraints of rare earth minerals or other commodities needed for current ZLEV power source technologies.

In considering the potential impact of market risks, readers are encouraged to review the following risk factors in “Section 5 – Risk Factors” in our AIF:

• Intense Competition	• Technology and Innovation
• Consumer “Take Rate” Shifts	• Market Shifts
• Supply Disruptions	• Dependence on Outsourcing
• Quote/Pricing Assumptions	• Customer Pricing Pressure/Contractual Arrangements
• Commodity Price Volatility	• Investments in Technology Companies

3.1.6 Reputation

Since light vehicles are contributors to global GHG emissions, Tier 1 suppliers like Magna may face reputational risks from participation in the automotive industry. Examples of such risk types include potential loss of business from sustainability-focused customers, reduced investor demand for our shares, and challenges attracting talent. A number of our OEM customers are embedding sustainability criteria in their sourcing decisions and could reduce purchases from us if they perceive Magna to lag other suppliers with respect to sustainability. Stakeholders, including investors and employees, as well as prospective employees are increasingly focused on companies’ sustainability efforts. Investors may sell shares of investee companies perceived to be less sustainable. In addition, millennial and other components of the workforce want to work in companies they perceive as sustainable, making it difficult for companies to attract such talent if the company is perceived as lagging in sustainability. However, OEMs and Tier 1 Suppliers have been proactively adapting to climate change and transitioning to a lower carbon economy, as evidenced by the significant spending on R&D and technological innovation to reduce CO2 emissions, particularly through electrification and powertrain efficiency, as well as the setting of carbon neutrality targets in their own operations. At the same time, particular OEMs may be viewed as more or less sustainable based on their sustainability strategies and commitment to transitioning to a lower-carbon economy. Equally, particular vehicle models or even entire vehicle segments may be perceived to be more or less sustainable. As a supplier of a broad range of systems to all major OEMs, we do not anticipate any consequences to our

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reputation by virtue of the fact that we may supply to any particular OEM, vehicle or vehicle segment. In any event, we believe that our R&D and technological innovation, which is focused on lightweighting, improved fuel economy and lower emissions, together with our sustainability strategy, including our carbon neutrality commitments, serve to mitigate potential reputational risks.

3.2	Physical Risks and Risk Mitigation
3.2.1	Acute
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With the increased frequency and severity of extreme weather events associated with Climate change, including floods, windstorms, wildfires, tornados, tsunamis, hailstorms and other natural weather hazards, we face the risk that such an event could cause significant damage to one or more of our facilities or those of our customers and/or sub-suppliers. While our primary concern in an acute climate event affecting one of our facilities would be the safety and well-being of our employees, property damage and business interruption would represent the primary financial risk.

An acute climate event that significantly damages one of our facilities, could disrupt our production and/or prevent us from supplying products to our customers. Such an event could lead to us incurring a number of costs, many of which may be unrecoverable, including: costs related to the physical repair of any damage to our facility; costs related to premium freight or re-sourcing of supply; penalties or business interruption claims by our customers; loss of future business and reputational damage; and higher insurance costs going forward.

Extreme climate events could also disrupt supply chains for the entire industry over the near-, medium- and long-term. For example, a rare and extreme storm impacted the U.S. state of Texas in February 2021 disrupting oil production and thus supplies of resins and materials required for automotive seating. Such events can cause shortages of critical materials, which in turn drives prices higher. Efforts to mitigate the impact of such events often result in higher near-term costs until disruption of the affected material has been resolved, due to factors such as premium freight costs for substitute materials. As the frequency of such events increases, we may be forced to maintain higher inventories of various materials and components required for production, to minimize potential disruptions.

We maintain a global property risk control program to support our efforts to mitigate risks to our employees’ safety, physical property risks and potential for business interruption due to extreme weather events, including hurricanes, tornadoes, flooding and earthquakes. The program, which includes risk engineering with support from a third party property risk engineering consulting firm, includes the following elements to promote the physical resiliency of our facilities and minimize the risk of disruption to our operations: pre-screening of facility site selection; acquisition risk assessments; periodic facility inspections; facility construction design review and recommendations; and training and education. In certain circumstances, the program extends the risk assessment to our direct suppliers by identifying and evaluating potential exposures to our direct supply chain (including natural hazards) which could disrupt business operations. Where such supply chain exposures are identified, a more detailed assessment may be performed to better understand the supply chain risk, including further on-site assessment, where practicable.

In considering the potential impact of acute physical risks, readers are encouraged to review the following risk factors in “Section 5 – Risk Factors” in our AIF:

• Supply Disruptions	• Legal and Regulatory Proceedings
• Regional Energy Shortages	• Climate Change Risks

An extreme weather event that damages any of our manufacturing Divisions and results in injuries or fatalities among employees at such Division could have a material adverse effect on our reputation and could result in legal claims being brought against us.

Climate change considerations may impact the availability of and premiums for insurance coverage in general, and in particular, for properties in high-risk locations. Additionally, we may need to self-insure a higher level of risk, which could result in a material adverse effect on profitability in the event of an extreme weather event which causes damage to one or more of our facilities.

3.2.2	Chronic

As part of our property risk control program, we have retained an advisor to map our global footprint against identified earthquake zones, wind exposed/hurricane zones, flood exposed zones, wildfire zones and areas with low water security, in order to assist us with footprint planning, as well as our understanding of, and efforts to address, potential risks associated with such types of natural catastrophes. This footprint mapping exercise provides the following conclusions:

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Property Risk Concentrations: There are ten geographic regions (in Austria, Canada, Germany, Mexico and the U.S.) in which we have concentrations of property/asset risk, meaning multiple locations within a 35 km radius, and comprising approximately 45% of the total insured value (“TIV”) under our property risk program. All of the regions of concentrated property/asset value are considered to be “Low” seismic hazard zones and are not exposed to tropical cyclones.

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Seismic Zones: We have operations in Austria, Germany, Slovenia, Slovak Republic, Morocco, India, Turkey, Japan, Italy, U.S., Romania, China and Mexico comprising 5.85% of the TIV under our property risk program, which are located in regions of “Moderately High” or greater seismic hazard. None of our operations are in regions where the seismic hazard is considered “Extreme”.

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•	Tropical Cyclone Zones: Operations in certain parts of Mexico, Japan, China, India, Korea and the U.S.<br>comprising 7.0% of the TIV under our property risk program are located in hurricane risk Zone 1 to Zone 5, as per Munich Re’s Natural Hazards Assessment Network (NATHAN) categorization. TIV by Tropical Cyclone Zones are as follows:<br>
Munich Re (NATHAN) Tropical Cyclone Zone	Proportion of TIV
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Zone 5: > 300 km/h		NIL
Zone 4: 252-300<br>km/h		<0.01	%
Zone 3: 213-251<br>km/h		0.40	%
Zone 2: 185-212<br>km/h		0.40	%
Zone 1: 142-184<br>km/h		2.4	%
Zone 0: 76-141<br>km/h		22.3	%
No hazard		74.3	%
•	Flood Zones: Flood risk is typically categorized as 50-year, 100-year, 200-year and 500-year flood risks. Definitions of these categories based on Swiss Re’s CatNet Global Flood Zone (GFZ)<br>categorization and the proportion by TIV of our facilities that fall within a five kilometre radius for each category are as follows:
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Category	Flood Probability	Proportion of TIVwithin 5 km Radius
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50<br>year	1 in 50 (2%) chance of occurring in a year		1.6	%
100<br>year	1 in 100 (1%) chance of occurring in a year		4.4	%
200<br>year	1 in 200 (0.5%) chance of occurring in a year		4.1	%
500 year	1 in 500 (0.2%) chance of occurring in a year		4.8	%

Climate change is associated with a rise in sea levels, which places properties located within a five kilometre radius of the current coastline at risk of coastal flooding. A total of 13 of our Divisions are located five kilometres or closer to a coastline and thus may be at higher risk from the effects of climate-change related sea rise:

No. of Divisions	Location(s)	Body of Water
2	Michigan, U.S.	Lake Michigan
1	Ohio, U.S.	Lake Erie
1	Ontario, Canada	Lake Ontario
1	Liverpool, U.K.	River Mersey
1	Bordeaux, France	Garonne River
1	Livorno, Italy	Ligurian Sea
1	Bari, Italy	Adriatic Sea
1	Golcuk Izmit, Turkey	Lake Sapanca
1	Tangier, Morocco	Atlantic Ocean
1	Guangzhou, China	Huangou River
1	Hangzhou, China	East China Sea
1	Taizhou, China	East China Sea
•	Wildfires: Only 2% of our Divisions (located in Argentina, Brazil, Mexico, Serbia and Spain), representing<br>approximately 1% of TIV, are considered as being exposed to significant wildfire risk due to reduced precipitation (drought) conditions.
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•	Water Security
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Water scarcity is a chronic condition in a number of regions of the world, and it is expected to be amplified due to the effects of climate change. As part of our PRM program we conducted an assessment of water security risk in 2021. Water security suggests the reliability/ security of an acceptable quantity and quality of water, since water is a critical input in many production processes as well as the lifeblood of sprinkler protection systems. A reduction or failure of water supply could cause a significant impact on operations in the affected region. The methodology for determining water security exposure was based on the “Baseline Water Stress” 4 of the World Resources Institute (WRI) Aqueduct Global Maps 3.0, that measures the ratio of water withdrawals to available renewable surface and groundwater at the catchment scale. Water withdrawals include domestic, industrial, irrigation, and livestock consumptive and non-consumptive uses. Available renewable water supplies include the impact of upstream consumptive water users and large dams on downstream water availability. The

A-18 Annual Information Form

indicator used is calculated by inverting the “Baseline Water Stress” scores and converted to a 0-100 scale to represent “Water Availability” as a percentage. Low values represent water stressed areas, due to either high water withdrawals or low water supplies.

Our assessment showed that we have 61 locations in regions deemed to have “low” water security, comprising approximately 14% of TIV. The assessment indicated exposure locations in China, Germany, India, Italy, Mexico, Spain and the United States. However, Mexico represents the most significant region for us in terms of exposure to water security risk as 29 of the 61 locations (48%) are located in Mexico, representing approximately 70% of the TIV in low water security regions. While we currently attempt to mitigate the impact of water scarcity risks through water reduction and re-use activities, including the use of treated waste water for irrigation of green areas on a site, the water security analysis will be used for additional discussions with our risk engineering consultant, including potential additional recommendations for action plans to mitigate water security risks in the affected regions.

In considering the potential impact of chronic physical risks, readers are encouraged to review the following risk factors in “Section 5 – Risk Factors” in our AIF:

• Supply Disruptions	• Regional Energy Shortages
• Climate Change Risks
4.	Non-Climate Elements of Sustainability
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4.1	Environmental Stewardship
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250+<br><br><br>FACILITIES ISO 14001<br><br><br>CERTIFIED<br> <br><br><br><br><br> <br>25+<br><br><br>FACILITIES ISO 50001<br><br><br>CERTIFIED	Magna strives to be an industry leader in health, safety and environmental practices in all operations through technological innovation and<br>process efficiencies to minimize the impact of our operations on the environment and to provide safe and healthful working conditions. In furtherance of this objective, Magna’s Health, Safety and Environmental Policy (“HSE Policy”)<br>commits to, among other things:<br> <br><br><br><br>• complying with, and exceeding where reasonably possible, all applicable health, safety and<br>environmental laws, regulations and conforming with our internal standards based on generally accepted environmental practices and industry codes of practice;<br> <br><br><br><br>• regularly evaluating and monitoring past and present business activities impacting on health,<br>safety and environmental matters;<br> <br><br><br><br>• improving the efficient use of natural resources, including energy and water;<br><br><br><br> <br>• minimizing waste streams and<br>emissions;<br> <br><br> <br>• implementing<br>environmental sustainability targets as defined in the Magna Environmental Principles;<br> <br><br><br><br>• utilizing innovative design and engineering to reduce the environmental impact of our products<br>during vehicle operation and at end of life;
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•	ensuring that a systematic review program is implemented and monitored at all times for each of our operations,<br>with a goal of continuous improvement in health, safety and environmental matters; and
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•	reporting to the Board at least annually.
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The full text of the HSE Policy is located on Magna’s website (www.magna.com).

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4.1.1	Environmental Compliance

Magna is subject to a wide range of environmental laws and regulations relating to emissions, soil and ground water quality, wastewater discharge, waste management and storage of hazardous substances. Magna maintains a global environmental program which consists of both internal and third party audits and inspections of our facilities for compliance with local regulations, internal corporate environmental requirements and industry best practices as detailed below:

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General environmental awareness training is provided to employees by Division management as well as Magna’s Environmental Department as part of ISO 14001 certification compliance. In addition, Magna’s Environmental Department holds regular conferences for representatives of our manufacturing facilities in order to:

•	reinforce Magna’s commitment to environmental responsibility;
•	communicate changes in local and regional regulations; and
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•	share best practices with respect to environmental protection, compliance and sustainability initiatives.<br>
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4.1.2	Hazardous Waste and Industrial Emissions
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We operate a number of manufacturing facilities that use environmentally-sensitive processes and hazardous materials. We believe that all of these operations meet, in all material respects, applicable governmental standards for management of hazardous waste and industrial emissions. Occasionally our operations may receive a notice of violation or similar communication from local regulators during routine reviews. We have in the past and will continue in the future to address any such notices promptly. Based on our preliminary data, approximately 7% of the aggregate waste generated by Magna in 2021 was hazardous. We attempt to reduce the amount of hazardous waste that ends up in secure landfills through: recycling, reuse or energy recovery initiatives. Approximately 90.5% of the hazardous waste generated by Magna in 2021 was diverted from secure landfills through such initiatives.

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4.2

Fairness and Concern for Employees

4.2.1 Our Commitment to Magna Employees We are committed to an operating philosophy based on fairness and concern for people. This philosophy is part of our “Fair Enterprise” culture in which employees and management share in the responsibility of ensuring our company’s success. Our Employee’s Charter, a foundational document in our business, sets out this philosophy through the following principles: • Job Security – Being competitive by making a better product for a better price is the best way to enhance job security. Magna is committed to working together with employees to help protect their job security. To assist employees Magna will provide job counselling, training and employee assistance programs. • A Safe & Healthful Workplace – Magna is committed to providing employees with a working environment which is safe and healthful. • Fair Treatment – Magna offers equal opportunities based on an individual’s qualifications and performance, free from discrimination or favouritism. • Competitive Wages & Benefits – Magna will provide employees with information which enables them to compare their total compensation, including wages and benefits, with those earned by employees of their direct competitors and local companies their Division competes with for people. If total compensation is found not to be competitive, it will be adjusted. • Employee Equity & Profit Participation – Magna believes that every employee should share in the financial success of the company. • Communication & Information – Through regular monthly meetings between management and employees, continuous improvement meetings and through various publications and videos, we keep our employees informed about company and industry developments. We also conduct regular employee opinion surveys to help facilitate employee engagement and to receive valuable feedback from employees to help drive continuous improvement. • The Hotline – Should an employee have a problem, or feel the above principles are not being met, we encourage them to contact the Hotline to register their complaint(s). Those using the Hotline do not have to give their name, but if they choose to do so, it will be held in strict confidence. Hotline Investigators will respond to those using the Hotline. The Hotline is committed to investigating and resolving all concerns or complaints and must report the outcome to Magna’s Global Human Resources Department. We also maintain a confidential and anonymous whistle-blower hotline for employees and other stakeholders that is overseen by our Audit Committee. See Section 4.5 – “Corporate Ethics and Compliance” below for further details. We also maintain a Global Labour Standards Policy, which codifies our existing practices consistent with our Fair Enterprise culture. This Policy provides a framework for our commitment to fundamental human rights and international standards that help support positive labour relations. In particular, the Global Labour Standards Policy sets out key commitments with regard to: • maintaining respectful work environments where our employees feel safe and welcome, with opportunities for personal and professional growth; • promoting the importance of diversity, inclusion and respect for one another, regardless of

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personal differences;

•	not tolerating harassment of any kind, including physical, sexual, psychological or verbal abuse;<br>
•	ensuring employees do not face discrimination in accordance with the protections afforded by applicable law,<br>including discrimination based on race, nationality or social origin, colour, sex, religion, gender identity, disability or sexual orientation;
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•	condemning child labour;
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•	rejecting forced or compulsory labour;
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•	maintaining safe and healthy workplaces; and
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•	providing employees with appropriate rest and leisure time.
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We publish a Slavery and Human Trafficking Statement setting out the steps Magna has taken to address the risk of slavery and human trafficking in our operations and supply chain. The statement can be found in the “Financial Reports & Public Filings” section of our website, at www.magna.com.

Our commitment to our employees continued to garner recognition, including:

•	U.S.: Forbes – Best Employers

Magna InternationalInc. A-21

•	Germany: Financial Times – Diversity Leader
•	Canada: Universum – Most Attractive Employers
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•	China: 51job – Top 100 Excellence Employer of China
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4.2.2	Actions to Protect Employee Economic Well-Being in response toCOVID-19
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COVID-19 continued to disrupt production in 2021, through increased absenteeism and occasional temporary layoffs of employees. To minimize the economic impact felt by our employees, we took a number of steps, including:

•	maintaining employee benefits coverages through the temporary layoff period;
•	providing additional flexibility regarding compensated days available to employees during periods of downtime<br>through utilization of accrued vacation days, and other types of paid leave, where possible;
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•	temporarily modifying our existing disability and sick leave plans to help provide coverage during periods of<br>required quarantine, isolation and contact tracing;
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•	providing free access to rapid COVID-19 testing; and<br>
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•	providing regular communication to employees, including with respect to Company programs to support their<br>physical and mental health needs.
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4.2.3	Collective Rights
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We are committed to providing workplace environments that promote the dignified, ethical and respectful treatment of our employees, as reflected in the standards contained in our Global Labour Standards Policy and our Code of Conduct and Ethics (“Code”).

Our Global Labour Standards Policy articulates our respect for employees’ right to associate freely and to choose for themselves whether or not they wish to be represented by a third party in accordance with local laws. Employees at: four of our Canadian Divisions are covered by collective agreements between Magna and Unifor; seven of our Divisions in the United States are represented by the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW); a number of our Divisions in China, India, Mexico and the United Kingdom are currently covered by collective bargaining agreements with various unions in these jurisdictions; and employees in a number of our Divisions across continental Europe are covered by national industry-wide tariff agreements relating to compensation and employment conditions and are also members of in-house employee associations, works councils and/or trade unions.

4.2.4	Fairness Committees and Employee Advocates

As a further example of our Employee’s Charter principle of Fair Treatment, we maintain Fairness Committees in many of our North American and European manufacturing facilities, as well as at various manufacturing facilities in India and China. These Fairness Committees enable employees to have many of their concerns resolved by a peer review committee comprised of both management and fellow employees. Most of our North American manufacturing facilities also have an Employee Advocate who works with our employees and management to help ensure that any concerns that arise in the workplace are addressed quickly and in accordance with our Employee’s Charter, Global Labour Standards Policy and Operational Principles.

4.2.5	Leadership Development / Talent Management

We have implemented, and continue to enhance, our Leadership Development System to help identify, train and develop future leaders with the skills and expertise needed to manage a complex, global business. We have also based our talent management strategy on our current business objectives and strategy and our understanding of the transformation taking place in the automotive industry. Given that an effective workforce will increasingly be required to be lean and digitally adept, we are focused on building such a workforce through attraction and recruitment, professional development, succession planning, promoting diversity and inclusion and preservation of our Fair Enterprise culture.

2021 was a year marked by the seamless transition of Magna’s leadership from Donald J. Walker to Seetarama S. Kotagiri. During 2021, Magna’s leadership development and succession planning processes were also drawn upon to facilitate other significant senior leadership role successions, such as the promotion of Vincent J. Galifi from Chief Financial Officer to President, Patrick W.D. McCann from Senior Vice-President, Finance to Chief Financial Officer, as well as Anton Mayer from Executive Vice-President, Research & Development to Chief Technology Officer, all effective as of January 1, 2022.

4.3 Diversity and Inclusion in our Workplaces

Magna is committed to attracting, retaining and developing under-represented talent across the globe. In order to pursue this commitment, Magna’s identified strategic pillars for Diversity and Inclusion (“D&I”) success are reviewed by our Executive Management with the Chairs of our Diversity and Inclusion (DI) Council. Periodic updates are provided to the Board of Directors about how the company is progressing the D&I strategy.

Our key D&I priorities are as follows:

A-22 Annual Information Form

4.3.1	Creating an Inclusive Workplace

Our employees are critical stakeholders in our business. We believe the principle of Fair Treatment, outlined in our Employee’s Charter – one which we reinforce through employee meetings, training and communications – has been a key element in fostering an inclusive workplace at Magna. Any employee who feels that we are not living up to the principles of the Charter can seek redress through the Magna Hotline.

We seek to abide by all applicable labour and employment laws, including those prohibiting discrimination and harassment and those providing for the reasonable accommodation of differences. We are committed to providing equal employment and career advancement opportunities, without discrimination based on sex, race, ethnic background, religion, disability or any other personal characteristic protected by law. This is addressed in our Code documentation and training, which all Magna employees must complete.

4.3.2	Promoting Awareness

Our Executive Management continues to reinforce the importance of an inclusive and diverse organization. We continue to roll out facilitated workshops to all leadership levels to better equip leaders with tools and resources to drive inclusive behaviour. We also initiated “listening sessions” to understand racial barriers and issues faced by diverse employees. We promote and embed diversity through our talent attraction and management processes. We have also implemented diversity and inclusion training for certain employees and have made various D&I tools and resources available for all employees. To further advance our D&I progress, we have implemented three employee-led, volunteer resource communities: Race & Ethnicity (EDGE); LGBQT+ and Allies (PRIDE); and the Women’s eXchange. These communities support the execution of Magna’s D&I strategy, raise awareness and help foster a more inclusive environment. By the end of 2022, a fourth employee resource community will be launched focusing on young professionals. The employee resource communities provide, among other things, opportunities for mentoring and career development.

4.3.3	Leveraging Strategic Partnerships

We continue to enhance our capabilities by working with diversity and inclusion thought leaders, associations and non-profit organizations dedicated to the advancement of women, racial minorities and employees of diverse backgrounds; promotion of inclusive work cultures; as well as strategies and actions to address the needs of a diverse workforce. These partnerships also help us to benchmark our activities and progress, as well as provide insight into best practices and emerging topics for our D&I agenda. Recognizing the importance of improving gender diversity within key technical career streams and to support the development of the next generation of the talent in science, technology, engineering and mathematics (STEM), we have formed strategic partnerships with a number of organizations that promote gender diversity in technical career streams. Our current strategic partnerships include: Build a Dream; Centre for Automotive Diversity, Inclusion & Advancement (CADIA); Catalyst; Engineers Canada; FIRST Robotics – Girls in STEM; Gartner, Inc.; her Career; Institute of Electrical and Electronic Engineers (IEEE); Inforum; KnowledgeStart; Ontario Society of Professional Engineers; Society of Automotive Engineers (SAE) International; The Art of Leadership for Women; The Knowledge Society; Women in Automotive; Women in Manufacturing; and Women’s Executive Network (WXN). We also participate in various automotive advisory groups to ensure the focus on Diversity and Inclusion in the industry remains strong.

4.3.4	Gender Diversity

We are continuing to progress our agenda to increase the number of women in Magna. On a global basis, approximately 27% of the employees in our wholly-owned operations are women. A total of approximately 4,300 employees in our wholly-owned operations occupy critical roles with 705 of such employees, or 16%, being women. Both the percentage of women in our wholly-owned operations, and the percentage of women in critical roles increased slightly from the previous year. Underrepresentation of women in our workforce is most pronounced in IT, operations and product engineering career streams, which is a consistent trend throughout the automotive industry. We recognize that there are improvements to be made and we are pursuing strategies to accelerate the progression of women, in director and managerial level roles, and in our most critical operational and technical roles, where there is the greatest level of underrepresentation.

As part of our succession planning program we continue to identify high-potential, diverse talent candidates and implement accelerated development plans to support their progression to advanced roles. During talent and succession discussions, there is an increased level of focus on the number of women and diverse candidates nominated into each of our succession pools.

In addition, the Board as a whole continues to advocate for improved gender representation and other diversity in leadership and other critical roles, as well as STEM career streams. In addition to their strong advocacy, the female directors of the Board, currently representing 38% of our Board of Directors, have also sought opportunities to mentor and share their experiences with the company’s high-performing female employees. Recognizing the important example set by the Board with respect to its own composition, the Board has adopted a Board Diversity Policy (located in the Board Charter) targeting gender parity by December 31, 2023, subject to a minimum of not less than 30% female director prior to that time. Consistent with the recommendations of the Canadian Coalition for Good Governance, gender parity will be achieved if the balance between male and female directors ranges between 40% and 60% over a rolling three-year timeframe.

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4.4	Occupational Health and Safety
4.4.1	Actions to Protect Employee Health and Safety in Response toCOVID-19
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In response to COVID-19, we developed and implemented COVID-19 protocols, assessment tools and guidance documents to support our objective of responsibly managing the health and safety of our employees. In 2020, we developed and implemented a “Smart Start Playbook”, a guide which includes a streamlined set of checklists and practical recommendations based on guidelines from the Centers for Disease Control and Prevention, as well as the World Health Organization. Our medical and health and safety staff continue to comply with applicable legal requirements and coordinate with public health authorities, as well as the medical directors of our OEM customers. Lessons learned, insights gained and best practices developed continue to assist us in managing the evolution of the COVID-19 pandemic, including the emergence of newer and more highly transmissible variants. In 2021, the development and availability of vaccines and testing became a key element of the Playbook, which included significant efforts to communicate with employees regarding the benefits of vaccination to minimize transmission, facilitate a safe work environment, and protect employees and the communities in which they live. In many of our operating jurisdictions, we established vaccination clinics, taking into account country specific requirements to provide employees and their family members accessibility to vaccines.

4.4.2	Health and Safety Standards and Compliance

Our commitment to providing a safe and healthful work environment is fulfilled through a regular program of health and safety audits and inspections of our global facilities. These audits and inspections cover health, safety, industrial-hygiene, industrial ergonomics and emergency preparedness policies and action plans. Audits are designed to address documentation requirements, while inspections assess physical hazards. Audits and inspections are conducted on-site and followed with a report requiring the facility to develop an action plan to address deficiencies or best practices. The action plans are reviewed quarterly by senior Operating Group management.

The compliance program incorporates international and regional standards, including: ISO 45001, Canadian Standards Association (CSA), American National Standards Institute (ANSI), Conformité Européenne (CE), as well as country-specific standards. Audits and inspections are conducted by specialists with knowledge of Magna’s standards and country-specific requirements. Legislative changes, accident trends and changes to industry standards are incorporated into the program as part of the annual review of the program and updates of audit requirements are conducted every three years. The key elements of the program are detailed below:

LOGO

Our Health and Safety Department holds regular conferences with representatives of our Divisions to reinforce our commitment to providing a safe and healthful work environment, as well as to share best practices with respect to occupational health and safety. An employee who believes we have not fulfilled our promise to provide a safe and healthful working environment can seek redress through the Magna Hotline.

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4.4.3	Ergonomics Program

A key program for supporting employee well-being is our ergonomics program which aims to reduce the risk of musculoskeletal injuries. Managed by each Division’s ergonomic committee and with the support and guidance of corporate ergonomists, the program regularly evaluates Division performance against a set of established criteria.

4.5	Corporate Ethics and Compliance
4.5.1	Code of Conduct and Ethics
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We are committed to conducting business in a legal and ethical manner globally. Our Code, which applies equally to all of our directors, executive officers and employees, articulates our compliance-oriented values and expectations. The principles of the Code have been and continue to be reinforced by our Chief Executive Officer, Executive Management, Operating Group management and the Board.

The Code addresses standards of conduct in a number of specific areas, including:

•	how to report suspected violations of the Code, and prohibiting retaliation against employees who report such<br>violations in good faith.
•	respect for human rights, diversity and inclusion;
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•	conducting business with integrity, fairness and respect;
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•	giving and receiving gifts and entertainment;
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•	complying with all laws and regulations, including anti-corruption/bribery and antitrust/competition laws;<br>
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•	lobbying and political contributions;
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•	full, accurate and timely public disclosures, including financial reporting;
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•	prohibiting insider trading;
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•	environmental responsibility;
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•	occupational health and safety;
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•	managing conflicts of interest;
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•	careful communication, and protecting confidential and personal information; and
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•	compliance with related corporate policies.
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The Code, which is disclosed on the corporate governance section of our website (www.magna.com) and posted on our employee intranet in 26 different languages, is reviewed regularly with all amendments approved by the Board. We have also supplemented the requirements of the Code through the adoption of policies covering specific topics, including: bribery and improper payments, tooling practices, gifts and entertainment, anti-retaliation, careful communication, conflicts of interest, sanctions and trade embargoes, antitrust and competition, and the conduct of internal ethics investigations (all of which are also available on our website (www.magna.com)).

4.5.2

Ethics and Legal Compliance Program

In order to help our employees understand the values, standards and principles underlying our Code, we have implemented an ethics and legal compliance (“ELC”) program overseen by the Audit Committee, which includes training of employees (both web-based training and live through an online classroom platform).We have also developed specialized compliance training modules which target specific functional audiences and high-risk regions. In addition to providing training on ELC topics generally, these specialized programs are designed to be interactive and incorporate real-life scenarios and exercises, which we believe amplify our compliance expectations and resonate more powerfully with participants.

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The global implementation of the ELC program is supervised by the Magna Compliance Council (“Compliance Council”), a body that

includes key corporate officers representing our finance, legal, human resources, operations, internal audit, sales and marketing, IT and ELC functions. The Compliance Council is tasked with, among other things, providing overall direction for our compliance program, approving key initiatives and ensuring that the required elements of our compliance program are being carried out globally by our cross-functional Operating Group Compliance Committees.

In March 2022, Magna was selected as a 2022 World’s Most Ethical Companies honoree by Ethisphere, a global leader in defining and advancing standards of ethical business practice.

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35,500 employees completed annual Code of Conduct e-learning in 2021 100% of customer facing employees completed antitrust training since 2015 204,000 new employees have received compliance onboarding since 2015

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4.5.3	Magna Hotline

The Magna Hotline is a whistle-blower hotline. The Hotline is confidential and reporters can remain anonymous (except where local law requires disclosure of a reporter’s identity), and is available for employees and other stakeholders such as customers and suppliers to make submissions by phone or online at any time in 27 languages. Submissions are received and tracked by an independent third party service provider. Non-HR submissions to the Magna Hotline are reviewed by our Internal Audit Department and, when appropriate, an investigation is conducted in accordance with our Policy on Internal Ethics Investigations. Investigations are conducted by Magna’s Internal Audit Department, Corporate Security team, In-House lawyers and/or external counsel (where applicable). We maintain an Investigations Oversight Committee, a sub-committee of the Compliance Council, which meets quarterly (and on an ad hoc basis, as needed) to review such investigations to ensure consistency of discipline and promote early awareness and oversight. The Audit Committee receives quarterly presentations from the Vice-President, Internal Audit regarding Magna Hotline activity and details of ELC, fraud, financial reporting and other non-HR-related reports.

4.6	Data and Cybersecurity/Privacy
4.6.1	Enterprise Cybersecurity
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Our enterprise cybersecurity strategy was developed by our Information Security, Risk and Compliance Department (“ISRC”) which ultimately reports to our EVP and Chief Digital and Information Officer. The strategy has been designed using guiding principles from our Code as well as enterprise risk considerations and aligns with industry standards including the National Institute of Standards and Technology, relevant ISO standards, and applicable customer requirements. Our Board has risk oversight responsibility for Magna’s enterprise IT/information security systems and cybersecurity program and receives reports regarding the program at periodic meetings.

Our cybersecurity initiatives are based on five key considerations:

•	Identify – develop an organizational understanding of cybersecurity risk to systems, people, assets, data,<br>and capabilities;
•	Protect – develop and implement appropriate safeguards to ensure against cybersecurity risk and continue to<br>deliver critical services;
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•	Detect – internal and external 24 × 7 monitoring of all information traffic for cyber-attacks,<br>including ransomware and other malware;
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•	Respond – our Security Operations Centre has appropriate incident response plans/processes and the necessary<br>resources and expertise to respond to detected threats; and
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•	Recover – our Security Operations Centre works with IT operations to recover as quickly as possible by<br>rebuilding affected systems and restoring data back-ups.
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We are committed to working with our customers and other stakeholders to ensure that appropriate cybersecurity standards and requirements are continually monitored and implemented as required. In addition, we ensure that we comply with all governmental rules and regulations regarding cybersecurity or privacy regulations (such as GDPR as defined and detailed below), which directly affect cybersecurity requirements. Our selection process for third party (e.g. Cloud-based) services includes a due diligence approach that ensures that such services are evaluated using industry standard security assurance approaches to assess and address the risks associated with third party technology services and aligns with our overall approach to cybersecurity.

We regularly evaluate and adjust our information security management strategy based on a variety of considerations including risk assessments, continuous monitoring and periodic independent cybersecurity maturity evaluations. This enables the ISRC to identify and prioritize responses to residual risk arising from changes to our business or the ever-changing threat landscape. Magna has developed and implemented centralized enterprise cybersecurity policies, compliance measures, as well as training and awareness programs designed to ensure that our cybersecurity strategy is executed to minimize our exposure.

Governance of cybersecurity over our shared global telecommunications and computer infrastructure is centralized under the ISRC. The ISRC facilitates identification of our risk exposures and mandates the implementation of appropriate security controls. We have processes in place to ensure that our IT systems receive appropriate upgrades, including patching and other protective measures, in a timely manner.

4.6.2	Product-Embedded and Solution Software Cybersecurity

In addition to the above centralized initiatives, our decentralized operating model assigns cybersecurity accountability to our Operating Groups with respect to risk/security issues inherent in products. However, the ISRC provides various standards-based approaches to assist our Operating Groups in assessing their respective product cybersecurity risk and maturity. From this assessment, our Divisions and Operating Groups are then able to determine appropriate cyber solutions that may be required. Our Technology Committee supports the Board through the committee’s risk oversight responsibility for Magna’s product-embedded or solution software cybersecurity.

4.6.3	Privacy

Magna is committed to preserving the privacy of our stakeholders in accordance with applicable laws. Our Code articulates our approach to the privacy of our employees and protection of their personal information. We only collect, use and disclose personal information for legitimate business or employment purposes, as required by law, or with an individual’s consent. In addition, like any other asset, confidential information which includes trade secrets and proprietary information is a valuable part of our business and we aim to safeguard it.

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Magna has established a data privacy organization and program in our divisions in the European Union, as well as Brazil, Thailand and China. The program includes the issuance of policies and procedures, employee training, gap assessments and the implementation of a data privacy management system.

In addition to our general privacy and confidentiality commitments, our Global Data Privacy Policy (the “Privacy Policy”) has been established. The Privacy Policy is designed to guide our compliance with, among others, the EU General Data Protection Regulation (“GDPR”), China’s Personal Information Protection Law (“PIPL”), the Brazilian General Data Protection Law (“LGPD”) and Thailand’s Personal Data Protection Act (“PDPA”).

The Privacy Policy sets out general data protection principles, responsibilities of data controllers and processors, circumstances under which personal data can be transferred, rights of data subjects and actions that must be taken in case of data breach, as well as addressing data retention periods. The Privacy Policy is accompanied by a variety of formal and comprehensive procedures, developed and overseen by our Compliance Council.

A training program has been implemented to address general data privacy awareness for all employees and provide more specific rules for those employees who are handling personal data as part of their daily work. Finally, those employees across our organization responsible for handling privacy requests by data subjects or for addressing data breaches have been provided with the tailored training and resources to carry out such responsibilities.

Furthermore, Magna continues to monitor legislative and regulatory developments in the fast-changing data privacy landscape in other regions with Magna operations.

4.7	Supply Chain Responsibility
4.7.1	Supplier Code of Conduct
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We have introduced a Supplier Code of Conduct and Ethics (“Supplier Code”) which outlines the principles we apply internally at Magna through our Code, as well as expectations we have for every company that supplies goods or services to Magna, relating to, among other things:

•	ethical business conduct, such as compliance with antitrust/competition, anti-corruption/bribery and export<br>controls laws; conflict minerals reporting; avoidance and reporting of conflicts of interest; and protection of Magna intellectual property and confidential information;
•	employee rights, including those rights set out in our Employee’s Charter, Global Working Conditions and<br>Global Labour Standards Policy; and
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•	environmental responsibility and compliance.
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The Supplier Code forms an integral part of our overall contractual relationship with our suppliers. We expect the standards set out in the Supplier Code to be met by our suppliers, even in jurisdictions where meeting such standards may not be considered part of the usual business culture and a failure to do so can result in the termination by Magna of the supply relationship. The full text of our Supplier Code is available on our website (www.magna.com).

We continue to support and participate in industry efforts to develop common standards relating to business ethics, environmental standards, working conditions and employee rights. We will continue to engage with our suppliers to raise awareness of the importance of sustainability in our supply chain.

4.7.2	Global Working Conditions in our Supply Chain

We expect that our supply chain will adhere to our Global Working Conditions and our Supplier Code, which prohibit the use of child, underage, slave or forced labour. Our Global Working Conditions are an integral part of our supplier package that emphasize the importance of maintaining global working conditions and standards that result in dignified and respectful treatment of all employees within all our global operating locations, as well as those of our supply chain. A failure by any of our suppliers to comply with its terms can result in the termination by Magna of the supply relationship.

4.7.3	Supply Chain Management
4.7.3.1	General
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Magna’s supply chain management group focuses on a number of elements that we believe are integral to world class supply chain management, such as: standardized supplier quality and delivery performance ratings; specific roles and responsibilities; processes and standards; global training; and risk management. The supplier quality and delivery performance ratings have been established to help optimize business award decisions. We use cross-functional sourcing teams to help ensure compliance with our internal standards when we place new business within our supply base. In order to promote awareness of the key elements of our supply chain risk management program, including the requirements in our Supplier Code, we provide a global training program on an ongoing basis to internal purchasing employees.

Magna InternationalInc. A-27

We continue to increase digitization of our supply chain management, including focusing on spend analytics and online transportation risk tracking, as well as electronic tagging and tracing of certain assets.

As part of our strategy to improve sustainability performance across our supply chain, we intend to introduce an ESG component into our program award criteria. We are in the process of evaluating the relevant key performance indicators (KPIs) that will form part of the ratings, but expect that such KPIs will, at a minimum, include a suppliers CDP and SAQ (discussed below) scores, as well as selected HSE certificates.

4.7.3.2	Enhancing Transparency into Our Supply Chain

In order to enhance transparency into our supply chain, we have introduced two key supplier engagement initiatives with respect to our supply chain:

•

We participate in the CDP Supply Chain Program for Climate Change, engaging key suppliers to report on their energy usage and emissions – a critical step in better understanding our Scope 3 emissions with a view to establishing Science-based Scope 3 emissions targets; and

•

We have recently engaged, for the first time on a global basis, key suppliers to respond to self-assessment questionnaires through NQC, a third party supply chain management organization who will be responsible for data collection and analysis via their SupplierAssurance platform. The self-assessment questionnaires (currently SAQ 4.0) which is a standard automotive industry sustainability questionnaire developed by global OEMs. The SAQ 4.0, which Magna completes for requesting OEM customers annually, requires information, including documentation, relating to several topics, including, among other things: sustainability management; working conditions and human rights; health and safety; business ethics; environmental compliance; supplier management; and responsible sourcing of raw materials.

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We are also monitoring emerging supply chain regulation, including the German Supply Chain Due Diligence (Lieferkettensorgfaltspflichtengesetz (LkSG)) (the “German Act”) which is set to come into force January 1, 2023, and which imposes a duty on companies to make reasonable due diligence efforts to determine if there are violations of human rights or violations of environmental obligations in their own business operations or in the their supply chain. We have established a cross-functional working group that includes representatives from our compliance, legal and purchasing functions and meets regularly to analyze and provide guidance on the coming requirements of the German Act. The working group has established a project plan for compliance with the German Act based on a completed gap-analysis of Magna’s relevant processes and policies. The working group reports its activities and progress to a Steering Committee comprised of members of Magna senior leadership led by Magna’s Global Vice President, Procurement.

In addition, Magna is monitoring developments related to the publication, in February 2022, of a draft E.U. Corporate Sustainability Due Diligence regulation that, like the German Act, would mandate supply chain due diligence relating to human rights and environmental matters.

4.7.3.3	Supplier Reviews

We review production suppliers in order to assess their overall quality, performance and financial health. We use a scorecard to provide ongoing monitoring and assessment of suppliers, which tracks (among other things) whether suppliers have certain industry-recognized environmental and health and safety certifications, such as ISO 14001 and ISO 18001. No suppliers were terminated in 2021 as a result of a violation of working conditions or human rights.

4.7.3.4	Phytosanitation Program

We maintain a phytosanitation program aimed at preventing the introduction and spread of plant diseases (i.e., pests and mold) through the cross-border import/export process. Our phytosanitation policy which applies to suppliers and shippers aligns with the International Plant Protection Convention (IPPC) standard for treatment of wood packaging material (e.g., wooden pallets), and includes the requirements of ISPM-15 (International Standards for Phytosanitary Measures). Our phytosanitation program includes training sessions for internal employees and suppliers, as well as reviews aimed at confirming compliance with our policy.

4.7.3.5	Supplier Diversity

To support the supplier diversity efforts which form part of our supply chain management program, we participate as a corporate member of several industry-recognized suppler diversity organizations, including the National Minority Supplier Development Council (NMSDC), Michigan Minority Supplier Development Council (MMSDC), Great Lakes Women’s Business Council (GL-WBC), the Canadian Aboriginal and Minority Supplier Council (CAMSC), National Veteran Business Development Council (NVBDC), Women’s Business Enterprise National Council (WBENC), Women Business Enterprises Canada Council (WBE Canada), the National LGBT Chamber of Commerce (NGLCC), Disability: IN, and WEConnect International. In addition, we are supporters of the Michigan Hispanic Chamber of Commerce (MHCC), the Asian Pacific American Chamber of Commerce (APACC), the Detroit LGBT Chamber of Commerce, and The National Business League. We are also involved with a number of supplier diversity advocacy events, conferences, and procurement fairs, including many organized by our OEM customers, such as GM Supplier Connections, Stellantis MatchMaker, BMW Supplier Diversity Conference, Toyota Opportunity Exchange and Honda Network Partnership. We are proud to have received several customer awards for our supplier diversity efforts from GM and also received a diversty award from supplier diversity leader – WBE Canada.

A-28 Annual Information Form

4.7.3.6	Conflict Minerals Reporting

Consistent with the approach taken by our customers, suppliers and other fellow members of the Automotive Industry Action Group with respect to “conflict minerals”, we are engaged in an annual process of determining whether any products which we make or buy contain such “conflict minerals”. Our latest conflict minerals report is available on our website www.magna.com and on the SEC’s EDGAR website (www.sec.gov/edgar). We continue to engage with our suppliers to increase awareness, and accuracy, of “conflict minerals” reporting requirements and, through our membership in the Responsible Minerals Initiative (RMI), support continuing cross-industry efforts to identify and validate conflict-free smelters and refiners. We also report to requesting OEM customers with respect to Cobalt and Mica.

4.8	Contributing to Communities in Which we Operate
4.8.1	Commitment to Communities and Society
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Magna recognizes the importance of giving back to society. We have a long history of supporting many global social and charitable causes, primarily in the communities around the world in which our employees live and work. While much of our corporate giving is to general philanthropic causes, we have identified seven United Nations Sustainable Development Goals that most directly relate to our business. Examples of Magna’s activities and accomplishments with respect to each relevant Development Goal is as follows:

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Ensure healthy lives and promote well- being for all at all ages

• Since 2017, more than $1M has been raised through employee donations and Magna’s matching program through annual participation in the World Vision Global 6K for Water, which aims to bring life-changing clean water to communities in need. In October 2021, The Suppliers Partnership for the Environment (SP) – an association of global automakers and their suppliers working together to advance environmental sustainability through the automotive supply chain – awarded Magna SP’s Community Impact Award for our support of the Global 6K for Water challenge • During 2020, Magna and its employees around the world mobilized to fight against COVID-19. Many manufacturing sites quickly pivoted to produce much-needed PPE, such as face masks, face shields and medical gowns. Others contributed parts for ventilator carts and one plant in China fulfilled an emergency request to build 1,700 ambulance transmissions in just eight days. In all, nearly half a million items of PPE were produced and distributed by Magna to governments, medical facilities and communities impacted by COVID-19 • Magna’s corporate wellness initiatives help support the ongoing physical and mental health of employees globally • Magna has contributed over $25M toward medical infrastructure and over $1M to the Red Cross and other organizations to aid with global disaster relief efforts. Magna’s Employee Disaster Relief Fund provides financial assistance to eligible employees and their families in the event they are victims of a disaster. In 2021, the program helped 18 employees in Canada, China, Czech Republic, Mexico, Russia, and the United States • Magna locations around the globe organize food drives and fundraisers to support local foodbanks and to address food security

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Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all

• Magna sponsors and actively participates in FIRST Robotics globally to encourage students to consider careers in science, technology and engineering. FIRST organizes mentor based programs that help participants build science, engineering and technology skills while also fostering self confidence, communication skills and leadership. • Magna embraces a culture of learning, including a pilot program that pays for employees to pursue job-related certificate programs and university degrees. • Employees can access Magna-sponsored scholarships for their children to pursue university degrees • We have partnerships in several countries with universities and technical institutions to develop a talent pipeline and help promote skilled trades development • Magna sponsors several regional and international skills competitions through WorldSkills to enhance technical trades development and growth opportunities for students

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Achieve gender equality and empower all women and girls

• Magna’s Women’s eXchange Employee Resource Community strives to empower, develop and recognize its female employees and encourage students to pursue STEM careers • Magna’s Board has adopted a Board Diversity Policy targeting gender parity by December 31, 2023, subject to a minimum of not less than 30% female directors prior to that time. • Since 2016, Magna has invested more than $1.5 billion with women-owned businesses as part of its overall supplier diversity program • Magna celebrates and honors the many contributions of women around the world, including annually celebrating International Women’s Day through live global events for employees to connect with and honor outstanding women in the company.

Magna InternationalInc. A-29

<br><br><br><br><br> <br>Build resilient infrastructure, promote inclusive and<br><br><br>sustainable industrialization and foster innovation	• Magna<br>completed hundreds of energy/sustainability projects in 2021, resulting in significant and ongoing energy, emission, and costs savings throughout its global operations. Some examples of sustainable projects in our company are:<br><br><br><br> <br>• Magna’s paint plant in<br>Hoce-Slivnica, Slovenia, uses solar panels on the roof and environmentally friendly transport trucks<br> <br><br><br><br>• Magna Steyr’s full vehicle manufacturing facility in Graz, Austria uses geothermal heating<br>and cooling that uses groundwater to provide heating in the winter and cooling in the summer<br> <br><br><br><br>• Approximately 1.3 million gallons of rainwater are recycled and used at Magna’s<br>Powertrain office in Untergruppenbach, Germany to run restroom facilities and to maintain as a reserve in the event of a fire
<br><br><br><br><br> <br>Reduce inequality within and among countries	• Magna’s race and ethnicity-focused employee resource community supports employee-led learning opportunities to foster open dialogue and understanding<br> <br><br><br><br>• Unconscious bias training is required for all managers and available to any Magna employee<br><br><br><br> <br>• Magna partners with various<br>United Way agencies in North America to support a broad number of organizations that are delivering community-based solutions to address poverty and inequalities<br> <br><br><br><br>• Magna has partnered with other industry leaders to support a variety of poverty-reduction efforts<br>in the Greater Detroit Area, including support for Pope Francis Center, an organization that provides vital services to the city’s homeless population
<br><br><br><br><br> <br>Ensure sustainable consumption and production patterns	• We have<br>implemented a zero waste to landfill target, with the aim of eliminating landfill bound waste by 2022. More than 88% of total waste outputs from operations in 2021 were recycled or diverted from landfills, rising to over 91% if energy recovery is<br>included<br> <br><br> <br>• In 2021, about<br>14% of our global electricity buy was from renewable electricity sources (8% of our global energy purchase was renewable)<br> <br><br><br><br>• Magna’s complete vehicle manufacturing facility in Graz, Austria will achieve carbon<br>neutrality in 2022, and has already reduced CO2 emissions by 12,000 tons since 2013<br> <br><br><br><br>• Magna is pursuing several packaging and logistics initiatives and aligning with industry partners<br>to limit the overall use of materials and to increase transportation efficiency across the supply chain
<br><br><br><br><br> <br>Take urgent action to combat climate<br><br><br>change and its<br> <br>impacts	• Magna is committed to carbon neutrality (Scope 1 and Scope 2) by 2025 in its European operations<br>and by 2030 in its global operations<br> <br><br><br><br>• Magna has committed to setting Science-based Targets by 2023, further reinforcing its commitment<br>to achieving carbon neutrality by 2030<br> <br><br><br><br>• Nine of our divisions have already achieved carbon neutrality<br><br><br><br> <br>• In addition to pursuing<br>energy reduction efforts and purchasing green energy, Magna is investing in clean carbon offset programs to counterbalance Scope 1 emissions that cannot be mitigated in its operations.<br><br><br><br> <br>• Magna invested in a<br>geothermal power plant in Turkey in order to offset 6,862 metric tons of CO2 emissions and the plant will generate about 51 GWh of clean energy and avoid 32,000 tons of CO2 per year<br> <br><br><br><br>• Magna is a financial sponsor of the Technical Office of the newly-formed International<br>Sustainability Standards Board (ISSB) that will establish a comprehensive global baseline of climate change-related disclosure standards.
5.	Sustainability Metrics
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In this Sustainability Report we report according to the SASB framework. SASB establishes and maintains industry-specific standards that assist companies in disclosing sustainability information to investors. SASB metrics indicated below are identified by the relevant SASB Auto Parts Sustainability Accounting Standard code. We caution readers that our processes to collect and validate the energy, emissions and water data shown below are not as mature as those related to financial data, but we are committed to enhancing both the data collection/validation processes and thus the quality of the data, in the coming years.

Readers are cautioned that COVID-19 significantly impacted our operations during 2020, including temporary suspension of production at our manufacturing facilities at different times during 2020 and implementation of work-from-home arrangements for employees globally. As a result, many of the 2020 metrics that follow are not reflective of a typical operational year for Magna and the extent of any improvement in such metrics from prior years is not necessarily indicative of expected performance in such metrics in future years.

A-30 Annual Information Form

5.1	Energy Management and Emissions
5.1.1	Energy
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Energy management data is set out below.

SASB Accounting Metric (TR-AP-130a.1)	2021^(1)^	2020^(2)^	2019
Aggregate amount of energy consumed by Magna	19,493,920 GJ<br> <br>5,414,978 MWh	18,169,048 GJ<br> <br>5,045,958 MWh	23,020,389 GJ<br> <br>6,394,553 MWh
Percentage of energy<br>consumed by Magna that was supplied from grid electricity	58%	59%	55%
Percentage of energy consumed by Magna that is renewable<br>energy	8.2%^(4)^	7.1%^(4)^	NT^(3)^

Notes:

(1)	Preliminary data.
(2)	Data for 2020 may not be indicative of current energy levels due to COVID-19-related production shutdowns impacting our facilities in 2020.
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(3)	Not tracked prior to 2020.
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(4)	The percentage of renewable electricity purchased in 2021 was 14% (11.9% in 2020).
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Energy intensity relative to Sales is as follows:

	2021	2020	2019
Energy Intensity (MWh/Sales (USDm))	149 MWh/USDm	155 MWh/USDm	162 MWh/USDm

In connection with our efforts to promote energy efficiency, each of our Operating Groups developed interim 2021 energy intensity reduction targets. On an consolidated basis, such targets amounted to approximately 2% of our energy intensity (MWh/Sales) per year. In 2021, we lowered our energy intensity by 6 MWh/USDm compared to 2020, a 4% reduction, despite increased levels of production from the prior year that had been heavily impacted by COVID-19 related shutdowns.

5.1.2	Emissions

Energy consumed can be converted to CO2 emissions based on regional conversion factors. In order to help us and our stakeholders better assess trends related to the emissions we generate, we track emissions “intensity” on the basis of total sales, employee headcount and aggregate square footage of our facilities and offices. These intensity metrics assist us in determining whether we are becoming more efficient by normalizing emissions on a per dollar of sales, per employee and per square footage basis. The raw data for Scope 1 & 2 emissions, together with intensity metrics are set out below.


Scope1&2 emissions<br>(metric tons)	1,613,922	^(1)^	1,620,090	2,126,678
Sales (, millions)	36,242		32,647	39,431
Sales Intensity (CO2 metric tons/ Sales)	0.0000445		0.0000496	0.0000539
Employees	158,000		158,000	165,000
Employee Intensity (metric<br>tons/employee)	10.21		10.25	12.89
Square Footage (million sq. ft)	83.5		83.8	86.6
Square Footage Intensity<br>(metric tons/sq. ft.)	0.0193		0.0193	0.0246

All values are in US Dollars.

Notes:

(1)	Preliminary data.
(2)	Data for 2020 may not be indicative of current emissions levels due to COVID 19 related production shutdowns<br>impacting our facilities in 2020.
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5.2	Water and Waste Management
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5.2.1	Water
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Description	2021^(1)^		2020^(2)^		2019
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Water withdrawals<br>(ML)		6,922		6,351		7,621

Notes:

(1)	Preliminary data.
(2)	Data for 2020 may not be indicative of current water usage levels due to COVID-19-related production shutdowns impacting our facilities in 2020.
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We have implemented a 1.5% per year water reduction target, with the aim of reducing water use 15% by 2030, in each case referencing 2019 as the baseline year.

Magna InternationalInc. A-31

5.2.2	Waste Management

Waste reduction and scrap elimination are important considerations in our manufacturing activities, including as part of our efforts to achieve World Class Manufacturing objectives in our facilities globally. We have implemented a zero waste to landfill target, with the aim of eliminating landfill-bound waste by 2022.

Waste data is set out below:

SASB Accounting Metric (TR-AP-150a.1)
Aggregate amount of waste<br>generated from manufacturing by Magna	1,144,018 t	965,677 t
Percentage of waste generated by Magna that is hazardous	7.0%^(3)^	4.9%^(3)^
Percentage of waste<br>generated by Magna that was recycled	88.4%^(4)^	91.5%^(4)^

Notes:

^(1)^	Preliminary data.
^(2)^	Data for 2020 may not be indicative of current waste generation levels due to COVID-19-related production shutdowns impacting our facilities in 2020.
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^(3)^	Approximately 91% of such hazardous waste was diverted from secure landfills through recycling, reuse, or energy<br>recovery initiatives in 2021 (84% in 2020).
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^(4)^	For 2021, this figure would be 91.2% if energy recovery was also included as a category of recycled waste (94.8%<br>in 2020).
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5.3	Environmental Remediation
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The aggregate costs incurred in complying with environmental laws and regulations, including the costs of clean-up and remediation, have not had a material adverse effect on Magna to date and are set out below.

Description	2021		2020		2019
Annual remediation<br>expenses	<$	1.0m	<$	1.0m	<$	1.0m
Aggregate remediation balance for known events	$	14.1	$	10.8m	$	13.4m
5.4	Product Safety
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Magna is at risk for product warranty, product liability and recall costs, and is currently experiencing increased customer pressure to assume greater warranty responsibility. Certain customers seek to impose partial responsibility for warranty costs where the underlying root cause of a product or system failure cannot be determined. For most types of products, we only account for existing or probable product warranty claims. However, for certain complete vehicle assembly, powertrain systems and electronics contracts, Magna also records an estimate of future warranty-related costs based on the terms of the specific customer agreements and/or Magna’s warranty experience. Product liability and recall provisions are established based on Magna’s best estimate of the amounts necessary to settle existing claims, which typically take into account: the number of units that may be returned; the cost of the product being replaced; labour to remove and replace the defective part; and the customer’s administrative costs relating to the recall. Where applicable, such provisions are booked net of recoveries from sub-suppliers and along with related insurance recoveries. Due to the uncertain nature of the net costs, actual product liability costs could be materially different from our best estimates of future costs. In 2021, our warranty accrual decreased by $37 million compared to 2020. See Note 14 of our consolidated financial statements for the year ended December 31, 2021, which have been filed on SEDAR and are on Magna’s website (www.magna.com).

5.5	Fuel Efficiency

Our product strategy, which is discussed in “Section 4 – Our Business & Strategy – Our Corporate Strategy” of this AIF, includes as a core element the supply of product solutions which support our customers’ objectives of increased fuel efficiency and reduced vehicle CO2 emissions. We do not currently track total revenue from products designed to increase fuel efficiency and/or reduce emissions.

5.6	Materials Sourcing

The SASB Auto Parts Standard identifies critical materials as defined by the U.S. National Research Council (NRC) of which cobalt, magnesium, tantalum and tungsten are most relevant to our products. We do not purchase such materials in their raw form, however, they may be present in components and sub-assemblies that we purchase. Our key purchased raw materials are steel, resin and aluminum, and our key purchased components include: stampings, electronics, chips, molded parts, die casting, forging, coverstock, and wire harnesses. See the discussion in “Section 6 – Description of the Business – Manufacturing & Engineering – Key Commodities and Raw Materials” of our AIF.

We address strategic risks regarding critical materials with more limited supply and key commodities/raw materials in a number of ways, including: diversification of suppliers; carrying excess inventory, where appropriate; and, designing and engineering our products to minimize the use of scarce/limited materials, where not constrained by customer specifications. The current shortage of semiconductors is discussed in greater detail in “Section 4 – Our Business & Strategy – Macroeconomic, Political and Other Trends” and “Section 5 – Risk Factors” of our AIF.

A-32 Annual Information Form

With respect to reputational risk related to critical materials, we maintain a conflict minerals program, including an annual process of determining whether any of our products contain conflict minerals, and through our membership in the responsible mineral initiative (RMI) supporting continuing cross-industry efforts to identify conflict-free smelters and refiners. We also report to requesting OEM customers with respect to Cobalt and Mica.

5.7	Competitive Behaviour

Magna’s policy is to comply with all applicable laws, including antitrust and competition laws. Our Corporate Ethics and Compliance Program is described in Section 4.5 – “Corporate Ethics and Compliance” of this Sustainability Report.

We previously completed a global review focused on antitrust risk and do not currently anticipate any material liabilities in connection with the review. See “Section 10 – Legal Proceedings” of this AIF with respect to our anti-trust investigation being conducted by the Brazilian Federal Competition Authority.

SASB Accounting Metric (TR-AP-520a.1)	2021
Total amount of monetary losses incurred as a result of legal proceedings associated<br>with anti-competitive behaviour regulations		NIL	NIL	NIL
5.8	Health & Safety
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We are committed to providing a safe and healthful workplace for our employees. This commitment is fulfilled through a regular program of health and safety audits and inspections of our global facilities. In connection with our health and safety program we track the frequency and severity of workplace accidents and conduct post-accident reviews to develop action plans to reduce/eliminate similar accidents in the future.

Description	2021		2020^(4)^		2019
Accident Frequency Rate^(1)(3)^		0.49		0.42		1.04
Accident Severity Rate^(2)(3)^		12.80		5.11		12.35

Notes:

^(1)^	Frequency 1.0 translates to 1 injury or illness per 100 employees working 40 hours/week, 50 weeks/year.<br>
^(2)^	Severity 10.0 translates to 10 lost work days per 100 employees working 40 hours/week, 50 weeks/year.<br>
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^(3)^	Global production facilities and certain engineering locations.
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^(4)^	Data for 2020 may not be indicative of current accident frequency and severity rates due to COVID-19-related production shutdowns impacting our facilities in 2020.
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The occurrence of injuries and fatalities is a matter of significant concern for both management and the Board. The CGCNC reviews the circumstances related to significant injuries and all fatalities of employees or third parties on Magna properties and reports same to the Board. Unfortunately, one member of the Magna family lost his life in an industrial accident at one of our Ontario facilities in 2021. There was one employee fatality at a Magna facility in 2020, and no employee fatalities at a Magna facility in 2019.

5.9	Diversity

Diversity within our employee population is important to us and we strive to create an inclusive work environment throughout our company. As part of our efforts to promote an inclusive workplace, we track metrics relating to gender diversity in our workforce.

Description
Percentage of global<br>employees who are women (wholly-owned operations)	27%	26%
Women in critical roles	16%^(1)^	15%
Women on the Board of<br>Magna	42%^(2)^	36%

Notes:

^(1)^	705 women in critical roles out of 4300 such roles.
^(2)^	As of May 3, 2022, the percentage of women on the Board will be 36%, assuming election of all nominees for<br>Magna’s annual and special meeting of shareholders.
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5.10	Reporting
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In addition to this Sustainability Report, we participate in CDP (formerly Carbon Disclosure Project), a not-for-profit project designed to provide investors with information relating to corporate GHG emissions, water use and perceived corporate risk due to climate change. Our current CDP submission is available on our website at www.magna.com. We also file a conflict minerals report, available on www.sec.gov/ edgar, in accordance with SEC requirements, and publish a slavery and human trafficking statement on our website, at www.magna.com. Magna also provides sustainability reporting directly to our customers. These assessments are supplier requirements and typically follow common reporting templates approved by automotive industry associations in North America (Automotive Industry Action Group) and Europe (CSR Europe/Drive Sustainability).

Magna InternationalInc. A-33

We also continue to monitor the acceleration of climate/sustainability reporting initiatives by regulators and standard setters, including:

•	the European Union’s Corporate Sustainability Reporting Directive (CSRD);
•	the International Sustainability Board (ISSB) publication of a climate-related disclosures prototype; and<br>
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•	initiatives by securities law regulators to mandate climate disclosure, including a recent proposal from Canadian<br>securities regulators, and proposed rule changes from the U.S. SEC.
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A-34 Annual Information Form

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EX-2

Exhibit 2

Magna International Inc.

Consolidated Financial Statements

December 31, 2021

Magna International Inc.<br> <br>337 Magna Drive<br> <br>Aurora, Ontario L4G 7K1<br> <br>Tel (905) 726-2462<br> <br>Fax (905) 726-7164

Consolidated Financial Statements

Magna International Inc.

December 31, 2021

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of Magna International Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Magna International Inc. and subsidiaries (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows, for each of the two years in the period ended

December 31, 2021, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 3, 2022, expressed an unqualified opinion on the Company’s internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Sales — Contracts with customers to provide assembled vehicles — Refer to Note 1 to the financial statements

Critical Audit Matter Description

The Company’s complete vehicle assembly contracts with customers are complex and often include promises to transfer multiple products and services to a customer. For these complex arrangements, each good or service is evaluated to determine whether it represents a distinct performance obligation, and whether it should be characterized as revenue or reimbursement of costs incurred. The total transaction price is then allocated to the distinct performance obligations based on the expected cost plus a margin approach and recognized as revenue.

There are many promises included in new or modified complete vehicle assembly contracts with customers that required management’s judgment to determine the appropriate accounting treatment. The judgments with the highest degree of subjectivity relate to: the determination of whether to combine contracts, the determination of whether performance obligations are considered distinct, the allocation of the transaction price to each distinct performance obligation, and the determination of revenue recognition. Auditing these judgments required a high degree of subjectivity and an increased extent of audit effort, including the need to involve accounting specialists with expertise in revenue recognition.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the appropriateness of the accounting treatment of new or modified complete vehicle assembly contracts with customers included the following, among others:

•	Evaluated the effectiveness of controls over new or modified complete vehicle assembly contracts, specifically relating to the combination of contracts, the identification of performance obligations, the allocation of the transaction price, and the determination of revenue recognition.
•	With the assistance of accounting specialists:
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•	Assessed the information in the complete vehicle assembly contracts to understand and evaluate that all components were identified.
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•	Evaluated management’s judgments related to the accounting treatment by analyzing it against various aspects of GAAP, including conceptual framework and interpretive guidance.
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•	To the extent each new and modified assembly contract during the year did not present a single performance obligation, tested the allocation of the transaction price to each performance obligation by evaluating management’s determination of a cost plus a margin approach.
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/s/ Deloitte LLP

Chartered Professional Accountants

Licensed Public Accountants

Toronto, Canada

March 3, 2022

We have served as the Company’s auditor since 2014.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of Magna International Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Magna International Inc. and subsidiaries (the “Company”) as of December 31, 2021, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2021 of the Company and our report dated March 3, 2022, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte LLP

Chartered Professional Accountants

Licensed Public Accountants

Toronto, Canada

March 3, 2022

MAGNA INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF INCOME

[U.S. dollars in millions, except per share figures]

Years ended December 31,

		2021			2020
Sales		$	36,242		$	32,647
Costs and expenses
Cost of goods sold			31,097			28,207
Depreciation and amortization			1,512			1,366
Selling, general and administrative			1,717			1,587
Interest expense, net	15		78			86
Equity income			(148	)		(189	)
Other expense, net	2		38			584
Income from operations before income taxes			1,948			1,006
Income taxes	10		395			329
Net income			1,553			677
(Income) loss attributable to <br>non-controlling<br> interests			(39	)		80
Net income attributable to Magna International Inc.		$	1,514		$	757
Earnings per Common Share:	3
Basic		$	5.04		$	2.52
Diluted		$	5.00		$	2.52
Weighted average number of Common Shares outstanding during the year [in millions]:	3
Basic			300.6			299.7
Diluted			302.8			300.4

See accompanying notes

MAGNA INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

[U.S. dollars in millions]

Years ended December 31,

		2021			2020
Net income		$	1,553		$	677
Other comprehensive income, net of tax:	20
Net unrealized (loss) gain on translation of net investment in foreign operations			(178	)		356
Net unrealized gain (loss) on cash flow hedges			34			(34	)
Reclassification of net (gain) loss on cash flow hedges to net income			(52	)		38
Reclassification of net loss on pensions to net income			9			8
Pension and post-retirement benefits			26			(11	)
Other comprehensive (loss) income			(161	)		357
Comprehensive income			1,392			1,034
Comprehensive (income) loss attributable to <br>non-controlling<br> interests			(48	)		72
Comprehensive income attributable to Magna International Inc.		$	1,344		$	1,106

See accompanying notes

MAGNA INTERNATIONAL INC.

CONSOLIDATED BALANCE SHEETS

[U.S. dollars in millions, except shares issued]

As at December 31,

		2021			2020
ASSETS
Current assets
Cash and cash equivalents	4	$	2,948		$	3,268
Accounts receivable			6,307			6,394
Inventories	6		3,969			3,444
Prepaid expenses and other	4, 15		278			260
			13,502			13,366
Investments	7		1,593			947
Fixed assets, net	8		8,293			8,475
Operating lease <br>right-of-use<br> assets	16		1,700			1,906
Goodwill	9		2,122			2,095
Intangible assets, net	11		493			481
Deferred tax assets	10		421			372
Other assets	12, 17		962			963
		$	29,086		$	28,605
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable		$	6,465		$	6,266
Other accrued liabilities	14		2,156			2,254
Accrued salaries and wages	13		851			815
Income taxes payable			200			38
Long-term debt due within one year	15		455			129
Current portion of operating lease liabilities	16		274			241
			10,401			9,743
Long-term debt	15		3,538			3,973
Operating lease liabilities	16		1,406			1,656
Long-term employee benefit liabilities	17		700			729
Other long-term liabilities	18		376			332
Deferred tax liabilities	10		440			452
			16,861			16,885
Shareholders’ equity
Common Shares [issued: 2021 – 297,871,976; 2020 – 300,527,416]	19		3,403			3,271
Contributed surplus			102			128
Retained earnings			9,231			8,704
Accumulated other comprehensive loss	20		(900	)		(733	)
			11,836			11,370
Non-controlling<br> interests			389			350
			12,225			11,720
		$	29,086		$	28,605

Commitments and contingencies [notes 15, 16, 21 and 22]

See accompanying notes

On behalf of the Board:

/s/ “Robert F. MacLellan”	/s/ “William L. Young”
Director	Chairman of the Board

MAGNA INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

[U.S. dollars in millions]

Years ended December

31,

		2021			2020
OPERATING ACTIVITIES
Net income		$	1,553		$	677
Items not involving current cash flows	4		1,576			1,976
			3,129			2,653
Changes in operating assets and liabilities	4		(189	)		625
Cash provided from operating activities			2,940			3,278
INVESTMENT ACTIVITIES
Fixed asset additions			(1,372	)		(1,145	)
Increase in equity method investments	7		(517	)		—
Increase in investments, other assets and intangible assets			(403	)		(331	)
Increase in public and private equity investments			(68	)		(132	)
Proceeds from dispositions			81			108
Business combinations	5		(13	)		91
(Funding provided for) proceeds on sale of business	2		(41	)		9
Settlement of long-term receivable from <br>non-consolidated<br> joint venture			50			—
Cash used for investing activities			(2,283	)		(1,400	)
FINANCING ACTIVITIES
Issues of debt	15		55			854
Decrease in short-term borrowings			(101	)		(31	)
Repayments of debt	15		(121	)		(140	)
Issue of Common Shares on exercise of stock options			146			81
Tax withholdings on vesting of equity awards			(13	)		(13	)
Repurchase of Common Shares	19		(517	)		(203	)
Contributions to subsidiaries by <br>non-controlling<br> interests			8			18
Dividends paid to <br>non-controlling<br> interests			(49	)		(18	)
Dividends paid			(514	)		(467	)
Cash (used for) provided from financing activities			(1,106	)		81
Effect of exchange rate changes on cash, cash equivalents and restricted cash equivalents			23			23
Net (decrease) increase in cash, cash equivalents and restricted cash equivalents during the year			(426	)		1,982
Cash, cash equivalents and restricted cash equivalents beginning of year			3,374			1,392
Cash, cash equivalents and restricted cash equivalents, end of year	4	$	2,948		$	3,374

See accompanying notes

MAGNA INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

[U.S. dollars in millions, except number of common shares]

						Contri-<br><br> <br>buted<br> Surplus			Retained<br> Earnings			AOCL <br>[i]			Non-<br><br> <br>controlling<br> Interests			Total<br> Equity
			Stated<br> Value

Balance, December 31, 2019	303.2		$	3,198		$	127		$	8,596		$	(1,090	)	$	300		$	11,131
Net income										757						(80	)		677
Other comprehensive income													349			8			357
Business combination																122			122
Contribution by non-controlling interests																18			18
Shares issued on exercise of stock options	1.8			98			(17	)											81
Release of stock and stock units	0.5			17			(17	)											—
Tax withholdings on vesting of equity awards	(0.2	)		(3	)					(10	)								(13	)
Repurchase and cancellation under normal course issuer bids [note 19]	(5.1	)		(54	)					(157	)		8						(203	)
Stock-based compensation expense							35												35
Dividends paid to non-controlling interests																(18	)		(18	)
Dividends paid [1.60 per share]	0.3			15						(482	)								(467	)
Balance, December 31, 2020	300.5		$	3,271		$	128		$	8,704		$	(733	)	$	350		$	11,720
Net income										1,514						39			1,553
Other comprehensive (loss) income													(170	)		9			(161	)
Contribution by non-controlling interests																8			8
Shares issued on exercise of stock options	3.0			175			(29	)											146
Release of stock and stock units	0.4			17			(17	)											—
Tax withholdings on vesting of equity awards	(0.1	)		(2	)					(11	)								(13	)
Repurchase and cancellation under normal course issuer bids [note 19]	(6.1	)		(68	)					(452	)		3						(517	)
Stock-based compensation expense							20												20
Business combinations																32			32
Dividends paid to non-controlling interests																(49	)		(49	)
Dividends paid [1.72 per share]	0.2			10						(524	)								(514	)
Balance, December 31, 2021	297.9		$	3,403		$	102		$	9,231		$	(900	)	$	389		$	12,225

All values are in US Dollars.

(i)	AOCL is Accumulated Other Comprehensive Loss.

See accompanying notes

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

1. SIGNIFICANT ACCOUNTING POLICIES

Magna International Inc. [collectively “Magna” or the “Company”] is a global supplier in the automotive space. Our systems approach to design, engineering and manufacturing touches nearly every aspect of the vehicle, including body and chassis structures, exterior systems and modules, trim and engineered glass, active aerodynamics, energy storage systems, electrified and conventional powertrain technologies, powertrain subsystems and components, ADAS and automated driving, control modules, mechatronics, mirrors and overhead consoles, lighting, complete seats, seating structural products, seat foam and seat trim. We also have complete vehicle engineering and contract manufacturing expertise.

The consolidated financial statements have been prepared in U.S. dollars following accounting principles generally accepted in the United States [“GAAP”].

Certain amounts in prior periods have been reclassified to conform with current period presentation.

Principles of consolidation

The Consolidated Financial Statements include the accounts of Magna and its subsidiaries in which Magna has a controlling financial interest and is the primary beneficiary. The Company presents non-controlling interests as a separate component within Shareholders’ equity in the Consolidated Balance Sheets. All intercompany balances and transactions have been eliminated.

Use of estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Foreign currency translation

The Company operates globally, which gives rise to a risk that its earnings and cash flows may be adversely impacted by fluctuations in foreign exchange rates.

Assets and liabilities of the Company’s operations having a functional currency other than the U.S. dollar are translated into U.S. dollars using the exchange rate in effect at year end, and revenues and expenses are translated at the average rate during the year. Exchange gains or losses on translation of the Company’s net investment in these operations are included in comprehensive income and are deferred in accumulated other comprehensive loss. Foreign exchange gains or losses on debt that was designated as a hedge of the Company’s net investment in these operations are also recorded in accumulated other comprehensive loss.

Foreign exchange gains and losses on transactions occurring in a currency other than an operation’s functional currency are reflected in net income, except for gains and losses on foreign exchange contracts used to hedge specific future commitments in foreign currencies and on intercompany balances which are designated as long-term investments. In particular, the Company uses foreign exchange forward contracts for the sole purpose of hedging certain of the Company’s future committed foreign currency based outflows and inflows. Most of the Company’s foreign exchange contracts are subject to master netting arrangements that provide for the net settlement of contracts, by counterparty, in the event of default or termination. All derivative instruments, including foreign exchange contracts, are recorded on the consolidated balance sheet at fair value. The fair values of derivatives are recorded on a gross basis in prepaid expenses and other, other assets, other accrued liabilities or other long-term liabilities. To the extent that derivative instruments are designated and qualify as cash flow hedges, the changes in their fair values are recorded in other comprehensive income. Changes in the fair value of derivative instruments that do not qualify for hedge accounting are recognized immediately in net income based on the nature of the underlying transaction. Amounts accumulated in other comprehensive loss or income are reclassified to net income in the period in which the hedged item affects net income.

If the Company’s foreign exchange forward contracts cease to be effective as hedges, for example if projected foreign cash inflows or outflows declined significantly, gains or losses pertaining to the portion of the hedging transactions in excess of projected foreign currency denominated cash flows would be recognized in net income at the time this condition was identified .

2021 Annual Financial Statements 1

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

Cash and cash equivalents

Cash and cash equivalents include cash on account, demand deposits and short-term investments with remaining maturities of less than three months at acquisition.

Inventories

Production inventories and tooling inventories manufactured in-house are valued at the lower of cost determined substantially on a first-in,

first-out basis, or net realizable value. Cost includes the cost of materials plus direct labour applied to the product and the applicable share of manufacturing overhead.

Investments

The Company accounts for investments in companies over which it has the ability to exercise significant influence, but does not hold a controlling financial interest, under the equity method [“Equity method investments”]. The Company monitors its Equity method investments for indicators of other-than-temporary declines in value on an ongoing basis. If the Company determines that an other-than-temporary decline in value has occurred, it recognizes an impairment loss, which is measured as the difference between the book value and the fair value of the investment. Fair value is generally determined using an income approach based on discounted cash flows. The inputs utilized in the analyses are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, “Fair Value Measurement” and primarily consist of expected investee revenue and costs, estimated production volumes and discount rates.

The Company also has investments in private and publicly traded technology companies over which it does not have the ability to exercise significant influence. The Company has elected to use the measurement alternative, defined as cost, less impairments, adjusted by observable price changes to measure the private equity investments. The Company values its investments in publicly traded equity securities using the closing price on the measurement date, as reported on the stock exchange on which the securities are traded.

Private equity investments are subject to impairment reviews which considers both qualitative and quantitative factors that may have a significant impact on the investee’s fair value. Upon determining that an impairment may exist, the security’s fair value is calculated using the best information available, which may include cash flow projections or other available market data and compared to its carrying value. An impairment is recognized immediately if the carrying value exceeds the fair value.

Long-lived assets

Fixed assets are recorded at historical cost. Depreciation is provided on a straight-line basis over the estimated useful lives of fixed assets at annual rates of 2 1 ⁄ 2

% to

5 % for buildings, 7 % to 10 % for general purpose equipment and 10 % to 33 % for special purpose equipment.

Finite-lived intangible assets, which have arisen principally through acquisitions, include customer relationship intangibles and patents and licences. These finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives which range from 4 to 15 years.

The Company assesses fixed and finite -lived intangible assets for recoverability whenever indicators of impairment exist. If the carrying value of the asset exceeds the estimated undiscounted cash flows from the use of the asset, then an impairment loss is recognized to write the asset down to fair value. The fair value of fixed and finite-lived intangible assets is generally determined using estimated discounted future cash flows.

2021 Annual Financial Statements 2

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

Goodwill

Goodwill represents the excess of the cost of an acquired enterprise over the fair value of the identifiable assets acquired and liabilities assumed less any subsequent write-downs for impairment. Goodwill is reviewed for impairment in the fourth quarter of each year, or more frequently if indicators of potential impairment exist. Goodwill impairment is assessed based on a comparison of the fair value of a reporting unit to the underlying carrying value of the reporting unit’s net assets, including goodwill. When the carrying amount of the reporting unit exceeds its fair value, an impairment is recognized based on that difference. The fair value of a reporting unit is determined using its estimated discounted future cash flows.

Tooling and Pre-Production Engineering Costs Related to Long-Term Supply Agreements

The Company incurs pre-production engineering and tooling costs related to the products produced for its customers under long-term supply agreements. Customer reimbursements for tooling and pre-production engineering activities that are part of a long-term supply arrangement are accounted for as a reduction of cost. Pre-production costs related to long-term supply arrangements with a contractual guarantee for reimbursement and capitalized tooling are included in Other assets.

The Company expenses all pre-production engineering costs for which reimbursement is not contractually guaranteed by the customer. All tooling costs related to customer-owned tools for which reimbursement is not contractually guaranteed by the customer or for which the Company does not have a non-cancelable right to use the tooling are also expensed.

Warranty

The Company has assurance warranties and records product warranty liabilities based on its individual customer agreements. Under most customer agreements, the Company only accounts for existing or probable claims on product default issues when amounts related to such issues are probable and reasonably estimable. However, for certain complete vehicle assembly, powertrain systems and electronics contracts, the Company records an estimate of future warranty-related costs based on the terms of the specific customer agreements and/or the Company’s warranty experience. Product liability and recall provisions are established based on the Company’s best estimate of the amounts necessary to settle existing claims which typically take into account: the number of units that may be returned; the cost of the product being replaced; labour to remove and replace the defective part; and the customer’s administrative costs relating to the recall. Judgement is also required as to the ultimate negotiated sharing of the cost between the Company, the customer and, in some cases, a supplier to the Company.

When a decision to recall a product has been made or is probable, the Company’s portion of the estimated cost of the recall is recorded as a charge to net income in that period. The Company monitors warranty activity on an ongoing basis and adjusts reserve balances when it is probable that future warranty costs will be different than those previously estimated.

Income taxes

The Company uses the liability method of tax allocation to account for income taxes. Under the liability method of tax allocation, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company assesses whether valuation allowances should be established or maintained against its deferred tax assets based on consideration of all available evidence using a “more-likely-than-not” standard. The factors the Company uses to assess the likelihood of realization are its history of losses, forecasts of future pre-tax income and tax planning strategies that could be implemented to realize the deferred tax assets.

No deferred tax liability is recorded for taxes on undistributed earnings and translation adjustments of foreign subsidiaries if these items are considered to be reinvested for the foreseeable future. Taxes are recorded on such foreign undistributed earnings and translation adjustments when it becomes apparent that such earnings will be distributed in the foreseeable future and the Company will incur further tax on remittance.

2021 Annual Financial Statements 3

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

Recognition of uncertain tax positions is dependent on whether it is more-likely-than-not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.

Leases

The Company determines if an arrangement is a lease or contains a lease at inception. Leases with an initial term of 12 months or less are considered short-term and are not recorded on the balance sheet. The Company recognizes operating lease expense for these leases on a straight-line basis over the lease term.

Operating lease right-of-use [“ROU”] assets and operating lease liabilities are recognized based on the present value of the future lease payments over the lease term at the commencement date. As the rate implicit in the lease is not readily determinable for the Company’s operating leases, an incremental borrowing rate is generally used to determine the present value of future lease payments. The incremental borrowing rate for each lease is based on the Company’s estimated borrowing rate over a similar term to that of the lease payments, adjusted for various factors including collateralization, location and currency.

A majority of the Company’s leases for manufacturing facilities are subject to variable lease-related payments, such as escalation clauses based on consumer price index rates or other similar indices. Variable payments that are based on an index or a rate are included in the recognition of the Company’s ROU assets and lease liabilities using the index or rate at lease commencement. Subsequent changes to these lease payments due to rate or index updates are recorded as lease expense in the period incurred.

The Company’s lease agreements generally exclude non-lease components, and do not contain any material residual value guarantees or material restrictive covenants.

Employee future benefit plans

The cost of providing benefits through defined benefit pensions, lump sum termination and long-term service payment arrangements, and post-retirement benefits other than pensions is actuarially determined and recognized in income using the projected benefit method pro-rated on service and management’s best estimate of expected plan investment performance, salary escalation, retirement ages of employees and, with respect to medical benefits, expected health care costs. Differences arising from plan amendments, changes in assumptions and experience gains and losses that are greater than 10% of the greater of: [i] the accrued benefit obligation at the beginning of the year; and [ii] the fair value [or market related value] of plan assets at the beginning of the year, are recognized in income over the expected average remaining service life of employees.

Plan assets are valued at fair value. The cost of providing benefits through defined contribution pension plans is charged to income in the period in respect of which contributions become payable.

The funded status of the plans is measured as the difference between the fair value of the plan assets and the projected benefit obligation [“PBO”]. The aggregate of all overfunded plans is recorded in other assets, and the aggregate of all underfunded plans is recorded in long-term employee benefit liabilities. The portion of the amount by which the actuarial present value of benefits included in the PBO exceeds the fair value of plan assets, payable in the next twelve months, is reflected in other accrued liabilities.

2021 Annual Financial Statements 4

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

Revenue recognition

The Company enters into contracts with its customers to provide production parts or assembled vehicles. Contracts do not commit the customer to a specified quantity of products; however, the Company is generally required to fulfill its customers’ purchasing requirements for the production life of the vehicle. Contracts do not typically become a performance obligation until the Company receives a purchase order and a customer release for a specific number of parts or assembled vehicles at a specified price. While long-term supply agreements may range from five to seven years, contracts may be terminated by customers at any time. Historically, terminations have been minimal. Contracts may also provide for annual price reductions over the production life of the vehicle, and prices are adjusted on an ongoing basis to reflect changes in product content/cost and other commercial factors.

Revenue is recognized at the point in time when control of the parts produced or assembled vehicles are transferred to the customer according to the terms of the contract. The amount of revenue recognized reflects the consideration that the Company expects to be entitled to in exchange for those products based on purchase orders and ongoing price adjustments [some of which is accounted for as variable consideration]. The Company uses the expected value method, taking into account historical data and the status of current negotiations, to estimate the amount to which it expects to be entitled. Significant changes to the Company’s estimates of variable consideration are not expected.

The Company’s complete vehicle assembly contracts with customers are complex and often include promises to transfer multiple products and services, some of which may be implicitly contracted for. For these arrangements, each good or service is evaluated to determine whether it represents a distinct performance obligation, and whether it should be characterized as revenue or reimbursement of costs incurred. The total transaction price is then allocated to the distinct performance obligations based on the expected cost plus a margin approach and amounts related to revenue are recognized as discussed above.

The Company also performs tooling and engineering activities for its customers that are not part of a long-term production arrangement. Tooling and engineering revenue is recognized at a point in time or over time depending, among other considerations, on whether the Company has an enforceable right to payment plus a reasonable profit, for performance completed to date. Over-time recognition utilizes costs incurred to date relative to total estimated costs at completion, to measure progress toward satisfying performance obligations. Revenue is recognized as control is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods and services. For the year ended December 31, 2021, total tooling and engineering sales were $783 million [2020 - $739 million].

The Company’s customers pay for products received in accordance with payment terms that are customary in the industry, typically 30 to 90 days. The Company’s contracts with its customers do not have significant financing components.

Taxes assessed by a governmental authority that are both imposed on, and concurrent with, a specific revenue-producing transaction that are collected by the Company from a customer are excluded from revenue.

Contract Assets and Liabilities

The Company’s contract assets relate to the right to consideration for work completed but not yet billed and are included in Accounts Receivable. Amounts may not exceed their net realizable value. As at December 31, 2021, the Company’s unbilled accounts receivable balance was $528 million [2020 - $425 million]. Contract assets do not include the costs of obtaining or fulfilling a contract with a customer, as these amounts are generally expensed as incurred.

Customer advances are recorded as deferred revenue [a contract liability]. For the years ended December 31, 2021 and 2020, the contract liability balances were $273 million and $214 million, respectively. During the year ended December 31, 2021 and 2020, the Company recognized $140 million and $81 million, respectively, of previously recorded contract liabilities into revenue as performance obligations were satisfied .

2021 Annual Financial Statements 5

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

Government assistance

The Company makes periodic applications for financial assistance under available government assistance programs in the various jurisdictions that the Company operates. Grants relating to capital expenditures are reflected as a reduction of the cost of the related assets. Grants relating to current operating expenditures may be deferred and recognized in the consolidated statement of income over the period necessary to match them with the costs that they are intended to compensate and are presented as a reduction of the related expense. The Company also receives tax credits and tax super allowances, the benefits of which are recorded as a reduction of income tax expense. In addition, the Company receives loans which are recorded as liabilities in amounts equal to the cash received. When a government loan is issued to the Company at a below-market rate of interest, the loan is initially recorded at its net present value and accreted to its face value over the period of the loan. The benefit of the below-market rate of interest is accounted for similar to a government grant and is measured as the difference between the initial carrying value of the loan and the cash proceeds received.

Research and development

Costs incurred in connection with research and development activities, to the extent not recoverable from the Company’s customers, are charged to expense as incurred. For the years ended December 31, 2021 and 2020, research and development costs charged to expense were $634 million and $830 million, respectively.

Restructuring

Restructuring costs may include employee termination benefits, as well as other costs resulting from restructuring actions. These actions may result in employees receiving voluntary or involuntary employee termination benefits, which are mainly pursuant to union or other contractual agreements or statutory requirements. Voluntary termination benefits are accrued when an employee accepts the related offer. Involuntary termination benefits are accrued upon the commitment to a termination plan and when liabilities are determined to be probable and estimable. Additional elements of severance and termination benefits associated with nonrecurring benefits may be recognized rateably over each employee’s required future service period. All other restructuring costs are expensed as incurred.

Earnings per Common Share

Basic earnings per Common Share are calculated on net income attributable to Magna International Inc. using the weighted average number of Common Shares outstanding during the year.

Diluted earnings per Common Share are calculated on the weighted average number of Common Shares outstanding, including an adjustment for stock options outstanding using the treasury stock method.

Common Shares that have not been released under the Company’s restricted stock plan or are being held in trust for purposes of the Company’s restricted stock unit program have been excluded from the calculation of basic earnings per share, but have been included in the calculation of diluted earnings per share.

2021 Annual Financial Statements 6

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

2. OTHER EXPENSE, NET

Other expense, net consists of significant items such as: impairment charges; restructuring costs generally related to significant plant closures or consolidations; net (gains) losses on investments; gains or losses on disposal of facilities or businesses; and other items not reflective of on-going operating profit or loss. Other expense, net consists of:

	2021			2020
Restructuring and impairments <br>[a]	$	101		$	269
Net losses (gains) on investments <br>[b]		2			(32	)
Merger agreement termination fee <br>[c]		(100	)		—
Gain on business combinations <br>[d]		(40	)		—
Loss on sale of business <br>[e]		75			—
Impairment of equity-accounted investments <br>[f]		—			347
Other expense, net	$	38		$	584
[a]	Restructuring and impairments
---	---

For the year ended December 31, 2021, the company recorded restructuring and impairment charges

of $67 million [$52 million after tax] for its Power & Vision segment, $18 million [$17 million after tax] for its Seating Systems segment and

$16 million [$14 million after tax] for its Body Exteriors & Structures segment .

During 2020, the Company recorded restructuring and impairment charges of $123 million [$118 million after tax] for its Body Exteriors & Structures segment, $115 million [$90 million after tax] for its Power & Vision segment and $31 million [$29 million after tax] for its Seating Systems segment. Of the total charges, $168 million was related to restructuring plans implemented by the Company to right-size its business in response to the impact that COVID-19 was expected to have on vehicle production volumes over the short to medium term. These restructuring plans included plant closures and workforce reductions which were substantially completed by December 31, 2021.

[b]	Net losses (gains) on investments

For the year ended December 31, 2021, the Company recorded unrealized losses of $6 million [$12 million after tax] on the revaluation of public and private equity investments and unrealized gains of $4 million [$3 million after tax] related to the revaluation of public company warrants [note 7].

During 2020, the Company recorded unrealized gains of $34 million [$29 million after tax] on the revaluation of its private equity investments and a non-cash impairment charge of $2 million [$2 million after tax] related to a private equity investment, which was included in the Corporate segment.

[c]	Merger agreement termination fee

In the fourth quarter of 2021, Veoneer, Inc. [“Veoneer”] terminated its merger agreement with the Company. In connection with the termination of the merger agreement, Veoneer paid Magna a termination fee which, net of the Company’s associated transaction costs, amounted to

$100 million [ $75 million after tax].

2021 Annual Financial Statements 7

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

[d]	Gain on business combinations

During 2021, the Company acquired a 65% equity interest and a controlling financial interest in Chongqing Hongli Zhixin Scientific Technology Development Group LLC (“Hongli”). The acquisition included an additional 15% equity interest in two entities that were previously equity accounted for by the Company. On the change in basis of accounting, the Company recognized a $22 million gain [$22 million after tax] [note 5] .

The Company also recorded a gain of $18 million [$18 million after tax] in connection with the distribution of substantially all of the assets of the Company’s European joint venture, Getrag Ford Transmission GmbH [note 5].

[e]	Loss on sale of business

During 2021, the Company sold three Body Exteriors & Structures operations in Germany. Under the terms of the arrangement, the Company provided the buyer with $41 million of funding, resulting in a loss on disposal of $75 million [$75 million after tax].

[f]	Impairment of equity-accounted investments

The following table summarizes the impairment charges and loss on sale recorded for certain investments in our Power & Vision segment in 2020:

	2020
Impairment of Getrag (Jiangxi) Transmission Co., Ltd. [“GJT”] <br>(i)	$	337
Loss on sale and impairment of Dongfeng Getrag Transmission Co. Ltd. [“DGT”] <br>(ii)		10
Total impairments and loss on sale of equity-accounted investments		347
Tax effect on Other Expense, net		(53	)
Loss attributable to <br>non-controlling<br> interests		(75	)
Non-cash<br> impairment charge included in Net income attributable to Magna International Inc.	$	219
(i)	An impairment for GJT was recorded based on pricing pressure in the China market as well as additional declines in volume and sales projections for the foreseeable future. In the fourth quarter of 2020, the governing documents related to GJT were revised, providing the Company with a controlling financial interest. As a result, the Company began consolidating GJT on December 29, 2020, the effective date of the amendments <br>[note 5].
---	---
(ii)	During 2020, we recorded a $10 million [$10 million after tax] loss on the sale of our 50% interest in DGT.
---	---

2021 Annual Financial Statements 8

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

3. EARNINGS PER SHARE

Earnings per share are computed as follows:

	2021		2020
Basic earnings per Common Share:
Net income attributable to Magna International Inc.	$	1,514	$	757
Weighted average number of Common Shares outstanding during the year		300.6		299.7
Basic earnings per Common Share	$	5.04	$	2.52
Diluted earnings per Common Share [a]:
Net income attributable to Magna International Inc.	$	1,514	$	757
Weighted average number of Common Shares outstanding during the year		300.6		299.7
Stock options and restricted stock		2.2		0.7
		302.8		300.4
Diluted earnings per Common Share	$	5.00	$	2.52
[a]	Diluted earnings per Common Share exclude 0.4 million [2020 – 4.7 million] Common Shares issuable under the Company’s Incentive Stock Option Plan because these options were not <br>“in-the-money”.<br> The dilutive effect of participating securities using the <br>two-class<br> method was excluded from the calculation of earnings per share because the effect would be immaterial.
---	---

2021 Annual Financial Statements 9

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

4. DETAILS OF CASH FROM OPERATING ACTIVITIES

[a]	Cash, cash equivalents and restricted cash equivalents consist of:
	2021		2020
---	---	---	---	---
Bank term deposits and bankers’ acceptances	$	1,984	$	1,987
Cash		964		1,281
Cash and cash equivalents	$	2,948	$	3,268
Restricted cash equivalents included in prepaid expenses <br>(i)		—		106
	$	2,948	$	3,374
(i)	In connection with the repayment of the credit facility, the deposit included in prepaid expenses was released <br>[note 1<br><br>5<br><br>]<br>.
---	---
[b]	Items not involving current cash flows:
---	---
	2021			2020
---	---	---	---	---	---	---
Depreciation and amortization	$	1,512		$	1,366
Amortization of other assets included in cost of goods sold		255			215
Deferred revenue amortization		(188	)		(89	)
Other <br>non-cash<br> charges		25			66
Future tax (recovery) expenses		(76	)		17
Equity income less than (in excess of) dividends received		11			(10	)
Impairment charges		—			435
Non-cash<br> portion of Other expense, net <br>[note 2]		37			(24	)
	$	1,576		$	1,976
[c]	Changes in operating assets and liabilities:
---	---
	2021			2020
---	---	---	---	---	---	---
Accounts receivable	$	114		$	(42	)
Inventories		(653	)		37
Prepaid expenses and other		(39	)		(12	)
Accounts payable		160			274
Accrued salaries and wages		58			(8	)
Other accrued liabilities		48			398
Income taxes payable		123			(22	)
	$	(189	)	$	625

2021 Annual Financial Statements 10

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

5. BUSINESS COMBINATIONS

On March 1, 2021, substantially all of the assets of the Company’s European joint venture with Ford Motor Company [“Ford”], GFT, were distributed to either Ford or the Company, which resulted in the Company recording an $18 million gain [note 2] . As part of the distribution, the Company received GFT’s non-controlling interest in a Chinese joint venture controlled by the Company, a facility in Europe and net cash of $94 million.

On January 1, 2021, the Company acquired a 65% equity interest and a controlling financial interest in Hongli, a China-based supplier of seat structures and related systems. The acquisition included an additional 15% equity interest in two entities that were previously equity accounted for by the Company. On the change in basis of accounting, the Company recognized a $22 million gain [note 2] . The total purchase price was $95 million [net of $17 million cash acquired]. The acquisition resulted in the recognition of goodwill of $90 million, intangible assets of $53 million and debt of $45 million.

During 2020, the governing documents related to GJT were revised to extend the term of the venture and grant additional rights to the Company, resulting in a controlling financial interest. Accordingly, the Company recorded a $239 million disposition of its equity method investment and began consolidating the entity on December 29, 2020. The transaction was accounted for as a business combination, which primarily resulted in the recognition of cash of $98 million, fixed assets of $211 million, minority interest of $122 million and other net assets of $52 million. The change in the method of accounting for the entity did not have an impact on the Company’s results of operations.

6. INVENTORIES

Inventories consist of:

	2021		2020
Raw materials and supplies	$	1,598	$	1,226
Work-in-process		400		340
Finished goods		506		470
Tooling and engineering		1,465		1,408
	$	3,969	$	3,444

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

2021 Annual Financial Statements 11

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

7. INVESTMENTS

	2021		2020
Equity method investments <br>[a]	$	1,031	$	677
Public and private equity investments		358		270
Warrants <br>[b]		204		—
	$	1,593	$	947
[a]	The ownership percentages and carrying values of the Company’s principal equity method investments at December 31 were as follows [in millions, except percentages]:
---	---
			2021		2020
---	---	---	---	---	---	---
LG Magna <br>e-Powertrain<br> Co., Ltd. <br>[i]	49.0	%	$	481	$	—
Litens Automotive Partnership <br>[ii]	76.7	%	$	291	$	273
Hubei HAPM Magna Seating Systems Co., Ltd.	49.9	%	$	127	$	121
[i]	On July 28, 2021, the Company’s Power & Vision segment formed a joint venture with LG Electronics [“LG”], LG Magna <br>e-Powertrain<br> Co., Ltd. [“LME”], for cash consideration of $517 million. LME is a variable interest entity [“VIE”] and depends on the Company and LG for funding. The Company is not considered the primary beneficiary. The Company’s known maximum exposure to loss approximated the carrying value of its investment balance as at December 31, 2021.
---	---

The difference between the purchase price of the Company’s investment in LME and its proportionate share of the fair value of LME’s net assets created a basis difference of $188 million, which has been allocated on a preliminary basis as follows:

Equity method goodwill	$	118
Intangible assets		47
Fixed assets		47
Deferred tax liabilities		(24	)
Total basis difference included in equity method investments	$	188

The basis differences for intangible and fixed assets are being amortized over an average estimated useful life

of 8 years.

[ii]

The Company accounts for its investments under the equity method of accounting as a result of significant participating rights that prevent control.

[b]

In October 2020, the Company signed agreements with Fisker Inc. [“Fisker”] for the platform sharing, engineering and manufacturing of the Fisker Ocean SUV. In connection with the arrangement, Fisker issued approximately 19.5 million penny warrants to the Company to purchase common stock, which vest based on specified milestones. During 2021, two third of the warrants vested with a value of $201 million. The initial value attributable to the warrants was deferred within other accrued liabilities and other long-term liabilities and is being recognized in income as performance obligations are satisfied.

---

Cumulative unrealized gains on equity securities were $63 million and $65 million as at December 31, 2021 and 2020, respectively.

2021 Annual Financial Statements 12

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

A summary of the total financial results, as reported by the Company’s equity method investees, in the aggregate, at December 31 was as follows:

Summarized Balance Sheets

	2021		2020
Current assets	$	1,825	$	1,510
Non-current<br> assets	$	1,838	$	1,748
Current liabilities	$	1,269	$	873
Long-term liabilities	$	450	$	835

Summarized Income Statements

	2021		2020
Sales	$	3,303	$	3,384
Cost of goods sold & expenses		3,156		3,140
Net income	$	147	$	244

Sales to equity method investees were approximately $65 million and $104 million for the years ended December 31, 2021 and 2020, respectively.

8. FIXED ASSETS

Fixed assets consist of:

	2021			2020
Cost
Land	$	198		$	195
Buildings		2,719			2,709
Machinery and equipment		17,355			17,217
		20,272			20,121
Accumulated depreciation
Buildings		(1,223	)		(1,147	)
Machinery and equipment		(10,756	)		(10,499	)
	$	8,293		$	8,475

Included in the cost of fixed assets are construction in progress expenditures of $1.0 billion [2020 - $1.0 billion] that have not been depreciated.

2021 Annual Financial Statements 13

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

9. GOODWILL

The following is a continuity of the Company’s goodwill by segment:

	Body Exteriors<br><br> <br>& Structures			Power<br> & Vision			Seating<br> Systems		Complete<br> Vehicles			Total
Balance, December 31, 2019	$	453		$	1,243		$	169	$	111		$	1,976
Acquisitions		4			—			1		—			5
Foreign exchange and other		21			77			6		10			114
Balance, December 31, 2020		478			1,320			176		121			2,095
Acquisitions		—			29			93		—			122
Foreign exchange and other		(7	)		(80	)		1		(9	)		(95	)
Balance, December 31, 2021	$	471		$	1,269		$	270	$	112		$	2,122

10. INCOME TAXES

[a]	The provision for income taxes differs from the expense that would be obtained by applying the Canadian statutory income tax rate as a result of the following:
	2021			2020
---	---	---	---	---	---	---
Canadian statutory income tax rate		26.5	%		26.5	%
Tax on repatriation of foreign earnings		2.9			4.4
Net effect of losses not benefited		1.8			8.1
Re-measurement<br> of deferred tax assets [i]		1.5			—
Foreign exchange <br>re-measurement<br> [ii]		1.2			3.4
Impairment of investments <br>[note 2]		—			8.6
Manufacturing and processing profits deduction		(0.2	)		(0.1	)
Valuation allowance on deferred tax assets		(0.7	)		0.6
Earnings of equity accounted investees		(1.3	)		(3.6	)
Reserve for uncertain tax positions		(2.5	)		(4.0	)
Research and development tax credits		(3.4	)		(3.7	)
Foreign rate differentials		(3.9	)		(7.3	)
Others		(1.6	)		(0.2	)
Effective income tax rate		20.3	%		32.7	%
[i]	Re-measurement<br> of deferred tax assets of a China subsidiary<br>.
---	---
[ii]	Includes foreign exchange gains reported on U.S. dollar denominated assets for Mexican tax purposes that are not recognized for GAAP purposes and losses related to the <br>re-measurement<br> of financial statement balances of foreign subsidiaries, primarily in Mexico, that are maintained in a currency other than their functional currency.
---	---

2021 Annual Financial Statements 14

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

[b]	The details of income before income taxes by jurisdiction are as follows:
	2021		2020
---	---	---	---	---
Canadian	$	220	$	93
Foreign		1,728		913
	$	1,948	$	1,006
[c]	The details of the income tax provision are as follows:
---	---
	2021			2020
---	---	---	---	---	---
Current
Canadian	$	63		$	10
Foreign		408			302
		471			312
Deferred
Canadian		(4	)		17
Foreign		(72	)		—
		(76	)		17
	$	395		$	329
[d]	Deferred income taxes have been provided on temporary differences, which consist of the following:
---	---
	2021			2020
---	---	---	---	---	---	---
Tax on undistributed foreign earnings	$	43		$	23
Re-measurement<br> of deferred tax assets		28			—
Liabilities currently not deductible for tax		5			(2	)
Change in valuation allowance on deferred tax assets		(13	)		6
Net tax losses benefited		(22	)		(38	)
Tax depreciation (less than) in excess of book depreciation		(30	)		50
Book amortization in excess of tax amortization		(58	)		(17	)
Others		(29	)		(5	)
	$	(76	)	$	17

2021 Annual Financial Statements 15

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

[e]	Deferred tax assets and liabilities consist of the following temporary differences:
	2021			2020
---	---	---	---	---	---	---
Assets
Tax benefit of loss carryforwards	$	766		$	735
Operating lease liabilities		409			469
Liabilities currently not deductible for tax		219			259
Tax credit carryforwards		84			64
Unrealized loss on foreign exchange hedges and retirement liabilities		59			87
Others		30			46
	1,567			1,660
Valuation allowance against tax benefit of loss carryforwards		(586	)		(569	)
Other valuation allowance		(125	)		(206	)
	$	856		$	885
Liabilities
Operating lease <br>right-of-use<br> assets		415			470
Tax depreciation in excess of book depreciation		228			239
Tax on undistributed foreign earnings		206			163
Unrealized gain on remeasurement of investments		12			11
Unrealized gain on foreign exchange hedges and retirement liabilities		11			17
Other assets book value in excess of tax values		3			65
		875			965
Net deferred tax liabilities	$	(19	)	$	(80	)

The net deferred tax liabilities are presented on the consolidated balance sheet in the following categories:

	2021			2020
Long-term deferred tax assets	$	421		$	372
Long-term deferred tax liabilities		(440	)		(452	)
	$	(19	)	$	(80	)
[f]	Deferred income taxes have not been provided on $4.9<br><br>billion of undistributed earnings of certain foreign subsidiaries, as the Company has concluded that such earnings should not give rise to additional tax liabilities upon repatriation or are indefinitely reinvested. A determination of the amount of the unrecognized tax liability relating to the remittance of such undistributed earnings is not practicable.
---	---
[g]	Income taxes paid in cash [net of refunds] were $341 million for the year ended December 31, 2021 [2020 - $336 million].
---	---
[h]	As of December 31, 2021, the Company had domestic and foreign operating loss carryforwards of $3.0 billion and tax credit carryforwards of $84 million. Approximately $1.9 billion of the operating losses can be carried forward indefinitely. The remaining operating losses and tax credit carryforwards expire between 2022 and 2041.
---	---
[i]	As at December 31, 2021 and 2020, the Company’s gross unrecognized tax benefits were $142 million and $182 million, respectively [excluding interest and penalties], of which $126 million and $165 million, respectively, if recognized, would affect the Company’s effective tax rate. The gross unrecognized tax benefits differ from the amount that would affect the Company’s effective tax rate due primarily to the impact of the valuation allowance on deferred tax assets. A summary of the changes in gross unrecognized tax benefits is as follows:
---	---

2021 Annual Financial Statements 16

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

	2021			2020
Balance, beginning of year	$	182		$	192
Increase based on tax positions related to current year		11			27
Increase based on tax positions of prior years		2			—
Increase related to acquisitions		—			11
Settlements		(5	)		(1	)
Foreign currency translation		(5	)		5
Statute expirations		(43	)		(52	)
	$	142		$	182

As at December 31, 2021 and 2020, the Company had recorded interest and penalties on the unrecognized tax benefits of $26 million and $43 million, respectively, which reflects a decrease of $17 and $3 million in expenses related to changes in its reserves for interest and penalties in 2021 and 2020, respectively.

The Company operates in multiple jurisdictions, and its tax returns are periodically audited or subject to review by both domestic and foreign tax authorities. During the next twelve months, it is reasonably possible that, as a result of audit settlements, the conclusion of current examinations or the expiration of the statute of limitations in several jurisdictions, the Company may decrease the amount of its gross unrecognized tax benefits [including interest and penalties] by approximately $73 million, of which $66 million, if recognized, would affect its effective tax rate.

The Company considers its significant tax jurisdictions to include Canada, the United States, Austria, Germany, Mexico and China. With few exceptions, the Company remains subject to income tax examination in Germany for years after 2007, China, Mexico and Austria for years after 2015, Canada for years after 2016 and the U.S. federal jurisdiction after 2017.

11. INTANGIBLE ASSETS

Intangible assets consist of:

	Remaining<br><br>weighted average<br><br>useful life in years	2021			2020
Cost
Customer relationship intangibles	7	$	386		$	348
Computer software	1		463			463
Patents and licenses	7		314			282
			1,163			1,093
Accumulated depreciation
Customer relationship intangibles			(175	)		(150	)
Computer software			(360	)		(361	)
Patents and licenses			(135	)		(101	)
		$	493		$	481

The Company recorded $114 million and $85 million of amortization expense related to finite-lived intangible assets for the years ended December 31, 2021 and 2020, respectively. The Company currently estimates annual amortization expense to be $111 million for 2022, $77 million for 2023, $59 million for 2024, $54 million for 2025 and $51 million for 2026.

2021 Annual Financial Statements 17

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

12. OTHER ASSETS

Other assets consist of:

	2021		2020
Preproduction costs related to long-term supply agreements	$	668	$	694
Long-term receivables		184		209
Unrealized gain on cash flow hedges <br>[note 21]		11		16
Pension overfunded status <br>[note 17[a]]		41		4
Other		58		40
	$	962	$	963

13. EMPLOYEE EQUITY AND PROFIT PARTICIPATION PROGRAM

During the year ended December 31, 2021, a trust which exists to make orderly purchases of the Company’s shares for employees for transfer to the Employee Equity and Profit Participation Program [“EEPPP”], borrowed up to $38 million [2020 - $38 million] from the Company to facilitate the purchase of Common Shares. At December 31, 2021, the trust’s indebtedness to Magna was $38 million [2020 - $38 million]. The Company nets the receivable from the trust with the Company’s accrued EEPPP payable in accrued wages and salaries.

14. WARRANTY

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

	2021			2020
Balance, beginning of year	$	284		$	252
Expense, net		82			164
Settlements		(111	)		(165	)
Business combination		2			21
Foreign exchange and other		(10	)		12
	$	247		$	284

15. DEBT

Short-term borrowings

[a]	Credit Facilities

The Company had an agreement for a credit facility that was drawn in euros that was secured with a USD cash deposit of 105% of the outstanding balance. During 2021, all amounts drawn under the credit facility were repaid and the facility was terminated [note 4] .

On December 10, 2021, the Company amended its U.S. $750 million 364 day syndicated revolving credit facility, including an extension of the maturity date to December 9, 2022. The facility can be drawn in U.S. dollars or Canadian dollars. As of December 31, 2021, the Company has not borrowed any funds under this credit facility.

2021 Annual Financial Statements 18

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

[b] Commercial Paper Program

The Company has a U.S. commercial paper program [the “U.S. Program”] and a euro-commercial paper program [the “euro-Program”]. Under the U.S. Program, the Company may issue U.S. commercial paper notes up to a maximum aggregate amount of U.S. $1 billion. The U.S. Program is guaranteed by the Company’s existing global credit facility. There were no amounts outstanding as at December 31, 2021 and 2020.

Under the euro-Program, the Company may issue euro-commercial paper notes [the “euro notes”] up to a maximum aggregate amount of €500 million or its equivalent in alternative currencies. The euro notes issued are guaranteed by the Company’s existing global credit facility. There were no amounts outstanding as at December 31, 2021 and 2020.

Long-term borrowings

[a]	The Company’s long-term debt, net of unamortized issuance costs, is substantially uncollateralized and consists of the following:
		2020
---	---	---	---
Senior Notes [note 15 [c]]
Cdn425 million Senior Notes due 2022 at 3.100%	336	$	333
550 million Senior Notes due 2023 at 1.900%	625		671
750 million Senior Notes due 2024 at 3.625%	748		748
650 million Senior Notes due 2025 at 4.150%	647		646
600 million Senior Notes due 2027 at 1.500%	681		730
750 million Senior Notes due 2030 at 2.450%	742		741
Bank term debt at a weighted average interest rate of approximately 4.86% [2020 – 4.23%], denominated primarily in Chinese renminbi, Brazilian real, euro and Indian rupee	187		189
Government loans at a weighted average interest rate of approximately 0.13% [2020 – 1.54%], denominated primarily in euro, Canadian dollar and Brazilian real	8		32
Other	19		12
	3,993		4,102
Less due within one year	455		129
	3,538	$	3,973

All values are in Euros.

[b]	Future principal repayments on long-term debt are estimated to be as f<br>o<br>llows:
2022	$	455
---	---	---
2023		692
2024		771
2025		651
2026		3
Thereafter		1,437
	$	4,009

2021 Annual Financial Statements 19

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

[c]	All of the Senior Notes pay a fixed rate of interest semi-annually except for the €550 million and €600 million Senior Notes which pay a fixed rate of interest annually. The Senior Notes are unsecured obligations and do not include any financial covenants. The Company may redeem the Senior Notes in whole or in part at any time, at specified redemption prices determined in accordance with the terms of each of the respective indentures governing the Senior Notes. All of the Senior Notes were issued for general corporate purposes.
[d]	On April 28, 2021, the Company amended its $2.75 billion revolving credit facility, including an extension of the maturity date for $2.6 billion from June 24, 2024 to June 24, 2026. The facility includes a $200 million Asian tranche, a $150 million Mexican tranche and a tranche for Canada, U.S. and Europe, which is fully transferable between jurisdictions and can be drawn in U.S. dollars, Canadian dollars or euros. <br>As a<br>t December 31, 20<br>21<br><br><br>and<br>2020<br>,<br> $6 million<br>and $13 million<br>was outstandin<br>g<br><br>, respectively.
---	---
[e]	Interest expense, net includes:
---	---
	2021			2020
---	---	---	---	---	---	---
Interest expense
Current	$	12		$	9
Long-term		110			96
		122			105
Interest income		(44	)		(19	)
Interest expense, net	$	78		$	86
[f]	Interest paid in cash was $122 million<br><br>for the year ended December 31, 2021 [2020 - $104 million].
---	---

2021 Annual Financial Statements 20

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

LEASES

The Company has entered into leases primarily for real estate, manufacturing equipment and vehicles with terms that range from 1 year to 8.5 years, excluding land use rights which generally extend over 90 years. These leases often include options to extend the term of the lease, most often for a period of 5 years. When it is reasonably certain that the option will be exercised, the impact of the option is included in the lease term for purposes of determining total future lease payments.

Costs associated with the Company’s operating lease expense were as follows:

	2021
Operating lease expense	$	325
Short-term lease expense		16
Variable lease expense		26
Total lease expense	$	367

Supplemental information related to the Company’s operating leases was as follows:

	2021
Operating cash flows – cash paid	$	373
New <br>right-of-use<br> assets	$	91
Weighted-average remaining lease term		9 years
Weighted-average discount rate		4.5	%

At December 31, 2021, the Company had commitments under operating leases requiring annual payments as follows:

	Total
2022	$	300
2023		268
2024		234
2025		205
2026		176
2027 and thereafter		835
		2,018
Less: amount representing interest		338
Total lease liabilities	$	1,680
Current operating liabilities	$	274
Non-current<br> operating lease liabilities		1,406
Total lease liabilities	$	1,680

As of December 31, 2021, the Company ha d additional operating leases, primarily for manufacturing facilities, that ha d not yet commenced of $12 million. These operating leases will commence during 2022 and have lease terms of 1 to 10 years.

The Company’s finance leases were not material for any of the periods presented.

2021 Annual Financial Statements 21

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

17. LONG-TERM EMPLOYEE BENEFIT LIABILITIES

Long-term employee benefit liabilities consist of:

	2021		2020
Defined benefit pension plans and other [a]	$	196	$	216
Termination and long-term service arrangements [b]		456		468
Retirement medical benefits plans [c]		26		29
Other long-term employee benefits		22		16
Long-term employee benefit obligations	$	700	$	729
[a]	Defined benefit pension plans
---	---

The Company sponsors a number of defined benefit pension plans and similar arrangements for its employees. All pension plans are funded to at least the minimum legal funding requirements, while European defined benefit pension plans are unfunded.

The weighted average significant actuarial assumptions adopted in measuring the Company’s obligations and costs are as follows:


Projected benefit obligation
Discount rate	2.4	%	2.1	%
Rate of compensation increase	2.7	%	2.4	%
Net periodic benefit cost
Discount rate	2.3	%	2.8	%
Rate of compensation increase	2.6	%	2.4	%
Expected return on plan assets	4.1	%	4.6	%

2021 Annual Financial Statements 22

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

Information about the Company’s defined benefit pension plans is as follows:

	2021			2020
Projected benefit obligation
Beginning of year	$	731		$	659
Current service cost		10			10
Interest cost		12			17
Actuarial (gains) losses and changes in actuarial assumptions		(37	)		43
Benefits paid		(27	)		(23	)
Divestiture		11			—
Foreign exchange		(11	)		25
End of year		689			731
Plan assets at fair value [i]
Beginning of year		517			478
Return on plan assets		25			42
Employer contributions		12			9
Benefits paid		(23	)		(18	)
Foreign exchange		1			6
End of year		532			517
Ending funded status – Plan deficit	$	157		$	214
Amounts recorded in the consolidated balance sheet
Non-current<br> asset <br>[note 12]	$	(41	)	$	(4	)
Current liability		2			2
Non-current<br> liability		196			216
Net amount	$	157		$	214
Amounts recorded in accumulated other comprehensive income Unrecognized actuarial losses	$	(112	)	$	(158	)
Net periodic benefit cost
Current service cost	$	10		$	10
Interest cost		12			17
Return on plan assets		(21	)		(21	)
Actuarial losses		8			5
Net periodic benefit cost	$	9		$	11

2021 Annual Financial Statements 23

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

[i]	The asset allocation of the Company’s defined benefit pension plans at December 31, 2021 and the target allocation for 2022 is as follows:
	2022			2021
---	---	---	---	---	---	---
Fixed income securities		55-80	%		63	%
Equity securities		25-50	%		33	%
Cash and cash equivalents		0-10	%		4	%
		100	%		100	%

Substantially all of the plan assets’ fair value has been determined using significant observable inputs [level 2] from indirect market prices on regulated financial exchanges.

The expected rate of return on plan assets was determined by considering the Company’s current investment mix, the historic performance of these investment categories and expected future performance of these investment categories.

[b]	Termination and long-term service arrangements

Pursuant to labour laws and national labour agreements in certain European countries and Mexico, the Company is obligated to provide lump sum termination payments to employees on retirement or involuntary termination, and long service payments contingent upon persons reaching a predefined number of years of service.

The weighted average significant actuarial assumptions adopted in measuring the Company’s projected termination and long-term service benefit obligations and net periodic benefit cost are as follows:

	2021			2020
Discount rate		2.4	%		2.1	%
Rate of compensation increase		3.1	%		3.1	%

2021 Annual Financial Statements 24

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

Information about the Company’s termination and long-term service arrangements is as follows:

	2021			2020
Projected benefit obligation
Beginning of year	$	478		$	446
Current service cost		23			32
Interest cost		9			8
Actuarial losses (gains) and changes in actuarial assumptions		10			(13	)
Benefits paid		(23	)		(27	)
Foreign exchange		(30	)		32
Ending funded status – Plan deficit	$	467		$	478
Amounts recorded in the consolidated balance sheet
Current liability	$	11		$	10
Non-current<br> liability		456			468
Net amount	$	467		$	478
Amounts recorded in accumulated other comprehensive income Unrecognized actuarial losses	$	(112	)	$	(106	)
Net periodic benefit cost
Current service cost	$	23		$	32
Interest cost		9			8
Actuarial losses		4			6
Net periodic benefit cost	$	36		$	46

2021 Annual Financial Statements 25

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

[c]	Retirement medical benefits plans

The Company sponsors a number of retirement medical plans which were assumed on certain acquisitions in prior years. These plans are frozen to new employees and incur no current service costs.

In addition, the Company sponsors a retirement medical benefits plan that was amended during 2009 such that substantially all employees retiring on or after August 1, 2009 no longer participate in the plan.

The weighted average discount rates used in measuring the Company’s projected retirement medical benefit obligations and net periodic benefit cost are as follows:


Retirement medical benefit obligations	2.8	%	2.4	%
Net periodic benefit cost	2.4	%	3.1	%
Health care cost inflation	6.4	%	6.6	%

Information about the Company’s retirement medical benefits plans are as follows:

	2021			2020
Projected benefit obligation
Beginning of year	$	30		$	29
Interest cost		1			1
Actuarial (gains) losses and changes in actuarial assumptions		(3	)		1
Benefits paid		(1	)		(1	)
Ending funded status – Plan deficit	$	27		$	30
Amounts recorded in the consolidated balance sheet
Current liability	$	1		$	1
Non-current<br> liability		26			29
Net amount	$	27		$	30
Amounts recorded in accumulated other comprehensive income Unrecognized actuarial gains		10			6
Total accumulated other comprehensive income	$	10		$	6
Net periodic benefit cost
Interest cost	$	1		$	1
Actuarial gains		(1	)		(1	)
Net periodic benefit cost	$	—		$	—

2021 Annual Financial Statements 26

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

[d]	Future benefit payments
	Defined<br> benefit<br> pension plans		Termination<br> and long<br> service<br> arrangements		Retirement<br> medical<br> benefits plans		Total
---	---	---	---	---	---	---	---	---
Expected employer contributions - 2022	$	13	$	11	$	1	$	25
Expected benefit payments:
2022	$	26	$	11	$	1	$	38
2023		25		14		1		40
2024		26		17		1		44
2025		27		19		2		48
2026		29		25		2		56
Thereafter		162		131		8		301
	$	295	$	217	$	15	$	527

18. OTHER LONG-TERM LIABILITIES

Other long-term liabilities consist of:

	2021		2020
Long-term portion of income taxes payable	$	147	$	199
Deferred revenue		127		52
Asset retirement obligation		37		39
Long-term portion of fair value of hedges <br>[note 21]		8		5
Other		57		37
	$	376	$	332

19. CAPITAL STOCK

[a]	At December 31, 2021, the Company’s authorized, issued and outstanding capital stock are as follows:

Preference shares - issuable in series -

The Company’s authorized capital stock includes 99,760,000 preference shares, issuable in series. None of these shares are currently issued or outstanding.

Common Shares -

Common Shares without par value [unlimited amount authorized] have the following attributes:

[i]	Each share is entitled to one vote per share at all meetings of shareholders.
[ii]	Each share shall participate equally as to dividends.
---	---
[b]	On November 10, 2021, the Toronto Stock Exchange [“TSX”] accepted the Company’s Notice of Intention to make a Normal Course Issuer Bid relating to the purchase for cancellation, as well as purchases to fund the Company’s stock-based compensation awards or programs and/or the Company’s obligations to its deferred profit sharing plans, of up to 29.9 million Magna Common Shares [the “2021 Bid”], representing approximately 10% of the Company’s public float of Common Shares. The Bid commenced on November 15, 2021 and will terminate no later than November 14, 2022.
---	---

2021 Annual Financial Statements 27

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

Previously, the Company had Normal Course Issuer Bids in place for the 12 month periods beginning in November 2020 and 2019.

The following is a summary of the Normal Course Issuer Bids [number of shares in the table below a r e expressed in whole numbers]:

	2021				2020
	Shares<br><br> <br>purchased		Cash<br><br> <br>amount		Shares<br> purchased		Cash<br> amount
2019 Bid		—	$	—		5,077,882	$	203
2020 Bid		3,318,523		301		—		—
2021 Bid		2,673,800		216		—		—
		5,992,323	$	517		5,077,882	$	203
[c]	The following table presents the maximum number of shares that would be outstanding if all the dilutive instruments outstanding at March 3, 2022 were exercised or converted:
---	---
Common Shares	296,643,367
---	---
Stock options <br>[i]	6,090,512
	302,733,879
[i]	Options to purchase Common Shares are exercisable by the holder in accordance with the vesting provisions and upon payment of the exercise price as may be determined from time to time pursuant to the Company’s stock option plans.
---	---

2021 Annual Financial Statements 28

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

20. ACCUMULATED OTHER COMPREHENSIVE LOSS

The following is a continuity schedule of accumulated other comprehensive loss:

	2021			2020
Accumulated net unrealized loss on translation of net investment in foreign operations
Balance, beginning of year	$	(551	)	$	(907	)
Net unrealized (loss) gain		(187	)		348
Repurchase of shares under normal course issuer bids <br>[note 19]		3			8
Balance, end of year		(735	)		(551	)
Accumulated net unrealized gain on cash flow hedges [b]
Balance, beginning of year		42			38
Net unrealized gains (loss)		34			(34	)
Reclassification of net (loss) gain to net income [a]		(52	)		38
Balance, end of year		24			42
Accumulated net unrealized loss on other long-term liabilities [b]
Balance, beginning of year		(224	)		(221	)
Net unrealized gains (loss)		26			(11	)
Reclassification of net gain to net income [a]		9			8
Balance, end of year		(189	)		(224	)
Total accumulated other comprehensive loss [c]	$	(900	)	$	(733	)

2021 Annual Financial Statements 29

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

[a]	The effects on net income of amounts reclassified from AOCL, with presentation location, were as follows:
	2021			2020
---	---	---	---	---	---	---
Cash flow hedges
Sales	$	49		$	(30	)
Cost of sales		21			(21	)
Income tax		(18	)		13
Net of tax		52			(38	)
Other long-term liabilities
Cost of sales		(11	)		(9	)
Income tax		2			1
Net of tax		(9	)		(8	)
Total gain (loss) reclassified to net income	$	43		$	(46	)
[b]	The amount of income tax benefit that has been allocated to each component of other comprehensive loss is as follows:
---	---
	2021			2020
---	---	---	---	---	---	---
Accumulated net unrealized loss on translation of net investment in foreign operations	$	4		$	7
Accumulated net unrealized gain on cash flow hedges
Balance, beginning of year		(15	)		(14	)
Net unrealized (gain) loss		(11	)		12
Reclassification of net loss to net income		18			(13	)
Balance, end of year		(8	)		(15	)
Accumulated net unrealized loss on other long-term liabilities
Balance, beginning of year		35			35
Net unrealized loss		(8	)		1
Reclassification of net loss to net income		(2	)		(1	)
Balance, end of year		25			35
Total income tax benefit	$	21		$	27
[c]	The amount of other comprehensive loss that is expected to be reclassified to net income during 2022 is $26 million.
---	---

2021 Annual Financial Statements 30

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

21. FINANCIAL INSTRUMENTS

[a]	Foreign exchange contracts

At December 31, 2021, the Company had outstanding foreign exchange forward contracts representing commitments to buy and sell various foreign currencies. Significant commitments are as follows:

	For Canadian dollars					For U.S. dollars
Buy<br> <br>(Sell)	U.S.<br> dollar<br> amount			Weighted<br> average<br> rate		Peso<br> amount			Weighted<br> average<br> rate
2022		176			1.26579		7,453			0.04619
2022		(851	)		0.78014		(6	)		21.20347
2023		12			1.28866		4,835			0.04394
2023		(457	)		0.78021		(8	)		23.51812
2024		—			—		1,027			0.04208
2024		(236	)		0.77730		—			—
2025		(62	)		0.77950		—			—
		(1,418	)				13,301
	For euros
---	---	---	---	---	---	---	---	---	---
Buy<br> <br>(Sell)	U.S<br> dollar<br> amount			Weighted<br> average<br> rate		Czech<br> koruna<br> amount		Weighted<br> average<br> rate
2022		137			0.84650		4,952		0.03808
2022		(121	)		1.18728		—		—
2023		53			0.82876		3,196		0.03739
2023		(74	)		1.19265		—		—
2024		11			0.82746		1,227		0.03652
2024		(18	)		1.21729		—		—
2025		(3	)		1.18615		—		—
		(15	)				9,375

Based on forward foreign exchange rates as at December 31, 2021 for contracts with similar remaining terms to maturity, the pre-tax gains and losses relating to the Company’s foreign exchange forward contracts recognized in other comprehensive income were $66 million and $14 million, respectively [note 20] .

The Company does not enter into foreign exchange forward contracts for speculative purposes.

2021 Annual Financial Statements 31

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

[b]	Financial assets and liabilities

The Company’s financial assets and liabilities consist of the following:

	2021			2020
Financial assets
Cash, cash equivalents and restricted cash equivalents	$	2,948		$	3,374
Accounts receivable		6,307			6,394
Warrants and public and private equity investments		561			267
Long-term receivables included in other assets <br>[note 12]		184			209
	$	10,000		$	10,244
Financial liabilities
Long-term debt (including portion due within one year)	$	3,993		$	4,102
Accounts payable		6,465			6,266
	$	10,458		$	10,368
Derivatives designated as effective hedges, measured at fair value
Foreign currency contracts
Prepaid expenses	$	34		$	52
Other assets		11			16
Other accrued liabilities		(12	)		(11	)
Other long-term liabilities		(8	)		(5	)
	$	25		$	52

2021 Annual Financial Statements 32

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

[c]	Derivatives designated as effective hedges, measured at fair value

The Company presents derivatives that are designated as effective hedges at gross fair values in the consolidated balance sheets. However, master netting and other similar arrangements allow net settlements under certain conditions. The following table shows the Company’s derivative foreign currency contracts at gross fair value as reflected in the consolidated balance sheets and the unrecognized impacts of master netting arrangements:

	Gross<br><br> <br>amounts<br> presented<br><br> <br>in consolidated<br> balance sheets			Gross<br><br> <br>amounts<br><br> <br>not offset<br><br> <br>in consolidated<br> balance sheets			Net<br> amounts
December 31, 2021
Assets	$	45		$	14		$	31
Liabilities	$	(20	)	$	(14	)	$	(6	)
December 31, 2020
Assets	$	68		$	13		$	55
Liabilities	$	(16	)	$	(13	)	$	(3	)
[d]	Fair value
---	---

The Company determined the estimated fair values of its financial instruments based on valuation methodologies it believes are appropriate; however, considerable judgment is required to develop these estimates. Accordingly, these estimated fair values are not necessarily indicative of the amounts the Company could realize in a current market exchange. The estimated fair value amounts can be materially affected by the use of different assumptions or methodologies. The methods and assumptions used to estimate the fair value of financial instruments are described below:

Cash and cash equivalents, accounts receivable, and accounts payable.

Due to the short period to maturity of the instruments, the carrying values as presented in the consolidated balance sheets are reasonable estimates of fair values.

Publicly traded and private equity securities

The fair value of the Company’s investments in publicly traded equity securities is determined using the closing price on the measurement date, as reported on the stock exchange on which the securities are traded. [Level 1 input based on the GAAP fair value hierarchy.]

The Company estimates the value of its private equity securities based on valuation methods using the observable transaction price at the transaction date and other observable inputs including rights and obligations of the securities held by the Company. [Level 3 input based on the GAAP fair value hierarchy.]

Warrants

The Company estimates the value of its warrants based on the quoted prices in the active market for Fisker’s common shares. [Level 2 inputs based on the GAAP fair value hierarchy.]

Term debt

The Company’s term debt includes $455 million due within one year. Due to the short period to maturity of this debt, the carrying value as presented in the consolidated balance sheets is a reasonable estimate of its fair value.

2021 Annual Financial Statements 33

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

Senior Notes

The fair value of our Senior Notes are classified as Level 1 when we use quoted prices in active markets and Level 2 when the quoted prices are from less active markets or when other observable inputs are used to determine fair value. At December 31, 2021, the net book value of the Company’s Senior Notes was $3.8 billion and the estimated fair value was $4.0 billion.

[e]	Credit risk

The Company’s financial assets that are exposed to credit risk consist primarily of cash and cash equivalents, accounts receivable, and foreign exchange and commodity forward contracts with positive fair values.

Cash and cash equivalents, which consist of short-term investments, are only invested in bank term deposits and bank commercial paper with an investment grade credit rating. Credit risk is further reduced by limiting the amount which is invested in certain major financial institutions.

The Company is also exposed to credit risk from the potential default by any of its counterparties on its foreign exchange forward contracts. The Company mitigates this credit risk by dealing with counterparties who are major financial institutions that the Company anticipates will satisfy their obligations under the contracts.

In the normal course of business, the Company is exposed to credit risk from its customers, substantially all of which are in the automotive industry and are subject to credit risks associated with the automotive industry. For the year ended December 31, 2021, sales to the Company’s six largest customers represented 78% [2020 - 78%] of the Company’s total sales; and substantially all of its sales are to customers in which the Company has ongoing contractual relationships. In determining the allowance for expected credit losses, the Company considers changes in customer’s credit ratings, liquidity, customer’s historical payments and loss experience, current economic conditions and the Company’s expectations of future economic conditions.

[f]	Currency risk

The Company is exposed to fluctuations in foreign exchange rates when manufacturing facilities have committed to the delivery of products for which the selling price has been quoted in currencies other than the facilities’ functional currency, and when materials and equipment are purchased in currencies other than the facilities’ functional currency. In an effort to manage this net foreign exchange exposure, the Company employs hedging programs, primarily through the use of foreign exchange forward contracts [note 21[a]] .

[g]	Interest rate risk

The Company is not exposed to significant interest rate risk due to the short-term maturity of its monetary current assets and current liabilities. In particular, the amount of interest income earned on cash and cash equivalents is impacted more by investment decisions made and the demands to have available cash on hand, than by movements in interest rates over a given period.

In addition, the Company is not exposed to interest rate risk on its term debt and Senior Notes as the interest rates on these instruments are fixed.

[h]	Equity price risk

Public equity securities and warrants

The Company’s public equity securities and warrants are subject to market price risk due to the risk of loss in value that would result from a decline in the market price of the common shares or underlying common shares.

2021 Annual Financial Statements 34

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

22. CONTINGENCIES

From time to time, the Company may become involved in regulatory proceedings, or become liable for legal, contractual and other claims by various parties, including customers, suppliers, former employees, class action plaintiffs and others. On an ongoing basis, the Company attempts to assess the likelihood of any adverse judgments or outcomes to these proceedings or claims, together with potential ranges of probable costs and losses. A determination of the provision required, if any, for these contingencies is made after analysis of each individual issue. The required provision may change in the future due to new developments in each matter or changes in approach such as a change in settlement strategy in dealing with these matters.

[a]	In September 2014, the Conselho Administrativo de Defesa Economica [“CADE”], Brazil’s Federal competition authority, attended at one of the Company’s operating divisions in Brazil to obtain information in connection with an ongoing antitrust investigation relating to suppliers of automotive door latches and related products [“access mechanisms”].

In May 2019, CADE informed the Company that it completed its preliminary investigation and, based on a review of the evidence, had commenced a formal administrative proceeding into alleged anticompetitive behaviour relating to access mechanisms involving the Company.

Administrative proceedings of this nature can often continue for several years. At this time, management is unable to predict the duration or outcome of the Brazilian administrative proceeding, including whether any operating divisions of the Company will be found liable for any violation of law or the extent or magnitude of any liability, if any. In the event that wrongful conduct is found, CADE may impose administrative penalties or fines taking into account several mitigating and aggravating factors. Administrative fines are tied to the sales in Brazil of the applicable Magna companies in the fiscal year prior to the commencement of the formal administrative proceeding.

The Company’s policy is to comply with all applicable laws, including antitrust and competition laws. Based on a previously completed global review of legacy antitrust risks which led to a September 2020 settlement with the European Commission where Magna received full immunity regarding two separate bilateral cartels involving the supply of closure systems, Magna does not currently anticipate any material liabilities. However, we could be subject to restitution settlements, civil proceedings, reputational damage and other consequences, including as a result of the matters specifically referred to above.

[b]

The Company is at risk for product warranty costs, which include product liability and recall costs, and is currently experiencing increased customer pressure to assume greater warranty responsibility. For most types of products, the Company only accounts for existing or probable product warranty claims. However, for certain complete vehicle assembly, powertrain systems and electronics contracts, the Company records an estimate of future warranty-related costs based on the terms of the specific customer agreements and/or the Company’s warranty experience. Product liability and recall provisions are established based on the Company’s best estimate of the amounts necessary to settle existing claims, which typically take into account: the number of units that may be returned; the cost of the product being replaced; labour to remove and replace the defective part; and the customer’s administrative costs relating to the recall. Where applicable, such provisions are booked net of recoveries from sub-suppliers and along with related insurance recoveries. Due to the uncertain nature of the net costs, actual product liability costs could be materially different from the Company’s best estimates of future costs [note 14] .

2021 Annual Financial Statements 35

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

23. SEGMENTED INFORMATION

[a]	Magna is a global automotive supplier which has complete vehicle engineering and contract manufacturing expertise, as well as product capabilities which include body, chassis, exterior, seating, powertrain, active driver assistance, electronics, mirrors & lighting, mechatronics and roof systems. Magna also has electronic and software capabilities across many of these areas.

The Company is organized under four operating segments: Body Exteriors & Structures, Power & Vision, Seating Systems and Complete Vehicles. These segments have been determined on the basis of technological opportunities, product similarities, and market and operating factors, and are also the Company’s reportable segments.

The Company’s chief operating decision maker uses Adjusted Earnings before Interest and Income Taxes [“Adjusted EBIT”] as the measure of segment profit or loss, since management believes Adjusted EBIT is the most appropriate measure of operational profitability or loss for its reporting segments. Adjusted EBIT is calculated by taking Net income and adding back Income taxes, Interest expense, net, and Other expense, net.

The accounting policies of each segment are the same as those set out under “Significant Accounting Policies” [note 1] . All intersegment sales and transfers are accounted for at fair market value.

2021 Annual Financial Statements 36

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

[a]	The following tables show segment information for the Company’s reporting segments and a reconciliation of Adjusted EBIT to the Company’s consolidated income before income taxes:
	2021
---	---	---	---	---	---	---	---	---	---	---	---	---	---
									Depreciation		Equity
	Total			External		Adjusted			and		loss
	sales			sales		EBIT			amortization		(income)
Body Exteriors & Structures	$	14,477		$	14,196	$	820		$	743	$	13
Power & Vision		11,342			11,129		738			554		(134	)
Seating Systems		4,891			4,851		152			92		(9	)
Complete Vehicles		6,106			6,057		287			103		(10	)
Corporate & Other [i]		(574	)		9		67			20		(8	)
Total Reportable Segments	$	36,242		$	36,242	$	2,064		$	1,512	$	(148	)
	2020
									Depreciation
	Total			External		Adjusted			and		Equity
	sales			sales		EBIT			amortization		income
Body Exteriors & Structures	$	13,550		$	13,292	$	817		$	727	$	—
Power & Vision		9,722			9,553		495			464		(179	)
Seating Systems		4,455			4,433		107			73		(6	)
Complete Vehicles		5,415			5,363		274			84		(3	)
Corporate & Other [i]		(495	)		6		(17	)		18		(1	)
Total Reportable Segments	$	32,647		$	32,647	$	1,676		$	1,366	$	(189	)
	2021
									Fixed		Fixed
	Net								assets,		asset
	assets			Investments		Goodwill			net		additions
Body Exteriors & Structures	$	7,349		$	15	$	471		$	4,599	$	711
Power & Vision		6,066			735		1,269			2,620		522
Seating Systems		1,379			147		270			485		73
Complete Vehicles		623			93		112			501		54
Corporate & Other [i]		813			603		—			88		12
Total Reportable Segments	$	16,230		$	1,593	$	2,122		$	8,293	$	1,372
	2020
									Fixed		Fixed
	Net								assets,		asset
	assets			Investments		Goodwill			net		additions
Body Exteriors & Structures	$	7,536		$	31	$	478		$	4,725	$	581
Power & Vision		5,529			371		1,320			2,666		440
Seating Systems		1,118			144		176			418		70
Complete Vehicles		671			80		121			578		34
Corporate & Other [i]		710			321		—			88		20
Total Reportable Segments	$	15,564		$	947	$	2,095		$	8,475	$	1,145
[i]	Included in Corporate and Other Adjusted EBIT are intercompany fees charged to the automotive segments.
---	---

2021 Annual Financial Statements 37

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

[b]	The following table reconciles Net income from operations to Adjusted EBIT:
	2021		2020
---	---	---	---	---
Net Income	$	1,553	$	677
Add:
Interest expense, net		78		86
Other expense, net		38		584
Income taxes		395		329
Adjusted EBIT	$	2,064	$	1,676
[c]	The following table shows Net Assets for the Company’s reporting segments:
---	---
	2021			2020
---	---	---	---	---	---	---
Total Assets	$	29,086		$	28,605
Deduct assets not included in segment net assets:
Cash and cash equivalents		(2,948	)		(3,268	)
Deferred tax assets		(421	)		(372	)
Long-term receivables from joint venture partners		(15	)		(66	)
Deduct liabilities included in segment net assets:
Accounts payable		(6,465	)		(6,266	)
Accrued salaries and wages		(851	)		(815	)
Other accrued liabilities		(2,156	)		(2,254	)
Segment Net Assets	$	16,230		$	15,564
[d]	The following table aggregates external revenues by customer as follows:
---	---
	2021	2020
---	---	---
BMW
Daimler AG
General Motors
Stellantis
Ford Motor Company
Volkswagen
Other
	36,242	32,647

All values are in US Dollars.

2021 Annual Financial Statements 38

MAGNA INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[All amounts in U.S. dollars and all tabular amounts in millions, except per share figures, unless otherwise noted]

[e]	The following table summarizes external revenues and long-lived assets by geographic region:
	External Sales				Fixed Assets, Net
---	---	---	---	---	---	---	---	---
	2021		2020		2021		2020
North America
United States	$	8,612	$	8,210	$	1,686	$	1,610
Canada		4,253		4,144		960		974
Mexico		3,833		3,359		1,210		1,247
		16,698		15,713		3,856		3,831
Europe
Austria		7,661		6,817		771		867
Germany		3,989		4,366		972		1,095
Czech Republic		931		912		274		293
Poland		610		535		220		221
Russia		371		345		110		120
Spain		331		323		79		82
United Kingdom		344		292		208		214
Italy		296		256		237		265
Turkey		293		247		6		9
France		262		142		58		62
Slovakia		204		126		273		283
Other Europe		139		111		208		222
		15,431		14,472		3,416		3,733
Asia Pacific
China		3,534		1,921		875		758
India		147		79		83		89
Other Asia Pacific		21		31		7		6
		3,702		2,031		965		853
Rest of World		411		431		56		58
	$	36,242	$	32,647	$	8,293	$	8,475

24. SUBSEQUENT EVENT

NORMAL COURSE ISSUER BID

Subsequent to December 31, 2021, we purchased 1,600,500 Common Shares for cancellation and 165,773 Common Shares to satisfy stock-based compensation awards each under our existing normal course issuer bid for cash consideration of $132 million.

SENIOR NOTES REDEMPTION

On February 28, 2022, the Company redeemed for cash the entire aggregate principle amount outstanding of the Cdn$425 million

3.100%

Senior Notes due 2022 [“the Notes”]. The redemption price for the Notes was Cdn$430 million, resulting in a loss on early extinguishment of Cdn$5 million that reflects the payment of the premium to redeem the Notes and the write-off of the unamortized debt issuance costs.

2021 Annual Financial Statements 39

EX-3

Exhibit 3

LOGO

Magna International Inc.

Management’s Discussion and Analysis of Results of Operations and Financial Position

December 31, 2021

MAGNA INTERNATIONAL INC.

Management’s Discussion and Analysis of Results of Operations and Financial Position

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

This MD&A should be read in conjunction with the audited consolidated financial statements and MD&A for the year ended December 31, 2021 included in our 2021 Annual Report to Shareholders.

This MD&A may contain statements that are forward looking. Refer to the “Forward-Looking Statements” section in this MD&A for a more detailed discussion of our use of forward-looking statements.

This MD&A has been prepared as at March 3, 2022.

USE OF NON-GAAP FINANCIAL MEASURES

In addition to results presented in accordance with accounting principles generally accepted in the United States of America [“U.S. GAAP”], this report includes the use of Adjusted earnings (loss) before interest and taxes [“Adjusted EBIT”], Adjusted EBIT as a percentage of sales, Adjusted diluted earnings per share, Return on Invested Capital, Adjusted Return on Invested Capital and Return on Equity [collectively, the “Non-GAAP Measures”]. We believe these non-GAAP financial measures provide additional information that is useful to investors in understanding our underlying performance and trends through the same financial measures employed by our management. Readers should be aware that Non-GAAP Measures have no standardized meaning under U.S. GAAP and accordingly may not be comparable to the calculation of similar measures by other companies. We believe that Return on Invested Capital and Return on Equity are useful to both management and investors in their analysis of our results of operations and reflect our ability to generate returns. Similarly, we believe that Adjusted EBIT, Adjusted EBIT as a percentage of sales, Adjusted diluted earnings per share and Adjusted Return on Invested Capital provide useful information to our investors for measuring our operational performance as they exclude certain items that are not reflective of ongoing operating profit and facilitate a comparison with prior periods. The presentation of any Non-GAAP Measures should not be considered in isolation or as a substitute for our related financial results prepared in accordance with U.S. GAAP. Non-GAAP financial measures are presented together with the most directly comparable U.S. GAAP financial measure, and a reconciliation to the most directly comparable U.S. GAAP financial measure, can be found in the “Non-GAAP Financial Measures Reconciliation” section of this MD&A.

HIGHLIGHTS

PRODUCTION

•

Throughout 2021, the automotive industry experienced supply constraints, in particular semiconductor chip shortages, which negatively impacted global light vehicle production. Largely due to the supply constraints, our customers’ production schedules were at times unpredictable, causing labour and other operational inefficiencies at our facilities. Our results in 2021 were also negatively impacted by inflationary cost increases in production inputs including commodities, labour and freight.

•

During 2020, COVID-19 had a significant impact on the automotive industry and our business, largely as a result of the unprecedented, industry-wide production suspensions in the first half of 2020.

---

SALES & EARNINGS

•	Global light vehicle production increased 4% in 2021, including an increase of 1% in North America and a decrease<br>of 3% in Europe, our two largest markets. In addition, light vehicle production increased 5% in China.
•	Total sales increased 11% to $36.2 billion, compared to $32.6 billion in 2020, primarily reflecting the<br>launch of new programs, the net strengthening of foreign currencies against the U.S. dollar, net business combinations, higher global light vehicle production and higher assembly volumes.
---	---
•	Diluted earnings per share were $5.00 in 2021, compared to $2.52 in 2020. The increase in earnings was primarily<br>due to higher contribution on higher sales, partially offset by the factors discussed below under “Results of Operations – Earnings Per Share”.
---	---
•	We recorded $101 million in restructuring and impairment charges in 2021. These and other factors included<br>in Other expense, net in 2021 are discussed under “Results of Operations – Other Expense, Net”.
---	---
•	Adjusted diluted earnings per share were $5.13, compared to $3.95 in 2020.
---	---

CASH & CAPITAL

•	Cash from operating activities was $2.9 billion, compared to $3.3 billion in 2020, largely reflecting<br>an investment in operating assets and liabilities in 2021 compared to generation of cash from operating assets and liabilities in 2020. Our increase in net income was partially offset by lower items not involving current cash flows, in particular<br>the non-cash impairment charges recorded in 2020.
•	We continued to invest in our business, including:
---	---
•	$1.4 billion for fixed assets;
---	---
•	$517 million associated with the formation of a new joint venture with LG Electronics [“LG”];<br>
---	---
•	$403 million in investment and other asset spending; and
---	---
•	$81 million for public and private equity investments, acquisitions and business combinations.<br>
---	---
•	We returned over $1 billion to shareholders in 2021 through $517 million in share repurchases and<br>$514 million in dividends.
---	---
•	Our Board of Directors increased our quarterly dividend by 5% to $0.45 per share reflecting its continued<br>confidence in Magna’s future.
---	---
Magna International Inc. Annual Report 2021	1
---	---

STRATEGIC UPDATES – ELECTRIFICATION, NEW OEMS AND ADAS

•	Electrification – we continue to advance our position in electrification in order to capitalize on the<br>global shift towards vehicle electrification, including:
•	Completing our joint venture transaction with LG to manufacture e-motors,<br>inverters and on-board chargers, as well as complete e-drive systems for certain automakers.
---	---
•	Winning two additional integrated e-drive programs, including both<br>primary and secondary drive systems.
---	---
•	Being awarded a new program from Daimler for a family of dual-clutch transmissions, including hybrid variants.<br>
---	---
•	Launching our first battery enclosures business for General Motors on a new electric vehicle model.<br>
---	---
•	New OEMs – the global shift to electrification has fostered the emergence of a number of new, electric<br>vehicle [“EV”] focused OEMs. We continue to pursue opportunities and grow our business with such OEMs. Achievements include:
---	---
•	The launch of the Arcfox α-S, the second vehicle in BJEV’s Arcfox brand, in our complete vehicle<br>manufacturing joint venture operation with BJEV.
---	---
•	Reaching the second milestone in our cooperation with Fisker Inc. [“Fisker”], signing a long-term<br>manufacturing agreement for the production of the Fisker Ocean SUV at our assembly facility in Graz, Austria. Manufacturing is scheduled to begin in November of 2022.
---	---
•	ADAS – we continue to progress with developing our advanced driver assistance systems business, as evidenced<br>by:
---	---
•	The award of a new program for advanced front cameras from a European-based global OEM.
---	---
•	The addition of more than 120 employees from Optimus Ride, to enhance Magna’s capabilities in ADAS.<br>
---	---
•	The award of an industry-first integrated driver and occupant monitoring system with a German-based automaker.<br>
---	---

ACQUISITIONS AND DIVESTITURES

•	We disposed of three Body Exteriors & Structures operations based in Germany.
•	We reached a binding agreement to dispose of our seating operations in Brazil.
---	---
•	We acquired Klein Automotive, a metalforming operation in the Czech Republic.
---	---
•	In July, we entered an agreement for the acquisition of Veoneer, Inc. [“Veoneer”]. Subsequent to our<br>agreement, Qualcomm Incorporated [“Qualcomm”] made a separate proposal to acquire Veoneer. In October, the Board of Directors of Veoneer determined that the proposal by Qualcomm to acquire Veoneer was a superior proposal considering the<br>terms of the merger agreement between us and Veoneer. Consequently, Veoneer terminated its merger agreement with us.
---	---

LEADERSHIP

•	Our Board approved the following management changes effective January 1, 2022:
•	Vince Galifi, previously Executive Vice President and Chief Financial Officer was appointed as President.<br>
---	---
•	Pat McCann, previously Senior Vice-President, Finance was promoted to Executive Vice-President and Chief<br>Financial Officer.
---	---
•	Anton Mayer, previously Executive Vice-President, Research & Development was promoted to Executive<br>Vice-President and Chief Technology Officer.
---	---

OTHER

•	We committed to achieving carbon neutrality in our operations (Scope 1 and 2) in Europe by 2025 and globally by<br>2030.

OVERVIEW

OUR BUSINESS^(1)^

Magna is more than one of the world’s largest suppliers in the automotive space. We are a mobility technology company with a global, entrepreneurial-minded team of over 158,000 employees^(2)^ and an organizational structure designed to innovate like a startup. With 60+ years of expertise, and a systems approach to design, engineering and manufacturing that touches nearly every aspect of the vehicle, we are positioned to support advancing mobility in a transforming industry. Our global network includes 343 manufacturing operations and 91 product development, engineering and sales centres spanning 28 countries. Our common shares trade on the Toronto Stock Exchange (MG) and the New York Stock Exchange (MGA).

^1^	Manufacturing operations, product development, engineering and sales centres include certain operations<br>accounted for under the equity method.
^2^	Number of employees includes over 149,000 employees at our wholly owned or controlled entities and over 9,000<br>employees at certain operations accounted for under the equity method.
---	---
2	Magna International Inc. Annual Report 2021
---	---

FORWARD-LOOKING STATEMENTS

Certain statements in this MD&A may constitute “forward-looking information” or “forward-looking statements” (collectively, “forward-looking statements”). Any such forward-looking statements are intended to provide information about management’s current expectations and plans and may not be appropriate for other purposes. Forward-looking statements may include financial and other projections, as well as statements regarding our future plans, strategic objectives or economic performance, or the assumptions underlying any of the foregoing, and other statements that are not recitations of historical fact. We use words such as “may”, “would”, “could”, “should”, “will”, “likely”, “expect”, “anticipate”, “believe”, “intend”, “plan”, “aim”, “forecast”, “outlook”, “project”, “estimate”, “target” and similar expressions suggesting future outcomes or events to identify forward-looking statements.

Forward-looking statements in this document include, but are not limited to, statements relating to: our ability to capitalize on growth in vehicle electrification and ADAS; our ability to capitalize on opportunities with new electric vehicle focused OEMs; our carbon neutrality commitments.

Forward-looking statements are based on information currently available to us, and are based on assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. While we believe we have a reasonable basis for making any such forward-looking statements, they are not a guarantee of future performance or outcomes. Whether actual results and developments conform to our expectations and predictions is subject to a number of risks, assumptions and uncertainties, many of which are beyond our control, and the effects of which can be difficult to predict, including the risk factors which are described later in this MD&A.

INDUSTRY TRENDS

Our operating results are primarily dependent on the levels of North American, European and Chinese car and light truck production by our customers. While we supply systems and components to every major original equipment manufacturer [“OEM”], we do not supply systems and components for every vehicle, nor is the value of our content consistent from one vehicle to the next. As a result, customer and program mix relative to market trends, as well as the value of our content on specific vehicle production programs, are also important drivers of our results.

Ordinarily, OEM production volumes are aligned with vehicle sales levels and thus affected by changes in such levels. Aside from vehicle sales levels, production volumes are typically impacted by a range of factors, including: general economic and political conditions; labour disruptions; free trade arrangements; tariffs; relative currency values; commodities prices; supply chain and infrastructure; availability and relative cost of skilled labour; regulatory considerations, including those related to environmental emissions and safety standards; and other factors. Additionally, COVID-19 can impact vehicle production volumes, including through: mandatory stay-at-home orders which restrict production; elevated employee absenteeism; and supply chain disruptions, such as the semiconductor chip shortage currently impacting global vehicle production volumes.

Overall vehicle sales levels are significantly affected by changes in consumer confidence levels, which may in turn be impacted by consumer perceptions and general trends related to the job, housing and stock markets, as well as other macroeconomic and political factors. Other factors which typically impact vehicle sales levels and thus production volumes include: interest rates and/or availability of credit; fuel and energy prices; relative currency values; regulatory restrictions on use of vehicles in certain megacities; and other factors. Additionally, COVID-19 can impact vehicle sales through: mandatory stay-at-home orders which restrict operations of car dealerships, as well as through a deterioration of consumer confidence.

While the foregoing economic, political and other factors are part of the general context in which the global automotive industry operates, there were a number of significant industry trends that impacted us during 2021, including:

•	supply chain disruptions, including the global shortage of semiconductor chips that materially affected global<br>automotive production volumes, as well as shortages of certain commodities;
•	operational inefficiencies related to “start-stop” production due to semiconductor chip and other<br>supply disruptions at our customers’ facilities;
---	---
•	the COVID-19 pandemic, including the impact of shipping capacity<br>constraints, and labour shortages in the value chain;
---	---
•	inflationary price increases in the value chain;
---	---
•	energy supply disruptions, including unplanned production shutdowns of some of our, our sub-suppliers’ and customers’ manufacturing facilities in China due to electricity rationing.
---	---

We continue to implement a business strategy which is rooted in our best assessment as to the rate and direction of change in the automotive industry, including with respect to trends related to vehicle electrification and advanced driver assistance systems, as well as future mobility business models. Our short and medium-term operational success, as well as our ability to create long-term value through our business strategy, are subject to a number of risks and uncertainties which are discussed later in this MD&A.

Magna International Inc. Annual Report 2021	3

RESULTS OF OPERATIONS

AVERAGE FOREIGN EXCHANGE ****

	2021
1 Canadian dollar equals U.S. dollars	****	0.798	0.746	+7	%
1 euro equals U.S. dollars	****	1.183	1.141	+4	%
1 Chinese renminbi equals U.S. dollars	****	0.155	0.145	+7	%

The preceding table reflects the average foreign exchange rates between the most common currencies in which we conduct business and our U.S. dollar reporting currency.

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

LIGHT VEHICLE PRODUCTION VOLUMES

Our operating results are mostly dependent on light vehicle production in the regions reflected in the table below:

Light Vehicle Production Volumes (thousands of units)

	2021						2020						Change
	NorthAmerica		Europe		China		North<br>America		Europe		China		North<br>America			Europe			China
For the three months ended:
March 31	****	3,753	****	4,902	****	6,048		3,777		4,699		3,222		-1	%		+4	%		+88	%
June 30	****	3,212	****	4,111	****	5,715		1,241		2,083		5,839		+159	%		+97	%		-2	%
September 30	****	2,931	****	3,051	****	5,467		3,945		4,276		6,265		-26	%		-29	%		-13	%
December 31	****	3,249	****	3,894	****	7,272		4,040		5,396		8,101		-20	%		-28	%		-10	%
Full Year	****	13,145	****	15,958	****	24,502		13,003		16,454		23,427		+1	%		-3	%		+5	%

Overall, global light vehicle production increased 4% in 2021, however, both 2020 and 2021 were impacted by significant global events which led to significant variability in production volumes throughout both years. Light vehicle production volumes were severely impacted by COVID-19 pandemic related production shutdowns in the first half of 2020, while the second half of 2020 saw a strong rebound. In each of the first three quarters of 2021 there was sequential weakening of light vehicle production volumes as the semiconductor chip shortage became progressively worse. The fourth quarter of 2021 saw some sequential recovery, however global production volumes were still lower compared to the fourth quarter of 2020.

4	Magna International Inc. Annual Report 2021

RESULTS OF OPERATIONS – FOR THE YEAR ENDED DECEMBER 31, 2021

SALES

LOGO

Sales increased 11% or $3.59 billion to $36.24 billion for 2021 compared to $32.65 billion for 2020 primarily as a result of higher global light vehicle production and higher assembly volumes, including the negative impact of the COVID-19 pandemic during 2020 partially offset by the negative impact of production disruptions due to semiconductor chip shortages during 2021. In addition, sales increased due to:

•	the launch of programs during or subsequent to 2020;
•	the net strengthening of foreign currencies against the U.S. dollar, which increased reported U.S. dollar sales<br>by $983 million; and
---	---
•	net business combinations during 2021 which increased sales by $942 million.
---	---

These factors were partially offset by:

•	the end of production of certain programs; and
•	net customer price concessions subsequent to 2020.
---	---

COST OF GOODS SOLD

	2021		2020		Change
Material	$	21,817	$	19,750	$	2,067
Direct labour	****	2,781		2,498		283
Overhead	****	6,499		5,959		540
Cost of goods sold	$	31,097	$	28,207	$	2,890

Cost of goods sold increased $2.89 billion to $31.10 billion for 2021 compared to $28.21 billion for 2020, primarily due to:

•	higher material, direct labour and overhead associated with higher sales;
•	the net strengthening of foreign currencies against the U.S. dollar, which increased reported U.S. dollar cost of<br>goods sold by $833 million;
---	---
•	net business combinations during 2021;
---	---
•	higher commodity, freight and energy costs in proportion to sales;
---	---
•	higher labour and other operational inefficiencies in proportion to sales due to the unpredictability of our<br>customers’ production schedules in 2021; and
---	---
•	higher launch costs.
---	---

These factors were partially offset by:

•	cost savings and operating efficiencies, including as a result of implemented restructuring actions;<br>
•	lower net application engineering costs related to three upcoming ADAS program launches; and<br>
---	---
•	lower net warranty costs of $83 million.
---	---

DEPRECIATION AND AMORTIZATION

Depreciation and amortization increased $146 million to $1.51 billion for 2021 compared to $1.37 billion for 2020 primarily due to:

•	net business combinations during 2021 which increased depreciation and amortization by $45 million;<br>
•	the net strengthening of foreign currencies against the U.S. dollar, which increased reported U.S. dollar<br>depreciation and amortization by $42 million; and
---	---
•	increased capital deployed at new and existing facilities to support the launch of programs subsequent to 2020.<br>
---	---
Magna International Inc. Annual Report 2021	5
---	---

SELLING, GENERAL AND ADMINISTRATIVE [“SG&A”]

SG&A expense increased $130 million to $1.72 billion for 2021 compared to $1.59 billion for 2020, primarily as a result of:

•	a $45 million provision on an engineering services contract with the automotive unit of Evergrande in our<br>Complete Vehicles segment;
•	the net strengthening of foreign currencies against the U.S. dollar, which increased reported U.S. dollar<br>SG&A expense by $44 million;
---	---
•	net business combinations during 2021 which increased SG&A by $44 million;
---	---
•	higher consulting costs;
---	---
•	higher labour and benefit costs;
---	---
•	costs incurred at new facilities; and
---	---
•	higher incentive compensation and employee profit sharing due to improved financial performance.<br>
---	---

These factors were partially offset by:

•	a favourable value-added tax settlement in Brazil during 2021;
•	transactional foreign exchange gains in 2021 compared to transactional foreign exchange losses in 2020; and<br>
---	---
•	higher royalty and licencing income.
---	---

INTEREST EXPENSE, NET

Net interest expense decreased $8 million to $78 million for 2021 compared to $86 million for 2020 primarily as a result of interest income recognized on a favourable value-added tax settlement in Brazil during 2021 and interest earned on higher cash balances, partially offset by an increase in long-term borrowings due to the issuance of $750 million of 2.45% fixed rate Senior notes during the second quarter of 2020.

EQUITY INCOME

Equity income decreased $41 million to $148 million for 2021 compared to $189 million for 2020, primarily as a result of the reorganization of certain transmission joint ventures which resulted in these entities no longer being equity-accounted for, and net business combinations during 2021, partially offset by earnings on higher sales at certain other equity-accounted entities.

OTHER EXPENSE, NET

	2021			2020
Restructuring and impairments ^(1)^	$	101	****	$	269
Net losses (gains) on investments ^(2)^	****	2	****		(32	)
Merger agreement termination fee ^(3)^	****	(100	)		—
Gain on business combinations ^(4)^	****	(40	)		—
Loss on sale of business ^(5)^	****	75	****		—
Impairments and loss on sale of equity-accounted investments ^(6)^	****	—	****		347
Other expense, net	$	38	****	$	584
(1)	Restructuring and impairments
---	---

For the year ended December 31, 2021, we recorded restructuring and impairment charges of $67 million [$52 million after tax] in our Power & Vision segment, $18 million [$17 million after tax] in our Seating Systems segment and $16 million [$14 million after tax] in our Body Exteriors & Structures segment.

During 2020, we recorded restructuring and impairment charges of $123 million [$118 million after tax] in our Body Exteriors & Structures segment, $115 million [$90 million after tax] in our Power & Vision segment and $31 million [$29 million after tax] in our Seating Systems segment. Of the total charges, $168 million was related to restructuring plans implemented by us to right-size our business in response to the impact that COVID-19 was expected to have on vehicle production volumes over the short to medium term. These restructuring plans included plant closures and workforce reductions which were substantially completed by December 31, 2021.

6	Magna International Inc. Annual Report 2021
(2)	Net losses (gains) on investments
---	---

For the year ended December 31, 2021, we recorded unrealized losses of $6 million [$12 million after tax] on the revaluation of public and private equity investments and unrealized gains of $4 million [$3 million after tax] related to the revaluation of public company warrants.

During 2020, we recorded unrealized gains of $34 million [$29 million after tax] on the revaluation of our private equity investments and a non-cash impairment charge of $2 million [$2 million after tax] related to a private equity investment, which was included in our Corporate segment.

(3)	Merger agreement termination fee

In the fourth quarter of 2021, Veoneer, Inc. [“Veoneer”] terminated its merger agreement with us. In connection with the termination of the merger agreement, Veoneer paid us a termination fee which, net of our associated transaction costs, amounted to $100 million [$75 million after tax].

(4)	Gain on business combinations

During 2021, we acquired a 65% equity interest and a controlling financial interest in Chongqing Hongli Zhixin Scientific Technology Development Group LLC. [“Hongli”]. The acquisition included an additional 15% equity interest in two entities that we previously equity accounted for. On the change in basis of accounting we recognized a $22 million gain [$22 million after tax].

During 2021, substantially all of the assets of our European joint venture with Ford Motor Company [“Ford”], Getrag Ford Transmission GmbH [“GFT”], were distributed to either Ford or us, which resulted in us recording a gain of $18 million [$18 million after tax]. As part of the distribution, we received GFT’s non-controlling interest in a Chinese joint venture, a facility in Europe and cash.

See Note 5, “Business Combinations”, to the consolidated financial statements included in this Report.

(5)	Loss on sale of business

During 2021, we sold three Body Exteriors & Structures operations in Germany. Under the terms of the arrangement, we provided the buyer with $41 million of funding, resulting in a loss on disposal of $75 million [$75 million after tax].

(6)	Impairments and loss on sale of equity-accounted investments

The following table summarizes the impairment charges and loss on sale recorded for certain investments in our Power & Vision segment in 2020:

Impairment of Getrag (Jiangxi) Transmission Co., Ltd. [“GJT”] ^(i)^	$	337
Loss on sale and impairment of Dongfeng Getrag Transmission Co. Ltd. [“DGT”] ^(ii)^		10
Total impairments and loss on sale of equity-accounted investments		347
Tax effect on Other Expense, net		(53	)
Loss attributable to non-controlling interests		(75	)
Non-cash impairment charge included in Net income<br>attributable to Magna International Inc.	$	219
(i)	An impairment for GJT was recorded based on pricing pressure in the China market as well as declines in volume<br>and sales projections for the foreseeable future. In the fourth quarter of 2020, the governing documents related to GJT were revised, providing us with a controlling financial interest and as a result, we began consolidating GJT on December 29,<br>2020. See Note 5, “Business Combinations”, to the consolidated financial statements included in this Report.
---	---
(ii)	During 2020, we recorded a $10 million [$10 million after tax] loss on the sale of our 50% interest<br>in DGT.
---	---
Magna International Inc. Annual Report 2021	7
---	---

INCOME FROM OPERATIONS BEFORE INCOME TAXES

Income from operations before income taxes was $1.95 billion for 2021 compared to $1.01 billion for 2020. This $942 million increase is a result of the following changes, each as discussed above:

	2021			2020			Change
Sales	$	36,242	****	$	32,647		$	3,595
Costs and expenses
Cost of goods sold	****	31,097	****		28,207			2,890
Depreciation and amortization	****	1,512	****		1,366			146
Selling, general & administrative	****	1,717	****		1,587			130
Interest expense, net	****	78	****		86			(8	)
Equity income	****	(148	)		(189	)		41
Other expense, net	****	38	****		584			(546	)
Income from operations before income taxes	$	1,948	****	$	1,006		$	942

INCOME TAXES

	2021					2020
Income taxes as reported	$	395	****	20.3	%	$	329	32.7	%
Tax effect on Other expense, net	****	(14	)	(1.1	)		80	(7.0	)
Adjustments to Deferred Tax Valuation Allowances	****	13	****	0.6	****		—	—
	$	394	****	19.8	%	$	409	25.7	%

During 2021 we recorded adjustments to valuation allowances against our deferred tax assets. As a result of a restructuring in Germany and unrealized capital gains in Canada we released a portion of our valuation allowances. These effects were partially offset by new valuation allowances against deferred tax assets in the Czech Republic and Italy due to cumulative losses in recent years. The net effect of these adjustments was a reduction in income tax expense of $13 million [“Adjustments to Deferred Tax Valuation Allowances”].

Excluding the tax effect on Other expense, net, and the Adjustments to Deferred Tax Valuation Allowances our effective income tax rate decreased to 19.8% for 2021 compared to 25.7% for 2020 primarily as a result of:

•	higher favourable changes in our reserves for uncertain tax positions;
•	lower losses not benefited in Europe and South America;
---	---
•	lower accrued tax on undistributed foreign earnings; and
---	---
•	an increase in research and development credits.
---	---

These factors were partially offset by an unfavourable re-measurement of deferred tax assets of a China subsidiary.

(INCOME) LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS

Income attributable to non-controlling interests was $39 million for 2021 compared to a loss attributable to non-controlling interests of $80 million for 2020. This $119 million change was substantially due to an impairment charge attributable to non-controlling interests of $75 million recorded in 2020 and a $28 million increase as a result of consolidating certain transmission joint ventures that were previously equity-accounted for. In addition, improved net income at our non-wholly owned operations in China and the acquisition of Hongli during 2021 contributed to this increase.

NET INCOME ATTRIBUTABLE TO MAGNA INTERNATIONAL INC.

Net income attributable to Magna International Inc. increased $757 million to $1.514 billion for 2021 compared to $757 million for 2020 as a result of an increase in income from operations before income taxes of $942 million, partially offset by an increase of $119 million in income attributable to non-controlling interests and an increase in income taxes of $66 million.

8	Magna International Inc. Annual Report 2021

EARNINGS PER SHARE

	2021		2020
Earnings per Common Share
Basic	$	5.04	$	2.52	+100	%
Diluted	$	5.00	$	2.52	+98	%
Weighted average number of Common Shares outstanding (millions)
Basic	****	300.6		299.7	—
Diluted	****	302.8		300.4	+1	%
Adjusted diluted earnings per share	$	5.13	$	3.95	+30	%

Diluted earnings per share was $5.00 for 2021 compared to $2.52 for 2020. The $2.48 increase was substantially a result of higher net income attributable to Magna International Inc., as discussed above, partially offset by an increase in the weighted average number of diluted shares outstanding during 2021. The increase in the weighted average number of diluted shares outstanding was primarily due to the exercise of stock options during or subsequent to 2020 and an increase in diluted shares related to outstanding stock options as a result of the increase in our share price. This increase was partially offset by the purchase and cancellation of Common Shares, during or subsequent to 2020, pursuant to our normal course issuer bids.

Other expense, net, after tax, and Adjustments to Deferred Tax Valuation Allowances negatively impacted diluted earnings per share by $0.13 in 2021, and $1.43 in 2020, respectively, as discussed in the “Other expense, net”, “Income Taxes” and “(Income) loss attributable to non-controlling interests” sections above.

Adjusted diluted earnings per share, as reconciled in the “Non-GAAP Financial Measures Reconciliation” section, was $5.13 for 2021 compared to $3.95 for 2020, an increase of $1.18.

Magna International Inc. Annual Report 2021	9

NON-GAAP PERFORMANCE MEASURES - FOR THE YEAR ENDEDDECEMBER 31, 2021

ADJUSTED EBIT ASA PERCENTAGE OF SALES

LOGO

The table below shows the change in Magna’s Sales and Adjusted EBIT by segment and the impact each segment’s changes have on Magna’s Adjusted EBIT as a percentage of sales for 2021 compared to 2020:

	Sales			Adjusted<br>EBIT		Adjusted EBIT<br>as a percentage<br>of sales
2020	$	32,647		$	1,676		5.1	%
Increase (decrease) related to:
Body Exteriors & Structures		927			3		-0.1	%
Power & Vision		1,620			243		+0.4	%
Seating Systems		436			45		+0.1	%
Complete Vehicles		691			13		-0.1	%
Corporate and Other		(79	)		84		+0.3	%
2021	$	36,242	****	$	2,064	****	5.7	%

Adjusted EBIT as a percentage of sales increased to 5.7% for 2021 compared to 5.1% for 2020, primarily due to:

•	the negative impact of the COVID-19 pandemic in 2020;<br>
•	cost savings and operating efficiencies, including as a result of implemented restructuring actions;<br>
---	---
•	lower net application engineering costs related to three upcoming ADAS program launches;
---	---
•	lower net warranty costs;
---	---
•	higher tooling contribution; and
---	---
•	amortization related to the initial value of public company warrants.
---	---

These factors were partially offset by:

•	the negative impact of production disruptions due to semiconductor chip shortages during 2021, including higher<br>labour and other operational inefficiencies as a result of the unpredictability of our customers’ production schedules;
•	higher production costs in proportion to sales, including commodity, freight and energy costs;<br>
---	---
•	the benefit of COVID-19 related government employee support programs<br>during 2020;
---	---
•	higher launch costs;
---	---
•	a provision on an engineering services contract with the automotive unit of Evergrande in our Complete Vehicles<br>segment;
---	---
•	higher employee profit sharing and incentive compensation due to improved financial performance;<br>
---	---
•	higher pre-operating costs incurred at new facilities;<br>
---	---
•	a favourable engineering program resolution in 2020 in our Complete Vehicle segment; and
---	---
•	net customer price concessions subsequent to 2020.
---	---
10	Magna International Inc. Annual Report 2021
---	---

RETURN ON INVESTED CAPITAL

Adjusted Return on Invested Capital increased to 10.3% for 2021 compared to 7.9% for 2020 as a result of an increase in Adjusted After-tax operating profits partially offset by higher Average Invested Capital. Other expense, net, after tax and Adjustments to Deferred Tax Valuation Allowances negatively impacted Return on Invested Capital by 0.2% in 2021 and by 3.2% in 2020.

Average Invested Capital increased $161 million to $16.01 billion 2021 compared to $15.84 billion for 2020 primarily due to:

•	the net strengthening of foreign currencies against the U.S. dollar;
•	net business combinations during 2021;
---	---
•	recognition of the initial value and subsequent revaluation of the vested portion of the public company warrants<br>in 2021; and
---	---
•	investments in and favourable revaluations of certain public and private equity investments.<br>
---	---

These factors were partially offset by:

•	a decrease in average non-cash working capital;
•	average depreciation expense on fixed assets in excess of our average investment in fixed assets; and<br>
---	---
•	the impairment of assets recorded during 2020.
---	---

RETURN ON EQUITY

LOGO

Return on Equity was 12.5% for 2021 compared to 7.0% for 2020. This increase was due to higher net income attributable to Magna, partially offset by higher average shareholders’ equity. Other expense, net, after tax and Adjustments to Deferred Tax Valuation Allowances negatively impacted Return on Equity by 0.3% in 2021 and by 4.0% in 2020.

Magna International Inc. Annual Report 2021	11

SEGMENT ANALYSIS

We are a global supplier in the automotive space. Our systems approach to design, engineering and manufacturing touches nearly every aspect of the vehicle, including body and chassis structures, exterior systems and modules, trim and engineered glass, active aerodynamics, energy storage systems, electrified and conventional powertrain technologies, powertrain subsystems and components, ADAS and automated driving, control modules, mechatronics, mirrors and overhead consoles, lighting, complete seats, seating structural products, seat foam and seat trim. We also have complete vehicle engineering and contract manufacturing expertise.

Our reporting segments are: Body Exteriors & Structures; Power & Vision; Seating Systems; and Complete Vehicles.

	Sales									Adjusted EBIT
	2021			2020			Change			2021		2020			Change
Body Exteriors & Structures	$	14,477	****	$	13,550		$	927		$	820	$	817		$	3
Power & Vision	****	11,342	****		9,722			1,620		****	738		495			243
Seating Systems	****	4,891	****		4,455			436		****	152		107			45
Complete Vehicles	****	6,106	****		5,415			691		****	287		274			13
Corporate and Other	****	(574	)		(495	)		(79	)	****	67		(17	)		84
Total reportable segments	$	36,242	****	$	32,647		$	3,595		$	2,064	$	1,676		$	388

BODY EXTERIORS & STRUCTURES

	2021			2020			Change
Sales	$	14,477	****	$	13,550		$	927	+7	%
Adjusted EBIT	$	820	****	$	817		$	3	—
Adjusted EBIT as a percentage of sales	****	5.7	%		6.0	%			-0.3	%

LOGO

Sales – Body Exteriors & Structures

Sales increased 7% or $927 million to $14.48 billion for 2021 compared to $13.55 billion for 2020, primarily as a result of higher global light vehicle production, including the negative impact of the COVID-19 pandemic during 2020 partially offset by production disruptions due to semiconductor chip shortages during 2021. In addition, sales increased due to:

•	the launch of programs during or subsequent to 2020, including the:
•	Ford Bronco Sport;
---	---
•	GM full-size SUV’s;
---	---
•	Jeep Grand Cherokee L; and
---	---
•	Ford Mustang Mach E; and
---	---
•	the net strengthening of foreign currencies against the U.S. dollar, which increased reported U.S. dollar sales<br>by $354 million.
---	---

These factors were partially offset by:

•	the end of production of certain programs;
•	the sale of three operations in Germany during 2021, which decreased sales by $220 million; and<br>
---	---
•	net customer price concessions subsequent to 2020.
---	---
12	Magna International Inc. Annual Report 2021
---	---

Adjusted EBIT and Adjusted EBIT as a percentage of sales – Body Exteriors & Structures

Adjusted EBIT increased $3 million to $820 million for 2021 compared to $817 million for 2020 while Adjusted EBIT as a percentage of sales decreased to 5.7% compared to 6.0%. Adjusted EBIT was higher primarily as a result of earnings on higher sales. Excluding this factor, Adjusted EBIT and Adjusted EBIT as a percentage of sales were lower primarily due to:

•	the negative impact of production disruptions due to semiconductor chip shortages during 2021, including higher<br>labour and other operational inefficiencies as a result of the unpredictability of our customers’ production schedules;
•	higher launch costs;
---	---
•	higher pre-operating costs incurred at new facilities;<br>
---	---
•	higher production costs in proportion to sales, including freight and energy costs;
---	---
•	higher net unfavourable commercial items;
---	---
•	higher net warranty costs of $23 million;
---	---
•	higher employee profit sharing and incentive compensation due to improved financial performance; and<br>
---	---
•	net customer price concessions subsequent to 2020.
---	---

These factors were partially offset by:

•	cost savings and operating efficiencies, including as a result of implemented restructuring actions;<br>
•	higher tooling contribution; and
---	---
•	the net strengthening of foreign currencies against the U.S. dollar, which had a favourable $22 million<br>impact on reported U.S. dollar Adjusted EBIT.
---	---

POWER & VISION

	2021			2020			Change
Sales	$	11,342	****	$	9,722		$	1,620	+17	%
Adjusted EBIT	$	738	****	$	495		$	243	+49	%
Adjusted EBIT as a percentage of sales	****	6.5	%		5.1	%			1.4	%
Magna International Inc. Annual Report 2021	13
---	---

LOGO

Sales – Power & Vision

Sales increased 17% or $1.62 billion to $11.34 billion for 2021 compared to $9.72 billion for 2020, primarily as a result of higher global light vehicle production, including the negative impact of the COVID-19 pandemic during 2020 partially offset by production disruptions due to semiconductor chip shortages during 2021. In addition, sales increased due to:

•	business combinations during 2021, which increased sales by $741 million;
•	the launch of programs during or subsequent to 2020, including the:
---	---
•	GM full-size SUV’s;
---	---
•	Jeep Grand Cherokee L;
---	---
•	Dongfeng T5 EVO; and
---	---
•	Renault Samsung XM3; **** and
---	---
•	the net strengthening of foreign currencies against the U.S. dollar, which increased reported U.S. dollar sales<br>by $348 million.
---	---

These factors were partially offset by net customer price concessions subsequent to 2020.

Adjusted EBIT and Adjusted EBIT as a percentage of sales – Power & Vision

Adjusted EBIT increased $243 million to $738 million for 2021 compared to $495 million 2020 and Adjusted EBIT as a percentage of sales increased to 6.5% from 5.1%. Adjusted EBIT was higher primarily as a result of earnings on higher sales. In addition, Adjusted EBIT and Adjusted EBIT as a percentage of sales were higher primarily due to:

•	lower net warranty costs of $106 million;
•	lower net application engineering costs related to three upcoming ADAS program launches;
---	---
•	cost savings and operating efficiencies, including as a result of implemented restructuring actions; and<br>
---	---
•	the net strengthening of foreign currencies against the U.S. dollar, which had a favourable $32 million<br>impact on reported U.S. dollar Adjusted EBIT.
---	---

These factors were partially offset by:

•	the negative impact of production disruptions due to semiconductor chip shortages during 2021, including higher<br>labour and other operational inefficiencies as a result of the unpredictability of our customers’ production schedules;
•	higher production costs in proportion to sales, including commodity, freight and energy costs;<br>
---	---
•	higher electrification spending;
---	---
•	business combinations during 2021, which negatively impacted Adjusted EBIT as a percentage of sales;<br>
---	---
•	higher employee profit sharing and incentive compensation due to improved financial performance; and<br>
---	---
•	net customer price concessions subsequent to 2020.
---	---
14	Magna International Inc. Annual Report 2021
---	---

SEATING SYSTEMS

	2021			2020			Change
Sales	$	4,891	****	$	4,455		$	436	+10	%
Adjusted EBIT	$	152	****	$	107		$	45	+42	%
Adjusted EBIT as a percentage of sales	****	3.1	%		2.4	%			+0.7	%

LOGO

Sales – Seating Systems

Sales increased 10% or $436 million to $4.89 billion for 2021 compared to $4.46 billion for 2020, primarily due to:

•	the acquisition of Hongli during 2021 which increased sales by $426 million;
•	the launch of programs during or subsequent to 2020, including the:
---	---
•	Jeep Grand Cherokee L;
---	---
•	Skoda Enyaq; and
---	---
•	Chevrolet Bolt EUV; and
---	---
•	the net strengthening of foreign currencies against the U.S. dollar, which increased reported U.S. dollar sales<br>by $66 million.
---	---

These factors were partially offset by:

•	an unfavourable mix of global light vehicle production including the negative impact of production disruptions<br>due to semiconductor chip shortages during 2021 partially offset by the negative impact of the COVID-19 pandemic during 2020;
•	the end of production of certain programs; and
---	---
•	and net customer price concessions subsequent to 2020.
---	---
Magna International Inc. Annual Report 2021	15
---	---

Adjusted EBIT and Adjusted EBIT as a percentage of sales – Seating Systems

The negative impact of production disruptions during 2021, including semiconductor chip shortages, was more pronounced in our Seating Systems segment compared to our other reporting segments due to the mix of programs impacted. Adjusted EBIT increased $45 million to $152 million for 2021 compared to $107 million for 2020 and Adjusted EBIT as a percentage of sales increased to 3.1% from 2.4%. Adjusted EBIT was higher primarily as a result of earnings on higher sales. In addition, Adjusted EBIT and Adjusted EBIT as a percentage of sales were higher primarily due to:

•	favourable commercial settlements during 2021;
•	the acquisition of Hongli during 2021;
---	---
•	cost savings and operating efficiencies, including as a result of implemented restructuring actions; and<br>
---	---
•	productivity and efficiency improvements at certain underperforming facilities.
---	---

These factors were partially offset by:

•	the negative impact of production disruptions during 2021, including higher labour and other operational<br>inefficiencies as a result of the unpredictability of our customers’ production schedules;
•	higher employee profit sharing and incentive compensation due to improved financial performance;<br>
---	---
•	higher production costs in proportion to sales, including freight and energy costs;
---	---
•	higher launch costs; and
---	---
•	net customer price concessions subsequent to 2020.
---	---

COMPLETE VEHICLES

	2021			2020			Change
Complete Vehicle Assembly Volumes (thousands of units) ^(i)^	****	125.6	****		109.5			16.1	+15	%
Sales	$	6,106	****	$	5,415		$	691	+13	%
Adjusted EBIT	$	287	****	$	274		$	13	+5	%
Adjusted EBIT as a percentage of sales	****	4.7	%		5.1	%			-0.4	%
(i)	Vehicles produced at our Complete Vehicle operations are included in Europe Light Vehicle Productionvolumes.
---	---

Sales – Complete Vehicles

Sales increased 13% or $691 million to $6.11 billion for 2021 compared to $5.42 billion for 2020 primarily as a result of a 15% increase in assembly volumes, including the negative impact of the COVID-19 pandemic in 2020 partially offset by the negative impact of production disruptions due to semiconductor chip shortages during 2021. In addition, sales were positively impacted by a $233 million increase in reported U.S. dollar sales as a result of the strengthening of the euro against the U.S. dollar.

16	Magna International Inc. Annual Report 2021

Adjusted EBIT and Adjusted EBIT as a percentage of sales – Complete Vehicles

Adjusted EBIT increased $13 million to $287 million for 2021 compared to $274 million for 2020 while Adjusted EBIT as a percentage of sales decreased to 4.7% from 5.1%. Adjusted EBIT increased primarily due to higher earnings due to higher assembly volumes, net of contractual fixed cost recoveries on certain programs. Excluding this factor, Adjusted EBIT and Adjusted EBIT as a percentage of sales were lower primarily due to:

•	a $45 million provision on an engineering services contract with the automotive unit of Evergrande;<br>
•	a favourable engineering program resolution in 2020;
---	---
•	higher production costs in proportion to sales, including freight and energy costs; and
---	---
•	higher employee profit sharing and incentive compensation due to improved financial performance.<br>
---	---

These factors were partially offset by higher favourable government research and development incentives in 2021, higher margins on engineering programs, and the strengthening of the euro against the U.S. dollar, which had a favourable $12 million impact on reported U.S. dollar Adjusted EBIT.

CORPORATE AND OTHER

Adjusted EBIT was earnings of $67 million for 2021 compared to a loss of $17 million for 2020. The $84 million improvement was primarily the result of:

•	amortization related to the initial value of public company warrants;
•	lower incentive compensation and employee profit sharing;
---	---
•	lower transactional foreign exchange losses in 2021 compared to 2020;
---	---
•	lower labour and benefits;
---	---
•	an increase in fees received from our divisions; and
---	---
•	a loss on sale of assets during 2020.
---	---
Magna International Inc. Annual Report 2021	17
---	---

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

OPERATING ACTIVITIES

LOGO

	2021			2020		Change
Net income	$	1,553	****	$	677
Items not involving current cash flows	****	1,576	****		1,976
	****	3,129	****		2,653	$	476
Changes in operating assets and liabilities	****	(189	)		625		(814	)
Cash provided from operating activities	$	2,940	****	$	3,278	$	(338	)

Cash provided from operating activities

Comparing 2021 to 2020, cash provided from operating activities decreased $338 million. The negative impact of production disruptions due to semiconductor chip shortages during 2021, including higher labour and other operational inefficiencies as a result of the unpredictability of our customers’ production schedules resulted in lower cash generation than would be expected from the increase in production volumes. Specifically, we used $3.21 billion of additional cash for materials and overhead, $709 million for labour partially offset by collecting an additional $3.74 billion from our customers.

Changes in operating assets and liabilities

During 2021, we used $189 million for operating assets and liabilities, primarily as result of increased production inventory related to supply chain and customers disruptions.

These uses of cash were partially offset by:

•	an increase in accounts payable;
•	an increase in taxes payable; and
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•	a decrease in production and other receivables as a result of lower operating activity in the month of December<br>2021 compared to the month of December 2020.
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18	Magna International Inc. Annual Report 2021
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INVESTING ACTIVITIES

LOGO

	2021			2020			Change
Fixed asset additions	$	(1,372	)	$	(1,145	)
Increase in investments, other assets and intangible assets	****	(403	)		(331	)
Increase in public and private equity investments	****	(68	)		(132	)
Fixed assets, investments, other assets and intangible assets additions	****	(1,843	)		(1,608	)
Increase in equity method investments	****	(517	)		—
Funding provided on sale of business	****	(41	)		9
Business combinations	****	(13	)		91
Settlement of long-term receivable from<br>non-consolidated joint venture	****	50	****		—
Proceeds from dispositions	****	81	****		108
Cash used for investing activities	$	(2,283	)	$	(1,400	)	$	(883	)

Cash used for investing activities in 2021 was $883 million higher compared to 2020, primarily due to $517 million used to fund the acquisition of a 49% non-controlling interest in LG Magna e-Powertrain Co., Ltd. [“LME”], a $235 million increase in fixed assets, investments, other assets and intangible assets, and $13 million net cash paid for business combinations in 2021 compared to $91 million in net cash received in 2020. These factors were partially offset by a $50 million cash receipt from a non-consolidated joint venture during 2021.

FINANCING ACTIVITIES

	2021			2020			Change
Issues of debt	$	55		$	854
Decrease in short-term borrowings	****	(101	)		(31	)
Repayments of debt	****	(121	)		(140	)
Issue of Common Shares on exercise of stock options	****	146	****		81
Tax withholdings on vesting of equity awards	****	(13	)		(13	)
Repurchase of Common Shares	****	(517	)		(203	)
Contributions to subsidiaries by non-controlling<br>interests	****	8	****		18
Dividends paid to non-controlling interest	****	(49	)		(18	)
Dividends paid	****	(514	)		(467	)
Cash (used for) provided from financing activities	$	(1,106	)	$	81		$	(1,187	)

The decrease in issues of debt relates primarily to the issuance of $750 million of 2.45% fixed-rate Senior Notes during 2020.

During 2021 we repurchased 6.0 million Common Shares under normal course issuer bids for aggregate cash consideration of $517 million. During 2020 we repurchased 5.1 million Common Shares under normal course issuer bids for aggregate cash consideration of $203 million.

Cash dividends paid per Common Share were $1.72 for 2021, for a total of $514 million compared to $1.60 for 2020, for a total of $467 million.

Magna International Inc. Annual Report 2021	19

FINANCING RESOURCES

	2021		2020		Change
Liabilities
Long-term debt due within one year	$	455	$	129
Current portion of operating lease liabilities	****	274		241
Long-term debt	****	3,538		3,973
Operating lease liabilities	****	1,406		1,656
	$	5,673	$	5,999	$	(326	)

Financial liabilities decreased $326 million to $5.67 billion as at December 31, 2021 primarily as a result of a reduction in operating lease liabilities. During 2021, $336 million of Senior Notes due December 15, 2022, was reclassified from long-term debt to long-term debt due within one year.

CASH RESOURCES

In 2021, our cash resources decreased by $426 million to $2.9 billion, primarily as a result of cash used for investing and financing activities, partially offset by cash provided from operating activities, as discussed above. **** In addition to our cash resources at December 31, 2021, we had term and operating lines of credit totaling $3.8 billion, of which $3.5 billion was unused and available. On December 10, 2021, we amended our U.S. $750 million 364-day syndicated revolving credit facility, including an extension of the maturity date to December 9, 2022. The facility can be drawn in U.S. dollars or Canadian dollars. As of December 31, 2021, we had not borrowed any funds under this credit facility.

MAXIMUM NUMBER OF SHARES ISSUABLE

The following table presents the maximum number of shares that would be outstanding if all of the outstanding options at March 3, 2022 were exercised:

Common Shares		296,643,367
Stock options ^(i)^		6,090,512
	302,733,879
(i)	Options to purchase Common Shares are exercisable by the holder in accordance with the vesting provisionsand upon payment of the exercise price as may be determined from time to time pursuant to our stock option plans.
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CONTRACTUALOBLIGATIONS

A purchase obligation is defined as an agreement to purchase goods or services that is enforceable and legally binding on us and that specifies all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Consistent with our customer obligations, substantially all of our purchases are made under purchase orders with our suppliers which are requirements based and accordingly do not specify minimum quantities. Other long-term liabilities are defined as long-term liabilities that are recorded on our consolidated balance sheet. Based on this definition, the following table includes only those contracts which include fixed or minimum obligations.

At December 31, 2021, we had contractual obligations requiring annual payments as follows:

	2022		2023-<br>2024		2025-<br>2026		Thereafter		Total
Operating leases	$	300	$	502	$	381	$	835	$	2,018
Long-term debt		455		1,460		651		1,427		3,993
Unconditional purchase obligations:
Materials and services		2,407		573		477		13		3,470
Capital		1,028		189		64		31		1,312
Total contractual obligations	$	4,190	$	2,724	$	1,573	$	2,306	$	10,793
20	Magna International Inc. Annual Report 2021
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Our unfunded obligations with respect to employee future benefit plans, which have been actuarially determined, were $651 million at December 31, 2021. These obligations are as follows:

	Pension<br>Liability			Retirement<br>Liability		Termination and<br>Long Service<br>Arrangements		Total
Projected benefit obligation	$	689		$	27	$	467	$	1,183
Less plan assets		(532	)		—		—		(532	)
Unfunded amount	$	157		$	27	$	467	$	651

Foreign Currency Activities

Our North American operations negotiate sales contracts with OEMs for payment in U.S. dollars, Canadian dollars and Mexican pesos. Materials and equipment are purchased in various currencies depending upon competitive factors, including relative currency values. Our North American operations use labour and materials which are paid for in U.S. dollars, Canadian dollars and Mexican pesos. Our Mexican operations generally use the U.S. dollar as the functional currency.

Our European operations negotiate sales contracts with OEMs for payment principally in euros. Our European operations’ material, equipment and labour are paid for principally in euros and U.S. dollars.

Our Asian operations negotiate sales contracts with OEMs for payment principally in Chinese renminbi. Our Asian operations’ material, equipment and labour are paid for principally in Chinese renminbi.

We employ hedging programs, primarily through the use of foreign exchange forward contracts, in an effort to manage our foreign exchange exposure, which arises when manufacturing facilities have committed to the delivery of products for which the selling price or material purchases have been quoted in foreign currencies and for labour in countries where their local currency is not their functional currency. These commitments represent our contractual obligations to deliver products over the duration of the product programs, which can last a number of years. The amount and timing of the forward contracts will be dependent upon a number of factors, including anticipated production delivery schedules and anticipated production costs, which may be paid in the foreign currency. Despite these measures, significant long-term fluctuations in relative currency values, in particular a significant change in the relative values of the U.S. dollar, Canadian dollar, euro, Chinese renminbi and Mexican peso, could have an adverse effect on our profitability and financial condition (as discussed throughout this MD&A).

Magna International Inc. Annual Report 2021	21

NON-GAAP FINANCIAL MEASURES RECONCILIATION

The reconciliation of Non-GAAP financial measures is as follows:

ADJUSTED EBIT

	2021		2020
Net Income	$	1,553	$	677
Add :
Interest Expense, net	****	78		86
Other Expense, net	****	38		584
Income Taxes	****	395		329
Adjusted EBIT	$	2,064	$	1,676

ADJUSTED EBIT AS A PERCENTAGE OF SALES

	2021			2020
Sales	$	36,242	****	$	32,647
Adjusted EBIT	$	2,064	****	$	1,676
Adjusted EBIT as a percentage of sales	****	5.7	%		5.1	%

ADJUSTED DILUTED EARNINGS PER SHARE

	2021			2020
Net income attributable to Magna International Inc.	$	1,514	****	$	757
Add :
Other Expense, net	****	38	****		584
Tax effect on Other Expense, net	****	14	****		(80	)
Adjustments to Deferred Tax Valuation Allowances	****	(13	)		—
Loss attributable to non-controlling interests related to<br>Other Expense, net	****	—	****		(75	)
Adjusted net income attributable to Magna International Inc.	$	1,553	****	$	1,186
Diluted weighted average number of Common Shares outstanding during the period (millions)	****	302.8	****		300.4
Adjusted diluted earnings per share	$	5.13	****	$	3.95

RETURN ON INVESTED CAPITAL AND ADJUSTED RETURN ON INVESTED CAPITAL

Return on Invested Capital is calculated as After-tax operating profits divided by Average Invested Capital for the period. Adjusted Return on Invested Capital is calculated as Adjusted After-tax operating profits divided by Average Invested Capital for the period. Average Invested Capital for the twelve month period is averaged on a five-fiscal quarter basis.

	2021			2020
Net Income	$	1,553	****	$	677
Add :
Interest Expense, net		78			86
Income taxes on Interest Expense, net at Magna’s effective income tax rate:	****	(15	)		(20	)
After-tax operating profits	****	1,616	****		743
Other Expense, net	****	38	****		584
Tax effect on Other Expense, net	****	14	****		(80	)
Adjustments to Deferred Tax Valuation Allowances	****	(13	)		—
Adjusted After-tax operating profits	$	1,655	****	$	1,247
22	Magna International Inc. Annual Report 2021
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	2021			2020
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Total Assets	$	29,086	****	$	28,605
Excluding:
Cash and cash equivalents	****	(2,948	)		(3,268	)
Deferred tax assets	****	(421	)		(372	)
Less Current Liabilities	****	(10,401	)		(9,743	)
Excluding:
Long-term debt due within one year	****	455	****		129
Current portion of operating lease liabilities	****	274	****		241
Invested Capital	$	16,045	****	$	15,592
	2021			2020
After-tax operating profits	$	1,616	****	$	743
Average Invested Capital	$	16,005	****	$	15,844
Return on Invested Capital	****	10.1	%		4.7	%
	2021			2020
Adjusted After-tax operating profits	$	1,655	****	$	1,247
Average Invested Capital	$	16,005	****	$	15,844
Adjusted Return on Invested Capital	****	10.3	%		7.9	%

RETURN ON EQUITY

	2021			2020
Net income attributable to Magna International Inc.	$	1,514	****	$	757
Average Shareholders’ Equity	$	12,121	****	$	10,751
Return on Equity	****	12.5	%		7.0	%

SUBSEQUENT EVENTS

NORMAL COURSE ISSUER BID

Subsequent to December 31, 2021, we purchased 1,600,500 Common Shares for cancellation and 165,773 **** Common Shares to satisfy stock-based compensation awards each under our existing normal course issuer bid for cash consideration of $132 million.

SENIOR NOTES REDEMPTION

On February 28, 2022, we redeemed for cash the entire aggregate principle amount outstanding of the Cdn$425 million 3.100% Senior Notes due 2022 [“the Notes”]. The redemption price for the Notes was Cdn$430 million, resulting in a loss on early extinguishment of Cdn$5 million that reflects the payment of the premium to redeem the Notes and the write-off of the unamortized debt issuance costs.

Magna International Inc. Annual Report 2021	23

SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES

Our significant accounting policies are more fully described in Note 1, “Significant Accounting Policies”, to the consolidated financial statements included in this Report. The preparation of the audited consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent assets and liabilities, as of the date of the consolidated financial statements. These estimates and assumptions are based on our historical experience, and various other assumptions we believe to be reasonable in the circumstances. Since these estimates and assumptions are subject to an inherent degree of uncertainty, actual results in these areas may differ significantly from our estimates.

We believe the following critical accounting policies and estimates affect the more subjective or complex judgements and estimates used in the preparation of our consolidated financial statements and accompanying notes. Management has discussed the development and selection of the following critical accounting policies with the Audit Committee of the Board of Directors, and the Audit Committee has reviewed our disclosure relating to critical accounting policies in this MD&A.

REVENUE RECOGNITION -COMPLETE VEHICLE ASSEMBLY ARRANGEMENTS

The Company’s complete vehicle assembly contracts with customers are complex and often include promises to transfer multiple products and services, some of which may be implicitly contracted for. For these complex arrangements, each good or service is evaluated to determine whether it represents a distinct performance obligation, and whether it should be characterized as revenue or reimbursement of costs incurred. The total transaction price is then allocated to the distinct performance obligations based on the expected cost plus a margin approach and recognized as revenue.

Significant interpretation and judgment is sometimes required to determine the appropriate accounting for these contracts including: (i) combining contracts that may impact the allocation of the transaction price between products and services; (ii) determining whether performance obligations are considered distinct and are required to be accounted for separately or combined; and (iii) the allocation of the transaction price to each distinct performance obligation and determining when to recognize revenue.

IMPAIRMENTASSESSMENTS – GOODWILL, LONG-LIVED ASSETS, AND EQUITY METHOD INVESTMENTS

We review goodwill at the reporting unit level for impairment in the fourth quarter of each year or more frequently if events or changes in circumstances indicate that goodwill might be impaired. Goodwill impairment is assessed by comparing the fair value of a reporting unit to the underlying carrying value of the reporting unit’s net assets, including goodwill. If a reporting unit’s carrying amount exceeds its fair value, an impairment is recognized based on that difference. The fair value of a reporting unit is determined using the estimated discounted future cash flows of the reporting unit.

In addition to our review of goodwill, we evaluate fixed assets and other long-lived assets for impairment whenever indicators of impairment exist. Indicators of impairment include the bankruptcy of a significant customer or the early termination, loss, renegotiation of the terms of, significant volume decrease in, or delay in the implementation of, any significant production contract. If the sum of the future cash flows expected to result from the asset, undiscounted and without interest charges, is less than the reported value of the asset, an asset impairment may be recognized in the consolidated financial statements. The amount of impairment to be recognized is calculated by subtracting the fair value of the asset from the reported value of the asset.

As of December 31, 2021, we had equity method investments of $1.0 billion. We monitor our investments for indicators of other-than-temporary declines in value on an ongoing basis in accordance with U.S. GAAP. If we determine that an other-than-temporary decline in value has occurred, we recognize an impairment loss, which is measured as the difference between the book value and the fair value of the investment.

We believe that accounting estimates related to goodwill, long-lived asset, and equity method investment impairment assessments are “critical accounting estimates” because: (i) they are subject to significant measurement uncertainty and are susceptible to change as management is required to make forward-looking assumptions regarding the impact of improvement plans on current operations, in-sourcing and other new business opportunities, program pricing and cost assumptions on current and future business, the timing of new program launches and future forecasted production volumes; and (ii) any resulting impairment loss could have a material impact on our consolidated net income and on the amount of assets reported in our consolidated balance sheet.

WARRANTY

We record product warranty costs, which include product liability and recall costs. Under most customer agreements, we only account for existing or probable claims on product default issues when amounts related to such issues are probable and reasonably estimable. Under certain complete vehicle assembly, powertrain systems, and electronics contracts, we record an estimate of future warranty-related costs based on the terms of the specific customer agreements and/or the Company’s warranty experience.

24	Magna International Inc. Annual Report 2021

Due to the uncertain nature of the net costs, actual product liability costs could be materially different from our best estimates of future costs.

INCOME TAXES

The determination of our tax liabilities involves dealing with uncertainties in the application of complex tax laws. Significant judgement and estimates are required in determining our provision for income taxes, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits. We recognize tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.

At December 31, 2021, we had gross unrecognized tax benefits of $142 million excluding interest and penalties, of which $126 million, if recognized, would affect our effective tax rate. The gross unrecognized tax benefits differ from the amount that would affect our effective tax rate due primarily to the impact of the valuation allowances on deferred tax assets.

Deferred tax assets and liabilities are recognized for the estimated future tax effects attributable to temporary differences between financial statement carrying value of existing assets and liabilities and their respective tax bases and tax loss and credit carryforwards. Deferred tax assets and liabilities are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Accounting standards require that we assess whether valuation allowances should be established or maintained against our deferred income tax assets, based on consideration of all available evidence, using a “more-likely-than-not” standard. The factors used to assess the likelihood of realization are: history of losses, forecasts of future pre-tax income and tax planning strategies that could be implemented to realize the deferred tax assets. On a quarterly basis, we evaluate the realizability of deferred tax assets by assessing our valuation allowances and by adjusting the amount of such allowances as necessary. We use tax planning strategies to realize deferred tax assets in order to avoid the potential loss of these tax benefits. Changes in our estimates, due to unforeseen events or otherwise, could have a material impact on our financial condition and results of operations. Refer to Note 10, “Income Taxes” of the notes to the consolidated financial statements for additional information.

EMPLOYEE FUTURE BENEFIT PLANS

The determination of the obligation and expense for defined benefit pension, termination and long service arrangements and other post-retirement benefits, such as retiree healthcare and medical benefits, is dependent on the selection of certain assumptions used by actuaries in calculating such amounts. Those assumptions include, among others, the discount rate, expected long-term rate of return on plan assets and rates of increase in compensation costs. Actual results that differ from the assumptions used are accumulated and amortized over future periods and therefore impact the recognized expense in future periods. Significant changes in assumptions or significant plan amendments could materially affect our future employee benefit obligations and future expense.

At December 31, 2021, we had past service costs and actuarial experience losses of $214 million included in accumulated other comprehensive income that will be amortized to future employee benefit expense over the expected average remaining service life of employees or over the expected average life expectancy of retired employees, depending on the status of the plan.

COMMITMENTS AND CONTINGENCIES

From time to time, we may be contingently liable for litigation, legal and/or regulatory actions and proceedings and other claims. Refer to Note 22, “Contingencies” of our audited consolidated financial statements for the year ended December 31, 2021, which describes these claims.

For a discussion of risk factors relating to legal and other claims/actions against us, refer to “Item 5. Risk Factors” in our Annual Information Form and Annual Report on Form 40-F, each in respect of the year ended December 31, 2021.

Magna International Inc. Annual Report 2021	25

CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended [the “Exchange Act”]), are designed to ensure that material information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported on a timely basis, and that such information is accumulated and communicated to senior management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to enable them to make timely decisions regarding required disclosure of such information. We have conducted an evaluation of our disclosure controls and procedures as of December 31, 2021, under the supervision, and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures (as this term is defined in the rules adopted by Canadian securities regulatory authorities and the United States Securities and Exchange Commission [“SEC”]) are effective as of December 31, 2021.

MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

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

CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING

RISK FACTORS

Our short and medium-term operational success, as well as our ability to create long-term value through our business strategy, are subject to risks and uncertainties. The following are the more significant of such risks:

RISKS RELATED TO THE AUTOMOTIVE INDUSTRY

•	Economic Cyclicality: The global automotive industry is cyclical, with the potential for regional<br>differences in timing of expansion and contraction of economic cycles. A worsening of economic, political, or other conditions in North America, Europe or China, including as a result of COVID-19, increasing<br>inflation and/or rising interest rates, may result in lower consumer confidence, which typically translates into lower vehicle sales and production levels. A significant decline in vehicle production volumes from current levels could have a material<br>adverse effect on our profitability and financial condition.
•	Regional Volumes Declines: North America, Europe and China are key automotive producing regions for us,<br>and our operating results are primarily dependent on car and light truck production by our customers in these regions. A significant or sustained decline in vehicle production volumes in any or all of these geographic regions could have a material<br>adverse effect on our operations, sales and profitability.
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•	Intense Competition: The automotive supply industry is highly competitive and becoming more so. Some of<br>our competitors have higher or more rapidly growing market share than we do in certain product or geographic markets. Additionally, a number of established electronics and semiconductor companies have entered or expanded their presence in the<br>automotive industry, while disruptive technology innovators have been introducing novel product and service solutions which traditional automotive suppliers may not be able to match. Failure to successfully compete with existing or new competitors,<br>including failure to grow our electronics or electric vehicle (“EV”) content at or above the rate of growth of vehicle production, could affect our ability to fully implement our corporate strategy.
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26	Magna International Inc. Annual Report 2021
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•	Trade Agreements: The global growth of the automotive industry has been aided by the free movement of<br>goods, services, people and capital through bilateral and regional trade agreements, particularly in North America and Europe. Introduction of measures which impede free trade could have a material adverse effect on our operations and profitability.<br>
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•	Trade Disputes/Tariffs: International trade disputes could, among other things, reduce demand for and<br>production of vehicles, disrupt global supply chains, distort commodity pricing, impair the ability of automotive suppliers and vehicle manufacturers to make efficient long-term investment decisions, create<br>volatility in relative foreign exchange rates, and contribute to stock market volatility. The imposition of tariffs and/or escalation of trade disputes which interfere with automotive supply chains could have an adverse effect on our operations and<br>profitability.
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CUSTOMER AND SUPPLIER RELATED RISKS

•	Customer Concentration: **** Although we supply parts to all of the leading OEMs, a significant<br>majority of our sales are to six customers: BMW, Daimler, General Motors, Stellantis, Ford and Volkswagen. In light of the amount of business we currently have with these six customers, our opportunities for incremental growth with them in North<br>America, Europe and China may be limited. While we continue to diversify our business, including to derive increased revenue from emergent EV-focused OEMs and through new business models, there is no assurance<br>we will be successful. Shifts in market share away from our top customers could have a material adverse effect on our profitability.
•	Emergence of Potentially Disruptive EV OEMs: With the accelerating trend toward vehicle<br>electrification, a number of potentially disruptive, EV-focused OEMs have emerged, particularly in China. It is too early to predict which of these emergent EV-focused<br>OEMs will succeed in the long-term, whether independently or through cooperative relationships with each other or with any of our traditional OEM customers. Vehicle electrification is an important component of our strategy, including through<br>development and supply of electric drive systems and products that support electrification, such as battery enclosures, as well as complete vehicle engineering and contract vehicle manufacturing. While we are developing business relationships with<br>some of the emergent EV-focused OEMs, we do not have relations with all, nor are such relationships as well established as those with our traditional customers. The failure to sufficiently grow our sales to<br>emergent OEMs which achieve significant commercial success could adversely impact our long-term strategy. At the same time, conducting business with recently established OEMs poses risks and challenges, including due to their limited operating<br>history and (in some cases) financial and capital resources, which may elevate counterparty risk, as well as uncertainties regarding consumer/market acceptance of their vehicles. It remains too early to determine whether our commercial experience<br>with such emergent EV-focused OEMs will be similar to our experience with established OEMs.
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•	Customer Consolidation and Cooperation: There have been a number of examples of OEM consolidation in<br>recent years, including the **** merger of PSA and Fiat Chrysler to form Stellantis. Additionally, competing OEMs are increasingly cooperating and collaborating in different ways to save costs, including through joint purchasing activities,<br>platform sharing, powertrain sharing, joint R&D and regional joint ventures. While OEM consolidation and cooperation may present opportunities, they also present a risk that we could lose future business or experience even greater pricing<br>pressure on certain production programs, either of which could have an adverse effect on our profitability.
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•	Market Shifts: While we supply parts for a wide variety of vehicles produced globally, we do not supply<br>parts for all vehicles produced, nor is the number or value of parts evenly distributed among the vehicles for which we do supply parts. Shifts in market shares away from vehicles on which we have significant content, as well as vehicle segments in<br>which our sales may be more heavily concentrated, could have a material adverse effect on our profitability.
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•	Consumer Take Rate Shifts: Shifts in consumer preferences may impact “take rates” for certain<br>types of products we sell. Examples of such products include: manual and dual-clutch transmissions; all-wheel drive systems; power liftgates; active aerodynamics systems; advanced driver assistance systems;<br>and complete vehicles with certain option packages or option choices. Where shifts in consumer preferences result in higher “take rates” for products that we do not sell or for products we sell at a lower margin, our profitability may be<br>adversely affected.
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•	Dependence on Outsourcing: We depend on outsourcing by OEMs. A reduction in outsourcing by<br>OEMs or the loss of any material production or assembly programs combined with the failure to secure alternative programs with sufficient volumes and margins, could have a material adverse effect on our profitability.
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Magna International Inc. Annual Report 2021	27
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MANUFACTURING / OPERATIONAL RISKS

•	Russian Invasion of Ukraine: In response to Russia’s invasion of Ukraine, a number of countries,<br>including the U.S. and European Union member states, have taken actions against Russia, such as: imposition of sanctions targeting certain Russian leadership and other individuals; restrictions on certain sectors of the Russian economy; expulsion of<br>some Russian banks from the SWIFT global banking payment system; and other measures, with further restrictions likely as the conflict continues. Magna currently has 6 manufacturing operations in Russia, primarily supplying VW and Hyundai, with 2021<br>sales of approximately $370 million. To the extent that VW, Hyundai and/or our other OEM customers in Russia suspend Russian production, and/or to the extent any of our OEM customers suspend production elsewhere or cease selling vehicles in the<br>Russian market, Magna’s sales would be adversely affected. Additionally, the conflict and restrictive measures against Russia could exacerbate a number of risks described elsewhere in these Risk Factors, including: disruption of vehicle<br>production and supply chains; worsening the current semiconductor chip shortage since Russia and Ukraine are critical suppliers of neon gas and palladium used in chip production; exacerbating energy shortages or driving energy prices higher,<br>particularly oil and natural gas; constraining the supply of aluminum, palladium or other commodity metals required in automotive production; and increasing cybersecurity threats.
•	Semiconductor Chip Shortages and Price Increases: The global shortage of semiconductor chips had a<br>material adverse effect on global automotive production volumes in 2021, is expected to continue impacting volumes in 2022, and could worsen as a result of Russia’s invasion of Ukraine. In response to the semiconductor chip shortage, OEMs<br>continue to take actions such as: unplanned shutdowns of production lines and/or plants; reductions in their vehicle production plans; and changes to their product mix. Such OEM responses can result in a number of direct and indirect consequences<br>for Tier 1 suppliers like us, including: lower sales; significant production inefficiencies due to production lines being stopped/restarted unexpectedly based on OEMs’ production priorities; higher inventory levels; premium freight costs to<br>expedite shipments; other unrecoverable costs; and increased challenges in retaining employees through production disruptions. The current shortage of semiconductor chips has also resulted in elevated prices for this critical automotive component.<br>Tier 1 suppliers may face price increases from sub-suppliers that have been negatively impacted by production inefficiencies, premium freight costs and/or other costs and surcharges related to the<br>semiconductor chip shortage. It remains unclear when supply and demand for automotive semiconductor chips will fully rebalance. A worsening or prolongation of the semiconductor chip shortage could have a material adverse effect on our operations,<br>sales and profitability.
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•	COVID-19: The development and spread of highly-transmissible COVID-19 variants such as the “Omicron” variant creates continued risk of further disruptions to the automotive industry, including through further mandatory lockdowns/stay-at-home orders or other restrictions. These orders may: restrict consumers’ ability to purchase vehicles; restrict production; cause elevated employee absenteeism; result in us incurring<br>significant unrecoverable costs; and lead to supply chain disruptions. Over the medium-to long term, the pandemic may result in societal changes that impact the automotive industry, positively or negatively,<br>including as a result of: expanded work-from-home practices that reduce consumers’ reliance on vehicles; and/or increased reluctance by people to utilize modes of public transit and/or shared mobility. Prolonged production shutdowns and/or<br>restrictions on consumers’ ability to purchase vehicles due to COVID-19 lockdowns in the short-term, or long-term changes in consumers’ vehicle purchasing behaviour, could have a material adverse<br>effect on our operations, sales and profitability.
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•	Supply Disruptions: Events which prevent us from supplying products to our customers could result in a<br>range of potential adverse consequences, including: material price increases; elevated, unrecoverable costs such as those for premium freight or re-sourcing of supply; penalties or business interruption claims<br>by our customers; loss of future business; and reputational damage. In addition to the global semiconductor chip shortage, OEMs and Tier 1 automotive suppliers could also experience supply disruptions or constraints on other critical manufacturing<br>inputs, such as steel and/or aluminum. The impacts of prolonged supply disruptions or constraints could have a material adverse effect on our operations and profitability.
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•	Inflationary Pressures: Global economies are currently experiencing elevated inflation which could curtail<br>levels of economic activity, including in our primary production markets. During 2021, we experienced higher commodity, freight and energy costs, as well as wage pressures related to labour shortages in some markets. Inflationary pressures are<br>expected to continue in 2022 and would be exacerbated by shortages or disruptions to inputs required for automotive production, including semiconductor chips, steel and aluminum. Tier 1 suppliers may also experience price increases or surcharges<br>from sub-suppliers in connection with the inflationary pressures they face. The inability to offset inflationary price increases through continuous improvement actions, price increases to our customers or<br>modifications to our own products or otherwise, could have an adverse effect on our profitability.
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•	Regional Energy Shortages: Parts of the world are experiencing energy shortages which appear to be related<br>to a resurgence in demand due to economic recovery, weather events; and challenges related to the transition to renewable energy generation. Prices for energy inputs critical to manufacturing, such as natural gas and electricity, rose dramatically<br>in parts of Europe and Asia in 2021 and may continue to increase in these or other markets. Russia’s invasion of Ukraine could disrupt natural gas supplies from Russia to Europe and/or cause elevated prices to rise further. Prolonged energy<br>disruptions and/or significant energy price increases could have an adverse effect on our operations and profitability.
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28	Magna International Inc. Annual Report 2021
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•	Product Launch: The launch of production is a complex process, the success of which depends on a wide<br>range of factors, including: the timing, frequency and complexity of design changes by our customers relative to start of production; production readiness of our and our customers and suppliers’ manufacturing facilities; robustness of<br>manufacturing processes; launch volumes; quality and production readiness of tooling and equipment; employees; and initial product quality. Our failure to successfully launch material new or takeover business could have a material adverse effect on<br>our profitability and reputation.
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•	Operational Underperformance: From time to time, we may have operating divisions which are not performing<br>at expected levels of profitability. The size and complexity of automotive manufacturing operations often makes it difficult to achieve a quick turnaround of underperforming divisions. Significant underperformance in our operating divisions could<br>have a material adverse effect on our profitability and operations.
---	---
•	Restructuring Costs: We may sell some product lines and/or downsize, close or sell some of our operating<br>divisions. By taking such actions, we may incur restructuring, downsizing and/or other significant non-recurring costs. These costs may be higher in some countries than others and could have a material adverse<br>effect on our profitability.
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•	Impairments: We have recorded significant impairment charges related to equity interests in joint<br>ventures, goodwill and long-lived assets in the past, and may do so again in the future. The early termination, loss, renegotiation of the terms of, or delay in the implementation of, any significant production contract could be indicators of<br>impairment, as may the technological obsolescence of any of our products or production assets or volumes that are lower than previously expected. In conducting our impairment analysis, we make forward-looking assumptions regarding: the impact of<br>turnaround plans on underperforming operations; new business opportunities; program price and cost assumptions on current and future business; the timing and success of new program launches; and forecast production volumes. To the extent such<br>forward-looking assumptions are not met, any resulting impairment loss could have a material adverse effect on our profitability.
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•	Skilled Labour Attraction/Retention: Our business is based on successfully attracting, training and<br>developing employees at all levels of the company from “shop-floor” to Executive Management. The markets for highly skilled workers, as well as talented professionals and leaders in our industry are extremely competitive, particularly in<br>the major global automotive and technology centres in which many of our operations are located. The inability to meet our needs for skilled workers and talented professionals and leaders, whether through recruitment or internal training and<br>development activities could impact our ability to profitably conduct business and/or effectively implement our strategy.
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•	Leadership Succession: Effective succession planning programs and practices are a critical element of our<br>overall talent management strategy. We experienced a significant number of planned retirements in the last few years, and may experience similar waves in future years. We maintain a leadership development and succession program that has facilitated<br>seamless leadership transitions to date. However, the failure to ensure effective knowledge transfers and seamless leadership transitions involving key professionals and leaders could also impact our ability to profitably conduct business and/or<br>effectively implement our strategy.
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•	Supply Base Condition: We rely on a number of suppliers to supply us with a wide range of components<br>required in connection with our business. The financial health of automotive suppliers is impacted by a number of factors, including economic conditions and production volumes. A significant worsening of economic conditions or reduction in<br>production volumes, including as a result of COVID-19, the semiconductor chip shortage, inflationary pressures or otherwise, could deteriorate the financial condition of our supply base, which could lead to,<br>among other things: disruptions in the supply of critical components to us or our customers; and/or temporary shut-downs of one of our production lines or the production lines of one of our customers; all of which could have a material adverse<br>effect on our profitability.
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IT SECURITY / CYBERSECURITY RISKS

•	IT/Cybersecurity Breach: Although we have established and continue to enhance security controls intended<br>to protect our IT systems and infrastructure, there is no guarantee that such security measures will be effective in preventing unauthorized physical access or cyber-attacks. A significant breach of our IT systems could: result in theft of funds;<br>cause disruptions in our manufacturing operations; lead to the loss, destruction or inappropriate use of sensitive data; or result in theft of our, our customers’ or our suppliers’ intellectual property or confidential information. The<br>occurrence of any of the foregoing could adversely affect our operations and/or reputation, and could lead to claims against us that could have a material adverse effect on our profitability.
•	Product Cybersecurity: The risk of vehicle cyber attacks has risen with the proliferation of technology<br>designed to connect vehicles to external networks. Although vehicle and systems-level cybersecurity controls and protections are typically managed and/or specified by our OEM customers, we cannot provide assurance that such controls and protections<br>will be effective in preventing cyber intrusion through one of our products. Furthermore, an OEM customer may still seek to hold us financially responsible, even where the OEM specified the cybersecurity controls and protections. Any such cyber<br>intrusion could cause reputational damage and lead to claims against us that have an adverse effect on our profitability. ****
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Magna International Inc. Annual Report 2021	29
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PRICING RISKS

•	Quote/Pricing Assumptions: The time between award of new production business and start of production<br>typically ranges between two and four years. Since product pricing is typically determined at the time of award, we are subject to significant pricing risk due to changes in input costs and quote assumptions between the time of award and start of<br>production. This risk is elevated in a rising inflation environment, as is currently the case globally. The inability to quote effectively, or the occurrence of a material change in input cost or other quote assumptions between program award and<br>production, could have an adverse effect on our profitability.
•	Customer Pricing Pressure: We face ongoing pricing pressure from OEMs, including through: quoting pre-requirements; long-term supply agreements with mutually agreed price reductions over the life of the agreement; non-contractual annual price concession demands; pressure<br>to absorb costs related to product design, engineering and tooling, and/or amortize such costs through the piece price for the product; pressure to assume incremental warranty costs; and OEM refusal to fully offset inflationary price increases. OEMs<br>possess significant leverage over their suppliers due to their purchasing power and the highly competitive nature of the automotive supply industry. As a result of the broad portfolio of parts we supply to our six largest OEM customers, such<br>customers may be able to exert greater leverage over us as compared to our competitors. We attempt to offset price concessions and costs in a number of ways, including through negotiations with our customers, improved operating efficiencies and cost<br>reduction efforts. Our inability to fully offset price concessions, absorb design, engineering and tooling costs, and/or fully recover such costs over the life of production, could have a material adverse effect on our profitability.<br>
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•	Commodity Price Volatility: Prices for certain key raw materials and commodities used in our parts,<br>including steel, aluminum and resin, can be volatile. To the extent we are unable to offset commodity price increases by: passing such increases to our customers, engineering products with reduced commodity content, implementing hedging strategies,<br>or otherwise, such additional commodity costs could have an adverse effect on our profitability. ****
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•	Scrap Steel/Aluminum Price Volatility: Some of our manufacturing facilities generate a significant amount<br>of scrap steel or scrap aluminum in their manufacturing processes, but recover some of the value through the sale of such scrap. Scrap steel and scrap aluminum prices can also be volatile and don’t necessarily move in the same direction as<br>steel or aluminum prices. Declines in scrap steel/aluminum prices from time to time could have an adverse effect on our profitability. ****
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WARRANTY / RECALL RISKS

•	Repair/Replacement Costs: We are responsible for repair and replacement costs of defective products we<br>supply to our customers. Certain of our products, such as transmissions, typically have a higher unit and labour cost in the event of replacement. Other products, such as side door latches, are supplied in multiples of two or four for a single<br>vehicle, which could result in significant cost in the event all need to be replaced. Our OEM customers and/or government regulators have the ability to initiate recalls of safety products, which will also place us at risk for the administrative<br>costs of the recall, even in situations where we dispute the need for a recall or the responsibility for any alleged defect. The obligation to repair or replace defective products could have a material adverse effect on our operations and<br>profitability. To the extent such obligation arises as a result of a product recall, we may face reputational damage, and the combination of administrative and product replacement costs could have a material adverse effect on our profitability.<br>
•	Warranty Provisions: In certain circumstances, we are at risk for warranty costs, including product<br>liability and recall costs, and are currently experiencing increased customer pressure to assume greater warranty responsibility. ** Warranty provisions for our products are based on our best estimate of the amounts necessary to settle existing<br>or probable claims related to product defects. In addition, warranty provisions for our powertrain systems, electronics and complete vehicle programs are also established on the basis of our or our customers’ warranty experience with the<br>applicable type of product and, in some cases, the terms in the applicable customer agreements. Actual warranty experience which results in costs that exceed our warranty provisions, could have a material adverse effect on our profitability. ** <br>
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•	Product Liability: We cannot guarantee that the design, engineering, testing, validation and manufacturing<br>measures we employ to ensure high-quality products will be completely effective, particularly as electronic content and product complexity increases. In the event that our products fail to perform as expected and such failure results in, or is<br>alleged to result in, bodily injury and/or property damage or other losses, product liability claims may be brought against us. The defense of product liability claims, particularly class action claims in North America, may be costly and judgements<br>against us could impair our reputation and have a material adverse effect on our profitability.
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30	Magna International Inc. Annual Report 2021
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ACQUISITION RISKS

•

Inherent Merger and Acquisition Risks: **** Acquisitions are subject to a range of inherent risks, including the assumption of incremental regulatory/compliance, pricing, supply chain, commodities, labour relations, litigation, environmental, pensions, warranty, recall, IT, tax or other risks. While the conduct of due diligence on an acquisition target is intended to mitigate such risks, these efforts may not always prove to be sufficient in identifying all risks and liabilities related to the acquisition, including as a result of: limited access to information; time constraints for conducting due diligence; inability to access target company facilities and/or personnel; or other limitations in the due diligence process. Additionally, we may identify risks and liabilities that we are not able to sufficiently mitigate through appropriate contractual or other protections. The realization of any such risks could have a material adverse effect on our profitability.

OTHER BUSINESS RISKS

•	Joint Ventures: We conduct certain of our operations through joint ventures under contractual arrangements<br>under which we share management responsibilities with one or more partners. Joint venture operations carry a range of risks, including those relating to: failure of our joint venture partner(s) to satisfy contractual obligations; potential conflicts<br>between us and our joint venture partner(s); strategic objectives of joint venture partners that may differ from our own; potential delays in decision-making; a limited ability to implement some or all of our policies, practices and controls, or to<br>control legal and regulatory compliance, within the joint venture(s); and other risks inherent to non-wholly-owned operations. The likelihood of such occurrences and their potential effect on us vary depending<br>on the joint venture arrangement, however, the occurrence of any such risks could have an adverse effect on our operations, profitability and reputation.
•	Technology and Innovation: While we continue to invest in technology and innovation which we believe will<br>be critical to our long-term growth, the automotive industry is experiencing rapid technological change and significant disruption. Our ability to anticipate changes in technology and to successfully develop and introduce new and enhanced products<br>and/or manufacturing processes on a timely basis will be a significant factor in our ability to remain competitive. If we are unsuccessful or are less successful than our competitors in consistently developing innovative products and/or processes,<br>we may be placed at a competitive disadvantage and may not be able to recover some or all of our investments and costs, which could have a material adverse effect on our profitability and financial condition and ability to fully implement our<br>corporate strategy.
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•	Intellectual Property: We own intellectual property that is important to our business and product<br>portfolio. Our intellectual property is an important factor in protecting our innovation activities and maintaining our competitive advantage. From time to time, our intellectual property rights may be challenged, including through the assertion of<br>intellectual property infringement claims which could result in us: being prevented from selling certain products; having to license the infringed product/technology; and/or incurring monetary damages. The foregoing consequences could have an<br>adverse effect on our sales, profitability and ability to fully implement our corporate strategy.
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•	Investments in Technology Companies: In addition to our development activities, we have invested in<br>various technology companies and funds that invest in such companies. Such investments are an important element of our long-term strategy and we may make further investments in such companies. Investing in<br>such companies involves a high degree of risk, including the potential loss of some or all of our investment value. There is currently no public market for the shares or units of some of these investments and, as a result, we may be unable to<br>monetize such investments in the future. Investments in companies or funds which are currently or subsequently become publicly traded are marked-to-market quarterly,<br>which may result in us recording unrealized gains or losses in any given quarter. The realization of any of the foregoing investment-related risks could have an adverse effect on our profitability and<br>financial condition.
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•	Evolving Business Risk Profile: The risk profile of our business continues to evolve with the increasing<br>importance to us of product areas such as electrified powertrains, ADAS and electronics, as well as future mobility business models. As our business evolves, we may face new or heightened risks, including: forecasting and planning risks related to<br>penetration rates of EVs, as well as take-rates for ADAS systems or features offered to consumers as optional items; reduction in demand for certain products which are unique to internal combustion engine vehicles; challenges in quoting for<br>profitable returns on products with leading-edge technologies for which we may not have significant quoting experience; rigorous testing and validation requirements from OEM customers for complex new products; increased warranty and recall risks on<br>new products and leading-edge technologies; increased product liability risks; heightened risk of technological obsolescence of some of our products, processes and/or assets; and difficulties in attracting or retaining employees with critical skills<br>in high-demand areas. Realization of one or more such risks could have a material adverse effect on our operations, profitability or financial condition.
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Magna International Inc. Annual Report 2021	31
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•	Risks of Doing Business in Foreign Markets: The establishment of manufacturing operations in new markets<br>carries a number of potential risks, including those relating to: political, civil and economic instability and uncertainty; corruption risks; high inflation and our ability to recover inflation-related cost increases; trade, customs and tax risks;<br>potential sanctions risk; expropriation risks; currency exchange rates; currency controls; limitations on the repatriation of funds; insufficient infrastructure; competition to attract and retain qualified employees; and other risks associated with<br>conducting business internationally. Expansion of our business in non-traditional markets is an element of our long-term strategy and, as a result, our exposure to the risks described above may be greater in<br>the future. The likelihood of such occurrences and their potential effect on us vary from country to country and are unpredictable, however, the occurrence of any such risks could have an adverse effect on our operations, profitability and financial<br>condition.
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•	Relative Foreign Exchange Rates: Our profitability is affected by movements of our U.S. dollar reporting<br>currency against the Canadian dollar, the euro, the Chinese renminbi and other currencies in which we generate revenues and incur expenses. Significant long-term fluctuations in relative currency values, in particular a significant change in the<br>relative values of the U.S. dollar, Canadian dollar, euro or Chinese renminbi, could have an adverse effect on our profitability and financial condition and any sustained change in such relative currency values could adversely impact our<br>competitiveness in certain geographic regions. ****
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•	Financial Flexibility: The occurrence of an economic shock not contemplated in our business plan, a rapid<br>deterioration of conditions or a prolonged recession could result in the depletion of our cash resources, which could have a material adverse effect on our operations and financial condition.
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•	Credit Ratings Changes: There is no assurance that any credit rating currently assigned to us will remain<br>in effect for any period of time or that any rating will not be revised or withdrawn entirely by a rating agency in the future. A downgrade in the credit ratings assigned to us by one or more agencies could increase our cost of borrowing or impact<br>our ability to negotiate loans, which could have an adverse effect on our profitability, financial condition and the trading price of our Common Shares.
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LEGAL, REGULATORY AND OTHER RISKS

•	Legal and Regulatory Proceedings: From time to time, we may become involved in regulatory proceedings, or<br>become liable for legal, contractual and other claims by various parties, including customers, suppliers, former employees, class action plaintiffs and others. Depending on the nature or duration of any potential proceedings or claims, we may incur<br>substantial costs and expenses, be required to devote significant management time and resources to the matters, and suffer reputational damage as a result of regulatory proceedings. On an ongoing basis, we attempt to assess the likelihood of any<br>adverse judgements or outcomes to these proceedings or claims, although it is difficult to predict final outcomes with any degree of certainty. Except as disclosed from time to time in our consolidated financial statements and/or our MD&A, we do<br>not believe that any of the proceedings or claims to which we are currently a party will have a material adverse effect on our profitability; however, we cannot provide any assurance to this effect.
•	Changes in Laws: A significant change in the current regulatory environment in our principal markets,<br>including changes in tax laws, laws related to the COVID-19 pandemic, laws related to vehicle emissions, and other laws which impose additional costs on automotive manufacturers or consumers, could have an<br>adverse effect on our profitability.
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32	Magna International Inc. Annual Report 2021
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EX-4

Exhibit 4

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in Registration Statement Nos. 333-210449 and 333-128257 on Form S-8 and Registration Statement No. 333-237672 on Form F-10 and to the use of our reports dated March 3, 2022 relating to the consolidated financial statements of Magna International Inc. (the “Company”), and the effectiveness of the Company’s internal control over financial reporting appearing in this Annual Report on Form 40-F for the year ended December 31, 2021.

/s/ Deloitte LLP

Chartered Professional Accountants

Licensed Public Accountants

Toronto, Canada

March 25, 2022

EX-99.1

Exhibit 99.1

CERTIFICATION

I, Seetarama (Swamy) Kotagiri, Chief Executive Officer, certify that:

1.	I have reviewed this annual report on Form 40-F of Magna International<br>Inc. (the issuer”);
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a<br>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;
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3.	Based on my knowledge, the financial statements, and other financial information included in this report,<br>fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;
---	---
4.	The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure<br>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 issuer and have:
---	---
a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be<br>designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being<br>prepared;
---	---
b)	Designed such internal control over financial reporting, or caused such internal control over financial<br>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<br>principles;
---	---
c)	Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this<br>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 issuer’s internal control over financial reporting that<br>occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and
---	---
5.	The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of<br>internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):
---	---
a)	All significant deficiencies and material weaknesses in the design or operation of internal controls over<br>financial reporting which are reasonably likely to adversely affect the issuer’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<br>the issuer’s internal control over financial reporting.
---	---

Date as of the 25^th^ day of March, 2022.

/s/ “Swamy Kotagiri”
Seetarama (Swamy) Kotagiri
Chief Executive Officer

EX-99.2

Exhibit 99.2

CERTIFICATION

I, Patrick W.D. McCann, Executive Vice-President and Chief Financial Officer, certify that:

1.	I have reviewed this annual report on Form 40-F of Magna International<br>Inc. (the issuer”);
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a<br>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;
---	---
3.	Based on my knowledge, the financial statements, and other financial information included in this report,<br>fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;
---	---
4.	The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure<br>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 issuer and have:
---	---
a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be<br>designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being<br>prepared;
---	---
b)	Designed such internal control over financial reporting, or caused such internal control over financial<br>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<br>principles;
---	---
c)	Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this<br>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 issuer’s internal control over financial reporting that<br>occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and
---	---
5.	The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of<br>internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):
---	---
a)	All significant deficiencies and material weaknesses in the design or operation of internal controls over<br>financial reporting which are reasonably likely to adversely affect the issuer’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<br>the issuer’s internal control over financial reporting.
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Date as of the 25^th^ day of March, 2022.

/s/ “Patrick McCann”
Patrick W.D. McCann
Executive Vice-President and
Chief Financial Officer

EX-99.3

Exhibit 99.3

CERTIFICATE OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO

18 U.S.C.SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

I, Seetarama (Swamy) Kotagiri, Chief Executive Officer of Magna International Inc. (the “Company”), certify that:

1.	the Annual Report on Form 40-F of the Company dated the 25^th^ day of March, 2022 for the fiscal year ending December 31, 2021 (the “Report”) fully complies with the requirements of Sections 13(a) and 15(d) of the Securities Exchange Act of 1934;<br>and
2.	the information contained in the Report fairly presents, in all material respects, the financial condition and<br>results of operations of the Company.
---	---

Dated as of the 25^th^ day of March, 2022.

/s/ “Swamy Kotagiri”
Seetarama (Swamy) Kotagiri
Chief Executive Officer

A signed original of this written statement required by Section 906 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-99.4

Exhibit 99.4

CERTIFICATE OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO

18 U.S.C.SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

I, Patrick W.D. McCann, the Executive Vice-President and Chief Financial Officer of Magna International Inc. (the “Company”), certify that:

1.	the Annual Report on Form 40-F of the Company dated the 25^th^ day of March, 2022 for the fiscal year ending December 31, 2021 (the “Report”) fully complies with the requirements of Sections 13(a) and 15(d) of the Securities Exchange Act of 1934;<br>and
2.	the information contained in the Report fairly presents, in all material respects, the financial condition and<br>results of operations of the Company.
---	---

Dated as of the 25^th^ day of March, 2022.

/s/ “Patrick McCann”
Patrick W.D. McCann
Executive Vice-President and
Chief Financial Officer