UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
x ANNUAL
REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the fiscal year ended December 31, 2022
OR
¨ TRANSITION
REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from _______________
to _______________
Commission File No. 001-11444
THE MAGNA GROUP OF COMPANIES RETIREMENT SAVINGS
PLANS
MAGNA INTERNATIONAL INC.
337 Magna Drive
Aurora, Ontario, Canada L4G 7K1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Plan Administrator has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
| |
THE MAGNA GROUP OF COMPANIES
RETIREMENT SAVINGS PLANS by
MAGNA INTERNATIONAL INC.
in its capacity as Plan Administrator |
|
| |
|
|
| |
/s/ Paul H. Brock |
|
| |
By: Paul H. Brock |
|
| |
Title: Vice-President and Treasurer |
|
| |
|
|
| |
/s/ Robert Cecutti |
|
| |
By: Robert Cecutti |
|
| |
Title: Controller |
|
Date: July 14, 2023
SUMMARY TABLE OF CONTENTS
| Appendix 1 | The
Magna Group of Companies Retirement Savings Plans Audited Financial Statements as of December 31, 2022 and 2021 |
Exhibit
| |
The Magna Group of Companies
Retirement Savings Plans |
| |
|
| |
Financial Statements |
| |
and Supplemental Schedules |
| |
Years Ended December 31, 2022
and 2021 |
The
Magna Group of Companies Retirement Savings Plans
Financial Statements
and Supplemental Schedules
Years Ended December 31,
2022 and 2021
The Magna Group
of Companies Retirement Savings Plans
Contents
Report of Independent Registered Public Accounting
Firm
To the Pension and Retirement Savings Committee and Plan Participants
The Magna Group of Companies Retirement Savings Plans
Aurora, Ontario, Canada
Opinion on the Financial Statements
We have audited the accompanying statements of
net assets available for benefits of The Magna Group of Companies Retirement Savings Plans (the “Plan”) as of December 31,
2022 and 2021, the related statements of changes in net assets available for benefits for the years then ended, and the related notes
(collectively, the “financial statements”). In our opinion, the financial statements present fairly, in all material respects,
the net assets available for benefits of the Plan as of December 31, 2022 and 2021, and the changes in net assets available for benefits
for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility
of the Plan’s management. Our responsibility is to express an opinion on the Plan’s financial statements based on our audits.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and
are required to be independent with respect to the Plan 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. The Plan is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of
internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal
control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess
the risk 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 the Plan’s management, as well
as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Supplemental Information
The supplemental information in the accompanying
Schedule H, Line 4a – Schedule of Delinquent Participant Contributions for the year ended December 31, 2022 and Schedule H,
Line 4i - Schedule of Assets (Held at End of Year) as of December 31, 2022 have been subjected to audit procedures performed in conjunction
with the audit of the Plan’s financial statements. The supplemental information is presented for the purpose of additional analysis
and is not a required part of the financial statements but included supplemental information required by the Department of Labor’s
Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental information
is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental information reconciles
to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness
and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we
evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labor’s
Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the
supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole.
/s/ BDO USA, P.A.
We have served as the Plan’s auditor since
2007.
Grand Rapids, Michigan
July 14, 2023
The Magna Group
of Companies Retirement Savings Plans
Statements
of Net Assets Available for Benefits
(in thousands)
| December 31, | |
2022 | | |
2021 | |
| Assets | |
| | | |
| | |
| Investments | |
| | | |
| | |
| Investments, at fair value | |
$ | 2,046,029 | | |
$ | 2,514,385 | |
| Receivables | |
| | | |
| | |
| Employer | |
| 232 | | |
| 29,209 | |
| Participants | |
| 293 | | |
| 410 | |
| Notes receivable from participants | |
| 56,607 | | |
| 60,166 | |
| Total Receivables | |
| 57,132 | | |
| 89,785 | |
| Net Assets Available for Benefits | |
$ | 2,103,161 | | |
$ | 2,604,170 | |
See accompanying notes to financial statements.
The Magna Group
of Companies Retirement Savings Plans
Statements of Changes in Net Assets Available
for Benefits
(in thousands)
| Year ended December 31, | |
2022 | | |
2021 | |
| Additions | |
| | | |
| | |
| Investment (loss)/income: | |
| | | |
| | |
| Interest and dividends | |
$ | 21,536 | | |
$ | 14,644 | |
| Net (depreciation)/appreciation in fair value of investments | |
| (495,204 | ) | |
| 339,512 | |
| Contributions: | |
| | | |
| | |
| Employer | |
| 66,598 | | |
| 58,177 | |
| Participants | |
| 110,018 | | |
| 100,023 | |
| Rollovers | |
| 11,210 | | |
| 13,509 | |
| Interest from notes receivable from participants | |
| 3,301 | | |
| 3,405 | |
| Total Additions | |
| (282,541 | ) | |
| 529,270 | |
| Deductions | |
| | | |
| | |
| Benefits paid to terminated employees | |
| 126,695 | | |
| 136,314 | |
| Benefits paid to participating employees | |
| 89,663 | | |
| 111,797 | |
| Loan expenses and other fees | |
| 2,110 | | |
| 2,287 | |
| Total Deductions | |
| 218,468 | | |
| 250,398 | |
| Net (decrease)/increase | |
| (501,009 | ) | |
| 278,872 | |
| Net Assets Available for Benefits,
beginning of year | |
| 2,604,170 | | |
| 2,325,298 | |
| Net Assets Available for Benefits,
end of year | |
$ | 2,103,161 | | |
$ | 2,604,170 | |
See accompanying notes to financial statements.
The Magna Group
of Companies Retirement Savings Plans
Notes
to Financial Statements
| 1. | Description of the Plan |
The following description of The Magna
Group of Companies Retirement Savings Plans (the Plan) provides only general information. Participants should refer to the restated Plan
Agreement for a more complete description of the Plan’s provisions.
General
Certain employees of Magna International
of America, Inc. (the Primary Employer) and other participating subsidiaries and affiliates of the Primary Employer (collectively,
the Employer) are eligible to participate in the Plan.
The Plan was established by the Primary
Employer as the Magna International of America 401(k) Plan on August 1, 1992. The Primary Employer restated the Plan’s
terms, provisions and conditions effective January 1, 2016.
The Plan is subject to the provisions
of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan Agreement provides that the Plan may invest in common stock of
Magna International Inc. (Magna), the parent company of the Primary Employer.
The Plan is administered
by the Primary Employer and individuals appointed by the Board of Directors of the Primary Employer. Principal Trust Company (Principal)
is the appointed Trustee of the Plan.
401(k) Eligibility
An employee is eligible to participate
on the first day of employment and shall be eligible for matching contributions on the first day of the month following six months of
service and attainment of 18 years of age.
Deferred Profit-Sharing Eligibility
An employee is
eligible to receive profit-sharing contributions if the employee is employed at a participating employer on the last day of the plan year
and the employee received compensation for 1,000 hours of service in the plan year. As of January 1, 2022, the Deferred Profit-Sharing
portion of the Plan was modified so that only certain union employees were eligible.
Contributions and Automatic Enrollment
The 401(k) portion of the Plan
is funded by contributions from employees who may elect to contribute from 1% to 50% of wages, as defined, subject to the maximum amount
permitted under the Internal Revenue Code (the Code). The Employer may make a discretionary matching contribution. For the 2022 and 2021
plan years, the Employer Matching Contribution was 50% of the first 6% of base earnings contributed by a participant, unless a collective
bargaining agreement states differently. Employees may also defer 1% to 100% of their bonus for a given year, which is not eligible for
a matching contribution by the Employer. Participants in the Plan may also contribute amounts representing distributions from other qualified
defined benefit or defined contribution plans.
The Magna Group
of Companies Retirement Savings Plans
Notes
to Financial Statements
Employees are
automatically enrolled after a 30-day opt-out period. The Employer withholds an amount equal to a percentage of eligible employee compensation
(other than bonus pay), until such time as the employee changes or stops the contribution.
New hires are automatically enrolled
at 6% of employee compensation (other than bonus pay), except for newly hired employees covered under certain collective bargaining agreements
who will be automatically enrolled at 3%.
The Plan has an automatic increase
feature whereby the contribution percentage is increased by 1% per year up to a maximum contribution percentage of 6% for participants
making a contribution of less than 6%, unless the employee changes or stops the contribution. The automatic increase does not apply to
certain employees who are covered by a collective bargaining agreement.
The Deferred Profit-Sharing portion
of the Plan is a non-contributory, defined contribution plan funded by discretionary Employer contributions as determined under the provisions
of the Plan, which are generally based on years of service and consolidated profits as determined by the Employer. As of January 1,
2022, the Deferred Profit-Sharing portion of the Plan was replaced by a new account labelled Magna Base Contribution (MBC) for all eligible
participants, defined in the Plan Agreement, as amended as the Base Contribution. The MBC for each eligible participant is determined
by multiplying their applicable Regular Earnings by 3%. The MBC is paid to eligible participants on a per-pay period basis throughout
the year. Contributions will commence on the first of the month on or following the completion of 6 months and attainment of 18 years
of age. A one- time Base Contribution for the 2021 plan year, totaling $28,904 thousand, was made in April 2022 to eligible participants,
as defined in the Plan Agreement, as amended.
Participant Accounts
Individual participant accounts are
maintained by Principal and are credited with employee contributions, Employer contributions, and Plan earnings in the case of the 401(k) portion
of the Plan, and allocations of Employer contributions, Plan earnings, and forfeitures of former participants’ non-vested amounts
in the case of the Deferred Profit-Sharing portion of the Plan. Allocations of contributions and forfeitures in the Deferred Profit-Sharing
portion of the Plan are based upon compensation and years of service, as defined, while allocations of earnings are recognized by changes
in the unit value. Such accounts are valued periodically in accordance with the provisions of the Plan.
Vesting
For the 401(k) portion of the Plan, participants are
100% vested immediately in Employer and employee contributions and allocated earnings thereon. This includes the Base Contribution.
Vesting for the historical Deferred Profit-Sharing portion
of the Plan will continue according to the following schedule:
| Full Years of Service | | |
Vested Percentage (%) | |
| Less than 1 | | |
| 0 | |
| 1 | | |
| 30 | |
| 2 | | |
| 40 | |
| 3 | | |
| 60 | |
| 4 | | |
| 80 | |
| 5 and after | | |
| 100 | |
The Magna Group
of Companies Retirement Savings Plans
Notes
to Financial Statements
Notwithstanding
the foregoing, all amounts allocated or re-allocated to a participant shall vest irrevocably to that participant not later than five years
after the end of the plan year in which the amounts are allocated or re-allocated, unless the participant has ceased before that time
to be an employee. Immediate full vesting also occurs upon a participant’s death, total and permanent disability, permanent layoff,
or attainment of normal retirement age of 60.
Forfeitures
For the Deferred
Profit-Sharing portion of the Plan, the non-vested portion of a terminated participant’s account balance is allocated to other
Plan participants after the former participant has five consecutive one-year service breaks. During 2022 and 2021, allocated
forfeitures were $1,729 thousand and $2,805 thousand, respectively. As of December 31, 2022 and 2021, forfeited nonvested
accounts totaled $1,805 and $2,054 thousand, respectively.
Plan Benefits
For the Deferred Profit-Sharing portion
of the Plan, participants are eligible to receive vested benefits based upon the most recent valuation of their account upon termination
of service with the Employer. Under certain provisions of the Plan, a percentage of vested benefits may also be distributed after ten
continuous years of service and/or upon reaching age 55. Distributions of Plan benefits are made to eligible participants in one lump-sum
payment. Only vested balances of a participant’s profit-sharing contribution account as of December 31, 2007 are eligible for
in-service withdrawals.
For the 401(k) portion of the
Plan, upon retirement, death, disability or termination of service, benefits will be paid in the form of a lump-sum distribution. Certain
other withdrawals are permitted in the event of financial hardship, as defined in the Plan Agreement.
Notes Receivable From Participants
Participants may borrow from their
fund accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their vested account balance, excluding amounts
related to the participant’s Deferred Profit-Sharing account. Participant note terms range from one to five years, or up to 10 years
for the purchase of a primary residence. The notes are secured by the balance in the participant’s account and bear interest at
the then current Prime plus 2% as determined by the Plan Administrator. Principal and interest is paid ratably through payroll deductions,
not less frequently than quarterly. As of December 31, 2022, outstanding notes receivable had interest rates ranging from 5.25% to
9.50%, excluding deemed loans.
Plan Termination
Although it has not expressed any intent
to do so, the Employer has the right to terminate the Plan in whole or in part at any time subject to the provisions of ERISA. In the
event the Plan is terminated, all participant accounts will become 100% vested and non-forfeitable.
Participant and Non-Participant Directed Investments
Participants may invest in Magna International
Inc. Common Stock (Employer Securities). For the Deferred Profit-Sharing portion of the Plan, 4/7th of the annual profit-sharing contribution,
as defined, is invested in Employer Securities, referred to as the non-participant directed portion of the Plan. The remaining portion of
the annual profit-sharing contribution is directed by the employee and may include investments in Employer Securities. Participants may
diversify up to 100% of Magna stock held in their account at any time. Voting rights are all retained by the trustee per the direction
of the Employer.
The Magna Group
of Companies Retirement Savings Plans
Notes
to Financial Statements
Administrative Expenses
The Employer administers the Plan.
The Employer pays certain administrative expenses of the Plan, and the Employer also provides certain administrative services which have
not been charged to the Plan. The amount of such expenses and cost of such services have not been determined. Certain administrative expenses
not paid directly by the Employer may be paid from the Plan in accordance with ERISA provisions. Fees related to the administration of
notes receivable from participants are charged directly to the participant’s account and are included in administrative expenses.
| 2. | Significant Accounting Policies |
Basis of Financial Statements
The accompanying financial statements
have been prepared under the accrual basis of accounting.
Subsequent Events
Subsequent events have been evaluated
by management through July 14, 2023, the date these financial statements were available to be issued.
Use of Estimates
The preparation of the financial statements
in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those
estimates.
Risks and Uncertainties
The Plan invests in various investment
securities. Investment securities are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk
associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities
will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported
in the statements of net assets available for benefits.
Investment Valuation and Income
Recognition
All Plan investments are stated at
fair value. Fair value is the price that would be received to sell an asset (an exit price) in the principal or most advantageous market
for the asset in an orderly transaction between market participants on the measurement date. The Plan’s management determines the
Plan’s valuation policies utilizing information provided by the investment advisors, Plan trustee and custodian. See Note 3 for
discussion of fair value measurements.
The Magna Group
of Companies Retirement Savings Plans
Notes
to Financial Statements
Purchases and sales of securities are
recorded on a trade date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Net
appreciation (depreciation) includes the Plan’s gains and losses on investments bought and sold as well as held during the year.
Notes Receivable From Participants
Participant loans are classified as
notes receivable from participants and are measured at the unpaid principal balance plus unpaid accrued interest. Defaulted loans, if
any, are reclassified as distributions based upon the terms of the Plan Document.
Concentration of Investments
Included in investments at December 31,
2022 and 2021 are shares of the Employer’s securities amounting to $353 and $521 million, respectively. This investment represents
17% and 21% of total investments at December 31, 2022 and 2021, respectively. A significant decline in the market value of the Employer’s
securities would significantly affect the net assets available for benefits.
Payment of Benefits
Benefits are recorded when paid.
In accordance with ASC 820, Fair
Value Measurement, the Plan utilizes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices
in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). A
financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the
fair value measurement. The three levels of the fair value hierarchy are described as follows:
Level 1 - Inputs to the valuation
methodology are unadjusted quoted prices for identical assets in active markets.
Level 2 - Inputs to the valuation
methodology include quoted prices for similar assets in active markets, quoted prices for identical or similar assets in inactive markets,
other inputs that are observable or can be corroborated by observable market data.
Level 3 - Inputs to the valuation
methodology are both significant to the fair value measurement and unobservable.
The following valuation methodologies
were used to measure the fair value of the Plan’s investments. There have been no changes in the methodologies used at December 31,
2022 or 2021.
The Principal Stable Value Fund
– This asset is daily valued by the trustee, Principal Global Investors Trust, based on the underlying investments which consist
primarily of a diversified portfolio of stable value investment contracts issued by life insurance companies, banks and other financial
institutions, the performance of which may be predicated on underlying fixed income investments. The Fund provides for daily redemptions
at the reported net asset value (NAV). Participants are permitted to redeem units at NAV on the valuation date. Participants who liquidate
are prohibited from moving assets back into the fund for 90 days.
The Magna Group
of Companies Retirement Savings Plans
Notes
to Financial Statements
Pooled Separate Accounts (PSAs)
– These assets are valued based on the underlying investments (i.e., common stock, mutual funds, short-term securities). While
the majority of the underlying assets values are based on quoted prices, the NAV of the pooled separate account is not publicly quoted.
The NAV is reported by the fund managers as of the financial statement date based on recent transaction prices. The NAV is used as a practical
expedient to estimate fair value. This practical expedient is not used when it is determined to be probable that the fund will sell the
investment for an amount different than the reported NAV. The PSAs held by the Plan provide for daily redemptions by the Plan at reported
NAV with no advance notice requirement. The Plan is permitted to redeem investment units at NAV on the measurement date. Principal may
place transfer or liquidation restrictions on the U.S. Property Separate Account. Effective close of market July 1, 2022, a contractual
limitation will delay the payment of most withdrawal or transfer requests from the Principal US Property Separate Account (Separate Account)
but for no more than three years from the effective date. In accordance with the terms of the Employer's group annuity contract, delayed
payment requests will be honored proportionately. This means transactions may be processed in a series of payments until enough cash is
available to pay obligations. The Separate Account invests the majority of assets in owned private equity commercial real estate. It focuses
on properties anticipated to return both lease income and appreciation of the buildings' marketable value. The property holdings usually
contain real estate from the multi-family, office, warehouse/manufacturing, and retail sectors. This Separate Account is subject to investment
and liquidity risk and other risks inherent in real estate such as those associated with general and local economic conditions.
Generally, the PSA investments in any
class can be transferred once every 30 days at the current NAV per share based on the fair value of the underlying assets. Participants
are not allowed to transfer back into that originating class until the 30-day period has expired. There are no unfunded commitments relating
to these investments.
Common/Collective Trusts (CCTs)
– These assets are valued at the NAV of the units held by the Plan, which are based on the quoted market prices of the underlying
securities of the funds. The unit price is based on the value of the underlying investment assets owned by the fund, minus its liabilities,
and then divided by the number of shares outstanding. The NAV is used as a practical expedient to estimate fair value. This practical
expedient is not used when it is determined to be probable that the fund will sell the investment for an amount different than the reported
NAV. The CCTs provide for daily redemptions by the Plan at reported NAV, with no advance notice requirements. There are no unfunded commitments
relating to these investments. All CCTs are Direct Filing Entities.
Employer Securities –
These assets are valued at the closing price quoted on a recognized securities exchange.
Mutual Funds – These assets
are valued at quoted market prices of shares held by the Plan.
Deferred Income Annuities -
The Principal Pension Builder is an investment option which allows participants to purchase deferred income annuities issued by
Principal Life Insurance Company. These assets can be transferred in the future to other investment options within the Plan or
surrendered. Transactions that occur prior to the commencement of guaranteed income payments are realized at the lower of contract
value (or return of premium) or an adjusted contract value that takes into account the current rates of interest available in the
marketplace as well as mortality factors. The fair market value of the
annuities is the value paid when funds are withdrawn prior to the income start date. The annuities are reported at fair value which approximates
contract value.
The Magna Group
of Companies Retirement Savings Plans
Notes
to Financial Statements
Life Insurance Policies –
These assets are valued at the cash surrender value of the individual policies.
The Plan’s valuation methods
may result in a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Although
Plan management believes the valuation methods are appropriate and consistent with the market participants, the use of different methodologies
or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the
reporting date.
The following tables set forth by level
within the fair value hierarchy the Plan’s investments (in thousands):
| December 31, 2022 | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
| Mutual funds | |
$ | 409,789 | | |
$ | - | | |
$ | - | | |
$ | 409,789 | |
| Employer securities | |
| 352,543 | | |
| - | | |
| - | | |
| 352,543 | |
| Deferred income annuities | |
| - | | |
| - | | |
| 2,796 | | |
| 2,796 | |
| Life insurance policies | |
| - | | |
| - | | |
| 37 | | |
| 37 | |
| | |
| 762,332 | | |
| - | | |
| 2,833 | | |
| 765,165 | |
| Total investments, at net asset value* | |
| | | |
| | | |
| | | |
| 1,280,864 | |
| Total Investments, at fair value | |
$ | 762,332 | | |
$ | - | | |
$ | 2,833 | | |
$ | 2,046,029 | |
| December 31, 2021 | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
| Mutual funds | |
$ | 521,726 | | |
$ | - | | |
$ | - | | |
$ | 521,726 | |
| Employer securities | |
| 521,481 | | |
| - | | |
| - | | |
| 521,481 | |
| Deferred income annuities | |
| - | | |
| - | | |
| 2,467 | | |
| 2,467 | |
| Life insurance policies | |
| - | | |
| - | | |
| 35 | | |
| 35 | |
| | |
| 1,043,207 | | |
| - | | |
| 2,502 | | |
| 1,045,709 | |
| Total investments, at net asset value* | |
| | | |
| | | |
| | | |
| 1,468,676 | |
| Total Investments, at fair value | |
$ | 1,043,207 | | |
$ | - | | |
$ | 2,502 | | |
$ | 2,514,385 | |
| * | The stable value funds, the pooled separate accounts and the
common/collective trusts are measured at fair value using the NAV per share (or its equivalent) as a practical expedient and have not
been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of
the fair value hierarchy to the amounts presented in the statements of net assets available for benefits. |
The Magna Group
of Companies Retirement Savings Plans
Notes
to Financial Statements
Investments classified within Level
3 consist of life insurance policies and deferred income annuities. The tables below set forth a summary of changes in the fair values
of the Plan’s Level 3 investments for the years ended December 31, 2022 and 2021 (in thousands):
| Year ended December 31, 2022 | |
Deferred Income
Annuities | | |
Life Insurance
Policies | |
| Balance, beginning of year | |
$ | 2,467 | | |
$ | 35 | |
| Purchases | |
| 629 | | |
| 2 | |
| Sales | |
| (300 | ) | |
| - | |
| Balance, end of year | |
$ | 2,796 | | |
$ | 37 | |
| Year ended December 31, 2021 | |
Deferred Income
Annuities | | |
Life Insurance
Policies | |
| Balance, beginning of year | |
$ | 2,047 | | |
$ | 33 | |
| Purchases | |
| 496 | | |
| 2 | |
| Sales | |
| (76 | ) | |
| - | |
| Balance, end of year | |
$ | 2,467 | | |
$ | 35 | |
| 4. | Non-Participant-Directed Investments |
The Magna International Inc. Common
Stock includes both participant and non-participant-directed investments, which are co-mingled. Substantially all contributions and associated
appreciation (depreciation), income and dividends are non-participant-directed until amounts are available for transfer as described in
the Plan Agreement. Information about the net assets available for benefits and the significant components of the changes in net assets
available for benefits for non- participant-directed investments is as follows:
| December 31, | |
2022 | | |
2021 | |
| Magna International Inc. common stock | |
$ | 352,543 | | |
$ | 521,481 | |
| Year ended December 31, | |
2022 | | |
2021 | |
| Changes in net assets available for benefits | |
| | | |
| | |
| Dividend income | |
$ | 11,483 | | |
$ | 11,347 | |
| Net (depreciation)/appreciation in fair value of investments | |
| (158,383 | ) | |
| 68,681 | |
| Employer contributions | |
| 2,892 | | |
| 12,150 | |
| Participant contributions | |
| 3,769 | | |
| 3,566 | |
| Net inter-fund transfers | |
| 1,925 | | |
| (14,419 | ) |
| Distributions to terminated employees | |
| (17,600 | ) | |
| (25,784 | ) |
| Distributions to participating employees | |
| (13,024 | ) | |
| (16,222 | ) |
| (Decrease)/Increase in Net Assets Available for Benefits | |
$ | (168,938 | ) | |
$ | 39,319 | |
| 5. | Related Party and Party-In-Interest Transactions |
Certain Plan investments are stable
value funds, common/collective trusts, and pooled separate accounts managed by Principal. Principal is the trustee as defined by the Plan
and qualifies as a party-in-interest. The Plan also invests in the common stock of the Employer, which had dividends paid totaling $11,483 and $11,347 thousand,
purchases totaling $55,102 and $55,592 thousand, and sales totaling $60,421 and $97,179 thousand, for 2022 and 2021, respectively. Notes
receivable from participants are also considered party-in interest transactions.
The Magna Group
of Companies Retirement Savings Plans
Notes
to Financial Statements
The Plan has received a determination
letter from the Internal Revenue Service dated March 15, 2018 stating that the Plan is qualified under Section 401(a) of
the Code and, therefore, the related trust is exempt from taxation. The Plan is required to operate in conformity with the Code to maintain
its qualification. The Plan has been amended since receiving the determination letter. However, the Plan Administrator believes the Plan
is being operated in compliance with the applicable requirements of the Code and, therefore, believes the Plan, as amended, is qualified
and the related trust is tax exempt.
Accounting principles generally accepted
in the United States of America require plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or
asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the Internal Revenue
Service. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in
progress.
| 7. | Delinquent Participant Contributions |
The Employer failed to remit certain
employee deferrals and loan repayments to the Plan in a timely manner according to DOL regulations during 2022 and 2021 aggregating to
$4,555 and $2,398 thousand, respectively. The Employer has calculated lost earnings and deposited the lost earnings into the Plan for
2021. Principal is calculating the lost earnings for 2022 at this time and the Employer will deposit lost earnings in 2023.
| 8. | Commitments and Contingencies |
On April 30, 2020, a putative
class action lawsuit was filed in the United States District Court, Eastern District of Michigan against Magna International of America, Inc.
and its Board of Directors, the Magna International of America, Inc. Investment Committee, the United States Pension and Retirement
Savings Committee, and several unnamed individuals (the Defendants). The Complaint alleges claims under the Employee Retirement Income
Security Act of 1974 (ERISA) for breach of fiduciary duty and failure to monitor other fiduciaries with respect to the fees and expenses
associated with investment options in the Magna Group of Companies Retirement Savings Plans. The plaintiffs seek various forms of relief,
including damages and declaratory and injunctive relief. Discovery was completed on January 21, 2022. Motion for certification was
denied on March 27, 2023 on grounds that the proposed plaintiffs were inadequate to represent the class, but plaintiffs’ counsel
were permitted to propose alternative representatives. New representatives have been proposed, and discovery on those individuals is underway.
Both certification and Defendants’ motion for summary judgment are still pending. The Defendants believe the suit is without merit
and therefore intend to vigorously defend the case. Given the current stage of the legal proceedings, it is not possible to predict the
outcome of the claim.
The Magna Group of Companies Retirement Savings
Plans
Notes to Financial
Statements
| 9. | Reconciliation of Financial Statements to Form 5500 |
The following is a reconciliation of net assets available
for plan benefits per the financial statements to the Form 5500 (in thousands):
| December 31, | |
2022 | | |
2021 | |
| Net assets available for benefits per the financial statements | |
$ | 2,103,161 | | |
$ | 2,604,170 | |
| Benefits payable to participants | |
| - | | |
| (1,038 | ) |
| Net Assets Available for Benefits, per the Form 5500 | |
$ | 2,103,161 | | |
$ | 2,603,132 | |
The following is a reconciliation of the net increase in
net assets per the financial statements to total income per the Form 5500 (in thousands):
| Year ended December 31, | |
2022 | | |
2021 | |
| Net (decrease)/increase per the financial statements | |
$ | (501,009 | ) | |
$ | 278,872 | |
| Benefits payable to participants - end of year | |
| - | | |
| (1,038 | ) |
| Benefits payable to participants - prior year | |
| 1,038 | | |
| 4,067 | |
| Total (Loss)/Income, per the Form 5500 | |
$ | (499,971 | ) | |
$ | 281,901 | |
Supplemental Schedules
The Magna Group of Companies Retirement Savings
Plans
Schedule H, Line 4a - Schedule of Delinquent
Participant Contributions
(in thousands)
| EIN: 98-0095901 |
Plan Number: 002 |
| Year ended December 31, 2022 | |
| | |
| |
| | |
| Total That Constitutes Nonexempt Prohibited Transactions | |
| | |
Participant Contributions Transferred Late to Plan | |
| Contributions
Not Corrected | | |
| Contributions
Corrected
Outside VFCP* | | |
| Contributions Pending
Correction in VFCP* | | |
| Total
Fully
Corrected
Under VFCP*
and PTE
2002-51 | |
| Check
here if late participant loan repayments are included: x | |
| | | |
| | | |
| | | |
| | |
| 2022 | |
$ | 4,555 | | |
$ | - | | |
$ | - | | |
$ | - | |
| 2021 | |
| - | | |
| 2,398 | | |
| - | | |
| - | |
* Voluntary Fiduciary Correction Program (DOL)
The Magna Group
of Companies Retirement Savings Plans
Schedule H, Line
4i – Schedule of Assets (Held at End of Year)
(in thousands)
| EIN: 98-0095901 |
Plan Number: 002 |
| December 31, 2022 |
| (a) | |
(b) | |
(c) | |
(d) | |
(e) | |
| | |
Identity of Issuer, Borrower,
Lessor or Similar Party | |
Description of Investment,
Including Maturity Date, Rate of Interest,
Collateral, Par or Maturity Value | |
Cost | |
Current Value | |
| | |
Stable Value Fund with Principal Life Insurance Company | |
| |
| |
| | |
| * | |
Union Bond & Trust Company | |
Principal Stable Value | |
** | |
$ | 189,431 | |
| * | |
Principal Life Insurance Company | |
Principal Pension Builder | |
** | |
| 2,796 | |
| | |
Total Stable Value Fund | |
| |
| |
| 192,227 | |
| | |
Pooled Separate Accounts | |
| |
| |
| | |
| | |
Principal Life Insurance Company: | |
| |
| |
| | |
| * | |
Prin LargeCap Growth I SA-I5 | |
| |
** | |
| 105,606 | |
| * | |
Prin Equity Income SA-Z | |
| |
** | |
| 61,719 | |
| * | |
Prin Div Intl SA-I5 | |
| |
** | |
| 55,830 | |
| * | |
Prin Core Plus Bond Sep Acct-Z | |
| |
** | |
| 51,572 | |
| * | |
Prin U.S. Property SA-I5 | |
| |
** | |
| 48,843 | |
| | |
Total Pooled Separate Accounts | |
| |
| |
| 323,570 | |
| | |
Common/Collective Trusts | |
| |
| |
| | |
| | |
Principal Global Investors Trust Co: | |
| |
| |
| | |
| * | |
Prin LifeTime Hyb 2030 CIT Q | |
| |
** | |
| 229,172 | |
| * | |
Prin LifeTime Hyb 2040 CIT Q | |
| |
** | |
| 180,968 | |
| * | |
Prin LifeTime Hyb 2050 CIT Q | |
| |
** | |
| 131,705 | |
| * | |
Prin LifeTime Hyb 2020 CIT Q | |
| |
** | |
| 113,585 | |
| * | |
Prin LifeTime Hyb 2060 CIT Q | |
| |
** | |
| 26,950 | |
| * | |
Prin LifeTime Hyb 2045 CIT Q | |
| |
** | |
| 18,029 | |
| * | |
Prin LifeTime Hyb 2035 CIT Q | |
| |
** | |
| 16,001 | |
| * | |
Prin LifeTime Hyb 2025 CIT Q | |
| |
** | |
| 14,829 | |
| * | |
Prin LifeTime Hyb 2055 CIT Q | |
| |
** | |
| 14,791 | |
| * | |
Prin LifeTime Hyb 2010 CIT Q | |
| |
** | |
| 13,300 | |
| * | |
Prin LifeTime Hyb Inc CIT Q | |
| |
** | |
| 5,344 | |
| * | |
Prin LifeTime Hyb 2015 CIT Q | |
| |
** | |
| 2,202 | |
| * | |
Prin LifeTime Hyb 2065 CIT Q | |
| |
** | |
| 987 | |
| | |
Total Common/Collective Trusts | |
| |
| |
| 767,863 | |
| | |
Employer Securities | |
| |
| |
| | |
| * | |
Magna International Inc. common stock | |
| |
287,562 | |
| 352,543 | |
| | |
Mutual Funds | |
| |
| |
| | |
| | |
Fidelity 500 Index Fund | |
| |
** | |
| 210,113 | |
| | |
Fidelity SM CAP Index Fund | |
| |
** | |
| 85,868 | |
| | |
Fidelity MID CP Index Fund | |
| |
** | |
| 72,457 | |
| | |
Fidelity US Bond Index Fund | |
| |
** | |
| 18,695 | |
| | |
Fidelity Total Int Index Fund | |
| |
** | |
| 12,061 | |
| | |
Vanguard Emerging Mkt Stk Index Fund | |
| |
** | |
| 10,595 | |
| | |
Total Mutual Funds | |
| |
| |
| 409,789 | |
| | |
Northwestern Mutual Life Insurance Company | |
Life insurance policies | |
| |
| 37 | |
| * | |
Participant Loans | |
Interest rates ranging from (5.25% to 9.50%) | |
| |
| 56,607 | |
| | |
Total Investments | |
| |
| |
$ | 2,102,636 | |
* A party in interest, as defined by ERISA.
** The cost of participant-directed investments is not required
to be disclosed.
Exhibit 23.1
Consent of Independent Registered
Public Accounting Firm
The Magna Group of Companies
Retirement Savings Plans
Aurora, Ontario, Canada
We hereby consent to the incorporation by
reference in the Registration Statement on Form S-8 (333-128257) of Magna International Inc. of our report dated July 14, 2023,
relating to the financial statements and supplemental schedules of The Magna Group of Companies Retirement Savings Plans which
appear in this Form 11-K for the year ended December 31, 2022.
/s/ BDO USA, P.A.
Grand Rapids, Michigan
July 14, 2023
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