Page 58


Outperforming the Market

NEW YORK
OPENING $47.93 JAN. 3, 2005
YEAR HIGH $52.11 MAR. 15, 2005
YEAR LOW $39.68 OCT. 20, 2005
ALL-TIME HIGH $52.11 MAR. 15, 2005
ALL-TIME LOW $13.25 SEP. 21, 2001

STOCKHOLM
OPENING SEK 320.50 JAN. 3, 2005
YEAR HIGH SEK 372.50 JUL. 21, 2005
YEAR LOW SEK 305.00 APR. 21, 2005
CLOSING SEK 359.00 DEC. 31, 2005
ALL-TIME HIGH SEK 372.50 JUL. 21, 2005
ALL-TIME LOW SEK 137.50 JAN. 4, 2001
 
STOCK PRICE AND TRADING VOLUME ON THE NYSE
 
STOCK PRICE AND TRADING VOLUME in stockholm
 
" The Autoliv share has outperformed its peers since the initial listing in 1997 in New York by increasing 28% compared to a decline of 23% in the Auto Parts Index."
 
During the past five years, the Autoliv stock has outperformed the market by raising 185% while the S&P 500 has declined by 5% during the same time. Since the S&P Auto Parts Index during the same period rose by 23%, Autoliv also outperformed its peer group.
In addition, the Autoliv share has outperformed its peers since the initial listing in 1997 in New York by increasing 28% compared to a decline of 23% in the Auto Parts Index.
Autoliv has also outperformed the market on the other stock exchange that trades Autoliv securities. In Stockholm, the Autoliv depository has appreciated 143% since the beginning of 2001 while the SIX Composite Index has increased by 9%. Furthermore, since the initial public offering in Sweden in 1994, the Autoliv security has increased at a compounded average annual rate of 13%, while the composite index in Stockholm has increased at an average rate of 10% during the same eleven and a half years. (All above-mentioned increases in the Autoliv share price are net of dividends).
During 2005, the average daily trading volume in Autoliv shares rose by 37% to 513,500 in New York and declined by 25% in Stockholm to 444,804. Autoliv's depository was the 24th most traded security in Stockholm, accounting for 1.0% of the trading compared to 1.4% during 2004.
Shareholders
According to Autoliv's stock registrar, there are nearly 3,500 record holders of Autoliv stock, and according to our soliciting agent, there are over 32,000 beneficial holders that hold shares in a "street name" through a bank, broker or other nominee.
According to the depository bank in Sweden, there are almost 3,600 record holders of the Autoliv SDR, and according to the Swedish soliciting agent, more than 8,000 "street holders" of the SDR. Many of these holders are nominees for other, non-Swedish nominees.
Autoliv therefore estimates that the total number of beneficial Autoliv owners exceeds 47,000 and that approximately 80% of the securities are held in the U.S. and approximately 5% in Sweden. Most of the remaining Autoliv securities are held in the U.K and central Europe.
The largest shareholders known to the Company are shown in the table to the right.
Number of Shares
During 2005, the number of shares outstanding decreased by 8.4 million to 83.7 million due to Autoliv's share repurchase program.
If all outstanding stock options are exercised and all granted restricted stock units utilized (see Note 15 on page 45), the number of outstanding shares could increase by 1.6% to 85.0 million.
Shareholder Rights Plan
In 1997 Autoliv adopted a Shareholder Rights Plan designed to encourage third parties interested in acquiring a controlling block of shares in the Company to negotiate with the Board to preserve the best interest of all Autoliv shareholders (see Note 13 on page 44).

Page 59

Dividend policy
Since Autoliv uses both dividend payments and share buybacks to return funds to shareholders, the Company has no set dividend policy. Instead, the Company's Board of Directors continuously analyzes which one of these two methods (or a combination of them) is most efficient to create shareholder value. Furthermore, total returns to shareholders are assessed using the model on page 12, which takes all important variables into account such as the Company's cost for marginal borrowing, the return on marginal investments and the price of the Autoliv share. Autoliv believes that such a continuous analysis has the potential to generate more value for Autoliv's shareholders than a pre-defined dividend policy.
During 2005, this approach resulted in a total return to shareholders of $483 million, of which $105 million was returned in quarterly dividends and $378 million as share buybacks. The total amount returned was 65% higher than the 2005 net income and corresponds to a total yield of 18% (i.e., the returns in relation to the Company's average market capitalization during 2005).
Dividend
If possible, quarterly dividends are paid on the first Thursday in the last month of each quarter. The record date is usually one month earlier and the ex-date typically two days before the record date. Quarterly dividends are declared separately by the Board, announced in press releases and published on Autoliv's corporate website.
During 2005, the dividend was 25 cents per share in the first quarter, which was a 25% increase over the dividend per share paid in the previous quarter. In the second quarter, the dividend was raised by 20% to 30 cents per share, remained at 30 cents in the third quarter and was raised by 7% to 32 cents per share in the fourth quarter. Since 2002, the quarterly dividend per share has been nearly tripled from 11 cents in six steps. For the first and second quarters 2006, the Company has declared dividends of 32 cents per share.
Share buybacks
During 2005, 8.4 million Autoliv shares were repurchased for $378 million at an average cost of $44.79 per share compared to 3.4 million during 2004 for $145 million at an average cost of $41.88. Since the start of the buyback program in 2000, Autoliv has bought back 20 million shares at an average cost of $34.85 per share compared to the share price at the end of 2005 of $45.42. This 30% increase in the potential market value compares favorably with the 20% reduction in the number of shares outstanding.
A new repurchase mandate was adopted at the end of 2005 for another 10 million shares since both authorizations from May 2000 and April 2003 had been fully utilized.
The repurchased shares are currently not retired but held as 19.1 million treasury shares.
Annual General Meeting
Autoliv's next Annual General Meeting of Shareholders will be held on Thursday, May 4, 2006, at The Ritz-Carlton Hotel, 160 East Pearson Street, Chicago, Illinois, 60611 USA.
Shareholders are urged to return their proxies whether or not they plan to attend the meeting.
 
The Largest Shareholders1)

Owner Country Number Percentage
Barclays Global Investors U.S.A. 8,446,335 10.1
Iridian Asset Management U.S.A. 5,982,215 7.1
LSV Asset Management U.S.A. 4,885,917 5.8
Blavin & Co Inc U.S.A. 4,328,700 5.2
Goldman Sachs & Co. U.S.A. 4,270,759 5.1
Management and Directors as a group2,3) 521,543 0.6
>47,000 other shareholders2)   55,352,163 66.1
Total December 31, 2005 83,787,632 100.0
1)Known to the Company 2)As of February 22, 2006. 3)Includes 362,545 shares issuable upon exercise of options that are exercisable within 60 days
trading places
During 2005, 55% of the trading in Autoliv securities was in shares of common stock in New York and 45% was in SDRs in Stockholm, where 107 million SDRs were traded during the year.