Comprehensive Income and Equity

Comprehensive Income

Comprehensive income is defined as all changes in the Company’s net assets except changes resulting from transactions with stockholders. It differs from net income in that certain items recorded in equity are included in comprehensive income.

A summary of comprehensive income and reconciliations of equity, Lear Corporation stockholders’ equity and noncontrolling interests for the three and six months ended June 27, 2015, are shown below (in millions):



	Three Months Ended June 27, 2015									Six Months Ended June 27, 2015
	Equity			Lear Corporation Stockholders' Equity			Non- controlling Interests			Equity			Lear Corporation Stockholders' Equity			Non- controlling Interests
Beginning equity balance	$	2,891.8		$	2,812.1		$	79.7		$	3,029.3		$	2,958.8		$	70.5
Stock-based compensation transactions	18.3			18.3			—			(15.2		)	(15.2		)	—
Repurchase of common stock	(122.4		)	(122.4		)	—			(234.8		)	(234.8		)	—
Dividends declared to Lear Corporation stockholders	(20.1		)	(20.1		)	—			(40.4		)	(40.4		)	—
Dividends paid to noncontrolling interests	(11.8		)	—			(11.8		)	(11.9		)	—			(11.9		)
Comprehensive income:
Net income	192.9			181.9			11.0			349.6			329.2			20.4
Other comprehensive income (loss), net of tax:
Defined benefit plan adjustments	2.3			2.3			—			10.0			10.0			—
Derivative instruments and hedging activities	(3.9		)	(3.9		)	—			1.8			1.8			—
Foreign currency translation adjustments	31.2			31.2			—			(110.1		)	(110.0		)	(0.1		)
Other comprehensive income (loss)	29.6			29.6			—			(98.3		)	(98.2		)	(0.1		)
Comprehensive income	222.5			211.5			11.0			251.3			231.0			20.3
Ending equity balance	$	2,978.3		$	2,899.4		$	78.9		$	2,978.3		$	2,899.4		$	78.9

A summary of changes, net of tax, in accumulated other comprehensive loss for the three and six months ended June 27, 2015, is shown below (in millions):



	Three Months Ended June 27, 2015			Six Months Ended June 27, 2015
Defined benefit plan adjustments:
Balance at beginning of period	$	(211.5	)	$	(219.2	)
Reclassification adjustments (net of tax expense of $0.5 million and $0.9 million for the three and six months ended June 27, 2015, respectively)	1.1			2.3
Other comprehensive income recognized during the period (net of tax expense of $1.1 million for the three and six months ended June 27, 2015)	1.2			7.7
Balance at end of period	$	(209.2	)	$	(209.2	)

Derivative instruments and hedging activities:
Balance at beginning of period	$	(27.5	)	$	(33.2	)
Reclassification adjustments (net of tax expense of $1.9 million and $3.2 million for the three and six months ended June 27, 2015, respectively)	5.3			8.7
Other comprehensive income recognized during the period (net of tax benefit of $3.6 million and $2.5 million for the three and six months ended June 27, 2015, respectively)	(9.2		)	(6.9		)
Balance at end of period	$	(31.4	)	$	(31.4	)

Foreign currency translation adjustments:
Balance at beginning of period	$	(390.8	)	$	(249.6	)
Other comprehensive loss recognized during the period (net of tax expense (benefit) of $0.1 million and ($4.0) million for the three and six months ended June 27, 2015, respectively)	31.2			(110.0		)
Balance at end of period	$	(359.6	)	$	(359.6	)

Other comprehensive loss related to the Company’s defined benefit plans includes pretax reclassification adjustments of $1.6 million and $3.2 million for the three and six months ended June 27, 2015, respectively. See Note 9, "Pension and Other Postretirement Benefit Plans." Other comprehensive loss related to the Company’s derivative instruments and hedging activities includes pretax reclassification adjustments of $7.2 million and $11.9 million for the three and six months ended June 27, 2015, respectively. See Note 16, "Financial Instruments."

For the three months ended June 27, 2015, foreign currency translation adjustments are related primarily to the strengthening of the Euro relative to the U.S. dollar and include pretax gains related to intercompany transactions for which settlement is not planned or anticipated in the foreseeable future of $2.8 million. For the six months ended June 27, 2015, foreign currency translation adjustments are related primarily to the weakening of the Euro relative to the U.S. dollar and include pretax losses related to intercompany transactions for which settlement is not planned or anticipated in the foreseeable future of $10.6 million.

A summary of comprehensive income and reconciliations of equity, Lear Corporation stockholders’ equity and noncontrolling interests for the three and six months ended June 28, 2014, are shown below (in millions):



	Three Months Ended June 28, 2014									Six Months Ended June 28, 2014
	Equity			Lear Corporation Stockholders' Equity			Non- controlling Interests			Equity			Lear Corporation Stockholders' Equity			Non- controlling Interests
Beginning equity balance	$	3,242.5		$	3,142.3		$	100.2		$	3,149.5		$	3,045.9		$	103.6
Stock-based compensation transactions	16.3			16.3			—			16.6			16.6			—
Repurchase of common stock	(156.0		)	(156.0		)	—			(156.0		)	(156.0		)	—
Dividends declared to Lear Corporation stockholders	(16.7		)	(16.7		)	—			(33.9		)	(33.9		)	—
Dividends paid to noncontrolling interests	(1.0		)	—			(1.0		)	(6.8		)	—			(6.8		)
Acquisition of noncontrolling interests	(15.9		)	5.4			(21.3		)	(18.0		)	5.7			(23.7		)
Sale of controlling interest	(11.5		)	—			(11.5		)	(11.5		)	—			(11.5		)
Comprehensive income:
Net income	157.8			148.5			9.3			286.4			270.5			15.9
Other comprehensive income (loss), net of tax:
Defined benefit plan adjustments	0.1			0.1			—			0.1			0.1			—
Derivative instruments and hedging activities	2.8			2.8			—			4.7			4.7			—
Foreign currency translation adjustments	2.8			3.1			(0.3		)	(9.9		)	(7.8		)	(2.1		)
Other comprehensive income (loss)	5.7			6.0			(0.3		)	(5.1		)	(3.0		)	(2.1		)
Comprehensive income	163.5			154.5			9.0			281.3			267.5			13.8
Ending equity balance	$	3,221.2		$	3,145.8		$	75.4		$	3,221.2		$	3,145.8		$	75.4

A summary of changes, net of tax, in accumulated other comprehensive loss for the three and six months ended June 28, 2014, is shown below (in millions):



	Three Months Ended June 28, 2014			Six Months Ended June 28, 2014
Defined benefit plan adjustments:
Balance at beginning of period	$	(104.5	)	$	(104.5	)
Reclassification adjustments (net of tax impact of $— million for the three and six months ended June 28, 2014)	0.1			0.1
Balance at end of period	$	(104.4	)	$	(104.4	)

Derivative instruments and hedging activities:
Balance at beginning of period	$	(3.4	)	$	(5.3	)
Reclassification adjustments (net of tax benefit of $0.9 million and $1.2 million for the three and six months ended June 28, 2014, respectively)	(2.5		)	(3.3		)
Other comprehensive income recognized during the period (net of tax expense of $1.9 million and $2.9 million for the three and six months ended June 28, 2014, respectively)	5.3			8.0
Balance at end of period	$	(0.6	)	$	(0.6	)

Foreign currency translation adjustments:
Balance at beginning of period	$	(67.2	)	$	(56.3	)
Other comprehensive loss recognized during the period (net of tax benefit of $0.3 million for the three and six months ended June 28, 2014)	3.1			(7.8		)
Balance at end of period	$	(64.1	)	$	(64.1	)

Other comprehensive income related to the Company’s defined benefit plans includes pretax reclassification adjustments of $0.1 million for the three and six months ended June 28, 2014. See Note 9, "Pension and Other Postretirement Benefit Plans." Other comprehensive loss related to the Company’s derivative instruments and hedging activities includes pretax reclassification adjustments of ($3.5) million and ($4.5) million for the three and six months ended June 28, 2014, respectively. See Note 16, "Financial Instruments."

For the three and six months ended June 28, 2014, foreign currency translation adjustments are related primarily to the Chinese renminbi and the Brazilian real and include pretax losses related to intercompany transactions for which settlement is not planned or anticipated in the foreseeable future of $1.2 million and $0.7 million, respectively.

Lear Corporation Stockholders’ Equity

Common Stock Share Repurchase Program

In February 2015, the Company's Board of Directors authorized a $661 million increase to the existing common stock share repurchase program to provide for aggregate repurchases of $1 billion and extended the term of the program to December 31, 2017. In the first half of 2015, the Company paid $234.8 million in aggregate for repurchases of its common stock (2,096,173 shares at an average purchase price of $112.02 per share, excluding commissions). As of the date of this Report, the Company has a remaining repurchase authorization of $765.2 million under its ongoing common stock share repurchase program. The Company may implement these share repurchases through a variety of methods, including, but not limited to, open market purchases, accelerated stock repurchase programs and structured repurchase transactions. The extent to which the Company will repurchase its outstanding common stock and the timing of such repurchases will depend upon its financial condition, prevailing market conditions, alternative uses of capital and other factors. In addition, the Company’s Credit Agreement places certain limitations on the Company’s ability to repurchase its common stock.

Since the first quarter of 2011, the Company's Board of Directors has authorized $2.9 billion in share repurchases under its common stock share repurchase program. As of the date of this Report, the Company has paid $2.1 billion in aggregate for repurchases of its outstanding common stock, at an average price of $65.15 per share excluding commissions and related fees, since the first quarter of 2011.

In addition to shares repurchased under the Company’s common stock share repurchase program described in the preceding paragraphs, the Company classified shares withheld from the settlement of the Company’s restricted stock unit and performance share awards to cover minimum tax withholding requirements as common stock held in treasury in the accompanying condensed consolidated balance sheets as of June 27, 2015 and December 31, 2014.

Quarterly Dividend

In the first six months of 2015 and 2014, the Company’s Board of Directors declared quarterly cash dividends of $0.25 and $0.20 per share of common stock, respectively. In the first half of 2015, declared dividends totaled $40.4 million, and dividends paid totaled $41.1 million. In the first half of 2014, declared dividends totaled $33.9 million and dividends paid totaled $33.6 million. Dividends payable on common shares to be distributed under the Company’s stock-based compensation program and common shares contemplated as part of the Company’s emergence from Chapter 11 bankruptcy proceedings will be paid when such common shares are distributed.

Noncontrolling Interests

In the first half of 2014, the Company acquired noncontrolling interests in certain of its consolidated subsidiaries.