Comprehensive Income (Loss) and Equity

3 Months Ended

Apr. 04, 2020

Comprehensive Income (Loss)

Comprehensive income (loss) 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 (loss).

Accumulated Other Comprehensive Loss

A summary of changes, net of tax, in accumulated other comprehensive loss for the three months ended April 4, 2020, is shown below (in millions):



	Three Months Ended
	April 4, 2020
Defined benefit plans:
Balance at beginning of period	$	(217.6	)
Reclassification adjustments (net of tax expense of $0.3 million)	1.3
Other comprehensive income recognized during the period (net of tax impact of $— million)	7.6
Balance at end of period	$	(208.7	)
Derivative instruments and hedging:
Balance at beginning of period	$	9.8
Reclassification adjustments (net of tax benefit of $1.4 million)	(5.7		)
Other comprehensive loss recognized during the period (net of tax benefit of $27.9 million)	(115.4		)
Balance at end of period	$	(111.3	)
Foreign currency translation:
Balance at beginning of period	$	(564.9	)
Other comprehensive loss recognized during the period (including tax expense of $4.8 million)	(164.4		)
Balance at end of period	$	(729.3	)

Total accumulated other comprehensive loss	$	(1,049.3	)

In the three months ended April 4, 2020, foreign currency translation adjustments are primarily related to the weakening of the Brazilian real, the Euro and the Chinese renminbi relative to the U.S. dollar and include pretax losses of $1.6 million related to intercompany transactions for which settlement is not planned or anticipated in the foreseeable future.

A summary of changes, net of tax, in accumulated other comprehensive loss for the three months ended March 30, 2019, is shown below (in millions):



	Three Months Ended
	March 30, 2019
Defined benefit plans:
Balance at beginning of period	$	(172.8	)
Reclassification adjustments (net of tax expense of $0.4 million)	1.6
Other comprehensive loss recognized during the period (net of tax impact of $— million)	(1.3		)
Balance at end of period	$	(172.5	)
Derivative instruments and hedging:
Balance at beginning of period	$	(9.7	)
Reclassification adjustments (net of tax benefit of $2.1 million)	(7.1		)
Other comprehensive income recognized during the period (net of tax expense of $2.3 million)	7.8
Balance at end of period	$	(9.0	)
Foreign currency translation:
Balance at beginning of period	$	(523.3	)
Other comprehensive loss recognized during the period (net of tax impact of $— million)	(6.7		)
Balance at end of period	$	(530.0	)

Total accumulated other comprehensive loss	$	(711.5	)

In the three months ended March 30, 2019, foreign currency translation adjustments are primarily related to weakening of the Euro, offset by the strengthening of the Chinese renminbi, relative to the U.S. dollar and include pretax gains of $0.1 million related to intercompany transactions for which settlement is not planned or anticipated in the foreseeable future.

For further information regarding reclassification adjustments related to the Company's defined benefit plans, see Note 10, "Pension and Other Postretirement Benefit Plans." For further information regarding reclassification adjustments related to the Company's derivative and hedging activities, see Note 18, "Financial Instruments."

Lear Corporation Stockholders’ Equity

Common Stock Share Repurchase Program

In March 2020, as a proactive measure in response to the COVID-19 pandemic, the Company temporarily suspended share repurchases under its share repurchase program. Shares repurchases in the first quarter of 2020 (prior to the suspension) are shown below (in millions except for shares and per share amounts):



Three Months Ended							As of
April 4, 2020							April 4, 2020
Aggregate Repurchases		Cash paid for Repurchases		Number of Shares	Average Price per Share ⁽¹⁾		Remaining Purchase Authorization
$	70.0	$	70.0	641,149	$	109.22	$	1,430.0

⁽¹⁾ Excludes commissions

Since the first quarter of 2011, the Company's Board of Directors has authorized $6.1 billion in share repurchases under the common stock share repurchase program. As of the end of the first quarter of 2020, the Company has repurchased, in aggregate, $4.7 billion of its outstanding common stock, at an average price of $90.07 per share, excluding commissions and related fees.

The Company may implement 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 to shares repurchased under the Company’s common stock share repurchase program described above, the Company classified shares withheld from the settlement of the Company’s restricted stock unit and performance share awards to cover tax withholding requirements as common stock held in treasury in the accompanying condensed consolidated balance sheets as of April 4, 2020 and December 31, 2019.

Quarterly Dividend

In March 2020, as a proactive measure in response to the COVID-19 pandemic, the Company temporarily suspended its quarterly cash dividend. In the first three months of 2020 (prior to the suspension) and 2019, the Company’s Board of Directors declared quarterly cash dividends of $0.77 and $0.75 per share of common stock, respectively. Dividends declared and paid are shown below (in millions):



	Three Months Ended
	April 4, 2020		March 30, 2019
Dividends declared	$	46.8	$	47.7
Dividends paid	47.8		49.5

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.

Redeemable Noncontrolling Interest

In accordance with GAAP, the Company records redeemable noncontrolling interests at the greater of (1) the initial carrying amount adjusted for the noncontrolling interest holder’s share of total comprehensive income or loss and dividends ("noncontrolling interest carrying value") or (2) the redemption value as of and based on conditions existing as of the reporting date. Required redeemable noncontrolling interest adjustments are recorded as an increase to redeemable noncontrolling interests, with an offsetting adjustment to retained earnings. The redeemable noncontrolling interest is classified in mezzanine equity in the accompanying condensed consolidated balance sheets as of April 4, 2020 and December 31, 2019.

For further information related to the redeemable noncontrolling interest adjustment, see Note 14, "Net Income Per Share Attributable to Lear," herein, as well as Note 5, "Investments in Affiliates and Other Related Party Transactions," to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.