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Comprehensive Income (Loss) and Equity

3 Months Ended

Apr. 03, 2021

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 3, 2021, is shown below (in millions):


	Three Months Ended April 3, 2021
Defined benefit plans:
Balance at beginning of period	$	(276.9)
Reclassification adjustments (net of tax expense of $0.4 million)	2.2
Other comprehensive loss recognized during the period (net of tax impact of $— million)	(0.9)
Balance at end of period	$	(275.6)
Derivative instruments and hedging:
Balance at beginning of period	$	12.6
Reclassification adjustments (net of tax benefit of $1.4 million)	(5.3)
Other comprehensive income recognized during the period (net of tax expense of $0.7 million)	2.3
Balance at end of period	$	9.6
Foreign currency translation:
Balance at beginning of period	$	(440.8)
Other comprehensive loss recognized during the period (net of tax expense of $2.1 million)	(83.6)
Balance at end of period	$	(524.4)

Total accumulated other comprehensive loss	$	(790.4)

In the three months ended April 3, 2021, foreign currency translation adjustments are primarily related to the weakening of the Euro, and to a lesser extent the Brazilian real, relative to the U.S. dollar and include pretax losses of $0.1 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 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 $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 (net of 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.

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

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 may 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.

The Company has a common stock share repurchase program (the "Program") which permits the discretionary repurchase of its common stock. Since its inception in the first quarter of 2011, the Company's Board of Directors has authorized $6.1 billion in share repurchases under the Program. The current authorization expires December 31, 2022. In March 2020, as a proactive measure in response to the COVID-19 pandemic, the Company suspended its share repurchases under the Program. Share repurchases continue to be suspended as of April 3, 2021. Prior to the suspension, the Company 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.

In addition to shares repurchased under the 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 3, 2021 and December 31, 2020.

Quarterly Dividend

In March 2020, as a proactive measure in response to the COVID-19 pandemic, the Company suspended its quarterly cash dividend. Prior to the suspension, the Company’s Board of Directors declared a quarterly cash dividend of $0.77 per share of common stock. In the fourth quarter of 2020, the Company reinstated a quarterly cash dividend of $0.25 per share of common stock. In the first quarter 2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share of common stock.

Dividends declared and paid are shown below (in millions):


	Three Months Ended
	April 3, 2021		April 4, 2020 (1)
Dividends declared	$	15.3	$	46.8
Dividends paid	15.7		47.8

(1) Prior to March 2020 suspension

Dividends payable on common shares to be distributed under the Company’s stock-based compensation program will be paid when such common shares are distributed.

Redeemable Noncontrolling Interest

As of April 4, 2020, the condensed consolidated statement of equity includes the Company's redeemable noncontrolling interest in Shanghai Lear STEC Automotive Parts Co., Ltd. ("STEC"). 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. In 2020, the noncontrolling interest holder in STEC exercised its option requiring the Company to purchase its redeemable noncontrolling interest. The transaction was completed in the fourth quarter of 2020