Lear Posts First-Quarter Results in Line with Guidance
SOUTHFIELD, Mich., April 23 -- Lear
Corporation , the world's fifth-largest automotive supplier, today
reported its financial results for the first quarter of 2001. For the
quarter, Lear posted net sales of $3.5 billion, operating income of $134.6
million and net income of $14.5 million, or $.22 per share. Excluding non-
recurring items, Lear had net income of $16.9 million, or $.26 per share.
"Our first quarter results were affected by the tough market conditions as
our customers significantly reduced their first quarter production," stated
Bob Rossiter, President and Chief Executive Officer of Lear Corporation.
"Production decreases of 17 percent in North America and 4 percent in Europe,
coupled with weaker European currencies, made the quarter particularly
challenging."
Rossiter continued, "We remain focused on working with our customers,
improving returns to our shareholders and continuing to run a lean and
efficient company. During the quarter, we took steps to further align our
business for the competitive marketplace. Additionally, we are pleased with
the successful completion of our Eurobond offering and the extension of our
revolving credit facility, each closing during the quarter."
Earnings per share in the quarter, excluding non-recurring items, were
$.26 versus $.93 in the first quarter of 2000, as the negative impact of lower
production levels, weaker European currencies and divestitures was partially
offset by aggressive cost actions and fewer shares outstanding.
In March 2001, the Company completed the sale of a non-core Spanish wire
business for $35.5 million and recorded a $3.1 million pre-tax charge for the
write-down of certain long-term assets to net realizable value. The net
result of these transactions was a pre-tax gain of $9.3 million and an after-
tax gain of $2.5 million or $.04 per share.
During the quarter, the Company reduced its hourly and salaried workforce.
These workforce reductions took place in North America and Europe and were
primarily hourly employees. The net cost of these severance actions for the
quarter was $4.2 million pre-tax and $2.5 million after-tax, or $.04 per
share.
The Company completed several financing transactions during the quarter,
which had the effect of extending maturities of the Company's credit
facilities and diversifying its capital base. The Company's $2.1 billion
revolving credit facility was amended to extend its maturity to March 2006 and
reduce commitments to $1.7 billion. During the quarter, Lear also drew $300
million under a recently established 364-day asset-backed securitization
financing program and issued 250 million euro of 8.125%, 7-year senior notes.
The Company incurred $3.0 million in non-recurring expenses related to the
securitization and wrote off $1.0 million of deferred financing fees
associated with the amendment to its credit agreement. The after-tax impact
of these two transactions was $2.4 million, or $.04 per share. In connection
with Lear's financings, Standard & Poor's and Moody's reaffirmed the Company's
senior credit ratings at BB+ and Ba1, respectively.
Net sales for the quarter fell 8 percent to $3.5 billion from $3.8 billion
in last year's first quarter. The decrease was attributable to lower customer
requirements, foreign exchange and non-core divestitures.
Net sales in the U.S. and Canada decreased 15 percent from $2.343 billion
in the first quarter of 2000, to $1.990 billion in the first quarter of 2001,
due primarily to 19 percent lower industry production. In Europe, revenues
were essentially flat at $1.170 billion, as new programs offset the negative
impact of 4 percent lower industry production and weaker European currencies.
Rest of World net sales increased $49 million to $344 million due to new
programs.
For 2001, the Company currently anticipates second-quarter net sales to be
approximately 6 to 7 percent lower than the second quarter of a year ago and
earnings of $.75 to $.85 per share. For the full year, net sales are
currently anticipated to be down 5 to 7 percent versus 2000 and earnings are
anticipated to be between $3.10 and $3.40 per share.
Lear Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited, in millions, except per share amounts)
First Quarter Ended
March 31, 2001 April 1, 2000
Reported Adjusted(e) Reported
Net sales $3,503.6 $3,503.6 $3,805.1
Cost of goods sold 3,238.6(a) 3,236.2 3,448.1
Selling, general & administrative
expenses 130.4(a) 128.6 141.1
Amortization of goodwill 22.4 22.4 22.2
Interest expense 76.5(b) 73.5 78.8
Other expense, net 5.7(c) 15.0 9.8
Pretax income before provision for
income taxes and extraordinary
item $30.0 $27.9 $105.1
Provision for income taxes 14.9(a,b,c) 11.0 43.1
Income before extraordinary item $15.1 $16.9 $62.0
Extraordinary item, net of tax 0.6(d) - -
Net income $14.5 $16.9 $62.0
Diluted net income per share $0.22 $0.26 $0.93
Weighted average number of shares
outstanding - diluted 64.7 64.7 67.0
(a), (b), (c), (d), (e) See Additional Disclosures
ADDITIONAL DISCLOSURES
(a) During the first quarter of 2001, the Company completed actions to
reduce its cost base. The non-recurring costs, comprised of severance costs
less the associated savings, were recorded in cost of goods sold and selling,
general and administrative expenses in the amounts of $2.4 million and $1.8
million, respectively. The net after-tax impact of these severance actions
was $2.5 million or $.04 per share.
(b) During the first quarter of 2001, the Company made the initial draws
under an asset-backed securitization. Approximately $3.0 million in non-
recurring expenses were incurred as a result of the transaction. The after-
tax impact of these expenses was $1.8 million or $.03 per share.
(c) In March 2001, the Company completed the sale of our Spanish wire
business for $35.5 million, resulting in a gain of $12.4 million pre-tax ($5.6
million after-tax). This gain was offset by a $3.1 million pre-tax charge
recorded to write-down certain long-term assets to net realizable value. The
net result of these transactions was a $9.3 million pre-tax gain ($2.5 million
after-tax or $.04 per share).
(d) In March 2001, the Company amended and restated its $2.1 billion
credit agreement. The write-off of deferred financing fees of $1.0 million
pre-tax ($0.6 million after-tax or $.01 per share) is presented as an
extraordinary item.
(e) Excludes the impact from the items included in (a), (b), (c) and (d)
above.
Lear Corporation and Subsidiaries
Consolidated Balance Sheets
(In millions)
March 31, December 31,
2001 2000
(Unaudited) (Audited)
ASSETS
Current:
Cash and cash equivalents $155.8 $98.8
Accounts receivable, net 1,601.1 1,639.0
Inventories 450.6 538.8
Recoverable customer engineering
and tooling 291.8 273.2
Other 279.5 278.2
2,778.8 2,828.0
Long-Term:
PP&E, net 1,822.4 1,891.3
Goodwill, net 3,213.7 3,266.6
Other 371.7 389.6
5,407.8 5,547.5
Total Assets $8,186.6 $8,375.5
LIABILITIES AND STOCKHOLDERS' EQUITY
Current:
Short-term borrowings $3.6 $72.4
Accounts payable and drafts 2,264.8 2,174.0
Accrued liabilities 982.4 969.6
Current portion of long-term debt 291.6 155.6
3,542.4 3,371.6
Long-Term:
Long-term debt 2,444.2 2,852.1
Other 637.6 551.0
3,081.8 3,403.1
Stockholders' Equity: 1,562.4 1,600.8
Total Liabilities and
Stockholders' Equity $8,186.6 $8,375.5
Lear Corporation and Subsidiaries
Supplemental Data
(Unaudited, in millions, except content per vehicle data)
First Quarter Ended
March 31, 2001 April 1, 2000
Net sales
U.S. and Canada $1,990.2 $2,343.4
Europe $1,169.8 $1,166.6
Rest of World $343.6 $295.1
Total $3,503.6 $3,805.1
Reported
Operating income $134.6 $215.9
Goodwill amortization $(22.4) $(22.2)
Operating income after amortization $112.2 $193.7
Adjusted
Operating income $138.8 $215.9
Goodwill amortization $(22.4) $(22.2)
Operating income after amortization $116.4 $193.7
Content per vehicle - North America $571 $547
Content per vehicle - Western Europe $257 $253
Content per vehicle - South America $116 $102
