Lear Reports Third Quarter Results
19 October 1998
Lear Reports Third Quarter Results; Plans One-Time Charge For Fourth Quarter 1998
SOUTHFIELD, Mich., Oct. 19 -- Lear Corporation
today reported fiscal 1998 third quarter and nine month results from
operations.
Net income for the quarter ended September 26, 1998 was $21.6 million, or
$.32 per share, compared with earnings of $35.6 million or $.52 per share,
last year. Excluding the previously announced impact from the General Motors
work stoppages, Lear estimates that net income per share would have increased
to $.53 per share. Operating income for the third quarter 1998 was $69.1
million, as compared to $93.8 million in the third quarter of 1997. For the
current quarter, the Company had approximately 200,000 less shares outstanding
on a weighted average basis.
Coincident with the earnings announcement, Lear also said that it expects
to take a one-time charge, primarily related to its international operations,
of approximately $125 million in the fourth quarter of 1998. The charge is
for plant consolidations and asset relocations as a result of adding over 200
facilities over the last several years, as well as the rationalization of the
Company's European seat cover production.
Commenting on the third quarter announcement, Kenneth L. Way, Chairman and
Chief Executive Officer of Lear Corporation stated, "Our core operations
continue to show solid performance, however we are taking immediate actions to
improve our long-term competitiveness. Our European seat cover strategy, in
tandem with improved asset management, continues to free up significant
amounts of both floor space and operating capacity. The steps we are taking
now are necessary in order to better match our operations for what may be a
more challenging environment."
Net sales for the third quarter of 1998 rose approximately 19 percent to
$1.9 billion from $1.6 billion last year. The increase was attributable to
incremental revenues from Lear's recent acquisitions as well as internal
growth, which contributed $323 million and $110 million, respectively. The
growth in revenues was partially offset by $122 million due to the
aforementioned work stoppages and the effect of foreign currency translation.
Net income for the nine months ended September 26, 1998 was $134.6
million, or $1.97 per share, compared with earnings of $138.6 million, or
$2.03 per share last year. Excluding the previously announced impact of the
work stoppages, Lear estimates that earnings per share for the first nine
months of 1998 would have risen to $2.32 per share. Operating income for the
first nine months of 1998 was $319.4 million, as compared to $332.5 million in
last year's comparable period. For the first nine months of 1998, the Company
had approximately 100,000 more shares outstanding on a weighted average basis.
Net sales for the nine months ended September 26, 1998 rose 18 percent to
$6.2 billion from $5.2 billion in last year's comparable period. The increase
was attributable to incremental revenues from Lear's recent acquisitions as
well as internal growth, which contributed $842 million and $394 million,
respectively. The growth in revenues was partially offset by $282 million due
to work stoppages and the effect of foreign currency translation.
Way continued, "Even though the fourth quarter will be impacted by the
one-time charge, we remain confident about the future for our Company. Lear's
strategic focus on innovation and flexibility in providing parts, systems,
modules or total interiors to our customers, continues to drive our sales and
earnings growth. This product strategy, together with our aggressive asset
management and value-adding acquisitions, will enable us to build upon our
leadership position and continue to achieve solid financial performance. We
also believe that we will continue to benefit from a consolidating industry
and the increased importance of global systems supply."
A Fortune 500 Company, Lear Corporation is the world's fifth largest
automotive supplier, with 1997 sales of $7.3 billion. The Company's world
class products are designed, engineered and manufactured by more than 60,000
employees located in 28 countries. Information about Lear and its products is
available on the Internet at http://www.lear.com.
This news release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Actual results may
differ materially from the anticipated results as a result of certain risks
and uncertainties, including but not limited to general economic conditions in
the markets in which Lear operates, fluctuations in the production of vehicles
for which the Company is a supplier, labor disputes involving the Company or
its significant customers, risks associated with conducting business in
foreign countries and other risks detailed from time to time in the Company's
Securities and Exchange Commission filings.
LEAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE DATA)
Third Quarter
1998 1997
Net sales $1,946.5 $1,635.9
Cost of sales 1,784.5 1,460.6
Selling, general & admin. expenses 80.1 71.2
Amortization of goodwill 12.8 10.3
Operating income 69.1 93.8
Interest expense 29.0 22.7
Other expense 4.5 8.6
Income before provision for
national income taxes and extraordinary item 35.6 62.5
Provision for national income taxes 14.0 25.9
Net income before extraordinary item 21.6 36.6
Extraordinary item - debt retirement --- 1.0
Net income $21.6 $35.6
Net income per share before extraordinary
item $0.32 $0.53
Net income per share after extraordinary
item $0.32 $0.52
Wtd. avg. no. of diluted
shares outstanding 68.2 68.4
Depreciation and amortization $57.2 $45.7
Capital expenditures $111.8 $38.0
Nine Months Ended
1998 1997
Net sales $6,153.6 $5,199.2
Cost of sales 5,559.8 4,632.5
Selling, general & admin. expenses 238.6 204.5
Amortization of goodwill 35.8 29.7
Operating income 319.4 332.5
Interest expense 79.2 76.6
Other expense 18.0 21.4
Income before provision for
national income taxes and extraordinary
item 222.2 234.5
Provision for national income taxes 87.6 94.9
Net income before extraordinary item 134.6 139.6
Extraordinary item - debt retirement --- 1.0
Net income $134.6 $138.6
Net income per share before extraordinary
item $1.97 $2.04
Net income per share after extraordinary
item $1.97 $2.03
Wtd. avg. no. of diluted
shares outstanding 68.3 68.2
Depreciation and amortization $163.7 $133.0
Capital expenditures $236.9 $113.1
LEAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
($ IN MILLIONS)
ASSETS 9/26/98 12/31/97
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $32.7 $12.9
Accounts receivable, net 1,299.2 1,065.8
Inventories 332.7 231.4
Other 400.9 304.8
2,065.5 1,614.9
LONG-TERM ASSETS:
Property, plant and equipment,
net 1,132.1 939.1
Goodwill, net 2,002.0 1,692.3
Other 279.7 212.8
TOTAL ASSETS $5,479.3 $4,459.1
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings $45.9 $37.9
Accounts payable 1,473.7 1,186.5
Accrued liabilities 767.2 620.5
Current portion of long-term debt 10.8 9.1
2,297.6 1,854.0
LONG-TERM LIABILITIES:
Deferred national income taxes 71.1 61.7
Long-term debt 1,466.3 1,063.1
Other 334.7 273.3
1,872.1 1,398.1
STOCKHOLDERS' EQUITY 1,309.6 1,207.0
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $5,479.3 $4,459.1