Lear Corporation Second-Quarter Earnings Jump 21%
20 July 2000
Lear Corporation Second-Quarter Earnings Jump 21%
SOUTHFIELD, Mich. - Lear Corporation , the world's fifth-largest automotive
supplier, today reported record financial performance for the second quarter of
2000. Net sales of $3.8 billion, operating income of $245.5 million and net
income of $101.7 million, or $1.53 per share, are all second-quarter records for
the company. Excluding non-recurring items, net income was $88.7 million, or
$1.33 per share, a 21 percent increase over the prior year.
"Our second-quarter results reflect strong internal growth as well as the
benefits of our integrated acquisitions," stated Kenneth L. Way, Chairman and
Chief Executive Officer of Lear Corporation. "The performance of the Lear
team enabled the company to achieve its twenty-fifth consecutive quarter of
year-over-year revenue growth since going public in 1994."
Way continued, "The second quarter was a grand slam as we delivered on
sales and earnings growth, reduced debt levels, sold non-core assets and
repurchased shares."
Net income and earnings per share for the quarter ended July 1, 2000,
excluding non-recurring items, increased 19 percent and 21 percent,
respectively, to $88.7 million, or $1.33 per share, compared with
$74.8 million, or $1.10 per share, in the second quarter of 1999. Operating
income for the second quarter increased 29 percent to $245.5 million, from
$190.8 million in the same quarter of 1999, resulting in operating margin
improvement of better than 60 basis points.
Net sales for the quarter rose 16 percent to $3.8 billion, from
$3.2 billion in last year's second quarter. The increase was attributable to
incremental revenues from Lear's recent acquisitions, strong internal growth
and higher customer build rates.
Geographically, approximately 37 percent of the current quarter's
$528 million sales increase was attributable to Lear's operations outside of
the U.S. and Canada. In spite of the impact of a weaker Euro, second-quarter
sales in Europe increased $48 million, or 5 percent, to $1.1 billion, while
sales in other world regions increased $148 million, or 75 percent, to
$345 million. U.S. and Canadian sales rose $332 million, or 17 percent, to
$2.3 billion.
Net income, excluding non-recurring items, for the six months ended
July 1, 2000, increased 20 percent to a record $150.7 million, or $2.25 per
share, compared with earnings of $125.1 million, or $1.85 per share, in the
comparable 1999 period. Operating income for the first six months of
2000 advanced 41 percent to $439.2 million, from $311.2 million in last year's
comparable period.
Net sales for the six months ended July 1, 2000, rose 28 percent to a
record $7.6 billion, from $5.9 billion in 1999. Geographically, 39 percent of
the sales increase was attributable to Lear's operations outside of the U.S.
and Canada. European sales increased 19 percent to $2.2 billion, while sales
in other world regions increased 75 percent to $640 million. U.S. and Canada
sales increased 27 percent to $4.7 billion.
Lear Corporation, a Fortune 150 company headquartered in Southfield,
Mich., USA, focuses on automotive interiors and electronics and is the world's
fifth-largest automotive supplier. Sales in 1999 were $12.4 billion. The
company's world-class products are designed, engineered and manufactured by
more than 120,000 employees in over 300 facilities located in 33 countries.
Lear Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited, in millions, except per share data)
Second Quarter Ended
07/01/00 07/03/99
Net sales $3,761.4 $3,233.6
Cost of sales 3,354.4 2,894.4
Selling, general and administrative expenses 138.9 129.1
Amortization of goodwill 22.6 19.3
Operating income $245.5 $190.8
Interest expense 80.7 60.2
Other (income) expense, net (a) (8.5) 7.3
Income before provision for
national income taxes $173.3 $123.3
Provision for national income taxes 71.6 48.5
Net income $101.7 $74.8
Basic net income per share $1.54 $1.12
Diluted net income per share $1.53 $1.10
Weighted average number of
diluted shares outstanding 66.7 67.9
Depreciation and amortization $98.5 $87.8
Capital expenditures $76.0 $91.0
Six Months Ended
07/01/00 07/03/99
Net sales $7,566.5 $5,920.8
Cost of sales 6,802.5 5,362.9
Selling, general and administrative expenses 280.0 213.4
Amortization of goodwill 44.8 33.3
Operating income $439.2 $311.2
Interest expense 159.5 90.3
Other expense, net (a) 1.3 15.2
Income before provision for
national income taxes $278.4 $205.7
Provision for national income taxes 114.7 80.6
Net income $163.7 $125.1
Basic net income per share $2.48 $1.87
Diluted net income per share $2.45 $1.85
Weighted average number of
diluted shares outstanding 66.8 67.7
Depreciation and amortization $199.3 $150.1
Capital expenditures $161.4 $162.6
(a) See additional disclosure
Lear Corporation and Subsidiaries
Consolidated Balance Sheets
(In millions)
07/01/00 12/31/99
ASSETS (Unaudited) (Audited)
Current Assets:
Cash and cash equivalents $93.6 $106.9
Accounts receivable, net 2,115.0 1,866.1
Inventories 495.2 577.3
Recoverable customer engineering and tooling 292.8 304.9
Other 328.0 299.0
Total current assets $3,324.6 $3,154.2
Long-Term Assets:
Property, plant and equipment, net $1,912.3 $1,970.0
Goodwill, net 3,281.0 3,210.5
Other 391.3 382.9
Total long-term assets $5,584.6 $5,563.4
Total Assets $8,909.2 $8,717.6
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term borrowings $22.3 $103.6
Accounts payable and drafts 2,396.0 2,245.3
Accrued liabilities 1,224.0 1,074.9
Current portion of long-term debt 129.1 63.6
Total current liabilities $3,771.4 $3,487.4
Long-Term Liabilities:
Long-term debt $3,150.2 $3,324.8
Other 465.1 440.1
Total long-term liabilities $3,615.3 $3,764.9
Stockholders' Equity $1,522.5 $1,465.3
Total Liabilities and Stockholders' Equity $8,909.2 $8,717.6
Additional Disclosure
(a) The Company recorded certain transactions in connection with the
divestiture of non-core businesses and assets. On June 14, 2000, the
Company completed the sale of its sealants and foam rubber business
for approximately $92.5 million, resulting in a gain of
$36.6 million. The business had sales of approximately $100 million
for the year ended December 31, 1999. The Company also recorded
other transactions, including charges related to the disposal of idle
plant equipment. The result of these transactions was a net gain of
$23.0 million ($ 13.0 million or $ .20 per dilutive share, after
tax).
Lear Corporation and Subsidiaries
Supplemental Data
(Unaudited, in millions, except content per vehicle data)
Second Quarter Ended
07/01/00 07/03/99
Net sales
U.S. and Canada $2,344 $2,012
Europe 1,072 1,024
Rest of World 345 197
Total $3,761 $3,233
Operating income before amortization $268 $210
Goodwill amortization (23) (19)
Operating income after amortization $245 $191
Content per vehicle -- North America $568 $482
Content per vehicle -- Western Europe $223 $225
Content per vehicle -- South America $99 $103
Six Months Ended
07/01/00 07/03/99
Net sales
U.S. and Canada $4,688 $3,681
Europe 2,239 1,875
Rest of World 640 365
Total $7,567 $5,921
Operating income before amortization $484 $344
Goodwill amortization (45) (33)
Operating income after amortization $439 $311