(12) Comprehensive Income and Equity

Comprehensive Income

Comprehensive income 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.

A summary of comprehensive income and reconciliations of equity, Lear Corporation stockholders’ equity and noncontrolling interests for the three and six months ended June 29, 2013 and June 30, 2012, are shown below (in millions):


	Three Months Ended June 29, 2013									Six Months Ended June 29, 2013
	Equity			Attributable to Lear Corporation Stockholders			Non- controlling Interests			Equity			Attributable to Lear Corporation Stockholders			Non- controlling Interests
Beginning equity balance	$	3,485.8		$	3,360.6		$	125.2		$	3,612.2		$	3,487.1		$	125.1
Stock-based compensation transactions		14.4			14.4			—			21.8			21.8			—
Repurchase of common stock		(800.0	)		(800.0	)		—			(1,000.1	)		(1,000.1	)		—
Dividends declared to Lear Corporation stockholders		(14.1	)		(14.1	)		—			(30.6	)		(30.6	)		—
Dividends paid to noncontrolling interests		(9.5	)		—			(9.5	)		(14.8	)		—			(14.8	)
Acquisition of noncontrolling interest		—			—			—			(6.6	)		(3.2	)		(3.4	)
Comprehensive income:
Net income		142.3			137.3			5.0			259.2			245.8			13.4
Other comprehensive income (loss), net of tax:
Defined benefit plan adjustments ⁽¹⁾		1.8			1.8			—			3.7			3.7			—
Derivative instruments and hedging activities ⁽²⁾		(16.1	)		(16.1	)		—			(8.8	)		(8.8	)		—
Foreign currency translation adjustments		(14.3	)		(14.6	)		0.3			(45.7	)		(46.4	)		0.7

Other comprehensive loss		(28.6	)		(28.9	)		0.3			(50.8	)		(51.5	)		0.7

Comprehensive income		113.7			108.4			5.3			208.4			194.3			14.1

Ending equity balance	$	2,790.3		$	2,669.3		$	121.0		$	2,790.3		$	2,669.3		$	121.0

(1)	Includes comprehensive income of $2.6 million and $5.2 million for the three and six months ended June 29, 2013, respectively, reclassified from accumulated other comprehensive loss. See Note 8, “Pension and Other Postretirement Benefit Plans.”

(2)	Includes comprehensive loss of $10.6 million and $18.8 million for the three and six months ended June 29, 2013, respectively, reclassified from accumulated other comprehensive loss. See Note 15, “Financial Instruments.”

In the three and six months ended June 29, 2013, foreign currency translation adjustments largely relate to the Euro and the Brazilian real.


	Three Months Ended June 30, 2012									Six Months Ended June 30, 2012
	Equity			Attributable to Lear Corporation Stockholders			Non- controlling Interests			Equity			Attributable to Lear Corporation Stockholders			Non- controlling Interests
Beginning equity balance	$	2,705.4		$	2,577.1		$	128.3		$	2,561.1		$	2,436.4		$	124.7
Stock-based compensation transactions		5.2			5.2			—			14.0			14.0			—
Repurchase of common stock		(70.0	)		(70.0	)		—			(122.5	)		(122.5	)		—
Dividends declared to Lear Corporation stockholders		(14.0	)		(14.0	)		—			(28.4	)		(28.4	)		—
Dividends paid to noncontrolling interests		(1.1	)		—			(1.1	)		(4.3	)		—			(4.3	)
Acquisition of noncontrolling interests		—			—			—			(6.2	)		(2.2	)		(4.0	)
Comprehensive income:
Net income		154.6			145.4			9.2			299.0			279.5			19.5
Other comprehensive income (loss), net of tax:
Defined benefit plan adjustments ⁽³⁾		2.6			2.6			—			(1.8	)		(1.8	)		—
Derivative instruments and hedging activities ⁽⁴⁾		(4.7	)		(4.7	)		—			36.0			36.0			—
Foreign currency translation adjustments		(77.5	)		(76.1	)		(1.4	)		(46.4	)		(45.5	)		(0.9	)

Other comprehensive income		(79.6	)		(78.2	)		(1.4	)		(12.2	)		(11.3	)		(0.9	)

Comprehensive income		75.0			67.2			7.8			286.8			268.2			18.6

Ending equity balance	$	2,700.5		$	2,565.5		$	135.0		$	2,700.5		$	2,565.5		$	135.0

(3)	Includes comprehensive income of $2.6 million and $5.7 million for the three and six months ended June 30, 2012, respectively, reclassified from accumulated other comprehensive loss. See Note 8, “Pension and Other Postretirement Benefit Plans.”

(4)	Includes comprehensive income of $5.0 million and $6.1 million for the three and six months ended June 30, 2012, respectively, reclassified from accumulated other comprehensive loss. See Note 15, “Financial Instruments.”

In the three and six months ended and June 30, 2012, foreign currency translation adjustments relate primarily to the Euro and the Brazilian real.

Lear Corporation Stockholders’ Equity

Common Stock Share Repurchase Program —

In January 2013, the Company’s Board of Directors authorized an increase of $800 million to the Company’s existing common stock share repurchase program, which permits the discretionary repurchase of the Company’s common stock, to provide for aggregate repurchases of $1.5 billion and extended the term of the program to January 10, 2016. In February 2013, the Board of Directors authorized the Company to increase the pace of its common stock share repurchase program in order to complete $600 million of share repurchases in 2013. Subsequent to this action, the Company received notice from certain of its stockholders, Marcato Capital Management LLC, Oskie Capital Management and their affiliates (together, the “Marcato-Oskie Group”), that they intended to nominate three directors for election and propose certain other business at the Company’s 2013 annual meeting of stockholders. Following discussions with the Marcato-Oskie Group and continued review of the Company’s capital structure by the Board of Directors, in April 2013, the Company and the Marcato-Oskie Group entered into an agreement pursuant to which, among other things, the Marcato-Oskie Group agreed to withdraw its director nominees, the Company agreed to appoint a ninth director who is mutually acceptable to the Company and the Marcato-Oskie Group, as promptly as practicable following the Company’s 2013 annual meeting of stockholders, and the Board of Directors authorized a further acceleration of the Company’s existing common stock share repurchase program so that the program will be completed no later than March 2014. In addition, under the terms of the agreement, the Board of Directors approved a new two-year common stock share repurchase authorization of $750 million to commence immediately following the completion of the current authorization.

Pursuant to the agreement reached with the Marcato-Oskie Group described above, on April 25, 2013, the Company entered into an accelerated stock repurchase (“ASR”) agreement with a third-party financial institution to repurchase $800 million of its common stock. In the second quarter of 2013, the Company paid $800 million to the financial institution, using cash on-hand, and received an initial delivery of 11,862,836 shares. This initial share delivery represented 80% of the ASR transaction’s value at the then-current price of $53.95 per share. These shares have been included in common stock held in treasury as of the applicable delivery date. The remaining 20% of the ASR transaction’s value, or $160 million, has been included in additional paid-in-capital in the accompanying condensed consolidated balance sheet as of June 29, 2013, and will be transferred to common stock held in treasury upon settlement of the ASR transaction. The ultimate number of shares to be repurchased and the final price paid per share under the ASR transaction will be based on the daily volume weighted average price of the Company’s common stock during the term of the ASR agreement, less an agreed upon discount. At settlement, if the ultimate number of shares to be repurchased exceeds the 11,862,836 shares initially delivered, the Company will receive additional shares from the financial institution. If the ultimate number of shares to be repurchased is less than the 11,862,836 shares initially delivered, the Company has the contractual right to either deliver additional shares or cash equal to the value of those shares to the financial institution. The ASR transaction is expected to be completed no later than March 2014. For further information regarding the Company’s ASR program, see Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Capitalization — Common Stock Share Repurchase Program.”

After completion of the ASR transaction, the Company will have a remaining repurchase authorization of $750 million under its common stock share repurchase program. The Company may implement these share repurchases through a variety of methods, including 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, the Company’s amended and restated credit facility and the indenture governing the 2018 Notes and the 2020 Notes place certain limitations on the Company’s ability to repurchase its common shares.

Inclusive of the $800 million ASR transaction, the Company has paid $1.5 billion, in aggregate, for repurchases of its outstanding common stock, excluding commissions and related fees, since the first quarter of 2011. In the first half of 2013, the Company paid $1.0 billion, in aggregate, for repurchases of its outstanding common stock (15,533,758 shares repurchased, including the initial delivery of shares under the ASR transaction, at an average purchase price of $54.08, excluding commissions and fees). In the first half of 2012, the Company paid $122.5 million, in aggregate, for repurchases of its outstanding common stock (2,942,771 shares repurchased at an average purchase price of $41.63 per share, excluding commissions).

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 awards to cover minimum tax withholding requirements as common stock held in treasury in the accompanying condensed consolidated balance sheets as of June 29, 2013 and December 31, 2012.

Quarterly Dividend — In the first half of 2013 and 2012, the Company’s Board of Directors declared quarterly cash dividends of $0.17 and $0.14 per share of common stock, respectively. In the first half of 2013, declared dividends totaled $30.6 million, and dividends paid totaled $29.6 million. In the first half of 2012, declared dividends totaled $28.4 million, and dividends paid totaled $27.6 million. 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.

Noncontrolling Interests

In the first half of 2013 and 2012, the Company acquired noncontrolling interests in certain of its consolidated subsidiaries.