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Lear Reports Record Third Quarter Earnings And

The following excerpt is from the company's SEC filing.

Increases 2015 Financial Outlook

SOUTHFIELD, Michigan, October 23, 2015

Lear Corporation [NYSE: LEA], a leading global supplier of automotive seating and electrical distribution systems, today reported financial results for the third quarter. Highlights include:

Sales of $4.3 billion, up 2% from a year ago; 11% growth excluding impact of foreign exchange

Record core operating earnings of $320 million, up 27% from prior year

Adjusted earnings per share of $2.56, up 33% from prior year

Core operating margin of 7.4%, up from 5.9% a year ago, with improved margins in bo th business segments

Acquired intellectual property and technology from Autonet Mobile

Returned $167 million to shareholders through share repurchases and dividends

Increasing full year outlook for earnings and free cash flow

In the third quarter, we continued to deliver record financial results and further strengthened our core capabilities, said Matt Simoncini, Lears president and chief executive officer. Our purchase of intellectual property from Autonet Mobile complements our industry-leading technology in gateway modules and positions Lear as a leader in vehicle connectivity. The recent acquisitions of Guilford Performance Textiles and Eagle Ottawa Premium Leather combined with our world-class sewing and seat component capabilities provide Lear with a competitive advantage in seat design and craftsmanship. With the industrys low cost position and leading product capabilities in both of our business segments, we are well positioned to take advantage of major industry trends and profitable sales growth opportunities.

Business Conditions

In the third quarter, global vehicle production was flat as compared to a year ago. Production increased by 5% in North America and by 6% in Europe & Africa. Production decreased by 6% in China and by 21% in South America.

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Third Quarter 2015 Financial Results

For the third quarter of 2015, Lear reported sales of $4.3 billion, core operating earnings of $320 million, net income of $181 million and adjusted earnings per share of $2.56. This compares with sales of $4.2 billion, core operating earnings of $251 million, net income of $140 million and adjusted earnings per share of $1.93 for the third quarter of 2014.

In the Seating segment, sales were up 5% to $3.4 billion, reflecting the acquisition of Eagle Ottawa and the addition of new business partially offset by the impact of foreign exchange. Excluding the impact of foreign exchange, sales increased 14%. Adjusted segment earnings were $243 million or 7.2% of sales. Margins improved 170 basis points from a year ago, reflecting the increase in sales, including the acquisition of Eagle Ottawa, and favorable operating performance.

In the Electrical segment, sales were down 7% to $973 million. Excluding the impact of foreign exchange, sales increased 4%, primarily reflecting the addition of new business. Adjusted segment earnings were $136 million or 14.0% of sales. Margins improved 70 basis points from a year ago, reflecting continued strong operating performance, and marks our 24th consecutive quarter of year-over-year margin improvement.

In the third quarter of 2015, free cash flow was $163 million, and net cash provided by operating activities was $278 million.

Reconciliations of core operating earnings to pretax income before equity income, adjusted net income to net income attributable to Lear, adjusted earnings per share to diluted net income per share attributable to Lear, adjusted segment earnings to reported segment earnings and free cash flow to net cash provided by operating activities, in each case as determined in accordance with accounting principles generally accepted in the United States (GAAP), are provided in the attached supplemental data pages.

Acquisition of Autonet Mobile

During the quarter, Lear acquired intellectual property and technology from Autonet Mobile, a Santa Rosa, California-based developer of software and devices for automotive applications. As part of the acquisition, Lear hired key members of Autonet Mobiles software and product development team.

Founded in 2005, Autonet Mobiles technology directly connects on-board vehicle systems with cloud-based applications using proprietary data exchange capabilities via cellular networks.

The acquired intellectual property and technology will complement Lears industry-leading wireless capabilities and provide growth opportunities for Lears Electrical business.

Share Repurchase Program

During the third quarter of 2015, Lear repurchased 1.4 million shares of its common stock for a total of $148 million. As of the end of the third quarter, Lear has a remaining share repurchase authorization of $617 million, which expires on December 31, 2017, and reflects approximately 7% of Lears total market capitalization at current market prices.

Since initiating the share repurchase program in early 2011, Lear has repurchased 34.4 million shares of its common stock for a total of $2.3 billion at an average price of $66.75 per share. This represents a reduction of approximately 33% of our shares outstanding at the time we began the program.

Full Year 2015 Financial Outlook

Lear has increased its full year 2015 financial outlook for earnings and free cash flow.

Our 2015 financial outlook is based on industry vehicle production assumptions of 17.5 million units in North America, up 3% from the prior year, 21.3 million units in Europe & Africa, up 3% from the prior year, and 21.7 million units in China, up 2% from the prior year. Lears financial guidance is based on an average full year exchange rate of $1.11/Euro, down 17% from 2014.

Sales in 2015 are expected to be approximately $18.2 billion, consistent with the midpoint of our prior guidance. Core operating earnings are expected to be in the range of $1.27 to $1.30 billion, up from the prior range of $1.225 to $1.275 billion. Free cash flow is expected to be approximately $650 million, up $25 million from the prior guidance.

Pretax income before restructuring costs and other special items is estimated to be in the range...


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