SOUTHFIELD, Mich. — Lear Corp. has reported preliminary financial results for the fourth quarter and full year of 2008.
For the fourth quarter of 2008, Lear reported net sales of $2.6 billion and a pretax loss of $692.1 million, driven largely by a non-cash goodwill impairment charge of $530 million and restructuring costs of $66.2 million. Income before interest, other (income) expense, income taxes, restructuring costs and other special items (core operating earnings) was $22 million in the fourth quarter of 2008. This compares with net sales of $3.9 billion, pretax income of $45.1 million and core operating earnings of $178.6 million in the fourth quarter of 2007.
Lear said the decline in net sales for the quarter primarily reflects a significant reduction in production in North America and Europe.
Net loss was $688.2 million, or $8.91 per share, including the non-cash goodwill impairment charge and restructuring costs, for the fourth quarter of 2008. This compares with net income of $27 million, or 34 cents per share, in the year earlier quarter.
In the fourth quarter of 2008, free cash flow was negative $38.3 million, as compared with free cash flow of $170.9 million in the fourth quarter of 2007. The decline in free cash flow compared with a year ago primarily reflects lower earnings. Net cash provided by (used in) operating activities was ($90.9) million and $157.4 million in the fourth quarters of 2008 and 2007, respectively. A reconciliation of free cash flow to net cash provided by (used in) operating activities as determined by GAAP is provided in the attached supplemental data pages.
For the full year 2008, Lear reported net sales of $13.6 billion and a pretax loss of $604.1 million, driven largely by a non-cash goodwill impairment charge of $530 million and restructuring costs of $193.9 million. Core operating earnings were $418.4 million for the full year 2008. This compares with net sales of $16.0 billion, pretax income of $331.4 million and core operating earnings of $748.5 million in 2007. A reconciliation of core operating earnings to pretax income (loss) as determined by GAAP is provided in the attached supplemental data pages.
The decline in net sales for the full year primarily reflects a significant reduction in production in North America and Europe and the divestiture of the interior business, partially offset by favorable foreign exchange. The decline in core operating earnings reflects the decline in net sales offset in part by favorable cost performance, including the benefit of restructuring actions.
Lear reported a net loss of $689.9 million, or $8.93 per share, including the non-cash goodwill impairment charge and restructuring costs, for the full-year 2008. This compares with net income of $241.5 million, or $3.09 per share, for the full-year 2007.
"These sharp declines in automotive production in North America and globally dramatically impacted our financial results in the fourth quarter," said Bob Rossiter, Lear’s chairman, chief executive officer and president. "We have been aggressively restructuring our global operations in response to changing business conditions. Lear’s strategy to manage through the downturn is to accelerate and expand global restructuring and cost reduction efforts, to narrow our investment focus to minimize cash burn and to continue to provide our customers with superior value."
