Document
false--12-31Q120192019-03-3010-Q000084216262261160falseLarge Accelerated FilerLEAR CORPfalseLEA90000000.010.0130000000030000000064563291645632910.0380.0380.21006300000000110000000023000001000000001089625010000000010896250003000007000004000002100000327498280020187.4116236782147928829360 0000842162 2019-01-01 2019-03-30 0000842162 2019-04-23 0000842162 2018-12-31 0000842162 2019-03-30 0000842162 us-gaap:ConvertiblePreferredStockMember 2018-12-31 0000842162 us-gaap:ConvertiblePreferredStockMember 2019-03-30 0000842162 2018-01-01 2018-03-31 0000842162 us-gaap:NoncontrollingInterestMember 2019-03-30 0000842162 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-30 0000842162 lear:RedeemableNoncontrollingInterestMember 2019-01-01 2019-03-30 0000842162 us-gaap:NoncontrollingInterestMember 2019-01-01 2019-03-30 0000842162 us-gaap:ParentMember 2019-01-01 2019-03-30 0000842162 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0000842162 lear:RedeemableNoncontrollingInterestMember 2019-03-30 0000842162 us-gaap:NoncontrollingInterestMember 2018-12-31 0000842162 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-03-30 0000842162 us-gaap:ParentMember 2019-03-30 0000842162 lear:RedeemableNoncontrollingInterestMember 2018-12-31 0000842162 us-gaap:ParentMember 2018-12-31 0000842162 us-gaap:TreasuryStockMember 2019-01-01 2019-03-30 0000842162 us-gaap:RetainedEarningsMember 2019-01-01 2019-03-30 0000842162 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-03-30 0000842162 us-gaap:TreasuryStockMember 2019-03-30 0000842162 us-gaap:CommonStockMember 2018-12-31 0000842162 us-gaap:AdditionalPaidInCapitalMember 2019-03-30 0000842162 us-gaap:RetainedEarningsMember 2019-03-30 0000842162 us-gaap:TreasuryStockMember 2018-12-31 0000842162 us-gaap:CommonStockMember 2019-03-30 0000842162 us-gaap:RetainedEarningsMember 2018-12-31 0000842162 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0000842162 us-gaap:RetainedEarningsMember 2018-01-01 2018-03-31 0000842162 us-gaap:CommonStockMember 2018-03-31 0000842162 us-gaap:CommonStockMember 2017-12-31 0000842162 us-gaap:TreasuryStockMember 2018-03-31 0000842162 us-gaap:TreasuryStockMember 2017-12-31 0000842162 us-gaap:RetainedEarningsMember 2017-12-31 0000842162 us-gaap:AdditionalPaidInCapitalMember 2017-12-31 0000842162 us-gaap:TreasuryStockMember 2018-01-01 2018-03-31 0000842162 us-gaap:RetainedEarningsMember 2018-01-01 0000842162 us-gaap:RetainedEarningsMember 2018-03-31 0000842162 us-gaap:AdditionalPaidInCapitalMember 2018-03-31 0000842162 us-gaap:AdditionalPaidInCapitalMember 2018-01-01 2018-03-31 0000842162 2018-03-31 0000842162 us-gaap:ParentMember 2018-01-01 2018-03-31 0000842162 lear:RedeemableNoncontrollingInterestMember 2018-01-01 2018-03-31 0000842162 2018-01-01 0000842162 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-31 0000842162 us-gaap:NoncontrollingInterestMember 2018-01-01 2018-03-31 0000842162 us-gaap:ParentMember 2018-03-31 0000842162 lear:RedeemableNoncontrollingInterestMember 2018-03-31 0000842162 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-03-31 0000842162 us-gaap:ParentMember 2017-12-31 0000842162 2017-12-31 0000842162 us-gaap:ParentMember 2018-01-01 0000842162 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-03-31 0000842162 us-gaap:NoncontrollingInterestMember 2018-03-31 0000842162 lear:RedeemableNoncontrollingInterestMember 2017-12-31 0000842162 us-gaap:NoncontrollingInterestMember 2017-12-31 0000842162 us-gaap:OtherRestructuringMember 2018-12-31 0000842162 us-gaap:EmployeeSeveranceMember 2019-01-01 2019-03-30 0000842162 lear:AssetImpairmentChargeMember 2019-01-01 2019-03-30 0000842162 us-gaap:ContractTerminationMember 2019-01-01 2019-03-30 0000842162 us-gaap:OtherRestructuringMember 2019-01-01 2019-03-30 0000842162 us-gaap:EmployeeSeveranceMember 2018-12-31 0000842162 us-gaap:ContractTerminationMember 2019-03-30 0000842162 us-gaap:ContractTerminationMember 2018-12-31 0000842162 lear:AssetImpairmentChargeMember 2018-12-31 0000842162 lear:AssetImpairmentChargeMember 2019-03-30 0000842162 us-gaap:OtherRestructuringMember 2019-03-30 0000842162 us-gaap:EmployeeSeveranceMember 2019-03-30 0000842162 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2019-01-01 2019-03-30 0000842162 us-gaap:CostOfSalesMember 2019-01-01 2019-03-30 0000842162 us-gaap:OtherNoncurrentAssetsMember 2018-12-31 0000842162 us-gaap:OtherCurrentAssetsMember 2018-12-31 0000842162 us-gaap:OtherCurrentAssetsMember 2019-03-30 0000842162 us-gaap:OtherNoncurrentAssetsMember 2019-03-30 0000842162 lear:AssetImpairmentChargeMember 2018-01-01 2018-03-31 0000842162 lear:ESystemsSegmentMember 2019-01-01 2019-03-30 0000842162 lear:ESystemsSegmentMember 2018-12-31 0000842162 lear:SeatingMember 2019-03-30 0000842162 lear:SeatingMember 2019-01-01 2019-03-30 0000842162 lear:ESystemsSegmentMember 2019-03-30 0000842162 lear:SeatingMember 2018-12-31 0000842162 us-gaap:NotesPayableOtherPayablesMember 2018-12-31 0000842162 lear:SeniorNotesDueTwoThousandTwentyFourMember us-gaap:SeniorNotesMember 2018-12-31 0000842162 lear:TermLoanFacilityMember lear:CreditAgreementTermLoanFacilityMember lear:CreditAgreementMember 2018-12-31 0000842162 lear:SeniorNotesDueTwoThousandTwentySevenMember us-gaap:SeniorNotesMember 2019-03-30 0000842162 lear:SeniorNotesDueTwoThousandTwentyFiveMember us-gaap:SeniorNotesMember 2018-12-31 0000842162 lear:SeniorNotesDueTwoThousandTwentyFourMember us-gaap:SeniorNotesMember 2019-03-30 0000842162 us-gaap:NotesPayableOtherPayablesMember 2019-03-30 0000842162 lear:SeniorNotesDueTwoThousandTwentyFiveMember us-gaap:SeniorNotesMember 2019-03-30 0000842162 lear:SeniorNotesDueTwoThousandTwentySevenMember us-gaap:SeniorNotesMember 2018-12-31 0000842162 lear:TermLoanFacilityMember lear:CreditAgreementTermLoanFacilityMember lear:CreditAgreementMember 2019-03-30 0000842162 srt:MaximumMember us-gaap:RevolvingCreditFacilityMember lear:CreditAgreementRevolvingCreditFacilityMember us-gaap:EurodollarMember 2019-01-01 2019-03-30 0000842162 srt:MaximumMember us-gaap:RevolvingCreditFacilityMember lear:CreditAgreementRevolvingCreditFacilityMember us-gaap:BaseRateMember 2019-01-01 2019-03-30 0000842162 us-gaap:RevolvingCreditFacilityMember lear:CreditAgreementRevolvingCreditFacilityMember us-gaap:EurodollarMember 2019-03-30 0000842162 srt:MinimumMember us-gaap:RevolvingCreditFacilityMember lear:CreditAgreementRevolvingCreditFacilityMember us-gaap:EurodollarMember 2019-01-01 2019-03-30 0000842162 srt:MinimumMember us-gaap:RevolvingCreditFacilityMember lear:CreditAgreementRevolvingCreditFacilityMember us-gaap:BaseRateMember 2019-01-01 2019-03-30 0000842162 srt:MinimumMember lear:TermLoanFacilityMember lear:CreditAgreementTermLoanFacilityMember us-gaap:BaseRateMember 2019-01-01 2019-03-30 0000842162 srt:MaximumMember lear:TermLoanFacilityMember lear:CreditAgreementTermLoanFacilityMember us-gaap:BaseRateMember 2019-01-01 2019-03-30 0000842162 lear:TermLoanFacilityMember lear:CreditAgreementTermLoanFacilityMember us-gaap:BaseRateMember 2019-03-30 0000842162 lear:TermLoanFacilityMember lear:CreditAgreementTermLoanFacilityMember us-gaap:EurodollarMember 2019-03-30 0000842162 us-gaap:RevolvingCreditFacilityMember lear:CreditAgreementRevolvingCreditFacilityMember us-gaap:BaseRateMember 2019-03-30 0000842162 srt:MaximumMember lear:TermLoanFacilityMember lear:CreditAgreementTermLoanFacilityMember us-gaap:EurodollarMember 2019-01-01 2019-03-30 0000842162 srt:MinimumMember lear:TermLoanFacilityMember lear:CreditAgreementTermLoanFacilityMember us-gaap:EurodollarMember 2019-01-01 2019-03-30 0000842162 srt:MaximumMember lear:CreditAgreementRevolvingCreditFacilityMember 2019-01-01 2019-03-30 0000842162 srt:MinimumMember lear:CreditAgreementRevolvingCreditFacilityMember 2019-01-01 2019-03-30 0000842162 us-gaap:RevolvingCreditFacilityMember lear:CreditAgreementRevolvingCreditFacilityMember lear:CreditAgreementMember 2017-08-08 0000842162 lear:TermLoanFacilityMember lear:CreditAgreementTermLoanFacilityMember lear:CreditAgreementMember 2017-08-08 0000842162 us-gaap:RevolvingCreditFacilityMember lear:CreditAgreementRevolvingCreditFacilityMember lear:CreditAgreementMember 2019-03-30 0000842162 lear:TermLoanFacilityMember lear:CreditAgreementTermLoanFacilityMember lear:CreditAgreementMember 2019-01-01 2019-03-30 0000842162 us-gaap:RevolvingCreditFacilityMember lear:CreditAgreementRevolvingCreditFacilityMember lear:CreditAgreementMember 2018-12-31 0000842162 us-gaap:AccountingStandardsUpdate201602Member 2019-01-01 0000842162 us-gaap:ScenarioForecastMember 2019-09-30 0000842162 srt:MinimumMember us-gaap:PensionPlansDefinedBenefitMember 2019-03-30 0000842162 srt:MaximumMember us-gaap:PensionPlansDefinedBenefitMember 2019-03-30 0000842162 us-gaap:PensionPlansDefinedBenefitMember 2019-01-01 2019-03-30 0000842162 us-gaap:ForeignPlanMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2018-01-01 2018-03-31 0000842162 country:US us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2018-01-01 2018-03-31 0000842162 us-gaap:ForeignPlanMember us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2019-01-01 2019-03-30 0000842162 country:US us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2019-01-01 2019-03-30 0000842162 us-gaap:ForeignPlanMember us-gaap:PensionPlansDefinedBenefitMember 2019-01-01 2019-03-30 0000842162 country:US us-gaap:PensionPlansDefinedBenefitMember 2019-01-01 2019-03-30 0000842162 us-gaap:ForeignPlanMember us-gaap:PensionPlansDefinedBenefitMember 2018-01-01 2018-03-31 0000842162 country:US us-gaap:PensionPlansDefinedBenefitMember 2018-01-01 2018-03-31 0000842162 srt:AsiaMember 2019-01-01 2019-03-30 0000842162 srt:SouthAmericaMember lear:ESystemsSegmentMember 2018-01-01 2018-03-31 0000842162 srt:AsiaMember 2018-01-01 2018-03-31 0000842162 srt:SouthAmericaMember lear:SeatingMember 2019-01-01 2019-03-30 0000842162 lear:SeatingMember 2018-01-01 2018-03-31 0000842162 srt:SouthAmericaMember lear:ESystemsSegmentMember 2019-01-01 2019-03-30 0000842162 srt:AsiaMember lear:SeatingMember 2018-01-01 2018-03-31 0000842162 srt:AsiaMember lear:ESystemsSegmentMember 2019-01-01 2019-03-30 0000842162 srt:AsiaMember lear:SeatingMember 2019-01-01 2019-03-30 0000842162 lear:EuropeandAfricaMember lear:SeatingMember 2018-01-01 2018-03-31 0000842162 srt:NorthAmericaMember lear:SeatingMember 2018-01-01 2018-03-31 0000842162 lear:EuropeandAfricaMember lear:ESystemsSegmentMember 2019-01-01 2019-03-30 0000842162 srt:SouthAmericaMember 2018-01-01 2018-03-31 0000842162 srt:NorthAmericaMember lear:SeatingMember 2019-01-01 2019-03-30 0000842162 lear:ESystemsSegmentMember 2018-01-01 2018-03-31 0000842162 srt:NorthAmericaMember 2019-01-01 2019-03-30 0000842162 srt:NorthAmericaMember lear:ESystemsSegmentMember 2019-01-01 2019-03-30 0000842162 srt:SouthAmericaMember 2019-01-01 2019-03-30 0000842162 srt:NorthAmericaMember lear:ESystemsSegmentMember 2018-01-01 2018-03-31 0000842162 srt:NorthAmericaMember 2018-01-01 2018-03-31 0000842162 lear:EuropeandAfricaMember lear:SeatingMember 2019-01-01 2019-03-30 0000842162 lear:EuropeandAfricaMember 2019-01-01 2019-03-30 0000842162 srt:SouthAmericaMember lear:SeatingMember 2018-01-01 2018-03-31 0000842162 lear:EuropeandAfricaMember lear:ESystemsSegmentMember 2018-01-01 2018-03-31 0000842162 srt:AsiaMember lear:ESystemsSegmentMember 2018-01-01 2018-03-31 0000842162 lear:EuropeandAfricaMember 2018-01-01 2018-03-31 0000842162 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2019-01-01 2019-03-30 0000842162 us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2018-12-31 0000842162 us-gaap:AccumulatedGainLossCashFlowHedgeIncludingNoncontrollingInterestMember 2019-01-01 2019-03-30 0000842162 us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember 2019-03-30 0000842162 us-gaap:AccumulatedGainLossCashFlowHedgeIncludingNoncontrollingInterestMember 2019-03-30 0000842162 us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2019-01-01 2019-03-30 0000842162 us-gaap:AccumulatedGainLossCashFlowHedgeIncludingNoncontrollingInterestMember 2018-12-31 0000842162 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2018-12-31 0000842162 us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2019-03-30 0000842162 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2019-03-30 0000842162 us-gaap:AccumulatedGainLossCashFlowHedgeIncludingNoncontrollingInterestMember 2018-01-01 2018-03-31 0000842162 us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2018-01-01 2018-03-31 0000842162 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2017-12-31 0000842162 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2018-01-01 2018-03-31 0000842162 us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2018-03-31 0000842162 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2018-03-31 0000842162 us-gaap:AccumulatedGainLossCashFlowHedgeIncludingNoncontrollingInterestMember 2018-03-31 0000842162 us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember 2017-12-31 0000842162 us-gaap:AccumulatedGainLossCashFlowHedgeIncludingNoncontrollingInterestMember 2017-12-31 0000842162 us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember 2018-03-31 0000842162 2011-01-01 2019-03-30 0000842162 2019-02-07 0000842162 us-gaap:OperatingSegmentsMember lear:SeatingMember 2019-01-01 2019-03-30 0000842162 lear:CorporateAndEliminationsMember 2019-01-01 2019-03-30 0000842162 us-gaap:OperatingSegmentsMember lear:ESystemsSegmentMember 2019-01-01 2019-03-30 0000842162 us-gaap:OperatingSegmentsMember lear:SeatingMember 2019-03-30 0000842162 lear:CorporateAndEliminationsMember 2019-03-30 0000842162 us-gaap:OperatingSegmentsMember lear:ESystemsSegmentMember 2019-03-30 0000842162 us-gaap:OperatingSegmentsMember lear:SeatingMember 2018-01-01 2018-03-31 0000842162 us-gaap:OperatingSegmentsMember lear:ESystemsSegmentMember 2018-01-01 2018-03-31 0000842162 lear:CorporateAndEliminationsMember 2018-01-01 2018-03-31 0000842162 lear:CorporateAndEliminationsMember 2018-03-31 0000842162 us-gaap:OperatingSegmentsMember lear:SeatingMember 2018-03-31 0000842162 us-gaap:OperatingSegmentsMember lear:ESystemsSegmentMember 2018-03-31 0000842162 us-gaap:InterestRateSwapMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-03-30 0000842162 us-gaap:InterestRateSwapMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-12-31 0000842162 srt:MaximumMember us-gaap:InterestRateSwapMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-01-01 2018-12-31 0000842162 srt:MaximumMember us-gaap:InterestRateSwapMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-01-01 2019-03-30 0000842162 us-gaap:ForeignExchangeContractMember us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000842162 us-gaap:InterestRateSwapMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000842162 us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000842162 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000842162 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000842162 us-gaap:ForeignExchangeContractMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000842162 us-gaap:InterestRateSwapMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000842162 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000842162 us-gaap:ForeignExchangeContractMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000842162 us-gaap:InterestRateSwapMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000842162 us-gaap:InterestRateSwapMember us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000842162 us-gaap:ForeignExchangeContractMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000842162 us-gaap:EquitySecuritiesMember 2019-03-30 0000842162 us-gaap:EquitySecuritiesMember 2018-12-31 0000842162 us-gaap:ForeignExchangeContractMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:AccumulatedGainLossCashFlowHedgeIncludingNoncontrollingInterestMember 2018-12-31 0000842162 us-gaap:ForeignExchangeContractMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:AccumulatedGainLossCashFlowHedgeIncludingNoncontrollingInterestMember 2019-03-30 0000842162 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-30 0000842162 us-gaap:ForeignExchangeContractMember us-gaap:FairValueMeasurementsRecurringMember 2019-03-30 0000842162 us-gaap:FairValueMeasurementsRecurringMember 2019-03-30 0000842162 us-gaap:InterestRateSwapMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-30 0000842162 us-gaap:ForeignExchangeContractMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-30 0000842162 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-30 0000842162 us-gaap:ForeignExchangeContractMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-30 0000842162 us-gaap:InterestRateSwapMember us-gaap:FairValueMeasurementsRecurringMember 2019-03-30 0000842162 us-gaap:ForeignExchangeContractMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-30 0000842162 us-gaap:InterestRateSwapMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-30 0000842162 us-gaap:InterestRateSwapMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-30 0000842162 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-30 0000842162 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2019-03-30 0000842162 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2018-12-31 0000842162 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-03-30 0000842162 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2018-12-31 0000842162 us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2019-03-30 0000842162 us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2018-12-31 0000842162 us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-12-31 0000842162 srt:MaximumMember us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-01-01 2018-12-31 0000842162 us-gaap:ForeignExchangeContractMember 2018-12-31 0000842162 us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-03-30 0000842162 us-gaap:ForeignExchangeContractMember 2019-03-30 0000842162 srt:MaximumMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2018-01-01 2018-12-31 0000842162 srt:MaximumMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2019-01-01 2019-03-30 0000842162 srt:MaximumMember us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-01-01 2019-03-30 0000842162 us-gaap:InterestRateSwapMember 2018-01-01 2018-03-31 0000842162 us-gaap:ForeignExchangeContractMember 2019-01-01 2019-03-30 0000842162 us-gaap:ForeignExchangeContractMember 2018-01-01 2018-03-31 0000842162 us-gaap:ForeignExchangeContractMember us-gaap:CostOfSalesMember 2018-01-01 2018-03-31 0000842162 us-gaap:ForeignExchangeContractMember us-gaap:SalesMember 2018-01-01 2018-03-31 0000842162 us-gaap:InterestRateSwapMember 2019-01-01 2019-03-30 0000842162 us-gaap:ForeignExchangeContractMember us-gaap:CostOfSalesMember 2019-01-01 2019-03-30 0000842162 us-gaap:ForeignExchangeContractMember us-gaap:SalesMember 2019-01-01 2019-03-30 0000842162 lear:XevoInc.Member us-gaap:RestrictedStockUnitsRSUMember us-gaap:SubsequentEventMember 2019-04-17 2019-04-17 0000842162 lear:XevoInc.Member us-gaap:RestrictedStockMember us-gaap:SubsequentEventMember 2019-04-17 2019-04-17 0000842162 lear:XevoInc.Member us-gaap:SubsequentEventMember 2019-04-17 2019-04-17 xbrli:pure iso4217:USD xbrli:shares xbrli:shares iso4217:USD lear:segment
Table of Contents

 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________ 
FORM 10-Q
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 30, 2019.
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     .
Commission file number: 001-11311
 http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12856190&doc=13
(Exact name of registrant as specified in its charter) 
_______________________________________  
 
Delaware
 
13-3386776
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
21557 Telegraph Road, Southfield, MI
 
48033
(Address of principal executive offices)
 
(Zip code)
(248) 447-1500
(Registrant’s telephone number, including area code)
________________________________________________________________ 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
x
 
 
Accelerated filer
¨
Non-accelerated filer
¨
 
 
Smaller reporting company
¨
Emerging growth company
¨
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x
As of April 23, 2019, the number of shares outstanding of the registrant’s common stock was 62,261,160 shares.
 


Table of Contents
LEAR CORPORATION

FORM 10-Q

FOR THE QUARTER ENDED MARCH 30, 2019

INDEX

 
Page No.
 
 
Item 3 – Quantitative and Qualitative Disclosures about Market Risk (included in Item 2)
 
 

2

Table of Contents
LEAR CORPORATION AND SUBSIDIARIES

PART I — FINANCIAL INFORMATION

ITEM 1 — CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

INTRODUCTION TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
We have prepared the unaudited condensed consolidated financial statements of Lear Corporation and subsidiaries pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States ("GAAP") have been condensed or omitted pursuant to such rules and regulations. We believe that the disclosures are adequate to make the information presented not misleading when read in conjunction with the financial statements and the notes thereto included in our Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, for the year ended December 31, 2018.
The financial information presented reflects all adjustments (consisting of normal recurring adjustments) which are, in our opinion, necessary for a fair presentation of the results of operations, cash flows and financial position for the interim periods presented. These results are not necessarily indicative of a full year’s results of operations.


3

Table of Contents
LEAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share data)

 
March 30,
2019 (1)
December 31,
2018
ASSETS
 
 
CURRENT ASSETS:
 
 
Cash and cash equivalents
$
1,199.4

$
1,493.2

Accounts receivable
3,468.8

2,880.3

Inventories
1,200.5

1,196.8

Other
728.9

710.2

Total current assets
6,597.6

6,280.5

LONG-TERM ASSETS:
 
 
Property, plant and equipment, net
2,593.3

2,598.1

Goodwill
1,406.3

1,405.3

Other
1,764.8

1,316.8

Total long-term assets
5,764.4

5,320.2

Total assets
$
12,362.0

$
11,600.7

 
 
 
LIABILITIES AND EQUITY
 
 
CURRENT LIABILITIES:
 
 
Short-term borrowings
$
14.9

$
9.9

Accounts payable and drafts
3,094.4

2,862.8

Accrued liabilities
1,791.3

1,615.0

Current portion of long-term debt
13.8

12.9

Total current liabilities
4,914.4

4,500.6

LONG-TERM LIABILITIES:
 
 
Long-term debt
1,938.6

1,941.0

Other
958.7

640.4

Total long-term liabilities
2,897.3

2,581.4

 
 
 
Redeemable noncontrolling interest
156.6

158.1

 
 
 
EQUITY:
 
 
Preferred stock, 100,000,000 shares authorized (including 10,896,250 Series A convertible preferred stock authorized); no shares outstanding


Common stock, $0.01 par value, 300,000,000 shares authorized; 64,563,291 shares issued as of March 30, 2019 and December 31, 2018
0.6

0.6

Additional paid-in capital
961.5

1,017.4

Common stock held in treasury, 2,147,928 and 1,623,678 shares as of March 30, 2019 and December 31, 2018, respectively, at cost
(305.6
)
(225.1
)
Retained earnings
4,300.3

4,113.6

Accumulated other comprehensive loss
(711.5
)
(705.8
)
Lear Corporation stockholders’ equity
4,245.3

4,200.7

Noncontrolling interests
148.4

159.9

Equity
4,393.7

4,360.6

Total liabilities and equity
$
12,362.0

$
11,600.7

 (1)  
Unaudited.
The accompanying notes are an integral part of these condensed consolidated balance sheets.

4

Table of Contents
LEAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited; in millions, except share and per share data)

 
Three Months Ended
 
March 30,
2019
March 31,
2018
Net sales
$
5,160.1

$
5,733.7

 
 
 
Cost of sales
4,686.9

5,102.3

Selling, general and administrative expenses
148.3

155.4

Amortization of intangible assets
12.7

13.1

Interest expense
20.9

20.7

Other (income) expense, net
4.4

(5.6
)
Consolidated income before provision for income taxes and equity in net income of affiliates
286.9

447.8

Provision for income taxes
43.1

77.7

Equity in net income of affiliates
(2.3
)
(4.1
)
Consolidated net income
246.1

374.2

Less: Net income attributable to noncontrolling interests
17.2

20.5

Net income attributable to Lear
$
228.9

$
353.7

 
 
 
Basic net income per share available to Lear common stockholders (Note 13)
$
3.75

$
5.19

 
 
 
Diluted net income per share available to Lear common stockholders (Note 13)
$
3.73

$
5.16

 
 
 
Cash dividends declared per share
$
0.75

$
0.70

 
 
 
Average common shares outstanding
62,818,792

67,086,326

 
 
 
Average diluted shares outstanding
63,123,197

67,562,452

 
 
 
 
 
 
Consolidated comprehensive income (Condensed Consolidated Statements of Equity)
$
248.2

$
520.0

Less: Comprehensive income attributable to noncontrolling interests
25.0

33.7

Comprehensive income attributable to Lear
$
223.2

$
486.3

The accompanying notes are an integral part of these condensed consolidated statements.

5

Table of Contents
LEAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In millions, except share and per share data)
 
Three Months Ended March 30, 2019
 
Common Stock
Additional Paid-In Capital
Common Stock Held in Treasury
Retained Earnings
Balance at January 1, 2019
$
0.6

$
1,017.4

$
(225.1
)
$
4,113.6

Comprehensive income (loss):
 
 
 
 
Net income



228.9

Other comprehensive income (loss):




Total comprehensive income (loss)



228.9

Stock-based compensation

9.5



Net issuance of 280,020 shares held in treasury in settlement of stock-based compensation

(65.4
)
37.4

(1.2
)
Repurchase of 804,270 shares of common stock at average price of $146.56 per share


(117.9
)

Dividends declared to Lear Corporation stockholders



(47.7
)
Dividends declared to non-controlling interest holders




Redeemable non-controlling interest adjustment



6.7

Balance at March 30, 2019
$
0.6

$
961.5

$
(305.6
)
$
4,300.3

The accompanying notes are an integral part of these condensed consolidated statements.



6

Table of Contents
LEAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (continued)
(In millions, except share and per share data)

 
Three Months Ended March 30, 2019
 
Accumulated Other Comprehensive Loss, Net of Tax
Lear Corporation Stockholders' Equity
Non-controlling Interests
Equity
 
 
Redeemable Non-controlling Interests
Balance at January 1, 2019
$
(705.8
)
$
4,200.7

$
159.9

$
4,360.6

 
 
$
158.1

Comprehensive income (loss):
 
 
 
 
 
 
 
Net income

228.9

16.0

244.9

 
 
1.2

Other comprehensive income (loss):
(5.7
)
(5.7
)
3.8

(1.9
)
 
 
4.0

Total comprehensive income (loss)
(5.7
)
223.2

19.8

243.0

 
 
5.2

Stock-based compensation

9.5


9.5

 
 

Net issuance of 280,020 shares held in treasury in settlement of stock-based compensation

(29.2
)

(29.2
)
 
 

Repurchase of 804,270 shares of common stock at average price of $146.56 per share

(117.9
)

(117.9
)
 
 

Dividends declared to Lear Corporation stockholders

(47.7
)

(47.7
)
 
 

Dividends declared to non-controlling interest holders


(31.3
)
(31.3
)
 
 

Redeemable non-controlling interest adjustment

6.7


6.7

 
 
(6.7
)
Balance at March 30, 2019
$
(711.5
)
$
4,245.3

$
148.4

$
4,393.7

 
 
$
156.6

The accompanying notes are an integral part of these condensed consolidated statements.




7

Table of Contents
LEAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (continued)
(In millions, except share and per share data)
 
Three Months Ended March 31, 2018
 
Common Stock
Additional Paid-In Capital
Common Stock Held in Treasury
Retained Earnings
Balance at January 1, 2018
$
0.7

$
1,215.4

$
(724.1
)
$
4,171.9

Comprehensive income:
 
 
 
 
Net income



353.7

Other comprehensive income:




Total comprehensive income



353.7

Stock-based compensation

13.2



Net issuance of 327,498 shares held in treasury in settlement of stock-based compensation

(72.2
)
27.8


Repurchase of 829,360 shares of common stock at average price of $187.41 per share


(155.4
)

Dividends declared to Lear Corporation stockholders



(47.7
)
Dividends declared to non-controlling interest holders




Adoption of ASU 2016-16



2.3

Affiliate transaction




Redeemable non-controlling interest adjustment



(5.4
)
Acquisition of outstanding non-controlling interest




Balance at March 31, 2018
$
0.7

$
1,156.4

$
(851.7
)
$
4,474.8

The accompanying notes are an integral part of these condensed consolidated statements.


8

Table of Contents
LEAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (continued)
(In millions, except share and per share data)
 
Three Months Ended March 31, 2018
 
Accumulated Other Comprehensive Loss, Net of Tax
Lear Corporation Stockholders' Equity
Non-controlling Interests
Equity
 
 
Redeemable Non-controlling Interests
Balance at January 1, 2018
$
(513.4
)
$
4,150.5

$
142.1

$
4,292.6

 
 
$
153.4

Comprehensive income:
 
 
 
 
 
 
 
Net income

353.7

17.0

370.7

 
 
3.5

Other comprehensive income:
132.6

132.6

5.2

137.8

 
 
8.0

Total comprehensive income
132.6

486.3

22.2

508.5

 
 
11.5

Stock-based compensation

13.2


13.2

 
 

Net issuance of 327,498 shares held in treasury in settlement of stock-based compensation

(44.4
)

(44.4
)
 
 

Repurchase of 829,360 shares of common stock at average price of $187.41 per share

(155.4
)

(155.4
)
 
 

Dividends declared to Lear Corporation stockholders

(47.7
)

(47.7
)
 
 

Dividends declared to non-controlling interest holders


(19.7
)
(19.7
)
 
 

Adoption of ASU 2016-16

2.3


2.3

 
 

Affiliate transaction


14.0

14.0

 
 

Redeemable non-controlling interest adjustment

(5.4
)

(5.4
)
 
 
5.4

Acquisition of outstanding non-controlling interest


(3.4
)
(3.4
)
 
 

Balance at March 31, 2018
$
(380.8
)
$
4,399.4

$
155.2

$
4,554.6

 
 
$
170.3

The accompanying notes are an integral part of these condensed consolidated statements.


9

Table of Contents
LEAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)
 
Three Months Ended
 
March 30,
2019
March 31,
2018
Cash Flows from Operating Activities:
 
 
Consolidated net income
$
246.1

$
374.2

Adjustments to reconcile consolidated net income to net cash provided by operating activities:
 
 
Depreciation and amortization
123.6

120.2

Net change in recoverable customer engineering, development and tooling
(15.3
)
22.5

Net change in working capital items (see below)
(287.5
)
(252.6
)
Other, net
(15.3
)
(27.5
)
Net cash provided by operating activities
51.6

236.8

Cash Flows from Investing Activities:
 
 
Additions to property, plant and equipment
(122.8
)
(162.8
)
Other, net
6.2

(25.3
)
Net cash used in investing activities
(116.6
)
(188.1
)
Cash Flows from Financing Activities:
 
 
Credit agreement repayments
(1.6
)
(1.5
)
Short-term borrowings, net
4.8


Repurchase of common stock
(122.2
)
(145.4
)
Dividends paid to Lear Corporation stockholders
(49.5
)
(50.7
)
Dividends paid to noncontrolling interests
(31.3
)
(19.2
)
Other, net
(34.9
)
(55.8
)
Net cash used in financing activities
(234.7
)
(272.6
)
Effect of foreign currency translation
0.8

18.0

Net Change in Cash, Cash Equivalents and Restricted Cash
(298.9
)
(205.9
)
Cash, Cash Equivalents and Restricted Cash as of Beginning of Period
1,519.8

1,500.4

Cash, Cash Equivalents and Restricted Cash as of End of Period
$
1,220.9

$
1,294.5

 
 
 
Changes in Working Capital Items:
 
 
Accounts receivable
$
(592.7
)
$
(460.7
)
Inventories
(8.0
)
(35.0
)
Accounts payable
239.6

227.9

Accrued liabilities and other
73.6

15.2

Net change in working capital items
$
(287.5
)
$
(252.6
)
 
 
 
Supplementary Disclosure:
 
 
Cash paid for interest
$
43.6

$
45.6

Cash paid for income taxes, net of refunds received
$
41.6

$
63.6

The accompanying notes are an integral part of these condensed consolidated statements.

10

Table of Contents
LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(1) Basis of Presentation
Lear Corporation ("Lear," and together with its consolidated subsidiaries, the "Company") and its affiliates design and manufacture automotive seating and electrical distribution systems and related components. The Company’s main customers are automotive original equipment manufacturers. The Company operates facilities worldwide.
The accompanying condensed consolidated financial statements include the accounts of Lear, a Delaware corporation, and the wholly owned and less than wholly owned subsidiaries controlled by Lear. In addition, Lear consolidates all entities, including variable interest entities, in which it has a controlling financial interest. Investments in affiliates in which Lear does not have control but does have the ability to exercise significant influence over operating and financial policies are accounted for under the equity method.
The Company’s annual financial results are reported on a calendar year basis, and quarterly interim results are reported using a thirteen week reporting calendar.
Certain amounts in the prior period’s financial statements have been reclassified to conform to the presentation used in the quarter ended March 30, 2019.

(2) Restructuring
Restructuring costs include employee termination benefits, fixed asset impairment charges and contract termination costs, as well as other incremental costs resulting from the restructuring actions. These incremental costs principally include equipment and personnel relocation costs. In addition to restructuring costs, the Company incurs incremental manufacturing inefficiency costs at the operating locations impacted by the restructuring actions during the related restructuring implementation period. Restructuring costs are recognized in the Company’s condensed consolidated financial statements in accordance with GAAP. Generally, charges are recorded as restructuring actions are approved and/or implemented.
In the first three months of 2019, the Company recorded charges of $54.3 million in connection with its restructuring actions. These charges consist of $48.6 million recorded as cost of sales and $5.7 million recorded as selling, general and administrative expenses. The restructuring charges consist of employee termination costs of $49.1 million, fixed asset impairment charges of $2.1 million and contract termination costs of $1.5 million, as well as other related costs of $1.6 million. Employee termination benefits were recorded based on existing union and employee contracts, statutory requirements, completed negotiations and Company policy. Fixed asset impairment charges relate to the disposal of buildings, leasehold improvements and/or machinery and equipment with carrying values of $2.1 million in excess of related estimated fair values.
The Company expects to incur approximately $51 million of additional restructuring costs related to activities initiated as of March 30, 2019, and expects that the components of such costs will be consistent with its historical experience. Any future restructuring actions will depend upon market conditions, customer actions and other factors.
A summary of 2019 activity is shown below (in millions):
 
Accrual as of
 
2019
 
Utilization
 
Accrual as of
 
January 1, 2019
 
Charges
 
Cash
 
Non-cash
 
March 30, 2019
Employee termination benefits
$
103.3

 
$
49.1

 
$
(25.5
)
 
$

 
$
126.9

Asset impairment charges

 
2.1

 

 
(2.1
)
 

Contract termination costs
5.4

 
1.5

 
(0.8
)
 

 
6.1

Other related costs

 
1.6

 
(1.6
)
 

 

Total
$
108.7

 
$
54.3

 
$
(27.9
)
 
$
(2.1
)
 
$
133.0




11

Table of Contents
LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

(3) Inventories
Inventories are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method. Finished goods and work-in-process inventories include material, labor and manufacturing overhead costs. A summary of inventories is shown below (in millions):
 
March 30,
2019
 
December 31, 2018
Raw materials
$
881.4

 
$
859.4

Work-in-process
105.0

 
104.6

Finished goods
331.1

 
346.0

Reserves
(117.0
)
 
(113.2
)
Inventories
$
1,200.5

 
$
1,196.8



(4) Pre-Production Costs Related to Long-Term Supply Agreements
The Company incurs pre-production engineering and development ("E&D") and tooling costs related to the products produced for its customers under long-term supply agreements. The Company expenses all pre-production E&D costs for which reimbursement is not contractually guaranteed by the customer. In addition, the Company expenses all pre-production tooling costs related to customer-owned tools for which reimbursement is not contractually guaranteed by the customer or for which the Company does not have a non-cancelable right to use the tooling.

During the first three months of 2019 and 2018, the Company capitalized $58.8 million and $33.5 million, respectively, of pre-production E&D costs for which reimbursement is contractually guaranteed by the customer. During the first three months of 2019 and 2018, the Company also capitalized $47.0 million and $31.8 million, respectively, of pre-production tooling costs related to customer-owned tools for which reimbursement is contractually guaranteed by the customer or for which the Company has a non-cancelable right to use the tooling. These amounts are included in other current and long-term assets in the accompanying condensed consolidated balance sheets.
During the first three months of 2019 and 2018, the Company collected $95.8 million and $79.0 million, respectively, of cash related to E&D and tooling costs.
The classification of recoverable customer E&D and tooling costs related to long-term supply agreements is shown below (in millions):
 
March 30,
2019
 
December 31, 2018
Current
$
174.6

 
$
160.9

Long-term
80.7

 
80.4

Recoverable customer E&D and tooling
$
255.3

 
$
241.3



(5) Long-Term Assets
Property, Plant and Equipment
Property, plant and equipment is stated at cost. Costs associated with the repair and maintenance of the Company’s property, plant and equipment are expensed as incurred. Costs associated with improvements which extend the life, increase the capacity or improve the efficiency or safety of the Company’s property, plant and equipment are capitalized and depreciated over the remaining useful life of the related asset. Depreciable property is depreciated over the estimated useful lives of the assets, using principally the straight-line method.

12

Table of Contents
LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

A summary of property, plant and equipment is shown below (in millions):
 
March 30,
2019
 
December 31, 2018
Land
$
114.9

 
$
116.8

Buildings and improvements
817.5

 
809.3

Machinery and equipment
3,568.8

 
3,463.3

Construction in progress
349.3

 
389.3

Total property, plant and equipment
4,850.5

 
4,778.7

Less – accumulated depreciation
(2,257.2
)
 
(2,180.6
)
Property, plant and equipment, net
$
2,593.3

 
$
2,598.1


Depreciation expense was $110.9 million and $107.1 million in the three months ended March 30, 2019 and March 31, 2018, respectively.
The Company monitors its long-lived assets for impairment indicators on an ongoing basis in accordance with GAAP. If impairment indicators exist, the Company performs the required impairment analysis by comparing the undiscounted cash flows expected to be generated from the long-lived assets to the related net book values. If the net book value exceeds the undiscounted cash flows, an impairment loss is measured and recognized. Except as discussed below, the Company does not believe that there were any indicators that would have resulted in long-lived asset impairment charges as of March 30, 2019. The Company will, however, continue to assess the impact of any significant industry events on the realization of its long-lived assets.
In the first quarters of 2019 and 2018, the Company recognized fixed asset impairment charges of $2.1 million and $0.9 million, respectively, in conjunction with its restructuring actions (Note 2, "Restructuring").

(6) Goodwill
A summary of the changes in the carrying amount of goodwill, by operating segment, in the three months ended March 30, 2019, is shown below (in millions):
 
Seating
 
E-Systems
 
Total
Balance at January 1, 2019
$
1,244.3

 
$
161.0

 
$
1,405.3

Foreign currency translation and other
(2.1
)
 
3.1

 
1.0

Balance at March 30, 2019
$
1,242.2

 
$
164.1

 
$
1,406.3


Goodwill is not amortized but is tested for impairment on at least an annual basis. Impairment testing is required more often than annually if an event or circumstance indicates that an impairment is more likely than not to have occurred. In conducting its annual impairment testing, the Company may first perform a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount. If not, no further goodwill impairment testing is required. If it is more likely than not that a reporting unit’s fair value is less than its carrying amount, or if the Company elects not to perform a qualitative assessment of a reporting unit, the Company then compares the fair value of the reporting unit to the related net book value. If the net book value of a reporting unit exceeds its fair value, an impairment loss is measured and recognized. The Company conducts its annual impairment testing as of the first day of its fourth quarter.
The Company does not believe that there were any indicators that would have resulted in goodwill impairment charges as of March 30, 2019. The Company will, however, continue to assess the impact of significant events or circumstances on its recorded goodwill.


13

Table of Contents
LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

(7) Debt
A summary of long-term debt, net of unamortized debt issuance costs, and the related weighted average interest rates is shown below (in millions):
 
March 30, 2019
 
December 31, 2018
Debt Instrument
Long-Term Debt
 
Debt Issuance Costs (2)
 
Long-Term
Debt, Net
 
Weighted
Average
Interest
Rate
 
Long-Term Debt
 
Debt Issuance Costs (2)
 
Long-Term
Debt, Net
 
Weighted
Average
Interest
Rate
Credit Agreement — Term Loan Facility
$
240.6

 
$
(1.3
)
 
$
239.3

 
3.66%
 
$
242.2

 
$
(1.5
)
 
$
240.7

 
3.92%
5.375% Senior Notes due 2024 (the "2024 Notes")
325.0

 
(1.9
)
 
323.1

 
5.375%
 
325.0

 
(2.0
)
 
323.0

 
5.375%
5.25% Senior Notes due 2025 (the "2025 Notes")
650.0

 
(4.8
)
 
645.2

 
5.25%
 
650.0

 
(5.0
)
 
645.0

 
5.25%
3.8% Senior Notes due 2027 (the "2027 Notes") (1)
745.5

 
(5.1
)
 
740.4

 
3.885%
 
745.4

 
(5.3
)
 
740.1

 
3.885%
Other
4.4

 

 
4.4

 
N/A
 
5.1

 

 
5.1

 
N/A
 
$
1,965.5

 
$
(13.1
)
 
1,952.4

 
 
 
$
1,967.7

 
$
(13.8
)
 
1,953.9

 
 
Less — Current portion
 
 
 
 
(13.8
)
 
 
 
 
 
 
 
(12.9
)
 
 
Long-term debt
 
 
 
 
$
1,938.6

 
 
 
 
 
 
 
$
1,941.0

 
 
(1) Net of unamortized original issue discount of $4.5 million and $4.6 million as of March 30, 2019 and December 31, 2018, respectively
(2) Unamortized portion
Senior Notes
The issuance date, maturity date and interest payable dates of the Company's senior unsecured 2024 Notes, 2025 Notes and 2027 Notes (together, the "Notes") are as shown below:
Note
Issuance Date
 
Maturity Date
 
Interest Payable Dates
2024 Notes
March 2014
 
March 15, 2024
 
March 15 and September 15
2025 Notes
November 2014
 
January 15, 2025
 
January 15 and July 15
2027 Notes
August 2017
 
September 15, 2027
 
March 15 and September 15

Covenants
Subject to certain exceptions, the indentures governing the Notes contain restrictive covenants that, among other things, limit the ability of the Company to: (i) create or permit certain liens and (ii) consolidate, merge or sell all or substantially all of the Company’s assets. The indenture governing the 2024 Notes limits the ability of the Company to enter into sale and leaseback transactions. The indentures governing the Notes also provide for customary events of default.
As of March 30, 2019, the Company was in compliance with all covenants under the indentures governing the Notes.
Credit Agreement
The Company's unsecured credit agreement (the "Credit Agreement"), dated August 8, 2017, consists of a $1.75 billion revolving credit facility (the "Revolving Credit Facility") and a $250.0 million term loan facility (the "Term Loan Facility"). On March 27, 2019, the Company entered into an agreement to extend the maturity date of the Revolving Credit Facility by one year to August 8, 2023. The maturity date of the Term Loan Facility remains August 8, 2022.
As of March 30, 2019 and December 31, 2018, there were no borrowings outstanding under the Revolving Credit Facility and $240.6 million and $242.2 million, respectively, of borrowings outstanding under the Term Loan Facility. In the first three months of 2019, the Company made required principal payments of $1.6 million under the Term Loan Facility.

14

Table of Contents
LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

Advances under the Revolving Credit Facility and the Term Loan Facility generally bear interest based on (i) the Eurocurrency Rate (as defined in the Credit Agreement) or (ii) the Base Rate (as defined in the Credit Agreement) plus a margin, determined in accordance with a pricing grid. The range and the rate as of March 30, 2019, are shown below (in percentages):
 
 
Eurocurrency Rate
 
Base Rate
 
 
Minimum
 
Maximum
 
Rate as of
March 30, 2019
 
Minimum
 
Maximum
 
Rate as of
March 30,
2019
Revolving Credit Facility
 
1.00
%
 
1.60
%
 
1.10
%
 
0.00
%
 
0.60
%
 
0.10
%
Term Loan Facility
 
1.125
%
 
1.90
%
 
1.25
%
 
0.125
%
 
0.90
%
 
0.25
%

A facility fee, which ranges from 0.125% to 0.30% of the total amount committed under the Revolving Credit Facility, is payable quarterly.
Covenants
The Credit Agreement contains various customary representations, warranties and covenants by the Company, including, without limitation, (i) covenants regarding maximum leverage, (ii) limitations on fundamental changes involving the Company or its subsidiaries and (iii) limitations on indebtedness and liens.
As of March 30, 2019, the Company was in compliance with all covenants under the Credit Agreement.
Other
As of March 30, 2019, other long-term debt consists of amounts outstanding under finance leases.
For further information related to the Company's debt, see Note 6, "Debt," to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

(8) Leases
On January 1, 2019, the Company adopted Accounting Standards Update ("ASU") 2016-02, "Leases," which requires lessees to record right-of-use assets and corresponding liabilities on the balance sheet, as well as disclose key information regarding leasing arrangements. Adoption of the standard resulted in the recognition of right-of-use assets of $438.1 million and related lease obligations of $445.8 million as of January 1, 2019. The standard did not have a significant impact on the Company's operating results or cash flows.
Transition
As permitted by the transition guidance, the Company adopted the standard by applying the modified retrospective method without the restatement of comparative periods. Accordingly, the Company has provided disclosures required by prior lease guidance for comparative periods.
The Company elected the package of practical expedients, which permits a lessee to not reassess under the new standard its prior conclusions regarding lease identification, lease classification and initial direct costs. The Company did not elect the practical expedient which permits the use of hindsight when determining the lease term and assessing right-of-use assets for impairment.
As permitted by the transition guidance, the Company used the remaining lease term as of the date of adoption of the standard to estimate discount rates. As permitted by the standard, the Company elected, for all asset classes, the short-term lease exemption. A short-term lease is a lease that, at the commencement date, has a term of twelve months or less and does not include an option to purchase the underlying asset.
Accounting Policy
The Company determines if an arrangement contains a lease at inception. The Company elected the practical expedient, for all asset classes, to account for each lease component of a contract and its associated non-lease components as a single lease component, rather than allocating a standalone value to each component of a lease.

15

Table of Contents
LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

For purposes of calculating operating lease obligations under the standard, the Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such option. The Company's leases do not contain material residual value guarantees or material restrictive covenants.
Operating lease expense is recognized on a straight-line basis over the lease terms.
Discount Rate
The discount rate used to measure a lease obligation should be the rate implicit in the lease; however, the Company’s operating leases generally do not provide an implicit rate. Accordingly, the Company uses its incremental borrowing rate at lease commencement to determine the present value of lease payments. The incremental borrowing rate is an entity-specific rate which represents the rate of interest a lessee would pay to borrow on a collateralized basis over a similar term with similar payments.
Right-of-Use Assets and Lease Obligations
The Company has operating leases for production, office and warehouse facilities, manufacturing and office equipment and vehicles. Operating lease assets and obligations included in the accompanying condensed consolidated balance sheet are shown below (in millions):
 
March 30, 2019
Right-of-use assets under operating leases:
 
Other long-term assets
$
443.5

Lease obligations under operating leases:
 
Accrued liabilities
$
107.5

Other long-term liabilities
342.1


$
449.6


Maturities of lease obligations as of March 30, 2019, are shown below (in millions):
 
March 30, 2019
2019 (1)
$
93.6

2020
102.3

2021
79.4

2022
59.6

2023
43.8

Thereafter
138.7

Total undiscounted cash flows
517.4

Less: Imputed interest
(67.8
)
Lease obligations under operating leases
$
449.6

(1) For the remaining nine months
In addition, the Company entered into a contract, for which a lease is expected to begin in the third quarter of 2019. The related right-of-use asset and corresponding lease obligation are expected to be approximately $63 million with a lease term of approximately ten years.

16

Table of Contents
LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

Cash flow information related to operating leases is shown below (in millions):
 
Three Months Ended
 
March 30, 2019
Non-cash activity:
 
Right-of-use assets obtained in exchange for operating lease obligations
$
36.9

Operating cash flows:
 
Cash paid related to operating lease obligations
$
33.2


Lease expense included in the accompanying condensed consolidated statement of comprehensive income is shown below (in millions):
 
Three Months Ended
 
March 30, 2019
Operating lease expense
$
32.5

Short-term lease expense
4.4

Variable lease expense
0.6

Total lease expense
$
37.5


The Company's short-term lease expense excludes leases with a duration of one month or less, as permitted by the standard.
Variable lease expense includes payments based on performance or usage, as well as changes to index and rate-based lease payments. Additionally, the Company evaluated its supply contracts with its customers and concluded that variable lease expense in these arrangements is not material.
In the first three months of 2018, the Company recorded rent expense of $41.4 million.
The weighted average lease term and discount rate for operating leases are shown below:
 
March 30, 2019
Weighted average remaining lease term (in years)
6.75

Weighted average discount rate
3.7
%

The Company has entered into certain finance lease agreements which are not material to the condensed consolidated financial statements. See Note 7, "Debt," to the condensed consolidated financial statements included in this Report.


17

Table of Contents
LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

(9) Pension and Other Postretirement Benefit Plans
The Company sponsors defined benefit pension plans and other postretirement benefit plans (primarily for the continuation of medical benefits) for eligible employees in the United States and certain other countries.
Net Periodic Pension and Other Postretirement Benefit (Credit) Cost
The components of the Company’s net periodic pension benefit (credit) cost are shown below (in millions):
 
Three Months Ended
 
March 30, 2019
 
March 31, 2018
 
U.S.
 
Foreign
 
U.S.
 
Foreign
Service cost
$

 
$
1.6

 
$

 
$
1.7

Interest cost
4.6

 
3.7

 
5.0

 
3.8

Expected return on plan assets
(5.0
)
 
(5.2
)
 
(6.9
)
 
(5.9
)
Amortization of actuarial loss
0.5

 
2.0

 
0.5

 
1.6

Settlement loss
0.1

 

 
0.2

 

Net periodic benefit (credit) cost
$
0.2

 
$
2.1

 
$
(1.2
)
 
$
1.2


The components of the Company’s net periodic other postretirement benefit (credit) cost are shown below (in millions):
 
Three Months Ended
 
March 30, 2019
 
March 31, 2018
 
U.S.
 
Foreign
 
U.S.
 
Foreign
Service cost
$

 
$
0.1

 
$

 
$
0.1

Interest cost
0.5

 
0.3

 
0.5

 
0.4

Amortization of actuarial gain
(0.6
)
 

 
(0.6
)
 

Amortization of prior service credit

 

 

 
(0.1
)
Net periodic benefit (credit) cost
$
(0.1
)
 
$
0.4

 
$
(0.1
)
 
$
0.4


Contributions
In the three months ended March 30, 2019, employer contributions to the Company’s domestic and foreign defined benefit pension plans were $3.5 million.
The Company expects contributions to its domestic and foreign defined benefit pension plans to be approximately $10 million to $15 million in 2019. The Company may elect to make contributions in excess of minimum funding requirements in response to investment performance or changes in interest rates or when the Company believes that it is financially advantageous to do so and based on its other cash requirements.

(10) Revenue Recognition
The Company enters into contracts with its customers to provide production parts generally at the beginning of a vehicle’s life cycle. Typically, these contracts do not provide for a specified quantity of products, but once entered into, the Company is often expected to fulfill its customers’ purchasing requirements for the production life of the vehicle. Many of these contracts may be terminated by the Company’s customers at any time. Historically, terminations of these contracts have been minimal. The Company receives purchase orders from its customers, which provide the commercial terms for a particular production part, including price (but not quantities). Contracts may also provide for annual price reductions over the production life of the vehicle, and prices may be adjusted on an ongoing basis to reflect changes in product content/cost and other commercial factors.
Revenue is recognized at a point in time when control of the product is transferred to the customer under standard commercial terms, as the Company does not have an enforceable right to payment prior to such transfer. The amount of revenue recognized reflects the consideration that the Company expects to be entitled to in exchange for those products based on the annual purchase orders, annual price reductions and ongoing price adjustments (some of which is accounted for as variable consideration). The Company does not believe that there will be significant changes to its estimates of variable consideration.

18

Table of Contents
LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

The Company's customers pay for products received in accordance with payment terms that are customary within the industry. The Company's contracts with its customers do not have significant financing components.
The Company records a contract liability for advances received from its customers. As of March 30, 2019, there were no significant contract liabilities recorded. Further, there were no significant contract liabilities recognized in revenue during the first three months of 2019.
Amounts billed to customers related to shipping and handling costs are included in net sales in the condensed consolidated statements of comprehensive income. Shipping and handling costs are accounted for as fulfillment costs and are included in cost of sales in the condensed consolidated statements of comprehensive income.
Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction that are collected by the Company from a customer are excluded from revenue.
A summary of the Company’s revenue by reportable operating segment and geography is shown below (in millions):
 
Three Months Ended
 
March 30, 2019
 
March 31, 2018
 
Seating
 
E-Systems
 
Total
 
Seating
 
E-Systems
 
Total
North America
$
1,591.1

 
$
285.0

 
$
1,876.1

 
$
1,740.1

 
$
315.0

 
$
2,055.1

Europe and Africa
1,554.3

 
617.1

 
2,171.4

 
1,752.2

 
691.0

 
2,443.2

Asia
651.4

 
304.3

 
955.7

 
686.1

 
358.0

 
1,044.1

South America
116.9

 
40.0

 
156.9

 
151.5

 
39.8

 
191.3

 
$
3,913.7

 
$
1,246.4

 
$
5,160.1

 
$
4,329.9

 
$
1,403.8

 
$
5,733.7



(11) Other (Income) Expense, Net
Other (income) expense, net includes non-income related taxes, foreign exchange gains and losses, gains and losses related to certain derivative instruments and hedging activities, losses on the extinguishment of debt, gains and losses on the disposal of fixed assets, the non-service cost components of net periodic benefit cost and other miscellaneous income and expense.
A summary of other (income) expense, net is shown below (in millions):
 
Three Months Ended
 
March 30,
2019
 
March 31,
2018
Other expense
$
11.3

 
$
5.5

Other income
(6.9
)
 
(11.1
)
Other (income) expense, net
$
4.4

 
$
(5.6
)

In the three months ended March 30, 2019, other expense includes net foreign currency transaction losses of $5.8 million.
In the three months ended March 31, 2018, other income includes a gain of $10.0 million related to gaining control of an affiliate. For further information related to obtaining control of an affiliate, see Note 5, "Investments in Affiliates and Other Related Party Transactions," to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.


19

Table of Contents
LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

(12) Income Taxes
A summary of the provision for income taxes and the corresponding effective tax rate for the three months ended March 30, 2019 and March 31, 2018, is shown below (in millions, except effective tax rates):
 
Three Months Ended
 
March 30,
2019
 
March 31,
2018
Provision for income taxes
$
43.1

 
$
77.7

Pretax income before equity in net income of affiliates
$
286.9

 
$
447.8

Effective tax rate
15.0
%
 
17.4
%

In the first three months of 2019 and 2018, the provision for income taxes was primarily impacted by the level and mix of earnings among tax jurisdictions. In addition, the Company recognized tax benefits (expense) related to the significant, discrete items shown below (in millions):
 
Three Months Ended
 
March 30, 2019
 
March 31, 2018
Restructuring charges and various other items
$
15.6

 
$
4.1

Reversal of valuation allowances on deferred tax assets of a foreign subsidiary

 
35.1

Share-based compensation
3.2

 
10.1

Increase in foreign withholding tax on certain undistributed foreign earnings

 
(22.0
)
Change in tax status of certain affiliates
18.4

 

 
$
37.2

 
$
27.3


In addition, in the first quarter of 2018, the Company recognized a gain of $10.0 million related to obtaining control of an affiliate, for which no tax expense was provided.
Excluding the items above, the effective tax rate for the first quarters of 2019 and 2018 approximated the U.S. federal statutory income tax rate of 21%, adjusted for income taxes on foreign earnings, losses and remittances, valuation allowances, tax credits, income tax incentives and other permanent items.
The Company’s current and future provision for income taxes is impacted by the initial recognition of and changes in valuation allowances in certain countries. The Company intends to maintain these allowances until it is more likely than not that the deferred tax assets will be realized. The Company’s future provision for income taxes will include no tax benefit with respect to losses incurred and, except for certain jurisdictions, no tax expense with respect to income generated in these countries until the respective valuation allowances are eliminated. Accordingly, income taxes are impacted by changes in valuation allowances and the mix of earnings among jurisdictions. The Company evaluates the realizability of its deferred tax assets on a quarterly basis. In completing this evaluation, the Company considers all available evidence in order to determine whether, based on the weight of the evidence, a valuation allowance for its deferred tax assets is necessary. Such evidence includes historical results, future reversals of existing taxable temporary differences and expectations for future taxable income (exclusive of the reversal of temporary differences and carryforwards), as well as the implementation of feasible and prudent tax planning strategies. If, based on the weight of the evidence, it is more likely than not that all or a portion of the Company’s deferred tax assets will not be realized, a valuation allowance is recorded. If operating results improve or decline on a continual basis in a particular jurisdiction, the Company’s decision regarding the need for a valuation allowance could change, resulting in either the initial recognition or reversal of a valuation allowance in that jurisdiction, which could have a significant impact on income tax expense in the period recognized and subsequent periods. In determining the provision for income taxes for financial statement purposes, the Company makes certain estimates and judgments, which affect its evaluation of the carrying value of its deferred tax assets, as well as its calculation of certain tax liabilities.
For further information related to the Company's income taxes, see Note 7, "Income Taxes," to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. For further information related to obtaining control of an affiliate, see Note 5, "Investments in Affiliates and Other Related Party Transactions," to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.


20

Table of Contents
LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

(13) Net Income Per Share Attributable to Lear
Basic net income per share available to Lear common stockholders is computed using the two-class method by dividing net income attributable to Lear, after deducting the redemption adjustment related to the redeemable noncontrolling interest, by the average number of common shares outstanding during the period. Common shares issuable upon the satisfaction of certain conditions pursuant to a contractual agreement are considered common shares outstanding and are included in the computation of basic net income per share available to Lear common stockholders.
Diluted net income per share available to Lear common stockholders is computed using the two-class method by dividing net income attributable to Lear, after deducting the redemption adjustment related to the redeemable noncontrolling interest, by the average number of common shares outstanding, including the dilutive effect of common stock equivalents computed using the treasury stock method and the average share price during the period.
A summary of information used to compute basic and diluted net income per share available to Lear common stockholders is shown below (in millions, except share and per share data):
 
Three Months Ended
 
March 30,
2019
 
March 31,
2018
Net income attributable to Lear
$
228.9

 
$
353.7

Less: Redeemable noncontrolling interest adjustment
(6.7
)
 
5.4

Net income available to Lear common stockholders
$
235.6

 
$
348.3

 
 
 
 
Average common shares outstanding
62,818,792

 
67,086,326

Dilutive effect of common stock equivalents
304,405

 
476,126

Average diluted shares outstanding