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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________ 
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 2, 2022.
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
 https://cdn.kscope.io/cc593852f26fb467d39bcd4116c88191-lear-20220402_g1.jpg
(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)
(248) 447-1500
(Registrant's telephone number, including area code)
_______________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common stock, par value $0.01 LEANew York Stock Exchange
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 filerxAccelerated 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 28, 2022, the number of shares outstanding of the registrant's common stock was 59,778,409 shares.


Table of Contents
LEAR CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED APRIL 2, 2022
INDEX


 Page No.

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, 2021.
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

LEAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
April 2,
 2022(1)
December 31,
2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$1,162.0 $1,318.3 
Accounts receivable3,236.1 3,041.5 
Inventories1,642.1 1,571.9 
Other888.3 833.5 
Total current assets6,928.5 6,765.2 
LONG-TERM ASSETS:
Property, plant and equipment, net2,826.7 2,720.1 
Goodwill1,675.3 1,657.9 
Other2,296.8 2,209.2 
Total long-term assets6,798.8 6,587.2 
Total assets$13,727.3 $13,352.4 
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable and drafts$3,209.8 $2,952.4 
Accrued liabilities1,876.5 1,806.7 
Current portion of long-term debt0.8 0.8 
Total current liabilities5,087.1 4,759.9 
LONG-TERM LIABILITIES:
Long-term debt2,595.8 2,595.2 
Other1,218.5 1,188.9 
Total long-term liabilities3,814.3 3,784.1 
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; 64,571,405 shares issued as of April 2, 2022 and December 31, 2021
0.6 0.6 
Additional paid-in capital1,000.4 1,019.4 
Common stock held in treasury, 4,805,135 and 4,945,847 shares as of April 2, 2022 and December 31, 2021, respectively, at cost
(663.8)(679.2)
Retained earnings5,075.4 5,072.8 
Accumulated other comprehensive loss(762.6)(770.2)
Lear Corporation stockholders' equity4,650.0 4,643.4 
Noncontrolling interests175.9 165.0 
Equity4,825.9 4,808.4 
Total liabilities and equity$13,727.3 $13,352.4 
 (1)     Unaudited.
The accompanying notes are an integral part of these condensed consolidated balance sheets.
4

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

 Three Months Ended
 April 2,
2022
April 3,
2021
Net sales$5,208.4 $5,354.4 
Cost of sales4,886.9 4,861.6 
Selling, general and administrative expenses177.3 168.9 
Amortization of intangible assets15.7 16.5 
Interest expense24.9 22.3 
Other expense, net27.3 6.3 
Consolidated income before provision for income taxes and equity in net income of affiliates76.3 278.8 
Provision for income taxes20.4 58.9 
Equity in net income of affiliates(10.7)(5.9)
Consolidated net income66.6 225.8 
Less: Net income attributable to noncontrolling interests17.2 22.1 
Net income attributable to Lear$49.4 $203.7 
Basic net income per share attributable to Lear (Note 15)
$0.82 $3.38 
Diluted net income per share attributable to Lear (Note 15)
$0.82 $3.36 
Cash dividends declared per share$0.77 $0.25 
Average common shares outstanding59,932,030 60,312,573 
Average diluted shares outstanding60,210,979 60,560,859 
Consolidated comprehensive income (Condensed Consolidated Statements of Equity)$74.0 $139.4 
Less: Comprehensive income attributable to noncontrolling interests17.0 21.0 
Comprehensive income attributable to Lear$57.0 $118.4 
The accompanying notes are an integral part of these condensed consolidated statements.
5

LEAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited; in millions, except share and per share data)
Three Months Ended April 2, 2022
Common StockAdditional Paid-In CapitalCommon Stock Held in TreasuryRetained EarningsAccumulated Other Comprehensive Loss, Net of TaxLear Corporation Stockholders' Equity
Balance at January 1, 2022$0.6 $1,019.4 $(679.2)$5,072.8 $(770.2)$4,643.4 
Comprehensive income:
Net income— — — 49.4 — 49.4 
Other comprehensive income (loss)— — — — 7.6 7.6 
Total comprehensive income— — — 49.4 7.6 57.0 
Stock-based compensation— 13.9 — — — 13.9 
Net issuance of 140,712 shares held in treasury in settlement of stock-based compensation
— (32.9)15.4 — — (17.5)
Dividends declared to Lear Corporation stockholders— — — (46.8)— (46.8)
Dividends declared to noncontrolling interest holders— — — — —  
Change in noncontrolling interests— — — — — — 
Balance at April 2, 2022$0.6 $1,000.4 $(663.8)$5,075.4 $(762.6)$4,650.0 
The accompanying notes are an integral part of these condensed consolidated statements.

6

LEAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited; in millions, except share and per share data)
Three Months Ended April 2, 2022
Lear Corporation Stockholders' EquityNon-controlling InterestsEquity
Balance at January 1, 2022$4,643.4 $165.0 $4,808.4 
Comprehensive income:
Net income49.4 17.2 66.6 
Other comprehensive income (loss)7.6 (0.2)7.4 
Total comprehensive income57.0 17.0 74.0 
Stock-based compensation13.9 — 13.9 
Net issuance of 140,712 shares held in treasury in settlement of stock-based compensation
(17.5)— (17.5)
Dividends declared to Lear Corporation stockholders(46.8)— (46.8)
Dividends declared to noncontrolling interest holders (6.7)(6.7)
Change in noncontrolling interests— 0.6 0.6 
Balance at April 2, 2022$4,650.0 $175.9 $4,825.9 
The accompanying notes are an integral part of these condensed consolidated statements.

7

LEAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited; in millions, except share and per share data)
Three Months Ended April 3, 2021
Common StockAdditional Paid-In CapitalCommon Stock Held in TreasuryRetained EarningsAccumulated Other Comprehensive Loss, Net of TaxLear Corporation Stockholders' Equity
Balance January 1, 2021$0.6 $963.6 $(598.6)$4,806.8 $(705.1)$4,467.3 
Comprehensive income (loss):
Net income— — — 203.7 — 203.7 
Other comprehensive loss— — — — (85.3)(85.3)
Total comprehensive income (loss)— — — 203.7 (85.3)118.4 
Stock-based compensation— 17.7 — — — 17.7 
Net issuance of 78,171 shares held in treasury in settlement of stock-based compensation
— (17.0)9.0 — — (8.0)
Dividends declared to Lear Corporation stockholders— — — (15.3)— (15.3)
Balance at April 3, 2021$0.6 $964.3 $(589.6)$4,995.2 $(790.4)$4,580.1 
The accompanying notes are an integral part of these condensed consolidated statements.




8

LEAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited; in millions, except share and per share data)
Three Months Ended April 3, 2021
Lear Corporation Stockholders' EquityNon-controlling InterestsEquity
Balance January 1, 2021$4,467.3 $147.6 $4,614.9 
Comprehensive income (loss):
Net income203.7 22.1 225.8 
Other comprehensive loss(85.3)(1.1)(86.4)
Total comprehensive income (loss)118.4 21.0 139.4 
Stock-based compensation17.7 — 17.7 
Net issuance of 78,171 shares held in treasury in settlement of stock-based compensation
(8.0)— (8.0)
Dividends declared to Lear Corporation stockholders(15.3)— (15.3)
Balance at April 3, 2021$4,580.1 $168.6 $4,748.7 
The accompanying notes are an integral part of these condensed consolidated statements.

9

LEAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)
Three Months Ended
April 2,
2022
April 3,
2021
Cash Flows from Operating Activities:
Consolidated net income$66.6 $225.8 
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization143.4 140.8 
Net change in recoverable customer engineering, development and tooling(36.1)(24.1)
Net change in working capital items (see below)38.1 (102.4)
Other, net8.7 7.4 
Net cash provided by operating activities220.7 247.5 
Cash Flows from Investing Activities:
Additions to property, plant and equipment(130.3)(112.9)
Acquisition(184.2) 
Other, net11.9 (30.0)
Net cash used in investing activities(302.6)(142.9)
Cash Flows from Financing Activities:
Term loan repayments (4.7)
Dividends paid to Lear Corporation stockholders(47.4)(15.7)
Other, net(23.8)(9.3)
Net cash used in financing activities(71.2)(29.7)
Effect of foreign currency translation(3.4)(10.9)
Net Change in Cash, Cash Equivalents and Restricted Cash(156.5)64.0 
Cash, Cash Equivalents and Restricted Cash as of Beginning of Period1,321.3 1,314.5 
Cash, Cash Equivalents and Restricted Cash as of End of Period$1,164.8 $1,378.5 
Changes in Working Capital Items:
Accounts receivable$(219.1)$(227.3)
Inventories(49.0)(87.4)
Accounts payable276.9 42.6 
Accrued liabilities and other29.3 169.7 
Net change in working capital items$38.1 $(102.4)
Supplementary Disclosure:
Cash paid for interest$9.6 $14.6 
Cash paid for income taxes, net of refunds received$49.9 $31.0 
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.
(2) Current Operating Environment
Due to the overall global economic conditions in 2020, largely as a result of the COVID-19 pandemic, the automotive industry experienced a decline in global customer sales and production volumes. Production disruptions continued in 2021 and are continuing in 2022, again largely due to the ongoing impact of the COVID-19 pandemic, particularly through supply shortages and, to a lesser extent, the resurgence of the virus in certain regions, as well as the Russia-Ukraine conflict. The most significant supply shortage relates to semiconductor chips, which is impacting global vehicle production and resulting in reductions and cancellations of planned production. In addition, the Company is experiencing increased costs related to labor shortages and inefficiencies and ongoing costs related to personal protective equipment, all of which are likely to continue for a period of time. Increases in certain commodity costs, as well as transportation and logistics costs, are also impacting, and will continue to impact, the Company's operating results for the foreseeable future. Further, a resurgence of the COVID-19 virus or its variants in other regions, including corresponding "stay at home" or similar government orders impacting industry production, could impact the Company's financial results.
In March 2022, as the Company's customers began to suspend their Russian operations as a result of Russia's invasion of Ukraine, the Company similarly suspended its Russian operations. Although the Company's net sales and total assets in Russia represent less than 1% of consolidated net sales and total assets, the Russia-Ukraine conflict and sanctions imposed on Russia globally have resulted in economic and supply chain disruptions affecting the overall industry, the ultimate financial impact of which cannot be reasonably estimated. Further, although the Company does not have operations in Ukraine, the Ukrainian operations of certain of the Company's suppliers and suppliers of its customers have been and will continue to be disrupted by the Russia-Ukraine conflict.
The accompanying condensed consolidated financial statements reflect estimates and assumptions made by management as of April 2, 2022, and for the three months then ended. Such estimates and assumptions affect, among other things, the Company's goodwill; long-lived asset and indefinite-lived intangible asset valuations; inventory valuations; valuations of deferred income taxes and income tax contingencies; and credit losses related to the Company's financial instruments. Events and circumstances arising after April 2, 2022, including those resulting from the impact of the COVID-19 pandemic, will be reflected in management's estimates and assumptions in future periods.
(3) Acquisition
On February 28, 2022, the Company completed the acquisition of substantially all of Kongsberg Automotive's Interior Comfort Systems business unit ("Kongsberg ICS"). Kongsberg ICS specializes in comfort seating solutions, including massage, lumber, seat heat and ventilation, with annual sales of approximately $300 million, of which approximately 20% are intercompany.
The acquisition of Kongsberg ICS was accounted for as a business combination, and accordingly, the assets acquired and liabilities assumed are included in the accompanying condensed consolidated balance sheet as of April 2, 2022. The operating results and cash flows of Kongsberg ICS are included in the condensed consolidated financial statements from the date of acquisition in the Company's Seating segment.

11

LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The preliminary purchase price and related allocation are shown below (in millions):
April 2, 2022
Preliminary purchase price, net of acquired cash$184.2 
Property, plant and equipment121.8 
Other assets purchased and liabilities assumed, net28.0 
Goodwill23.3 
Intangible assets11.1
Preliminary purchase price allocation$184.2 
Goodwill recognized in this transaction is primarily attributable to the assembled workforce and expected synergies related to future growth.
Intangible assets consist of amounts recognized for the fair value of developed technology based on an independent appraisal. It is currently estimated that the developed technology will have a weighted average useful life of approximately seventeen years.
The purchase price and related allocation are preliminary and will be revised as a result of adjustments made to the purchase price, additional information obtained regarding liabilities assumed, including, but not limited to, certain tax attributes and contingent liabilities, and revisions of provisional estimates of fair values resulting from the completion of independent appraisals and valuations of property, plant and equipment and intangible assets.
The Company incurred transaction costs of $10.0 million in the three months ended April 2, 2022, which have been expensed as incurred and are recorded in selling, general and administrative expenses.
The pro-forma effects of this acquisition do not materially impact the Company's reported results for any period presented.
For further information related to acquired assets measured at fair value, see Note 19, "Financial Instruments."
(4) Restructuring
Restructuring costs include employee termination benefits, asset impairment charges and contract termination costs, as well as other incremental costs resulting from the restructuring actions. Employee termination benefits are recorded based on existing union and employee contracts, statutory requirements, completed negotiations and Company policy. Other 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 when restructuring actions are approved and/or implemented.
In the first three months of 2022, the Company recorded charges of $29.9 million in connection with its restructuring actions. These charges consist of $29.5 million recorded as cost of sales and $0.4 million recorded as selling, general and administrative expenses. The restructuring charges consist of employee termination costs of $27.3 million, asset impairment charges of $0.5 million and contract termination costs of $1.0 million, as well as other related costs of $1.1 million. Employee termination benefits were recorded based on existing union and employee contracts, statutory requirements, completed negotiations and Company policy. Asset impairment charges relate to the disposal of buildings, leasehold improvements and/or machinery and equipment with carrying values of $0.5 million in excess of related estimated fair values.
The Company expects to incur approximately $26 million of additional restructuring costs related to activities initiated as of April 2, 2022, 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.
12

LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
A summary of 2022 activity is shown below (in millions):
 Accrual at January 1, 20222022UtilizationAccrual at April 2, 2022
ChargesCashNon-cash
Employee termination benefits$126.1 $27.3 $(11.5)$ $141.9 
Asset impairment charges 0.5  (0.5) 
Contract termination costs3.3 1.0 (0.2) 4.1 
Other related costs 1.1 (1.1)  
Total$129.4 $29.9 $(12.8)$(0.5)$146.0 
(5) 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):
April 2,
2022
December 31,
2021
Raw materials$1,251.4 $1,171.0 
Work-in-process135.7 119.9 
Finished goods425.8 453.4 
Reserves(170.8)(172.4)
Inventories$1,642.1 $1,571.9 
(6) 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 2022 and 2021, the Company capitalized $63.2 million and $66.7 million, respectively, of pre-production E&D costs for which reimbursement is contractually guaranteed by the customer. During the first three months of 2022 and 2021, the Company also capitalized $46.4 million and $31.4 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 2022 and 2021, the Company collected $72.9 million and $77.0 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 included in the accompanying condensed consolidated balance sheets is shown below (in millions):
April 2,
2022
December 31,
2021
Current$232.2 $207.4 
Long-term155.4 143.5 
Recoverable customer E&D and tooling$387.6 $350.9 
13

LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(7) Long-Lived 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.
A summary of property, plant and equipment is shown below (in millions):
April 2,
2022
December 31,
2021
Land$106.9 $108.7 
Buildings and improvements860.5 850.3 
Machinery and equipment4,672.2 4,497.7 
Construction in progress349.2 345.6 
Total property, plant and equipment5,988.8 5,802.3 
Less – accumulated depreciation(3,162.1)(3,082.2)
Property, plant and equipment, net$2,826.7 $2,720.1 
Depreciation expense was $127.7 million and $124.3 million in the three months ended April 2, 2022 and April 3, 2021, respectively.
Impairment of Long-Lived Assets
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.
In the first three months of 2022 and 2021, the Company recognized fixed asset impairment charges of $0.5 million and $0.2 million, respectively, in conjunction with its restructuring actions (Note 4, "Restructuring"). In the first three months of 2022, the Company recognized additional asset impairment charges of $1.1 million.
The Company will continue to assess the impact of significant industry and other events on the realization of its long-lived assets.
(8) Goodwill
A summary of the changes in the carrying amount of goodwill, by operating segment, in the three months ended April 2, 2022, is shown below (in millions):
SeatingE-SystemsTotal
Balance at January 1, 2022$1,249.3 $408.6 $1,657.9 
Acquisition23.3  23.3 
Foreign currency translation and other(6.2)0.3 (5.9)
Balance at April 2, 2022$1,266.4 $408.9 $1,675.3 
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
14

LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
value. If the net book value of a reporting unit exceeds its fair value, an impairment loss is measured and recognized. The annual goodwill impairment assessment is completed as of the first day of the Company's fourth quarter.
There was no impairment of goodwill in the first three months of 2022 and 2021. The Company will, however, continue to assess the impact of significant industry and other events on its recorded goodwill.
For further information related to the acquisition, see Note 3, "Acquisition."
(9) Debt
A summary of long-term debt, net of unamortized debt issuance costs and unamortized original issue premium (discount), and the related weighted average interest rates is shown below (in millions):
April 2, 2022
Debt InstrumentLong-Term DebtUnamortized Debt Issuance CostsUnamortized Original Issue Premium (Discount)Long-Term
Debt, Net
Weighted
Average
Interest
Rate
3.8% Senior Notes due 2027 (the "2027 Notes")
$550.0 $(2.5)$(2.1)$545.4 3.885%
4.25% Senior Notes due 2029 (the "2029 Notes")
375.0 (2.2)(0.8)372.0 4.288%
3.5% Senior Notes due 2030 (the "2030 Notes")
350.0 (2.2)(0.7)347.1 3.525%
2.6% Senior Notes due 2032 (the "2032 Notes")
350.0 (3.0)(0.6)346.4 2.624%
5.25% Senior Notes due 2049 (the "2049 Notes")
625.0 (6.0)13.5 632.5 5.103%
3.55% Senior Notes due 2052 (the "2052 Notes")
350.0 (3.9)(0.4)345.7 3.558%
Other7.5 — — 7.5 N/A
$2,607.5 $(19.8)$8.9 $2,596.6 
Less — Current portion(0.8)
Long-term debt$2,595.8 
December 31, 2021
Debt InstrumentLong-Term DebtUnamortized Debt Issuance CostsUnamortized Original Issue Premium (Discount)Long-Term
Debt, Net
Weighted
Average
Interest
Rate
2027 Notes$550.0 $(2.5)$(2.2)$545.3 3.885%
2029 Notes375.0 (2.3)(0.9)371.8 4.288%
2030 Notes350.0 (2.3)(0.7)347.0 3.525%
2032 Notes350.0 (3.1)(0.8)346.1 2.624%
2049 Notes625.0 (6.1)13.7 632.6 5.103%
2052 Notes350.0 (3.8)(0.5)345.7 3.558%
Other7.5 — — 7.5 N/A
$2,607.5 $(20.1)$8.6 2,596.0 
Less — Current portion(0.8)
Long-term debt$2,595.2 
15

LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Senior Notes
The issuance, maturity and interest payment dates of the Company's senior unsecured 2027 Notes, 2029 Notes, 2030 Notes, 2032 Notes, 2049 Notes and 2052 Notes (collectively, the "Notes") are shown below:
NoteIssuance Date(s)Maturity DateInterest Payment Dates
2027 NotesAugust 2017September 15, 2027March 15 and September 15
2029 NotesMay 2019May 15, 2029May 15 and November 15
2030 NotesFebruary 2020May 30, 2030May 30 and November 30
2032 NotesNovember 2021January 15, 2032
January 15 and July 15 (1)
2049 NotesMay 2019 and February 2020May 15, 2049May 15 and November 15
2052 NotesNovember 2021January 15, 2052
January 15 and July 15 (1)
(1) Commencing July 15, 2022.
Covenants
Subject to certain exceptions, the indentures governing the Notes contain certain 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 indentures governing the Notes also provide for customary events of default.
As of April 2, 2022, the Company was in compliance with all covenants under the indentures governing the Notes.
Credit Agreement
The Company's amended and restated unsecured credit agreement ("Credit Agreement") consists of a $2.0 billion revolving credit facility (the "Revolving Credit Facility"), which expires on October 28, 2026, and a $250 million term loan facility, which was repaid in full in 2021.
As of April 2, 2022 and December 31, 2021, there were no borrowings outstanding under the Revolving Credit Facility.
Advances under the Revolving Credit 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. As of April 2, 2022, the ranges and rates are as follows (in percentages):
Eurocurrency RateBase Rate
Rate as ofRate as of
MinimumMaximumApril 2, 2022MinimumMaximumApril 2, 2022
Revolving Credit Facility0.925 %1.450 %1.125 %0.000 %0.450 %0.125 %
A facility fee, which ranges from 0.075% to 0.20% 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 April 2, 2022, the Company was in compliance with all covenants under the Credit Agreement.
Other
As of April 2, 2022 and December 31, 2021, other long-term debt, including the current portion, consists of amounts outstanding under an unsecured working capital loan and a finance lease agreement.
For further information related to the Company's debt, see Note 7, "Debt," to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021.

16

LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(10) Leases
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 sheets are shown below (in millions):
April 2,
2022
December 31, 2021
Right-of-use assets under operating leases:
Other long-term assets$677.2 $627.9 
Lease obligations under operating leases:
Accrued liabilities$130.5 $125.6 
Other long-term liabilities569.1 523.6 
$699.6 $649.2 
Maturities of lease obligations as of April 2, 2022, are shown below (in millions):
April 2, 2022
2022 (1)
$115.2 
2023130.3 
2024110.8 
202595.5 
202684.9 
Thereafter237.7 
Total undiscounted cash flows774.4 
Less: Imputed interest(74.8)
Lease obligations under operating leases$699.6 
(1) For the remaining nine months
Cash flow information related to operating leases is shown below (in millions):
Three Months Ended
April 2,
2022
April 3,
2021
Non-cash activity:
Right-of-use assets obtained in exchange for operating lease obligations$62.5 $63.8 
Operating cash flows:
Cash paid related to operating lease obligations$40.4 $40.4 
In addition to the right-of-use assets obtained in exchange for operating lease obligations shown above, in the three months ended April 2, 2022, the Company acquired $34.1 million of right-of-use assets and related lease liabilities in connection with its acquisition of Kongsberg ICS. See Note 3, "Acquisition."
17

LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Lease expense included in the accompanying condensed consolidated statements of comprehensive income is shown below (in millions):
Three Months Ended
April 2,
2022
April 3,
2021
Operating lease expense$41.4 $39.0 
Short-term lease expense5.4 4.2 
Variable lease expense2.0 2.2 
Total lease expense$48.8 $45.4 
The weighted average lease term and discount rate for operating leases are shown below:
April 2,
2022
Weighted average remaining lease termSeven years
Weighted average discount rate2.9 %
The Company is party to a finance lease agreement, which is not material to the accompanying condensed consolidated financial statements (Note 9, "Debt").
For further information related to the Company's leases, see Note 8, "Leases," to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021.
(11) Pension and Other Postretirement Benefit Plans
The Company sponsors defined benefit pension plans covering certain eligible employees in the United States and certain foreign countries. The Company also sponsors postretirement benefit plans (primarily for the continuation of medical benefits) covering certain eligible retirees in the United States and Canada.
Net Periodic Pension and Other Postretirement Benefit (Credit) Cost
The components of the Company's net periodic pension benefit (credit) cost are shown below (in millions):
 Three Months Ended
 April 2, 2022April 3, 2021
 U.S.ForeignU.S.Foreign
Service cost$ $1.0 $ $1.3 
Interest cost3.9 2.9 3.6 2.6 
Expected return on plan assets(6.0)(4.4)(5.9)(4.8)
Amortization of actuarial loss0.5 1.1 1.0 1.5 
Settlement loss0.4  0.4  
Net periodic benefit (credit) cost$(1.2)$0.6 $(0.9)$0.6 
18

LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The components of the Company's net periodic other postretirement benefit cost are shown below (in millions):
Three Months Ended
 April 2, 2022April 3, 2021
 U.S.ForeignU.S.Foreign
Interest cost$0.4 $0.2 $0.3 $0.2 
Amortization of actuarial gain(0.3) (0.3) 
Net periodic benefit cost$0.1 $0.2 $ $0.2 
Contributions
In the three months ended April 2, 2022, employer contributions to the Company's domestic and foreign defined benefit pension plans were $4.4 million. The Company expects contributions to its funded pension plans and benefit payments related to its unfunded pension plans to be $5 million to $10 million in 2022.
(12) 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 infrequent. 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 current purchase orders, annual price reductions and ongoing price adjustments. In the first three months of 2022 and 2021, revenue recognized related to prior years represented less than 2% of consolidated net sales. 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 April 2, 2022 and December 31, 2021, there were no significant contract liabilities recorded. Further, in the first three months of 2022 and 2021, there were no significant contract liabilities recognized in revenue.
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
April 2, 2022April 3, 2021
SeatingE-SystemsTotalSeatingE-SystemsTotal
North America$1,841.9 $