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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 June 29, 2024.

☐			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

 

(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 class			Trading symbol(s)			Name of each exchange on which registered
Common stock, par value $0.01			LEA			New 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 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 July 22, 2024, the number of shares outstanding of the registrant's common stock was 56,256,685 shares.

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Table of Contents

LEAR CORPORATION

FORM 10-Q

FOR THE QUARTER ENDED JUNE 29, 2024

INDEX

			Page No.
Part I – Financial Information
Item 1 - Condensed Consolidated Financial Statements			1
Introduction to the Condensed Consolidated Financial Statements			1
Condensed Consolidated Balance Sheets - June 29, 2024 (Unaudited) and December 31, 2023			2
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - Three and Six Months Ended June 29, 2024 and July 1, 2023			3
Condensed Consolidated Statements of Equity (Unaudited) - Three and Six Months Ended June 29, 2024 and July 1, 2023			4
Condensed Consolidated Statements of Cash Flows (Unaudited) - Six Months Ended June 29, 2024 and July 1, 2023			8
Notes to the Condensed Consolidated Financial Statements (Unaudited)			9
Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations			31
Item 3 – Quantitative and Qualitative Disclosures about Market Risk			45
Item 4 – Controls and Procedures			46
Part II – Other Information
Item 1 – Legal Proceedings			47
Item 1A – Risk Factors			47
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds			47
Item 5 – Other Information			47
Item 6 – Exhibits			48
Signatures			49

2

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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, 2023.

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.

1

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Table of Contents

LEAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

			June 29, 2024 (1)						December 31, 2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents			$	950.3					$	1,196.3
Accounts receivable			4,158.8						3,681.2
Inventories			1,702.4						1,758.0
Other			969.3						1,001.4
Total current assets			7,780.8						7,636.9
LONG-TERM ASSETS:
Property, plant and equipment, net			2,864.7						2,977.4
Goodwill			1,720.4						1,737.9
Other			2,316.0						2,343.3
Total long-term assets			6,901.1						7,058.6
Total assets			$	14,681.9					$	14,695.5
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term borrowings			$	26.8					$	27.5
Accounts payable and drafts			3,552.2						3,434.2
Accrued liabilities			2,238.5						2,205.2
Current portion of long-term debt			0.3						0.3
Total current liabilities			5,817.8						5,667.2
LONG-TERM LIABILITIES:
Long-term debt			2,743.5						2,742.6
Other			1,206.6						1,225.1
Total long-term liabilities			3,950.1						3,967.7
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 June 29, 2024 and December 31, 2023			0.6						0.6
Additional paid-in capital			1,052.6						1,050.5
Common stock held in treasury, 8,141,134 and 7,592,473 shares as of June 29, 2024 and December 31, 2023, respectively, at cost			(1,115.2)						(1,044.6)
Retained earnings			5,793.2						5,601.1
Accumulated other comprehensive loss			(929.4)						(688.8)
Lear Corporation stockholders' equity			4,801.8						4,918.8
Noncontrolling interests			112.2						141.8
Equity			4,914.0						5,060.6
Total liabilities and equity			$	14,681.9					$	14,695.5

 (1)     Unaudited

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

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LEAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited; in millions, except share and per share data)

			Three Months Ended												Six Months Ended
			June 29, 2024						July 1, 2023						June 29, 2024						July 1, 2023
Net sales			$	6,012.4					$	5,999.2					$	12,007.0					$	11,844.7
Cost of sales			5,563.6						5,542.2						11,160.1						10,957.7
Selling, general and administrative expenses			175.3						182.8						361.8						359.6
Amortization of intangible assets			12.7						16.0						27.8						31.9
Interest expense, net			26.9						26.2						53.0						50.4
Other expense, net			7.4						19.5						20.9						33.2
Consolidated income before provision for income taxes and equity in net income of affiliates			226.5						212.5						383.4						411.9
Provision for income taxes			46.2						41.5						86.7						87.1
Equity in net income of affiliates			(14.1)						(16.2)						(24.6)						(25.8)
Consolidated net income			194.4						187.2						321.3						350.6
Less: Net income attributable to noncontrolling interests			21.3						18.5						38.6						38.3
Net income attributable to Lear			$	173.1					$	168.7					$	282.7					$	312.3
Basic net income per share attributable to Lear (Note 14)			$	3.04					$	2.85					$	4.95					$	5.27
Diluted net income per share attributable to Lear (Note 14)			$	3.02					$	2.84					$	4.92					$	5.25
Cash dividends declared per share			$	0.77					$	0.77					$	1.54					$	1.54
Average common shares outstanding			56,926,745						59,133,427						57,088,459						59,224,991
Average diluted shares outstanding			57,234,459						59,366,167						57,401,172						59,462,566
Consolidated comprehensive income (Condensed Consolidated Statements of Equity)			$	19.2					$	204.1					$	77.7					$	468.2
Less: Comprehensive income attributable to noncontrolling interests			20.5						12.3						35.6						32.5
Comprehensive income (loss) attributable to Lear			$	(1.3)					$	191.8					$	42.1					$	435.7

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

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LEAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited; in millions, except share and per share data)

			Three Months Ended June 29, 2024
			Common Stock						Additional Paid-In Capital						Common Stock Held in Treasury						Retained Earnings						Accumulated Other Comprehensive Loss, Net of Tax						Lear Corporation Stockholders' Equity
Balance at March 30, 2024			$	0.6					$	1,039.2					$	(1,056.7)					$	5,664.8					$	(755.0)					$	4,892.9
Comprehensive income (loss):
Net income			—						—						—						173.1						—						173.1
Other comprehensive loss			—						—						—						—						(174.4)						(174.4)
Total comprehensive income (loss)			—						—						—						173.1						(174.4)						(1.3)
Stock-based compensation			—						16.0						—						—						—						16.0
Net issuance of 15,963 shares held in treasury in settlement of stock-based compensation			—						(2.6)						2.2						—						—						(0.4)
Repurchase of 477,932 shares of common stock at average price of $125.70 per share			—						—						(60.7)						—						—						(60.7)
Dividends declared to Lear Corporation stockholders			—						—						—						(44.7)						—						(44.7)
Dividends declared to noncontrolling interest holders			—						—						—						—						—						—
Balance at June 29, 2024			$	0.6					$	1,052.6					$	(1,115.2)					$	5,793.2					$	(929.4)					$	4,801.8

			Six Months Ended June 29, 2024
			Common Stock						Additional Paid-In Capital						Common Stock Held in Treasury						Retained Earnings						Accumulated Other Comprehensive Loss, Net of Tax						Lear Corporation Stockholders' Equity
Balance at January 1, 2024			$	0.6					$	1,050.5					$	(1,044.6)					$	5,601.1					$	(688.8)					$	4,918.8
Comprehensive income (loss):
Net income			—						—						—						282.7						—						282.7
Other comprehensive loss			—						—						—						—						(240.6)						(240.6)
Total comprehensive income (loss)			—						—						—						282.7						(240.6)						42.1
Stock-based compensation			—						34.6						—						—						—						34.6
Net issuance of 145,045 shares held in treasury in settlement of stock-based compensation			—						(32.5)						20.3						(1.0)						—						(13.2)
Repurchase of 693,706 shares of common stock at average price of $129.99 per share			—						—						(90.9)												—						(90.9)
Dividends declared to Lear Corporation stockholders			—						—						—						(89.6)						—						(89.6)
Dividends declared to noncontrolling interest holders			—						—						—						—						—						—
Balance at June 29, 2024			$	0.6					$	1,052.6					$	(1,115.2)					$	5,793.2					$	(929.4)					$	4,801.8

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

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LEAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited; in millions, except share and per share data)

			Three Months Ended June 29, 2024
			Lear Corporation Stockholders' Equity						Non-controlling Interests						Equity
Balance at March 30, 2024			$	4,892.9					$	93.3					$	4,986.2
Comprehensive income (loss):
Net income			173.1						21.3						194.4
Other comprehensive loss			(174.4)						(0.8)						(175.2)
Total comprehensive income (loss)			(1.3)						20.5						19.2
Stock-based compensation			16.0						—						16.0
Net issuance of 15,963 shares held in treasury in settlement of stock-based compensation			(0.4)						—						(0.4)
Repurchase of 477,932 shares of common stock at average price of $125.70 per share			(60.7)						—						(60.7)
Dividends declared to Lear Corporation stockholders			(44.7)						—						(44.7)
Dividends declared to noncontrolling interest holders			—						(1.6)						(1.6)
Balance at June 29, 2024			$	4,801.8					$	112.2					$	4,914.0

			Six Months Ended June 29, 2024
			Lear Corporation Stockholders' Equity						Non-controlling Interests						Equity
Balance at January 1, 2024			$	4,918.8					$	141.8					$	5,060.6
Comprehensive income (loss):
Net income			282.7						38.6						321.3
Other comprehensive loss			(240.6)						(3.0)						(243.6)
Total comprehensive income (loss)			42.1						35.6						77.7
Stock-based compensation			34.6						—						34.6
Net issuance of 145,045 shares held in treasury in settlement of stock-based compensation			(13.2)						—						(13.2)
Repurchase of 693,706 shares of common stock at average price of $129.99 per share			(90.9)						—						(90.9)
Dividends declared to Lear Corporation stockholders			(89.6)						—						(89.6)
Dividends declared to noncontrolling interest holders			—						(65.2)						(65.2)
Balance at June 29, 2024			$	4,801.8					$	112.2					$	4,914.0

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

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LEAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited; in millions, except share and per share data)

			Three Months Ended July 1, 2023
			Common Stock						Additional Paid-In Capital						Common Stock Held in Treasury						Retained Earnings						Accumulated Other Comprehensive Loss, Net of Tax						Lear Corporation Stockholders' Equity
Balance at April 1, 2023			$	0.6					$	1,013.4					$	(761.5)					$	5,310.0					$	(704.8)					$	4,857.7
Comprehensive income:
Net income			—						—						—						168.7						—						168.7
Other comprehensive income (loss)			—						—						—						—						23.1						23.1
Total comprehensive income			—						—						—						168.7						23.1						191.8
Stock-based compensation			—						16.2						—						—						—						16.2
Net issuance of 15,172 shares held in treasury in settlement of stock-based compensation			—						(2.5)						2.1						(0.1)						—						(0.5)
Repurchase of 286,630 shares of common stock at average price of $132.58 per share			—						—						(38.4)						—						—						(38.4)
Dividends declared to Lear Corporation stockholders			—						—						—						(46.3)						—						(46.3)
Dividends declared to noncontrolling interest holders			—						—						—						—						—						—
Balance at July 1, 2023			$	0.6					$	1,027.1					$	(797.8)					$	5,432.3					$	(681.7)					$	4,980.5

			Six Months Ended July 1, 2023
			Common Stock						Additional Paid-In Capital						Common Stock Held in Treasury						Retained Earnings						Accumulated Other Comprehensive Loss, Net of Tax						Lear Corporation Stockholders' Equity
Balance at January 1, 2023			$	0.6					$	1,023.1					$	(753.9)					$	5,214.1					$	(805.1)					$	4,678.8
Comprehensive income:
Net income			—						—						—						312.3						—						312.3
Other comprehensive income (loss)			—						—						—						—						123.4						123.4
Total comprehensive income			—						—						—						312.3						123.4						435.7
Stock-based compensation			—						35.1						—						—						—						35.1
Net issuance of 140,838 shares held in treasury in settlement of stock-based compensation			—						(31.1)						19.6						(1.1)						—						(12.6)
Repurchase of 469,532 shares of common stock at average price of $134.39 per share			—						—						(63.5)						—						—						(63.5)
Dividends declared to Lear Corporation stockholders			—						—						—						(93.0)						—						(93.0)
Dividends declared to noncontrolling interest holders			—						—						—						—						—						—
Balance at July 1, 2023			$	0.6					$	1,027.1					$	(797.8)					$	5,432.3					$	(681.7)					$	4,980.5

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

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LEAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited; in millions, except share and per share data)

			Three Months Ended July 1, 2023
			Lear Corporation Stockholders' Equity						Non-controlling Interests						Equity
Balance at April 1, 2023			$	4,857.7					$	171.7					$	5,029.4
Comprehensive income:
Net income			168.7						18.5						187.2
Other comprehensive income (loss)			23.1						(6.2)						16.9
Total comprehensive income			191.8						12.3						204.1
Stock-based compensation			16.2						—						16.2
Net issuance of 15,172 shares held in treasury in settlement of stock-based compensation			(0.5)						—						(0.5)
Repurchase of 286,630 shares of common stock at average price of $132.58 per share			(38.4)						—						(38.4)
Dividends declared to Lear Corporation stockholders			(46.3)						—						(46.3)
Dividends declared to noncontrolling interest holders			—						(73.2)						(73.2)
Balance at July 1, 2023			$	4,980.5					$	110.8					$	5,091.3

			Six Months Ended July 1, 2023
			Lear Corporation Stockholders' Equity						Non-controlling Interests						Equity
Balance at January 1, 2023			$	4,678.8					$	151.5					$	4,830.3
Comprehensive income:
Net income			312.3						38.3						350.6
Other comprehensive income (loss)			123.4						(5.8)						117.6
Total comprehensive income			435.7						32.5						468.2
Stock-based compensation			35.1						—						35.1
Net issuance of 140,838 shares held in treasury in settlement of stock-based compensation			(12.6)						—						(12.6)
Repurchase of 469,532 shares of common stock at average price of $134.39 per share			(63.5)						—						(63.5)
Dividends declared to Lear Corporation stockholders			(93.0)						—						(93.0)
Dividends declared to noncontrolling interest holders			—						(73.2)						(73.2)
Balance at July 1, 2023			$	4,980.5					$	110.8					$	5,091.3

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

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LEAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)

			Six Months Ended
			June 29, 2024						July 1, 2023
Cash Flows from Operating Activities:
Consolidated net income			$	321.3					$	350.6
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization			309.2						298.4
Net change in recoverable customer engineering, development and tooling			(42.8)						(49.7)
Net change in working capital items (see below)			(364.9)						(328.1)
Other, net			33.8						4.6
Net cash provided by operating activities			256.6						275.8
Cash Flows from Investing Activities:
Additions to property, plant and equipment			(234.4)						(280.1)
Acquisition, net of cash acquired			(0.8)						(174.5)
Other, net			5.3						4.7
Net cash used in investing activities			(229.9)						(449.9)
Cash Flows from Financing Activities:
Repurchases of common stock			(106.8)						(53.3)
Dividends paid to Lear Corporation stockholders			(89.1)						(92.1)
Dividends paid to noncontrolling interests			(39.8)						(46.2)
Short-term borrowings, net			—						17.6
Term loan borrowings			—						150.0
Other, net			(15.3)						(23.9)
Net cash used in financing activities			(251.0)						(47.9)
Effect of foreign currency translation			(20.6)						9.9
Net Change in Cash, Cash Equivalents and Restricted Cash			(244.9)						(212.1)
Cash, Cash Equivalents and Restricted Cash as of Beginning of Period			1,198.5						1,117.4
Cash, Cash Equivalents and Restricted Cash as of End of Period			$	953.6					$	905.3
Changes in Working Capital Items:
Accounts receivable			$	(556.0)					$	(774.9)
Inventories			20.7						(74.4)
Accounts payable (including $15.4 million of cash paid in 2023 in conjunction with the acquisition of I.G. Bauerhin to settle pre-existing accounts payable)			186.6						409.6
Accrued liabilities and other			(16.2)						111.6
Net change in working capital items			$	(364.9)					$	(328.1)
Supplementary Disclosure:
Cash paid for interest			$	57.9					$	54.9
Cash paid for income taxes, net of refunds received			$	153.4					$	110.3

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

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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, develop, engineer and manufacture complete seat systems, key seat components, complete electrical distribution and connection systems, high- and low-voltage power distribution products, electronic controllers and other electronic products. 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) Acquisition

On April 26, 2023, the Company completed the acquisition of I.G. Bauerhin ("IGB"), a privately held supplier of automotive seat heating, ventilation and active cooling, steering wheel heating, seat sensors and electronic control modules, headquartered in Grundau-Rothenbergen, Germany. IGB has more than 4,600 employees at nine manufacturing plants in seven countries with annual sales of approximately $290 million. The acquisition of IGB furthers the Company's comprehensive strategy to develop and integrate a complete portfolio of thermal comfort systems for automotive seating.

The acquisition of IGB was accounted for as a business combination, and accordingly, the assets acquired and liabilities assumed are included in the accompanying condensed consolidated balance sheets as of June 29, 2024 and December 31, 2023. The operating results and cash flows of IGB are included in the accompanying condensed consolidated financial statements from the date of acquisition in the Company's Seating segment.

The final purchase price and related allocation are shown below (in millions):

						December 31, 2023						Adjustments						June 29, 2024
Purchase price, net of acquired cash						$	174.5					$	0.8					$	175.3
Property, plant and equipment						47.5						(0.7)						46.8
Other assets purchased and liabilities assumed, net						38.1						(1.8)						36.3
Goodwill						73.5						3.3						76.8
Intangible assets						15.4						—						15.4
Purchase price allocation						$	174.5					$	0.8					$	175.3

Goodwill recognized 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 and customer-based assets which were both based on an independent appraisal. Developed technology assets have a weighted average useful life of approximately nine years. Customer-based assets include IGB's established relationships with its customers and the ability of these customers to generate future economic profits for the Company and have a weighted average useful life of approximately thirteen years.

The pro-forma effects of this acquisition do not materially impact the Company's reported results for any period presented.

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LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

(3) Restructuring

Restructuring costs include employee termination benefits, asset impairment charges and contract termination costs, as well as other incremental net 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 net costs principally include equipment and personnel relocation costs. In addition to restructuring costs, the Company also 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, communicated and/or implemented.

A summary of the changes in the Company's restructuring reserves is shown below (in millions):

Balance at January 1, 2024			$	121.6
Provision for employee termination benefits			75.3
Payments, utilizations and foreign currency			(70.2)
Balance at June 29, 2024			$	126.7

Charges recorded in connection with the Company's restructuring actions are shown below (in millions):

			Six Months Ended
			June 29, 2024						July 1, 2023
Employee termination benefits			$	75.3					$	33.0
Asset impairments:
Property, plant and equipment			1.5						0.1
Right-of-use assets			—						9.6
Contract termination costs			2.1						1.3
Other related costs			4.8						4.1
			$	83.7					$	48.1

Restructuring charges by income statement line item are shown below (in millions):

			Six Months Ended
			June 29, 2024						July 1, 2023
Cost of sales			$	75.7					$	41.2
Selling, general and administrative expenses			9.6						6.9
Other expense, net			(1.6)						—
			$	83.7					$	48.1

Restructuring charges by operating segment are shown below (in millions):

			Three Months Ended												Six Months Ended
			June 29, 2024						July 1, 2023						June 29, 2024						July 1, 2023
Seating			$	19.3					$	24.9					$	62.7					$	36.9
E-Systems			10.0						7.7						18.4						10.0
Other			0.8						0.9						2.6						1.2
			$	30.1					$	33.5					$	83.7					$	48.1

The Company expects to incur approximately $42 million and approximately $15 million of additional restructuring costs in its Seating and E-Systems segments, respectively, related to activities initiated as of June 29, 2024, and expects that the components of such costs will be consistent with its historical experience.

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LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

(4) Inventories

Inventories are stated at the lower of cost or net realizable value. Cost is determined using standard costing, which approximates actual cost on a first-in, first-out method. Finished goods and work-in-process inventories include material, labor and manufacturing overhead costs. The Company records reserves for inventory in excess of production and/or forecasted requirements and for obsolete inventory in production and service inventories.

A summary of inventories is shown below (in millions):

			June 29, 2024						December 31, 2023
Raw materials			$	1,286.4					$	1,260.7
Work-in-process			142.1						141.0
Finished goods			479.6						540.8
Reserves			(205.7)						(184.5)
Inventories			$	1,702.4					$	1,758.0

(5) 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 six months of 2024 and 2023, the Company capitalized $115.4 million and $115.7 million, respectively, of pre-production E&D costs for which reimbursement is contractually guaranteed by the customer. During the first six months of 2024 and 2023, the Company also capitalized $78.3 million and $80.0 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 six months of 2024 and 2023, the Company collected $148.3 million and $151.0 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):

			June 29, 2024						December 31, 2023
Current			$	260.4					$	220.2
Long-term			160.3						164.3
Recoverable customer E&D and tooling			$	420.7					$	384.5

(6) 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.

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LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

A summary of property, plant and equipment is shown below (in millions):

			June 29, 2024						December 31, 2023
Land			$	103.7					$	105.6
Buildings and improvements			913.4						919.4
Machinery and equipment			5,439.9						5,324.4
Construction in progress			335.3						408.7
Total property, plant and equipment			6,792.3						6,758.1
Less – accumulated depreciation			(3,927.6)						(3,780.7)
Property, plant and equipment, net			$	2,864.7					$	2,977.4

Depreciation expense was $141.2 million and $135.2 million in the three months ended June 29, 2024 and July 1, 2023, respectively, and $281.4 million and $266.5 million in the six months ended June 29, 2024 and July 1, 2023, 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. An impairment loss is measured as the difference between the net book value and the fair value of the long-lived asset. Fair value estimates of long-lived assets are based on independent appraisals or discounted cash flows, giving consideration to the highest and best use of the assets. Key assumptions used in the appraisals are based on a combination of market and cost approaches, as appropriate.

In the first six months of 2024 and 2023, the Company recognized property, plant and equipment impairment charges of $1.5 million and $0.1 million, respectively, in conjunction with its restructuring actions (Note 3, "Restructuring"). In the first six months of 2024 and 2023, the Company recognized additional property, plant and equipment impairment charges of $3.9 million and $2.2 million, respectively. The impairment charges are included in cost of sales in the accompanying condensed consolidated statements of comprehensive income (loss).

Definite-Lived Intangible Assets

In the three and six months ended July 1, 2023, the Company recognized impairment charges of $1.0 million and $1.9 million, respectively, related to certain intangible assets of its E-Systems segment resulting from a change in the intended use of such assets. The impairment charges are included in amortization of intangible assets in the accompanying condensed consolidated statement of comprehensive income (loss).

(7) Goodwill

A summary of the changes in the carrying amount of goodwill, by operating segment, in the six months ended June 29, 2024, is shown below (in millions):

			Seating						E-Systems						Total
Balance at January 1, 2024			$	1,341.5					$	396.4					$	1,737.9
Acquisition			3.3						—						3.3
Foreign currency translation and other			(18.2)						(2.6)						(20.8)
Balance at June 29, 2024			$	1,326.6					$	393.8					$	1,720.4

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 annual goodwill impairment assessment is completed as of the first day of the Company's fourth quarter.

12

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LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

There was no impairment of goodwill in the first six months of 2024 and 2023. 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 2, "Acquisition."

(8) Debt

Short-Term Borrowings

The Company utilizes uncommitted lines of credit as needed for its short-term working capital fluctuations. As of June 29, 2024 and December 31, 2023, the Company had lines of credit from banks totaling $355.5 million and $337.7 million, respectively. As of June 29, 2024 and December 31, 2023, the Company had short-term debt balances outstanding related to draws on its lines of credit of $26.8 million and $27.5 million, respectively.

Long-Term 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):

						June 29, 2024
Debt Instrument						Long-Term Debt						Unamortized Debt Issuance Costs						Unamortized Original Issue Premium (Discount)						Long-Term Debt, Net						Weighted Average Interest Rate
Delayed-Draw Term Loan Facility (the "Term Loan")						$	150.0					$	(0.4)					$	—					$	149.6					6.555%
3.8% Senior Notes due 2027 (the "2027 Notes")						550.0						(1.4)						(1.2)						547.4						3.885%
4.25% Senior Notes due 2029 (the "2029 Notes")						375.0						(1.5)						(0.5)						373.0						4.288%
3.5% Senior Notes due 2030 (the "2030 Notes")						350.0						(1.6)						(0.5)						347.9						3.525%
2.6% Senior Notes due 2032 (the "2032 Notes")						350.0						(2.4)						(0.6)						347.0						2.624%
5.25% Senior Notes due 2049 (the "2049 Notes")						625.0						(5.5)						12.4						631.9						5.103%
3.55% Senior Notes due 2052 (the "2052 Notes")						350.0						(3.6)						(0.5)						345.9						3.558%
Other						1.1						—						—						1.1						N/A
						$	2,751.1					$	(16.4)					$	9.1					$	2,743.8
Less — Current portion																								(0.3)
Long-term debt																								$	2,743.5

						December 31, 2023
Debt Instrument						Long-Term Debt						Unamortized Debt Issuance Costs						Unamortized Original Issue Premium (Discount)						Long-Term Debt, Net						Weighted Average Interest Rate
Term Loan						$	150.0					$	(0.5)					$	—					$	149.5					6.575%
2027 Notes						550.0						(1.6)						(1.4)						547.0						3.885%
2029 Notes						375.0						(1.7)						(0.6)						372.7						4.288%
2030 Notes						350.0						(1.8)						(0.5)						347.7						3.525%
2032 Notes						350.0						(2.5)						(0.7)						346.8						2.624%
2049 Notes						625.0						(5.6)						12.6						632.0						5.103%
2052 Notes						350.0						(3.7)						(0.4)						345.9						3.558%
Other						1.3						—						—						1.3						N/A
						$	2,751.3					$	(17.4)					$	9.0					2,742.9
Less — Current portion																								(0.3)
Long-term debt																								$	2,742.6

13

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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:

Note

Issuance Date(s)

Maturity Date

Interest Payment Dates

2027 Notes

August 2017

September 15, 2027

March 15 and September 15

2029 Notes

May 2019

May 15, 2029

May 15 and November 15

2030 Notes

February 2020

May 30, 2030

May 30 and November 30

2032 Notes

November 2021

January 15, 2032

January 15 and July 15

2049 Notes

May 2019 and February 2020

May 15, 2049

May 15 and November 15

2052 Notes

November 2021

January 15, 2052

January 15 and July 15

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 indentures governing the Notes also provide for customary events of default.

As of June 29, 2024, the Company was in compliance with all covenants under the indentures governing the Notes.

Credit Agreement

The Company's $2.0 billion amended and restated unsecured revolving credit agreement (the "Credit Agreement") expires on October 28, 2027.

As of June 29, 2024 and December 31, 2023, there were no borrowings outstanding under the Credit Agreement.

Advances under the Credit Agreement generally bear interest based on (i) Term Benchmark, Central Bank Rate and Risk Free Rate ("RFR") (in each case, as defined in the Credit Agreement) or (ii) Alternate Base Rate ("ABR") and Canadian Prime Rate (in each case, as defined in the Credit Agreement). As of June 29, 2024, the ranges and rates are as follows:

						Term Benchmark, Central Bank Rate and RFR Loans																		ABR and Canadian Prime Rate Loans
						Minimum						Maximum						Rate as of June 29, 2024						Minimum						Maximum						Rate as of June 29, 2024
Credit Agreement						0.925		%				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 Credit Agreement, is payable quarterly.

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 June 29, 2024, the Company was in compliance with all covenants under the Credit Agreement.

Term Loan

In May 2023, the Company borrowed $150 million under its unsecured delayed-draw term loan facility (the "Term Loan") to finance, in part, the acquisition of IGB (Note 2, "Acquisition"). The Term Loan matures on May 1, 2026, three years after the funding date. Advances under the Term Loan generally bear interest based on the Daily or Term SOFR (as defined in the Term Loan agreement) plus a margin determined in accordance with a pricing grid that ranges from 1.00% to 1.525%. As of June 29, 2024, the interest rate was 6.555%.

The Term Loan contains the same covenants as the Credit Agreement. As of June 29, 2024, the Company was in compliance with all covenants under the Term Loan.

Other Long-Term Debt

As of June 29, 2024 and December 31, 2023, other long-term debt, including the current portion, consisted of amounts outstanding under finance lease agreements.

14

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LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

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, 2023.

(9) 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):

			June 29, 2024						December 31, 2023
Right-of-use assets under operating leases:
Other long-term assets			$	720.5					$	733.5
Lease obligations under operating leases:
Accrued liabilities			$	153.0					$	151.9
Other long-term liabilities			607.3						623.0
			$	760.3					$	774.9

Maturities of lease obligations as of June 29, 2024, are shown below (in millions):

			June 29, 2024
2024 (1)			$	92.8
2025			169.7
2026			144.0
2027			119.7
2028			97.3
Thereafter			242.2
Total undiscounted cash flows			865.7
Less: Imputed interest			(105.4)
Lease obligations under operating leases			$	760.3

(1) For the remaining six months

The Company entered into an operating lease with a lease term of eight years that is expected to commence in the third quarter of 2024. The right-of-use asset and related lease obligation are expected to be approximately $6 million.

Cash flow information related to operating leases is shown below (in millions):

			Six Months Ended
			June 29, 2024						July 1, 2023
Non-cash activity:
Right-of-use assets obtained in exchange for operating lease obligations			$	88.5					$	100.9
Operating cash flows:
Cash paid related to operating lease obligations			$	95.4					$	89.6

In addition to the right-of-use assets obtained in exchange for operating lease obligations shown above, in the three and six months ended July 1, 2023, the Company acquired $14.3 million of right-of-use assets and related lease obligations in conjunction with its acquisition of IGB (Note 2, "Acquisition").

15

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LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

Lease expense included in the accompanying condensed consolidated statements of comprehensive income (loss) is shown below (in millions):

			Three Months Ended												Six Months Ended
			June 29, 2024						July 1, 2023						June 29, 2024						July 1, 2023
Operating lease expense			$	47.4					$	45.3					$	94.7					$	89.5
Short-term lease expense			5.3						5.1						10.9						10.2
Variable lease expense			2.0						2.4						4.1						5.0
Total lease expense			$	54.7					$	52.8					$	109.7					$	104.7

In the six months ended June 29, 2024, the Company recognized impairment charges of $0.9 million related to its right-of-use assets. In the three and six months ended July 1, 2023, the Company recognized impairment charges of $9.6 million related to its right-of-use assets in conjunction with its restructuring actions (see Note 3, "Restructuring"). The impairment charges are included in cost of sales in the accompanying condensed consolidated statement of comprehensive income (loss).

The weighted average lease term and discount rate for operating leases are shown below:

			June 29, 2024
Weighted average remaining lease term			Seven years
Weighted average discount rate			4.0		%

The Company is party to finance lease agreements, which are not material to the accompanying condensed consolidated financial statements (Note 8, "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, 2023.

(10) 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																								Six Months Ended
			June 29, 2024												July 1, 2023												June 29, 2024												July 1, 2023
			U.S.						Foreign						U.S.						Foreign						U.S.						Foreign						U.S.						Foreign
Service cost			$	—					$	1.0					$	—					$	0.8					$	—					$	2.0					$	—					$	1.6
Interest cost			5.1						3.9						5.2						4.2						10.2						7.8						10.4						8.3
Expected return on plan assets			(5.4)						(3.7)						(5.2)						(4.1)						(10.7)						(7.4)						(10.2)						(8.1)
Amortization of actuarial loss			0.2						0.5						0.3						0.5						0.4						1.0						0.5						1.0
Settlement gain			—						—						—						—						(0.1)						—						(0.1)						—
Net periodic benefit (credit) cost			$	(0.1)					$	1.7					$	0.3					$	1.4					$	(0.2)					$	3.4					$	0.6					$	2.8

16

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LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

The components of the Company's net periodic other postretirement benefit (credit) cost are shown below (in millions):

			Three Months Ended																								Six Months Ended
			June 29, 2024												July 1, 2023												June 29, 2024												July 1, 2023
			U.S.						Foreign						U.S.						Foreign						U.S.						Foreign						U.S.						Foreign
Interest cost			$	0.3					$	0.2					$	0.4					$	0.3					$	0.7					$	0.4					$	0.8					$	0.5
Amortization of actuarial gain			(0.7)						(0.1)						(0.8)						(0.1)						(1.5)						(0.2)						(1.7)						(0.1)
Amortization of prior service credit			(0.1)						—						(0.1)						—						(0.1)						—						(0.1)						—
Net periodic benefit (credit) cost			$	(0.5)					$	0.1					$	(0.5)					$	0.2					$	(0.9)					$	0.2					$	(1.0)					$	0.4

(11) 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 six months of 2024 and 2023, revenue recognized related to prior years represented approximately 1% 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 June 29, 2024 and December 31, 2023, there were no significant contract liabilities recorded. Further, in the first six months of 2024 and 2023, 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 (loss). 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 (loss).

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
			June 29, 2024																		July 1, 2023
			Seating						E-Systems						Total						Seating						E-Systems						Total
North America			$	2,033.1					$	519.4					$	2,552.5					$	2,001.4					$	468.4					$	2,469.8
Europe and Africa			1,543.6						628.0						2,171.6						1,567.8						624.7						2,192.5
Asia			731.2						343.2						1,074.4						737.1						372.0						1,109.1
South America			139.1						74.8						213.9						161.8						66.0						227.8
			$	4,447.0					$	1,565.4					$