<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 5, 1994
REGISTRATION NO. 33-52565
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
LEAR SEATING CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 3714 13-3386776
(State or other jurisdiction of (Primary Standard Industrial (IRS Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
21557 TELEGRAPH ROAD
SOUTHFIELD, MICHIGAN 48034
(810) 746-1500
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
JAMES H. VANDENBERGHE
21557 TELEGRAPH ROAD
SOUTHFIELD, MICHIGAN 48034
(810) 746-1500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
John L. MacCarthy David O. Brownwood
Winston & Strawn Cravath, Swaine & Moore
35 W. Wacker Drive 835 Eighth Avenue
Chicago, Illinois 60601 New York, New York 10019
(312) 558-5600 (212) 474-1000
</TABLE>
------------------------------
Approximate date of commencement of proposed sale to public: As soon as
practicable after the registration statement becomes effective.
------------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: / /
------------------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
EXPLANATORY NOTE
This Amendment No. 2 to the Registration Statement is being filed with the
Securities and Exchange Commission solely to file signed reports of the
Registrant's independent public accountants and to complete a Note to the
Registrant's consolidated financial statements.
<PAGE> 3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Lear Seating Corporation:
We have audited the accompanying consolidated balance sheets of LEAR
SEATING CORPORATION AND SUBSIDIARIES ("the Company") as of June 30, 1992, June
30, 1993 and December 31, 1993 and the related consolidated statements of
operations, stockholders' equity and cash flows for the years ended June 30,
1991, 1992 and 1993 and for the twelve months and six months ended December 31,
1993. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Company as of June 30,
1992, June 30, 1993 and December 31, 1993 and the results of its operations and
its cash flows for the years ended June 30, 1991, 1992 and 1993 and for the
twelve months and six months ended December 31, 1993, in conformity with
generally accepted accounting principles.
As discussed in Note 12 to the consolidated financial statements, as of
July 1, 1993, the Company changed its method of accounting for post-retirement
benefits other than pensions.
/s/ ARTHUR ANDERSEN & CO.
ARTHUR ANDERSEN & CO.
Detroit, Michigan,
February 10, 1994 (Except with
respect to the matters discussed in
Note 18, as to which the date is
March 2, 1994).
F-2
<PAGE> 4
LEAR SEATING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, 1992 JUNE 30, 1993 DECEMBER 31, 1993
------------- ------------- -----------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........................................... $ 33,217 $ 53,787 $ 55,034
Accounts receivable, less allowance for doubtful accounts of $239 at
June 30, 1992, $516 at June 30, 1993 and $644 at December 31,
1993.............................................................. 178,070 215,745 272,421
Inventories......................................................... 46,427 40,877 71,731
Unbilled customer tooling........................................... 10,741 8,565 19,441
Other............................................................... 14,409 6,225 14,957
----------- ----------- --------------
282,864 325,199 433,584
----------- ----------- --------------
PROPERTY, PLANT AND EQUIPMENT:
Land................................................................ 13,718 13,405 31,289
Buildings and improvements.......................................... 79,252 73,015 114,514
Machinery and equipment............................................. 160,123 180,208 210,654
Construction in progress............................................ 3,144 2,094 5,030
----------- ----------- --------------
256,237 268,722 361,487
Less -- Accumulated depreciation................................ (76,732) (103,527) (110,530)
----------- ----------- --------------
179,505 165,195 250,957
----------- ----------- --------------
OTHER ASSETS:
Goodwill, less accumulated amortization of $36,568 at June 30, 1992,
$46,116 at June 30, 1993 and $50,871 at December 31, 1993......... 317,913 309,165 403,694
Deferred financing fees, net........................................ 7,765 9,825 14,377
Investments in affiliates and other................................. 11,837 10,825 11,679
----------- ----------- --------------
337,515 329,815 429,750
----------- ----------- --------------
$ 799,884 $ 820,209 $ 1,114,291
----------- ----------- --------------
----------- ----------- --------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings............................................... $ 11,982 $ 1,211 $ 48,155
Cash overdrafts..................................................... 8,324 17,317 19,769
Accounts payable.................................................... 204,865 248,454 298,326
Accrued liabilities................................................. 81,716 106,707 138,299
Financing lease obligation.......................................... 10,296 -- --
Current portion of long-term debt................................... 26,986 1,261 1,168
----------- ----------- --------------
344,169 374,950 505,717
----------- ----------- --------------
LONG-TERM LIABILITIES:
Deferred national income taxes...................................... 26,392 15,536 15,889
Long-term debt...................................................... 348,331 321,116 498,324
Other............................................................... 28,210 29,621 38,716
----------- ----------- --------------
402,933 366,273 552,929
----------- ----------- --------------
COMMITMENTS AND CONTINGENCIES
COMMON STOCK SUBJECT TO REDEMPTION:
Common stock subject to limited rights of redemption, $.01 par
value, 905,850 shares at June 30, 1992, 990,033 shares at June 30,
1993 and December 31, 1993, at estimated maximum redemption price
of $5.00 per share at June 30, 1992 and 1993 and $13.64 per share
at December 31, 1993.............................................. 4,530 4,950 13,500
Notes receivable from sale of common stock.......................... (1,065) (1,065) (1,065)
----------- ----------- --------------
3,465 3,885 12,435
----------- ----------- --------------
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 15,000,000 shares authorized, no
shares issued..................................................... -- -- --
Common stock, $.01 par value, 49,500,000 shares authorized at June
30, 1992 and 1993 and 150,000,000 shares authorized at December
31, 1993, 33,894,168 shares issued at June 30, 1992, 37,809,981
shares issued at June 30, 1993 and December 31, 1993, net of
shares subject to redemption...................................... 10 12 378
Additional paid-in capital.......................................... 131,650 150,993 156,551
Warrants exercisable for common stock............................... 10,000 10,000 10,000
Less -- Common stock held in treasury, 3,384,183 shares at June 30,
1992, 3,300,000 shares at June 30, 1993 and December 31, 1993, at
cost.............................................................. (10,255) (10,000) (10,000)
Retained deficit.................................................... (84,646) (74,532) (109,248)
Minimum pension liability adjustment................................ (2,858) (3,240) (4,164)
Cumulative translation adjustment................................... 5,416 1,868 (307)
----------- ----------- --------------
49,317 75,101 43,210
----------- ----------- --------------
$ 799,884 $ 820,209 $ 1,114,291
----------- ----------- --------------
----------- ----------- --------------
</TABLE>
The accompanying notes are an integral part of these balance sheets.
F-3
<PAGE> 5
LEAR SEATING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
TWELVE MONTHS SIX MONTHS
YEAR ENDED JUNE 30, ENDED ENDED
------------------------------------ DECEMBER 31, DECEMBER 31,
1991 1992 1993 1993 1993
---------- ---------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Net sales........................... $1,085,319 $1,422,740 $1,756,510 $ 1,950,288 $1,005,218
Cost of sales....................... 983,890 1,307,099 1,604,011 1,780,073 932,983
Selling, general and administrative
expenses.......................... 41,596 50,074 61,898 62,717 27,666
Incentive stock and other
compensation expense (Note 14).... 1,353 (12) -- 18,016 18,016
Amortization of goodwill and other
intangible assets................. 13,810 8,746 9,548 9,929 4,755
---------- ---------- ---------- ------------- ------------
Operating income.................. 44,670 56,833 81,053 79,553 21,798
Interest expense.................... 61,676 55,158 47,832 45,656 24,767
Foreign currency exchange (gain)
loss.............................. 1,717 300 470 49 (193)
Other expense, net.................. 1,574 7,859 4,331 7,750 6,520
---------- ---------- ---------- ------------- ------------
Income (loss) before provision for
national income taxes, minority
interests in net income of
subsidiaries, equity income of
affiliates and extraordinary
item........................... (20,297) (6,484) 28,420 26,098 (9,296)
Provision for national income
taxes............................. 14,019 12,968 17,847 26,864 13,467
Minority interests in net income of
subsidiaries...................... 1,770 691 470 349 88
Equity (income) loss of
affiliates........................ (2,917) (3,013) (11) 1,032 181
---------- ---------- ---------- ------------- ------------
Income (loss) before extraordinary
item........................... (33,169) (17,130) 10,114 (2,147) (23,032)
Extraordinary loss on early
extinguishment of debt............ -- 5,100 -- 11,684 11,684
---------- ---------- ---------- ------------- ------------
Net income (loss)................... $ (33,169) $ (22,230) $ 10,114 $ (13,831) $ (34,716)
---------- ---------- ---------- ------------- ------------
---------- ---------- ---------- ------------- ------------
Net income (loss) per common share,
as adjusted (Note 18):
Income (loss) before extraordinary
item........................... $ (2.01) $ (.62) $ .25 $ (.06) $ (.65)
Extraordinary loss................ -- (.18) -- (.33) (.33)
---------- ---------- ---------- ------------- ------------
$ (2.01) $ (.80) $ .25 $ (.39) $ (.98)
---------- ---------- ---------- ------------- ------------
---------- ---------- ---------- ------------- ------------
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE> 6
LEAR SEATING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
WARRANTS MINIMUM
ADDITIONAL EXERCISABLE PENSION CUMULATIVE
COMMON PAID-IN INTO TREASURY RETAINED LIABILITY TRANSLATION
STOCK CAPITAL COMMON STOCK STOCK DEFICIT ADJUSTMENT ADJUSTMENT TOTAL
------ ---------- ------------ -------- --------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JUNE 30, 1990............ $ 6 $ 59,454 $ 10,000 $(10,000) $ (29,247) $ -- $ 5,079 $ 35,292
Net loss........................ -- -- -- -- (33,169) -- -- (33,169)
Stock option compensation....... -- 1,353 -- -- -- -- -- 1,353
Re-acquisition of 21,450 shares
of common stock subject to
redemption from management
investors, at cost............ -- 65 -- (65) -- -- -- --
Foreign currency translation.... -- -- -- -- -- -- 859 859
------ ---------- ------------ -------- --------- ---------- ---------- --------
BALANCE, JUNE 30, 1991............ 6 60,872 10,000 (10,065) (62,416) -- 5,938 4,335
Net loss........................ -- -- -- -- (22,230) -- -- (22,230)
Stock option compensation....... -- (12) -- -- -- -- -- (12)
Re-acquisition of 62,700 shares
of common stock subject to
redemption from management
investors, at cost............ -- 190 -- (190) -- -- -- --
Sale of additional 14,999,985
shares of common stock, net of
transaction expenses.......... 4 72,384 -- -- -- -- -- 72,388
Recognize minimum pension
liability adjustment.......... -- -- -- -- -- (2,858) -- (2,858)
Foreign currency translation.... -- -- -- -- -- -- (522) (522)
Restate common stock subject to
redemption to estimated
maximum redemption value...... -- (1,784) -- -- -- -- -- (1,784)
------ ---------- ------------ -------- --------- ---------- ---------- --------
BALANCE, JUNE 30, 1992............ 10 131,650 10,000 (10,255) (84,646) (2,858) 5,416 49,317
Net loss........................ -- -- -- -- (10,771) -- -- (10,771)
Sale of additional 3,999,996
shares of common stock, net of
transaction expenses.......... 2 19,598 -- -- -- -- -- 19,600
Sale of 84,183 shares of
treasury stock to management
investors..................... -- (255) -- 255 -- -- -- --
Foreign currency translation.... -- -- -- -- -- -- (4,640) (4,640)
------ ---------- ------------ -------- --------- ---------- ---------- --------
BALANCE, JANUARY 2, 1993.......... 12 150,993 10,000 (10,000) (95,417) (2,858) 776 53,506
Net income...................... -- -- -- -- 20,885 -- -- 20,885
Minimum pension liability
adjustment.................... -- -- -- -- -- (382) -- (382)
Foreign currency translation.... -- -- -- -- -- -- 1,092 1,092
------ ---------- ------------ -------- --------- ---------- ---------- --------
BALANCE, JUNE 30, 1993............ 12 150,993 10,000 (10,000) (74,532) (3,240) 1,868 75,101
Net loss........................ -- -- -- -- (34,716) -- -- (34,716)
Incentive stock option
compensation.................. -- 14,474 -- -- -- -- -- 14,474
Minimum pension liability
adjustment.................... -- -- -- -- -- (924) -- (924)
Foreign currency translation.... -- -- -- -- -- -- (2,175) (2,175)
Restate common stock subject to
redemption to estimated
maximum redemption value...... -- (8,550) -- -- -- -- -- (8,550)
Thirty-three-for-one stock
split......................... 366 (366) -- -- -- -- -- --
------ ---------- ------------ -------- --------- ---------- ---------- --------
BALANCE, DECEMBER 31, 1993........ $378 $156,551 $ 10,000 $(10,000) $(109,248) $ (4,164) $ (307) $ 43,210
------ ---------- ------------ -------- --------- ---------- ---------- --------
------ ---------- ------------ -------- --------- ---------- ---------- --------
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE> 7
LEAR SEATING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
TWELVE SIX
MONTHS MONTHS
YEAR ENDED JUNE 30, ENDED ENDED
------------------------------- DECEMBER 31, DECEMBER 31,
1991 1992 1993 1993 1993
-------- -------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).......................................... $(33,169) $(22,230) $ 10,114 $ (13,831) $ (34,716)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities --
Depreciation and amortization of goodwill and other
intangible assets...................................... 36,758 34,974 40,654 42,559 21,866
Incentive stock option compensation...................... 1,353 (12) -- 14,474 14,474
Accreted interest on Senior Subordinated Discount
Notes.................................................. 10,322 4,738 -- -- --
Amortization of deferred financing fees.................. 4,096 3,198 2,972 2,594 1,065
Deferred national income taxes........................... (6,987) (1,672) (10,856) (12,342) (90)
Post-retirement benefits accrued......................... -- -- -- 3,273 3,273
Loss on retirement of property, plant and equipment...... 316 82 374 6,752 6,373
Extraordinary loss....................................... -- 5,100 -- 11,684 11,684
Other, net............................................... (3,103) (2,932) 482 (294) 583
Net change in working capital items...................... 23,921 26,801 50,760 58,388 (7,368)
-------- -------- --------- ------------ ------------
Net cash provided by operating activities.............. 33,507 48,047 94,500 113,257 17,144
-------- -------- --------- ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment................. (20,892) (27,926) (31,595) (45,915) (28,989)
Acquisitions (Note 6)...................................... (7,527) (650) -- (172,065) (172,065)
Proceeds from sale of property, plant and equipment........ 2,860 996 1,044 968 133
Other, net................................................. (1,862) 1,593 (170) 2,226 2,207
-------- -------- --------- ------------ ------------
Net cash used by investing activities.................. (27,421) (25,987) (30,721) (214,786) (198,714)
-------- -------- --------- ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term revolving credit borrowings, net (Note 9)........ 8,952 (10,284) (24,130) 225,512 230,700
Additions to other long-term debt.......................... -- 20,000 125,000 -- --
Reductions in other long-term debt......................... (26,699) (69,209) (154,055) (103,618) (54,150)
Short-term borrowings, net................................. 21,653 (15,270) (10,771) 12,828 17,729
Proceeds from sale of common stock, net.................... -- 72,388 20,020 -- --
Deferred financing fees.................................... -- (1,839) (5,032) (10,508) (10,508)
Increase (decrease) in cash overdrafts..................... (2,205) (10,867) 8,993 3,321 2,452
Other, net................................................. (25) (190) -- -- --
-------- -------- --------- ------------ ------------
Net cash provided (used) by financing activities....... 1,676 (15,271) (39,975) 127,535 186,223
-------- -------- --------- ------------ ------------
Effect of foreign currency translation..................... 2,423 540 (3,234) (2,507) (3,406)
-------- -------- --------- ------------ ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS...................... 10,185 7,329 20,570 23,499 1,247
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............. 15,703 25,888 33,217 31,535 53,787
-------- -------- --------- ------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD................... $ 25,888 $ 33,217 $ 53,787 $ 55,034 $ 55,034
-------- -------- --------- ------------ ------------
-------- -------- --------- ------------ ------------
CHANGES IN WORKING CAPITAL, NET OF EFFECTS OF ACQUISITIONS:
Accounts receivable, net................................... $ 21,061 $(42,334) $ (42,564) $ (83,475) $ (60,319)
Inventories................................................ (2,682) (6,081) 4,219 2,947 (4,225)
Accounts payable........................................... 4,346 62,128 49,605 93,950 56,465
Accrued liabilities and other.............................. 1,196 13,088 39,500 44,966 711
-------- -------- --------- ------------ ------------
$ 23,921 $ 26,801 $ 50,760 $ 58,388 $ (7,368)
-------- -------- --------- ------------ ------------
-------- -------- --------- ------------ ------------
SUPPLEMENTARY DISCLOSURE:
Cash paid for interest..................................... $ 47,304 $ 47,584 $ 41,130 $ 42,088 $ 20,235
-------- -------- --------- ------------ ------------
-------- -------- --------- ------------ ------------
Cash paid for income taxes................................. $ 22,900 $ 12,135 $ 21,843 $ 15,685 $ 4,255
-------- -------- --------- ------------ ------------
-------- -------- --------- ------------ ------------
</TABLE>
The accompanying notes are an integral part of these statements.
F-6
<PAGE> 8
LEAR SEATING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Lear Seating
Corporation ("the Company"), a Delaware corporation, and its wholly-owned and
majority-owned subsidiaries. Investments in less than majority-owned businesses
are generally accounted for under the equity method (Note 7).
Prior to December 31, 1993, the Company was a wholly-owned subsidiary of
Lear Holdings Corporation ("Holdings"). On December 31, 1993, Holdings was
merged with and into the Company and the separate corporate existence of
Holdings ceased (the "Merger"). Prior to the Merger, Holdings had several other
wholly-owned subsidiaries, including LS Acquisition No. 14 ("LS No. 14"), Lear
Seating Holdings Corp. No. 50 ("LS No. 50") and Lear Seating Sweden, AB
("LS-Sweden"). In conjunction with the Merger, these companies became
subsidiaries of the Company. The Merger has been accounted for and reflected in
the accompanying financial statements as a merger of companies under common
control. As such, the financial statements of the Company have been restated as
if the current structure (post-Merger) had existed for all periods presented.
In February 1994, the Company changed its fiscal year end from June 30 to
December 31, effective December 31, 1993. Accordingly, the twelve months ended
December 31, 1993 does not constitute a fiscal year.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
Transactions and balances among the Company and its subsidiaries have been
eliminated in the consolidated financial statements.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined
principally using the first-in, first-out method. Finished goods and
work-in-process inventories include material, labor and manufacturing overhead
costs.
Inventories are comprised of the following (in thousands):
<TABLE>
<CAPTION>
JUNE 30, JUNE 30, DECEMBER 31,
1992 1993 1993
-------- -------- ------------
<S> <C> <C> <C>
Raw materials................................... $ 29,931 $ 29,005 $ 42,470
Work-in-process................................. 9,849 8,331 23,394
Finished goods.................................. 6,647 3,541 5,867
-------- -------- ----------
$ 46,427 $ 40,877 $ 71,731
-------- -------- ----------
-------- -------- ----------
</TABLE>
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciable property is
depreciated over the estimated useful lives of the assets, using principally the
straight-line method as follows:
<TABLE>
<S> <C>
Buildings and improvements..................................... 20 to 25 years
Machinery and equipment........................................ 5 to 15 years
</TABLE>
Goodwill and Other Intangible Assets
Goodwill consists of purchase price and related acquisition costs in excess
of the fair value of identifiable assets acquired. Goodwill is amortized on a
straight-line basis over 40 years. The Company evaluates the
F-7
<PAGE> 9
LEAR SEATING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
carrying value of goodwill for potential impairment on an ongoing basis. Such
evaluations compare operating income before amortization of goodwill of the
operations to which goodwill relates to the amortization recorded. The Company
also considers future anticipated operating results, trends and other
circumstances in making such evaluations.
Other intangible assets, consisting of a license agreement, were amortized
over the two-year term of the agreement, which expired in September 1990.
Deferred Financing Fees
Costs incurred in connection with the issuance of debt are amortized over
the term of the related indebtedness using the effective interest method.
Research and Development
Costs incurred in connection with the development of new products and
manufacturing methods are charged to operations as incurred. Such costs amounted
to $7,923,000, $11,387,000, $18,229,000, $16,177,000 and $7,062,000 for the
years ended June 30, 1991, 1992 and 1993 and for the twelve and six months ended
December 31, 1993, respectively.
Foreign Currency Translation
Assets and liabilities of foreign subsidiaries are generally translated
into U.S. dollars at the exchange rates in effect at the end of the period.
Revenue and expense accounts are translated using a weighted average of exchange
rates in effect during the period. Translation adjustments that arise from
translating a foreign subsidiary's financial statements from functional currency
to U.S. dollars are reflected as cumulative translation adjustment in the
consolidated balance sheets.
Until December 31, 1992, non-monetary assets and liabilities of a foreign
subsidiary operating in Mexico were translated using historical rates, while
monetary assets and liabilities were translated at the exchange rates in effect
at the end of the period, with the U.S. dollar effects of exchange rate changes
included in the results of operations. As of January 1, 1993, Mexico's economy
was no longer deemed to be highly inflationary, and since then, the accounts of
the subsidiary operating in Mexico have been translated consistent with other
foreign subsidiaries.
Transaction gains and losses that arise from exchange rate fluctuations on
transactions denominated in a currency other than the functional currency,
except those transactions which operate as a hedge of a foreign currency
investment position, are included in the results of operations as incurred.
Income Taxes
The consolidated financial statements reflect the provisions of Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes", for
all periods presented. Since the twelve months ended December 31, 1993 does not
constitute a fiscal year, the consolidated national income tax provision for
this period was determined based upon the provisions of APB Opinion No. 28,
"Interim Financial Reporting."
Deferred national income taxes represent the effect of cumulative temporary
differences between income and expense items reported for financial statement
and tax purposes, and between the bases of various assets and liabilities for
financial statement and tax purposes. Deferred tax assets are reduced by a
valuation allowance if, based on the weight of evidence, it is deemed more
likely than not that the asset will not be realized.
F-8
<PAGE> 10
LEAR SEATING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Industry Segment Reporting
The Company is principally engaged in the design and manufacture of
automotive seating and, therefore, separate industry segment reporting is not
applicable.
Reclassifications
Certain items in prior years' financial statements have been reclassified
to conform with the presentation used in the periods ended December 31, 1993.
(3) 1994 REFINANCING -- SUBSEQUENT EVENT
On February 3, 1994, the Company completed a public offering of
$145,000,000 of 8 1/4% Subordinated Notes, due 2002 (the "8 1/4% Notes"). The
8 1/4% Notes require interest payments semi-annually on February 1 and August 1.
Fees and expenses related to the issuance of the 8 1/4% Notes are expected to be
approximately $5,000,000, including underwriting fees of $2,400,000 paid to
Lehman Brothers Inc.
The net proceeds from the sale of the 8 1/4% Notes were used to finance the
redemption of the 14% Subordinated Debentures. Simultaneous with the sale of
8 1/4% Notes, the Company called the 14% Subordinated Debentures for redemption
on March 4, 1994, at a redemption price equal to 105.4% of the outstanding
principal amount of $135,000,000, plus accrued interest to the redemption date.
The premium for early extinguishment of the 14% Subordinated Debentures and the
accelerated amortization of deferred financing fees totaled approximately
$10,718,000. This amount has been reflected as an extraordinary loss in the
periods ending December 31, 1993. The deferred tax benefit related to this
extraordinary loss was offset by a valuation allowance.
(4) 1992 REFINANCING AND SALE OF COMMON STOCK
On July 30, 1992, the Company sold $125,000,000 of 11 1/4% Senior
Subordinated Notes (the "11 1/4% Notes") (Note 9). Fees and expenses related to
issuance of the 11 1/4% Notes were approximately $5,032,000, including
consulting and underwriting fees of $2,200,000 paid to Lehman Brothers Inc. and
$50,000 paid to FIMA Finance Management, Inc., an affiliate of IFINT-USA Inc.
("FIMA"), for consulting fees.
Simultaneous with the sale of the 11 1/4% Notes, the Company issued
3,999,996 shares of common stock to the four merchant banking partnerships
affiliated with Lehman Brothers Inc. ("Lehman Funds") and FIMA, for total
proceeds of approximately $20,000,000. Fees and expenses related to the sale
were $400,000, paid to the Lehman Funds and FIMA. Certain management investors
also purchased 84,183 shares of common stock previously held in treasury for
approximately $421,000.
On August 14, 1992, the Company redeemed the 14 1/4% Senior Subordinated
Discount Notes (the "Discount Notes") at a redemption price equal to 103% of the
outstanding principal amount of $85,000,000 plus accrued interest. The
prepayment premium for early extinguishment of these notes and the accelerated
amortization of deferred financing fees totaled approximately $4,686,000 and
have been reflected as an extraordinary loss in the year ended June 30, 1992.
The deferred tax benefit related to this extraordinary loss was offset by a
valuation allowance.
A portion of the net proceeds from the sale of the 11 1/4% Notes and common
stock described above were used to finance the redemption of the Discount Notes
and to prepay $15,000,000 of the Domestic Term Loan. The balance of the proceeds
was designated for temporary reduction of outstanding borrowings on the Domestic
Revolving Credit Loan, expansion of the Company's operations and for general
corporate purposes.
F-9
<PAGE> 11
LEAR SEATING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(5) 1991 CAPITALIZATION AND RELATED TRANSACTIONS
Capitalization
Pursuant to a Stock Purchase Agreement dated September 27, 1991 (the "1991
Agreement"), the Company issued 14,999,985 shares of common stock to the Lehman
Funds and FIMA, for total proceeds of approximately $75,000,000. Fees and
expenses related to the sale and the transactions described below approximated
$7,700,000, of which approximately $3,200,000 was charged to other expense and
approximately $1,800,000 was capitalized as deferred financing fees. Such fees
and expenses included $4,500,000 paid to Lehman Brothers. The Lehman Funds and
FIMA also purchased all of the outstanding common stock and warrants owned by
the Company's former majority owner, General Electric Capital Corporation
("GECC"), and certain other stockholders.
Simultaneous with the sale of common stock, the Company obtained a
$20,000,000 real estate mortgage from GECC.
The net proceeds from the sale of common stock and the real estate mortgage
were used to reduce outstanding borrowings on the Domestic Revolving Credit Loan
by $32,000,000, to prepay the Domestic Term Loan by $48,500,000, and to purchase
LS-Sweden (see discussion below). A write-off of deferred financing fees of
$414,000 related to the prepayment of the Domestic Term Loan was recognized as
an extraordinary loss in the consolidated statement of operations for the year
ended June 30, 1992. The deferred tax benefit related to this extraordinary loss
was offset by a valuation allowance.
Assuming the sale of common stock and the retirement of debt had taken
place on July 1, 1990, the Company's unaudited pro forma net loss per common
share for the year ended June 30, 1991 would have been $(.99). The pro forma
results and the weighted average shares outstanding used to calculate the pro
forma net loss per common share give effect to the reduced interest expense, net
of related income taxes, and the increased number of shares that would have been
outstanding from July 1, 1990 through June 30, 1991, respectively.
The 1991 Agreement required the Company to make certain representations and
warranties prior to the sale with respect to its tax position and title to the
new shares. The Company is required to indemnify the parties to the Agreement
for any aggregate losses, liabilities, claims or expenses arising from a breach
of the aforementioned representations and warranties. Management is not
currently aware of any information or condition which will require
indemnification under the terms of the Agreement.
Lear Seating Sweden, AB
In October 1990, the Company entered into an agreement with Saab Automobile
AB ("Saab") in which, effective January 1991, Saab agreed to purchase, and the
Company agreed to supply, completely assembled seat modules on a just-in-time
basis to Saab's production facilities located in Trollhattan, Sweden. The
Company then established a Swedish subsidiary, Lear Seating Sweden, AB
("LS-Sweden").
In February 1991, the Company sold its investment in the common stock of
LS-Sweden to GECC, then a major shareholder of the Company, for $100,000. The
Company entered into an agreement with GECC to continue to manage the operations
of LS-Sweden. GECC agreed to provide sufficient funds to LS-Sweden to finance
the purchase of inventory and equipment from Saab at estimated book value of
approximately $3,900,000 and to fund working capital requirements. In addition,
GECC agreed to provide the Company with the right of first refusal in the event
of sale, assignment, or transfer of substantially all of the assets or common
stock of LS-Sweden.
F-10
<PAGE> 12
LEAR SEATING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
On September 27, 1991, and as part of the capitalization, the Company
reacquired all common stock of LS-Sweden from GECC for $100,000. In addition,
the Company repaid cumulative advances from GECC to LS-Sweden and related
expenses in the aggregate amount of approximately $7,300,000.
The sale and purchase transactions described above related to LS-Sweden's
common stock are accounted for as transactions between entities under common
control. Accordingly, the Company's consolidated financial statements include
the balance sheet accounts and results of operations of LS-Sweden as if it were
a subsidiary of the Company since its inception in January 1991.
(6) ACQUISITIONS
Acquisition of Certain Assets of the North American Seating Business of Ford
Motor Company ("NAB")
On November 1, 1993, the Company purchased certain assets of the Plastics
and Trim Products Division of Ford Motor Company ("Ford") consisting of (i) the
U.S. operations that supply seat trim and trimmed seat assemblies to Ford which
are manufactured by Favesa, S.A. de C.V. ("Favesa"); (ii) all of the shares of
Favesa, a maquiladora company located in Juarez, Mexico; and (iii) certain
inventories and assets employed in the operation of Favesa (collectively
referred as the "NAB"). In connection with this transaction, the Company and
Ford entered into a long-term supply agreement for certain products produced by
these operations at agreed upon prices.
This acquisition was accounted for as a purchase, and accordingly, the
operating results of the NAB have been included in the accompanying financial
statements since the date of acquisition. The purchase price, after giving
effect to an adjustment related to changes in NAB working capital, was financed
and allocated to the purchased assets as follows (in thousands):
<TABLE>
<S> <C>
Cash consideration paid to seller, net of cash acquired of
$2,671........................................................... $170,727
Execution of promissory notes (Notes 8 and 9)...................... 10,500
Fees and expenses (including $500 paid to Lehman Brothers Inc.).... 1,338
--------
Total purchase price.......................................... $182,565
--------
--------
Property, Plant and Equipment...................................... $ 85,565
Net non-cash working capital....................................... 773
Other assets purchased and liabilities assumed, net................ (3,057)
Goodwill........................................................... 99,284
--------
Total purchase price allocation............................... $182,565
--------
--------
</TABLE>
The cash portion of the purchase price was financed with borrowings under
the Company's domestic credit agreement (Note 9). The purchase price and related
allocation may be revised in the next year based on revisions of preliminary
estimates of fair values made at the date of purchase. Such changes are not
expected to be significant.
As part of the NAB Acquisition, the Company has exercised an option to
cause Ford to purchase two facilities in consideration of Ford cancelling a
$19,915,000 note payable (Note 8). The Company has exercised this option, and
the sale of these facilities is scheduled to occur on March 15, 1994. The
Company will lease one of these facilities until the earlier of March 15, 1996
or the date it vacates this facility.
Assuming the acquisition had taken place as of the beginning of each period
presented, the consolidated pro forma results of operations of the Company would
have been as follows, after giving effect to certain adjustments, including
certain operations adjustments consisting principally of managements' estimates
of the effects of product pricing adjustments negotiated in connection with the
acquisition and incremental ongoing
F-11
<PAGE> 13
LEAR SEATING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NAB engineering, overhead and administrative expenses, increased interest
expense and goodwill amortization and the related income tax effects (Unaudited;
in thousands, except per share data):
<TABLE>
<CAPTION>
TWELVE MONTHS SIX MONTHS
YEAR ENDED ENDED ENDED
JUNE 30, 1993 DECEMBER 31, 1993 DECEMBER 31, 1993
------------- ----------------- -----------------
<S> <C> <C> <C>
Net sales........................................ $ 2,235,150 $ 2,361,422 $ 1,159,482
Income (loss) before extraordinary item.......... 26,580 5,058 (19,582)
Net income (loss)................................ 26,580 (6,626) (31,266)
Income per common share before extraordinary
item........................................... .66 .12 (.55)
Net income (loss) per common share............... .66 (.16) (.88)
</TABLE>
The pro forma information above does not purport to be indicative of the
results that actually would have been obtained if the operations were combined
during the periods presented, and is not intended to be a projection of future
results or trends.
Acquisition of Central de Industrias, S.A. de C.V. ("CISA")
From April 1991 through October 1991, the Company, through LS No. 50,
acquired approximately 4,514,600 shares of the common stock of CISA for an
aggregate purchase price of approximately $8,177,000, including related
expenses. These shares represented approximately 38% of CISA's outstanding
common stock. Prior to this purchase, the Company had owned approximately 61% of
CISA's common stock, resulting in a total ownership interest of over 99%. These
acquisitions were accounted for as purchases and the aggregate purchase price
approximated the fair value of net assets acquired.
Acquisition of Fair Haven Industries, Inc.
In July 1990, the Company, through a subsidiary, acquired 9,600 newly
issued shares of the common stock of Fair Haven Industries, Inc. ("FHI") for
approximately $750,000, plus related expenses. The shares acquired represented
approximately 49% of FHI's outstanding common stock. The Company also received
an option to acquire an additional 2% of FHI common stock for nominal additional
consideration and an irrevocable proxy to vote those shares, resulting in a
controlling interest. The 2% option was exercised in December 1991.
The acquisition was accounted for as a purchase. The excess of the purchase
price over the fair value of net assets acquired was approximately $3,801,000
with the minority interest valued at zero. Subsequently, the Company determined
that the excess purchase price of $3,801,000 was not realizable and recorded the
amount as a charge against operating income in the year ended June 30, 1991. FHI
has been included in the Company's consolidated financial statements for all
periods presented.
In August 1993, the Company reached a settlement with the former owners of
FHI in which the Company agreed to purchase the remaining 49% of FHI's common
stock and release all claims against the former owners arising from the July
1990 purchase. The settlement amount, plus related legal costs, was not
significant and was charged to operating income in the year ended June 30, 1993.
F-12
<PAGE> 14
LEAR SEATING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(7) INVESTMENTS IN AFFILIATES
The investments in affiliates are as follows:
<TABLE>
<CAPTION>
PERCENT BENEFICIAL OWNERSHIP
-----------------------------------
JUNE 30, DECEMBER
-------------------- 31,
1991 1992 1993 1993
---- ---- ---- -----------
<S> <C> <C> <C> <C>
General Seating of America, Inc.................. 35% 35% 35% 35%
General Seating of Canada, Ltd................... 35 35 35 35
Pacific Trim Corporation Ltd. (Thailand)......... 20 20 20 20
Probel, S.A. (Brazil)............................ 31 31 31 31
Moldeados Interiores, S.A. de C.V................ 38 -- -- --
</TABLE>
The above businesses are generally involved in the manufacture of
automotive seating and seating components.
Investments in General Seating of America, Inc., General Seating of Canada,
Ltd., and Pacific Trim Corporation Ltd. are accounted for using the equity
method. In June 1993, the Company revalued its investment in Probel, which was
previously accounted for using the cost method, to zero due to continued
operating losses and other factors impacting its potential recoverability. A
charge of approximately $1,700,000 was recorded and is reflected in equity
income of affiliates in the consolidated statement of operations in the year
ended June 30, 1993 and the twelve months ended December 31, 1993.
The investment in Moldeados Interiores, S.A. de C.V. was accounted for
using the equity method until its sale in July 1991. The gain recognized on this
sale was not material.
The aggregate investment in affiliates was $6,379,000, $4,756,000 and
$4,593,000 as of June 30, 1992, June 30, 1993 and December 31, 1993,
respectively.
Dividends of approximately $930,000 and $985,000 were received by the
Company in the years ended June 30, 1992 and 1993, respectively, from General
Seating of Canada, Ltd. No other dividends were received by the Company from
affiliates during 1991, 1992 or 1993.
F-13
<PAGE> 15
LEAR SEATING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Summarized group financial information for affiliates accounted for under
the equity method is as follows (unaudited, in thousands):
<TABLE>
<CAPTION>
JUNE JUNE DECEMBER
30, 30, 31,
1992 1993 1993
------- ------- -----------
<S> <C> <C> <C>
Balance sheet data:
Current assets................................ $19,032 $17,004 $18,277
Non-current assets............................ 15,154 13,717 14,081
Current liabilities........................... 18,847 16,757 14,478
Non-current liabilities....................... 5,700 5,700 5,700
</TABLE>
<TABLE>
<CAPTION>
TWELVE MONTHS SIX MONTHS
YEAR ENDED JUNE 30, ENDED ENDED
-------------------------------- DECEMBER 31, DECEMBER 31,
1991 1992 1993 1993 1993
-------- -------- -------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Income statement data:
Net sales.......................... $114,705 $129,220 $119,837 $ 122,448 $ 58,399
Gross profit....................... 17,541 19,335 13,001 12,593 4,915
Income before provision for income
taxes........................... 8,491 11,643 10,833 7,317 2,347
Net income......................... 7,926 8,246 6,566 5,031 1,409
</TABLE>
The Company had sales to affiliates of approximately $10,393,000,
$11,787,000, $10,711,000, $11,123,000 and $5,315,000 for the years ended June
30, 1991, 1992 and 1993, and for the twelve and six months ended December 31,
1993, respectively. Included in the Company's accounts receivable are trade
receivables from affiliates of approximately $1,056,000, $878,000 and $936,000
at June 30, 1992, June 30, 1993 and December 31, 1993, respectively.
The Company has guaranteed certain obligations of its affiliates. The
Company's share of amounts outstanding under guaranteed obligations as of June
30, 1992, June 30, 1993 and December 31, 1993 amounted to $3,484,000, $3,224,000
and $6,253,000, respectively.
(8) SHORT-TERM BORROWINGS
Short-term borrowings are comprised of the following (in thousands):
<TABLE>
<CAPTION>
JUNE 30, 1992 JUNE 30, 1993 DECEMBER 31, 1993
------------- ------------- -----------------
<S> <C> <C> <C>
Lines of credit..................................... $11,982 $ 1,211 $18,152
Unsecured notes payable --
Ford Motor Company, non-interest bearing.......... -- -- 9,300
Ford Motor Company, 11 1/2% (Note 6).............. -- -- 19,915
Trade acceptance payable, 7 1/4%.................... -- -- 788
------------- ------------- -----------------
$11,982 $ 1,211 $48,155
------------- ------------- -----------------
------------- ------------- -----------------
</TABLE>
At December 31, 1993, the Company has lines of credit available with banks
of approximately $69,190,000, subject to certain restrictions imposed by the
credit agreement (Note 9). Short-term bank
F-14
<PAGE> 16
LEAR SEATING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
borrowings, in U.S. dollar equivalents, based on the amounts outstanding at the
end of each month were as follows for the indicated period (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, TWELVE MONTHS SIX MONTHS
----------------------------- ENDED ENDED
1991 1992 1993 DECEMBER 31, 1993 DECEMBER 31, 1993
------- ------- ------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Maximum amount outstanding at any
month-end....................... $21,119 $18,092 $16,260 $18,152 $18,152
Average amount outstanding........ 12,540 15,394 8,198 6,908 7,362
Weighted average interest rate at
end of period................... 16.9% 8.7% 8.6% 6.3% 6.3%
Weighted average interest rate
during the period............... 16.3% 13.2% 9.9% 6.0% 6.9%
</TABLE>
(9) LONG-TERM DEBT
Long-term debt is comprised of the following (in thousands):
<TABLE>
<CAPTION>
JUNE 30, 1992 JUNE 30, 1993 DECEMBER 31, 1993
------------- ------------- -----------------
<S> <C> <C> <C>
Senior Debt:
Term loans --
Domestic....................................... $ 51,300 $ 33,550 $ --
Canadian....................................... 50,000 -- --
German......................................... 9,887 8,827 7,592
------------- ------------- -----------------
111,187 42,377 7,592
------------- ------------- -----------------
Revolving credit loans --
Domestic....................................... 16,662 -- 230,700
Canadian....................................... 7,468 -- --
------------- ------------- -----------------
24,130 -- 230,700
------------- ------------- -----------------
Mortgage payable.................................. 20,000 20,000 --
------------- ------------- -----------------
155,317 62,377 238,292
Less -- Current portion................... (26,986) (1,261) (1,168)
------------- ------------- -----------------
128,331 61,116 237,124
------------- ------------- -----------------
Subordinated Debt:
14 1/4% Senior Subordinated Discount Notes (Note
4)............................................. 85,000 -- --
11 1/4% Senior Subordinated Notes (Note 4)........ -- 125,000 125,000
14% Subordinated Debentures (Note 3).............. 135,000 135,000 135,000
------------- ------------- -----------------
220,000 260,000 260,000
------------- ------------- -----------------
Note Payable........................................ -- -- 1,200
------------- ------------- -----------------
$ 348,331 $ 321,116 $ 498,324
------------- ------------- -----------------
------------- ------------- -----------------
</TABLE>
In October 1993, the Company amended and restated its existing credit
agreement with a syndicate of banks. The new $425 million revolving credit
facility (the "Credit Agreement") enabled the Company to replace the existing
Domestic Term Loan and Domestic Revolving Credit Facility, finance the cash
portion of the NAB Acquisition (Note 6) and retire an existing $20 million
mortgage payable. The accelerated amortization of deferred financing fees
related to the previous Domestic Term Loan and Domestic Revolving Credit
Facility and the mortgage payable totaled approximately $1,464,000. This amount,
net of the related tax benefit of $498,000, has been reflected as an
extraordinary loss in the periods ending December 31, 1993.
F-15
<PAGE> 17
LEAR SEATING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In connection with this transaction, the Company paid $500,000 to Lehman
Brothers for consulting fees. In addition, Lehman Commercial Paper, Inc., an
affiliate of the Lehman Funds, is a managing agent of the Credit Agreement and
received fees of $666,000.
Loans under the Credit Agreement bear interest at the Eurodollar rate plus
3/4% to 1 1/2% or prime rate plus 0% to 1/2%, depending on the satisfaction of
certain financial ratios. The Company pays a commitment fee on the unused
balance of the facility of 3/8% to 1/2%, depending on certain ratios. At
December 31, 1993, interest was being charged at the Eurodollar rate plus 1 1/2%
and the commitment fee is 1/2%. Amounts available to be drawn under the Credit
Agreement will decrease by $40 million on each of October 31, 1996, April 29,
1997, October 31, 1997 and April 29, 1998. The facility expires on October 31,
1998.
The German Term Loan bears interest at a stated rate of 9.125%, is payable
in Deutschemarks in quarterly installments of approximately $292,000 through
March 2000, and is collateralized by certain assets of a German subsidiary.
The Canadian Revolving Credit Loan bears interest at the prime rate plus
1/2%, is payable in September 1994, with an option to extend through September
1995 with the consent of the lending banks, and is guaranteed by letters of
credit issued under the Credit Agreement.
The Company had available unused long-term revolving credit commitments of
$157,454,000 at December 31, 1993, net of $36,846,000 of outstanding letters of
credit. Borrowings on revolving credit loans were $665,594,000, $737,839,000,
$549,208,000, $986,308,000 and $820,519,000 for the years ended June 30, 1991,
1992 and 1993 and the twelve and six months ended December 31, 1993,
respectively. Repayments on revolving credit loans were $656,642,000,
$748,123,000, $573,338,000, $760,796,000 and $589,819,000 for the years ended
June 30, 1991, 1992 and 1993 and the twelve and six months ended December 31,
1993, respectively.
The weighted average interest rates on the Senior Debt as of June 30, 1992,
June 30, 1993 and December 31, 1993 were 7.3%, 7.5% and 5.1%, respectively.
The 11 1/4% Senior Subordinated Notes, due in 2000, require payments of
interest semi-annually.
The 14% Subordinated Debentures were redeemed subsequent to December 31,
1993 in connection with the refinancing (Note 3).
The Credit Agreement and Subordinated Debt Agreements contain numerous
restrictive covenants. The most restrictive of these covenants are financial
covenants related to maintenance of certain levels of net worth, operating
profit and interest coverage. The financial covenants generally become more
restrictive with the passage of time. These agreements also, among other things,
significantly restrict the Company's ability to incur additional indebtedness,
declare dividends, make investments and advances, sell assets and limit capital
expenditures to specified amounts. The German Term Loan agreement also contains
certain restrictive covenants.
As of December 31, 1993, the Company is unable to declare dividends. Loans
under the Credit Agreement and the German Term Loan are collectively
collateralized by substantially all assets of the Company.
The scheduled maturities of long-term debt at December 31 for the five
succeeding years before consideration of the refinancing described in Note 3 are
as follows (in thousands):
<TABLE>
<S> <C>
1994............................................................... $ 1,168
1995............................................................... 2,368
1996............................................................... 1,168
1997............................................................... 1,168
1998............................................................... 265,618
</TABLE>
F-16
<PAGE> 18
LEAR SEATING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(10) NATIONAL INCOME TAXES
A summary of income (loss) before provision for national income taxes and
components of the provision for national income taxes for the indicated periods
is as follows (in thousands):
<TABLE>
<CAPTION>
TWELVE SIX
MONTHS MONTHS
YEAR ENDED JUNE 30, ENDED ENDED
------------------------------- DECEMBER 31, DECEMBER 31,
1991 1992 1993 1993 1993
-------- -------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Income (loss) before
provision for national
income taxes, minority
interests in net income
of subsidiaries, equity
income of affiliates
and extraordinary item:
Domestic............ $(47,302) $(19,964) $ 6,759 $ (3,433) $(15,105)
Foreign............. 27,005 13,480 21,661 29,531 5,809
-------- -------- ------- ------------ ------------
$(20,297) $ (6,484) $28,420 $ 26,098 $ (9,296)
-------- -------- ------- ------------ ------------
-------- -------- ------- ------------ ------------
Domestic provision for
national income taxes:
Current provision... $ -- $ 2,146 $ 6,873 $ 7,442 $ 5,404
-------- -------- ------- ------------ ------------
Deferred --
Deferred
provision...... 958 2,603 1,481 904 943
Tax benefit of net
operating
losses carried
back........... (6,119) -- -- -- --
Benefit of
previously
unbenefitted
net operating
loss
carryforwards... -- -- (2,446) (2,953) (1,613)
-------- -------- ------- ------------ ------------
(5,161) 2,603 (965) (2,049) (670)
-------- -------- ------- ------------ ------------
Foreign provision for
national income taxes:
Current provision... 21,006 12,494 17,449 22,477 9,739
-------- -------- ------- ------------ ------------
Deferred --
Deferred
provision...... 242 (2,123) (1,725) (1,006) (1,006)
Adjustment due to
changes in
enacted tax
rates.......... -- -- (993) -- --
Tax benefit of
operating
losses......... (2,068) (2,152) (2,792) -- --
-------- -------- ------- ------------ ------------
(1,826) (4,275) (5,510) (1,006) (1,006)
-------- -------- ------- ------------ ------------
Provision for national
income taxes........... $ 14,019 $ 12,968 $17,847 $ 26,864 $ 13,467
-------- -------- ------- ------------ ------------
-------- -------- ------- ------------ ------------
</TABLE>
F-17
<PAGE> 19
LEAR SEATING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The differences between the United States Federal statutory income tax rate
of 35% for the periods ended December 31, 1993 and 34% for the years ended June
30, 1991, 1992 and 1993 and the consolidated effective national income tax rate
for the periods indicated are summarized as follows (in thousands):
<TABLE>
<CAPTION>
TWELVE MONTHS SIX MONTHS
YEAR ENDED JUNE 30, ENDED ENDED
----------------------------- DECEMBER 31, DECEMBER 31,
1991 1992 1993 1993 1993
------- ------- ------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Income (loss) before provision for
national income taxes, minority
interests in net income of
subsidiaries, equity income of
affiliates and extraordinary item
multiplied by the United States Federal
statutory rate......................... $(6,901) $(2,205) $ 9,663 $ 9,135 $ (3,254)
Utilization of domestic net operating
loss carryforwards..................... -- -- (2,446) (2,953) (1,613)
Differences between domestic and
effective foreign tax rates............ 9,999 3,636 901 3,664 2,420
Operating losses not tax benefitted...... 6,663 8,562 3,674 4,850 4,280
Increase in valuation allowance.......... -- -- 426 8,775 10,850
Domestic income taxes provided on foreign
earnings............................... -- -- 1,564 875 70
Amortization of goodwill................. 4,259 2,974 3,246 3,344 1,531
Other, net............................... (1) 1 819 (826) (817)
------- ------- ------- ---------- ----------
$14,019 $12,968 $17,847 $26,864 $ 13,467
------- ------- ------- ---------- ----------
------- ------- ------- ---------- ----------
</TABLE>
Deferred national income taxes represent temporary differences in the
recognition of certain items for income tax and financial reporting purposes.
The components of the net deferred national income tax liability are summarized
as follows (in thousands):
<TABLE>
<CAPTION>
JUNE 30, JUNE 30, DECEMBER 31,
1992 1993 1993
-------- -------- ------------
<S> <C> <C> <C>
Deferred national income tax liabilities:
Depreciation and basis difference............. $ 28,165 $ 18,837 $ 13,788
Financing and intercompany transactions....... 9,348 9,855 9,663
Taxes provided on unremitted foreign
earnings................................... 2,346 1,930 6,054
Benefit plans................................. -- 1,234 1,264
Other......................................... 1,440 1,740 2,646
-------- -------- ----------
$ 41,299 $ 33,596 $ 33,415
-------- -------- ----------
-------- -------- ----------
</TABLE>
F-18
<PAGE> 20
LEAR SEATING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
JUNE 30, JUNE 30, DECEMBER 31,
1992 1993 1993
-------- -------- ------------
<S> <C> <C> <C>
Deferred national income tax assets:
Tax credit carryforwards.................... $(18,105) $(18,105) $(23,671)
Tax loss carryforwards...................... (7,187) (13,203) (17,082)
Benefit plans............................... (3,676) (4,645) (6,153)
Accruals.................................... (3,306) (3,654) (5,435)
Deferred financing fees..................... (2,922) (1,640) (4,742)
Minimum pension liability adjustment........ (1,563) (1,962) (1,784)
Alternative minimum tax carryforward........ (1,242) (1,053) (432)
Deferred compensation....................... (1,324) (1,324) (7,640)
Other....................................... (413) (1,398) (1,290)
-------- -------- ----------
(39,738) (46,984) (68,229)
Valuation allowance........................... 24,209 30,108 51,454
-------- -------- ----------
(15,529) (16,876) (16,775)
-------- -------- ----------
Net deferred national income tax liability.... $ 25,770 $ 16,720 $ 16,640
-------- -------- ----------
-------- -------- ----------
</TABLE>
The net deferred national income tax liability includes deferred tax assets
of $2,173,000, $81,000 and $58,000 as of June 30, 1992, June 30, 1993 and
December 31, 1993, respectively, and a deferred tax liability of $1,551,000,
$1,265,000 and $1,561,000 as of June 30, 1992, June 30, 1993 and December 31,
1993, respectively, which have been classified as current in the consolidated
balance sheets and a deferred tax asset of $752,000 as of December 31, 1993,
which has been classified as long-term in the consolidated balance sheet.
Deferred national income taxes and withholding taxes have been provided on
earnings of the Company's Canadian subsidiary to the extent it is anticipated
that the earnings will be remitted in the form of future dividends. Deferred
national income taxes and withholding taxes have not been provided on the
undistributed earnings of the Company's European and Mexican subsidiaries as
such amounts are deemed to be permanently reinvested. The cumulative
undistributed earnings at December 31, 1993 on which the Company had not
provided additional national income taxes and withholding taxes were
approximately $19,942,000.
In June 1993, the Company settled with the Canadian taxing authorities on
the open issues relating to its Canadian tax returns through 1989. In addition,
a settlement was reached with Revenue Canada regarding treatment of certain
items relating to the Company's financing subsidiaries. The expense related to
these settlements was provided by the Company prior to the year ended June 30,
1993, and did not have a material effect on the Company's results of operations
or financial position.
As of December 31, 1993 the Company had a net operating loss carryforward
for United States income tax return purposes of approximately $1,039,000,
subject to certain limitations, expiring in the year 2006. In addition, two
European subsidiaries had net operating loss carryforwards for tax return
purposes totalling approximately $31,500,000, which have no expiration date, and
FHI had a net operating loss carryforward of approximately $7,200,000, expiring
in 2007. The foreign tax credit carryforwards expire in 1994 through 1996.
(11) RETIREMENT PLANS
The Company has noncontributory defined benefit pension plans covering
substantially all domestic employees and certain employees in foreign countries.
The Company's salaried plans provide benefits based on a career average earnings
formula. Hourly pension plans provide benefits under flat benefit formulas. The
Company also has a contractual arrangement with a key employee which provides
for supplemental retirement benefits. In general, the Company's policy is to
fund these plans based on legal requirements, tax considerations, and local
practices.
F-19
<PAGE> 21
LEAR SEATING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Components of the Company's pension expense include the following for the
periods indicated (in thousands):
<TABLE>
<CAPTION>
TWELVE MONTHS SIX MONTHS
YEAR ENDED JUNE 30, ENDED ENDED
----------------------------- DECEMBER 31, DECEMBER 31,
1991 1992 1993 1993 1993
------- ------- ------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Service cost...................................... $ 2,229 $ 2,921 $ 3,096 $ 3,466 $ 1,918
Interest cost on projected benefit obligation..... 5,309 6,211 5,908 6,142 3,188
Actual return on assets........................... (2,942) (4,894) (6,618) (7,847) (4,538)
Net amortization and deferral..................... (1,886) 471 1,785 3,131 2,238
------- ------- ------- ------------- ----------
Net pension expense............................... $ 2,710 $ 4,709 $ 4,171 $ 4,892 $ 2,806
------- ------- ------- ------------- ----------
------- ------- ------- ------------- ----------
</TABLE>
The following table sets forth a reconciliation of the funded status of the
Company's defined benefit pension plans to the related amounts recorded in the
consolidated balance sheets (in thousands):
<TABLE>
<CAPTION>
JUNE 30, 1992 JUNE 30, 1993 DECEMBER 31, 1993
---------------------------- ---------------------------- ----------------------------
PLANS WHOSE PLANS WHOSE PLANS WHOSE PLANS WHOSE PLANS WHOSE PLANS WHOSE
ASSETS EXCEED ABO EXCEEDS ASSETS EXCEED ABO EXCEEDS ASSETS EXCEED ABO EXCEEDS
ABO ASSETS ABO ASSETS ABO ASSETS
------------- ----------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Actuarial present value of:
Vested benefit obligation.... $11,393 $47,570 $13,946 $48,001 $11,938 $ 58,076
Non-vested benefit
obligation................. 42 2,171 809 1,908 77 3,139
---------- --------- ---------- --------- ---------- ----------
Accumulated benefit obligation
(ABO)........................ 11,435 49,741 14,755 49,909 12,015 61,215
Effects of anticipated future
compensation increases....... 983 8,366 9,135 883 1,075 10,097
---------- --------- ---------- --------- ---------- ----------
Projected benefit obligation... 12,418 58,107 23,890 50,792 13,090 71,312
Plan assets at fair value...... 16,952 36,674 21,942 36,034 18,317 42,833
---------- --------- ---------- --------- ---------- ----------
Projected benefit obligation in
excess of (less than) plan
assets....................... (4,534) 21,433 1,948 14,758 (5,227) 28,479
Unamortized net loss........... (3,027) (6,838) (2,946) (4,943) (1,270) (12,461)
Unrecognized prior service
cost......................... -- 165 641 (2,041) (20) (1,065)
Unamortized net asset
(obligation) at transition... 5,047 (1,922) 4,039 (1,413) 4,001 (1,580)
Adjustment required to
recognize minimum
liability.................... -- 6,545 -- 7,601 -- 11,105
---------- --------- ---------- --------- ---------- ----------
Accrued pension (asset)
liability recorded in the
consolidated balance
sheets....................... $(2,514) $19,383 $ 3,682 $13,962 $(2,516) $ 24,478
---------- --------- ---------- --------- ---------- ----------
---------- --------- ---------- --------- ---------- ----------
</TABLE>
F-20
<PAGE> 22
LEAR SEATING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The actuarial assumptions used in determining pension expense and the
funded status information shown above were as follows:
<TABLE>
<CAPTION>
TWELVE MONTHS SIX MONTHS
YEAR ENDED JUNE 30, ENDED ENDED
--------------------- DECEMBER 31, DECEMBER 31,
1991 1992 1993 1993 1993
---- ---- ---- ------------- ------------
<S> <C> <C> <C> <C> <C>
Discount rate:
Domestic plans.............................. 8% 8 % 8 % 7.5-8% 7.5-8%
Foreign plans............................... 10% 9 % 7-9 % 7-9% 7-8%
Rate of salary progression:
Domestic plans.............................. 6% 6 % 6 % 6% 6%
Foreign plans............................... 4% 1-5 % 3-5 % 3-5% 3-5%
Long-term rate of return on assets:
Domestic plans.............................. 9% 9 % 9 % 9% 9%
Foreign plans............................... 10% 9 % 9 % 8-9% 8%
</TABLE>
Plan assets include cash equivalents, common and preferred stock, and
government and corporate debt securities.
Statement of Financial Accounting Standards No. 87, "Employers' Accounting
for Pensions," required the Company to record a minimum liability as of June 30,
1992, June 30, 1993 and December 31, 1993. As of December 31, 1993, the Company
recorded a long-term liability of $11,105,000, an intangible asset of
$5,157,000, which is included with other assets, and a reduction in
stockholders' equity of $4,164,000, net of income taxes of $1,784,000.
The Company also sponsors defined contribution plans and participates in
Government sponsored programs in certain foreign countries. Contributions are
determined as a percentage of each covered employee's salary. The Company also
participates in multi-employer pension plans for certain of its hourly employees
and contributes to those plans based on collective bargaining agreements. The
aggregate cost of the defined contribution and multi-employer pension plans
charged to operations was $1,001,000, $1,093,000, $1,335,000, $1,712,000 and
$1,002,000 for the years ended June 30, 1991, 1992 and 1993 and the twelve and
six months ended December 31, 1993, respectively.
(12) POST-RETIREMENT BENEFITS
On July 1, 1993, the Company adopted Statement of Financial Accounting
Standards No. 106, "Employers Accounting for Post-retirement Benefits Other Than
Pensions" for its domestic plans. This standard, which must be adopted for
foreign plans no later than 1995, requires that the expected cost of post-
retirement benefits be charged to expense during the years in which the
employees render service to the Company.
The Company's domestic post-retirement plans generally provide for the
continuation of medical benefits for all employees who complete 10 years of
service after age 45 and retire from the Company at age 55 or older. The Company
does not fund its post-retirement benefit obligation. Rather, payments are made
as costs are incurred by covered retirees.
As of July 1, 1993, the Company's accumulated post-retirement benefit
obligation was approximately $31,925,000. Because the Company had previously
recorded a liability of $6,277,000 related to these benefits, the net transition
obligation, which will be amortized over 20 years, was $25,648,000. The
following table sets forth a reconciliation of the funded status of the accrued
post-retirement benefits liability to the related
F-21
<PAGE> 23
LEAR SEATING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
amounts recorded in the financial statements as of December 31, 1993, excluding
the amounts related to the acquisition of the NAB as discussed below (in
thousands):
<TABLE>
<S> <C>
Accumulated Post-retirement Benefit Obligation ("APBO"):
Retirees......................................................... $ 10,776
Fully eligible active plan participants.......................... 4,051
Other active participants........................................ 19,783
Unamortized Transition Obligation.................................. (25,007)
--------
Liability Recorded in the Balance Sheet (includes current liability
of $675)......................................................... $ 9,603
--------
--------
</TABLE>
Components of the Company's post-retirement benefit expense based upon an
adoption date of July 1, 1993 for the indicated periods were as follows (in
thousands):
<TABLE>
<CAPTION>
YEAR SIX MONTHS
ENDED ENDED
DECEMBER 31, DECEMBER 31,
1993 1993
------------ ------------
<S> <C> <C>
Service cost......................................... $1,719 $1,719
Interest cost on APBO................................ 1,313 1,313
Amortization of transition obligation................ 641 641
------------ ------------
Net post-retirement benefit expense.................. $3,673 $3,673
------------ ------------
------------ ------------
</TABLE>
The APBO as of December 31, 1993 was calculated using an assumed discount
rate of 7.5%. Health care costs were assumed to rise 13.8% in 1994, with the
assumed rate increase decreasing by 1% per year to a minimum of 6.4% in 2008. To
illustrate the significance of these assumptions, a rise in the assumed rate of
health care cost increases of 1% each year would increase the APBO as of
December 31, 1993 by $4,702,000 and increase the net post-retirement benefit
expense by $577,000 for the six months ended December 31, 1993.
In connection with the acquisition of the NAB (Note 6) the Company assumed
certain post-retirement obligations. Accordingly, a liability for the estimated
APBO of $965,000 was recorded in purchase accounting.
Prior to July 1, 1993, post-retirement benefit costs were expensed as
incurred. Benefit payments were approximately $1,076,000, $883,000, $826,000,
$758,000 and $400,000 for the years ended June 30, 1991, 1992 and 1993 and for
the twelve and six months ended December 31, 1993.
In November 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 112, "Employers Accounting for
Post-Employment Benefits." This statement requires that employers accrue the
cost of post-employment benefits during the employees' active service. The
Company will adopt this statement effective January 1, 1994. The Company
believes that the adoption of this statement will not have a material effect on
its financial position of results of operations.
(13) COMMITMENTS AND CONTINGENCIES
The Company is the subject of various lawsuits, claims and environmental
contingencies. In addition, the Company has been identified as a potentially
responsible party under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended ("Superfund"), for the cleanup of
contamination from hazardous substances at three Superfund sites, and may incur
indemnification obligations for cleanup at two additional sites. In the opinion
of management, the expected liability resulting from these matters is adequately
covered by amounts accrued, and will not have a material adverse effect on the
Company's consolidated financial position or future results of operations.
Two of the Company's European subsidiaries factor their accounts receivable
with a bank subject to limited recourse provisions and is charged a discount fee
equal to the current LIBOR rate plus 1%. The
F-22
<PAGE> 24
LEAR SEATING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
amount of such factored receivables, which was not included in accounts
receivable in the consolidated balance sheet at December 31, 1993, was
approximately $38,485,000.
Lease commitments at December 31, 1993 under noncancelable operating leases
with terms exceeding one year are as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
1994................................................................ $15,802
1995................................................................ 13,300
1996................................................................ 8,987
1997................................................................ 7,666
1998................................................................ 6,905
1999 and thereafter................................................. 41,233
-------
Total............................................................. $93,893
-------
-------
</TABLE>
The Company's operating leases cover principally buildings and
transportation equipment. Rent expense incurred under all operating leases and
charged to operations was $4,760,000, $8,598,000, $11,573,000, $12,599,000 and
$6,529,000 for the years ended June 30, 1991, 1992 and 1993 and the twelve and
six months ended December 31, 1993, respectively.
In January 1992, the Company entered into an agreement with Volvo
Personvagnar AB ("Volvo") to either purchase or cause a third party to purchase
certain real property from Volvo. From January 1, 1992 until September 1992, the
Company accounted for the transaction as a financing lease. In September 1992,
the City of Bengtsfors, Sweden purchased this property from Volvo and
subsequently leased it to LS-Sweden for a term of 15 years. The lease with the
City of Bengtsfors requires quarterly lease payments of approximately $500,000,
and is accounted for as an operating lease. These payments are included in the
table above.
(14) WARRANTS, STOCK OPTIONS AND COMMON STOCK SUBJECT TO REDEMPTION
Warrants
In 1988, the Company sold warrants exercisable into 3,300,000 shares of
common stock. The warrants, which entitle the holder to receive one share of
common stock for no additional consideration, became exercisable on December 1,
1993. None of the warrants have been exercised as of December 31, 1993.
1988 Stock Option Plan
At December 31, 1993, 2,131,272 options granted under a stock option plan
dated September 29, 1988 were issued and outstanding. The options vested over a
three-year period and are currently exercisable at $1.29 per share. The
difference between the exercise price and the market value at the date of grant
was amortized to expense over the vesting period.
1992 Stock Option Plan
Under the 1992 stock option plan, the Company may grant up to 1,914,000
stock options to the management investors and certain other management
personnel. During fiscal 1993, the Company granted 1,376,100 of these options.
On December 31, 1993, the remaining 537,900 options under this plan were
granted. Pursuant to a plan amendment effective December 31, 1993, all of the
options became immediately vested and will generally become exercisable at $5
per share on September 28, 1996.
Stock option expense for the six months and twelve months ended December
31, 1993 was approximately $14,474,000, and is included in incentive stock and
other compensation expense in the accompanying statements of operations. The
expense recognized reflects the immediate vesting of the previously unvested
F-23
<PAGE> 25
LEAR SEATING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
options on December 31, 1993, based on the estimated market value of the common
stock of the Company of $13.64 per share.
In addition to the stock option expense, incentive stock and other
compensation expense in the accompanying statements of operations includes
$3,542,000 in special management bonuses approved by the Board of Directors as
of December, 1993.
The changes in the number of options outstanding for the periods indicated
are as follows:
<TABLE>
<CAPTION>
TWELVE MONTHS SIX MONTHS
YEAR ENDED JUNE 30, ENDED ENDED
--------------------------------- DECEMBER 31, DECEMBER 31,
1991 1992 1993 1993 1993
--------- --------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Options outstanding at
beginning of period.... 2,232,186 2,309,868 2,131,272 3,507,372 3,507,372
Options Granted........ 97,086 -- 1,376,100 537,900 537,900
Options Revoked........ 19,404 178,596 -- -- --
--------- --------- --------- ------------- ------------
Options outstanding at
end of period.......... 2,309,868 2,131,272 3,507,372 4,045,272 4,045,272
--------- --------- --------- ------------- ------------
--------- --------- --------- ------------- ------------
</TABLE>
Under the terms of the Stockholders' and Registration Rights Agreement,
shares of common stock held by certain management investors are subject to
redemption at the option of the holder in the event of death, disability and
certain events of termination, as defined in the agreement. In such event, the
redemption price is the higher of cost or fair market value, as defined, as of
the date of the exercise of the option. Shares subject to such a redemption
option at December 31, 1993 total 990,033, distributed among 33 investors (Note
18).
Because no public market exists for the common stock of the Company and no
fair market value appraisal of the common stock had been performed, shares
subject to limited rights of redemption were stated at cost of $3.03 per share
as of June 30, 1991. At June 30, 1992 and June 30, 1993, these shares are stated
at $5 per share, representing the maximum estimated fair market value of the
stock based on the price per share in the September 1991 capitalization
transaction (Note 5) and the sale of common stock in July 1992 (Note 4). At
December 31, 1993, the shares are stated at $13.64 per share, representing an
estimated market value of the common stock of the Company. In the accompanying
consolidated balance sheets, common stock subject to redemption is stated net of
the related notes receivable from sale of common stock.
F-24
<PAGE> 26
LEAR SEATING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(15) GEOGRAPHIC SEGMENT DATA
Worldwide operations are divided into four geographic segments -- United
States, Canada, Europe and Mexico. The European geographic segment includes
operations in Austria, Finland, France, Germany, Sweden and the United Kingdom.
Geographic segment information is as follows (in thousands):
<TABLE>
<CAPTION>
TWELVE SIX
MONTHS MONTHS
YEAR ENDED JUNE 30, ENDED ENDED
------------------------------------ DECEMBER 31, DECEMBER 31,
1991 1992 1993 1993 1993
---------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales:
United States....... $ 490,611 $ 684,979 $ 847,133 $1,060,555 $ 587,064
Canada.............. 360,705 427,457 389,924 397,488 179,695
Europe.............. 145,540 268,175 434,146 407,488 191,844
Mexico.............. 128,880 173,383 203,218 208,647 106,410
Intersegment
sales............ (40,417) (131,254) (117,911) (123,890) (59,795)
---------- ---------- ---------- ------------ ------------
$1,085,319 $1,422,740 $1,756,510 $1,950,288 $1,005,218
---------- ---------- ---------- ------------ ------------
---------- ---------- ---------- ------------ ------------
Operating Income:
United States....... $ 6,181 $ 32,002 $ 51,752 $ 61,283 $ 27,081
Canada.............. 35,303 14,695 15,308 25,628 12,128
Europe.............. (3,667) 2,952 (3,907) (9,668) (7,608)
Mexico.............. 8,206 7,172 17,900 20,326 8,213
Unallocated(a)...... (1,353) 12 -- (18,016) (18,016)
---------- ---------- ---------- ------------ ------------
$ 44,670 $ 56,833 $ 81,053 $ 79,553 $ 21,798
---------- ---------- ---------- ------------ ------------
---------- ---------- ---------- ------------ ------------
Identifiable Assets:
United States....... $ 341,676 $ 350,694 $ 369,982 $ 679,686 $ 679,686
Canada.............. 209,813 197,371 200,195 180,144 180,144
Europe.............. 112,982 179,482 181,077 170,838 170,838
Mexico.............. 53,525 64,572 59,130 68,249 68,249
Unallocated(b)...... 11,674 7,765 9,825 14,377 14,377
---------- ---------- ---------- ------------ ------------
$ 729,670 $ 799,884 $ 820,209 $1,113,294 $1,113,294
---------- ---------- ---------- ------------ ------------
---------- ---------- ---------- ------------ ------------
</TABLE>
- -------------------------
(a) Unallocated Operating Income consists of incentive stock and other
compensation expense (Note 14).
(b) Unallocated Identifiable Assets consist of deferred financing fees.
The net assets of foreign subsidiaries were $169,461,000, $236,019,000,
$215,255,000 and $231,691,000 at June 30, 1991, 1992 and 1993 and December 31,
1993, respectively. The Company's share of foreign net income (loss) was
$8,438,000, $7,544,000, $8,508,000, $6,034,000 and $(2,412,000) for the years
ended June 30, 1991, 1992 and 1993 and for the twelve and six months ended
December 31, 1993, respectively.
A majority of the Company's sales are to automobile manufacturing
companies. The following is a summary of the percentage of net sales to major
customers:
<TABLE>
<CAPTION>
TWELVE MONTHS SIX MONTHS
YEAR ENDED JUNE 30, ENDED ENDED
-------------------- DECEMBER 31, DECEMBER 31,
1991 1992 1993 1993 1993
---- ---- ---- ------------- ------------
<S> <C> <C> <C> <C> <C>
General Motors Corporation.......... 51% 52% 48% 45% 42%
Ford Motor Company.................. 26 22 22 28 33
</TABLE>
F-25
<PAGE> 27
LEAR SEATING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In addition, a significant portion of remaining sales are to the above
automobile manufacturing companies through various other automotive suppliers or
to affiliates of these automobile manufacturing companies. The majority of the
Company's accounts receivable are due from the customers listed above.
(16) QUARTERLY FINANCIAL DATA (UNAUDITED)(A)
<TABLE>
<CAPTION>
THIRTEEN
WEEKS THIRTEEN WEEKS THIRTEEN WEEKS THIRTEEN WEEKS
ENDED ENDED ENDED ENDED
SEPTEMBER 28, DECEMBER 28, MARCH 28, JUNE 30,
1991 1991 1992 1992
------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net sales................ $ 284,431 $359,725 $339,233 $439,351
Gross profit............. 17,761 27,164 25,244 45,472
Income (loss) before
extraordinary item..... (14,689) 926 (4,667) 1,300
Net income (loss)........ (15,103) 926 (4,667) (3,386)
Income (loss) before
extraordinary item per
common share........... $(.88) $.03 $(.15) $.04
Net income (loss) per
common share........... $(.90) $.03 $(.15) $(.11)
</TABLE>
<TABLE>
<CAPTION>
FOURTEEN WEEKS THIRTEEN WEEKS THIRTEEN WEEKS THIRTEEN WEEKS
ENDED ENDED ENDED ENDED
OCTOBER 3, JANUARY 2, APRIL 3, JUNE 30,
1992(B) 1993(B) 1993 1993
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net sales............... $359,136 $452,304 $458,022 $487,048
Gross profit............ 21,415 33,104 40,224 57,756
Income (loss) before
extraordinary item.... (12,291) 1,520 6,120 14,765
Net income (loss)....... (12,291) 1,520 6,120 14,765
Income (loss) before
extraordinary item per
common share.......... $(.36) $.04 $.15 $.37
Net income (loss) per
common share.......... $(.36) $.04 $.15 $.37
</TABLE>
<TABLE>
<CAPTION>
THIRTEEN WEEKS THIRTEEN WEEKS
ENDED ENDED
OCTOBER 2, DECEMBER 31,
1993 1993
-------------- --------------
<S> <C> <C>
Net sales.......................................... $399,066 $606,152
Gross profit....................................... 21,827 50,408
Income (loss) before extraordinary item............ (10,829) (12,203)
Net income (loss).................................. (11,364) (23,352)
Income (loss) before extraordinary item per common
share............................................ $(.31) $(.34)
Net income (loss) per common share................. $(.32) $(.66)
</TABLE>
- -------------------------
(a) Dollar amounts are in thousands, except per share data.
(b) The provision for national income taxes for the fourteen weeks ended October
3, 1992 and the thirteen weeks ended January 2, 1993 were approximately
$1,687,000 and $2,763,000, respectively.
F-26
<PAGE> 28
LEAR SEATING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(17) FINANCIAL INSTRUMENTS
The Company hedges certain foreign currency risks through the use of
forward foreign exchange contracts and options. Such contracts are deemed as and
are effective as hedges of the related transactions. As such, gains and losses
from these contracts are deferred and are recognized on the settlement date,
consistent with the related transactions. As of December 31, 1993, the Company
and its subsidiaries have contracted to exchange up to $107,000,000 U.S. for
fixed amounts of Canadian dollars. In addition, the Company and its subsidiaries
have contracted to purchase 4,000,000 British Pounds for fixed amounts of German
Marks. The contracts mature during 1994.
The historical cost of certain of the Company's financial instruments
varies from the fair values of these instruments. The instruments listed below
have fair values which differ significantly from their carrying values. The
carrying values of all other financial instruments approximate the fair values
of such instruments.
<TABLE>
<CAPTION>
ITEM CARRYING VALUE FAIR VALUE
-------------------------------------------------- -------------- ------------
<S> <C> <C>
German Term Loan.................................. $ 7,592,000 $ 8,869,000
Senior Subordinated Notes......................... 125,000,000 136,250,000
Subordinated Debentures........................... 135,000,000 143,100,000
</TABLE>
Fair values of financial instruments were determined as follows:
Cash, Accounts Receivable, Accounts Payable and Notes Payable -- Fair
values were estimated to be equal to carrying values because of the
short-term, highly liquid nature of these instruments.
Senior Indebtedness -- Fair values were determined based on rates
currently available to the Company for similar borrowings of the same
maturities.
Subordinated Debt -- Fair values were determined by reference to
market prices of the securities in recent public transactions.
(18) STOCK SPLIT, INITIAL PUBLIC OFFERING AND AMENDMENT TO STOCKHOLDERS AND
REGISTRATION RIGHTS AGREEMENT -- SUBSEQUENT EVENTS
On March 2, 1994, the Company's Board of Directors approved a 33 to 1 split
of the common stock of the Company to be effective no later than June 1, 1994.
All references to the numbers of shares of common stock, stock options and
income (loss) per share in the accompanying financial statements and notes
thereto have been adjusted to give effect to the split as though it had already
occurred.
The weighted average number of common shares outstanding for the years
ended June 30, 1991, 1992 and 1993 and for the twelve and six months ended
December 31, 1993 were 16,493,499; 27,768,312; 40,049,064; 35,500,014; and
35,500,014, respectively. Shares exercisable under the 1988 Stock Option Plan,
1992 Stock Option Plan, and the warrants (Note 14) are included in the weighted
average share calculation for the year ended June 30, 1993. These shares are not
included in the calculation of weighted average common shares outstanding in
other periods as their impact would be anti-dilutive.
The Board of Directors also approved an initial public offering of the
Company's common stock. Upon consummation of the offering, the Stockholders and
Registration Rights Agreement will be amended in order to, among other things,
relax certain restrictions on transfers of common stock owned by the parties to
the agreement and remove the rights of certain management investors to require
the Company to redeem their stock upon death, disability and certain events of
termination.
F-27
<PAGE> 29
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
(a) Exhibits:
- -------------
<S> <C>
* 1.1 -- Form of U.S. Underwriting Agreement.
* 1.2 -- Form of International Underwriting Agreement.
* 1.3 -- Form of Power of Attorney and Custody Agreement of the Selling Stockholder
dated as of , 1994
* 3.1 -- Certificate of Incorporation of Lear Seating Corporation ("Lear" or the
"Company"), as currently in effect on September 30, 1988 (incorporated by
reference to Exhibit 3.1 to Holdings' and Lear's Registration Statement on
Form S-1 (No. 33-25256)).
* 3.2 -- Certificate of Amendment as filed on May 15, 1990 to the Certificate of
Incorporation of Lear (incorporated by reference to Exhibit 3.2 to Holdings'
and Lear's Registration Statement on Form S-1 (No. 33-47867)).
* 3.3 -- Form of Restated Certificate of Incorporation of Lear to be filed prior to the
consummation of the Offerings (incorporated by reference to Exhibit 3.3 to the
Company's Transition Report on Form 10-K filed on March 31, 1994).
* 3.4 -- Amended and Restated By-laws of Lear.
* 3.5 -- Merger Agreement dated December 31, 1993, by and between Lear and Holdings
(incorporated by reference to Exhibit 3.4 to Lear's Registration Statement on
Form S-1 (No. 33-51317)).
* 4.1 -- Indenture by and between Lear and The First National Bank of Boston, as
Trustee, relating to the 8 1/4% Subordinated Notes (incorporated by reference
to Exhibit 4.1 to the Company's Transition Report on Form 10-K filed on March
31, 1994).
* 4.2 -- Form of 11 1/4% Senior Subordinated Note Indenture dated as of July 15, 1992
between Lear and The Bank of New York, as Trustee (incorporated by reference
to Exhibit 4.1 to Holdings' and Lear's Registration Statement on Form S-1 (No.
33-47867)).
* 5.1 -- Opinion of Winston & Strawn, special counsel to the Company.
* 10.1 -- Amended and Restated Credit Agreement dated as of October 25, 1993 (the
"Credit Agreement") among Holdings, Lear, Chemical Bank, as agent for the bank
parties thereto, and Bankers Trust Company, The Bank of Nova Scotia, Citicorp
USA, Inc. and Lehman Commercial Paper Inc., as managing agents (incorporated
by reference to Exhibit 4 to the Company's Quarterly Report on Form 10-Q for
the quarter ended October 2, 1993).
* 10.2 -- Amendment No. 1 to the Credit Agreement dated as of January 27, 1994
(incorporated by reference to Exhibit 10 to Lear's Current Report on Form 8-K
dated February 11, 1994).
* 10.3 -- Credit Agreement dated as of March 8, 1989, as amended June 21, 1989 (the
"Canadian Credit Agreement"), between Lear Seating Canada, Ltd. and The Bank
of Nova Scotia with respect to the establishment of credit facilities
(incorporated by reference to Exhibit 10.28 to Lear's Annual Report on Form
10-K for the year ended June 30, 1989).
* 10.4 -- Amendment dated September 13, 1989 to the Canadian Credit Agreement
(incorporated by reference to Exhibit 10.30 to Lear's Quarterly Report on Form
10-Q for the quarter ended September 30, 1989).
* 10.5 -- Amendment dated March 28, 1990 to the Canadian Credit Agreement (incorporated
by reference to Exhibit 10.11 to Holdings' and Lear's Registration Statement
on Form S-1 (No. 33-47867)).
* 10.6 -- Amendment dated October 11, 1990 to the Canadian Credit Agreement
(incorporated by reference to Exhibit 10.12 to Holdings' and Lear's
Registration Statement on Form S-1 (No. 33-47867)).
* 10.7 -- Amendment dated January 23, 1992 to the Canadian Credit Agreement
(incorporated by reference to Exhibit 10.13 to Holdings' and Lear's
Registration Statement on Form S-1 (No. 33-47867)).
</TABLE>
II-1
<PAGE> 30
<TABLE>
<CAPTION>
(a) Exhibits:
- -------------
<S> <C>
* 10.8 -- Senior Executive Incentive Compensation Plan of Lear (incorporated by
reference to Exhibit 10.14 to Holdings' and Lear's Registration Statement on
Form S-1
(No. 33-47867)).
* 10.9 -- Management Incentive Compensation Plan of Lear (incorporated by reference to
Exhibit 10.15 to Holdings' and Lear's Registration Statement on Form S-1
(No. 33-47867)).
*10.10 -- Form of Warrant Agreement dated as of December 15, 1988 between Holdings and
Norwest Bank, N.A., as Warrant Agent (incorporated by reference to Exhibit 4.3
to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-25256)).
*10.11 -- Stock Option Agreement dated as of September 29, 1988 between Holdings and
certain management investors (the "Management Investors") (incorporated by
reference to Exhibit 10.6 to Holdings' and Lear's Registration Statement on
Form S-1 (No. 33-25256)).
*10.12 -- Employment Agreement dated September 29, 1988 between Lear and Kenneth L. Way
(incorporated by reference to Exhibit 10.7 to Holdings' and Lear's
Registration Statement on Form S-1 (No. 33-25256)).
*10.13 -- Employment Agreement dated September 29, 1988 between Lear and Robert E.
Rossiter (incorporated by reference to Exhibit 10.8 to Holdings' and Lear's
Registration Statement on Form S-1 (No. 33-25256)).
*10.14 -- Employment Agreement dated September 29, 1988 between Lear and James H.
Vandenberghe (incorporated by reference to Exhibit 10.9 to Holdings' and
Lear's Registration Statement on Form S-1 (No. 33-25256)).
*10.15 -- Employment Agreement dated September 29, 1988 between Lear and James A.
Hollars (incorporated by reference to Exhibit 10.10 to Holdings' and Lear's
Registration Statement on Form S-1 (No. 33-25256)).
*10.16 -- Employment Agreement dated September 29, 1988 between Lear and Randal T.
Murphy (incorporated by reference to Exhibit 10.12 to Holdings' and Lear's
Registration Statement on Form S-1 (No. 33-25256)).
*10.17 -- Employment Agreement dated as of September 29, 1988 between Lear and Ted E.
Melson (incorporated by reference to Exhibit 10.13 to Holdings' and Lear's
Registration Statement on Form S-1 (No. 33-25256)).
*10.18 -- Employment Agreement dated June 1, 1992 between Lear and Donald J. Stebbins
(incorporated by reference to Exhibit 10.17 to Lear's Registration Statement
on Form S-1 (No. 33-51317)).
*10.19 -- Amendments to Employment Agreements dated as of September 21, 1991 by and
between Lear and each of Messrs. Way, Vandenberghe, Rossiter, Hollars, Melson
and Murphy (incorporated by reference to Exhibit 28.7 to Holdings' Current
Report on Form 8-K dated September 24, 1991).
*10.20 -- Stock Purchase Agreement dated July 25, 1990 by and between Fair Haven
Industries, Inc., Bradley D. Osgood, Robert Michelin and LS Acquisition
Corporation No. 24. (incorporated by reference to Exhibit 10.34 to Holdings'
Annual Report on Form 10-K for the year ended June 30, 1991).
*10.21 -- Purchase Agreement dated July, 1990 by and between Fairfax Industries, Inc.
and LS Acquisition Corporation No. 24 (incorporated by reference to Exhibit
10.37 to the Company's Annual Report on Form 10-K for the year ended June 30,
1991).
*10.22 -- Amended and Restated Stockholders and Registration Rights Agreement dated as
of September 27, 1991 by and among Holdings, the Lehman Funds, Lehman Merchant
Banking Partners Inc., as representative of the Lehman Partnerships, FIMA
Finance Management Inc., a British Virgin Islands corporation, and the
Management Investors (incorporated by reference to Exhibit 2.2 to Holdings'
Current Report on Form 8-K dated September 24, 1991).
</TABLE>
II-2
<PAGE> 31
<TABLE>
<CAPTION>
(a) Exhibits:
- -------------
<S> <C>
*10.23 -- Waiver and Agreement dated September 27, 1991, by and among Holdings, Kidder
Peabody Group Inc., KP/Hanover Partners 1988, L.P., General Electric Capital
Corporation, FIMA Finance Management Inc., a Panamanian corporation, FIMA
Finance Management Inc., a British Virgin Islands corporation, MH Capital
Partners Inc., successor by merger and name change to MH Equity Corp.,
SO.PA.F. Societa Partecipazioni Finanziarie S.p.A., INVEST Societa Italiana
Investimenti S.p.A., the Lehman Partnerships and the Management Investors
(incorporated by reference to Exhibit 2.3 to Holdings' Current Report on Form
8-K dated September 24, 1991).
*10.24 -- Form of Amendment to Amended and Restated Stockholders and Registration Rights
Agreement dated as of March 31, 1994 (incorporated by reference to Exhibit
10.24 to the Company's Transition Report on Form 10-K filed on March 31,
1994).
*10.25 -- 1992 Stock Option Plan (incorporated by reference to Exhibit 10.7 to Lear's
Annual Report on Form 10-K for the year ended June 30, 1993).
*10.26 -- Form of Amendment to 1992 Stock Option Plan dated March , 1994 (incorporated
by reference to Exhibit 10.26 to the Company's Transition Report on Form 10-K
filed on March 31, 1994).
*10.27 -- Form of 1994 Stock Option Plan (incorporated by reference to Exhibit 10.27 to
the Company's Transition Report on Form 10-K filed on March 31, 1994).
*10.28 -- Stock Purchase Agreement dated as of July 21, 1992 among the Company, the
Lehman Funds and FIMA Finance Management Inc., a British Virgin Islands
corporation (incorporated by reference to Exhibit 10.33 to Holdings' and
Lear's Registration Statement on Form S-1 (No. 33-47867)).
*10.29 -- Asset Purchase & Supply Agreement dated as of November 18, 1991 between Lear
Seating Sweden, AB and Volvo Car Corporation (incorporated by reference to
Exhibit 10.34 to Holdings' and Lear's Registration Statement on Form S-1 (No.
33-47867)).
*10.30 -- Purchase Agreement dated as of November 1, 1993 between the Company and Ford
Motor Company (incorporated by reference to Exhibit 10 to the Company's
Quarterly Report on Form 10-Q for the quarter ended October 2, 1993).
* 11.1 -- Computation of income (loss) per share.
* 21.1 -- List of subsidiaries of the Company.
23.1 -- Consent of Arthur Andersen & Co. dated April 4, 1994.
* 23.2 -- Consent of Coopers & Lybrand dated April 1, 1994.
* 23.3 -- Consent of Winston & Strawn (included in Exhibit 5.1).
* 24.1 -- Powers of Attorney.
* 99.1 -- Consent of Mr. Washkowitz.
</TABLE>
- -------------------------
* Previously filed.
(b) Financial Statement Schedules:
Lear Seating Corporation and Subsidiaries
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Schedule II -- Amounts Receivable from Employees
Schedule V -- Property, Plant and Equipment
Schedule VI -- Accumulated Depreciation of Property, Plant and Equipment
Schedule VII -- Guarantees of Securities of Other Issuers
Schedule VIII -- Valuation and Qualifying Accounts
Schedule X -- Supplementary Income Statement Information
II-3
<PAGE> 32
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant has duly caused this Amendment to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Southfield, State of
Michigan on April 4, 1994.
LEAR SEATING CORPORATION
By: /s/ KENNETH L. WAY
------------------------------
Kenneth L. Way
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
has been signed below by the following persons in the capacities and on the
dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ KENNETH L. WAY Chairman of the Board and April 4, 1994
--------------------------------- Chief Executive Officer
Kenneth L. Way (Principal Executive Officer)
* President and Director April 4, 1994
---------------------------------
Robert E. Rossiter
/s/ JAMES H. VANDENBERGHE Executive Vice President and April 4, 1994
--------------------------------- Secretary (Principal Financial
James H. Vandenberghe and Principal Accounting Officer)
* Director April 4, 1994
---------------------------------
Larry W. McCurdy
* Director April 4, 1994
---------------------------------
N. Peter Ruys
* Director April 4, 1994
---------------------------------
Gian Andrea Botta
* Director April 4, 1994
---------------------------------
Eliot Fried
* Director April 4, 1994
---------------------------------
Robert W. Shower
* Director April 4, 1994
---------------------------------
Jeffrey P. Hughes
* Director April 4, 1994
---------------------------------
David P. Spalding
* Director April 4, 1994
---------------------------------
James A. Stern
* Director April 4, 1994
---------------------------------
Gordon C. Davidson
*By: /s/ JAMES H. VANDENBERGHE
---------------------------------
James H. Vandenberghe
Attorney-in-Fact
</TABLE>
II-5
<PAGE> 33
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Lear Seating Corporation:
We have audited in accordance with generally accepted auditing standards
the consolidated financial statements of LEAR SEATING CORPORATION AND
SUBSIDIARIES ("the Company") included in this registration statement and have
issued our report thereon dated February 10, 1994 (except with respect to the
matters discussed in Note 18, as to which the date is March 2, 1994). Our audits
were made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The schedules on pages S-2 through S-7 are the
responsibility of the Company's management and are presented for purposes of
complying with the Securities and Exchange Commission's rules and are not part
of the basic financial statements. These schedules have been subjected to the
auditing procedures applied in the audits of the consolidated financial
statements and, in our opinion, fairly state in all material respects the
financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.
/s/ ARTHUR ANDERSEN & CO.
ARTHUR ANDERSEN & CO.
Detroit, Michigan
February 10, 1994 (Except with
respect to the matters discussed
in Note 18 to the consolidated
financial statements, as to which
the date is March 2, 1994.)
S-1
<PAGE> 34
LEAR SEATING CORPORATION AND SUBSIDIARIES
SCHEDULE II -- AMOUNTS RECEIVABLE FROM EMPLOYEES(A)
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING END
NAME OF PERSON OF PERIOD ADDITIONS DEDUCTIONS OF PERIOD
- ---------------------------------------------------------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
FOR THE YEAR ENDED JUNE 30, 1991:
K. Way, Chairman and Chief Executive Officer............ $ 368 $ 42 $ -- $ 410
R. Rossiter, President and Chief Operating Officer...... 368 42 -- 410
J. Vandenberghe, Executive Vice President, Chief
Financial Officer and Secretary....................... 123 14 -- 137
J. Hollars, Senior Vice President -- International
Operations............................................ 123 14 -- 137
T. Melson, Senior Vice President -- Manufacturing
Planning.............................................. 123 14 -- 137
R. Murphy, Vice President and General Manager --
Chrysler/BMW Operations............................... 123 14 -- 137
R. Williams, Vice President -- European JIT
Operations............................................ 123 14 -- 137
-------- ------- -------- --------
$1,351 $ 154 $ -- $1,505
-------- ------- -------- --------
-------- ------- -------- --------
FOR THE YEAR ENDED JUNE 30, 1992:
K. Way, Chairman and Chief Executive Officer............ $ 410 $ 36 $ -- $ 446
R. Rossiter, President and Chief Operating Officer...... 410 36 -- 446
J. Vandenberghe, Executive Vice President, Chief
Financial Officer and Secretary....................... 137 12 -- 149
J. Hollars, Senior Vice President -- International
Operations............................................ 137 12 -- 149
T. Melson, Senior Vice President -- Manufacturing
Planning.............................................. 137 12 -- 149
R. Murphy, Vice President and General Manager --
Chrysler/BMW Operations............................... 137 12 -- 149
R. Williams, Vice President -- European JIT
Operations............................................ 137 -- (137) --
-------- ------- -------- --------
$1,505 $ 120 $ (137) $1,488
-------- ------- -------- --------
-------- ------- -------- --------
FOR THE YEAR ENDED JUNE 30, 1993:
K. Way, Chairman and Chief Executive Officer............ $ 446 $ 34 $ -- $ 480
R. Rossiter, President and Chief Operating Officer...... 446 34 -- 480
J. Vandenberghe, Executive Vice President, Chief
Financial Officer and Secretary....................... 149 11 -- 160
J. Hollars, Senior Vice President -- International
Operations............................................ 149 11 -- 160
T. Melson, Senior Vice President -- Manufacturing
Planning.............................................. 149 11 -- 160
R. Murphy, Vice President and General Manager --
Chrysler/BMW Operations............................... 149 11 -- 160
-------- ------- -------- --------
$1,488 $ 112 $ -- $1,600
-------- ------- -------- --------
-------- ------- -------- --------
FOR THE SIX MONTHS ENDED DECEMBER 31, 1993:
K. Way, Chairman and Chief Executive Officer............ $ 480 $ 18 $ -- $ 498
R. Rossiter, President and Chief Operating Officer...... 480 18 -- 498
J. Vandenberghe, Executive Vice President, Chief
Financial Officer and Secretary....................... 160 6 -- 166
J. Hollars, Senior Vice President -- International
Operations............................................ 160 6 -- 166
T. Melson, Senior Vice President -- Manufacturing
Planning.............................................. 160 6 -- 166
R. Murphy, Vice President and General Manager --
Chrysler/BMW Operations............................... 160 6 -- 166
-------- ------- -------- --------
$1,600 $ 60 $ -- $1,660
-------- ------- -------- --------
-------- ------- -------- --------
</TABLE>
- -------------------------
(A) Long-term notes were issued in connection with the sale of stock to certain
management investors. These notes, including accrued interest, mature on
January 31, 1997 and bear interest at a rate of prime plus 1 1/2% through
December 31, 1993.
S-2
<PAGE> 35
LEAR SEATING CORPORATION AND SUBSIDIARIES
SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING ADDITIONS OTHER END
DESCRIPTION OF PERIOD AT COST RETIREMENTS CHANGES(B) OF PERIOD
- ---------------------------------- ---------- --------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED JUNE 30, 1991:
Land............................ $ 12,697 $ -- $ (900) $ 499 $ 12,296
Buildings and improvements...... 58,490 5,487 (1,532) 2,989 65,434
Machinery and equipment......... 126,579 15,376 (4,194) 2,546 140,307
Construction in progress........ 2,334 29(a) (440) 1 1,924
---------- --------- ----------- ---------- ----------
$ 200,100 $ 20,892 $ (7,066) $ 6,035(c) $ 219,961
---------- --------- ----------- ---------- ----------
---------- --------- ----------- ---------- ----------
FOR THE YEAR ENDED JUNE 30, 1992:
Land............................ $ 12,296 $ 1,626 $ (205) $ 1 $ 13,718
Buildings and improvements...... 65,434 14,608 (244) (546) 79,252
Machinery and equipment......... 140,307 22,014 (1,746) (452) 160,123
Construction in progress........ 1,924 478(a) (197) 939 3,144
---------- --------- ----------- ---------- ----------
$ 219,961 $ 38,726(e) $ (2,392) $ (58)(d) $ 256,237
---------- --------- ----------- ---------- ----------
---------- --------- ----------- ---------- ----------
FOR THE YEAR ENDED JUNE 30, 1993:
Land............................ $ 13,718 $ 1,474 $ (1,608) $ (179) $ 13,405
Buildings and improvements...... 79,252 3,722 (9,004) (955) 73,015
Machinery and equipment......... 160,123 27,353 (3,303) (3,965) 180,208
Construction in progress........ 3,144 (954)(a) (47) (49) 2,094
---------- --------- ----------- ---------- ----------
$ 256,237 $ 31,595 $ (13,962)(f) $ (5,148) $ 268,722
---------- --------- ----------- ---------- ----------
---------- --------- ----------- ---------- ----------
FOR THE SIX MONTHS ENDED DECEMBER
31, 1993:
Land............................ $ 13,405 $ 18,417 $ (7) $ (526) $ 31,289
Buildings and improvements...... 73,015 43,523 -- (2,024) 114,514
Machinery and equipment......... 180,208 49,650 (13,988) (5,216) 210,654
Construction in progress........ 2,094 2,964(a) -- (28) 5,030
---------- --------- ----------- ---------- ----------
$ 268,722 $ 114,554(g) $ (13,995) $ (7,794) $ 361,487
---------- --------- ----------- ---------- ----------
---------- --------- ----------- ---------- ----------
</TABLE>
- -------------------------
(a) Net of transfers to various property, plant and equipment categories.
(b) Includes changes due to fluctuations in foreign currency exchange rates.
(c) Amount includes $5,977,000 of additions to property, plant and equipment
through acquisitions (Note 6 to the financial statements).
(d) Amount includes $234,000 of additions to property, plant and equipment
through acquisitions (Note 6 to the financial statements).
(e) Amount includes $10,800,000 of additions to property, plant and equipment
through a financing lease obligation (Note 13 to the financial statements).
(f) Amount includes $10,800,000 of retirement of property, plant and equipment
through release from a financing lease obligation (Note 13 to the financial
statements).
(g) Amount includes $85,565,000 of additions to property, plant and equipment
through acquisitions (Note 6 to the financial statements).
S-3
<PAGE> 36
LEAR SEATING CORPORATION AND SUBSIDIARIES
SCHEDULE VI -- ACCUMULATED DEPRECIATION
OF PROPERTY, PLANT AND EQUIPMENT
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING ADDITIONS OTHER END
DESCRIPTION OF PERIOD AT COST RETIREMENTS CHANGES(A) OF PERIOD
- ------------------------------------------ ---------- --------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED JUNE 30, 1991:
Buildings and improvements.............. $ 3,985 $ 2,429 $ (180) $ (1) $ 6,233
Machinery and equipment................. 27,246 20,519 (2,086) (133) 45,546
---------- --------- ----------- ---------- ----------
$ 31,231 $22,948 $(2,266) $ (134) $ 51,779
---------- --------- ----------- ---------- ----------
---------- --------- ----------- ---------- ----------
FOR THE YEAR ENDED JUNE 30, 1992:
Buildings and improvements.............. $ 6,233 $ 2,892 $ (219) $ (69) $ 8,837
Machinery and equipment................. 45,546 23,336 (1,177) 190 67,895
---------- --------- ----------- ---------- ----------
$ 51,779 $26,228 $(1,396) $ 121 $ 76,732
---------- --------- ----------- ---------- ----------
---------- --------- ----------- ---------- ----------
FOR THE YEAR ENDED JUNE 30, 1993:
Buildings and improvements.............. $ 8,837 $ 3,202 $ (294) $ (149) $ 11,596
Machinery and equipment................. 67,895 27,904 (2,328) (1,540) 91,931
---------- --------- ----------- ---------- ----------
$ 76,732 $31,106 $(2,622) $ (1,689) $ 103,527
---------- --------- ----------- ---------- ----------
---------- --------- ----------- ---------- ----------
FOR THE SIX MONTHS ENDED DECEMBER 31,
1993:
Building and improvements............... $ 11,596 $ 1,655 $ (331) $ (269) $ 12,651
Machinery and equipment................. 91,931 15,456 (7,157) (2,351) 97,879
---------- --------- ----------- ---------- ----------
$ 103,527 $17,111 $(7,488) $ (2,620) $ 110,530
---------- --------- ----------- ---------- ----------
---------- --------- ----------- ---------- ----------
</TABLE>
- -------------------------
(a) Includes changes due to fluctuations in foreign currency exchange rates.
S-4
<PAGE> 37
LEAR SEATING CORPORATION AND SUBSIDIARIES
SCHEDULE VII -- GUARANTEES OF SECURITIES OF OTHER ISSUERS
<TABLE>
<CAPTION>
TOTAL AMOUNT
TITLE OF ISSUE OF GUARANTEED AND
NAME OF ISSUER SECURITIES GUARANTEED OUTSTANDING NATURE OF GUARANTEE
- ------------------------ ------------------------ -------------- ------------------------
<S> <C> <C> <C>
General Seating of Letter of credit $1,995,000 Guarantee of payment of
America, Inc. securing an Economic amounts outstanding on
Development Revenue guaranteed obligations
Bond, Series 1988
General Seating of Banker's Acceptance $4,258,000 Guarantee of payment of
Canada, Ltd. unsecured bank loan
------------
$6,253,000
------------
------------
</TABLE>
S-5
<PAGE> 38
LEAR SEATING CORPORATION AND SUBSIDIARIES
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING OTHER END
DESCRIPTION OF PERIOD ADDITIONS RETIREMENTS CHANGES(A) OF PERIOD
- ------------------------------------------ ---------- --------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED JUNE 30, 1991:
Valuation of accounts deducted from
related assets:
Allowance for doubtful accounts...... $ 32 $ 170 $ (103) $ -- $ 99
Reserve for unmerchantable
inventories........................ 681 2,321 (1,663) (24) 1,315
Deferred tax asset valuation
allowance.......................... 18,105 -- -- -- 18,105
---------- --------- ----------- ---------- ----------
$ 18,818 $ 2,491 $(1,766) $ (24) $ 19,519
---------- --------- ----------- ---------- ----------
---------- --------- ----------- ---------- ----------
FOR THE YEAR ENDED JUNE 30, 1992:
Valuation of accounts deducted from
related assets:
Allowance for doubtful accounts...... $ 99 $ 206 $ (68) $ 2 $ 239
Reserve for unmerchantable
inventories........................ 1,315 2,840 (1,740) (34) 2,381
Deferred tax asset valuation
allowance.......................... 18,105 6,104 -- -- 24,209
---------- --------- ----------- ---------- ----------
$ 19,519 $ 9,150 $(1,808) $ (32) $ 26,829
---------- --------- ----------- ---------- ----------
---------- --------- ----------- ---------- ----------
FOR THE YEAR ENDED JUNE 30, 1993:
Valuation of accounts deducted from
related assets:
Allowance for doubtful accounts...... $ 239 $ 473 $ (187) $ (9) $ 516
Reserve for unmerchantable
inventories........................ 2,381 1,390 (1,976) (56) 1,739
Deferred tax asset valuation
allowance.......................... 24,209 8,345 (2,446) -- 30,108
---------- --------- ----------- ---------- ----------
$ 26,829 $10,208 $(4,609) $ (65) $ 32,363
---------- --------- ----------- ---------- ----------
---------- --------- ----------- ---------- ----------
FOR THE SIX MONTHS ENDED DECEMBER 31,
1993:
Valuation of accounts deducted from
related assets:
Allowance for doubtful accounts...... $ 516 $ 318 $ (144) $ (46) $ 644
Reserve for unmerchantable
inventories........................ 1,739 617 (243) (180) 1,933
Deferred tax asset valuation
allowance.......................... 30,108 22,959 (1,613) -- 51,454
---------- --------- ----------- ---------- ----------
$ 32,363 $23,894 $(2,000) $ (226) $ 54,031
---------- --------- ----------- ---------- ----------
---------- --------- ----------- ---------- ----------
</TABLE>
- -------------------------
(a) Includes changes due to fluctuations in foreign currency exchange rates.
S-6
<PAGE> 39
LEAR SEATING CORPORATION AND SUBSIDIARIES
SCHEDULE X -- SUPPLEMENTARY INCOME STATEMENT INFORMATION
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE
FOR THE FOR THE FOR THE FOR THE SIX MONTHS
YEAR ENDED YEAR ENDED YEAR ENDED TWELVE MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30, DECEMBER 31, DECEMBER 31,
1991 1992 1993 1993 1993
----------- ----------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Charged to costs and
expenses -- Maintenance
and repairs............... $15,294 $20,545 $24,883 $26,181 $ 13,739
</TABLE>
Amounts charged to costs and expenses for (1) taxes, other than payroll and
income taxes, (2) royalties, and (3) advertising costs have been omitted since
each is less than 1% of net sales.
S-7
<PAGE> 40
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- --------- --------------------------------------------------------------------- ------------
<S> <C> <C>
* 1.1 -- Form of U.S. Underwriting Agreement.
* 1.2 -- Form of International Underwriting Agreement.
* 1.3 -- Form of Power of Attorney and Custody Agreement of the Selling
Stockholder dated as of , 1994
* 3.1 -- Certificate of Incorporation of Lear Seating Corporation ("Lear" or
the "Company"), as currently in effect on September 30, 1988
(incorporated by reference to Exhibit 3.1 to Holdings' and Lear's
Registration Statement on Form S-1 (No. 33-25256)).
* 3.2 -- Certificate of Amendment as filed on May 15, 1990 to the Certificate
of Incorporation of Lear (incorporated by reference to Exhibit 3.2 to
Holdings' and Lear's Registration Statement on Form S-1 (No.
33-47867)).
* 3.3 -- Form of Restated Certificate of Incorporation of Lear to be filed
prior to the consummation of the Offerings (incorporated by reference
to Exhibit 3.3 to the Company's Transition Report on Form 10-K filed
on March 31, 1994).
* 3.4 -- Amended and Restated By-laws of Lear.
* 3.5 -- Merger Agreement dated December 31, 1993, by and between Lear and
Holdings (incorporated by reference to Exhibit 3.4 to Lear's
Registration Statement on Form S-1 (No. 33-51317)).
* 4.1 -- Indenture by and between Lear and The First National Bank of Boston,
as Trustee, relating to the 8 1/4% Subordinated Notes (incorporated
by reference to Exhibit 4.1 to the Company's Transition Report on
Form 10-K filed on March 31, 1994).
* 4.2 -- Form of 11 1/4% Senior Subordinated Note Indenture dated as of July
15, 1992 between Lear and The Bank of New York, as Trustee
(incorporated by reference to Exhibit 4.1 to Holdings' and Lear's
Registration Statement on Form S-1 (No. 33-47867)).
* 5.1 -- Opinion of Winston & Strawn, special counsel to the Company.
* 10.1 -- Amended and Restated Credit Agreement dated as of October 25, 1993
(the "Credit Agreement") among Holdings, Lear, Chemical Bank, as
agent for the bank parties thereto, and Bankers Trust Company, The
Bank of Nova Scotia, Citicorp USA, Inc. and Lehman Commercial Paper
Inc., as managing agents (incorporated by reference to Exhibit 4 to
the Company's Quarterly Report on Form 10-Q for the quarter ended
October 2, 1993).
* 10.2 -- Amendment No. 1 to the Credit Agreement dated as of January 27, 1994
(incorporated by reference to Exhibit 10 to Lear's Current Report on
Form 8-K dated February 11, 1994).
* 10.3 -- Credit Agreement dated as of March 8, 1989, as amended June 21, 1989
(the "Canadian Credit Agreement"), between Lear Seating Canada, Ltd.
and The Bank of Nova Scotia with respect to the establishment of
credit facilities (incorporated by reference to Exhibit 10.28 to
Lear's Annual Report on Form 10-K for the year ended June 30, 1989).
* 10.4 -- Amendment dated September 13, 1989 to the Canadian Credit Agreement
(incorporated by reference to Exhibit 10.30 to Lear's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1989).
* 10.5 -- Amendment dated March 28, 1990 to the Canadian Credit Agreement
(incorporated by reference to Exhibit 10.11 to Holdings' and Lear's
Registration Statement on Form S-1 (No. 33-47867)).
* 10.6 -- Amendment dated October 11, 1990 to the Canadian Credit Agreement
(incorporated by reference to Exhibit 10.12 to Holdings' and Lear's
Registration Statement on Form S-1 (No. 33-47867)).
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* 10.7 -- Amendment dated January 23, 1992 to the Canadian Credit Agreement
(incorporated by reference to Exhibit 10.13 to Holdings' and Lear's
Registration Statement on Form S-1 (No. 33-47867)).
* 10.8 -- Senior Executive Incentive Compensation Plan of Lear (incorporated by
reference to Exhibit 10.14 to Holdings' and Lear's Registration
Statement on Form S-1 (No. 33-47867)).
* 10.9 -- Management Incentive Compensation Plan of Lear (incorporated by
reference to Exhibit 10.15 to Holdings' and Lear's Registration
Statement on Form S-1 (No. 33-47867)).
*10.10 -- Form of Warrant Agreement dated as of December 15, 1988 between
Holdings and Norwest Bank, N.A., as Warrant Agent (incorporated by
reference to Exhibit 4.3 to Holdings' and Lear's Registration
Statement on Form S-1 (No. 33-25256)).
*10.11 -- Stock Option Agreement dated as of September 29, 1988 between
Holdings and certain management investors (the "Management
Investors") (incorporated by reference to Exhibit 10.6 to Holdings'
and Lear's Registration Statement on Form S-1 (No. 33-25256)).
*10.12 -- Employment Agreement dated September 29, 1998 between Lear and
Kenneth L. Way (incorporated by reference to Exhibit 10.7 to
Holdings' and Lear's Registration Statement on Form S-1 (No.
33-25256)).
*10.13 -- Employment Agreement dated September 29, 1988 between Lear and Robert
E. Rossiter (incorporated by reference to Exhibit 10.8 to Holdings'
and Lear's Registration Statement on Form S-1 (No. 33-25256)).
*10.14 -- Employment Agreement dated September 29, 1988 between Lear and James
H. Vandenberghe (incorporated by reference to Exhibit 10.9 to
Holdings' and Lear's Registration Statement on Form S-1 (No.
33-25256)).
*10.15 -- Employment Agreement dated September 29, 1988 between Lear and James
A. Hollars (incorporated by reference to Exhibit 10.10 to Holdings'
and Lear's Registration Statement on Form S-1 (No. 33-25256)).
*10.16 -- Employment Agreement dated September 29, 1988 between Lear and Randal
T. Murphy (incorporated by reference to Exhibit 10.12 to Holdings'
and Lear's Registration Statement on Form S-1 (No. 33-25256)).
*10.17 -- Employment Agreement dated as of September 29, 1988 between Lear and
Ted E. Melson (incorporated by reference to Exhibit 10.13 to
Holdings' and Lear's Registration Statement on Form S-1 (No.
33-25256)).
*10.18 -- Employment Agreement dated June 1, 1992 between Lear and Donald J.
Stebbins (incorporated by reference to Exhibit 10.17 to Lear's
Registration Statement on Form S-1 (No. 33-51317)).
*10.19 -- Amendments to Employment Agreements dated as of September 21, 1991 by
and between Lear and each of Messrs. Way, Vandenberghe, Rossiter,
Hollars, Melson and Murphy (incorporated by reference to Exhibit 28.7
to Holdings' Current Report on Form 8-K dated September 24, 1991).
*10.20 -- Stock Purchase Agreement dated July 25, 1990 by and between Fair
Haven Industries, Inc., Bradley D. Osgood, Robert Michelin and LS
Acquisition Corporation No. 24. (incorporated by reference to Exhibit
10.34 to Holdings' Annual Report on Form 10-K for the year ended June
30, 1991).
*10.21 -- Purchase Agreement dated July, 1990 by and between Fairfax
Industries, Inc. and LS Acquisition Corporation No. 24 (incorporated
by reference to Exhibit 10.37 to the Company's Annual Report on Form
10-K for the year ended June 30, 1991).
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*10.22 -- Amended and Restated Stockholders and Registration Rights Agreement
dated as of September 27, 1991 by and among Holdings, the Lehman
Funds, Lehman Merchant Banking Partners Inc., as representative of
the Lehman Partnerships, FIMA Finance Management Inc., a British
Virgin Islands corporation, and the Management Investors
(incorporated by reference to Exhibit 2.2 to Holdings' Current Report
on Form 8-K dated September 24, 1991).
*10.23 -- Waiver and Agreement dated September 27, 1991, by and among Holdings,
Kidder Peabody Group Inc., KP/Hanover Partners 1988, L.P., General
Electric Capital Corporation, FIMA Finance Management Inc., a
Panamanian corporation, FIMA Finance Management Inc., a British
Virgin Islands corporation, MH Capital Partners Inc., successor by
merger and name change to MH Equity Corp., SO.PA.F. Societa
Partecipazioni Finanziarie S.p.A., INVEST Societa Italiana
Investimenti S.p.A., the Lehman Partnerships and the Management
Investors (incorporated by reference to Exhibit 2.3 to Holdings'
Current Report on Form 8-K dated September 24, 1991).
*10.24 -- Form of Amendment to Amended and Restated Stockholders and
Registration Rights Agreement dated as of March 31, 1994
(incorporated by reference to Exhibit 10.24 to the Company's
Transition Report on Form 10-K filed on March 31, 1994).
*10.25 -- 1992 Stock Option Plan (incorporated by reference to Exhibit 10.7 to
Lear's Annual Report on Form 10-K for the year ended June 30, 1993).
*10.26 -- Form of Amendment to 1992 Stock Option Plan dated March , 1994
(incorporated by reference to Exhibit 10.26 to the Company's
Transition Report on Form 10-K filed on March 31, 1994).
*10.27 -- Form of 1994 Stock Option Plan (incorporated by reference to Exhibit
10.27 to the Company's Transition Report on Form 10-K filed on March
31, 1994).
*10.28 -- Stock Purchase Agreement dated as of July 21, 1992 among the Company,
the Lehman Funds and FIMA Finance Management Inc., a British Virgin
Islands corporation (incorporated by reference to Exhibit 10.33 to
Holdings' and Lear's Registration Statement on Form S-1 (No.
33-47867)).
*10.29 -- Asset Purchase & Supply Agreement dated as of November 18, 1991
between Lear Seating Sweden, AB and Volvo Car Corporation
(incorporated by reference to Exhibit 10.34 to Holdings' and Lear's
Registration Statement on Form S-1 (No. 33-47867)).
*10.30 -- Purchase Agreement dated as of November 1, 1993 between the Company
and Ford Motor Company (incorporated by reference to Exhibit 10 to
the Company's Quarterly Report on Form 10-Q for the quarter ended
October 2, 1993).
* 11.1 -- Computation of income (loss) per share.
* 21.1 -- List of subsidiaries of the Company.
23.1 -- Consent of Arthur Andersen & Co. dated April 4, 1994.
* 23.2 -- Consent of Coopers & Lybrand dated April 1, 1994.
* 23.3 -- Consent of Winston & Strawn (included in Exhibit 5.1).
* 24.1 -- Powers of Attorney.
* 99.1 -- Consent of Mr. Washkowitz.
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* Previously filed.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports and all references to our Firm included in or made a part of this
registration statement.
/S/ ARTHUR ANDERSEN & CO.
ARTHUR ANDERSEN & CO.
Detroit, Michigan
April 4, 1994
