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Pursuant to Rule 424b3
Registration No. 333-16341
PROSPECTUS
750,000 SHARES
[LEAR CORPORATION LOGO]
COMMON STOCK
DIRECT STOCK PURCHASE AND DIVIDEND REINVESTMENT PLAN
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Lear Corporation ("Lear" or the "Company") is offering its stockholders and
other interested investors the opportunity to purchase shares of its common
stock, $0.01 par value ("Common Stock"), pursuant to the Company's Systematic
Investment Plan, a direct stock purchase and dividend reinvestment plan (the
"Plan"). The Company does not currently pay cash dividends and, to the extent
that the Company decides to declare a dividend in the future, the amount of
dividends it may declare is limited by its existing credit agreements and by the
indentures governing its subordinated indebtedness. The dividend reinvestment
feature of the Plan will not be available until the Company declares a cash
dividend. Until such time, purchases of shares of Common Stock under the Plan
will only be available pursuant to the optional cash investment feature of the
Plan. The Plan is designed to provide interested investors a convenient and
economical way to acquire shares of Common Stock and to reinvest cash dividends.
The Bank of New York (the "Plan Administrator") is the administrator of the Plan
and acts as agent for participants in the Plan ("Participants").
Features of the Plan include:
- Persons not currently owning Common Stock may become Participants with
an initial cash contribution of at least $250 to purchase shares under
the Plan.
- Existing registered stockholders may become Participants in the Plan
by simply completing and returning the Plan enrollment form to the
Plan Administrator.
- Following enrollment in the Plan, Participants may make optional cash
payments for Common Stock purchases of $50 (minimum per month) to
$150,000 (maximum per year), which payments may be made regularly or
occasionally as the Participant chooses. The Company has never waived
such limitations on optional cash purchase amounts and currently has
no intention of waiving such limitations.
- No brokerage commissions are charged for purchases of shares under the
Plan, only a minimal transaction fee.
- All shares purchased on behalf of a Participant are recorded in the
Participant's name.
- Some or all shares of Common Stock purchased on behalf of a
Participant may be sold at any time.
- Common Stock certificates may be deposited with the Plan Administrator
for safekeeping at minimal cost.
- Participants may make gifts of Common Stock to family members and
others by transferring shares in book entry form to the account of
another registered holder, new or old.
- Cash dividends, if and when paid, shall be reinvested automatically
for Participants on all full and fractional shares registered in their
names.
Shares of Common Stock will be purchased under the Plan, at the option of
the Company (which decision can be changed once every three (3) months), from
newly issued shares, shares held in the treasury of the Company or shares
purchased in the open market. As of the date of this Prospectus, shares of
Common Stock purchased for Participants under the Plan will be purchased from
the open market. The Common Stock is listed on the New York Stock Exchange under
the symbol "LEA." On December 13, 1996, the last reported sale price of the
Common Stock on the New York Stock Exchange Composite Tape was $34.50 per share.
The purchase price of newly issued or treasury shares of Common Stock
purchased under the Plan from the Company for an Investment Date (as hereinafter
defined) will be calculated by computing the average of the high and low prices
of the Common Stock on the relevant Investment Date as reported on the New York
Stock Exchange Consolidated Tape. The price of shares of Common Stock purchased
or sold in the open market will be the average cost of all shares purchased or
sold by the Plan Administrator in relation to the applicable Investment Date.
This Prospectus sets forth the provisions of the Plan and, therefore,
should be retained by Participants for future reference.
To the extent required by applicable law in certain jurisdictions,
including Arizona, Florida, New York, North Carolina, North Dakota, and Vermont,
shares of Common Stock offered under the Plan to persons not presently holders
of Common Stock are offered only through a registered broker/dealer in such
jurisdictions.
SEE "RISK FACTORS" ON PAGE 3 FOR CERTAIN CONSIDERATIONS RELEVANT TO AN
INVESTMENT IN THE COMMON STOCK.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is December 20, 1996
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AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files periodic reports and other information with the
Securities and Exchange Commission (the "Commission"). The registration
statement ("Registration Statement") (which term encompasses any amendments
thereto) and the exhibits thereto filed by the Company with the Commission, as
well as the reports and other information filed by the Company with the
Commission, may be inspected at the public reference facilities maintained by
the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and are also available for inspection and copying at the
regional offices of the Commission located at Seven World Trade Center, 13th
Floor, New York, New York 10048, and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661, and at the New York Stock Exchange located
at 20 Broad Street, New York, New York 10005. Copies of such material may also
be obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, the
Commission maintains a Web site at http://www.sec.gov that contains periodic
reports and other information regarding registrants, like the Company, that file
electronically with the Commission.
The Company has filed with the Commission a Registration Statement under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the shares of Common Stock offered hereby. This Prospectus does not contain all
the information set forth in the Registration Statement and the exhibits and
schedules thereto, to which reference is hereby made. Statements made in this
Prospectus as to the contents of any contract, agreement or other document
referred to are not necessarily complete. With respect to each such contract,
agreement or other document filed as an exhibit to the Registration Statement or
to a document incorporated by reference herein, reference is hereby made to the
exhibit for a more complete description of the matter involved and each such
statement shall be deemed qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated in this Prospectus by reference and made a part hereof:
(a) The Company's Annual Report on Form 10-K for the year ended December
31, 1995;
(b) The Company's Quarterly Report on Form 10-Q for the period ended
March 30, 1996;
(c) The Company's Quarterly Report on Form 10-Q for the period ended
June 29, 1996;
(d) The Company's Quarterly Report on Form 10-Q for the period ended
September 28, 1996;
(e) The Company's Current Report on Form 8-K dated May 22, 1996;
(f) The Company's Current Report on Form 8-K dated June 27, 1996;
(g) The audited consolidated financial statements of Automotive
Industries Holding, Inc. and the notes included on pages 3 through
36 of the Company's Current Report on Form 8-K dated August 28,
1995; and
(h) The Company's Registration Statement on Form 8-A filed on April 1,
1994, as amended by Amendment No. 1 on Form 8-A filed April 5, 1994.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering shall be deemed to be incorporated by reference
in this Prospectus and to be a part hereof from the date of filing such
documents. Any statement contained herein or in a document incorporated or
deemed to be incorporated herein by reference shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained in any subsequently filed document which is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide, without charge, to each person to whom a copy of
this Prospectus is delivered, on the written or oral request of such person, a
copy of any or all of the documents incorporated herein by reference (other than
exhibits thereto, unless such exhibits are specifically incorporated by
reference into the information that this Prospectus incorporates). Written or
telephone requests for such copies should be directed to the Company's principal
office: Lear Corporation, 21557 Telegraph Road, Southfield, Michigan 48086-5008,
Attention: Director of Investor Relations (telephone: (800) 413-5327).
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THE COMPANY
Lear Corporation is one of the ten largest independent automotive suppliers
in the world. The Company's principal products include: finished automobile and
light truck seat systems; interior trim products such as door panels,
headliners, floor and acoustic systems and interior and luggage trim components;
and automobile component products such as seat frames, seat covers and various
blow molded plastic parts. The Company's sales have grown rapidly, both
internally and through acquisitions, from approximately $159.8 million in the
fiscal year ended June 30, 1983 to approximately $4.7 billion in the year ended
December 31, 1995, a compound annual growth rate of approximately 32.6%.
The Company was incorporated in Delaware in 1987. The Company's principal
executive offices are located at 21557 Telegraph Road, Southfield, Michigan
48086-5008. Its telephone number at that location is (810) 746-1500.
RISK FACTORS
A potential investor should consider carefully all of the information
contained in this Prospectus before deciding whether to purchase the Common
Stock offered hereby and, in particular, should consider the following:
LEVERAGE
The Company has debt that is greater than its stockholders' equity and a
significant portion of the Company's cash flow from operations will be used to
service its debt obligations. The Company's high leverage may have consequences,
including the following: (i) the ability of the Company to obtain additional
financing for working capital, capital expenditures and debt service
requirements or other purposes may be impaired; (ii) the Company may be more
highly leveraged than companies with which it competes, which may place it at a
competitive disadvantage; (iii) because certain of the Company's indebtedness
bears interest at floating rates, an increase in interest rates could affect the
Company's ability to service its debt obligations; and (iv) the Company may be
more vulnerable in the event of a downturn in its business or in the economy
generally. If the Company is unable to generate sufficient cash flow to service
its debt obligations, it will have to adopt one or more alternatives, such as
reducing or delaying planned expansion and capital expenditures, selling assets,
restructuring debt or obtaining additional equity capital. There can be no
assurance that any of these strategies could be effected on satisfactory terms.
In addition, the Company's existing credit agreements and the indentures
governing its 11 1/4% Senior Subordinated Notes due 2000 (the "Senior
Subordinated Notes"), its 8 1/4% Subordinated Notes due 2000 (the "8 1/4%
Subordinated Notes") and its 9 1/2% Subordinated Notes due 2006 (the "9 1/2%
Subordinated Notes"), contain various restrictive covenants including, among
other things, financial covenants relating to the minimum operating profit and
net worth levels and interest coverage ratios as well as restrictions on
indebtedness, guarantees, acquisitions, capital expenditures, investments,
loans, liens, dividends and other restricted payments and asset sales. Such
restrictions, together with the leveraged nature of the Company, could limit the
Company's ability to respond to market conditions, to provide for unanticipated
capital investments or to take advantage of business opportunities.
NATURE OF AUTOMOTIVE INDUSTRY
The Company's principal operations are directly related to domestic and
foreign automotive vehicle production. Automobile sales and production are
cyclical and can be affected by the strength of a country's general economy. In
addition, automobile production and sales can be affected by labor relations
issues, regulatory requirements, trade agreements and other factors. A decline
in automotive sales and production could result in a decline in the Company's
results of operations or financial condition. As a result of Canadian Auto
Worker and United Auto Worker work stoppages which occurred in October and
November of 1996, based on preliminary estimates, earnings per share of the
Company for the quarter ending December 31, 1996 will be adversely affected by
approximately $.10 per share.
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RELIANCE ON MAJOR CUSTOMERS AND SELECTED CAR MODELS
Two of the Company's customers, General Motors and Ford, account for a
substantial portion of the Company's total sales. Although the Company has
purchase orders from many of its customers, such purchase orders generally
provide for supplying the customers' annual requirements for a particular model
or assembly plant, renewable on a year-to-year basis, rather than for
manufacturing a specific quantity of products. In addition, certain of the
Company's manufacturing and assembly plants are dedicated to a single customer's
automobile assembly plant. The customer's decision to close any such plant would
require the Company to obtain alternate supply agreements, relocate existing
business to such facility or close such facility. To date, neither model
discontinuances nor plant closings have had a material adverse effect on the
Company because of the breadth of the Company's product lines and the ability of
the Company to relocate its facilities with minimal capital expenditures. There
can be no assurances that the Company's loss of business with respect to either
a particular automobile model or a particular assembly plant would not have a
material adverse effect on the Company's results of operations or financial
condition in the future.
There is substantial and continuing pressure from the Company's customers
to reduce costs, including costs associated with outside suppliers such as the
Company. Management believes that the Company's ability to develop new products
and to control its own costs, many of which are variable, will allow the Company
to remain competitive. However, there can be no assurance that the Company will
be able to improve or maintain its gross margins.
RESTRICTIONS ON DIVIDENDS
The Company's ability to pay dividends to holders of Common Stock is
limited under the terms of the Company's existing credit agreements and the
indentures governing its Senior Subordinated Notes, its 8 1/4% Subordinated
Notes and its 9 1/2% Subordinated Notes. The Company currently does not intend
to pay cash dividends.
FOREIGN EXCHANGE RISK
As a result of recent acquisitions and the Company's current business
strategy, which includes plans for global expansion of its operations, a
significant portion of the Company's revenues and expenses are denominated in
currencies other than U.S. dollars. Changes in exchange rates therefore may have
a significant effect on the Company's results of operations and financial
condition.
ANTI-TAKEOVER PROVISIONS
Certain provisions of the Company's Restated Certificate of Incorporation
and by-laws, as well as provisions of the Delaware General Corporation Law, may
have the effect of delaying, deterring or preventing transactions involving a
change of control of the Company, including transactions in which stockholders
might otherwise receive a substantial premium for their shares over then current
market prices, and may limit the ability of stockholders to approve transactions
that they may deem to be in their best interests. For example, under the
Restated Certificate of Incorporation, the Board of Directors is authorized to
issue one or more classes of preferred stock having such designations, rights
and preferences as may be determined by the Board of Directors. In addition, the
Board of Directors is divided into three classes, each having a term of three
years, with the term of one class expiring each year. A director may be removed
from office only for cause. These provisions could delay the replacement of a
majority of the Board of Directors and have the effect of making changes in the
Board of Directors more difficult than if such provisions were not in place.
Further, Section 203 of the Delaware General Corporation Law restricts certain
business combinations with any "interested stockholder" as defined in such law.
Certain current stockholders of the Company are not, by virtue of their current
holdings, deemed to be "interested stockholders" under this statute. This
statute also may delay, deter or prevent a change of control of the Company.
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CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This Prospectus contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. When used in this
document, the words "anticipate," "believe," "estimate," and "expect" and
similar expressions are generally intended to identify forward-looking
statements. Prospective investors are cautioned that any forward-looking
statements, including statements regarding the intent, belief, or current
expectations of the Company or its management, are not guarantees of future
performance and involve risks and uncertainties, and that actual results may
differ materially from those in the forward-looking statements as a result of
various factors including but not limited to (i) general economic conditions in
the markets in which the Company operates, (ii) fluctuations in, or the
termination of, the production of automobile and light truck models for which
the Company is a supplier, (iii) labor disputes involving the Company or its
significant customers, (iv) changes in the relationship of the Company with its
significant customers, (v) changes in practices and/or policies of the Company's
customers towards outsourcing automotive components and systems, (vi) the effect
of, and changes in, trade, monetary and fiscal policies in countries in which
the Company operates, (vii) those items identified under "Rick Factors" and
(viii) other risks detailed from time to time in the Company's Securities and
Exchange Commission filings. The Company does not intend to update these
forward-looking statements.
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PLAN DESCRIPTION
PURPOSE
1. WHAT IS THE PURPOSE OF THE PLAN?
The Lear Systematic Investment Plan is designed to provide stockholders and
other interested investors a convenient and economical way to acquire shares of
Common Stock and to reinvest cash dividends.
ELIGIBILITY
2. WHO IS ELIGIBLE TO PARTICIPATE IN THE PLAN?
Any person, whether or not a registered holder of Common Stock, is eligible
to participate in the Plan after completing and returning the Plan Enrollment
Form to the Plan Administrator in the manner described under the caption
"Enrollment" below. However, citizens or residents of a country other than the
United States or its territories and possessions should determine that
participation in the Plan would not violate local laws before enrolling in the
Plan.
ADVANTAGES
3. WHAT ARE SOME OF THE ADVANTAGES OF THE PLAN?
- Persons not currently owning Common Stock may become Participants with
an initial cash contribution of at least $250 to purchase shares under
the Plan.
- Existing stockholders may become Participants in the Plan by simply
completing and returning the Plan enrollment form to the Plan
Administrator.
- Following enrollment in the Plan, Participants may make optional cash
payments for Common Stock purchases of $50 (minimum per month) to
$150,000 (maximum per year), which amounts may be made regularly or
occasionally as the Participant chooses.
- No brokerage commissions are charged for purchases of Common Stock
under the Plan, only a minimal transaction fee.
- All shares purchased on behalf of a Participant are recorded in the
Participant's name.
- Some or all shares of Common Stock purchased on behalf of a
Participant may be sold at any time.
- Common Stock certificates may be deposited with the Plan Administrator
for safekeeping at minimal cost.
- Participants may make gifts of Common Stock to family members and
others at minimal cost by transferring shares in book entry form to
the account of another registered holder, new or old.
- Cash dividends, if and when paid, shall be reinvested automatically
for Participants on all full and fractional shares registered in their
names.
DISADVANTAGES
4. WHAT ARE SOME OF THE DISADVANTAGES OF THE PLAN?
- Optional cash payments or sales under the Plan may be exposed to
changes in market conditions for a longer period of time than in the
case of typical secondary market transactions due to the length of
time between when the optional cash payment or sale instruction is
made and the date shares of Common Stock are purchased or sold.
- Optional cash payments, which must be received by the Plan
Administrator at least three (3) business days prior to an Investment
Date, will not accrue any interest during any time that the Plan
Administrator holds the funds.
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- Participants will not be able to determine the actual number of shares
of Common Stock purchased on their behalf until after the applicable
Investment Date.
ADMINISTRATION
5. WHO ADMINISTERS THE PLAN FOR PARTICIPANTS?
The Bank of New York, as the Plan Administrator, is responsible for
receiving all cash investments made by Participants, purchasing and selling
shares acquired under the Plan, serving as custodian for shares on deposit in
the Plan, maintaining records of each Participant's account activities, issuing
account statements and performing other duties under the Plan.
Participants may contact the Plan Administrator by telephone toll free at
(800) 524-4458 between the hours of 9:00 a.m. and 5:00 p.m. (Eastern time) or by
writing to one of the following addresses:
1. For Requests for Prospectuses or Plan Enrollment Forms:
Lear Corporation
c/o The Bank of New York
Investor Relations Department
Church Street Station
P. O. Box 11258
New York, NY 10286-1258
2. For Transaction Requests Forms or more information regarding
Optional Cash Payments, Sales, Terminations or Stock Certificates:
The Bank of New York
c/o Investment Services
P. O. Box 19560
Newark, NJ 07195-0560
ENROLLMENT
6. HOW DOES AN INTERESTED INVESTOR ENROLL IN THE PLAN?
Eligible applicants may enroll and become a Participant in the Plan at any
time by obtaining and completing a Plan Enrollment Form and returning it to the
Plan Administrator. A Plan Enrollment Form and information about the Plan may be
obtained by calling The Bank of New York at the toll free number or by writing
to the address set forth above.
Interested investors who are not already stockholders of the Company must
include a minimum initial cash investment of $250 (but no more than $150,000),
in the form of a check or money order payable to the Bank of New York, with
their completed Plan Enrollment Forms.
Any record or registered holder of Common Stock not already a Participant
may join the Plan at any time by returning a completed Plan Enrollment Form or
depositing some or all of such holder's Common Stock certificates with the Plan
Administrator. A five dollar ($5.00) deposit fee will be charged to the
Participant.
Beneficial owners, stockholders whose shares are held in nominee name by a
bank or broker, must become record holders (stockholders who are registered on
the books of the Company) by having such shares transferred into the
stockholder's name.
Enrollment in the Plan will become effective on receipt and acceptance of a
properly executed Plan Enrollment Form by the Plan Administrator.
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OPTIONAL AND INITIAL CASH INVESTMENTS
7. HOW DOES A PARTICIPANT MAKE ADDITIONAL CASH INVESTMENTS?
Following enrollment in the Plan, Participants have the option of
purchasing additional shares of Common Stock. Such investments, which can be in
any amount from a minimum of $50 in a particular month to a maximum of $150,000
per year, are made by completing the Transaction Request Form, attached to the
bottom of each account statement, and mailing it to the Plan Administrator along
with a check or money order made payable to The Bank of New York.
Investments may be made regularly or occasionally, as the Participant
wishes, and the investment amount may remain constant or vary with each
investment. Participants are under no obligation to make additional cash
investments.
All cash investments must be in U.S. dollars, drawn on a U.S. bank. Checks
drawn on foreign banks or payable in any currency other than U.S. dollars will
be returned to the Participant.
8. WHEN WILL INITIAL AND ADDITIONAL CASH PAYMENTS BE INVESTED?
Initial as well as optional cash investments must be received by the Plan
Administrator at least three (3) business days before an Investment Date.
Otherwise, initial or optional cash investments will be held by the Plan
Administrator and invested on the next Investment Date. No interest will be paid
on any payments held by the Plan Administrator prior to an Investment Date.
Funds not invested in Common Stock within 30 days of receipt will be
promptly returned, without interest, to the Participant. In addition, upon a
Participant's written request, received at least three (3) business days before
an Investment Date, initial or optional cash investments not already invested
shall be returned without interest. However, no refund of a check or money order
will be made until the funds from such instruments have been collected by the
Plan Administrator, which may take up to three (3) weeks.
REINVESTMENT OF DIVIDENDS
9. HOW WILL DIVIDENDS BE REINVESTED?
The Company does not currently pay a dividend. The availability of the
Plan's dividend reinvestment feature does not in any way indicate an intent to
declare or pay a dividend in the future. However, if the Company ever declares a
dividend, cash dividends will be reinvested automatically for Participants on
all full and fractional shares held in their Plan account or registered in their
names. In such case, the declared dividends on shares registered in each
Participant's name will be forwarded to the Plan Administrator. The Plan
Administrator, in turn, will apply these funds toward the purchase of Common
Stock. If dividends are insufficient to purchase full additional shares, a
fractional share (computed to four (4) decimal places) will be credited to a
Participant's account, which will also earn any dividends. The amount so
reinvested will be reduced by any amount which is required to be withheld under
any applicable tax or other statutes.
INVESTMENT DATES
10. WHEN ARE THE INVESTMENT DATES?
Normally, shares of Common Stock will be purchased on the date (the
"Investment Date") which is the 25th calendar day of each month or as soon as
practicable thereafter. As no interest will be paid on uninvested funds,
Participants may wish to send payments so as to reach the Plan Administrator
just prior to the third business day preceding the Investment Date. If Lear
begins paying dividends, in months in which cash dividends are paid on the
Common Stock, the Investment Date for initial enrollment or for optional cash
investments will be the same as the dividend payment date. In such case, the
Plan Administrator must receive initial or optional cash investments at least
three (3) business days prior to the modified Investment Date.
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PURCHASE OF SHARES
11. HOW DOES THE PLAN ADMINISTRATOR ACQUIRE SHARES OF COMMON STOCK FOR THE
PLAN?
The Bank of New York, as Plan Administrator, may use any registered
broker-dealer, including BNY Brokerage, Inc., a wholly-owned subsidiary of The
Bank of New York, to acquire or sell shares of Common Stock on behalf of the
Participants.
Shares of Common Stock purchased for Participants under the Plan will be,
at the Company's option, either newly issued shares, shares held in the treasury
of the Company or shares of Common Stock purchased in the open market.
Initially, shares will be purchased by the Plan Administrator on the open market
on any stock exchange in the United States where the Common Stock is traded, in
the over-the-counter market, or by negotiated transactions on such terms as the
Plan Administrator may reasonably determine at the time of purchase.
The Company may change its determination that shares of Common Stock will
be purchased directly from the Company or on the open market no more than once
in any three (3) month period. Furthermore, at any time that shares of Common
Stock are purchased for Participants in the open market, the Company will not
exercise its right to change the source of purchases of shares of Common Stock
absent a determination by the Company's Board of Directors or Chief Financial
Officer that the Company's need to raise equity capital has changed or there is
another valid reason for the change.
12. WHAT WILL BE THE COST OF COMMON STOCK THROUGH THE PLAN?
For Common Stock purchased on the open market, each Participant's cash
investment is combined with all the funds received from other Plan Participants
and used to purchase Common Stock on the open market. A Participant's account is
credited with Common Stock (including fractional shares rounded to four (4)
decimal places) at the average market price of all shares purchased by the Plan
Administrator for the relevant Investment Date. A two dollar ($2.00) processing
fee will be deducted from each cash payment, excluding dividend reinvestments,
before purchasing Common Stock. Purchases may be made over a period of days, so
as not to adversely affect the price of the Common Stock.
The price of shares purchased under the Plan that are sold from the
Company's treasury stock or from the Company's authorized but unissued shares of
Common Stock will be calculated by computing the average of the high and low
prices of the Common Stock on the relevant Investment Date as reported on the
New York Stock Exchange Consolidated Tape. A two dollar ($2.00) processing fee
will be deducted from each cash payment, excluding dividend reinvestments,
before purchasing Common Stock.
The share price of the Common Stock may fluctuate significantly.
Participants should be aware that the Common Stock price may rise during the
period between a request for purchase, its receipt by the Plan Administrator and
the ultimate purchase either in the open market or from the Company.
CERTIFICATES FOR SHARES
13. WILL CERTIFICATES BE ISSUED FOR SHARES OF COMMON STOCK PURCHASED UNDER THE
PLAN?
Common Stock purchased by the Plan Administrator will be credited to each
Participant's account in book entry form (computed to four (4) decimal places)
with a certificate issued only upon request. A five dollar ($5.00) fee will be
charged to the Participant for each issuance of certificates.
At any time a Participant may request that a certificate be issued for some
or all of the shares held in the Plan by calling the Plan Administrator at
1-800-524-4458 or by making a request in writing to the address set forth above.
No certificates for fractional shares will be issued.
14. MAY A PARTICIPANT DEPOSIT INTO A PLAN ACCOUNT SHARE CERTIFICATES ACQUIRED
OUTSIDE THE PLAN?
Certificates may be sent to the Plan Administrator for safekeeping when
enrolling in the Plan together with a completed Plan Enrollment Form. Once
enrolled in the Plan, additional certificates may be sent to the Plan
Administrator for safekeeping along with a completed Transaction Request Form,
which is located on the
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bottom portion of the account statement provided to the Participant. The
certificates to be deposited, together with a Plan Enrollment Form or
Transaction Request Form, should be sent by registered mail to the Plan
Administrator. A five dollar ($5.00) fee will be charged to the Participant for
each deposit of certificates.
SALE OR TRANSFER OF SHARES
15. HOW DOES A PARTICIPANT SELL SHARES?
Participants in the Plan may instruct the Plan Administrator to sell any or
all shares held in the Participant's Plan account by sending a Transaction
Request Form to the Plan Administrator.
If a Participant's sale instructions cover all of the shares of Common
Stock credited to his or her account, and such instructions are received on or
after the record date relating to a dividend payment but before the dividend
payment date, the sale may not be processed until after the dividend has been
invested in Common Stock through the Plan, at which time all of the shares
credited to his or her account will be sold.
As with purchases, the Plan Administrator will aggregate all requests for
shares to be sold and sell the total share amount on the open market. Shares are
expected to be sold weekly, but depending on volumes may be sold daily. The sale
price will not be known until the sale is completed and Participants should be
aware that the Common Stock price may fluctuate during the period between a
request for sale, its receipt by the Plan Administrator and the subsequent sale
on the open market.
Following the sale, the net proceeds of the sale will be sent by check to
the Participant. A five dollar ($5.00) transaction fee plus a seven cent ($0.07)
per share brokerage commission will be deducted from the net sale proceeds. The
advice attached to the check should be retained for income tax purposes.
A request to sell all shares held in a Participant's account will be
treated as a withdrawal from the Plan and the Plan account will be closed.
16. HOW DOES A PARTICIPANT TRANSFER SHARES?
Participants in the Plan may effect "book-to-book" transfers, which involve
transferring shares from an existing participant account in the Plan to a new
participant account by providing the Plan Administrator with a written request
in accordance with the terms and conditions of the Plan. All participants in the
current account must sign the request and their signatures must be guaranteed by
a bank, broker or financial institution that is a member of a Signature
Guarantee Medallion Program. The new participant account will automatically be
coded for full dividend reinvestment unless otherwise instructed.
COST
17. WHAT ARE THE COSTS ASSOCIATED WITH THE PLAN?
Lear has elected to absorb most of the costs associated with the Plan.
However, the costs to the Participants for each type of transaction are: (i) a
two dollar ($2.00) transaction fee per cash investment; (ii) a five dollar
($5.00) transaction fee plus a seven cent ($0.07) per share brokerage commission
for the sale of shares in a Participant's Plan account; (iii) a five dollar
($5.00) transaction fee for the deposit or the withdrawal of any share
certificate; and (iv) a five dollar ($5.00) transaction fee for each book
transfer requested.
WITHDRAWAL OF PARTICIPATION
18. HOW DOES A PARTICIPANT WITHDRAW FROM THE PLAN?
A Participant may at any time terminate participation in the Plan by
providing written notice to the Plan Administrator at the address set forth
above. Unless a Participant requests that the shares held in the Participant's
account be sold by the Plan Administrator, the Plan Administrator will send a
stock certificate for the number of whole shares in the Participant's account
and a check to the Participant equal to the current market value of any
fractional shares in the Participant's account. A five dollar ($5.00)
transaction fee will be charged for the withdrawal of share certificates and/or
liquidation from the Plan.
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After a Participant withdraws from the Plan, he or she may re-enroll by
submitting a new Plan Enrollment Form in the same manner as any new applicant.
However, a Participant who withdraws from the Plan may not re-enroll for six
months after such withdrawal.
REPORTS TO PARTICIPANTS
19. WHAT KIND OF REPORTS WILL A PARTICIPANT RECEIVE?
As soon as practicable after each purchase and sale pursuant to the Plan,
the Participant will receive a confirmation of such transaction. As soon as
practicable after any dividend reinvestment pursuant to the Plan, the
Participant will receive a year-to-date cumulative account statement. If no
dividends are declared by the Company, the Participant will receive an annual
account statement. These statements are a Participant's continuing record of the
cost of his or her purchases and should be retained for income tax purposes.
Following each sale of Common Stock, a Participant will receive tax form
1099-B. At year end, the Plan Administrator will also provide tax form 1099 to
Participants for dividends, if any, received during the previous year.
In addition, Participants will receive copies of all communications sent to
holders of Common Stock. This may include quarterly reports, the notice of
annual meeting, proxy material for stockholder meetings and Internal Revenue
Service information, if appropriate, for reporting dividend income.
STOCK SPLITS, STOCK DIVIDENDS OR RIGHTS OFFERINGS
20. WHAT HAPPENS IF THE COMPANY ISSUES A STOCK DIVIDEND OR DECLARES A STOCK
SPLIT?
If the Company pays a stock dividend or declares a stock split, any shares
distributed by the Company on shares held by the Plan Administrator for a
Participant's account will be added to the Participant's account. For those
shares registered in a Participant's name and held in certificate form by the
Participant, any shares distributed pursuant to a stock split or stock dividend
will be mailed directly to the Participant in the same manner as to stockholders
who are not participating in the Plan.
Transaction processing may be curtailed or suspended until completion of
the stock dividend or stock split.
21. WHAT HAPPENS IF THE COMPANY HAS A RIGHTS OFFERING?
In the event of a rights offering, the Participant will receive rights
based upon the shares of record held in the Participant's name and whole shares
credited to his or her account under the Plan. The Plan Administrator will
deliver to each Participant by mail the number of rights due such Participant on
whole shares held. Rights may be exercised or sold (with the proceeds reinvested
in Common Stock) through the Plan by written instruction to the Plan
Administrator. Rights certificates will not be issued for fractional shares of
Common Stock.
VOTING RIGHTS
22. HOW WILL A PARTICIPANT'S SHARES BE VOTED AT MEETINGS OF STOCKHOLDERS?
All shares of Common Stock (including any fractional share) registered in a
Participant's name under the Plan may be voted by the Participant at a
stockholders meeting in the same manner as other shares registered in his or her
name. A proxy form will be sent to each Participant with respect to each
stockholders meeting. When the executed proxy is returned by the Participant,
all shares will be voted as directed. If the Participant attends the
stockholders meeting in person, the Participant may vote such shares in person
at the meeting, regardless of whether or not he or she has sent in the proxy.
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SUSPENSION, MODIFICATION OR TERMINATION OF THE PLAN
23. MAY THE PLAN BE CHANGED OR DISCONTINUED?
The Company may suspend, modify or terminate the Plan at any time, in
whole, in part or in respect of Participants in one or more jurisdictions,
without the approval of Participants. Notice of such suspension, modification or
termination will be sent to all affected Participants, who will in all events
have the right to withdraw from participation. Upon any whole or partial
termination of the Plan by the Company, each affected Participant will receive
(i) a certificate for all of the whole shares of Common Stock credited to the
Participant's account, (ii) any dividends or cash investments credited to the
Participant's account and (iii) a check for the cash value of any fractional
shares of Common Stock credited to the Participant's account. Such fractional
shares will be valued at the current market value.
In the event the Company terminates the Plan for the purpose of
establishing another stock purchase and/or dividend reinvestment plan,
Participants will be automatically enrolled in such other plan and shares
credited to the Participant's Plan account will be credited automatically to
such other plan, unless notice to the contrary is received by the Plan
Administrator.
PLAN INQUIRIES
24. WHERE DOES A PARTICIPANT MAKE INQUIRIES REGARDING THE PLAN?
All inquiries by Participants concerning the Plan should be directed to the
Plan Administrator. A Participant should include in all correspondence the
Participant's stockholder account number and taxpayer identification number
(social security number).
FEDERAL INCOME TAX CONSEQUENCES
25. WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF PARTICIPATION IN THE PLAN?
The amount of cash dividends, if any, paid to a Participant by the Company
is considered taxable income, even though reinvested through the Plan. Expenses
and fees paid for a Participant by the Company will be included as dividend
income for tax purposes, and these expenses and fees should be added to the cost
basis of the shares shown on the account statement prepared by the Plan
Administrator.
A Participant will not realize any taxable income when the Participant
receives certificates for shares credited to the Participant's account. Gain or
loss will be recognized by the Participant when the Participant sells such
shares. The sale of any whole or fractional shares through the Plan will be
reported to the IRS and a Participant on Form 1099-B.
The above rules may not be applicable to all Participants in the Plan, such
as foreign stockholders, and, therefore, Participants in the Plan are advised to
consult their own tax advisors with respect to the tax consequences (including
federal, state, local and other tax laws and tax withholding laws) applicable to
their particular situations.
26. HOW ARE INCOME TAX WITHHOLDING PROVISIONS APPLIED TO FOREIGN STOCKHOLDERS?
In the case of those foreign stockholders whose dividends on Common Stock
are subject to United States income tax withholding, the amount of dividends
reinvested will be reduced by the amount of the tax to be withheld.
27. HOW ARE BACKUP INCOME TAX WITHHOLDING PROVISIONS APPLIED TO STOCKHOLDERS?
In the case of stockholders whose dividends on Common Stock are subject to
United States backup income tax withholding, the amount of dividends reinvested
will be reduced by the amount of tax required to be withheld. Backup withholding
applies to certain stockholders who fail to furnish the Plan Administrator with
their correct tax identification number (usually, for individuals, their social
security numbers), or fail to sign a certificate stating that they are not
subject to backup withholding. Backup withholding also applies if
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the Internal Revenue Service notifies the Company that a stockholder has failed
to report dividends or interest on his or her return or that a stockholder has
furnished an incorrect taxpayer identification number.
OTHER INFORMATION
28. WHAT ARE THE RESPONSIBILITIES OF THE COMPANY AND THE PLAN ADMINISTRATOR
UNDER THE PLAN?
Neither the Company nor the Plan Administrator will be liable for any act
done in good faith or for the good faith omission to act in connection with the
Plan, including, without limitation, any claim of liability arising out of a
failure to terminate a Participant's account upon such Participant's death prior
to receipt of notice in writing of such death, or with respect to the prices at
which shares of Common Stock are purchased or sold for the Participant's account
and the times when such purchases and sales are made, or with respect to any
loss or fluctuation in the market value after the purchase or sale of such
shares (provided, however, that nothing herein shall be deemed to constitute a
waiver of any rights a Participant may have under applicable federal securities
laws).
Furthermore, if it appears to the Company that any Participant is using or
contemplating the use of the optional cash investment mechanism in a manner or
with the effect that, in the sole judgment and discretion of the Company, is not
in the best interests of the Company or its stockholders, then the Company may
decline to issue all or any portion of the shares of Common Stock for which any
optional cash payment by or on behalf of such Participant is tendered. Such
optional cash payment (or the portion thereof not to be invested in shares of
Common Stock) will be returned by the Company as promptly as practicable,
without interest.
Participants should recognize that the Company cannot assure them of a
profit or protect them against a loss on the shares purchased by them under the
Plan.
29. WHO INTERPRETS AND REGULATES THE PLAN?
The officers of the Company are authorized to take such actions as may be
consistent with the Plan's terms and conditions. The Company reserves the right
to interpret and regulate the Plan as the Company deems desirable or necessary
in connection with the Plan's operation.
USE OF PROCEEDS
The Company will not receive any proceeds when shares of Common Stock are
purchased under the Plan in the open market. However, if treasury shares or
authorized but unissued shares of Common Stock are purchased from the Company
under the Plan, the net proceeds of such sales would be received by the Company
to be used for general corporate purposes, which may include debt retirement.
PLAN OF DISTRIBUTION
The Common Stock being offered hereby is offered pursuant to the Plan, the
terms of which provide for the purchase of shares of Common Stock, either from
the open market by the Plan Administrator, from shares held in the treasury of
the Company or from authorized but unissued shares. As of the date of this
Prospectus, shares of Common Stock purchased for Participants under the Plan are
being purchased from the open market. The Plan provides that the Company may not
change its determination regarding the source of purchase of shares under the
Plan more than once in any three (3) month period. The primary consideration in
determining the source of shares of Common Stock to be used for purchases under
the Plan is expected to be the Company's need to increase equity capital. If the
Company does not need to raise funds externally or if financing needs are
satisfied using non-equity sources of funds to maintain the Company's targeted
capital structure, shares of Common Stock purchased for Participants under the
Plan will continue to be purchased on the open market, subject to the
aforementioned limitation on changing the source of shares of Common Stock.
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LEGAL MATTERS
Certain legal matters in connection with the Common Stock offered hereby
have been passed upon for the Company by Winston & Strawn, Chicago, Illinois.
EXPERTS
The audited financial statements and schedules of the Company incorporated
by reference into this Prospectus have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon authority of said firm as
experts in giving said reports.
The audited financial statements of Automotive Industries Holding, Inc.
("AI") and its subsidiaries, which were acquired by the Company in August 1995,
incorporated by reference into this Prospectus have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, and are included herein in reliance upon authority of said firm
as experts in giving said report.
The audited financial statements of Masland Corporation ("Masland") and its
subsidiaries, which were acquired in June 1996, incorporated by reference into
this Prospectus have been audited by Price Waterhouse LLP, as indicated in their
report with respect hereto, and are included herein in reliance upon authority
of said firm as experts in giving said report.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES
OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO SELL, OR A SOLICITATION OF
AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER OR
SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Company........................... 3
Risk Factors.......................... 3
Plan Description...................... 6
Use of Proceeds....................... 13
Plan of Distribution.................. 13
Legal Matters......................... 14
Experts............................... 14
</TABLE>
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750,000 SHARES
LEAR CORPORATION LOGO
COMMON STOCK
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PROSPECTUS
DECEMBER 20, 1996
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