LEAR CORP /DE/, S-3/A, 1997-06-24

LEAR CORP /DE/
S-3/A, 1997-06-24
PUBLIC BLDG & RELATED FURNITURE

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 23, 1997

REGISTRATION NO. 333-28845

================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------

AMENDMENT NO. 1

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------------

LEAR CORPORATION
(Exact name of Registrant as specified in its charter)

<TABLE>
<S> <C>
DELAWARE 13-3386776
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
</TABLE>

21557 TELEGRAPH ROAD
SOUTHFIELD, MICHIGAN 48086-5008
(248) 746-1500
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)

JOSEPH F. MCCARTHY
21557 TELEGRAPH ROAD
SOUTHFIELD, MICHIGAN 48086-5008
(248) 746-1500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------------------

Copies to:

<TABLE>
<C> <C>
John L. MacCarthy John D. Lobrano
Winston & Strawn Simpson Thacher & Bartlett
35 West Wacker Drive 425 Lexington Avenue
Chicago, Illinois 60601 New York, New York 10017
(312) 558-5600 (212) 455-2000
</TABLE>

---------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the registration statement becomes effective.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]

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. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please 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 Registration Statement covers the registration of 10,284,854 shares
(including 1,284,854 shares which may be purchased upon the exercise of the
Underwriters' over-allotment options) of Common Stock, $0.01 par value per
share, of Lear Corporation for sale in underwritten public offerings (the
"Offerings") in the United States and Canada (the "U.S. Offering") and outside
the United States and Canada (the "International Offering"). The complete
Prospectus relating to the U.S. Offering (the "U.S. Prospectus") follows
immediately after this Explanatory Note. Following the U.S. Prospectus is an
alternate cover page and alternate back cover page for the Prospectus to be used
in the International Offering (the "International Prospectus" and, together with
the U.S. Prospectus, the "Prospectuses"). Otherwise, the International
Prospectus will be identical to the U.S. Prospectus.
<PAGE> 3

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

Subject to Completion, dated June 24, 1997

PROSPECTUS
9,000,000 Shares

Lear Logo

COMMON STOCK
---------------------------

Of the 9,000,000 shares of Common Stock, $0.01 par value per share ("Common
Stock"), of Lear Corporation ("Lear" or the "Company") being offered hereby,
7,200,000 shares are being offered initially in the United States and Canada by
the U.S. Underwriters (the "U.S. Offering") and 1,800,000 shares are being
offered initially outside the United States and Canada by the International
Managers (the "International Offering" and, together with the U.S. Offering, the
"Offerings"). The public offering price and underwriting discounts and
commissions per share are identical for both Offerings. See "Underwriting." All
of the shares being offered hereby are being offered by certain stockholders of
the Company (the "Selling Stockholders"). See "Selling Stockholders." The
Company will not receive any of the proceeds from the sale of Common Stock.

The Company's Common Stock is listed on the New York Stock Exchange under
the symbol "LEA." On June 23, 1997, the reported last sale price of the Common
Stock on the New York Stock Exchange Composite Tape was $40 1/8 per share.

---------------------------

SEE "RISK FACTORS" COMMENCING ON PAGE 9 HEREIN FOR CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
---------------------------
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.

<TABLE>
<CAPTION>
==================================================================================================================
Discounts and Proceeds to
Price to Underwriting Selling
Public Commissions(1) Stockholders(2)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share.............................. $ $ $
- ------------------------------------------------------------------------------------------------------------------
Total(3)............................... $ $ $
==================================================================================================================
</TABLE>

(1) Lear and the Selling Stockholders have agreed to indemnify the U.S.
Underwriters, the International Managers and certain other persons against
certain liabilities, including liabilities under the Securities Act of 1933,
as amended. See "Underwriting."

(2) Before deducting expenses payable by Lear estimated at $650,000.

(3) The Selling Stockholders have granted the U.S. Underwriters and the
International Managers 30-day options to purchase up to an aggregate of
1,284,854 shares of Common Stock on the same terms and conditions as set
forth above solely to cover over-allotments, if any. If such options are
exercised in full, the total Price to Public, Underwriting Discounts and
Commissions and Proceeds to Selling Stockholders will be $ ,
$ and $ , respectively. See "Underwriting."
---------------------------

The shares of Common Stock offered by this Prospectus are offered by the
U.S. Underwriters subject to prior sale, to withdrawal, cancellation or
modification of the offer without notice, to delivery to and acceptance by the
U.S. Underwriters and to certain further conditions. It is expected that
delivery of certificates for shares will be made at the offices of Lehman
Brothers Inc., New York, New York, on or about , 1997.
---------------------------

LEHMAN BROTHERS
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MORGAN STANLEY DEAN WITTER
SALOMON BROTHERS INC
SCHRODER WERTHEIM & CO.

PAINEWEBBER INCORPORATED

, 1997
<PAGE> 4
[INSIDE FRONT COVER]

Global Solutions for automotive interiors.

[Lear Corporation Logo]

Innovation * Design and Engineering * Research and Development * Computer-aided
Manufacturing and Design * Product and Process Diversity

[a picture of two Lear technicians with an automotive interior and a car seat;
a picture of a Lear technician placing two crash test dummies on a High-G sled;
a picture of an automobile inside of a Lear noise and vibration test room; and
a picture of two Lear technicians working on a crash test dummy]

The following caption appears below the pictures described in the preceding
paragraph:

Lear provides leading edge technology for today's automotive
manufacturers from our worldwide network of product engineering and
technology centers

[a picture of an automobile containing Lear products on a street in Brazil; a
picture of a Lear engineer at a CAD/CAM terminal; a picture of a mini-van seat
system; a picture of a door panel and a CAD/CAM terminal exhibiting the door
panel, and a picture of a Lear worker making final preparations on a seat
system]

The following caption appears below the pictures described in the preceding
paragraph:

Lear can duplicate its processes and its quality, delivering interior
systems and components in the global automotive market, managing programs from
concept and design straight through to sequenced delivery of parts.
<PAGE> 5

CERTAIN PERSONS PARTICIPATING IN THE OFFERINGS MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK. SUCH
TRANSACTIONS MAY INCLUDE THE PURCHASE OF SHARES OF COMMON STOCK PRIOR TO THE
PRICING OF THE OFFERINGS FOR THE PURPOSE OF MAINTAINING THE PRICE OF THE COMMON
STOCK AND THE PURCHASE OF SHARES OF COMMON STOCK FOLLOWING THE PRICING OF THE
OFFERINGS TO COVER A SYNDICATE SHORT POSITION IN THE COMMON STOCK OR FOR THE
PURPOSE OF MAINTAINING THE PRICE OF THE COMMON STOCK. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."
-------------------------

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 7 World Trade Center, Suite 1300,
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 at 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, which is part of the
Registration Statement, 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,
1996;

(b) the Company's Quarterly Report on Form 10-Q for the quarter ended March 29,
1997;

(d) the Company's Current Report on Form 8-K dated June 6, 1997;

(e) the audited consolidated financial statements of Masland Corporation and the
notes thereto included on pages 2 through 22 of the Company's Current Report
on Form 8-K dated June 27, 1996; and

(f) the Company's Registration Statement on Form 8-A filed on April 1, 1994, as
amended by Amendment No. 1 on Form 8-A/A filed on 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 Offerings 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, P.O. Box 5008, Southfield,
Michigan 48086-5008, Attention: Director of Investor Relations and Business
Planning (telephone: (800) 413-5327).

2
<PAGE> 6

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements appearing elsewhere or
incorporated by reference in this Prospectus. As used in this Prospectus, unless
the context otherwise requires, the "Company" or "Lear" refers to Lear
Corporation and its consolidated subsidiaries. A significant portion of the
Company's operations are conducted through wholly-owned subsidiaries of Lear
Corporation.

THE COMPANY

GENERAL

Lear is one of the largest independent suppliers of automotive interior
products to the estimated $45 billion global automotive interior market and one
of the ten largest independent automotive suppliers in the world. The Company
has experienced substantial growth in market presence and profitability over the
last five years as a result of both internal growth and acquisitions. The
Company's sales have grown from approximately $1.4 billion for the year ended
June 30, 1992 to over $6.2 billion for the year ended December 31, 1996, a
compound annual growth rate of 39%. In addition, the Company's operating income
has grown from approximately $56.8 million for the year ended June 30, 1992 to
approximately $375.8 million for the year ended December 31, 1996, a compound
annual growth rate of 51%. The Company's present customers include 26 original
equipment manufacturers ("OEMs"), the most significant of which are Ford,
General Motors, Fiat, Chrysler, Volvo, Saab, Volkswagen, Audi and BMW. As of
April 30, 1997, the Company employed over 45,000 people in 22 countries and
operated 149 manufacturing, technology, product engineering and administration
facilities.

Lear is a leading supplier of automotive interiors with in-house
capabilities in all five principal automotive interior segments: seat systems;
floor and acoustic systems; door panels; instrument panels; and headliners. In
addition, Lear is able to offer its customers design, engineering and project
management support for the entire automotive interior. Management believes that
the ability to offer automotive interior "one-stop-shopping" provides Lear with
a competitive advantage as OEMs continue to reduce their supplier base and
demand improved quality and enhanced technology. In addition, the Company's
broad array of product and process offerings enables it to provide each customer
with products tailored to its particular automotive interior needs.

STRATEGY

The Company's principal objective is to expand its position as one of the
leading independent suppliers of automotive interior systems in the world. To
this end, the Company's strategy is to capitalize on three significant trends in
the automotive industry: (i) the outsourcing of automotive components and
systems by OEMs; (ii) the increased emphasis on the automotive interior by OEMs
as they seek to differentiate their vehicles in the marketplace; and (iii) the
consolidation and globalization of the OEMs' supply base. Outsourcing of
interior components and systems has increased in response to competitive
pressures on OEMs to improve quality and reduce capital needs, costs of labor,
overhead and inventory. Management believes that these trends will result in
OEMs outsourcing a greater percentage of automotive interior systems, including
the outsourcing of complete automotive interiors. Management believes that the
criteria for selection of
3
<PAGE> 7

automotive interior suppliers include not only cost, quality and responsiveness,
but will increasingly include certain full-service capabilities including
design, engineering and project management support. Lear intends to build on its
full-service capabilities, strong customer relationships and worldwide presence
in order to increase its share of the global automotive interior market.

Elements of the Company's strategy include:

- Enhance its Relationships with OEMs. The Company's management has
developed strong relationships with its 26 OEM customers which allow Lear
to identify business opportunities and customer needs in the early stages
of vehicle design. Lear maintains "Customer Focused Divisions" for each of
its major customers. This organizational structure consists of several
dedicated groups, each of which is focused on serving the needs of a single
customer and supporting that customer's programs and product development.
This customer-oriented structure has helped Lear develop and maintain an
excellent reputation with OEMs for timely delivery and customer service and
for providing world class quality at competitive prices.

- Penetrate Emerging Markets. Geographic expansion will continue to be
an important element of the Company's growth strategy. In 1996, more than
two-thirds of total worldwide vehicle production occurred outside of the
United States and Canada. Emerging markets such as South America and the
Asia/Pacific Rim region present strong global growth opportunities as
demand for automotive vehicles has been increasing dramatically in these
areas. For example, from 1991 through 1996, sales of light vehicles in
China have increased nearly 500%, while sales in Brazil have increased over
70%. Industry analysts forecast continued strong increases in light vehicle
sales in these and certain other emerging markets. As a result of Lear's
strong customer relationships and worldwide presence, management believes
that the Company is well-positioned to expand with OEMs in emerging
markets.

- Capitalize on New Outsourcing Opportunities. The door panel,
instrument panel and headliner segments of the automotive interior market
contain no dominant independent supplier and are in the early stages of the
outsourcing and/or consolidation process. These segments constituted over
20% of the total estimated $45 billion global automotive interior market in
1996. The Company believes that the same competitive pressures that have
contributed to the rapid expansion of its seat systems business in North
America since 1983 will continue to encourage OEMs to outsource more of
their door, instrument panel and headliner system and component
requirements. In addition, management believes that as the outsourcing of
these systems accelerates and OEMs continue their worldwide expansion and
seek ways to improve vehicle quality and reduce costs, OEMs will
increasingly look to independent suppliers such as Lear to fill the role of
"Systems Integrator" to manage the design, purchasing and supply of the
total automotive interior. Lear's full-service capabilities make it
well-positioned to perform this role.

- Invest in Product Technology and Design Capability. Lear has made
substantial investments in product technology and product design capability
to support its products. The Company maintains five technology centers and
twenty customer dedicated product engineering centers where it designs and
develops new products and conducts extensive product testing. The Company
also has state-of-the-art acoustics testing, instrumentation and data
analysis capabilities. Lear's investments in research and development are
consumer-driven and customer-focused. The Company conducts extensive
analysis and testing of consumer responses to automotive interior styling
and innovations. Because OEMs increasingly view the vehicle interior as a
major selling point to their customers, the focus of Lear's research and
development efforts is to identify new interior features that make vehicles
safer, more comfortable and attractive to consumers. The development of
these products has been, and management believes will continue to be, an
important element in the Company's future growth. For automotive vehicles
manufactured in North America, Lear's total content per vehicle has
increased from $94 per vehicle in the fiscal year ended June 30, 1992 to
$292 per vehicle in the fiscal year ended December 31, 1996. For automotive
vehicles manufactured in Western Europe, Lear's total content per vehicle
has increased from $19 per vehicle in the fiscal year ended June 30, 1992
to $109 per vehicle in the fiscal year ended December 31, 1996.
4
<PAGE> 8

- Utilize Worldwide JIT Facility Network. Beginning in the 1980s, Lear
established facilities, most of which were, and still are, dedicated to a
single customer, that allowed it to receive components from its suppliers
on a just-in-time ("JIT") basis and deliver seat systems to its customers
on a sequential JIT basis. This process minimizes inventories and fixed
costs for both the Company and its customers and enables the Company to
deliver products in as little as 90 minutes notice. In many cases, by
carefully managing floor space and overall efficiency, Lear can move the
final assembly and sequencing of other interior systems and components from
centrally located facilities to its existing JIT facilities. Management
believes that the efficient utilization of the Company's JIT facilities
located around the world is an important aspect of Lear's global growth
strategy and, together with the Company's system integration skills,
provides Lear with a significant competitive advantage in terms of
delivering total interior systems to OEMs.

- Grow Through Strategic Acquisitions. Strategic acquisitions have
been, and management believes will continue to be, an important element in
the Company's worldwide growth and in its efforts to capitalize on
automotive industry trends. The Company seeks acquisitions which strengthen
Lear's relationships with OEMs, complement Lear's existing products and
process capabilities and provide Lear with growth opportunities in new
markets. The Company's recent acquisitions have expanded its OEM customer
base and worldwide presence and have enhanced its relationships with
existing customers. The Company's most recent acquisitions have also
expanded Lear's manufacturing capabilities to allow the Company to produce
all five automotive interior systems. In 1996, after giving pro forma
effect to the Masland Acquisition (described below), the Company's Tier I
sales of non-seating systems and components would have been approximately
$2.1 billion, or approximately 32% of the Company's total pro forma sales.

ACQUISITIONS

On May 26, 1997, Lear entered into a definitive agreement to acquire
certain equity and partnership interests in Keiper Car Seating GmbH & Co. and
certain of its subsidiaries and affiliates (collectively, "Keiper") for DM 400
million (approximately $235 million) (the "Keiper Acquisition"). In connection
with the Keiper Acquisition, Lear will also pay or assume outstanding
indebtedness of Keiper, which is anticipated to be approximately $28 million.
Keiper is a leading supplier of automotive vehicle seat systems on a JIT basis
for markets in Europe, Brazil and South Africa, with unaudited sales for the
year ended December 31, 1996 of approximately $615 million. Management believes
that the Keiper Acquisition will strengthen Lear's core seat system business,
expand Lear's presence in Europe, Brazil and South Africa and strengthen Lear's
relationships with Mercedes Benz, Audi, Volkswagen and Porsche. The Keiper
Acquisition, which is subject to clearance by the Antitrust Commission of the
European Union, is expected to close in the third quarter of 1997. However,
there can be no assurances that the Keiper Acquisition will be consummated.

On June 5, 1997, the Company acquired the stock of Dunlop Cox Limited
("Dunlop Cox") for approximately $60 million (the "Dunlop Cox Acquisition").
Dunlop Cox, based in Nottingham, England, provides Lear with the ability to
design and manufacture manual and electronically-powered automotive seat
adjusters. For the year ended December 31, 1996, Dunlop Cox had sales of
approximately $39 million.

Prior to August 1995, Lear primarily produced seat systems and components.
Since then, the Company has made three major acquisitions which have provided it
with significant capabilities in the other four systems comprising a total
automotive interior. In August 1995, Lear acquired Automotive Industries
Holding, Inc. ("AI") which gave Lear a strong presence in the door panel and
headliner segments of the automotive interior market (the "AI Acquisition"). In
June 1996 and December 1996, respectively, Lear acquired Masland Corporation
("Masland"), a leading designer and manufacturer of floor and acoustic systems
in North America (the "Masland Acquisition"), and Borealis Industrier AB
("Borealis"), a European manufacturer of instrument panels, door panels and
various other automotive interior components (the "Borealis Acquisition"). In
addition to broadening its product lines, the acquisitions of Borealis, Masland
and AI have expanded the Company's customer base, strengthened its relationships
with existing customers and enhanced its technological expertise.
5
<PAGE> 9

In addition to the Dunlop Cox, Borealis, Masland and AI Acquisitions, Lear
has completed five significant strategic acquisitions since 1990. In December
1994, the Company acquired the primary automotive seat systems supplier to Fiat
and certain related businesses (the "Fiat Seat Business" or the "FSB"),
establishing Lear as one of the leading independent suppliers of automotive seat
systems in Europe (the "FSB Acquisition"). In 1993, the Company significantly
expanded its operations in North America by purchasing certain portions of the
North American seat cover and seat systems business (the "NAB") of Ford (the
"NAB Acquisition"). In 1991 and 1992, the Company acquired the seat systems
businesses of Saab in Sweden and Finland and of Volvo in Sweden. In addition to
broadening the Company's geographic coverage, these acquisitions have expanded
the Company's customer base and solidified relationships with existing
customers.

The Company's principal executive offices are located at 21557 Telegraph
Road, Southfield, Michigan 48086-5008. Its telephone number at that location is
(248) 746-1500.

THE OFFERING

<TABLE>
<S> <C> <C>
Common Stock offered by the Selling
Stockholders:
U.S. Offering................................. 8,230,000 shares(1)
International Offering........................ 2,054,854 shares(1)
Total...................................... 10,284,854 shares(1)
----------
NYSE Symbol..................................... LEA
</TABLE>

- -------------------------
(1) Assumes that the Underwriters' over-allotment options are exercised in full.

RISK FACTORS

Investment in the Company's Common Stock involves certain risks discussed
under "Risk Factors" that should be considered by prospective investors.
6
<PAGE> 10

SUMMARY FINANCIAL DATA OF THE COMPANY

The following summary consolidated financial data were derived from the
consolidated financial statements of the Company. The consolidated financial
statements of the Company for each of the years ended December 31, 1996, 1995
and 1994 have been audited by Arthur Andersen LLP. The consolidated financial
statements of the Company for the three months ended March 29, 1997 and March
30, 1996 are unaudited; however, in the Company's opinion, they reflect all
adjustments, consisting only of normal recurring items, necessary for a fair
presentation of the financial position and results of operations for such
periods. The results for the three months ended March 29, 1997 are not
necessarily indicative of the results to be expected for the full year. The
summary financial data below should be read in conjunction with the other
financial data of the Company included in this Prospectus, the consolidated
financial statements of the Company and the notes thereto incorporated by
reference in this Prospectus and "Management's Discussion and Analysis of
Financial Condition and Results of Operations of the Company."

LEAR CORPORATION

<TABLE>
<CAPTION>
AS OF OR FOR THE
THREE MONTHS ENDED AS OF OR FOR THE YEAR ENDED
----------------------- ---------------------------------------------
MARCH 29, MARCH 30, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1996 1995 1994
--------- --------- ------------ ------------ ------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AND CONTENT PER VEHICLE DATA)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales.............................. $1,724.0 $1,405.8 $6,249.1 $4,714.4 $3,147.5
Operating income....................... 102.1 70.0 375.8 244.8 169.6
Interest expense(1).................... 27.2 24.4 102.8 75.5 46.7
Net income(2).......................... 41.9 25.8 151.9 91.6 59.8
Net income per share(2)................ .62 .43 2.38 1.74 1.26
BALANCE SHEET DATA:
Total assets........................... $3,860.4 $3,122.2 $3,816.8 $3,061.3 $1,715.1
Long-term debt......................... 1,001.6 1,033.3 1,054.8 1,038.0 418.7
Stockholders' equity................... 1,036.2 612.5 1,018.7 580.0 213.6
OTHER DATA:
EBITDA(3).............................. $ 145.6 $ 103.2 $ 518.1 $ 336.8 $ 225.7
Depreciation and amortization.......... 43.5 33.2 142.3 92.0 56.1
Capital expenditures................... 32.6 33.7 153.8 110.7 103.1
North American content per
vehicle(4)........................... 312 274 292 227 169
Western European content per
vehicle(5)........................... 106 98 109 92 44
</TABLE>

- -------------------------
(1) Interest expense includes non-cash charges for amortization of deferred
financing fees of approximately $0.9 million, $0.8 million, $3.4 million,
$2.7 million and $2.4 million for the three months ended March 29, 1997 and
March 30, 1996, and for the years ended December 31, 1996, 1995 and 1994,
respectively.

(2) After extraordinary charges of $2.6 million ($.05 per share) for the year
ended December 31, 1995 relating to the early extinguishment of debt.

(3) "EBITDA" is operating income plus depreciation and amortization. EBITDA does
not represent and should not be considered as an alternative to net income
or cash flow from operations as determined by generally accepted accounting
principles.

(4) "North American content per vehicle" is the Company's net automotive sales
in North America divided by total North American vehicle production. "North
American vehicle production" comprises car and light truck production in the
United States, Canada and Mexico estimated by the Company from industry
sources.

(5) "Western European content per vehicle" is the Company's net automotive sales
in Western Europe divided by total Western European vehicle production.
"Western European vehicle production" comprises car and light truck
production in Western Europe estimated by the Company from industry sources.
7
<PAGE> 11

SUMMARY PRO FORMA UNAUDITED CONSOLIDATED FINANCIAL DATA

The following summary pro forma unaudited consolidated financial data were
derived from and should be read in conjunction with the pro forma unaudited
consolidated financial data included elsewhere in this Prospectus. The following
summary pro forma unaudited consolidated operating data and other data of the
Company for the year ended December 31, 1996 were prepared to illustrate the
estimated effects of (i) the Masland Acquisition (including the refinancing of
certain debt of Masland), (ii) the public offering of Common Stock by the
Company and the application of the net proceeds therefrom in July 1996 (the
"1996 Stock Offering"), (iii) the public offering of the Company's 9 1/2%
Subordinated Notes due 2006 (the "9 1/2% Notes") and the application of the
proceeds therefrom in July 1996 (the "1996 Note Offering") and (iv) the
completion of the Company's Amended and Restated Credit and Guarantee Agreement
(the "Credit Agreement") and other credit agreement financings in 1996
(collectively, the "Credit Agreement Financings") (collectively, the "Pro Forma
Transactions"), as if the Pro Forma Transactions had occurred on January 1,
1996. The following summary pro forma unaudited consolidated financial data do
not purport to represent (i) the actual results of operations of the Company had
the Pro Forma Transactions occurred on the dates assumed or (ii) the results to
be expected in the future.

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1996
------------------
(DOLLARS IN MILLIONS,
EXCEPT PER SHARE AND
CONTENT PER VEHICLE DATA)
<S> <C>
OPERATING DATA:
Net sales................................................. $6,510.8
Operating income.......................................... 394.6
Interest expense(1)....................................... 113.5
Net income................................................ 153.9
Net income per share...................................... 2.27
OTHER DATA:
EBITDA(2)................................................. $ 548.3
Depreciation and amortization............................. 153.7
Capital expenditures...................................... 169.8
North American content per vehicle(3)..................... 309
Western European content per vehicle(4)................... 109
</TABLE>

- -------------------------
(1) Interest expense includes non-cash charges for amortization of deferred
financing fees of approximately $3.4 million.

(2) "EBITDA" is operating income plus depreciation and amortization. EBITDA does
not represent and should not be considered as an alternative to net income
or cash flow from operations as determined by generally accepted accounting
principles.

(3) "North American content per vehicle" is the Company's pro forma net
automotive sales in North America divided by total North American vehicle
production. "North American vehicle production" comprises car and light
truck production in the United States, Canada and Mexico estimated by the
Company from industry sources.

(4) "Western European content per vehicle" is the Company's pro forma net
automotive sales in Western Europe divided by total Western European vehicle
production. "Western European vehicle production" comprises car and light
truck production in Western Europe estimated by the Company from industry
sources.
8
<PAGE> 12

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:

NATURE OF AUTOMOTIVE INDUSTRY

The Company's principal operations are directly related to domestic and
foreign automotive vehicle production. Automotive sales and production are
cyclical and can be affected by the strength of a country's general economy. In
addition, automotive production and sales can be affected by labor relations
issues (including strikes and other work stoppages), 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.

RELIANCE ON MAJOR CUSTOMERS AND SELECTED CAR MODELS

Two of the Company's customers, Ford and General Motors, accounted for
approximately 32% and 30%, respectively, of the Company's net sales during 1996.
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 automotive 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 major OEMs 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.

FOREIGN EXCHANGE RISK

As a result of Lear's continued global expansion, a significant portion of
the Company's revenues, expenses and net assets 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

9
<PAGE> 13

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. See "Description of Capital Stock" for
additional information regarding these and certain other anti-takeover
provisions adopted by the Company.

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 worldwide or
regional automobile and light truck production, (iii) labor disputes involving
the Company or its significant customers, (iv) changes in practices and/or
policies of the Company's significant customers toward outsourcing automotive
components and systems, (v) other risks detailed from time to time in the
Company's Securities and Exchange Commission filings and (vi) those items
identified under "Risk Factors." The Company does not intend to update these
forward-looking statements.

COMMON STOCK PRICE RANGE AND DIVIDENDS

The Common Stock is listed for trading on the New York Stock Exchange under
the symbol "LEA." The following table sets forth the high and low sale prices of
the Common Stock as reported on the New York Stock Exchange for the periods
indicated:

<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1995:
First Quarter............................................. $20 7/8 $16 5/8
Second Quarter............................................ 24 1/4 17 7/8
Third Quarter............................................. 31 1/8 23
Fourth Quarter............................................ 32 1/2 26 1/4
1996:
First Quarter............................................. $34 $25 1/4
Second Quarter............................................ 39 1/4 27 1/2
Third Quarter............................................. 39 7/8 29 7/8
Fourth Quarter............................................ 38 7/8 31 3/4
1997:
First Quarter............................................. $39 7/8 $33 3/8
Second Quarter (through June 23, 1997).................... 40 1/4 33 1/4
</TABLE>

The reported last sale price of the Common Stock on the New York Stock
Exchange Composite Tape as of a recent date is set forth on the cover page of
this Prospectus.

As of May 28, 1997, there were 332 holders of record of the outstanding
Common Stock and the Company estimates that, at such date, there were
approximately 15,400 beneficial holders.

The Company to date has not paid dividends on its Common Stock. Any future
payment of dividends is subject to the discretion of the Company's Board of
Directors, which may consider the Company's earnings and financial condition and
such other factors as it deems relevant. In addition, the Credit Agreement and
the Indentures governing Lear's 11 1/4% Senior Subordinated Notes due 2000 (the
"Senior Subordinated Notes"), 8 1/4% Subordinated Notes due 2002 (the
"Subordinated Notes") and the 9 1/2% Notes presently contain certain
restrictions on the Company's ability to pay dividends. The Company does not
currently intend to pay cash dividends.

10
<PAGE> 14

PRO FORMA FINANCIAL DATA

The following pro forma unaudited consolidated statement of income of the
Company for the year ended December 31, 1996 was prepared to illustrate the
estimated effects of (i) the Masland Acquisition (including the refinancing of
certain debt of Masland), (ii) the 1996 Stock Offering, (iii) the 1996 Note
Offering and (iv) Credit Agreement Financings (collectively, the "Pro Forma
Transactions"), as if the Pro Forma Transactions had occurred on January 1,
1996.

The Pro Forma Statement does not purport to represent (i) the actual
results of operations of the Company had the Pro Forma Transactions occurred on
the date assumed or (ii) the results to be expected in the future.

The pro forma adjustments are based upon available information and upon
certain assumptions that management believes are reasonable. The Pro Forma
Statement and accompanying notes should be read in conjunction with the
historical financial statements of the Company and Masland, including the notes
thereto, and the other financial information pertaining to the Company and
Masland, including the information included elsewhere or incorporated by
reference in this Prospectus.

PRO FORMA UNAUDITED CONSOLIDATED STATEMENT OF INCOME

YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
OPERATING AND
LEAR MASLAND FINANCING
HISTORICAL HISTORICAL(1) ADJUSTMENTS PRO FORMA
---------- ------------- ------------- ---------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales....................................... $6,249.1 $263.7 $ (2.0)(2) $6,510.8
Cost of sales................................... 5,629.4 211.6 (2.0)(2) 5,839.0
-------- ------ ------ --------
Gross profit.................................... 619.7 52.1 -- 671.8
Selling, general and administrative expenses.... 210.3 29.2 -- 239.5
Amortization.................................... 33.6 1.2 2.9 (3) 37.7
-------- ------ ------ --------
Operating income................................ 375.8 21.7 (2.9) 394.6
Interest expense................................ 102.8 2.2 8.5 (4) 113.5
Other expense, net.............................. 19.6 1.2 -- 20.8
-------- ------ ------ --------
Income before income taxes...................... 253.4 18.3 (11.4) 260.3
Income taxes.................................... 101.5 7.9 (3.0)(5) 106.4
-------- ------ ------ --------
Net income...................................... $ 151.9 $ 10.4 $ (8.4) $ 153.9
======== ====== ====== ========
Net income per share............................ $ 2.38 $ 2.27
Weighted average shares outstanding (in
millions)..................................... 63.8 4.0 (6) 67.8
EBITDA(7)....................................... $ 518.1 $ 548.3
======== ========
</TABLE>

- -------------------------
(1) The Masland historical information reflects Masland historical unaudited
results of operations for the period from January 1, 1996 through June 27,
1996, the date on which the Company acquired 97% of Masland's common stock.
The results from Masland's operations for the period subsequent to June 27,
1996 are included in the historical results of the Company.

(2) Reflects the elimination of net sales from Masland to the Company from
January 1, 1996 through June 27, 1996.

11
<PAGE> 15

(3) The adjustment to amortization represents the following:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
-----------------
(DOLLARS IN MILLIONS)
<S> <C>
Amortization of goodwill from the Masland Acquisition....... $ 4.1
Elimination of the historical goodwill amortization of
Masland................................................... (1.2)
------
$ 2.9
======
</TABLE>

(4) Reflects interest expense changes as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
-----------------
(DOLLARS IN MILLIONS)
<S> <C>
Reduction in interest due to application of the net proceeds
from the 1996 Stock Offering.............................. $(8.8)
Reduction in interest due to application of the net proceeds
from the 1996 Note Offering............................... (7.1)
Interest on borrowings to finance the Masland Acquisition... 15.7
Elimination of interest on Masland debt refinanced.......... (2.2)
Interest on the 9 1/2% Notes from January 1, 1996 through
July 11, 1996............................................. 10.1
Other changes in interest expense, commitment fees and
amortization of deferred finance fees due to the 1996
Stock Offering, the 1996 Note Offering and the Credit
Agreement Financings...................................... .8
------
$ 8.5
======
</TABLE>

(5) Reflects the income tax effects of the operating and financing adjustments.

(6) The adjustment to weighted average shares outstanding represents the
following:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
-----------------
(SHARES IN MILLIONS)
<S> <C>
Effect of the issuance of 7.5 million shares pursuant to the
1996 Stock Offering....................................... 3.9
Conversion of certain Masland stock options into Lear stock
options in connection with the Masland Acquisition........ .1
-----
4.0
=====
</TABLE>

(7) "EBITDA" is operating income plus depreciation and amortization. EBITDA does
not represent and should not be considered as an alternative to net income
or cash flow from operations as determined by generally accepted accounting
principles.

12
<PAGE> 16

SELECTED FINANCIAL DATA OF THE COMPANY

The following income statement and balance sheet data were derived from the
consolidated financial statements of the Company. The consolidated financial
statements of the Company for each of the fiscal years ended December 31, 1996,
1995, 1994 and 1993 and June 30, 1993 and 1992 have been audited by Arthur
Andersen LLP. Effective December 31, 1993, the Company changed its fiscal year
end from June 30 to December 31. The consolidated financial statements of the
Company for the three months ended March 29, 1997 and March 30, 1996 are
unaudited; however, in the Company's opinion, they reflect all adjustments,
consisting only of normal recurring items, necessary for a fair presentation of
the financial position and results of operations for such periods. The results
for the three months ended March 29, 1997 are not necessarily indicative of the
results to be expected for the full year. The selected financial data below
should be read in conjunction with the consolidated financial statements of the
Company and the notes thereto incorporated by reference in this Prospectus and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations of the Company."

<TABLE>
<CAPTION>
AS OF OR FOR THE
THREE MONTHS ENDED AS OF OR FOR THE YEAR ENDED
--------------------- -------------------------------------------------------------------------------
MARCH 29, MARCH 30, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, JUNE 30, JUNE 30,
1997 1996 1996 1995 1994 1993 1993 1992
--------- --------- ------------ ------------ ------------ ------------ -------- --------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AND CONTENT PER VEHICLE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales........... $1,724.0 $1,405.8 $6,249.1 $4,714.4 $3,147.5 $1,950.3 $1,756.5 $1,422.7
Gross profit........ 177.9 120.6 619.7 403.1 263.6 170.2 152.5 115.6
Selling, general and
administrative
expenses.......... 66.1 43.3 210.3 139.0 82.6 62.7 61.9 50.1
Incentive stock and
other compensation
expense(1)........ -- -- -- -- -- 18.0 -- --
Amortization........ 9.7 7.3 33.6 19.3 11.4 9.9 9.5 8.7
-------- -------- -------- -------- -------- -------- -------- --------
Operating income.... 102.1 70.0 375.8 244.8 169.6 79.6 81.1 56.8
Interest
expense(2)........ 27.2 24.4 102.8 75.5 46.7 45.6 47.8 55.2
Other expense,
net(3)............ 5.5 3.1 19.6 12.0 8.1 9.2 5.4 5.8
-------- -------- -------- -------- -------- -------- -------- --------
Income (loss) before
income taxes and
extraordinary
items............. 69.4 42.5 253.4 157.3 114.8 24.8 27.9 (4.2)
Income taxes........ 27.5 16.7 101.5 63.1 55.0 26.9 17.8 12.9
-------- -------- -------- -------- -------- -------- -------- --------
Net income (loss)
before
extraordinary
items............. 41.9 25.8 151.9 94.2 59.8 (2.1) 10.1 (17.1)
Extraordinary
items(4).......... -- -- -- 2.6 -- 11.7 -- 5.1
-------- -------- -------- -------- -------- -------- -------- --------
Net income (loss)... $ 41.9 $ 25.8 $ 151.9 $ 91.6 $ 59.8 $ (13.8) $ 10.1 $ (22.2)
======== ======== ======== ======== ======== ======== ======== ========
Net income (loss)
per share before
extraordinary
items(5).......... $ .62 $ .43 $ 2.38 $ 1.79 $ 1.26 $ (.06) $ .25 $ (.62)
Net income (loss)
per share(5)...... $ .62 $ .43 $ 2.38 $ 1.74 $ 1.26 $ (.39) $ .25 $ (.80)
Weighted average
shares outstanding
(in millions)(5).. 68.0 60.0 63.8 52.6 47.6 35.5 40.0 27.8
BALANCE SHEET DATA:
Current assets...... $1,426.2 $1,257.9 $1,347.4 $1,207.2 $ 818.3 $ 433.6 $ 325.2 $ 282.9
Total assets........ 3,860.4 3,122.2 3,816.8 3,061.3 1,715.1 1,114.3 820.2 799.9
Current
liabilities....... 1,584.9 1,306.0 1,499.3 1,276.0 981.2 505.8 375.0 344.2
Long-term debt...... 1,001.6 1,033.3 1,054.8 1,038.0 418.7 498.3 321.1 348.3
Stockholders'
equity............ 1,036.2 612.5 1,018.7 580.0 213.6 43.2 75.1 49.4
OTHER DATA:
EBITDA(6)........... $ 145.6 $ 103.2 $ 518.1 $ 336.8 $ 225.7 $ 122.2 $ 121.8 $ 91.8
Capital
expenditures...... $ 32.6 $ 33.7 $ 153.8 $ 110.7 $ 103.1 $ 45.9 $ 31.6 $ 27.9
Number of
facilities(7)..... 149 116 148 107 79 61 48 45
North American
content per
vehicle(8)........ $ 312 $ 274 $ 292 $ 227 $ 169 $ 112 $ 98 $ 94
Western European
content per
vehicle(9)........ $ 106 $ 98 $ 109 $ 92 $ 44 $ 34 $ 26 $ 19
</TABLE>

- -------------------------
(1) Includes a one-time charge of $18.0 million, of which $14.5 million was
non-cash, for the year ended December 31, 1993 for incentive stock and other
compensation expense.
(2) Interest expense includes non-cash charges for amortization of deferred
financing fees of approximately $0.9 million, $0.8 million, $3.4 million,
$2.7 million, $2.4 million, $2.6 million, $3.0 million and $3.2 million for
the three months ended March 29, 1997 and March 30, 1996, and for the years
ended December 31, 1996, 1995, 1994 and 1993, and the fiscal years ended
June 30, 1993 and 1992, respectively.
(3) Consists of foreign currency exchange gain or loss, minority interests in
consolidated subsidiaries, equity in net income of affiliates, state and
local taxes and other expense.
(4) The extraordinary items resulted from the prepayment of debt.
(5) Weighted average shares outstanding and net income (loss) per share are
calculated on a fully-diluted basis.
(6) "EBITDA" is operating income plus depreciation and amortization. EBITDA does
not represent and should not be considered as an alternative to net income
or cash flows from operations as determined by generally accepted accounting
principles.
(7) Includes facilities operated by the Company's less than majority-owned
affiliates and facilities under construction.
(8) "North American content per vehicle" is the Company's net automotive sales
in North America divided by total North American vehicle production. "North
American vehicle production" comprises car and light truck production in the
United States, Canada and Mexico estimated by the Company from industry
sources.
(9) "Western European content per vehicle" is the Company's net automotive sales
in Western Europe divided by total Western European vehicle production.
"Western European vehicle production" comprises car and light truck
production in Western Europe estimated by the Company from industry sources.

13
<PAGE> 17

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS OF THE COMPANY

RESULTS OF OPERATIONS

Lear's sales have grown rapidly, both internally and through acquisitions,
from approximately $3.1 billion in the year ended December 31, 1994 to
approximately $6.2 billion in the year ended December 31, 1996. Net income over
the same period increased from $59.8 million to $151.9 million. The Company's
principal operations are directly affected by worldwide automotive vehicle
production. Automotive production can be affected by factors such as the
country's general economy, labor relation issues, regulatory requirements, trade
agreements, and other factors. Labor relations issues at one of the Company's
major customers had a negative impact on the results of operations of the
Company for the year ended December 31, 1996 and labor relations issues at two
of the Company's major customers will have a negative impact on the results of
operations of the Company for the three months ended June 28, 1997.

The following chart shows operating results of the Company by principal
geographic area:

GEOGRAPHIC OPERATING RESULTS

<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
---------------------- --------------------------------------------
MARCH 29, MARCH 30, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1996 1995 1994
--------- --------- ------------ ------------ ------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
NET SALES:
United States and Canada............. $1,161.6 $ 916.6 $4,058.0 $3,108.0 $2,378.7
Europe............................... 415.1 382.9 1,621.8 1,325.4 572.5
Mexico and other..................... 147.3 106.3 569.3 281.0 196.3
-------- -------- -------- -------- --------
Net sales.......................... $1,724.0 $1,405.8 $6,249.1 $4,714.4 $3,147.5
======== ======== ======== ======== ========
OPERATING INCOME:
United States and Canada............. $ 87.1 $ 56.7 $ 302.6 $ 204.8 $ 155.6
Europe............................... 6.9 9.4 49.2 26.5 4.4
Mexico and other..................... 8.1 3.9 24.0 13.5 9.6
-------- -------- -------- -------- --------
Operating income................... $ 102.1 $ 70.0 $ 375.8 $ 244.8 $ 169.6
======== ======== ======== ======== ========
</TABLE>

Three Months Ended March 29, 1997 Compared With Three Months Ended March 30,
1996

Net sales of $1,724.0 million in the quarter ended March 29, 1997 surpassed
the first quarter of 1996 by $318.2 million or 22.6%. Net sales in the first
quarter of 1997 benefited from the June 1996 Masland Acquisition and the
December 1996 Borealis Acquisition, which collectively accounted for $207.6
million of the increase from the first quarter of 1996. Further contributing to
the overall increase in sales was new business introduced globally within the
past year and the incremental volume and content on mature programs in North
America and South America.

Net sales in the United States and Canada of $1,161.6 million in the first
quarter of 1997 exceeded net sales in the first quarter of 1996 by $245.0
million or 26.7%. Sales in the quarter ended March 29, 1997 benefited from the
contribution of $149.3 million in sales from the Masland Acquisition,
introduction within the past twelve months of new Ford and Chrysler truck
programs and vehicle production increases by domestic automotive manufacturers
on certain established programs.

Net sales in Europe of $415.1 million increased by $32.2 million or 8.4% in
the first quarter of 1997 as compared to net sales in the first quarter of 1996.
Sales in the quarter ended March 29, 1997 benefited from $47.7 million in sales
from the Borealis Acquisition. Partially offsetting the increase in sales were
unfavorable exchange rate fluctuations in Germany and Sweden and a modest
downturn on industry build schedules for carryover programs.

14
<PAGE> 18

Net sales of $147.3 million for the first quarter of 1997 in the Company's
remaining geographic regions, consisting of Mexico, South America, the
Asia/Pacific Rim region and South Africa surpassed net sales for the first
quarter of 1996 by $41.0 million or 38.6%. Sales in the quarter ended March 29,
1997 benefited from increased Fiat and Volkswagen programs in South America and
$10.6 million in sales from a Masland operation in Mexico. Partially offsetting
the increase in sales was reduced market demand for existing General Motors
truck and Ford passenger car programs in Mexico.

Gross profit (net sales less cost of sales) and gross margin (gross profit
as a percentage of net sales) were $177.9 million and 10.3% for the first
quarter of 1997 as compared to $120.6 million and 8.6% in the comparable period
of 1996. Gross profit improvement in the quarter ended March 29, 1997 reflected
the contribution of the Masland and Borealis Acquisitions coupled with the
benefits derived from the overall growth in new and ongoing programs.

Selling, general and administrative expenses as a percentage of net sales
increased to 3.8% in the first quarter of 1997 as compared to 3.1% in the first
quarter of 1996. These expenditures increased in the first quarter of 1997 in
comparison to the comparable period of the prior year due to the inclusion of
Masland and Borealis operating expenses as well as support expenses associated
with established and potential business opportunities.

Operating income and operating margin were $102.1 million and 5.9% for the
first quarter of 1997 as compared to $70.0 million and 5.0% for the first
quarter of 1996. For the quarter ended March 29, 1997, operating income
benefited from the Masland Acquisition, increased market demand and content on
car and light truck programs in the United States and Canada and improved
performances at certain South America and Asia/Pacific Rim operations. Partially
offsetting the increase in operating income were design, development and
administrative expenses, program expenses for recently opened facilities in
South America and the Asia/Pacific Rim region and the integration of the
Company's interior trim operations in Europe. Non-cash depreciation and
amortization charges were $43.5 million and $33.2 million for the first quarter
of 1997 and 1996, respectively. For the quarter ended March 29, 1997, interest
expense increased over the first quarter of 1996 by $2.8 million, largely as a
result of interest incurred on additional debt utilized to finance the Masland
and Borealis Acquisitions.

Other expenses for the first quarter of 1997, which include state and local
taxes, foreign exchange, minority interests in consolidated subsidiaries, equity
in net income of affiliates and other non-operating expenses, increased in
comparison to the first quarter of the prior year as increases in the provisions
for minority interest and state and local taxes more than offset foreign
exchange gains.

Net income for the first quarter of 1997 was $41.9 million, or $.62 per
share, as compared to $25.8 million, or $.43 per share, in the first quarter of
1996. The provision for income taxes in the current quarter was $27.5 million,
or an effective tax rate of 39.6% as compared to $16.7 million, or an effective
tax rate of 39.3% in the previous year. Earnings per share increased in the
first quarter of 1997 by 44.2% despite an increase in the weighted average
number of shares outstanding of approximately 8.0 million shares.

Year Ended December 31, 1996 Compared With Year Ended December 31, 1995

Net sales of $6,249.1 million in the year ended December 31, 1996
represented the fifteenth consecutive year of record sales and exceeded sales of
$4,714.4 million in the year ended December 31, 1995 by $1,534.7 million, or
32.6%. Net sales in 1996, as compared to the prior year, benefited from the full
year contribution of the AI Acquisition completed in August 1995 and the partial
year contribution of the Masland Acquisition in June 1996, respectively, which
collectively accounted for $836.3 million of the increase. Further contributing
to the overall increase in sales was new business introduced globally within the
past year and incremental volume and content on mature programs.

Gross profit and gross margin improved to $619.7 million and 9.9% in 1996
as compared to $403.1 million and 8.6% in 1995. Gross profit in 1996 reflects
the contribution of the AI and Masland Acquisitions coupled with the benefits
derived from increased revenues from new and ongoing programs. Also contributing
to the increase in gross profit was a decrease in start-up expenses from $32.1
million in 1995 to $18.0 million in 1996.

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Partially offsetting the increase in gross profit was the cumulative impact of
the General Motors work stoppages in the first and fourth quarters of 1996 and
downtime associated with a Chrysler model changeover.

Selling, general and administrative expenses, including research and
development, as a percentage of net sales increased to 3.4% in the year ended
December 31, 1996 as compared to 2.9% a year earlier. In comparison to the prior
year, the increase in actual expenditures in 1996 was due to the inclusion of
Masland and AI operating expenses as well as increased research and development
and administrative support expenses associated with the expansion of domestic
and international business.

Operating income and operating margin were $375.8 million and 6.0% in the
year ended December 31, 1996 as compared to $244.8 million and 5.2% in the
previous year. For 1996, operating income benefited from the incremental
operating income generated from acquisitions along with increased revenue from
domestic and foreign automotive manufacturers on new and mature programs.
Partially offsetting the increase in operating income were design, development
and administrative expenses at North American and European Technical Centers,
Chrysler's downtime for model changeover and the adverse impact of the General
Motors work stoppages. Non-cash depreciation and amortization charges were
$142.3 million and $92.0 million for the years ended December 31, 1996 and 1995,
respectively.

For the year ended December 31, 1996, interest expense increased by $27.3
million to $102.8 million as compared to the corresponding period in the prior
year. The increase in interest expense was largely the result of interest
incurred on additional debt utilized to finance the Masland and AI Acquisitions.

Other expenses for the year ended December 31, 1996, which include state
and local taxes, foreign exchange, minority interests in consolidated
subsidiaries, equity in net income of affiliates and other non-operating
expenses, increased to $19.6 million in 1996 as compared to $12.0 million in
1995 as the effect of higher sales volumes on state and local taxes and the
provision for minority interest expense from the Company's joint ventures more
than offset favorable foreign exchange related to the Company's North American
and European operations.

Net income in 1996 was $151.9 million, or $2.38 per share, as compared to
$91.6 million, or $1.74 per share in 1995. The increase in net income was due to
the Masland Acquisition, a full year activity from the AI Acquisition, new
business awarded, cost reduction programs and increased production levels on
existing programs. The provision for income taxes in the current year was $101.5
million, or an effective tax rate of 40.1%, as compared to $63.1 million and
40.1% in the previous year. Net income in 1995 reflects an extraordinary loss of
$2.6 million related to the early retirement of debt. Earnings per share
increased in 1996 by 36.8% despite an increase in the weighted average number of
shares outstanding of approximately 11.1 million shares.

United States and Canadian Operations

Net sales in the United States and Canada were $4,058.0 million and
$3,108.0 million in the years ended December 31, 1996 and 1995, respectively.
Sales in 1996 benefited from the contribution of $708.4 million in incremental
sales from the AI and Masland Acquisitions, new passenger car and truck programs
introduced during 1996 and modest vehicle production increases by domestic
automotive manufacturers on carryover programs. Partially offsetting the
increase in sales was the impact of the General Motors work stoppages and
downtime associated with a Chrysler model changeover.

Operating income and operating margin were $302.6 million and 7.5% in 1996
as compared to $204.8 million and 6.6% in 1995. The increase in operating income
was largely the result of the benefits derived from the acquisitions of AI and
Masland as well as the overall growth in domestic vehicle sales, including
production of new business vehicle sales. Partially offsetting the increase in
operating income were reduced utilization at General Motors and Chrysler
facilities and higher engineering and administrative expenses necessary to
support established and new business opportunities.

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European Operations

Net sales in Europe increased by 22.4% to $1,621.8 million in the year
ended December 31, 1996 as compared to $1,325.4 million in the year ended
December 31, 1995. Sales in 1996 benefited from increased market demand on
existing passenger car and light truck programs in Italy, Germany and Austria
and the full year contribution of the AI Acquisition.

Operating income and operating margin were $49.2 million and 3.0% in 1996
as compared to $26.5 million and 2.0% in 1995. Operating income in 1996
benefited from incremental volume on carryover seat and seat component programs,
the contribution of the AI Acquisition and improved operating performance at
certain of the Company's facilities in England and Germany.

Mexico and Other Operations

Net sales of $569.3 million in 1996 in the Company's remaining geographic
regions, consisting of Mexico, South America, the Asia/Pacific Rim region and
South Africa, increased by $288.3 million, or 102.6%, from $281.0 million in the
comparable period in 1995. Sales in the year ended December 31, 1996 benefited
from new business operations in South America, the Asia/Pacific Rim region, and
South Africa which accounted for $214.7 million of the increase, higher
production build schedules for General Motors and Chrysler programs in Mexico
and sales of $22.3 million from a Masland operation in Mexico.

Operating income and operating margin were $24.0 million and 4.2% in 1996
as compared to $13.5 million and 4.8% in 1995. Operating income in 1996
increased primarily due to the benefits derived from the growth in sales
activity, including the production of new business operations and the
acquisition of Masland. Partially offsetting the increase in operating income
were facility and preproduction costs for recently opened facilities in
Argentina, India and Venezuela.

Year Ended December 31, 1995 Compared With Year Ended December 31, 1994

Net sales of $4,714.4 million in the year ended December 31, 1995 increased
by $1,566.9 million or 49.8% over net sales for the year ended December 31,
1994. Net sales in 1995 benefited from the acquisitions of AI on August 17, 1995
and the Fiat Seat Business on December 15, 1994 which together accounted for
$795.3 million of the increase. Further contributing to the growth in sales were
incremental volumes on new seating programs in North America and increased
production in Europe.

Gross profit and gross margin were $403.1 million and 8.6% in 1995 as
compared to $263.6 million and 8.4% in 1994. Gross profit in 1995 benefited from
the overall increase in North American and European sales activity, including
the acquisitions of AI and FSB, and production of certain new seat programs in
the United States and Mexico. Partially offsetting the increase in gross profit
were new program start-up expenses of $32.1 million versus $23.1 million in
1994, and costs associated with new business opportunities in Asia/Pacific Rim,
South America and South Africa.

Selling, general and administrative expenses, including research and
development, as a percentage of net sales increased to 2.9% in 1995 as compared
to 2.6% in the previous year. Actual expenditures in 1995 increased in
comparison to the prior year primarily due to the inclusion of AI and FSB
engineering and administrative expenses in 1995. In addition, research and
development costs increased at the United States and European customer focused
technical centers in support of existing and potential business opportunities.

Operating income and operating margin were $244.8 million and 5.2% in the
year ended December 31, 1995 as compared to $169.6 million and 5.4% in the year
ended December 31, 1994. The increase in operating income was primarily due to
increased volumes on new and existing light truck seating programs, improved
performance of the Company's European operations and the incremental operating
income derived from acquisitions. Partially offsetting the increase in operating
income and contributing to the decline in operating margins were design and
development costs associated with the expansion of business and program start-up
expenses for new seat programs. Also contributing to the decline in operating
margin were the increased sales in Europe caused by the FSB which had lower
margins. Non-cash depreciation and amortization charges were $92.0 million and
$56.1 million for the years ended December 31, 1995 and 1994, respectively.

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<PAGE> 21

Interest expense in the year ended December 31, 1995 increased in
comparison to prior year as a result of interest incurred on additional debt
utilized to finance the AI and FSB Acquisitions as well as higher interest rates
in 1995 under the Company's prior senior credit facilities.

Other expenses in 1995 increased in comparison to the prior year as foreign
exchange losses incurred at the Company's North American and European
operations, along with increased state and local taxes associated with the AI
Acquisition, more than offset income derived from joint ventures accounted for
under the equity method.

Net income for the year ended December 31, 1995 was $91.6 million, or $1.74
per share, as compared to $59.8 million, or $1.26 per share in the year ended
December 31, 1994. The provision for income taxes in fiscal 1995 was $63.1
million, or an effective tax rate of 40.1%, versus $55.0 million and 47.9% for
the previous year. The decrease in rate is largely the result of changes in
operating performance and related income levels among the various tax
jurisdictions. Earnings per share increased in 1995 by 38.1% despite an increase
in the number of shares outstanding and an extraordinary loss of $2.6 million
($.05 per share) for the early retirement of debt.

United States and Canadian Operations

Net sales in the United States and Canada were $3,108.0 million and
$2,378.7 million in the years ended December 31, 1995 and 1994, respectively.
Sales in 1995 benefited from new Ford and General Motors passenger car programs,
the contribution of $248.1 million in sales from the AI Acquisition and
incremental volume on light truck seating for previously existing programs.

Operating income and operating margin were $204.8 million and 6.6% in 1995
as compared to $155.6 million and 6.5% in 1994. Operating income in 1995
increased primarily due to increased volumes at certain of the Company's car and
light-truck seating facilities, the benefits derived from the AI Acquisition and
increased productivity and cost reduction programs at existing seat and seat
component facilities. Partially offsetting this increase in operating margin
were engineering and administrative support expenses along with preproduction
costs at new business operations.

European Operations

Net sales in Europe were $1,325.4 million in the year ended December 31,
1995 and $572.5 million in the year ended December 31, 1994. Sales in 1995
benefited from $547.2 million in sales from the FSB and AI acquisitions,
incremental volume on existing programs in Sweden and England and favorable
exchange rate fluctuations in Germany and Sweden.

Operating income and operating margin were $26.5 million and 2.0% in 1995
as compared to $4.4 million and 0.8% in 1994. Operating income in 1995 benefited
from incremental volume on mature Scandinavian and German seat programs and the
benefits derived from the FSB and AI Acquisitions. Partially offsetting the
increase in operating income were engineering, preproduction and facility costs
associated with the start-up of a new seat program in Germany.

Mexico and Other Operations

Net sales of $281.0 million in 1995 in the Company's remaining geographic
regions, consisting of Mexico, Asia/Pacific Rim, South Africa and South America
increased by $84.7 million or 43.1% as compared to $196.3 million in the
comparable period in the prior year. Sales in the year ended December 31, 1995
benefited from the overall growth in Mexican sales activity, including the
production of new General Motors and Ford passenger car and truck seat programs.
Further contributing to the increase in sales was the addition of new business
operations in Australia, South Africa, Brazil and Argentina.

Operating income and operating margin were $13.5 million and 4.8% in the
year ended December 31, 1995 and $9.6 million and 4.9% in the previous year. The
increase in operating income was largely the result of the benefits derived from
increased market demand for new and ongoing seat programs in Mexico. Partially

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offsetting the increase in operating income were engineering and preproduction
costs for recently opened manufacturing facilities in Asia/Pacific Rim, South
Africa and South America.

LIQUIDITY AND FINANCIAL CONDITION

The Company's Credit Agreement is a $1.8 billion multicurrency revolving
credit facility with a syndicate of financial institutions. The Credit Agreement
matures on September 30, 2001 and borrowings thereunder may be used for general
corporate purposes. The Credit Agreement is guaranteed by certain of the
Company's significant domestic subsidiaries and secured by a pledge of the
capital stock of certain of the Company's domestic and foreign subsidiaries.
Generally, United States dollar loans under the Credit Agreement bear interest,
at the election of the Company, at a floating rate equal to (i) the higher of a
specified bank's prime rate and the federal funds rate plus 0.5% or (ii) the
Eurodollar rate plus 0.275% to 0.625%, depending on the level of the Company's
coverage ratio (as specified in the Credit Agreement). Foreign currency
borrowings under the Credit Agreement may be made at floating interest rates set
forth in the Credit Agreement. In addition, at the Company's option, the Company
may incur United States dollar loans under competitive advance facilities and
foreign currency loans under alternative currency facilities at interest rates
to be agreed upon at the time of such loans. The Company also pays a facility
fee on the total $1.8 billion commitment equal to 0.15% to 0.25% per annum,
depending on the level of the Company's coverage ratio (as specified in the
Credit Agreement). As of March 29, 1997, the Company had $450.3 million
outstanding under the Credit Agreement, and an additional $38.5 million was
committed under outstanding letters of credit, resulting in approximately $1.3
billion unused and available. The Company used borrowings under the Credit
Agreement to finance the Dunlop Cox Acquisition and intends to use new
borrowings under the Credit Agreement to finance the Keiper Acquisition.

In addition to debt outstanding under the Credit Agreement, as of March 29,
1997, the Company had an additional $571.5 million of debt, primarily consisting
of $470.0 million of subordinated debentures due between 2000 and 2006. On May
30, 1997, the Company gave notice to the Trustee for holders of the Senior
Subordinated Notes, pursuant to which the Company has stated its intention to
redeem, at 100% of principal amount, all $125.0 million outstanding of the
Senior Subordinated Notes on July 15, 1997 (the "Redemption"). The Company
intends to use new borrowings under the Credit Agreement to fund the Redemption.

As of March 29, 1997 the Company had $16.3 million of cash and cash
equivalents. The Company's scheduled principal payments, including the
Redemption, on long-term debt are $133.0 million, $49.4 million, $6.6 million,
$5.8 million and $452.0 million in the remainder of 1997, 1998, 1999, 2000 and
2001, respectively.

The Company believes that cash flows from operations and available credit
facilities will be sufficient to meet its debt service obligations, projected
capital expenditures and working capital requirements for the foreseeable
future.

As a result of its continued global expansion, the amount of the Company's
revenues and expenses denominated in currencies other than the U.S. Dollar
continues to increase. The Company closely monitors its exposure to currency
fluctuations and, where cost justified, adopts strategies to reduce this
exposure.

The Credit Agreement, the Senior Subordinated Notes, the Subordinated Notes
and the 9 1/2% Notes impose various restrictions and covenants on the Company,
including, among other things, financial covenants relating to the maintenance
of minimum net worth and interest coverage ratios, maximum leverage ratio, as
well as restrictions on indebtedness, guarantees, acquisitions, capital
expenditures, investments, loans, liens, dividends and other restricted payments
and assets sales. Such restrictions could limit the Company's ability to respond
to market conditions, to provide for unanticipated capital investments or to
take advantage of business opportunities.

CAPITAL EXPENDITURES

During the year ended December 31, 1996, the Company's capital expenditures
aggregated approximately $153.8 million, of which approximately $49.9 million
was related to the addition of new facilities and

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<PAGE> 23

other expenditures for new programs, $22.0 million was related to replacement
programs, and the remainder was spent for increased capacity and cost reduction
at existing facilities and continuing maintenance requirements. For the years
ended December 31, 1995 and 1994, capital expenditures of the Company were
$110.7 million and $103.1 million, respectively. For 1997, the Company
anticipates capital expenditures of approximately $185.0 million.

ENVIRONMENTAL MATTERS

The Company is subject to local, state, federal and foreign laws,
regulations and ordinances (i) which govern activities or operations that may
have adverse environmental effects and (ii) that impose liability for the costs
of cleaning up certain damages resulting from sites of past spills, disposal or
other releases of hazardous substances. The Company's policy is to comply with
all applicable environmental laws and maintain procedures to promote compliance.
However, the Company has been, and in the future may become, the subject of
formal or informal enforcement actions or procedures. The Company currently is
engaged in the cleanup of hazardous substances at certain sites owned, leased or
operated by the Company, including soil and groundwater cleanup at its facility
in Mendon, Michigan. Management believes that the Company will not incur
compliance costs or cleanup costs at its facilities with known contamination
that would have a material adverse effect on the Company's consolidated
financial position or future results of operations.

The Company has been identified as a potentially responsible party ("PRP")
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended ("CERCLA" or "Superfund"), for the cleanup of contamination
from hazardous substances at two Superfund sites where liability has not been
substantially resolved. Management believes that the Company is, or may be,
responsible for less than one percent, if any, of the total costs at the two
Superfund sites. The Company has also been identified as a PRP at two additional
sites where liability has not been substantially resolved, as well as at several
other sites (including Superfund sites) at which no significant liability issues
known to the Company remain open at this time. In addition, the Company is one
of a number of defendants in a state court action brought by a group of
plaintiffs in Texas who have claimed various impacts from a Texas landfill to
which the Company and others allegedly sent waste. The Company's expected
liability, if any, at these additional sites is not material.

INFLATION AND ACCOUNTING POLICIES

Lear's contracts with its major customers generally provide for an annual
productivity price reduction and provide for the recovery of increases in
material and labor costs in some contracts. Cost reduction through design
changes, increased productivity and similar programs with the Company's
suppliers generally have offset changes in selling prices. The Company's cost
structure is comprised of a high percentage of variable costs. The Company
believes that this structure provides it with additional flexibility during
economic cycles.

During 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 121, "Recognition of
Impairment of Long-lived Assets", which specifies when and how impairment of
virtually all long-lived assets should be measured and recorded. In general, the
statement requires that whenever circumstances raise doubt about the
recoverability of long-lived assets, the Company should analyze the future cash
flows expected from such assets to determine if impairment exists. This
statement was adopted prospectively on January 1, 1996, and no such impairment
was recognized during 1996.

Also during 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation", which was adopted by the Company in 1996 and requires that stock
compensation, including compensation in the form of stock options, be calculated
using a measure of fair value, compared with intrinsic value required under
current accounting principles. The new method may be either reflected in the
financial statements or disclosed in the notes to the statements. The Company
has adopted the statement by disclosing the effects of the fair value method in
Note 16 to its 1996 financial statements.

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BUSINESS OF THE COMPANY

GENERAL

Lear is one of the largest independent suppliers of automotive interior
systems in the estimated $45 billion global automotive interior systems market
and one of the ten largest independent automotive suppliers in the world. The
Company has experienced substantial growth in market presence and profitability
over the last five years as a result of both internal growth and acquisitions.
The Company's sales have grown from approximately $1.4 billion for the year
ended June 30, 1992 to over $6.2 billion for the year ended December 31, 1996, a
compound annual growth rate of 39%. In addition, the Company's operating income
has grown from $56.8 million for the year ended June 30, 1992 to $375.8 million
for the year ended December 31, 1996, a compound annual growth rate of 51%. The
Company's present customers include 26 OEMs, the most significant of which are
Ford, General Motors, Fiat, Chrysler, Volvo, Saab, Volkswagen and BMW. As of
April 30, 1997, the Company employed over 45,000 people in 22 countries and
operated 149 manufacturing, technology, product engineering and administration
facilities.

Lear is a leading supplier of automotive interiors with in-house
capabilities in all five principal automotive interior segments: seat systems;
floor and acoustic systems; door panels; instrument panels; and headliners. In
addition, as one of the leading independent global suppliers of interior systems
and components to OEMs, Lear is able to offer its customers design, engineering
and project management support for the entire automotive interior. Management
believes that the ability to offer automotive interior "one-stop-shopping"
provides Lear with a competitive advantage as OEMs continue to reduce their
supplier base and demand improved quality and enhanced technology. In addition,
the Company's broad array of products and process offerings enables it to
provide each customer with products tailored to its particular needs.

Lear is focused on delivering high quality automotive interior systems and
components to its customers on a global basis. Due to the opportunity for
significant cost savings and improved product quality and consistency, OEMs have
increasingly required their suppliers to manufacture automotive interior systems
and components in multiple geographic markets. In recent years, the Company has
aggressively expanded its operations in Western Europe and emerging markets in
Eastern Europe, South America, South Africa and the Asia/Pacific Rim region,
giving it the capability to provide its products on a global basis to its OEM
customers. For example, in 1996, Lear entered into a joint venture to supply
seat systems in Thailand to a joint venture between Ford and Mazda. In 1996,
Lear also announced its entry into the Chinese market with a joint venture to
supply seat systems and interior trim components for Isuzu trucks and Ford
transit vans. In addition, during 1996 Lear was awarded a contract to supply
seat and interior trim systems in Argentina for Ford's Ranger program and began
its production of seat systems for the Palio (Fiat's world car) in Brazil. Since
late 1995, the Company has also established joint ventures in Brazil and
Argentina and has opened facilities in South Africa, India, Indonesia, Australia
and Venezuela. As a result of the Company's efforts to expand its worldwide
operations, the Company's sales outside the United States and Canada have grown
from $0.4 billion, or 29.7% of the Company's total sales, for the year ended
June 30, 1992 to $2.2 billion, or 35.1% of the Company's total sales, for the
year ended December 31, 1996.

In 1996, after giving pro forma effect to the Masland Acquisition, Lear was
one of the leading independent suppliers to the estimated $45 billion global
automotive interior market, with a 13% share. In addition, after giving pro
forma effect to the Masland Acquisition, the Company in 1996 held a leading 37%
share of the estimated $7.9 billion North American seat systems market and a 37%
share of the estimated $1.4 billion North American floor and acoustic systems
market. In 1996, the Company was also a leading independent supplier to the
estimated $7.2 billion Western European seat systems market, with a 17% share.
After consummation of the Keiper Acquisition, Lear will have a leading 23% share
of the Western European seat systems market. The door panel, headliner and
instrument panel segments of the automotive interior market contain no dominant
independent supplier and are in the early stages of the outsourcing and/or
consolidation process. The Company believes that the same competitive pressures
that contributed to the rapid expansion of its seat systems business in North
America since 1983 will continue to encourage OEMs in the North American and
European markets to outsource more of their door panel, headliner and instrument
panel requirements.

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The Company is the successor to a manufacturer of automotive steel
components founded in 1917 that served as a supplier to General Motors and Ford
from its inception. As a result of the expansion of the Company's business from
automotive seat systems to products for a vehicle's complete interior, the
Company changed its name to "Lear Corporation" from "Lear Seating Corporation"
effective May 9, 1996.

STRATEGY

Lear's business objective is to expand its position as one of the leading
independent suppliers of automotive interior systems in the world. Lear intends
to build on its full-service capabilities, strong customer relationships and
worldwide presence to increase its share of the global automotive interior
market. To achieve this objective, the Company will continue to pursue a
strategy based upon the following elements:

- Enhance its Strong Relationships with OEMs. The Company's management
has developed strong relationships with its 26 OEM customers which allow
Lear to identify business opportunities and anticipate customer needs in
the early stages of vehicle design. Management believes that working
closely with OEMs in the early stages of designing and engineering vehicle
interior systems gives it a competitive advantage in securing new business.
Lear maintains "Customer Focused Divisions" for each of its major
customers. This organizational structure consists of several dedicated
groups, each of which is focused on serving the needs of a single customer
and supporting that customer's programs and product development. Each
division can provide all the interior systems and components the customer
needs, allowing that customer's purchasing agents, engineers and designers
to have a single point of contact. Lear maintains an excellent reputation
with OEMs for timely delivery and customer service and for providing world
class quality at competitive prices. As a result of the Company's service
and performance record, many of the Company's facilities have won awards
from OEMs with which they do business.

- Penetrate Emerging Markets. Geographic expansion will continue to be
an important element of the Company's growth strategy. In 1996, more than
two-thirds of total worldwide vehicle production occurred outside the
United States and Canada. Emerging markets such as South America and the
Asia/Pacific Rim region present strong global growth opportunities as
demand for automotive vehicles has been increasing dramatically in these
areas. For example, from 1991 through 1996, sales of light vehicles in
China have increased nearly 500%, while sales in Brazil have increased over
70%. It is anticipated that population and per capita income in China,
Brazil and other emerging markets will continue to increase. Industry
analysts forecast that these underlying trends will result in continued
strong increases in light vehicle sales in these and certain other emerging
markets. As a result of Lear's strong customer relationships and worldwide
presence, management believes that the Company is well positioned to expand
with OEMs in emerging markets.

- Capitalize on New Outsourcing Opportunities. The door panel,
instrument panel and headliner segments of the automotive interior market
contain no dominant independent supplier and are in the early stages of the
outsourcing and/or consolidation process. These segments constituted over
20% of the total estimated $45 billion global automotive interior market in
1996. The Company believes that the same competitive pressures that
contributed to the rapid expansion of its seat systems business in North
America since 1983 will continue to encourage customers to outsource more
of their door, instrument panel and headliner system and component
requirements. In addition, management believes that as the outsourcing of
these systems accelerates and OEMs continue their worldwide expansion and
seek ways to improve vehicle quality and reduce costs, OEMs will
increasingly look to independent suppliers such as Lear, to fill the role
of "Systems Integrator" to manage the design, purchasing and supply of the
total automotive interior. Lear's full-service capabilities make it
well-positioned to perform this role.

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<PAGE> 26

testing of consumer responses to automotive interior styling and
innovations. Because OEMs increasingly view the vehicle interior as a major
selling point to their customers, the focus of Lear's research and
development efforts is to identify new interior features that make vehicles
safer, more comfortable and attractive to consumers. For example, in 1996
Lear developed a One-Step(TM) door which consolidates all of the door's
internal mechanisms including glass, window regulators and latches,
providing customers with a higher quality door at a lower price. In
addition, Lear has developed a lightweight, adjustable seat with built in
lateral accelerometers that automatically adjust the side bolsters to
provide passengers with additional support during sharp turns. In 1996, the
Company also developed a "Mobile Office" unit, specially designed to fit
across the vehicle's width, that contains customized containers for
portable computers, fax machines, hanging files and other items. The
development of these and similar products has been, and management believes
will continue to be, an important element in the Company's future growth.
For automotive vehicles manufactured in North America, Lear's total content
per vehicle has increased from $94 per vehicle in the fiscal year ended
June 30, 1992 to $292 per vehicle in the fiscal year ended December 31,
1996. For automotive vehicles manufactured in Western Europe, Lear's total
content per vehicle has increased from $19 per vehicle in the fiscal year
ended June 30, 1992 to $109 per vehicle in the fiscal year ended December
31, 1996.

- Grow Through Strategic Acquisitions. Strategic acquisitions have
been, and management believes will continue to be, an important element in
the Company's worldwide growth and in its efforts to capitalize on the
outsourcing and supplier consolidation trends. The Company seeks
acquisitions which strengthen Lear's relationships with OEMs, complement
Lear's existing products and process capabilities and provide Lear with
growth opportunities in new markets. The Company's recent acquisitions have
expanded its OEM customer base and worldwide presence and have enhanced its
relationships with existing customers. The Borealis, Masland and AI
Acquisitions also provide the Company with a substantial presence in the
non-seating segments of the automobile and light truck interior market. The
Company believes that these markets hold significant growth potential. In
1996, after giving pro forma effect to the Masland Acquisition, the
Company's Tier I sales of non-seating systems and components would have
been approximately $2.1 billion, or approximately 32% of the Company's
total pro forma sales. The Company will continue to consider strategic
acquisitions that provide opportunities to enhance its market position,
expand its global presence, increase its product offerings, improve its
technological capabilities or enhance customer relationships.

ACQUISITIONS

To supplement its internal growth and implement its business strategy, the
Company has made several strategic acquisitions since 1990. The following is a
summary of recent major acquisitions:

Keiper Acquisition

On May 26, 1997, the Company entered into a definitive agreement to acquire
certain equity and partnership interests in Keiper for DM 400 million
(approximately $235 million). In connection with the Keiper Acquisition, Lear
will also pay or assume outstanding indebtedness of Keiper anticipated to be
approximately $28 million. Keiper is a leading supplier of automotive vehicle
seat systems on a JIT basis for

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markets in Europe, Brazil and South Africa, and had 1996 sales of approximately
$615 million. Management believes that the Keiper Acquisition will strengthen
Lear's core seat system business, expand Lear's presence in Europe, Brazil and
South Africa and strengthen Lear's relationships with Mercedes Benz, Audi,
Volkswagen and Porsche. The Keiper Acquisition, which is subject to clearance by
the Antitrust Commission of the European Union, is expected to close in the
third quarter of 1997. However, there can be no assurances that the Keiper
Acquisition will be consummated.

Dunlop Cox Acquisition

On June 5, 1997, the Company acquired the stock of Dunlop Cox for
approximately $60 million. Dunlop Cox, based in Nottingham, England, provides
Lear with the ability to design and manufacture manual and
electronically-powered automotive seat adjusters. For the year ended December
31, 1996, Dunlop Cox had sales of approximately $39 million.

Borealis Acquisition

In December 1996, the Company acquired all of the issued and outstanding
shares of common stock of Borealis, a leading Western European supplier of
instrument panels, door panels and other automotive components. The Borealis
Acquisition provided the Company with the technology to manufacture instrument
panels, giving the Company the ability to produce complete interior systems.
Borealis also produces door panels, climate systems, exterior trim and various
components for the Western European automotive, light truck and heavy truck
industries. In addition, the Borealis Acquisition increased the Company's
presence in the Western European market and strengthened its relationships with
Volvo, Saab and Scania. The aggregate purchase price for the Borealis
Acquisition was approximately $91.1 million.

Masland Acquisition

On July 1, 1996, the Company completed the acquisition of all of the issued
and outstanding shares of common stock of Masland for an aggregate purchase
price of $475.7 million. The Masland Acquisition gave Lear manufacturing
capabilities to produce floor and acoustic systems. In 1996, after giving pro
forma effect to the Masland Acquisition, Lear held a 37% share of the estimated
$1.4 billion North American floor and acoustics systems market. As a result of
the Masland Acquisition, Lear also became a major supplier of interior and
luggage trim component and other acoustical products which are designed to
minimize noise, vibration and harshness for passenger cars and light trucks. The
Masland Acquisition also provided Lear with access to certain leading-edge
technology. Its 33,000 square foot Technology Center in Plymouth, Michigan
provides full service acoustics testing, design, product engineering, systems
integration and program management.

AI Acquisition

In August 1995, the Company acquired all of the issued and outstanding
shares of common stock of AI, a leading designer and manufacturer of high
quality interior systems and blow molded plastic parts to automobile and light
truck manufacturers. Prior to the AI Acquisition, Lear had participated
primarily in the seat system segment of the interior market, which comprises
approximately 50% of the total combined worldwide interior market. By providing
the Company with substantial manufacturing capabilities in door panels and
headliners, the AI Acquisition made Lear one of the largest independent Tier I
suppliers of automotive interior systems in the North American and Western
European light vehicle interior market. The aggregate purchase price for the AI
Acquisition was $881.3 million.

FSB Acquisition

On December 15, 1994, the Company, through its wholly-owned subsidiary,
Lear Seating Italia Holdings, S.r.L., acquired the primary automotive seat
systems supplier to Fiat and certain related businesses (the "Fiat Seat
Business" or the "FSB"). Lear and Fiat also entered into a long-term supply
agreement for Lear to produce all outsourced automotive seat systems for Fiat
and affiliated companies worldwide. The

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<PAGE> 28

acquisition of the Fiat Seat Business not only established Lear as a market
leader in automotive seat systems in Europe, but, combined with its position in
North America, made Lear one of the largest automotive seat systems
manufacturers in the world. In addition, it gave the Company access to rapidly
expanding markets in South America and has resulted in the formation of new
joint ventures which are supplying automotive seat systems to Fiat or its
affiliates in Brazil and Argentina.

NAB Acquisition

On November 1, 1993, Lear significantly strengthened its position in the
North American automotive seating market by purchasing the North American seat
cover and seat systems business (the "NAB") of Ford Motor Company. The NAB
consists of an integrated United States and Mexican operation which produces
seat covers for approximately 80% of Ford's North American vehicle production
(as well as for several independent suppliers) and manufactures seat systems for
certain Ford models. Prior to the NAB Acquisition, the Company outsourced a
significant portion of its seat cover requirements. The expansion of the
Company's seat cover business has provided Lear with better control over the
costs and quality of one of the critical components of a seat system. In
addition, by virtue of the NAB Acquisition, the Company was able to enhance its
relationship with one of its largest OEM customers, entering into a five year
supply agreement with Ford, which expires in November 1998, covering models for
which the NAB had produced seat covers and seat systems at the time of the
acquisition. The Company also assumed during the term of the supply agreement
primary engineering responsibility for a substantial portion of Ford's car
models, providing Lear with greater involvement in the planning and design of
seat systems and related products for future light vehicle models.

Scandinavian Acquisitions

In 1991 and 1992, the Company acquired the seat systems businesses of Saab
in Sweden and Finland and of Volvo in Sweden. In connection with each of these
acquisitions, the Company entered into supply relationships with the respective
OEMs.

PRODUCTS

Lear's products have evolved from the Company's many years of manufacturing
experience in the automotive seat frame market where it has been a supplier to
General Motors and Ford since its inception in 1917. The seat frame has
structural and safety requirements which make it the basis for overall seat
design and was the logical first step to the Company's emergence as a premier
supplier of entire seat systems and seat components. With the acquisitions of
Borealis, Masland and AI, the Company has expanded its product offerings and can
now manufacture and supply its customers with complete interiors, including
floor systems, door panels, instrument panels and headliners. The Company also
produces a variety of blow molded products and other automotive components such
as fluid reservoirs, fuel tank shields, exterior airdams, front grille
assemblies, engine covers, battery trays/covers and insulators. Lear believes
that as OEMs continue to seek ways to improve vehicle quality while
simultaneously reducing the costs of the various vehicle components, they will
increasingly look to suppliers such as Lear with the capability to test, design,
engineer and deliver products for a complete vehicle interior. In addition, with
the Borealis, Masland and AI Acquisitions, the Company believes that it has
significant cross-selling opportunities across its customer base as well as its
vehicle platforms and is well-positioned to expand its position as one of the
leading independent suppliers of automotive interior systems and components in
the world.

The following is the approximate composition by product category of the
Company's net sales in the year ended December 31, 1996, after giving pro forma
effect to the Masland Acquisition: seat systems, $4.4 billion; floor and
acoustic systems, $0.5 billion; door panels, $0.3 billion; headliners, $0.1
billion; and other component products, $1.2 billion.

- Seat Systems. The seat systems business consists of the manufacture,
assembly and supply of vehicle seating requirements. Seat systems typically
represent approximately 50% of the cost of the total automotive interior. The
Company produces seat systems for automobiles and light trucks that are fully
finished and ready

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<PAGE> 29

to be installed in a vehicle. Seat systems are fully assembled seats, designed
to achieve maximum passenger comfort by adding a wide range of manual and power
features such as lumbar supports, cushion and back bolsters and leg and thigh
supports.

As a result of its product technology and product design strengths, the
Company has been a leader in producing convenience features and safety
improvements into its seat designs. For example, in 1996, Lear developed
automatically adjusting seats that provide passengers additional support during
sharp turns. In addition, Lear has recently introduced a newly designed,
integrated restraint seat system that increases occupant comfort and
convenience. Licensed exclusively to Lear, this patented seating concept uses a
special ultra high-strength steel tower, a blow-molded seat back frame and a
split-frame design to improve occupant comfort and convenience. Other recent
product ideas include newly developed fabric seat heaters, a "Sound Seat," which
has a high output bass speaker built into the back seat, and a Code-Alarm(TM)
integrated seat, which includes a security device that automatically moves the
back of the driver seat against the steering wheel to deter theft.

Lear's position as a market leader in seat systems is largely attributable
to seating programs on new vehicle models launched in the past five years. The
Company is currently working with customers in the development of a number of
seat systems products to be introduced by automotive manufacturers in the next
six years.

- Floor and Acoustic Systems. Floor systems consist both of carpet and
vinyl products, molded to fit precisely the front and rear passenger
compartments of cars and trucks, and accessory mats. While carpet floors are
used predominately in passenger cars and trucks, vinyl floors, because of their
better wear and washability characteristics, are used primarily in commercial
and fleet vehicles. The Company is one of the largest independent suppliers of
vinyl automotive floor systems in North America, and one of the only suppliers
of both carpet and vinyl automotive floor systems. With the Masland Acquisition,
the Company acquired Maslite(TM), a recently developed material that is 40%
lighter than vinyl, which has replaced vinyl accessory mats on selected
applications.

The automotive floor system is multi-purpose. Its performance is based on
the correct selection of materials to achieve an attractive, quiet, comfortable
and durable interior compartment. Automotive carpet requirements are more
stringent than the requirements for carpet used in homes and offices. For
example, automotive carpet must provide higher resistance to fading and improved
resistance to wear despite being lighter in weight than carpet found in homes
and offices. Masland's significant experience has enabled the Company to meet
these specialized needs. Carpet floor systems generally consist of tufted carpet
to which a specifically engineered thermoplastic backcoating has been added.
This backcoating, when heated, enables the Company to mold the carpet to fit
precisely the interior of the vehicle. Additional insulation materials are added
to provide noise, vibration and harshness resistance. Floor systems are complex
products which are based on sophisticated designs and use specialized design
materials to achieve the desired visual, acoustic and heat management
requirements in the automotive interior.

Lear's primary acoustic product, after floor systems, is the dash
insulator. The dash insulator attaches to the vehicle's sheet metal firewall,
separating the passenger compartment from the engine compartment, and is the
primary component for preventing engine noise and heat from entering the
passenger compartment. The Company's ability to produce both the dash insulator
and the floor system enables it to accelerate the design process and supply an
integrated system. The Company believes that OEMs, recognizing the cost and
quality advantages of producing the dash insulator and the floor system as an
integrated system, will increasingly seek suppliers to coordinate the design,
development and manufacture of the entire floor and acoustic system.

In 1996, after giving pro forma effect to the Masland Acquisition, the
Company held a 37% share in the estimated $1.4 billion North American floor and
acoustic systems market. In addition, the Company participates in the European
floor system market through its joint venture with Sommer-Allibert S.A.

- Door Panels. Door panels consist of several component parts that are
attached to a base molded substrate by various methods. Specific components
include vinyl or cloth-covered appliques, armrests, radio speaker grilles, map
pocket compartments, carpet and sound-reducing insulation. Upon assembly, each

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<PAGE> 30

component must fit precisely, with a minimum of misalignment or gap, and must
match the color of the base substrate. In 1996, Lear introduced the One-Step(TM)
door, an innovative door system concept which consolidates all of the door's
internal mechanisms, including glass, window regulators and latches, providing
customers with a higher quality product at a lower price. Assembly of the
One-Step(TM) door involves combining an injection molded plastic door panel with
all major mechanical components and an interior trim cover, into a single system
which can be shipped to OEMs fully assembled, tested and ready to install.
Management believes that the One-Step(TM) door, while not yet in production,
offers Lear significant opportunities to capture a major share of the estimated
$8 billion modular door market.

In 1996, among independent automotive interior suppliers, the Company held
a leading 14% share of the estimated $1.6 billion North American door panel
market. Management believes that this leadership position has been achieved by
offering OEMs the widest variety of manufacturing processes for door panel
production. In Western Europe, the Company held a small position in the door
panel market. These markets contain no dominant supplier and are just beginning
to experience the outsourcing and consolidation trends that have characterized
the seat systems market since the 1980's. With its global scope, technological
expertise and established customer relationships, Lear believes that it is
well-positioned to benefit from these positive industry dynamics.

- Instrument Panels. The instrument panel is a complex system of foil
coverings, foams, plastics and metals designed to house various components and
act as a safety device for the vehicle occupants. Specific components of the
instrument panel include the heating, venting and air conditioning (HVA/C)
module, air distribution ducts, air vents, cross car structure, glove
compartment assemblies, electrical components, wiring harness, radio system, and
passenger airbag units. As the primary occupant focal point of the vehicle
interior, the instrument panel are designed to be aesthetically pleasing while
also serving as the structural carrier of various components.

Safety issues surrounding air bag technologies are currently a significant
focus of the instrument panel segment. Management believes that Lear will
continue to increase its presence in this area through its research and
development efforts, resulting in innovations such as the introduction of cost
effective, integrated, seamless airbag covers, which increase occupant safety.
Future trends in the instrument panel segment will continue to focus on safety
with the introduction of low-mounted airbags as knee restraint components.

Cost, weight and part minimization are also key elements in instrument
panel development for the next generation of vehicle systems. Lear's goals are
to meet future OEM requirements by increasing the integration level of
instrument panel components, and by incorporating additional safety features on
the primary carrier. Currently, the majority of instrument panel components are
assembled at the assembly plant by the OEM. By utilizing its years of JIT
assembly experience of complex automotive interior systems, management believes
Lear has the ability to capitalize on the OEMs' trend toward outsourcing of
complete instrument panel systems and to increase its share of the worldwide
instrument panel market.

- Headliners. The Company designs and manufactures headliners, which
consist of the headliner substrate, covering material, visors, overhead
consoles, grab handles, coat hooks, lighting, wiring and insulators. As with
door panels, upon assembly, each headliner component must fit precisely and must
match the color of the base substrate. With its sophisticated design and
engineering capabilities, the Company believes it is able to supply headliners
with enhanced quality and lower costs than OEMs could achieve internally.

OEMs are increasingly requiring independent suppliers, such as Lear to
produce integrated overhead systems. In 1997, Lear introduced an advanced
overhead system which incorporates HVA/C ducting, an occupant position detection
system, CD changer, trim inflatable tubular structure side air bags and surround
sound speakers into a single integrated overhead system. The Company believes
that as this and other products move from the design stage to the production
stage over the next several years, Lear will have significant opportunities to
increase its share of the headliner market.

The headliner market is highly fragmented, with no dominant independent
supplier. As OEMs continue to seek ways to improve vehicle quality and
simultaneously reduce costs, the Company believes that headliners

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<PAGE> 31

will increasingly be outsourced to suppliers such as Lear, providing the Company
with significant growth opportunities.

- Component Products. In addition to the interior systems and other
products described above, the Company is able to supply a variety of interior
trim, blow molded plastic parts and other automotive components.

Lear produces seat covers for integration into its own seat systems and for
delivery to external customers. The Company's major external customers for seat
covers are other independent seat systems suppliers as well as the OEMs. The
Company is currently producing approximately 80% of the seat covers for Ford's
North American vehicles. The expansion of the Company's seat cover business
gives the Company better control over the costs and quality of one of the
critical components of a seat system. Typically, seat covers comprise
approximately 30% of the aggregate cost of a seat system.

Lear produces steel and aluminum seat frames for passenger cars and light
trucks. Seat frames are primarily manufactured using precision stamped, tubular
steel and aluminum components joined together by highly automated,
state-of-the-art welding and assembly techniques. The manufacture of seat frames
must meet strict customer and government specified safety standards. The
Company's seat frames are either delivered to its own plants, where they become
part of a complete seat system that is sold to the OEM customer or are delivered
to other independent seating suppliers for use in the manufacture of assembled
seating systems.

The Company also produces a variety of interior trim products, such as
pillars, cowl panels, scuff plates, trunk liners, quarter panels and spare tire
covers, as well as blow molded plastic products, such as fluid reservoirs, vapor
canisters and duct systems. In contrast to interior trim products, blow molded
products require little assembly. However, the manufacturing process for such
parts demands considerable expertise in order to consistently produce
high-quality products. Blow molded parts are produced by extruding a shaped
parison or tube of plastic material and then clamping a mold around the parison.
High pressure air is introduced into the tube causing the hot plastic to take
the shape of the surrounding mold. The part is removed from the mold after
cooling and is finished by trimming, drilling and other operations.

MANUFACTURING

All of the Company's manufacturing facilities use JIT manufacturing
techniques. Most of the Company's seating related products and many of the
Company's other interior products are delivered to the OEMs on a JIT basis. The
JIT concept, first broadly utilized by Japanese automotive manufacturers, is the
cornerstone of the Company's manufacturing and supply strategy. This strategy
involves many of the principles of the Japanese system, but was adapted for
compatibility with the greater volume requirements and geographic distances of
the North American market. The Company first developed JIT operations in the
early 1980's at its seat frame manufacturing plants in Morristown, Tennessee and
Kitchener, Ontario, Canada. These plants had previously operated under
traditional manufacturing practices, resulting in relatively low inventory
turnover rates, significant scrap and rework, a high level of indirect labor
costs and long production set-up times. As a result of JIT manufacturing
techniques, the Company has been able to consolidate plants, increase capacity
and significantly increase inventory turnover, quality and productivity.

The JIT principles first developed at Lear's seat frame plants were next
applied to the Company's growing seat systems business and have now evolved into
sequential parts delivery principles. The Company's seating plants are typically
no more than 30 minutes or 20 miles from its customers' assembly plants and are
able to manufacture seats for delivery to the customers' facilities in as little
as 90 minutes. Orders for the Company's seats are received on a weekly basis,
pursuant to blanket purchase orders for annual requirements. These orders detail
the customers' needs for the following week. In addition, constant computer and
other communication connections are maintained between personnel at the
Company's plants and personnel at the customers' plants to keep production
current with the customers' demand.

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<PAGE> 32

As the Company expands its product line to include total automotive
interiors, it is also expanding its JIT facility network. The Company's strategy
is to leverage its JIT seat system facilities by moving the final assembly and
sequencing of other interior components from its centrally located facilities to
its JIT facilities.

A description of the Company's manufacturing processes for its product
segments is set forth below.

- Seat Systems. Seat assembly techniques fall into two major categories,
traditional assembly methods (in which fabric is affixed to a frame using
Velcro, wire or other material) and more advanced bonding processes. The
Company's principal bonding technique involves its patented SureBond(TM) and
DryBond(TM) processes, in which fabric is affixed to the underlying foam padding
using adhesives. The SureBond(TM) and DryBond(TM) processes have several major
advantages when compared to traditional methods, including design flexibility,
increased quality and lower cost. The SureBond(TM) and DryBond(TM) processes,
unlike alternative bonding processes, result in a more comfortable seat in which
air can circulate freely. The SureBond(TM) and DryBond(TM) processes, moreover,
are reversible, so that seat covers that are improperly installed can be removed
and repositioned properly with minimal materials cost. In addition, the
SureBond(TM) and DryBond(TM) processes are not capital intensive when compared
to competing bonding technologies. Approximately one-fourth of the Company's
seats are manufactured using the SureBond(TM) and DryBond(TM) processes.

The seat assembly process begins with pulling the requisite components from
inventory. Inventory at each plant is kept at a minimum, with each component's
requirement monitored on a daily basis. This allows the plant to minimize
production space, but also requires precise forecasts of the day's output. Seats
are assembled in modules, then tested and packaged for shipment. The Company
operates a specially designed trailer fleet that accommodates the off-loading of
vehicle seats at the customers' assembly plants.

The Company obtains steel, aluminum and foam chemicals used in its seat
systems from several producers under various supply arrangements. These
materials are readily available. Leather, fabric and certain purchased
components are generally purchased from various suppliers under contractual
arrangements usually lasting no longer than one year. Some of the purchased
components are obtained through the Company's own customers.

- Floor and Acoustic Systems. The Company produces carpet at its plant in
Carlisle, Pennsylvania. Smaller "focused" facilities are dedicated to specific
groups of customers and are strategically located near their production
facilities. This proximity improves responsiveness to its customers and speeds
product delivery to customer assembly lines, which is done on a JIT basis. The
Company's manufacturing operations are complemented by its research and
development efforts, which have led to the development of a number of
proprietary products, such as its EcoPlus(TM) recycling process as well as
Maslite(TM), a lightweight proprietary material used in the production of
accessory mats.

- Door Panels/Headliners. The Company uses numerous molding, bonding,
trimming and finishing manufacturing processes. The wide variety of
manufacturing processes helps to satisfy a broad range of customers' different
cost and functionality specifications. The Company's ability and experience in
producing interior products for such a vast array of applications enhances its
ability to provide total interior solutions to OEMs globally. The Company is
beginning to employ many of the same JIT principles used at the Company's seat
facilities.

The core technologies used in the Company's interior trim systems include
injection molding, low-pressure injection molding, rotational molding and
urethane foaming, compression molding of Wood-Stock(TM) (a proprietary process
that combines polypropylene and wood flour), glass reinforced urethane and a
proprietary headliner process. One element of Lear's strategy is to focus on
more complex, value-added products such as door panels and armrests. The Company
delivers these integrated systems at attractive prices to the customer because
certain services such as design and engineering and sub-assembly are provided
more cost efficiently by the Company. The principal purchased components for
interior trim systems are polyethylene and polypropylene resins which are
generally purchased under long-term agreements and are available from multiple
suppliers. Lear is continuing to develop recycling methods in light of future
environmental requirements and conditions in order to maintain its competitive
edge in this segment.

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The combined pressures of cost reduction and fuel economy enhancement have
caused automotive manufacturers to concentrate their efforts on developing and
employing lower cost, lighter materials. As a result, plastic content in cars
and light trucks has grown significantly. Increasingly, automotive content
requires large plastic injection molded assemblies for both the interior and
exterior. Plastics are now commonly used in such nonstructural components as
interior and exterior trim, door panels, instrument panels, grilles, bumpers,
duct systems, taillights and fluid reservoirs. For interior trim applications,
substitution of plastics for other materials is largely complete, and little
growth through substitution is expected. However, further advances in injection
molding technologies are improving the performance and appearance of parts
molded in reinforced thermoplastics.

- Instrument Panels. Lear's in-house process capabilities for producing
instrument panels include injection molding, vacuum forming, and other various
finishing methods. Lear's foil and foam capabilities, whereby molded vinyl is
bonded to a plastic substrate using an expandable foam, are used throughout the
world. One of Lear's current development projects is an instrument panel concept
for trucks produced with low pressure injection molding which management
believes will be in production by the beginning of 1998. Lear is continuing to
develop recycling methods in light of future environmental requirements and
conditions in order to reduce costs and increase its presence in this segment.
The wide variety of available manufacturing processes helps Lear to continue to
meet customer cost and functionality specifications.

CUSTOMERS

Lear serves the worldwide automobile and light truck market, which produces
approximately 50 million vehicles annually. The Company's OEM customers
currently include Ford, General Motors, Fiat, Chrysler, Volvo, Saab, Opel,
Jaguar, Volkswagen, Audi, BMW, Rover, Honda USA, Daimler (Mercedes) Benz,
Mitsubishi, Mazda, Toyota, Subaru, Nissan, Isuzu, Peugeot, Porsche, Renault,
Suzuki, Hyundai and Daewoo. During the year ended December 31, 1996, Ford and
General Motors, the two largest automobile and light truck manufacturers in the
world, accounted for approximately 32% and 30%, respectively, of the Company's
net sales. For additional information regarding customers, foreign and domestic
operations and sales, see Note 18, "Geographic Segment Data," to the 1996
consolidated financial statements of the Company incorporated by reference in
this Prospectus.

In the past six years, in the course of retooling and reconfiguring plants
for new models and model changeovers, certain OEMs have eliminated the
production of seat systems and other interior systems and components from
certain of their facilities, thereby committing themselves to purchasing these
items from outside suppliers. During this period, the Company became a supplier
of these products for a significant number of new models, many on a JIT basis.

The purchase of seat systems and other interior systems and components from
full-service independent suppliers like Lear has allowed the Company's customers
to realize a competitive advantage as a result of (i) a reduction in labor costs
since suppliers like the Company generally enjoy lower direct labor and benefit
rates, (ii) the elimination of working capital and personnel costs associated
with the production of interior systems by the OEM, (iii) a reduction in net
overhead expenses and capital investment due to the availability of significant
floor space for the expansion of other OEM manufacturing operations and (iv) a
reduction in transaction costs by utilizing a limited number of sophisticated
system suppliers instead of numerous individual component suppliers. In
addition, the Company offers improved quality and on-going cost reductions to
its customers through continuous, Company-initiated design improvements. The
Company believes that such cost reductions will lead OEMs to outsource an
increasing portion of their automotive interior requirements in the future and
provide the Company with significant growth opportunities.

The Company's sales of value-added assemblies and component systems have
increased as a result of the decision by many OEMs to reduce their internal
engineering and design resources. In recent years, the Company has significantly
increased its capacity to provide complete engineering and design services to
support its product line. Because assembled parts such as door panels, floor and
acoustic systems, armrests and consoles need to be designed at an early stage in
the development of new vehicles or model revisions, the Company is increasingly
given the opportunity to participate earlier in the product planning process.
This has

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resulted in opportunities to add value by furnishing engineering and design
services and managing the sub-assembly process for the manufacturer, as well as
providing the broader range of parts that are required for the assembly.

Lear maintains "Customer Focused Divisions" for each of the Company's major
customers. This organizational structure consists of several dedicated groups,
each of which is focused on serving the needs of a single customer and
supporting that customer's programs and product development. Each division is
capable of providing whatever interior component the customer needs, thereby
providing that customer's purchasing agents, engineers and designers with a
single point of contact for their total automotive interior needs.

The Company receives blanket purchase orders from its customers that
normally cover annual requirements for products to be supplied for a particular
vehicle model. Such supply relationships typically extend over the life of the
model, which is generally four to seven years, and do not require the purchase
by the customer of any minimum number of products. Although such purchase orders
may be terminated at any time, the Company does not believe that any of its
customers have terminated a material purchase order prior to the end of the life
of a model. The primary risk to the Company is that an OEM will produce fewer
units of a model than anticipated. In order to reduce its reliance on any one
model, the Company produces interior systems and components for a broad
cross-section of both new and more established models.

The Company's sales for the year ended December 31, 1996 were comprised of
the following vehicle categories: 42% light truck; 23% mid-size; 17% compact;
10% luxury/sport; and 8% full-size. The following table presents an overview of
the major vehicle models for which the Company, or its affiliates, produces
automotive interior systems or components and the locations of such production:

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<TABLE>
<S> <C> <C> <C>
NORTH AMERICA
BMW: FORD (CONT): GENERAL MOTORS (CONT): GENERAL MOTORS/SUZUKI:
Z3 Ford Explorer Chevrolet Corvette Geo Metro
Z3 Coupe Ford F-Series Chevrolet Express Geo Tracker
Ford Ghia Chevrolet Kodiak Suzuki Sidekick
CHRYSLER: Ford Mustang Chevrolet Lumina Suzuki Swift
Chrysler Cirrus Ford Probe Chevrolet Malibu
Chrysler Concorde Ford Ranger Chevrolet Monte Carolo HONDA:
Chrysler LHS Ford Taurus Chevrolet S 10 Accord
Chrysler Sebring Ford Thunderbird Chevrolet Suburban Acura CL
Chrysler Sebring Convertible Ford Windstar Chevrolet Swing Civic
Chrysler Town & Country Lincoln Continental Chevrolet Tahoe Passport
Dodge Avenger Lincoln Mark VIII Chevrolet Venture
Dodge Caravan Lincoln Town Car Geo Prizm MAZDA:
Dodge Dakota Mercury Cougar GMC Jimmy MX-6
Dodge Intrepid Mercury Grand Marquis GMC Safari Pickup
Dodge Neon Mercury Mountaineer GMC Savana 626
Dodge Ram Mercury Mystique GMC Sierra
Dodge Ram Van Mercury Sable GMC Sonoma MITSUBISHI:
Dodge Ram Wagon Mercury Tracer GMC Suburban Eclipse
Dodge Ramcharger Mercury Villager GMC Top-Kick Galant
Dodge Stratus GMC Yukon
Dodge Viper GENERAL MOTORS: Oldsmobile Achieva NISSAN:
Eagle Talon Buick Century Oldsmobile Aurora Altima
Eagle Vision Buick LeSabre Oldsmobile Bravada Pickup
Jeep Cherokee Buick Park Avenue Oldsmobile Cutlass Quest
Jeep Grand Cherokee Buick Regal Oldsmobile Cutlass Supreme Sentra
Jeep Wrangler Buick Riviera Oldsmobile Silhouette
Plymouth Breeze Buick Skylark Oldsmobile 88 SUBARU/ISUZU:
Plymouth Neon Cadillac Catera Pontiac Bonneville Isuzu Rodeo
Plymouth Voyager Cadillac DeVille/Concours Pontiac Firebird Subaru Legacy
Cadillac Eldorado/Seville Pontiac Grand Am
FORD: Chevrolet Astro Pontiac Grand Prix TOYOTA:
Ford Aerostar Chevrolet Blazer Pontiac Sunfire Avalon
Ford Contour Chevrolet C/K Pontiac Transport Camry
Ford Crown Victoria Chevrolet Camaro Saturn Corolla
Ford Econoline Chevrolet Cavalier Saturn EV1 Tacoma
Ford Escort
Ford Expedition VOLKSWAGEN:
Cabrio
Golf
GPA Minivan
Jetta
EUROPE
ALFA ROMEO: FIAT (CONT): MERCEDES: ROVER (CONT):
Coupe Ducato C Class 100
Spider Marea E Class 200
145 Panda S Class 400
146 Punto 600
155 OPEL: 800
164 FORD: Astra
Escort Corsa SAAB:
AUDI: Fiesta Omega 900
A3 Mondeo Sintra 9000
A4 Scorpio Vectra
A6 TOYOTA:
A8 HONDA: PORSCHE: Carina
Honda Accord Boxster Corolla
BMW: Honda Civic 911
3 Series VOLKSWAGEN:
5 Series JAGUAR: RENAULT: Golf
XJ Series Cabrio Passat
CHRYSLER: XK8 Transit
Eurostar ROVER: T4-Multivan
LANCIA: Defender Viento
FIAT: Dedra Discovery
Barchetta Delta MGF VOLVO:
Bravo/Brava Kappa Mini Series 800
Coupe Y Range Rover Series 900
Croma
</TABLE>

32
<PAGE> 36

<TABLE>
<S> <C> <C> <C>
OTHER REGIONS
BMW (SOUTH AFRICA): FORD (SOUTH AMERICA): GENERAL MOTORS (S. SEAT (SOUTH AMERICA):
3 Series Ford Ranger AMERICA): Cordoba
Chevrolet C/K
DAEWOO (POLAND): GENERAL MOTORS VOLVO (THAILAND):
Tico (AUSTRALIA): HYUNDAI (KOREA): 800 Series
Berlina Grandeur 900 Series
FIAT (POLAND): Calais
500 Caprice OPEL (INDIA): VOLKSWAGEN (S. AMERICA):
Uno Executive Astra Combi
Statesman Gol
FIAT (SOUTH AMERICA): PEUGEOT (SOUTH AMERICA): Saveiro
Bravo/Brava GENERAL MOTORS 306
Duna (INDONESIA): 405
Fiorino S-10 Blazer 504
Palio
Spazio
Tempra
Tipo
Uno
</TABLE>

Because of the economic benefits inherent in outsourcing to suppliers such
as Lear and the costs associated with reversing a decision to purchase seat
systems and other interior systems and components from an outside supplier, the
Company believes that automotive manufacturers' commitment to purchasing seating
and other interior systems and components from outside suppliers, particularly
on a JIT basis, will increase. However, under the contracts currently in effect
in the United States and Canada between each of General Motors, Ford and
Chrysler with the United Auto Workers ("UAW") and the Canadian Auto Workers
("CAW"), in order for any of such manufacturers to obtain from external sources
components that it currently produces, it must first notify the UAW or the CAW
of such intention. If the UAW or the CAW objects to the proposed outsourcing,
some agreement will have to be reached between the UAW or the CAW and the OEM.
Factors that will normally be taken into account by the UAW, the CAW and the OEM
include whether the proposed new supplier is technologically more advanced than
the OEM, whether the new supplier is unionized, whether cost benefits exist and
whether the OEM will be able to reassign union members whose jobs are being
displaced to other jobs within the same factories. As part of its long-term
agreement with General Motors, the Company operates its Rochester Hills,
Michigan, Wentzville, Missouri and Lordstown, Ohio facilities with General
Motors' employees and reimburses General Motors for the wages of such employees
on the basis of the Company's employee wage structure. The Company enters into
these arrangements to enhance its relationship with its customers.

General Motors has experienced work stoppages during 1996 and 1997,
primarily relating to the outsourcing of automotive components. Chrysler has
also experienced a work stoppage in 1997, primarily relating to the outsourcing
of automotive components. These work stoppages halted the production of certain
vehicle models and adversely affected the Company's operations.

The Company's contracts with its major customers generally provide for an
annual productivity price reduction and, in some cases, provide for the recovery
of increases in material and labor costs. Cost reduction through design changes,
increased productivity and similar productivity price reduction programs with
the Company's suppliers have generally offset changes in selling prices. The
Company's cost structure is comprised of a high percentage of variable costs.
The Company believes that this structure provides it with additional flexibility
during economic cycles.

MARKETING AND SALES

Lear markets its products by maintaining strong customer relationships,
which have been developed over its 80-year history through extensive technical
and product development capabilities, reliable delivery of high quality
products, strong customer service, innovative new products and a competitive
cost structure. Close personal communications with automotive manufacturers are
an integral part of the Company's marketing strategy. Recognizing this, the
Company is organized into independent divisions, each with the ability to focus
on its customers and programs and each having complete responsibility for the
product, from design to

33
<PAGE> 37

installation. By moving the decision-making process closer to the customer, and
by instilling a philosophy of "cooperative autonomy," the Company is more
responsive to, and has strengthened its relationships with, its customers. OEMs
have generally continued to reduce the number of their suppliers as part of a
strategy of purchasing interior systems rather than individual components. This
process favors suppliers like Lear with established ties to OEMs and the
demonstrated ability to adapt to the new competitive environment in the
automotive industry.

The Company's sales are originated almost entirely by its sales staff. This
marketing effort is augmented by design and manufacturing engineers who work
closely with OEMs from the preliminary design to the manufacture and supply of
interior systems or components. Manufacturers have increasingly looked to
suppliers like the Company to assume responsibility for introducing product
innovation, shortening the development cycle of new models, decreasing tooling
investment and labor costs, reducing the number of costly design changes in the
early phases of production and improving interior comfort and functionality.
Once the Company is engaged to develop the design for the interior system or
component of a specific vehicle model, it is also generally engaged to supply
these items when the vehicle goes into production. The Company has devoted
substantial resources toward improving its engineering and technical
capabilities and developing technology centers in the United States and in
Europe. The Company has also developed full-scope engineering capabilities,
including all aspects of safety and functional testing, acoustics testing and
comfort assessment. In addition, the Company has established numerous
engineering sites in close proximity to its OEM customers to enhance customer
relationships and design activity. Finally, the Company has implemented a
program of dedicated teams consisting of interior trim and seat system personnel
who are able to meet all of a customer's interior needs. These teams provide a
single interface for Lear's customers and help avoid duplication of sales and
engineering efforts.

TECHNOLOGY

The Company conducts advanced product design development at its technology
centers in Southfield, Michigan, Plymouth, Michigan, Ebersberg, Germany,
Middlemarch, England and Turin, Italy and at 20 worldwide product engineering
centers. At these centers, the Company tests its products to determine
compliance with applicable safety standards, the products' quality and
durability, response to environmental conditions and user wear and tear. The
Company also has state-of-the-art acoustics testing, instrumentation and data
analysis capabilities.

The Company believes that in order to effectively develop total interior
systems, it is necessary to integrate the research, design, development and
styling of all interior subsystems. Accordingly, during 1997, the Company began
consolidating its North American technology centers at its world headquarters in
Southfield, Michigan.

The Company has dedicated, and will continue to dedicate, resources to
research and development to maintain its position as a leading technology
developer in the automotive interior industry. Research and development costs
incurred in connection with the development of new products and manufacturing
methods, to the extent not recoverable from the customer, are charged to
selling, general and administrative expenses as incurred. Such costs amounted to
approximately $70.0 million, $53.3 million and $21.9 million for the years ended
December 31, 1996, 1995 and 1994, respectively. Engineering expenses related to
current production are charged to cost of sales as incurred and amounted to
$21.4 million, $14.1 million and $8.9 million for the years ended December 31,
1996, 1995 and 1994, respectively.

In the past, the Company has developed a number of designs for innovative
seat features which it has patented, including ergonomic features such as
adjustable lumbar supports and bolster systems and adjustable thigh supports. In
addition, the Company incorporates many convenience, comfort and safety features
into its seat designs, including storage armrests, rear seat fold down panels,
integrated restraint systems (belt systems integrated into seats), side impact
air bags and child restraint seats. The Company continually invests in its CAE
and CAD/CAM systems. Recent enhancements to these systems include customer
telecommunications and direct interface with customer CAD systems.

34
<PAGE> 38

Lear uses its patented SureBond(TM) process (the patent for which expires
in approximately 7 years) in bonding seat cover materials to the foam pads used
in certain of its seats. The SureBond(TM) process is used to bond a pre-shaped
cover to the underlying foam to minimize the need for sewing and to achieve new
seating shapes, such as concave shapes, which were previously difficult to
manufacture. The Company has recently improved this process through the
development of its patented DryBond(TM) process which allows for the bonding of
vinyl and leather to seat cushions and seat backs. This process further
increases manufacturing efficiency, provides longer work cycles for automotive
seats and yields more design flexibility for automotive interior components.

The Company has virtually all technologies and manufacturing processes
available for interior trim and under-the-hood applications. The manufacturing
processes include, among other things, high and low pressure injection molding,
vacuum forming, blow molding, soft foam molding, heat staking, water jet
cutting, vibration welding, ultrasonic welding, and robotic painting. This wide
range of capabilities allows the Company to assist its customers in selecting
the technologies that are the most cost effective for each application. Combined
with its design and engineering capabilities and its state-of-the-art technology
and engineering centers, the Company provides comprehensive support to its OEM
customers from product development to production.

The Company owns one of the few proprietary-design dynamometers capable of
precision acoustics testing of front, rear and four-wheel drive vehicles.
Together with its custom-designed reverberation room, computer-controlled data
acquisition and analysis capabilities provide precisely controlled laboratory
testing conditions for sophisticated interior and exterior noise, vibration and
harshness (NVH) testing of parts, materials and systems, including powertrain,
exhaust and suspension components. The Company also owns a 29% interest in
Precision Fabrics Group, Inc. ("PFG"), which has patented a process to sew and
fold an ultralight fabric into airbags which are 60% lighter than airbags
currently used in the automotive industry. As this new airbag can fit into a
shirt pocket when folded, it is adaptable to side restraint systems (door panels
and seats) as well as headliners.

The Company holds a number of mechanical and design patents covering its
products and has numerous applications for patents currently pending. In
addition, the Company holds several trademarks relating to various manufacturing
processes. The Company also licenses its technology to a number of seating
manufacturers. Additionally, the Company continues to identify and implement new
technologies for use in the design and development of its products.

JOINT VENTURES AND MINORITY INTERESTS

The Company currently has 15 joint ventures and minority-owned affiliates
located in 10 countries. The Company pursues attractive joint ventures in order
to assist its entry into new markets, facilitate the exchange of technical
information, expand its product offerings, and broaden its customer base. In
1996, the Company expanded its presence in the Asia/Pacific Rim region with a
joint venture with NHK Spring Co., Ltd. to supply seat systems in Thailand to a
joint venture between Ford and Mazda. In addition, Lear entered a joint venture
with Jiangling Motors Co., Ltd. to supply seat systems and interior trim
components in China for Isuzu trucks and Ford transit vans. In addition, several
of the Company's recent acquisitions, including Masland and AI, have provided
the Company with strategic joint ventures. With the Masland Acquisition, Lear
acquired interests in PFG and Sommer Masland (U.K.) Ltd. Sommer Masland helped
to expand Masland's geographical presence in Europe and strengthened its
relationship with several existing customers, including Nissan, Peugeot and
Saab. The AI Acquisition included a 40% interest in Industrias Automotrices
Summa, S.A. de C.V. (Mexico), as well as a 33% interest in Guildford Kast
Plastifol Ltd. (U.K.), both of which produce interior trim parts for
automobiles. In addition, the Keiper Acquisition would provide the Company with
interests in joint ventures in Mexico and the United States.

COMPETITION

The Company is a leading independent supplier automotive interior products
with manufacturing capabilities in all five principal automotive interior
segments: seat systems; floor and acoustic systems; door panels; instrument
panels; and headliners. Within each segment, the Company competes with a variety
of

35
<PAGE> 39

independent suppliers and OEM in-house operations. Set forth below is a summary
of the Company's primary independent competitors.

- Seat Systems. Lear is one of the two primary suppliers in the outsourced
North American seat systems market. The Company's main independent competitors
are Johnson Controls, Inc. and Magna International, Inc. The Company's major
independent competitors in Western Europe, besides Johnson Controls, Inc., are
Bertrand Faure (headquartered in France) and prior to the consummation of the
Keiper Acquisition, Keiper (headquartered in Germany).

- Floor and Acoustic Systems. Lear is one of the largest of the three
primary independent suppliers in the outsourced North American floor and
acoustic systems market. The Company's primary competitors are Collins & Aikman
Corp. Automotive Division, a division of Collins & Aikman Corporation and the
Magee Carpet Company. The Company's major competitors in Western Europe include
H.P. Chemie Pelzer, GmbH, Rieter Automotive, BTR Fatati, Ltd. and Johann Borgers
GmbH and Co.

- Other Interior Systems and Components. The market for outsourced
headliners, door panels and instrument panels is highly fragmented. The
Company's major independent competitors in these segments include Johnson
Controls, Inc., Davidson Interior Trim (a division of Textron, Inc.), UT
Automotive (a subsidiary of United Technologies, Inc.), The Becker Group and a
large number of smaller operations.

SEASONALITY

Lear's principal operations are directly related to the automotive
industry. Consequently, the Company may experience seasonal fluctuation to the
extent automotive vehicle production slows, such as in the summer months when
plants close for model year changeovers and vacation. Historically, the
Company's sales and operating profit have been the strongest in the second and
fourth calendar quarters. Net sales for the year ended December 31, 1996 by
calendar quarter were distributed as follows: first quarter, 22%; second
quarter, 26%; third quarter, 24%; and fourth quarter, 28%. See Note 19,
"Quarterly Financial Data," of the notes to the Company's 1996 consolidated
financial statements incorporated by reference in this Prospectus.

EMPLOYEES

As of April 30, 1997, the Company employed approximately 19,200 persons in
the United States and Canada, 14,300 in Mexico, 9,700 in Europe and 1,900 in
other regions of the world. Of these, about 7,000 were salaried employees and
the balance were paid on an hourly basis. Approximately 23,000 of the Company's
employees are members of unions. In addition, the Keiper Acquisition would
provide the Company with over 2,000 additional employees. The Company has
collective bargaining agreements with several unions including: the UAW; the
CAW; the Textile Workers of Canada; the International Brotherhood of Teamsters,
Chauffeurs, Warehousemen, and Helpers of America; the International Association
of Machinists and Aerospace Workers; and the AFL-CIO. Each of the Company's
unionized facilities in the United States and Canada has a separate contract
with the union which represents the workers employed there, with each such
contract having an expiration date independent of the Company's other labor
contracts. The majority of the Company's European and Mexican employees are
members of industrial trade union organizations and confederations within their
respective countries. The majority of these organizations and confederations
operate under national contracts which are not specific to any one employer. The
Company has experienced some labor disputes at its plants, none of which has
significantly disrupted production or had a materially adverse effect on its
operations. The Company has been able to resolve all such labor disputes and
believes its relations with its employees are generally good.

In addition, as part of its long-term agreements with General Motors, the
Company currently operates three facilities with an aggregate of approximately
1,000 General Motors' employees and reimburses General Motors for the wages of
such employees on the basis of the Company's wage structure.

36
<PAGE> 40

LITIGATION

The Company is involved in certain legal actions and claims arising in the
ordinary course of business. Management of the Company does not believe that any
of the litigation in which the Company is currently engaged, either individually
or in the aggregate, will have a material effect on the Company's consolidated
financial position or future results of operations.

The Company is subject to various laws, regulations and ordinances which
govern activities such as discharges to the air and water, as well as handling
and disposal practices for solid and hazardous wastes, and which impose costs
and damages associated with spills, disposal or other releases of hazardous
substances. The Company believes that it is in substantial compliance with such
requirements. Management does not believe that it will incur compliance costs
pursuant to such requirements that would have a material adverse effect on the
Company's consolidated financial position or future results of operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations of the Company -- Environmental Matters."

The Company has been identified as a potentially responsible party ("PRP")
under the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended ("CERCLA" or "Superfund"), for the cleanup of contamination
from hazardous substances at two Superfund sites where liability has not been
substantially resolved. Management believes that the Company is, or may be,
responsible for less than one percent, if any, of the total costs at the two
Superfund sites. The Company has also been identified as a PRP at three
additional sites where liability has not been substantially resolved, as well as
at several other sites (including Superfund sites) at which no significant
liability issues known to the Company remain open at this time. In addition, the
Company is one of a number of defendants in a state court action brought by a
group of plaintiffs in Texas who have claimed various impacts from a Texas
landfill to which the Company and others allegedly sent waste. The Company's
expected liability, if any, at these additional sites is not material. The
Company has set aside reserves which management believes are adequate to cover
any such liabilities. Management believes that such matters will not result in
liabilities that will have a material adverse effect on the Company's
consolidated financial position or future results of operations.

PROPERTIES

As of April 30, 1997, the Company's operations are conducted through 149
facilities, some of which are used for multiple purposes, including 129
manufacturing facilities, 20 product engineering centers and 5 technology
centers, in 22 countries employing over 45,000 people worldwide. In addition,
the Keiper Acquisition would provide the Company with 10 additional facilities.
The Company's world headquarters are located in Southfield, Michigan.

No facility is materially underutilized. Of the 149 existing facilities
(which include facilities owned by the Company's less than majority-owned
affiliates), 77 are owned and 72 are leased with expiration dates ranging from
1997 through 2005. Management believes substantially all of the Company's
property and equipment is in good condition and that it has sufficient capacity
to meet its current and expected manufacturing and distribution needs. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations of the Company -- Capital Expenditures."

37
<PAGE> 41

The following table presents the locations of the Company's facilities:

<TABLE>
<S> <C> <C> <C>
ARGENTINA GERMANY POLAND UNITED STATES (CONTINUED)
Buenos Aires Ebersberg Myslowice Fair Haven, MI
Cordoba Eisenach Tychy Fenton, MI
Gustavsburg Frankfort, IN
AUSTRALIA Munich SOUTH AFRICA Fremont, OH
Adelaide Plattling Brits Greencastle, IN
Brooklyn Quakenbruck Hammond, IN
Rietberg SPAIN Huron, OH
AUSTRIA Wackersdorf Pamplona Janesville, WI
Koflach Kansas City, MO
INDIA SWEDEN Lebanon, VA
BRAZIL Gujarat Arendal Lebanon, OH
Belo Horizonte Bengtsfors Lewistown, PA
Sao Paolo INDONESIA Fargelanda Lorain, OH
Jakarta Gnosjo Lordstown, OH
CANADA Goteberg Louisville, KY
Ajax ITALY Ljungby Luray, VA
Kitchener Bruino Tanumshede Madisonville, KY
Maple Caivano Tidaholm Manteca, CA
Mississauga Cassino Trollhattan Marlette, MI
Oakville Grugliasco Marshall, MI
St. Thomas Melfi THAILAND Melvindale, MI
Whitby Orbassano Bangkok Mendon, MI
Woodstock Pozzilli Khorat Mequon, WI
Termini Imerese Midland, TX
CHINA TURKEY Morristown, TN
Wanchai MEXICO Bursa Newark, DE
Cuautitlan Novi, MI
CZECH REPUBLIC Hermosillo UNITED STATES Pontiac, MI
Prestice Juarez Allen Park, MI Plymouth, MI
Naucalpan Arlington, TX Rochester Hills, MI
ENGLAND Puebla Atlanta, GA Romulus, MI
Colne Ramos Arizpe Auburn Hills, MI Sheboygan, WI
Coventry Saltillo Bowling Green, OH Southfield, MI
Dunton Silao Bridgeton, MO Strasburg, VA
Lancashire Tlahuac Carlisle, PA Sidney, OH
Middlemarch Toluca Clawson, MI Troy, MI
Nottingham Covington, VA Warren, MI
Tipton Dearborn, MI Wentzville, MO
Washington Detroit, MI West Chicago, IL
Duncan, SC Winchester, VA
FRANCE El Paso, TX
Meaux VENEZUELA
Paris Valencia
</TABLE>

38
<PAGE> 42

MANAGEMENT

Set forth below is certain information concerning the executive officers of
the Company.

<TABLE>
<CAPTION>
YEARS WITH
THE COMPANY,
PREDECESSOR OR
NAME AGE POSITION ACQUIRED COMPANY
---- --- -------- ----------------
<S> <C> <C> <C>
Kenneth L. Way................. 57 Chairman of the Board and Chief Executive 31
Officer
Robert E. Rossiter............. 51 President and Chief Operating Officer -- 26
International Operations and Director of the
Company
James H. Vandenberghe.......... 47 President and Chief Operating Officer -- 24
North American Operations and Director of
the Company
Gerald G. Harris............... 63 Senior Vice President and Group Vice 35
President -- GM Division and Latin American
Operations of the Company
Terrence E. O'Rourke........... 50 Senior Vice President and Group Vice 2
President -- Ford and Chrysler Divisions of
the Company
Frank J. Preston............... 54 Senior Vice President and Group Vice 3
President -- Interior Systems Group
James A. Hollars............... 52 Senior Vice President and President -- BMW 24
Division of the Company
Roger A. Jackson............... 50 Senior Vice President -- Human Resources 2
Robert G. Lawrie............... 52 Senior Vice President -- Global Mergers, 1
Acquisitions and Strategic Alliances
Donald J. Stebbins............. 39 Senior Vice President, Chief Financial 5
Officer and Treasurer of the Company
Joseph F. McCarthy............. 53 Vice President, Secretary and General 3
Counsel of the Company
Charles E. Fisher.............. 43 Vice President and President -- Chrysler 12
Division
Douglas G. Del Grosso.......... 35 Vice President and President -- GM Division 13
Daniel A. Jannette............. 54 Vice President and President -- Technology 10
Division
</TABLE>

Set forth below is a description of the business experience of each
executive officer of the Company.

Kenneth L. Way. Mr. Way is Chairman of the Board and Chief Executive
Officer of the Company, a position he has held since 1988. Prior to this he
served as Corporate Vice President, Automotive Group of Lear Siegler, Inc.
("LSI") since October 1984. During the previous six years, Mr. Way was President
of LSI's General Seating Division. Prior to this, he was President of LSI's
Metal Products Division in Detroit for three years. Other positions held by Mr.
Way during his 31 years at Lear include Manufacturing Manager of the Metal
Products Division and Manager of Production Control for the Automotive Division
in Detroit. Mr. Way also serves as a director of Hayes Wheels International,
Inc., Comerica, Inc. and R.P. Scherer Corporation.

Robert E. Rossiter. Mr. Rossiter is President and Chief Operating Officer
- -- International Operations of the Company, a position he has held since April
1997, and he has been a Director since 1988. Mr. Rossiter served as President of
the Company from 1984 until April 1997 and as Chief Operating Officer of the
Company from 1988 to April 1997. He joined LSI in 1971 in the Material Control
Department of the Automotive Division, then joined the Metal Products Division
of LSI as Production Control Manager, and subsequently moved into sales and
sales management. In 1979, he joined the General Seating Division as Vice
President of Sales and worked in that position, as well as Vice President of
Operations, until 1984.

James H. Vandenberghe. Mr. Vandenberghe is President and Chief Operating
Officer -- North American Operations of the Company, a position he has held
since April 1997, and he has been a Director since 1995. He served as Executive
Vice President of the Company from 1993 to April 1997 and Chief

39
<PAGE> 43

Financial Officer from 1988 to April 1997. Mr. Vandenberghe also served as a
director of the Company from 1988 until the merger of Lear Holdings Corporation
("Holdings"), Lear's former parent, into Lear. Mr. Vandenberghe also served as
Senior Vice President -- Finance and Secretary of the Company from 1988 to 1993.

Gerald G. Harris. Mr. Harris is Senior Vice President and Group Vice
President -- GM Division and Latin American Operations of the Company, a
position he has held since May 1997. Previously, Mr. Harris served as Senior
Vice President and President -- GM Division of the Company from July 1996 until
May 1997 and Vice President and President -- GM Division from November 1994 to
July 1996. Previously, Mr. Harris served as Director Ford Business Unit from
March 1992 to March 1994, Director of Sales from August 1990 to March 1992 and
Sales Manager from January 1989 to August 1990. Prior to 1989, Mr. Harris held
various managerial positions with the Company.

Terrence E. O'Rourke. Mr. O'Rourke is Senior Vice President and Group Vice
President -- Ford and Chrysler Divisions of the Company, a position he has held
since May 1997. Previously, he served as Senior Vice President and President --
Ford Division of the Company from July 1996 until May 1997, Vice President and
President -- Ford Division of the Company from November 1995 until July 1996,
Vice President and President -- Chrysler Division of the Company since November
1994 and Director -- Strategic Planning since October 1994. Prior to joining
Lear, Mr. O'Rourke was employed by Ford Motor Company as Supply Manager --
Climate Control Department from 1992 and Procurement Operations Manager from
1988.

Frank J. Preston. Dr. Preston is Senior Vice President and Group Vice
President -- Interior System Group of the Company, a position he has held since
July 1996. Previously, Dr. Preston served as Senior Vice President and President
- -- Masland Division of the Company since the consummation of Lear's acquisition
of Masland Corporation in June 1996. Prior to the Masland Acquisition, he served
as President of Masland since January 1995 and Chief Executive Officer of
Masland since January 1996. During 1995, Dr. Preston also served as Chief
Operating Officer of Masland. Prior to joining Masland, Dr. Preston held various
positions with Textron, most recently President of Textron Automotive Interiors.

James A. Hollars. Mr. Hollars is Senior Vice President and President -- BMW
Division of the Company. He was appointed to this position in November 1995.
Prior to serving in this position, he was Senior Vice President and President --
International Operations of the Company since November 1994. Previously, he
served as Senior Vice President -- International Operations of the Company since
1993 and Vice President -- International since the sale of LSI's Power Equipment
Division to Lucas Industries in 1988. Mr. Hollars has held a variety of
managerial positions with the Company and LSI since 1973.

Roger A. Jackson. Mr. Jackson is Senior Vice President -- Human Resources,
a position he has held since October 1995. Previously, he served as Vice
President -- Human Resources for Allen Bradley, a wholly-owned subsidiary of
Rockwell International. Mr. Jackson was employed by Rockwell International or
its subsidiaries from December 1977 to September 1995.

Robert G. Lawrie. Mr. Lawrie is Senior Vice President -- Global Mergers,
Acquisitions and Strategic Alliances, a position he has held since June 1996.
Prior to joining the Company, Mr. Lawrie served as Vice President and Special
Counsel to the Chairman of Magna International Inc. since July 1992. Prior to
his tenure with Magna International, Inc., Mr. Lawrie was an International
Consultant to Consolidated Hydro Inc., an operator of hydroelectric plants, in
1992. From 1991 to July 1993, Mr. Lawrie was Senior Vice President, General
Counsel and Secretary of Abitibi-Price Inc., an international paper
manufacturer. From 1988 to 1991, Mr. Lawrie was the managing partner of the Los
Angeles office of Broad Schulz Larson & Wineberg, a law firm.

Donald J. Stebbins. Mr. Stebbins is Senior Vice President, Chief Financial
Officer and Treasurer of the Company, a position he has held since April 1997.
Prior to serving in this position, he was Vice President, Treasurer and
Assistant Secretary of the Company since 1992. Previously he was with Bankers
Trust Company, New York where he was a Vice President for four years. Prior to
his tenure at Bankers Trust Company, he held positions at Citibank, N.A. and The
First National Bank of Chicago.

40
<PAGE> 44

Joseph F. McCarthy. Mr. McCarthy is Vice President, Secretary and General
Counsel of the Company, a position he has held since April 1994. Prior to
joining the Company, Mr. McCarthy served as Vice President -- Legal and
Secretary for both Hayes Wheels International, Inc. and Kelsey-Hayes Company.
Prior to joining Hayes Wheels International, Inc. and Kelsey-Hayes Company, Mr.
McCarthy was a partner in the law firm of Kreckman & McCarthy from 1973 to 1983.

Douglas G. DelGrosso. Douglas DelGrosso is Vice President and President --
GM Division of the Company, a position he has held since May 1997. Previously he
was Vice President and President -- Chrysler Division of the Company since
December 1995. Other positions held by Mr. DelGrosso during his 13 years with
the Company include Vice President -- Operations for the GM Division and Group
Engineering Manager.

Charles E. Fisher. Charles E. Fisher is Vice President and President --
Chrysler Division of the Company, a position he has held since May 1997. Mr.
Fisher joined Lear in 1985 as Sales Manager. Positions previously held by Mr.
Fisher include Director of Purchasing, Vice President of Global Purchasing and
Vice President of Marketing and Sales.

Daniel A. Jannette. Daniel A. Jannette is Vice President -- Technology of
the Company, a position he has held since August 1995. Prior to joining Lear in
August 1995, Mr. Jannette served as Vice President of AI since August 1993 and
President of FIBERCRAFT/DESCon since 1987.

41
<PAGE> 45

SELLING STOCKHOLDERS

The following table and accompanying footnotes set forth certain
information regarding beneficial ownership of the Company's Common Stock by the
Selling Stockholders as of May 28, 1997 prior to the Offerings and as adjusted
to reflect the sale of the shares of Common Stock by the Selling Stockholders in
the Offerings:

<TABLE>
<CAPTION>
PRIOR TO OFFERINGS AFTER OFFERINGS(3)
------------------------------------- -------------------------------------
NUMBER OF SHARES SHARES OF NUMBER OF SHARES
OF COMMON STOCK PERCENTAGE OF COMMON STOCK OF COMMON STOCK PERCENTAGE OF
OWNED BENEFICIALLY COMMON STOCK(2) BEING OFFERED(3) OWNED BENEFICIALLY COMMON STOCK
------------------ --------------- ---------------- ------------------ -------------
<S> <C> <C> <C> <C> <C>
Lehman Funds(1)......... 10,284,854 15.6% 10,284,854 0 0%
</TABLE>

- -------------------------
(1) The number of shares beneficially owned by the Lehman Funds includes
3,694,191 shares of Common Stock owned by Lehman Brothers Merchant Banking
Portfolio Partnership L.P. and 2,510,953 shares of Common Stock owned by
Lehman Brothers Capital Partners II, L.P. (each located at Three World
Financial Center, New York, New York 10285); 1,015,636 shares of Common
Stock owned by Lehman Brothers Offshore Investment Partnership L.P. and
3,064,074 shares of Common Stock owned by Lehman Brothers Offshore
Investment Partnership-Japan L.P. (each located at Clarendon House, Church
Street, Hamilton HMCX, Bermuda). LB I Group Inc. and Lehman Brothers
Holdings Inc. are the general partners of Lehman Brothers Merchant Banking
Portfolio Partnership L.P. and Lehman Brothers Capital Partners II, L.P.,
respectively, and Lehman Brothers Offshore Partners Ltd. is the general
partner of Lehman Brothers Offshore Investment Partnership-Japan L.P. and
Lehman Brothers Offshore Investment Partnership L.P. Each such general
partner may be deemed to own beneficially the shares directly owned by the
entity of which it is the general partner. LB I Group Inc. and Lehman
Brothers Offshore Partners Ltd. are wholly-owned subsidiaries of Lehman
Brothers Holdings Inc. Each of the partnerships may be deemed to share with
Lehman Brothers Holdings Inc. the power to vote and the power to dispose of
the shares owned by such partnership. The address of Lehman Brothers
Holdings Inc. is Three World Financial Center, New York, New York 10285.

(2) Assumes that none of the options granted pursuant to the Company's stock
option plans, pursuant to which a maximum of 3,680,121 shares of Common
Stock are issuable, are exercised.

(3) The Lehman Funds have collectively granted to the Underwriters options to
purchase up to an aggregate of 1,284,854 shares of Common Stock, exercisable
solely to cover over-allotments. See "Underwriting." The data set forth in
the table assumes that the Underwriters' over-allotment options are
exercised in full.

In 1991, the Lehman Funds acquired an aggregate of 22,874,940 shares of
Common Stock from the Company and certain other stockholders (the "1991 Common
Stock Acquisition"). In 1992, the Lehman Funds acquired an additional 3,999,996
shares of Common Stock from the Company (the "1992 Common Stock Acquisition").
In connection with the 1991 Common Stock Acquisition, the 1992 Common Stock
Acquisition, the offering of the Senior Subordinated Notes, the NAB Acquisition,
the offering of the Subordinated Notes, the initial public offering of the
Company's Common Stock in April 1994, the AI Acquisition, the 1995 Stock
Offering and the 1996 Stock Offering, Lehman Brothers, an affiliate of the
Lehman Funds, has received, and in connection with the Offerings will receive,
compensation from the Company comprising underwriting fees, discounts and
commissions and financial advisory fees. In addition, Lehman Commercial Paper
Inc., an affiliate of the Lehman Funds, has from time to time been a lender
under the Company's credit facilities and has received customary fees in such
capacity.

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<PAGE> 46

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 150,000,000 shares
of Common Stock, par value $0.01 per share, and 15,000,000 shares of preferred
stock, par value $0.01 per share ("Preferred Stock").

COMMON STOCK

As of May 28, 1997, there were 66,075,270 shares of Common Stock
outstanding. Holders of Common Stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Cumulative voting is not
permitted. Subject to preferences of any Preferred Stock that may be issued in
the future, the holders of Common Stock are entitled to receive such dividends
as may be declared by the Board of Directors. The Company is currently
restricted under the terms of the Credit Agreement and the Indentures governing
the Senior Subordinated Notes, the Subordinated Notes and the 9 1/2% Notes, from
paying dividends to holders of Common Stock. In the event of a liquidation,
dissolution or winding up of the Company, and subject to preferences of any
Preferred Stock that may be issued in the future, the Common Stock is entitled
to receive pro rata all of the assets of the Company available for distribution
to its stockholders. There are no redemption or sinking fund provisions
applicable to the Common Stock. All outstanding shares of Common Stock are fully
paid and non-assessable, and the shares of Common Stock to be outstanding upon
the closing of the Offerings will be fully paid and non-assessable.

PREFERRED STOCK

The Board of Directors has the authority to issue up to 15,000,000 shares
of Preferred Stock in one or more series and to fix the rights, preferences,
privileges and restrictions thereof, including dividend rights, dividend rates,
conversion rates, voting rights, terms of redemption, redemption prices,
liquidation preferences and the number of shares constituting any series or the
designation of such series, which may be superior to those of the Common Stock,
without further vote or action by the stockholders. Although it presently has no
intention to do so, the Board of Directors, without stockholder approval, can
issue Preferred Stock with rights that could adversely affect the Common Stock.
The issuance of Preferred Stock may have the effect of delaying, deferring or
preventing a change in control of the Company. There will be no shares of
Preferred Stock outstanding upon the closing of the Offerings and the Company
has no present plans to issue any Preferred Stock.

STOCKHOLDERS AND REGISTRATION RIGHTS AGREEMENT

The Lehman Funds, FIMA Finance Management Inc. ("FIMA") and certain current
and former officers and employees of the Company are parties to the Amended and
Restated Stockholders and Registration Rights Agreement dated September 27,
1991, as amended (the "Stockholders Agreement"), which contains certain
restrictions on the transfer of Common Stock held by those stockholders and
grants such stockholders certain registration rights. Assuming exercise of the
Underwriters' over-allotment options in full, upon consummation of the
Offerings, the Lehman Funds will no longer be a shareholder of the Company and
therefore, no longer a party to the Stockholders Agreement.

CERTAIN PROVISIONS OF THE RESTATED CERTIFICATE OF INCORPORATION AND BY-LAWS

The by-laws of the Company provide that the Company shall indemnify each
officer and director of the Company to the fullest extent permitted by
applicable law. The Restated Certificate of Incorporation also provides that, to
the fullest extent permitted by the Delaware General Corporation Law, the
directors of the Company shall be indemnified by the Company and shall not be
liable to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director.

Certain provisions of the Company's Restated Certificate of Incorporation
and by-laws may have the effect of preventing, discouraging or delaying any
change in control of the Company and may maintain the incumbency of the Board of
Directors and management. The authorization of undesignated Preferred Stock will
make it possible for the Board of Directors to issue Preferred Stock with voting
or other rights or preferences that could impede the success of any attempt to
change control of the Company. The Company's

43
<PAGE> 47

Restated Certificate of Incorporation provides that the Board of Directors of
the Company will be divided into three classes serving staggered three-year
terms. Directors can be removed from office only for Cause (as defined below)
and only by the affirmative vote of the holders of a majority of the
then-outstanding shares of capital stock entitled to vote generally in an
election of directors. Vacancies on the Board of Directors may be filled only by
the remaining directors and not by the stockholders. "Cause" is defined as the
willful and continuous failure substantially to perform one's duties to the
Company or the willful engaging in gross misconduct materially and demonstrably
injurious to the Company.

The by-laws provide that special meetings of stockholders may be called by
the chairman, the president, any vice president, the secretary or any assistant
secretary of the Company and must be called by any such officer at the request
in writing of a majority of the Board of Directors or at the request in writing
of stockholders owning at least a majority of the capital stock of the Company
issued and outstanding and entitled to vote. The by-laws establish an advance
notice procedure for the nomination, other than by or at the direction of the
Board of Directors, of candidates for election as directors as well as for other
stockholder proposals to be considered at annual meetings of stockholders. In
general, notice of intent to nominate a director must be received by the
secretary of the Company not less than 60 nor more than 90 days prior to the
date of the annual meeting, and must contain certain specified information
concerning the person to be nominated. Notice of intent to raise business at
such meeting must be received by the secretary of the Company not less than 120
nor more than 150 days prior to the first anniversary of the date of the
Company's consent solicitation or proxy statement released in connection with
the previous year's meeting.

DELAWARE ANTI-TAKEOVER LAW

The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law (the "Anti-Takeover Law") regulating corporate
takeovers. The Anti-Takeover Law prevents certain Delaware corporations,
including those whose securities are listed on the New York Stock Exchange, from
engaging, under certain circumstances, in a "business combination" (which
includes a merger or sale of more than 10% of the corporation's assets) with any
"interested stockholder" (a stockholder who acquired 15% or more of a
corporation's outstanding voting stock without the prior approval of the
corporation's board of directors) for three years following the date that such
stockholder became an "interested stockholder." The current stockholders of the
Company may not, by virtue of their current holdings, be deemed to be
"interested stockholders" under this statute. A Delaware corporation may "opt
out" of the Anti-Takeover Law with an express provision in its original
certificate of incorporation or an express provision in its certificate of
incorporation or bylaws resulting from a stockholders' amendment approved by at
least a majority of the outstanding voting shares. The Company has not "opted
out" of the provisions of the Anti-Takeover Law.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Company's Common Stock is The Bank
of New York, located in New York, New York.

LISTING

The Common Stock is listed on the New York Stock Exchange under the symbol
LEA.

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<PAGE> 48

CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS FOR
NON-U.S. HOLDERS OF COMMON STOCK

The following is a general discussion of certain U.S. federal income and
estate tax consequences of the ownership and disposition of Common Stock by a
holder that is not a "U.S. person" (a "non-U.S. holder"). A "U.S. person" is a
person or entity that, for U.S. federal income tax purposes, is a citizen or
resident of the United States, a corporation or partnership created or organized
in the United States or under the laws of the United States or of any political
subdivision thereof, an estate whose income is includible in gross income for
U.S. federal income tax purposes regardless of its source or a trust subject to
the supervision of a court within the United States and the control of a United
States fiduciary as described in Section 7701(a)(30) of the Internal Revenue
Code of 1986, as amended (the "Code"). An individual will be deemed to be a
resident of the United States for U.S. federal income tax purposes if: (1) such
individual is a lawful permanent resident of the United States at any time
during the taxable year; (2) such individual makes an election to be treated as
a resident pursuant to the provisions of the Code; or (3) such individual is
present in the United States for an aggregate of 183 days or more during the
calendar year. In addition, an individual will be presumed to be a resident of
the United States for U.S. federal income tax purposes if such individual is
present in the United States on at least 31 days in the current calendar year
and for an aggregate of 183 days during the three-year period ending with the
current calendar year (counting, for such purposes all of the days present in
the United States during the current year, one-third of the days present during
the immediately preceding year and one-sixth of the days present during the
second preceding year). This presumption of residence may be rebutted if an
individual is present in the United States for fewer than 183 days during the
current year and it is established that such individual has a "tax home" in a
foreign country and a "closer connection" to such foreign country than to the
United States, with such terms being defined in the Code. Furthermore, the
determination of residence under the Code may be rebutted by application of an
applicable tax treaty or convention between the United States and an appropriate
foreign country that may also treat such individual as a tax resident of such
country. A special definition of U.S. resident applies for U.S. federal estate
tax purposes. Resident aliens are subject to U.S. federal tax as if they were
U.S. citizens.

This discussion is based on Code and administrative and judicial
interpretations as of the date hereof, all of which may be changed either
retroactively or prospectively. This discussion does not address all the aspects
of U.S. federal income and estate taxation that may be relevant to non-U.S.
holders in light of their particular circumstances, nor does it address tax
consequences under the laws of any U.S. state, municipality or other taxing
jurisdiction or under the laws of any jurisdiction other than the United States.

Prospective holders should consult their own tax advisors about the
particular U.S. federal tax consequences to them of holding and disposing of
Common Stock, as well as any tax consequences that may arise under the laws of
any state, local or foreign taxing jurisdiction.

DIVIDENDS

In the event that dividends are paid to a non-U.S. holder, such dividends
will be subject to United States federal withholding tax at a 30% rate or such
lower rate as may be specified by an applicable income tax treaty. Under current
U.S. Treasury regulations, dividends paid to an address outside the United
States are presumed to be paid to a resident of the country of address (unless
the payor has knowledge to the contrary) for purposes of the withholding tax.
Under the current interpretation of U.S. Treasury regulations, the same
presumption generally applies to determine the applicability of a reduced rate
of withholding under a U.S. tax treaty (the "address system"). Thus, non-U.S.
holders receiving dividends at addresses outside the United States generally are
not yet required to file tax forms to obtain the benefit of an applicable treaty
rate. If there is excess withholding on a person eligible for a treaty benefit,
the person can file for a refund with the U.S. Internal Revenue Service (the
"IRS").

Under U.S. Treasury regulations which were recently proposed and which have
not yet been put into effect, the address system for claiming treaty benefits
would be eliminated for payments made after December 31, 1997. Rather, to claim
the benefits of a tax treaty pursuant to these proposed regulations, a

45
<PAGE> 49

non-U.S. holder of Common Stock would have to file certain forms attesting to
the holder's eligibility to claim treaty benefits.

Generally, upon the filing of a Form 4224 with the Company, there is no
withholding tax on dividends that are effectively connected with the non-U.S.
holder's conduct of a trade or business within the United States. Instead, the
effectively connected dividends are subject to the U.S. federal income tax on
net income applicable to U.S. persons. Effectively connected dividends received
by a foreign corporation may be subject to an additional "branch profits tax" at
a 30% rate (or a lower rate under an applicable income tax treaty) when such
dividends are deemed repatriated from the United States.

GAIN ON DISPOSITION OF COMMON STOCK

A non-U.S. holder generally will not be subject to U.S. federal income tax
in respect of gain recognized on a disposition of Common Stock unless (i) the
gain is effectively connected with the conduct of a trade or business of the
non-U.S. holder (or of a partnership that holds the Common Stock in which the
non-U.S. holder is a member) in the United States, (ii) in the case of a
non-U.S. holder who is an individual and holds the Common Stock as a capital
asset (or is a member in a partnership that holds the Common Stock as a capital
asset), such holder is present in the United States for 183 or more days in the
taxable year of the disposition and either (x) has a "tax home" in the United
States (as specially defined for U.S. federal income tax purposes) or (y)
maintains an office or other fixed place of business in the United States and
the income from the sale of the stock is attributable to such office or other
fixed place of business, (iii) the non-U.S. holder is subject to tax pursuant to
the provisions of U.S. tax law applicable to certain U.S. expatriates or (iv)
the Company is or has been a "U.S. real property holding corporation" for
federal income tax purposes. The Company is not currently, has not been and does
not anticipate becoming a "U.S. real property holding corporation" for U.S.
federal income tax purposes.

INFORMATION REPORTING AND BACKUP WITHHOLDING TAX

The Company must report annually to the IRS and to each non-U.S. holder the
amount of dividends paid to, and the tax withheld with respect to such holder,
regardless of whether tax was actually withheld. That information may also be
made available to the tax authorities of the country in which the non-U.S.
holder resides.

United States federal backup withholding (which generally is withholding
imposed at the rate of 31% on certain payments to persons not otherwise exempt
who fail to furnish certain identifying information to the IRS) will generally
not apply to dividends paid to a non-U.S. holder that are subject to withholding
at the 30% rate (or would be so subject but for a reduced rate under an
applicable treaty). In addition, the payor of dividends may rely on the payee's
foreign address in determining that the payee is exempt from backup withholding,
unless the payor has knowledge that the payee is a U.S. person. However, U.S.
Treasury regulations that were recently proposed would, if adopted in their
present form, eliminate this address system and require a payee to furnish
certain documentation to the payor so as to be able to claim such exemption from
backup withholding.

The backup withholding and information reporting requirements also apply to
the gross proceeds paid to a non-U.S. holder upon the disposition of Common
Stock by or through a U.S. office of a U.S. or foreign broker, unless the holder
certifies to the broker under penalty of perjury as to its name, address and
status as a non-U.S. holder or the holder otherwise establishes an exemption.
Information reporting requirements (but not backup withholding) will apply to a
payment of the proceeds of a disposition of Common Stock by or through a foreign
office of (i) a U.S. broker, (ii) a foreign broker 50% or more of whose gross
income for certain periods is effectively connected with the conduct of a trade
or business in the United States or (iii) a foreign broker that is a "controlled
foreign corporation" for U.S. federal income tax purposes, unless the broker has
documentary evidence in its records that the holder is a non-U.S. holder and
certain other conditions are met, or the holder otherwise establishes an
exemption. Neither backup withholding nor information reporting will generally
apply to a payment of the proceeds of a disposition of Common Stock by or
through a foreign office of a foreign broker not subject to the preceding
sentence.

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<PAGE> 50

Any amounts withheld under the backup withholding rules will be refunded or
credited against the non-U.S. holder's United States federal income tax
liability, provided that required information is furnished to the IRS.

The backup withholding and information reporting rules are currently under
review by the Treasury Department, and their application to the Common Stock is
subject to change.

FEDERAL ESTATE TAXES

Common Stock owned or treated as owned by an individual who is neither a
citizen nor a resident of the United States for federal estate tax purposes at
the date of death will be included in such individual's estate for U.S. federal
estate tax purposes and may be subject to U.S. federal estate tax unless an
applicable estate tax treaty provides otherwise. Estates of nonresident aliens
are generally allowed a statutory credit for U.S. estate tax purposes. Estate
tax treaties may permit a larger credit. A special definition of U.S. resident
applies for U.S. federal estate purposes.

UNDERWRITING

Under the terms of, and subject to the conditions contained in, the U.S.
Underwriting Agreement, the form of which is filed as an exhibit to the
Registration Statement, the underwriters named below (the "U.S. Underwriters"),
for whom Lehman Brothers Inc., Donaldson, Lufkin & Jenrette Securities
Corporation, Morgan Stanley & Co. Incorporated, Salomon Brothers Inc, Schroder
Wertheim & Co. Incorporated and PaineWebber Incorporated are acting as
representatives (the "Representatives"), have severally agreed to purchase from
the Selling Stockholders, and the Selling Stockholders have agreed to sell to
each U.S. Underwriter, the aggregate number of shares of Common Stock set forth
opposite the name of each such U.S. Underwriter below:

<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITERS SHARES
----------------- ---------
<S> <C>
Lehman Brothers Inc.........................................
Donaldson, Lufkin & Jenrette Securities Corporation.........
Morgan Stanley & Co. Incorporated...........................
Salomon Brothers Inc........................................
Schroder Wertheim & Co. Incorporated........................
PaineWebber Incorporated....................................
----------
Total................................................
==========
</TABLE>

Under the terms of, and subject to the conditions contained in, the
International Underwriting Agreement, the form of which is filed as an exhibit
to the Registration Statement, the managers named below of the concurrent
offering of the Common Stock outside the United States and Canada (the
"International Managers" and together with the U.S. Underwriters, the
"Underwriters"), for whom Lehman Brothers International (Europe), Donaldson,
Lufkin & Jenrette Securities Corporation, Morgan Stanley & Co. International
Limited, Salomon Brothers International Limited, J. Henry Schroder & Co. Limited
and PaineWebber International (U.K.) Ltd. are acting as lead managers (the "Lead
Managers"), have severally agreed to purchase from the Selling Stockholders, and
the Selling Stockholders have agreed to sell to each

47
<PAGE> 51

International Manager, the aggregate number of shares of Common Stock set forth
opposite the name of each such International Manager below:

<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL MANAGERS SHARES
---------------------- ---------
<S> <C>
Lehman Brothers International (Europe)......................
Donaldson, Lufkin & Jenrette Securities Corporation.........
Morgan Stanley & Co. International Limited..................
Salomon Brothers International Limited......................
J. Henry Schroder & Co. Limited.............................
PaineWebber International (U.K.) Ltd. ......................
----------
Total................................................
==========
</TABLE>

The U.S. Underwriting Agreement and the International Underwriting
Agreement (collectively, the "Underwriting Agreements") provide that the
obligations of the U.S. Underwriters and the International Managers to purchase
shares of Common Stock are subject to certain conditions, and that if any of the
foregoing shares of Common Stock are purchased by the U.S. Underwriters pursuant
to the U.S. Underwriting Agreement or by the International Managers pursuant to
the International Underwriting Agreement, all the shares of Common Stock agreed
to be purchased by either the U.S. Underwriters or the International Managers,
as the case may be, pursuant to the respective Underwriting Agreements must be
so purchased. The offering price and underwriting discounts and commissions for
the U.S. Offering and the International Offering are identical. The closing of
the U.S. Offering is a condition to the closing of the International Offering,
and the closing of the International Offering is a condition to the closing of
the U.S. Offering.

The Company has been advised that the U.S. Underwriters and the
International Managers propose to offer the shares of Common Stock directly to
the public at the public offering price set forth on the cover page of this
Prospectus, and to certain selected dealers (who may include the U.S.
Underwriters and the International Managers) at such public offering price less
a selling concession not in excess of $ per share. The selected dealers may
reallow a concession not in excess of $ per share to certain brokers and
dealers. After the public offering, the public offering price, the concession to
select dealers and reallowance may be changed by the U.S. Underwriters and the
International Managers.

The Company and the Selling Stockholders have agreed to indemnify the U.S.
Underwriters and the International Managers against certain liabilities,
including liabilities under the Securities Act, and to contribute to payments
that the U.S. Underwriters and the International Managers may be required to
make in respect thereof.

The Selling Stockholders have granted to the U.S. Underwriters and the
International Managers an option to purchase up to an aggregate of 1,030,000 and
254,854 additional shares of Common Stock, respectively, exercisable solely to
cover over-allotments, at the offering price to the public less the underwriting
discounts and commissions shown on the cover page of this Prospectus. All of the
shares of Common Stock sold upon any exercise of this over-allotment option will
be sold by the Selling Stockholders. Such option may be exercised at any time
until 30 days after the date of the U.S. Underwriting Agreement and the
International Underwriting Agreement, respectively. To the extent that the
option is exercised, each U.S. Underwriter or International Manager, as the case
may be, will be committed, subject to certain conditions, to purchase a number
of the additional shares of Common Stock proportionate to such U.S.
Underwriter's or International Manager's initial commitment as indicated in the
preceding tables.

The Company has agreed that it will not, for a period of 90 days from the
date of this Prospectus, directly or indirectly, offer, sell or otherwise
dispose of any shares of Common Stock or any securities convertible into or
exchangeable or exercisable for any such shares without the prior written
consent of Lehman Brothers Inc. and Lehman Brothers International (Europe),
subject to certain exceptions (including the issuance of shares as consideration
in acquisitions). In addition, each of the executive officers named herein and
FIMA has agreed that it will not, for a period of 60 days from the date of this
Prospectus, directly or indirectly, offer, sell or otherwise dispose of any
shares of Common Stock or any securities convertible or exchangeable for any

48
<PAGE> 52

such shares without the prior written consent of Lehman Brothers Inc. and Lehman
Brothers International (Europe), subject to certain exceptions.

The U.S. Underwriters and the International Managers have entered into an
Agreement Between U.S. Underwriters and International Managers pursuant to which
each U.S. Underwriter has agreed that, as part of the distribution of the shares
of Common Stock offered in the U.S. Offering, (i) it is not purchasing any such
shares for the account of anyone other than a U.S. Person (as defined below) and
(ii) it has not offered or sold, and will not offer, sell, resell or deliver,
directly or indirectly, any of such shares or distribute any prospectus relating
to the U.S. Offering outside the United States or Canada or to anyone other than
a U.S. Person. In addition, pursuant to such agreement each International
Manager has agreed that, as part of the distribution of the shares of Common
Stock offered in the International Offering, (i) it is not purchasing any such
shares for the account of a U.S. Person and (ii) it has not offered or sold, and
will not offer, sell, resell or deliver, directly or indirectly, any of such
shares or distribute any prospectus relating to the International Offering in
the United States or Canada or to any U.S. Person. Each International Manager
has also agreed that it will offer to sell shares only in compliance with all
relevant requirements of any applicable laws.

The foregoing limitations do not apply to stabilization transactions or to
certain other transactions specified in the Underwriting Agreements and the
Agreement Between U.S. Underwriters and International Managers, including (i)
certain purchases and sales between the U.S. Underwriters and the International
Managers, (ii) certain offers, sales, resales, deliveries or distributions to or
through investment advisors or other persons exercising investment discretion,
(iii) purchases, offers or sales by a U.S. Underwriter who is also acting as an
International Manager or by an International Manager who is also acting as a
U.S. Underwriter and (iv) other transactions specifically approved by the
Representatives and the Lead Managers. As used herein, (a) the term "United
States" means the United States of America (including the District of Columbia)
and its territories, its possessions and other areas subject to its
jurisdiction, and (b) the term "U.S. Person" means any resident or national of
the United States or Canada or its provinces, any corporation, partnership or
other entity created or organized in or under the laws of the United States or
Canada or its provinces, or any estate or trust the income of which is subject
to United States or Canadian income taxation regardless of the source of its
income (other than the foreign branch of any U.S. Person), and includes any
United States or Canadian branch of a person other than a U.S. Person.

Each International Manager has represented and agreed that (i) it has not
offered or sold and prior to the date six months after the date of issue of the
shares of Common Stock will not offer or sell any shares of Common Stock to
persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 (the "1986 Act") with
respect to anything done by it in relation to the shares of Common Stock in,
from or otherwise involving the United Kingdom; and (iii) it has only issued or
passed on, and will only issue and pass on to any person in the United Kingdom,
any investment advertisement (within the meaning of the 1986 Act) relating to
the shares of Common Stock if that person falls within Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995.

The shares of Common Stock may not be offered or sold directly or
indirectly in Hong Kong by means of this document or any other offering material
or document other than to persons whose ordinary business it is to buy or sell
shares or debentures, whether as principal or as agent. Unless permitted to do
so by the securities laws of Hong Kong, no person may issue or cause to be
issued in Hong Kong this document or any amendment or supplement thereto or any
other information, advertisement or document relating to the shares of Common
Stock other than with respect to shares of Common Stock intended to be disposed
of to persons outside Hong Kong or to persons whose business involves the
acquisition, disposal or holding of securities, whether as principal or as
agent.

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<PAGE> 53

The shares of Common Stock have not been registered under the Securities
and Exchange Law of Japan and are not being offered and may not be offered or
sold directly or indirectly in Japan or to residents of Japan, except pursuant
to applicable Japanese laws and regulations.

No action has been taken or will be taken in any jurisdiction by the
Company or the International Managers that would permit a public offering of the
shares offered pursuant to the Offerings in any jurisdiction where action for
that purpose is required, other than the United States and Canada and its
provinces. Persons into whose possession this Prospectus comes are required by
the Company and the International Managers to inform themselves about and to
observe any restrictions as to the offering of the shares offered pursuant to
the Offerings and the distribution of this Prospectus.

Purchasers of the shares of Common Stock offered hereby may be required to
pay stamp taxes and other charges in accordance with the laws and practices of
the country of purchase in addition to the offering price set forth on the cover
page hereof.

Prior to the Offerings, the Lehman Funds, each an affiliate of Lehman
Brothers and Lehman Brothers International (Europe), beneficially own, in the
aggregate, approximately 15.6% of the outstanding Common Stock of the Company
(assuming no outstanding Options are exercised). Therefore, the underwriting
arrangements for the Offerings will comply with the requirements of Conduct Rule
2720 (formerly Schedule E) to the Bylaws of the National Association of
Securities Dealers, Inc. ("NASD") regarding an NASD member firm's participation
in distributing its affiliate's securities. In accordance with Conduct Rule
2720, the Underwriters will not make sales of shares of Common Stock offered
hereby to customers' discretionary accounts without the prior specific written
approval of such customers.

The Lehman Funds will receive the proceeds from the Offerings. One of the
eleven members of Lear's Board of Directors is presently employed by Lehman
Brothers. Lehman Brothers has from time to time provided investment banking,
financial advisory and other services to the Company, for which services it has
received fees.

Until the distribution of the Common Stock is completed, rules of the
Commission may limit the ability of the U.S. Underwriters and International
Managers to bid for and purchase shares of Common Stock. As an exception to
these rules, the Representatives are permitted to engage in certain transactions
that stabilize the price of the Common Stock. Such transactions may consist of
bids or purchases for the purpose of pegging, fixing or maintaining the price of
the Common Stock.

If the U.S. Underwriters and International Managers create a short position
in the Common Stock in connection with the Offerings, (i.e., if they sell more
shares of Common Stock than are set forth on the cover page of this Prospectus),
the Representatives may reduce that short position by purchasing Common Stock in
the open market.

In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might be in the absence of such purchases.

Neither the Company nor any of the U.S. Underwriters or International
Managers makes any representation or prediction as to the direction or magnitude
of any effect that the transactions described above may have on the price of the
Common Stock. In addition, neither the Company nor any of the U.S. Underwriters
or International Managers makes any representation that the Representatives will
engage in such transactions or that such transactions, once commenced, will not
be discontinued without notice.

LEGAL MATTERS

The validity of the issuance of shares of Common Stock offered hereby will
be passed upon for the Company by Winston & Strawn, Chicago, Illinois. Certain
legal matters in connection with the Offerings will be passed upon for the U.S.
Underwriters and the International Managers by Simpson Thacher & Bartlett (a
partnership which includes professional corporations), New York, New York.
Simpson Thacher & Bartlett has performed, and continues to perform, services for
the Lehman Funds from time to time.

50
<PAGE> 54

EXPERTS

The audited financial statements and schedule 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 historical consolidated financial statements of Masland
Corporation as of June 30, 1995 and July 1, 1994 and for each of the three years
in the period ended June 30, 1995 included on pages 2 through 22 of the
Company's Form 8-K dated June 27, 1996, which is incorporated herein by
reference, have been so incorporated in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.

51
<PAGE> 55
[INSIDE BACK COVER]

[Lear Corporation Logo]

Lear Corporation is one of the world's largest independent suppliers of
automotive interior systems - with over 45,000 quality-dedicated,
customer-focused people operating in 149 facilities in 22 countries around the
globe.

[A picture of an automobile depicting the automotive products which Lear
produces]

INTERIOR SYSTEMS AND COMPONENTS

SEAT SYSTEMS
Armrest Assemblies
Armrest Cup Holders
Armrest Frames
Back of Seat Trim Panels
Center Seat Console Assemblies
Child Seat Frames
Formed Wire Spring Assemblies
Headrest Assemblies
Headrest Frames
Integrated Child Seat Systems
Integrated Restraint Seat Systems
Package Trays
Back Frames
Cushion Frames
Hinge Assemblies
Latch Assemblies
Molded Foam Pads
Riser Assemblies
Side Shields
Switch Covers
Trim Covers
Side Impact Seat Systems
Sinuous Wire Spring Assemblies
Speciality Sport Seat Systems
Storage Armrest Assemblies
Under Seat Storage Systems
Wire Support Mat Assemblies

DOOR AND INTERIOR TRIM SYSTEMS
Acoustical Sound Absorption Systems
Applique Assemblies
Armrest Assemblies
Armrest Handles
Bezels and Door Switch Plates
Cab Panel Trim
Carpeted Map Pocket Appliques
Cowl Panel Trim
Cowl Panels
Cup Holders
Door Map Pocket Assemblies
Door Trim Assemblies
Door Trim Panels
Energy Absorption Systems
HVAC Assemblies
Lift Gate Lower Panels
Lift Gate Trim
Map Pocket Trim
Modular Door Panel Systems
Pull Cups/Handles
Quarter Trim Assemblies
Quarter Trim Panels
Scuff Plates
Seatbelt Retractor Covers
Speaker Grilles
Storage Systems

FLOOR AND ACOUSTIC SYSTEMS
Accessory Mats
Acoustic Seals/Patches
Acoustical Sound Absorption Systems
Back Panels
Carpeted Floor Systems
CD Changer Covers
Cowl Side Insulators
Dampers
Dash Doublers
Dash Insulators
Decklid Trim
Engine Side Dash Absorbers
Engine Side Hood Absorbers
Expandable Foam Baffles
Luggage Compartment Trim
Luggage Floor Trim
Spare Tire Covers
Structural Load Floors
Trunk Trim Panels
Vinyl/Maslite Floor Systems
Wheelhouse Trim
Wheelwell Insulators

INSTRUMENT PANEL SYSTEMS
Ash Tray Assemblies
Center Floor Consoles
Console Armrests
Console Cup Holders
Console Storage Compartments
Defrosterducts
Glove Box Compartments
HVAC Airducts
HVAC Airvents
HVAC Control Panels
Instrument Panels Control Knobs
Instrument Panel Substrates
Instrument Panels
Knee Bolsters
Upper Pads

OVERHEAD SYSTEMS
Acoustical Sound Absorption Systems
Assist Handles
Coat Hooks
Headliners
Modular Headliner Assemblies
Overhead Console Assemblies
Overhead Storage Systems
Pillar Trim
Sun Visor Retainers
Sun Visors

UNDERHOOD AND FUNCTIONAL COMPONENTS
A/C Accumulator Brackets
Air Distribution Systems
Air Filter Housings
Air Induction Ducts
Battery Trays
Coolant Reservoirs
Engine Covers
Exterior Air Dams
Fan Shrouds
Fender Liners
Front Grille Assemblies
Innershields
Roll Goods - Barrier Materials
Roll Goods - Needle-punched Carpet
Roll Goods - PVC
Roll Goods - Tufted Carpet
Spoilers
Vapor Canisters
Windshield Washer Reservoirs

<PAGE> 56

======================================================

NO DEALER, SALESMAN OR ANY OTHER 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 OR ANY OF THE U.S. UNDERWRITERS.
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.

---------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
Prospectus Summary.................... 3
Risk Factors.......................... 9
Cautionary Statements for Purposes of
the "Safe Harbor" Provisions of the
Private Securities Litigation Reform
Act of 1995......................... 10
Common Stock Price Range and
Dividends........................... 10
Pro Forma Financial Data.............. 11
Selected Financial Data of the
Company............................. 13
Management's Discussion and Analysis
of Financial Condition and Results
of Operations of the Company........ 14
Business of the Company............... 21
Management............................ 39
Selling Stockholders.................. 42
Description of Capital Stock.......... 43
Certain United States Federal Tax
Considerations for Non-U.S. Holders
of Common Stock..................... 45
Underwriting.......................... 47
Legal Matters......................... 50
Experts............................... 50
</TABLE>

======================================================
======================================================

9,000,000 SHARES

LEAR LOGO

COMMON STOCK

---------------------------

PROSPECTUS
, 1997

---------------------------

LEHMAN BROTHERS
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MORGAN STANLEY DEAN WITTER
SALOMON BROTHERS INC
SCHRODER WERTHEIM & CO.

PAINEWEBBER INCORPORATED

======================================================
<PAGE> 57

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

Subject to Completion, dated June 24, 1997

PROSPECTUS
9,000,000 Shares

Lear Logo

COMMON STOCK
---------------------------

Of the 9,000,000 shares of Common Stock, $0.01 par value per share ("Common
Stock") of Lear Corporation ("Lear" or the "Company") being offered hereby
1,800,000 shares are being offered initially outside the United States and
Canada by the International Managers (the "International Offering") and
7,200,000 shares are being offered initially in the United States and Canada by
the U.S. Underwriters (the "U.S. Offering" and, together with the International
Offering, the "Offerings"). The public offering price and underwriting discounts
and commissions per share are identical for both Offerings. See "Underwriting."
All shares being offered hereby are being offered by certain stockholders of the
Company (the "Selling Stockholders"). See "Selling Stockholders." The Company
will not receive any of the proceeds from the sale of Common Stock by the
Selling Stockholders.

---------------------------

(2) Before deducting expenses payable by Lear estimated at $650,000.

The shares of Common Stock offered by this Prospectus are offered by the
International Managers subject to prior sale, to withdrawal, cancellation or
modification of the offer without notice, to delivery to and acceptance by the
International Managers and to certain further conditions. It is expected that
delivery of certificates for shares will be made at the offices of Lehman
Brothers Inc., New York, New York, on or about , 1997.
---------------------------
LEHMAN BROTHERS

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

MORGAN STANLEY DEAN WITTER
SALOMON BROTHERS INTERNATIONAL LIMITED
SCHRODERS

PAINEWEBBER INTERNATIONAL

, 1997
<PAGE> 58

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

======================================================

NO DEALER, SALESMAN OR ANY OTHER 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 OR ANY OF THE INTERNATIONAL
MANAGERS. 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.

---------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information.................. 2
Incorporation of Certain Documents by
Reference............................ 2
Prospectus Summary..................... 3
Risk Factors........................... 9
Cautionary Statements for Purposes of
the "Safe Harbor" Provisions of the
Private Securities Litigation Reform
Act of 1995.......................... 10
Common Stock Price Range and
Dividends............................ 10
Pro Forma Financial Data............... 11
Selected Financial Data of the
Company.............................. 13
Management's Discussion and Analysis of
Financial Condition and Results of
Operations of the Company............ 14
Business of the Company................ 21
Management............................. 39
Selling Stockholders................... 42
Description of Capital Stock........... 43
Certain United States Federal Tax
Considerations for Non-U.S. Holders
of Common Stock...................... 45
Underwriting........................... 47
Legal Matters.......................... 50
Experts................................ 50
</TABLE>

======================================================
======================================================

9,000,000 SHARES

LEAR LOGO

COMMON STOCK
---------------------------

PROSPECTUS
, 1997

---------------------------

LEHMAN BROTHERS
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MORGAN STANLEY DEAN WITTER
SALOMON BROTHERS
INTERNATIONAL LIMITED

SCHRODERS

PAINEWEBBER INTERNATIONAL

======================================================
<PAGE> 59

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth all fees and expenses payable by the
Registrant in connection with the issuance and distribution of the securities
being registered hereby (other than underwriting discounts and commissions). All
of such expenses, except the SEC filing fee and the NASD filing fee, are
estimated.

<TABLE>
<S> <C>
SEC filing fee.............................................. $116,094
NASD filing fee............................................. 30,500
Legal fees and expenses..................................... 150,000
Accounting fees and expenses................................ 50,000
Printing and engraving...................................... 300,000
Miscellaneous............................................... 3,406
--------
Total.................................................. $650,000
========
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Registrant is a Delaware corporation. Reference is made to Section 145
of the Delaware General Corporation Law, as amended (the "GCL"), which provides
that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of such corporation), by reason of the fact that
such person is or was a director, officer, employee or agent of the corporation,
or is or was serving at its request in such capacity of another corporation or
business organization against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding if such person acted
in good faith and in a manner such person reasonably believed to be in or not
opposed to the best interest of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe that such
person's conduct was unlawful. A Delaware corporation may indemnify officers and
directors in an action by or in the right of a corporation under the same
conditions, except that no indemnification is permitted without judicial
approval if the officer or director is adjudged to be liable to the corporation.
Where an officer or director is successful on the merits or otherwise in the
defense of any action referred to above, the corporation must indemnify him
against the expenses (including attorneys' fees) that such officer or director
actually and reasonably incurred.

Reference is also made to Section 102(b)(7) of the GCL, which permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the GCL or (iv) for any transaction from which the director
derived an improper personal benefit.

The certificate of incorporation of the Registrant provides for the
elimination of personal liability of a director for breach of fiduciary duty as
permitted by Section 102(b)(7) of the GCL and the by-laws of the Registrant
provide that the Registrant shall indemnify its directors and officers to the
full extent permitted by Section 145 of the GCL.

The Registrant has directors and officers liability insurance that insures
the directors and officers of the Registrants against certain liabilities. In
addition, Lehman Brothers Inc. has agreed to indemnify Alan Washkowitz, a
director of the Registrant and an officer of Lehman Brothers Inc., in connection
with his service as directors of the Registrant.

II-1
<PAGE> 60

The Underwriting Agreements provide for indemnification by each of the U.S.
Underwriters and each of the International Managers, as the case may be, of
directors and officers of Lear against certain liabilities, including
liabilities under the Securities Act of 1933, under certain circumstances.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

A list of exhibits is set forth on the Index to Exhibits.

ITEM 17. UNDERTAKINGS

1. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by them is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.

2. The undersigned Registrant hereby undertakes that:

(a) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act of 1933 shall be deemed to be part
of this registration statement as of the time it was declared effective.

(b) For purposes of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein and this offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

(c) For purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrants' annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

II-2
<PAGE> 61

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Southfield, State of Michigan on June 24, 1997.

LEAR 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
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

NAME TITLE DATE
- --------------------------------------------- ---------------------------------- -------------
<S> <C> <C>
/s/ KENNETH L. WAY Chairman of the Board and Chief June 24, 1997
- --------------------------------------------- Executive Officer
Kenneth L. Way (Principal Executive Officer)

* President and Chief Operating June 24, 1997
- --------------------------------------------- Officer -- International
Robert E. Rossiter Operations and Director

/s/ JAMES H. VANDENBERGHE President and Chief Operating June 24, 1997
- --------------------------------------------- Officer -- North American
James H. Vandenberghe Operations and Director

* Senior Vice President, Chief June 24, 1997
- --------------------------------------------- Financial Officer and Treasurer
Donald J. Stebbins (Principal Financial and Principal
Accounting Officer)

* Director June 24, 1997
- ---------------------------------------------
Larry W. McCurdy

* Director June 24, 1997
- ---------------------------------------------
Gian Andrea Botta

* Director June 24, 1997
- ---------------------------------------------
Irma B. Elder

* Director June 24, 1997
- ---------------------------------------------
Roy E. Parrott

* Director June 24, 1997
- ---------------------------------------------
Robert W. Shower

* Director June 24, 1997
- ---------------------------------------------
David P. Spalding

* Director June 24, 1997
- ---------------------------------------------
James A. Stern

* Director June 24, 1997
- ---------------------------------------------
Alan H. Washkowitz

*By: /s/ JAMES H. VANDENBERGHE
---------------------------------------
James H. Vandenberghe
Attorney-in-fact
</TABLE>

II-3
<PAGE> 62

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT NUMBER EXHIBIT
- -------------- -------
<C> <C> <S>
*1.1 -- Form of U.S. Underwriting Agreement.
*1.2 -- Form of International Underwriting Agreement.
*5.1 -- Opinion of Winston & Strawn, special counsel to Lear.
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of Price Waterhouse LLP, with respect to the Masland
Financial Statements.
*23.3 -- Consent of Winston & Strawn (included in Exhibit 5.1).
*24.1 -- Powers of Attorney.
*99.1 -- Purchase Agreement dated as of May 26, 1997, among Keiper
GmbH & Co., Putsch GmbH & Co. KG, Keiper Recaro GmbH, Keiper
Car Seating Verwaltungs GmbH, Lear Corporation GmbH & Co.
and the Company.
99.2 -- Interim Financial Statements of Masland Corporation for the
period ended June 27, 1996.
</TABLE>

- -------------------------

* Previously filed.

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated February 4, 1997
included in Lear Corporation's Form 10-K for the year ended December 31, 1996,
and to all references to our firm included in this registration statement.

/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP

Detroit, Michigan

June 20, 1997

<PAGE> 1

EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 dated June 24, 1997
of Lear Corporation (formerly known as Lear Seating Corporation) of our report
dated August 8, 1995, relating to the consolidated financial statements of
Masland Corporation as of June 30, 1995 and July 1, 1994 and for the three years
in the period ended June 30, 1995, which appears on page 3 of Lear Corporation's
Form 8-K dated June 27, 1996. We also consent to the reference to us under the
heading "Experts" in the Form S-3 of Lear Corporation dated June 24, 1997.

/s/ PRICE WATERHOUSE LLP
- --------------------------------------
PRICE WATERHOUSE LLP

Philadelphia, Pennsylvania

June 24, 1997

<PAGE> 1
EXHIBIT 99.2

MASLAND CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Consolidated Balance Sheets as of June 27, 1996 and June 30, 1995 2

Consolidated Statements of Income for the 363 day period ended June 27, 1996 and 3
for the year ended June 30, 1995

Consolidated Statements of Cash Flows for the 363 day period ended June 27, 1996 and 4
for the year ended June 30, 1995

Notes to the Condensed Consolidated Financial Statements 5
</TABLE>

<PAGE> 2

CONSOLIDATED BALANCE SHEETS
MASLAND CORPORATION
(In thousands, except share data)

<TABLE>
<CAPTION>
JUNE 27, June 30,
1996 1995
(Unaudited)
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
ASSETS
Current Assets:
Cash and cash equivalents $ 14,684 $ 3,702
Trade accounts receivable 82,648 63,984
Inventories 19,762 20,967
Other 24,479 21,586
- ---------------------------------------------------------------------------------------------------------------------
Total current assets 141,573 110,239
- ---------------------------------------------------------------------------------------------------------------------

Long-Term Assets:
Property, plant and equipment, net 132,779 106,428
Intangible assets and goodwill, net 13,987 8,682
Other 29,780 2,639
- ---------------------------------------------------------------------------------------------------------------------
$ 318,119 $ 227,988
=====================================================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Trade accounts payable $ 54,091 $ 41,861
Other current liabilities 29,811 27,625
Current portion of long-term debt 1,000 2,179
- ---------------------------------------------------------------------------------------------------------------------
Total current liabilities 84,902 71,665
- ---------------------------------------------------------------------------------------------------------------------

Long-Term Liabilities:
Long-term debt 95,765 37,008
Other long-term liabilities 22,035 22,098
Minority interest in consolidated subsidiaries 12,241 8,992
- ---------------------------------------------------------------------------------------------------------------------
Total liabilities 214,943 139,763
- ---------------------------------------------------------------------------------------------------------------------

Commitments and contingencies

Shareholders' Equity:
Common stock, par value $.01 per share, 50,000,000 shares authorized,
13,590,393 and 13,421,897 shares issued and outstanding at June 27, 1996
and June 30, 1995, respectively 136 134
Capital in excess of par value 36,856 35,257
Retained earnings 66,760 53,329
Treasury stock (5,000 shares) (61) (61)
Deferred compensation (250) (434)
Cumulative translation adjustment (265) -
- ---------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 103,176 88,225
- ---------------------------------------------------------------------------------------------------------------------
$ 318,119 $ 227,988
=====================================================================================================================
</TABLE>

The accompanying notes are an integral part of these statements.

<PAGE> 3

CONSOLIDATED STATEMENTS OF INCOME
MASLAND CORPORATION
(In thousands, except per share data)

<TABLE>
<CAPTION>
FOR THE 363 For the year
DAYS ENDED ended
JUNE 27, 1996 June 30, 1995
(Unaudited)
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
Net sales $ 484,615 $ 496,613
Cost of sales 398,293 405,421
Selling, general and administrative expenses 48,448 42,088
Amortization of goodwill 2,332 2,134
- ---------------------------------------------------------------------------------------------------------------------

Operating income 35,542 46,970
Interest expense 4,148 4,181
Other (income) expense, net (321) 1,025
- ---------------------------------------------------------------------------------------------------------------------

Income before provision for income taxes, and
minority interests in consolidated subsidiaries, 31,715 41,764
Provision for income taxes 12,598 17,261
Minority interests in consolidated subsidiaries 3,244 3,252
- ---------------------------------------------------------------------------------------------------------------------

Net income 15,873 21,251
=====================================================================================================================

Earnings per common share $ 1.13 $ 1.53
=====================================================================================================================

Weighted average shares used in computation
of earnings per common share 14,031,119 13,910,339
=====================================================================================================================
</TABLE>

The accompanying notes are an integral part of these statements.

<PAGE> 4

CONSOLIDATED STATEMENTS OF CASH FLOWS
MASLAND CORPORATION
(In thousands)

<TABLE>
<CAPTION>
FOR THE 363 For the year
DAYS ENDED ended
JUNE 27, 1996 June 30, 1995
(Unaudited)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 15,873 $ 21,251
Adjustments to reconcile net income to net cash
provided by operating activities-
Depreciation and amortization 19,826 15,239
Amortization of deferred stock compensation 184 182
Provision for deferred income taxes (189) 2,749
Minority interest 3,249 3,252
Other (4,422) (1,455)
Net change in working capital items (1,477) (10,978)
- ----------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 33,044 30,240
- ----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (28,408) (21,994)
Proceeds from sale of property, plant and equipment (266) 4,582
Investments in unconsolidated affiliates (23,360) -
Acquisitions, net of cash acquired (26,500) (12,148)
Proceeds from sale of non-automotive inventories
and accounts receivable - 2,069
- ----------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (78,534) (27,491)
- ----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from common stock and warrants issuances 1,601 999
Purchase of treasury stock - (61)
Dividends on common stock (2,442) (2,677)
Borrowings (repayments) of long-term debt, net 57,578 (2,931)
Net short-term borrowings - (6,970)
- ----------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities 56,737 (11,640)
- ----------------------------------------------------------------------------------------------------------------------
Cumulative translation adjustment (265) -
NET CHANGE IN CASH AND CASH EQUIVALENTS 10,982 (8,891)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 3,702 12,593
- ----------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 14,684 $ 3,702
======================================================================================================================
CHANGES IN WORKING CAPITAL, NET OF EFFECTS OF ACQUISITIONS:
Trade accounts receivable $ (11,985) $ (5,744)
Inventories 4,866 (1,506)
Other current assets (2,519) 55
Accounts payable 8,243 3,683
Other current liabilities (82) (7,466)
- ----------------------------------------------------------------------------------------------------------------------
$ (1,477) $ (10,978)
======================================================================================================================
SUPPLEMENTARY DISCLOSURE:
Cash paid for interest $ 4,956 $ 4,517
======================================================================================================================
Cash paid for income taxes $ 6,215 $ 16,213
======================================================================================================================
</TABLE>

The accompanying notes are an integral part of these statements.

<PAGE> 5
MASLAND CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(1) BASIS OF PRESENTATION
The condensed consolidated financial statements of Masland Corporation (the
"Company") have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission (the "SEC"). The information furnished in
the condensed consolidated financial statements is unaudited. However, in the
opinion of the Company, the information includes all adjustments, consisting
only of normal recurring adjustments, necessary for a fair presentation of the
financial statements. These condensed consolidated financial statements should
be read in conjunction with the consolidated financial statements for the year
ended June 30, 1995 included in the Company's 1995 Annual Report to
shareholders.

(2) ACQUISITION
In June, 1996, the Company acquired all of the outstanding common stock of
Dexter Corporation ("Dexter") for a purchase price of $26 million. The
acquisition was accounted for as a purchase and accordingly, the assets
purchased and liabilities assumed have been included in the accompanying
balance sheet as of June 27, 1996. The operations of Dexter since the date of
acquisition were not material.

(3) SUPPLEMENTAL BALANCE SHEET INFORMATION
Inventories
Inventories are stated at the lower of cost or market. Cost is determined 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 27, June 30,
1996 1995
<S> <C> <C>
- --------------------------------------------------------------------------
Raw materials $ 8,313 $ 8,974
Work-in-process 4,171 5,740
Finished goods 8,624 7,757
- --------------------------------------------------------------------------
21,108 22,471
Less: reserves (1,346) (1,504)
- --------------------------------------------------------------------------
19,762 20,967
==========================================================================
</TABLE>

Property, Plant and Equipment
Property, plant and equipment are stated at cost and includes funds borrowed to
finance construction. Depreciation is provided on a straight-line basis. A
summary of property, plant and equipment is shown below (in thousands):

<TABLE>
<CAPTION>
JUNE 27, June 30,
1996 1995
<S> <C> <C>
- --------------------------------------------------------------------------
Land and improvements $ 2,889 $ 4,159
Buildings and improvements 36,367 25,046
Machinery and equipment 154,766 115,779
- --------------------------------------------------------------------------
Total property, plant and equipment 194,022 144,984
Less accumulated depreciation (61,243) (38,556)
- --------------------------------------------------------------------------
Net property, plant and equipment $132,779 $106,428
==========================================================================
</TABLE>

Long-Term Debt
Subsequent to the acquisition of the Company by Lear (see Note 4), all of the
long-term debt of the Company was either assumed or paid off by Lear. Long
term debt is comprised of the following (in thousands):

<TABLE>
<CAPTION>
JUNE 27, June 30,
1996 1995
<S> <C> <C>
- --------------------------------------------------------------------------
Revolving credit facility $ 93,100 $ 32,000
Term loans - Mexico 665 3,187
Industrial revenue bonds 3,000 4,000
- --------------------------------------------------------------------------
96,765 39,187
Less current portion (1,000) (2,179)
- --------------------------------------------------------------------------
$ 95,765 $ 37,008
==========================================================================
</TABLE>

5
<PAGE> 6

MASLAND CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

(4) SUBSEQUENT EVENT
On June 27, 97% of the issued and outstanding shares of common stock of the
Company were acquired by Lear Corporation ("Lear") pursuant to an offer to
purchase which was commenced on May 30, 1996. On July 1, 1996, the remaining
issued and outstanding shares of common stock of the Company were acquired by
Lear and Masland merged with and into Lear becoming a wholly-owned subsidiary
of Lear.