<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 22, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
LEAR CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C>
DELAWARE 13-3386776
(STATE OR OTHER JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER IDENTIFICATION NO.)
ORGANIZATION)
</TABLE>
AND SUBSIDIARY GUARANTORS:
LEAR OPERATIONS CORPORATION
LEAR CORPORATION AUTOMOTIVE HOLDINGS
(EXACT NAME OF REGISTRANTS AS SPECIFIED IN THEIR RESPECTIVE CHARTERS)
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<S> <C>
DELAWARE 38-3265872
DELAWARE 11-2462850
(STATE OR OTHER JURISDICTION OF INCORPORATION OR
ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
</TABLE>
3714
(PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE NUMBER)
<TABLE>
<S> <C>
JOSEPH F. MCCARTHY, ESQ.
LEAR CORPORATION
21557 TELEGRAPH ROAD 21557 TELEGRAPH ROAD
SOUTHFIELD, MI 48086-5008 SOUTHFIELD, MI 48086-5008
(248) 447-1500 (248) 447-1500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
INCLUDING NUMBER,
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>
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COPIES TO:
JOHN L. MACCARTHY
DANIEL A. NINIVAGGI
WINSTON & STRAWN
200 PARK AVENUE
NEW YORK, NY 10166
(212) 294-6700
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, 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, 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(d)
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: [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE(2)
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<S> <C> <C> <C> <C>
7.96% Series B Senior Notes due 2005........ $600,000,000 100% $600,000,000 $166,800
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Guarantees of 7.96% Series B Senior Notes
due 2005.................................. $600,000,000 -- -- (2)
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8.11% Series B Senior Notes due 2009........ $800,000,000 100% $800,000,000 $222,400
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Guarantees of 8.11% Series B Senior Notes
due 2009.................................. $800,000,000 -- -- (2)
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Total............................... $1,400,000,000 100% $1,400,000,000 $389,200
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(1) In accordance with Rule 457(f)(2), the registration fee is calculated based
on the book value, which has been calculated as of June 17, 1999, of the
outstanding 7.96% Senior Notes due 2005 and 8.11% Senior Notes due 2009 of
Lear Corporation.
(2) Pursuant to Rule 457(n) under the Securities Act of 1933, no separate fee is
payable for the Guarantees.
------------------------
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 SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. LEAR MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED JUNE 22, 1999
PROSPECTUS
EXCHANGE OFFER
FOR
ALL OUTSTANDING
7.96% SENIOR NOTES DUE 2005
AND
8.11% SENIOR NOTES DUE 2009
OF
LEAR CORPORATION
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1999, UNLESS EXTENDED
TERMS OF THE EXCHANGE OFFER
- Lear is offering to exchange registered 7.96% Series B Senior Notes due
2005 for all of its original unregistered 7.96% Senior Notes due 2005
and registered 8.11% Series B Senior Notes due 2009 for all of its
original unregistered 8.11% Senior Notes due 2009.
- The terms of the exchange securities are identical in all respects to
the terms of the original securities for which they are being
exchanged, except that the registration rights and related liquidated
damages provisions, and the transfer restrictions, applicable to the
original securities are not applicable to the exchange securities.
- Subject to the satisfaction or waiver of specified conditions, Lear
will exchange the applicable exchange securities for all original
securities that are validly tendered and not withdrawn prior to the
expiration of the exchange offer.
- You may withdraw tenders of original securities at any time prior to
the expiration of the exchange offer.
- The exchange of original securities for exchange securities pursuant to
the exchange offer generally will not be a taxable event for U.S.
federal income tax purposes. See "United States Federal Income Tax
Considerations."
- Lear will not receive any proceeds from the exchange offer.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined whether
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
------------------------
THIS PROSPECTUS IS DATED , 1999.
<PAGE> 3
TABLE OF CONTENTS
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PAGE
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Where You Can Find More Information......................... (i)
Incorporation of Certain Documents by Reference............. (i)
Forward-Looking Statements.................................. (ii)
Prospectus Summary.......................................... 1
Risk Factors................................................ 10
Use of Proceeds............................................. 15
Unaudited Pro Forma Financial Data.......................... 16
Selected Consolidated Financial Data........................ 21
Business.................................................... 23
The Exchange Offer.......................................... 35
Description of Other Material Indebtedness.................. 43
Description of Exchange Securities.......................... 46
United States Federal Income Tax Considerations............. 60
Plan of Distribution........................................ 63
Legal Matters............................................... 63
Experts..................................................... 63
</TABLE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the Securities and Exchange Commission. You may inspect and
copy such material at the public reference facilities maintained by the
Securities and Exchange Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, as well as at the Securities and Exchange
Commission's regional offices at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York,
New York 10048. You may also obtain copies of such material from the Securities
and Exchange Commission at prescribed rates by writing to the Public Reference
Section of the Securities and Exchange Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549. In addition, reports, proxy statements and other
information concerning Lear can be inspected at the New York Stock Exchange, 20
Broad Street, New York, New York 10005, where Lear's common stock is listed.
Please call the Securities and Exchange Commission at 1-800-SEC-0330 for
more information on the public reference rooms. You can also find our Securities
and Exchange Commission filings at the Securities and Exchange Commission's
website at http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Rather than include certain information in this prospectus that we have
already included in reports filed with the Securities and Exchange Commission,
we are incorporating this information by reference, which means that we can
disclose important information to you by referring to those publicly filed
documents that contain the information. The information incorporated by
reference is considered to be part of this prospectus, and information that we
file later with the Securities and Exchange Commission will automatically update
and supersede the information in this prospectus. Accordingly, we incorporate by
reference the following documents filed by us:
1. Annual Report on Form 10-K for the fiscal year ended December 31, 1998;
2. Current Report on Form 8-K/A dated September 1, 1998, and filed with the
Securities and Exchange Commission on November 17, 1998;
3. Current Report on Form 8-K dated May 4, 1999, and filed with the
Securities and Exchange Commission on May 6, 1999;
(i)
<PAGE> 4
4. Current Report on Form 8-K dated May 7, 1999, and filed with the
Securities and Exchange Commission on May 11, 1999; and
5. Quarterly Report on Form 10-Q for the fiscal quarter ended April 3,
1999.
In addition, all reports and other documents we subsequently file pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") after the date of this prospectus shall be deemed
to be incorporated by reference in this prospectus and to be part of this
prospectus from the date of the filing of such reports and documents. Any
statement contained in this prospectus or in a document incorporated or deemed
to be incorporated in this prospectus by reference shall be deemed to be
modified or superseded for the 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 in this prospectus 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.
You may obtain, without charge, a copy of any of the documents incorporated
by reference in this prospectus, other than exhibits to those documents that are
not specifically incorporated by reference into those documents, by writing or
telephoning Lear Corporation, 21557 Telegraph Road, P.O. Box 5008, Southfield,
Michigan 48086-5008, Attention: Investor Relations (248) 447-1684.
Statements contained in this prospectus or in any document incorporated by
reference in this prospectus as to the contents of any contract or other
document referred to herein or therein are not necessarily complete, and in each
instance, reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement of which this prospectus is part or
any other document incorporated in this prospectus by reference, each such
statement being qualified in all respects by such reference.
FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated in this prospectus by
reference contain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. We typically use words such as
"anticipate", "believe", "plan", "expect", "intend", "will", "may" and similar
expressions to identify forward-looking statements. You are cautioned that
actual results could differ materially from those anticipated in forward-looking
statements. Any forward-looking statements, including statements regarding the
intent, belief or current expectations of Lear or its management, are not
guarantees of future performance and involve risks, uncertainties and
assumptions about us and the industry in which we operate, including, among
other things:
- general economic conditions in the markets in which we operate;
- fluctuations in worldwide or regional automobile and light truck
production;
- labor disputes involving us or our significant customers;
- changes in practices and/or policies of our significant customers toward
outsourcing automotive components, systems and modules;
- fluctuations in currency exchange rates and other risks associated with
doing business in foreign countries;
- risks relating to the impact of the year 2000;
- other risks detailed from time to time in our Securities and Exchange
Commission filings; and
- those items identified in "Risk Factors."
All forward-looking statements in this prospectus are based on information
available to us on the date of this prospectus. We do not intend to update or
revise any forward-looking statements that we may make in this prospectus or
other documents, reports, filings or press releases, whether as a result of new
information, future events or otherwise.
(ii)
<PAGE> 5
PROSPECTUS SUMMARY
This brief summary highlights selected information from the prospectus. It
may not contain all of the information that is important to you. We urge you to
carefully read and review the entire prospectus and the other documents to which
it refers to fully understand the terms of the exchange securities and the
exchange offer.
LEAR
When we use the terms "Lear," "we," "us" and "our," unless otherwise
indicated or the context otherwise requires, we are referring to Lear
Corporation and its consolidated subsidiaries, including UT Automotive, which we
acquired in May 1999. When we use the term "UT Automotive," we are referring to
UT Automotive, Inc. together with its consolidated subsidiaries, unless
otherwise indicated or the context otherwise requires. When we use the term
"EMS," we are referring to the Electric Motor Systems business of UT Automotive.
Unless otherwise indicated, pro forma information included in this prospectus
gives effect to the acquisition of Delphi's automotive seating business, the UT
Automotive acquisition, the proposed sale of EMS and the application of the
anticipated proceeds therefrom, the amendment and restatement of our prior
senior credit facility in connection with the UT Automotive acquisition,
borrowings under our new credit facilities in connection with the UT Automotive
acquisition, the offering of the original securities and the application of the
proceeds therefrom (collectively, the "Transactions"), as if such Transactions
had occurred on January 1, 1998 for statement of operations data and April 3,
1999 for balance sheet data.
GENERAL
We are one of the ten largest independent automotive suppliers in the
world. We are also the leading supplier of automotive interior systems in the
estimated $50 billion global automotive interior market and the third largest
supplier in the estimated $20 billion global automotive electrical distribution
systems market. We have grown substantially over the last five years as a result
of both internal growth and acquisitions. Our sales have grown from $3.1 billion
in 1994 to $12.3 billion, on a pro forma basis, in 1998, a compound annual
growth rate of 41.1%. Excluding the $133 million restructuring and other charges
recorded in 1998, operating income and EBITDA have grown from $170 million and
$226 million in 1994 to $560 million and $916 million, on a pro forma basis, in
1998. Our present customers include every major automotive manufacturer in the
world. These customers include Ford, General Motors, DaimlerChrysler, Fiat,
Volkswagen, BMW, Volvo and Saab.
We have established in-house capabilities in all five principal segments of
the automotive interior market: seat systems; flooring and acoustic systems;
door panels; headliners; and instrument panels. We are the largest supplier in
the estimated $24 billion global seat systems market. In North America, we are
one of the two largest suppliers in each of the other principal automotive
interior markets, except the instrument panels market in which we are the fourth
largest supplier. With the acquisition of UT Automotive, we also are one of the
leading global suppliers of automotive electrical distribution systems. As a
result of these capabilities, we are able to offer our customers fully
integrated modules, as well as design, engineering and project management
support for the entire automotive interior, including electronics and electrical
distribution systems. We believe that our ability to offer automotive interiors
with integrated electrical distribution systems provides us with a competitive
advantage as automotive manufacturers continue to reduce their supplier bases
and cost structures and to demand improved quality and greater product
integration and enhanced technology.
We are focused on delivering high quality automotive interior systems and
components to our customers on a global basis. Due to the opportunity for
significant cost savings and improved product quality and consistency,
automotive manufacturers have increasingly required their suppliers to
manufacture automotive interior systems and components in multiple geographic
markets. In recent years, we have followed our customers and expanded our
operations significantly in Western Europe, as well as in
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Eastern Europe, South America, South Africa and the Asia/Pacific Rim region. As
a result of our efforts to expand our worldwide operations, our sales outside
the United States have grown from $1.3 billion in 1994 to $5.6 billion, on a pro
forma basis, in 1998.
STRATEGY
Our principal objective is to expand our position as the leading supplier
of automotive interior systems in the world and capitalize on integration
opportunities that result from our new electrical distribution systems
capabilities. We intend to build on our full service capabilities, strong
customer relationships and worldwide presence to increase our share of the
global automotive interior market. The specific elements of our strategy to
achieve this objective include:
- ENHANCE STRONG RELATIONSHIPS WITH CUSTOMERS
We have developed strong relationships with our customers which allow us to
identify business opportunities and anticipate customer needs in the early
stages of vehicle design. We believe that working closely with our customers in
the early stages of designing and engineering vehicle interior systems gives us
a competitive advantage in securing new business.
- CAPITALIZE ON MODULE AND INTEGRATION OPPORTUNITIES
We believe that as automotive manufacturers continue to seek ways to
improve quality and reduce costs, customers will increasingly look to
independent suppliers, such as Lear, to:
- supply fully integrated modules, or "chunks," of the automotive
interior; and
- act as systems integrators, by managing the design, purchase and
supply of the total automotive interior.
Our global capability to manufacture the five principal segments of the
automotive interior, as well as automotive electronics and electrical
distribution systems, provides us with the ability to supply fully integrated
modules and act as a systems integrator on a worldwide basis.
- CONTINUE GLOBAL EXPANSION
Global expansion will continue to be an important element of our growth
strategy. As a result of our strong customer relationships and worldwide
presence, we believe that we are well positioned to continue to grow with our
customers as they expand their operations worldwide.
- INVEST IN PRODUCT TECHNOLOGY AND DESIGN CAPABILITY
We intend to continue to make significant investments in technology and
design capability to support our products. Our investments in research and
development are consumer-driven and customer-focused. Because automotive
manufacturers increasingly view the vehicle interior as a major selling point to
their customers, the focus of our research and development efforts is to
identify new interior features that make vehicles safer, more comfortable and
more attractive to consumers.
- INCREASE USE OF "JUST-IN-TIME" FACILITY NETWORK
We have established facilities that allow our customers to receive interior
products on a "just-in-time" basis. The use of "just-in-time" manufacturing
techniques minimizes inventories and fixed costs for both us and our customers
and enables us to deliver products on as little as 90 minutes notice. Most of
our "just-in-time" manufacturing facilities are dedicated to individual
customers. We believe that combining our "just-in-time" manufacturing techniques
with our systems integration capabilities provides us with an important
competitive advantage in delivering total interior systems to automotive
manufacturers.
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- GROWTH THROUGH STRATEGIC ACQUISITIONS
Strategic acquisitions have been an important element in our worldwide
growth and in our efforts to capitalize on the globalization, integration and
supplier consolidation trends. We intend to continue to review attractive
acquisition opportunities that preserve our financing flexibility.
ACQUISITIONS AND EMS SALE
Prior to August 1995, we primarily produced seat systems and components. In
1995 and 1996, we made three major acquisitions which provided us with
significant capabilities in the other four principal segments comprising a total
automotive interior. In August 1995, we acquired Automotive Industries, which
gave us a strong presence in door panels and headliners. In June 1996, we
acquired Masland Corporation, a leading designer and manufacturer of floor and
acoustic systems in North America. In December 1996, we acquired Borealis
Industrier, a European manufacturer of instrument panels, door panels and other
automotive interior components. These and other acquisitions broadened our
product lines, expanded our customer base, strengthened our relationships with
existing customers and enhanced our technological expertise.
On May 4, 1999, we acquired UT Automotive for a purchase price of
approximately $2.3 billion, subject to post-closing adjustments. UT Automotive
is a leading independent supplier of automotive electrical distribution systems
and produces a broad portfolio of automotive interior products, including
instrument panels, headliners and door panels. UT Automotive also has an
automotive and industrial motors business, which we have entered into an
agreement to sell, as described below. With the acquisition of UT Automotive, we
became the third largest supplier of automotive electrical distribution systems
in the estimated $20 billion global automotive electrical distribution systems
market. We believe the opportunity to integrate these electrical distribution
systems into the automotive interiors that we produce provides us with a unique
competitive advantage. In addition, we significantly increased our presence in
the headliner and instrument panel segments of the global automotive interiors
market as a result of UT Automotive's position in North America as the second
largest headliner supplier and the fourth largest instrument panel supplier.
On May 7, 1999, we entered into a definitive purchase agreement with
Johnson Electric Holdings Limited to sell our recently acquired Electric Motor
Systems business for $310 million, subject to certain post-closing adjustments.
It is expected that the proceeds of the sale of EMS will be used to repay
indebtedness under our primary credit facilities. We acquired EMS on May 4, 1999
in our acquisition of UT Automotive. EMS is a supplier of industrial and
automotive electric motors and starter motors for small gasoline engines. EMS
had 1998 sales of $351 million and has approximately 3,300 employees operating
at locations in 10 countries. Consummation of the sale is contingent upon
expiration or termination of applicable waiting periods provided under the
Hart-Scott-Rodino Antitrust Improvements Act, applicable foreign competition act
approvals and certain other customary conditions.
3
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SUMMARY OF THE TERMS OF THE EXCHANGE OFFER
General....................... On May 18, 1999, Lear completed a private
offering of the original securities, which
consist of $600,000,000 aggregate principal
amount of its 7.96% Senior Notes due 2005 and
$800,000,000 aggregate principal amount of its
8.11% Senior Notes due 2009. In connection with
the private offering, Lear entered into a
Registration Rights Agreement in which it
agreed, among other things, to deliver this
prospectus to you and to complete an exchange
offer for the original securities.
The Exchange Offer............ Lear is offering to exchange up to $600,000,000
aggregate principal amount of its 7.96% Series
B Senior Notes due 2005 which have been
registered under the Securities Act for a like
aggregate principal amount of its original
unregistered 7.96% Senior Notes due 2005 and up
to $800,000,000 aggregate principal amount of
its 8.11% Series B Senior Notes due 2009 which
have been registered under the Securities Act
for a like aggregate principal amount of its
original unregistered 8.11% Senior Notes due
2009.
The terms of the exchange securities are
identical in all respects to the terms of the
original securities for which they are being
exchanged, except that the registration rights
and related liquidated damages provisions, and
the transfer restrictions, applicable to the
original securities are not applicable to the
exchange securities.
Original securities may be tendered only in
$1,000 increments. Subject to the satisfaction
or waiver of specified conditions, Lear will
exchange the applicable exchange securities for
all original securities that are validly
tendered and not withdrawn prior to the
expiration of the exchange offer. Lear will
cause the exchange to be effected promptly
after the expiration of the exchange offer.
UPON COMPLETION OF THE EXCHANGE OFFER, THERE
MAY BE NO MARKET FOR THE ORIGINAL SECURITIES
AND YOU MAY HAVE DIFFICULTY SELLING THEM.
Resales....................... Based on interpretations by the staff of the
Securities and Exchange Commission, Lear
believes that exchange securities issued in the
exchange offer may be offered for resale,
resold, or otherwise transferred by you,
without compliance with the registration and
prospectus delivery requirements of the
Securities Act, if:
- you acquire the exchange securities in the
ordinary course of your business;
- you are not engaging in and do not intend to
engage in a distribution of the exchange
securities;
- you do not have an arrangement or
understanding with any person to participate
in a distribution of the exchange securities;
and
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<PAGE> 9
- you are not an affiliate of Lear within the
meaning of Rule 405 under the Securities Act.
If you are an affiliate of Lear, or are
engaging in or intend to engage in, or have any
arrangement or understanding with any person to
participate in, a distribution of the exchange
securities:
- you cannot rely on the applicable
interpretations of the staff of the
Securities and Exchange Commission; and
- you must comply with the registration and
prospectus delivery requirements of the
Securities Act in connection with any resale
transaction.
If you are a broker or dealer seeking to
receive exchange securities for your own
account in exchange for original securities
that you acquired as a result of market-making
or other trading activities, you must
acknowledge that you will deliver this
prospectus in connection with any offer to
resell, resale, or other transfer of the
exchange securities that you receive in the
exchange offer.
Expiration Date............... The exchange offer will expire at 5:00 p.m.,
New York City time, on , 1999,
unless extended by Lear.
Withdrawal.................... You may withdraw the tender of your original
securities at any time prior to the expiration
of the exchange offer. Lear will return to you
any of your original securities that are not
accepted for exchange for any reason, without
expense to you, promptly after the expiration
or termination of the exchange offer.
Interest on the Exchange
Securities and the Original
Securities.................. Each exchange note will accrue interest from
the date of the completion of the exchange
offer. Accrued and unpaid interest on the
original notes exchanged in the exchange offer
will be paid on the first interest payment date
for the exchange notes to the holders on the
relevant record date of the exchange notes
issued in respect of the original notes being
exchanged. Interest on the original notes being
exchanged in the exchange offer shall cease to
accrue on the date of the completion of the
exchange offer.
Conditions to the Exchange
Offer......................... The exchange offer is subject to customary
conditions. Lear may assert or waive these
conditions in its sole discretion. See "The
Exchange Offer -- Conditions to the Exchange
Offer."
Exchange Agent................ The Bank of New York is serving as exchange
agent for the exchange offer.
Procedures for Tendering
Original Securities........... Any holder of original securities that wishes
to tender original securities must cause the
following to be transmitted to and received by
the exchange agent no later than 5:00 p.m., New
York City time, on the expiration date:
- The certificates representing the tendered
original securities or, in the case of a
book-entry tender, a confirmation of the
book-entry transfer of the tendered original
securities into the
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<PAGE> 10
exchange agent's account at The Depository
Trust Company ("DTC"), as book-entry transfer
facility;
- A properly completed and duly executed letter
of transmittal in the form accompanying this
prospectus (with any required signature
guarantees) or, at the option of the
tendering holder in the case of a book-entry
tender, an agent's message in lieu of such
letter of transmittal; and
- Any other documents required by the letter of
transmittal.
Guaranteed Delivery
Procedures.................... Any holder of original securities that cannot
cause the original securities or any other
required documents to be transmitted to and
received by the exchange agent before 5:00
p.m., New York City time, on the expiration
date, may tender original securities according
to the guaranteed delivery procedures set forth
in "The Exchange Offer -- Guaranteed Delivery
Procedures."
Special Procedures for
Beneficial Owners............. If you are the beneficial owner of original
securities that are registered in the name of
your broker, dealer, commercial bank, trust
company, or other nominee, and you wish to
participate in the exchange offer, you should
promptly contact the person through which you
beneficially own your original securities and
instruct that person to tender original
securities on your behalf. See "The Exchange
Offer -- Procedures for Tendering."
Representations of Tendering
Holders....................... By tendering original securities pursuant to
the exchange offer, each holder will, in
addition to other customary representations,
represent to Lear that:
- the exchange securities acquired pursuant to
the exchange offer are being acquired in the
ordinary course of business of the person
receiving the exchange securities (whether or
not the person is the holder of the original
securities);
- neither the holder nor any such other person
is engaging in or intends to engage in a
distribution of the exchange securities;
- neither the holder nor any such other person
has an arrangement or understanding with any
person to participate in a distribution of
the exchange securities; and
- neither the holder nor any such other person
is an affiliate of Lear, or if either is an
affiliate, it will comply with the
registration and prospectus delivery
requirements of the Securities Act.
Acceptance of Original
Securities and Delivery of
Exchange Securities......... Subject to the satisfaction or waiver of the
conditions to the exchange offer, Lear will
accept for exchange any and all original
securities that are properly tendered and not
withdrawn prior to 5:00 p.m., New York City
time, on the expiration date. Lear will cause
the exchange to be effected promptly after the
expiration of the exchange offer.
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U.S. Federal Income Tax
Considerations.............. The exchange of original securities for
exchange securities pursuant to the exchange
offer generally will not be a taxable event for
U.S. federal income tax purposes. See "United
States Federal Income Tax Considerations."
Use of Proceeds............... Lear will not receive any proceeds from the
issuance of exchange securities pursuant to the
exchange offer. Lear will pay all expenses
incident to the exchange offer.
CONSEQUENCES OF EXCHANGING OR FAILURE TO EXCHANGE ORIGINAL SECURITIES
PURSUANT TO THE EXCHANGE OFFER
Holders that are not
Broker-Dealers................ Generally, if you are not an "affiliate" of
Lear within the meaning of Rule 405 under the
Securities Act, upon the exchange of your
original securities for exchange securities
pursuant to the exchange offer, you will be
able to offer your exchange securities for
resale, resell your exchange securities and
otherwise transfer your exchange securities
without compliance with the registration and
prospectus delivery provisions of the
Securities Act.
This is true so long as you have acquired the
exchange securities in the ordinary course of
your business, you have no arrangement with any
person to participate in a distribution of the
exchange securities and neither you nor any
other person is engaging in or intends to
engage in a distribution of the exchange
securities.
Holders that are
Broker-Dealers................ A broker-dealer who acquired original
securities directly from us cannot exchange
those original securities in the exchange
offer.
Otherwise, each broker-dealer that receives
exchange securities for its own account in
exchange for original securities must
acknowledge that it will deliver a prospectus
in connection with any resale of the exchange
securities. You should read "Plan of
Distribution" for a more detailed discussion of
these requirements.
Failure to Exchange........... Upon consummation of the exchange offer,
holders that were not prohibited from
participating in the exchange offer and did not
tender their original securities will not have
any registration rights under the Registration
Rights Agreement with respect to such
nontendered original securities. Accordingly,
nontendered original securities will continue
to be subject to the significant restrictions
on transfer contained in the legend on them.
7
<PAGE> 12
SUMMARY OF THE TERMS OF THE EXCHANGE SECURITIES
The terms of the exchange securities are identical in all respects to the
terms of the original securities for which they are being exchanged, except that
the registration rights and related liquidated damages provisions, and the
transfer restrictions, applicable to the original securities are not applicable
to the exchange securities. The exchange securities will evidence the same debt
as the original securities for which they are being exchanged. The exchange
securities and the original securities will be governed by the same indenture.
Except where the context requires otherwise, references in this prospectus to
"notes," or "securities" are references to both original notes and exchange
notes or both original securities and exchange securities, as the case may be.
Securities Offered............ $600,000,000 principal amount of 7.96% Series B
Senior Notes due 2005. $800,000,000 principal
amount of 8.11% Series B Senior Notes due 2009.
Maturity Dates................ The 7.96% Series B Senior Notes due 2005 will
mature on May 15, 2005. The 8.11% Series B
Senior Notes due 2009 will mature on May 15,
2009.
Interest Payment Dates........ May 15 and November 15 of each year, commencing
November 15, 1999.
Ranking....................... The exchange notes will be senior unsecured
obligations and will rank pari passu in right
of payment with all of Lear's existing and
future unsubordinated unsecured indebtedness.
Indebtedness under our principal credit
facilities is secured by the pledge of all or a
portion of the capital stock of certain of our
subsidiaries. The exchange notes will not have
the benefit of such pledges. In addition, other
secured creditors of Lear will have a claim on
the assets which secure the related obligations
of Lear prior to any claims of holders of the
exchange notes against such assets.
Guarantees.................... The exchange notes will be guaranteed on a
senior unsecured basis by each of our domestic
subsidiaries that guarantee our principal
credit facilities. In the event that any such
subsidiary ceases to be a guarantor under our
principal credit facilities, such subsidiary
will be released as a guarantor of the exchange
notes.
Optional Redemption........... We may redeem all or part of each series of
exchange notes, at our option, at any time, at
the redemption price equal to the greater of
(a) 100% of the principal amount of the
exchange notes to be redeemed and (b) the sum
of the present values of the remaining
scheduled payments of principal and interest
thereon from the redemption date to the
maturity date discounted to the redemption date
on a semiannual basis at the Treasury Rate plus
50 basis points, in each case, together with
any interest accrued but not paid to the date
of redemption. See "Description of the Exchange
Securities -- Optional Redemption."
Certain Covenants............. The indenture governing the exchange securities
contains covenants that limit our ability and
the ability of our restricted subsidiaries to
create liens and engage in sale and lease-back
transactions. The indenture also limits Lear's
ability to engage in mergers and consolidations
or to transfer all or substantially all
8
<PAGE> 13
of our assets. See "Description of the Exchange
Notes -- Certain Covenants."
Risk Factors.................. You should carefully consider all the
information set forth and incorporated by
reference in this prospectus and, in
particular, you should carefully read the
section entitled "Risk Factors" before
tendering your original securities in the
exchange offer.
9
<PAGE> 14
RISK FACTORS
Prospective participants in the exchange offer should consider carefully
all of the information contained in this prospectus in connection with the
exchange offer. The risk factors set forth below (with the exception of the
first risk factor) are generally applicable to the original notes as well as the
exchange notes.
FAILURE TO EXCHANGE -- IF YOU FAIL TO EXCHANGE YOUR ORIGINAL SECURITIES FOR
EXCHANGE SECURITIES YOU WILL NO LONGER HAVE ANY
REGISTRATION RIGHTS WITH RESPECT TO YOUR ORIGINAL
SECURITIES.
Upon the completion of the exchange offer, if you were not prohibited from
participating in the exchange offer and you did not tender your original
securities, you will no longer have any registration rights with respect to the
original securities you still hold. These original securities are privately
placed securities and will remain subject to the restrictions on transfer
contained in the legend on the notes. In general, you cannot sell or offer to
sell the original securities without complying with these restrictions, unless
the original securities are registered under the Securities Act and applicable
state securities laws. We do not intend to register the original securities
under the Securities Act.
We believe, based on SEC staff interpretations with respect to other
transactions like the one described in this prospectus, the exchange securities
issued as part of the exchange offer may be offered for resale, resold and
otherwise transferred by any holder, other than a holder that is an "affiliate"
of Lear within the meaning of Rule 405 under the Securities Act, without
compliance with the prospectus delivery provisions of the Securities Act. This
is true so long as the exchange securities are acquired in the ordinary course
of the holder's business, the holder does not have any arrangement or
understanding with anyone to participate in the distribution of the exchange
securities and neither the holder nor anyone else is engaging in or intends to
engage in a distribution of the exchange securities.
A broker-dealer that acquires exchange securities for its own account in
the exchange offer for original securities must acknowledge that it will deliver
a prospectus in connection with any resale of exchange securities. The letter of
transmittal states that by making this acknowledgment and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. A broker-dealer may use
this prospectus, as it may be amended or supplemented from time to time, in
connection with resales of the exchange securities received in exchange for the
original securities acquired by the broker-dealer as a result of market-making
activities or other trading activities. We have agreed that we will make this
prospectus available to any broker-dealer for use in connection with any such
resale for a period of 90 days after the exchange date or, if earlier, until all
participating broker-dealers have so resold. You should read "Plan of
Distribution" for more information.
LEVERAGE -- OUR INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL HEALTH AND
PREVENT US FROM FULFILLING OUR OBLIGATIONS UNDER THE EXCHANGE NOTES.
A significant portion of the funds needed to finance our recent
acquisitions, including the UT Automotive acquisition, was raised through
borrowings. As a result, we have debt that is greater than our stockholders'
equity and a significant portion of our cash flow from operations will be used
to satisfy our debt obligations. The following chart sets forth certain
important information regarding our capitalization and is presented, on a pro
forma basis, assuming we had completed the Transactions as of April 3, 1999 or,
in the case of the ratio of earnings to fixed charges, on January 1, 1998:
<TABLE>
<CAPTION>
(IN MILLIONS, EXCEPT FOR RATIOS)
<S> <C>
Total indebtedness.......................... $3,543.1
Stockholders' equity........................ $1,297.2
Total capitalization........................ $4,840.3
Debt to equity ratio........................ 2.7x
Ratio of earnings to fixed charges for the
year ended December 31, 1998.............. 1.5x
</TABLE>
10
<PAGE> 15
Our indebtedness may have important consequences to you. For example, it
could:
- make it more difficult for us to satisfy our obligations with respect to
the exchange notes;
- increase our vulnerability to general adverse economic and industry
conditions;
- limit our ability to use operating cash flow in other areas of our
business because we must dedicate a substantial portion of these funds to
payments on our other indebtedness;
- limit our ability to obtain other financing to fund future working
capital, acquisitions, capital expenditures, research and development
costs and other general corporate requirements;
- limit our ability to take advantage of business opportunities as a result
of various restrictive covenants in our indebtedness; and
- place us at a competitive disadvantage compared to our main competitors
that have less debt.
In addition, since a portion of our borrowings are at variable rates of
interest, we will be vulnerable to increases in interests rates, which could
have a material adverse effect on our results of operations, liquidity and
financial condition.
See "Description of the Exchange Securities" and "Description of Other
Material Indebtedness."
ADDITIONAL BORROWINGS AVAILABLE -- DESPITE CURRENT INDEBTEDNESS LEVELS, WE AND
OUR SUBSIDIARIES MAY STILL BE ABLE TO INCUR
SUBSTANTIALLY MORE DEBT. THIS COULD FURTHER
EXACERBATE THE RISKS DESCRIBED ABOVE. SECURED
OR SUBSIDIARY BORROWINGS MAY BE EFFECTIVELY
SENIOR TO THE EXCHANGE NOTES.
We and our subsidiaries may be able to incur additional indebtedness in the
future. As of April 3, 1999, assuming we had completed the Transactions as of
such date, we had additional unused borrowing availability under our primary
credit facilities of $1.5 billion, and additional borrowing availability under
other working capital and revolving credit facilities of $185 million. If new
debt is added to our current debt levels, the related risks that we and they now
face could intensify.
The exchange notes are unsecured and therefore will be effectively
subordinated to any existing or future secured indebtedness to the extent of the
value of the assets securing such indebtedness. In addition, the exchange notes
will be effectively subordinated to the obligations of any of our subsidiaries
that are not guarantors of the exchange notes. As of April 3, 1999, assuming we
had completed the Transactions as of such date, subsidiaries that will not be
guarantors of the exchange notes would have had $425 million of indebtedness
outstanding, including $333 million of indebtedness under our primary credit
facilities. See "Selected Consolidated Financial Data," "Description of Other
Material Indebtedness -- Primary Credit Facilities," and "Description of the
Exchange Securities."
NATURE OF AUTOMOTIVE INDUSTRY -- A DECLINE IN AUTOMOTIVE SALES COULD ADVERSELY
AFFECT US.
Our operations are directly related to 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 sales and production can
be affected by labor relations issues, regulatory requirements, trade agreements
and other factors. A decline in automotive sales and production could result in
a decline in our business, results of operations and financial condition.
RELIANCE ON MAJOR CUSTOMERS AND SELECTED CAR MODELS -- LOSS IN BUSINESS FROM A
MAJOR CUSTOMER OR
DISCONTINUATION OF A
PARTICULAR CAR MODEL
COULD ADVERSELY AFFECT
US.
Ford and General Motors, the two largest automotive manufacturers in the
world, together accounted for approximately 50% of our pro forma net sales in
1998. A loss of significant business from Ford or General Motors could have a
material adverse effect on our business, results of operations and financial
condition. Although we have purchase orders from many of our customers, these
purchase orders generally
11
<PAGE> 16
provide for the supply of a customer's annual requirements for a particular
model or assembly plant, renewable on a year-to-year basis, rather than for the
purchase of a specific quantity of products. To date, neither model
discontinuances nor plant closings have had a material adverse affect on us
because of the breadth of our product lines and our ability to relocate
facilities with minimal capital expenditures. We cannot assure you, however,
that the loss of business with respect to a particular automobile model would
not have a material adverse effect on our business, results of operations or
financial condition in the future.
There is substantial and continuing pressure from automotive manufacturers
to reduce costs, including costs associated with outside suppliers such as our
company. We believe that our ability to develop new products and control our
costs will allow us to remain competitive. However, we cannot assure you that we
will be able to improve or maintain our margins.
INTEGRATION OF ACQUIRED COMPANIES -- WE MAY NOT BE SUCCESSFUL IN INTEGRATING
COMPANIES THAT WE ACQUIRE INTO OUR
OPERATIONS.
Part of our strategy is to grow through selected acquisitions of
complementary businesses, such as the business acquired in the UT Automotive
acquisition. We have been able to increase our net sales and profitability, in
large part as a result of sixteen acquisitions completed during the last five
years. Acquisitions involve risks. Potential problems include:
- difficulties in integrating acquired businesses into our operations;
- unanticipated problems, delays, liabilities or expenses, including
potential environmental liabilities;
- anticipated benefits may not be realized; and
- a negative impact of acquired businesses on our operating results,
liquidity and financial condition.
INTERNATIONAL OPERATIONS -- THERE ARE CERTAIN INHERENT RISKS TO DOING BUSINESS
IN FOREIGN COUNTRIES.
As a result of recent acquisitions and our business strategy, which
includes plans for continued global expansion of operations, a significant
portion of our revenues and expenses are denominated in currencies other than
U.S. dollars. In addition, we have manufacturing and distribution facilities in
many foreign countries. International operations are subject to certain risks
inherent in doing business abroad, including:
- exposure to local economic conditions;
- expropriation and nationalization;
- currency exchange rate fluctuations and currency controls;
- withholding and other taxes on remittances and other payments by
subsidiaries;
- investment restrictions or requirements; and
- export and import restrictions.
The likelihood of such occurrences and their potential effect on us vary from
country to country and are unpredictable but may have a significant effect on
our business, results of operations and financial condition.
12
<PAGE> 17
FRAUDULENT CONVEYANCE -- GUARANTEES OF CERTAIN SUBSIDIARIES MAY BE VOIDABLE OR
THE EXCHANGE NOTES MAY BE SUBORDINATED TO OTHER
OBLIGATIONS OF SUCH SUBSIDIARIES.
Although standards may vary depending on the applicable law, generally
under the federal bankruptcy law and comparable provisions of state fraudulent
transfer laws, if a court were to find that, among other things, at the time any
guarantor of the notes incurred the debt evidenced by its guarantee of the
notes, such guarantor:
- either:
- was insolvent or rendered insolvent by reason of such incurrence;
- was engaged or about to engage in a business or transaction for which
that guarantor's remaining assets constituted unreasonably small
capital;
- was a defendant in an action for money damages, or had a judgment for
money damages docketed against it (if in either case, after a final
judgment, the judgment were unsatisfied); or
- intended to incur, or believed that it would incur, debts beyond its
ability to pay such debts as they mature;
and
- that guarantor received less than reasonably equivalent value or fair
consideration for the incurrence of such debt; or
- incurred such debt or made related distributions or payments with the
intent of hindering, delaying or defrauding creditors,
there is a risk that the guarantee of that guarantor could be voided by such
court, or claims by holders of the notes under that guarantee could be
subordinated to other debts of that guarantor. In addition, any payment by that
guarantor pursuant to its guarantee could be required to be returned to that
guarantor, or to a fund for the benefit of the creditors of that guarantor.
The measures of insolvency for purposes of the foregoing considerations
will vary depending upon the law applied in any proceeding. Generally, however,
a guarantor of the notes would be considered insolvent if:
- the sum of its debts, including contingent liabilities, was greater than
the saleable value of all of its assets at a fair valuation; or
- the present fair saleable value of its assets was less than the amount
that would be required to pay its probable liability on its existing
debts, including contingent liabilities, as they become absolute and
mature; or
- it could not pay its debts as they become due.
On the basis of historical financial information, recent operating history
and other factors, we believe that each of the guarantors of the notes has acted
for proper purposes and in good faith and, after giving effect to the debt
incurred by that guarantor in connection with the offering of the original
securities and the exchange offer, will not be insolvent, will not have
unreasonably small capital for the business in which it is engaged and will not
have incurred debts beyond its ability to pay such debts as they mature.
However, we cannot assure you as to what standard a court would apply in making
such determination or that a court would agree with our conclusions in this
regard.
13
<PAGE> 18
ABSENCE OF A PUBLIC MARKET FOR THE EXCHANGE SECURITIES -- YOU CANNOT BE SURE
THAT AN ACTIVE TRADING
MARKET WILL DEVELOP FOR
THE EXCHANGE
SECURITIES.
There is no established trading market for the exchange securities. We have
no plans to list the exchange securities on a securities exchange. We have been
advised by each of the initial purchasers in the private offering of the
original securities (the "Initial Purchasers") that it presently intends to make
a market in the exchange securities; however, none of them is obligated to do
so. Any market-making activity, if initiated, may be discontinued at any time,
for any reason, without notice. If any Initial Purchaser ceases to act as a
market maker for the exchange securities for any reason, we cannot assure you
that another firm or person will make a market in the exchange securities. The
liquidity of any market for the exchange securities will depend upon the number
of holders of the exchange securities, our results of operations and financial
condition, the market for similar securities, the interest of securities dealers
in making a market in the exchange securities and other factors. An active or
liquid trading market may not develop for the exchange securities.
14
<PAGE> 19
USE OF PROCEEDS
The exchange offer is intended to satisfy Lear's obligations under the
Registration Rights Agreement that Lear entered into in connection with the
private offering of the original securities. Lear will not receive any cash
proceeds from the issuance of the exchange securities. The original securities
that are surrendered in exchange for the exchange securities will be retired and
canceled and cannot be reissued. As a result, the issuance of the exchange
securities will not result in any increase or decrease in Lear's indebtedness.
Lear used the net proceeds from the private offering of the original
securities to repay a $1.4 billion interim term loan under its primary credit
facilities, which was used to fund a portion of the UT Automotive acquisition
purchase price. At the time of such repayment, the interim term loan bore
interest at a rate of approximately 7.75% per annum.
15
<PAGE> 20
UNAUDITED PRO FORMA FINANCIAL DATA
The following unaudited pro forma consolidated statements of operations of
Lear for the three months ended April 3, 1999 and the year ended December 31,
1998 were prepared to illustrate the effects of the completion of the
Transactions, as if such Transactions had occurred on January 1, 1998.
The Transactions are:
- the acquisition of Delphi's automotive seating business;
- the UT Automotive acquisition;
- the proposed sale of EMS and the application of the anticipated proceeds
therefrom;
- the amendment and restatement of our prior senior credit facility in
connection with the acquisition of UT Automotive;
- borrowings under our new credit facilities in connection with the
acquisition of UT Automotive; and
- the offering of the original securities and the application of the net
proceeds therefrom.
The following unaudited pro forma consolidated balance sheet (collectively
with the unaudited pro forma consolidated statements of operations, the "Pro
Forma Statements") was prepared as if the Transactions had occurred as of April
3, 1999. The Pro Forma Statements are not necessarily indicative of the results
that actually would have been achieved if the Transactions reflected therein had
been completed on the dates indicated or the results which may be attained in
the future.
The pro forma adjustments are based upon available information and upon
certain assumptions that we believe are reasonable. The Pro Forma Statements and
accompanying notes should be read in conjunction with the historical financial
statements of Lear, UT Automotive and Delphi Seating, including the notes
thereto, and the other financial information pertaining to us included elsewhere
or incorporated by reference in this prospectus.
16
<PAGE> 21
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED APRIL 3, 1999
<TABLE>
<CAPTION>
OPERATING AND PRO FORMA ELIMINATION
LEAR UT AUTOMOTIVE FINANCING AS OF EMS
HISTORICAL HISTORICAL(1) ADJUSTMENTS ADJUSTED PRO FORMA(7) PRO FORMA
---------- ------------- ------------- --------- ------------ ---------
(IN MILLIONS, EXCEPT PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C> <C>
Net sales..................................... $2,687.2 $793.0 $ -- $3,480.2 $(85.2) $3,395.0
Cost of sales................................. 2,468.5 655.3 -- 3,123.8 (68.0) 3,055.8
-------- ------ ------ -------- ------ --------
Gross profit.................................. 218.7 137.7 -- 356.4 (17.2) 339.2
Selling, general and administrative
expenses.................................... 84.3 90.6 -- 174.9 (8.7) 166.2
Amortization.................................. 14.0 3.3 4.9(3) 22.2 (.3) 21.9
-------- ------ ------ -------- ------ --------
Operating income.............................. 120.4 43.8 (4.9) 159.3 (8.2) 151.1
Interest expense.............................. 30.1 7.3 39.4(4) 76.8 (4.9) 71.9
Other (income)/expense, net................... 7.9 (.7) -- 7.2 -- 7.2
-------- ------ ------ -------- ------ --------
Income before income taxes.................... 82.4 37.2 (44.3) 75.3 (3.3) 72.0
Income taxes.................................. 32.1 15.4 (13.8)(5) 33.7 (2.0) 31.7
-------- ------ ------ -------- ------ --------
Net income.................................... $ 50.3 $ 21.8 $(30.5) $ 41.6 $ (1.3) $ 40.3
======== ====== ====== ======== ====== ========
Diluted net income per share.................. $ .75 $ 0.60
Weighted average shares outstanding (in
millions)................................... 67.5 67.5
OTHER DATA:
EBITDA (6).................................... $ 182.7 $ 78.7 -- $ 261.4 $(12.4) $ 249.0
Ratio of EBITDA to interest expense, net...... 3.5x
Ratio of earnings to fixed charges(8)......... 1.9x
</TABLE>
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
OPERATING AND LEAR/UT
LEAR UT AUTOMOTIVE FINANCING AUTOMOTIVE
HISTORICAL HISTORICAL(1) ADJUSTMENTS PRO FORMA
---------- ------------- ------------- ----------
(IN MILLIONS, EXCEPT PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C>
Net sales................ $9,059.4 $2,900.3 $ -- $11,959.7
Cost of sales............ 8,198.0 2,365.4 -- 10,563.4
-------- -------- ------- ---------
Gross profit............. 861.4 534.9 -- 1,396.3
Selling, general and
administrative
expenses............... 337.0 362.7 -- 699.7
Restructuring and other
charges................ 133.0 -- -- 133.0
Amortization............. 49.2 13.0 20.0(3) 82.2
-------- -------- ------- ---------
Operating income......... 342.2 159.2 (20.0) 481.4
Interest expense......... 110.5 22.2 161.0(4) 293.7
Other (income)/expense,
net.................... 22.3 (.6) -- 21.7
-------- -------- ------- ---------
Income before income
taxes.................. 209.4 137.6 (181.0) 166.0
Income taxes............. 93.9 57.5 (56.3)(5) 95.1
-------- -------- ------- ---------
Net income............... $ 115.5 $ 80.1 $(124.7) $ 70.9
======== ======== ======= =========
Diluted net income per
share.................. $ 1.70
Weighted average shares
outstanding
(in millions).......... 68.0
OTHER DATA:
EBITDA (6)............... $ 561.9 $ 283.5 -- $ 845.4
Ratio of EBITDA to
interest expense,
net....................
Ratio of earnings to
fixed charges(8).......
<CAPTION>
DELPHI PRO FORMA ELIMINATION
SEATING AS OF EMS
PRO FORMA(2) ADJUSTED PRO FORMA(7) PRO FORMA
------------ --------- ------------ ---------
(IN MILLIONS, EXCEPT PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C>
Net sales................ $669.0 $12,628.7 $(351.1) $12,277.6
Cost of sales............ 651.2 11,214.6 (282.8) 10,931.8
------ --------- ------- ---------
Gross profit............. 17.8 1,414.1 (68.3) 1,345.8
Selling, general and
administrative
expenses............... 41.5 741.2 (35.7) 705.5
Restructuring and other
charges................ -- 133.0 -- 133.0
Amortization............. 3.2 85.4 (5.1) 80.3
------ --------- ------- ---------
Operating income......... (26.9) 454.5 (27.5) 427.0
Interest expense......... 9.1 302.8 (19.1) 283.7
Other (income)/expense,
net.................... (6.1) 15.6 -- 15.6
------ --------- ------- ---------
Income before income
taxes.................. (29.9) 136.1 (8.4) 127.7
Income taxes............. (11.9) 83.2 (6.3) 76.9
------ --------- ------- ---------
Net income............... $(18.0) $ 52.9 $ (2.1) $ 50.8
====== ========= ======= =========
Diluted net income per
share.................. $ 0.75
Weighted average shares
outstanding
(in millions).......... 68.0
OTHER DATA:
EBITDA (6)............... $(14.8) $ 830.6 $ (47.5) $ 783.1
Ratio of EBITDA to
interest expense,
net.................... 2.8x
Ratio of earnings to
fixed charges(8)....... 1.5x
</TABLE>
- -------------------------
(1) The UT Automotive Historical information represents amounts derived from the
audited results of operations for the year ended December 31, 1998 and the
unaudited results of operations for the three months ended April 3, 1999.
Certain amounts have been reclassified to conform to Lear's presentation.
(2) The Delphi Seating pro forma information reflects (i) Delphi Seating
historical unaudited results of operations for the period from January 1,
1998 through September 1, 1998, the date on which Delphi Seating was
acquired by Lear and (ii) adjustments to reflect the elimination of net
sales between Delphi Seating and Lear, estimated interest on borrowings to
finance the acquisition of Delphi Seating, amortization of goodwill from the
acquisition of Delphi Seating, income tax effects of the adjustments and the
elimination of items with no continuing impact on Lear's results of
operations, including the capitalization of fixed asset purchases which were
accounted for as
17
<PAGE> 22
impaired assets by Delphi Seating, operating losses at plants which were not
included in the acquisition, a charge related to the employee benefit
obligations not assumed by Lear and the elimination of certain expenses
allocated from the parent.
(3) The adjustment to amortization represents the following:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1998 APRIL 3, 1999
----------------- -------------
(IN MILLIONS)
<S> <C> <C>
Amortization of goodwill from the acquisition of UT
Automotive (over 40 years)................................ $ 33.0 $ 8.2
Elimination of the historical goodwill amortization of UT
Automotive................................................ (13.0) (3.3)
------ -----
$ 20.0 $ 4.9
====== =====
</TABLE>
(4) The adjustment to interest expense represents the following:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1998 APRIL 3, 1999
----------------- -------------
(IN MILLIONS)
<S> <C> <C>
Interest on the original securities at an average rate of
8.05%..................................................... $112.6 $28.2
Interest on borrowings under our primary credit facilities
to finance the portion of the UT Automotive acquisition
purchase price and expenses not refinanced through the
offering of the original securities....................... 58.6 14.6
Other changes in interest expense, commitment fees and
amortization of deferred finance fees due to the offering
of the original securities, the new credit facilities and
the amendment and restatement of our prior senior credit
facility.................................................. 10.1 3.2
Elimination of interest expense on UT Automotive
intercompany debt retired upon acquisition................ (20.3) (6.6)
------ -----
$161.0 $39.4
====== =====
</TABLE>
(5) Reflects the income tax effects of the operating and financing adjustments.
(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 flow from operations as determined by generally accepted accounting
principles. Excluding the $133.0 million restructuring and other charges
recorded in 1998, EBITDA would have been $694.9 million for Lear on a
historical basis and $916.1 on a pro forma basis.
(7) The pro forma EMS information reflects (i) the elimination of EMS's
historical unaudited results of operations for the three months ended April
3, 1999 and the fiscal year ended December 31, 1998 and (ii) adjustments to
reflect reduced goodwill amortization of $.3 million for the three months
ended April 3, 1999 and $5.1 million for the year ended December 31, 1998
resulting from the elimination of goodwill from the proposed sale of EMS,
reduced interest expense of $4.9 million for the three months ended April 3,
1999 and $19.1 million for the year ended December 31, 1998 resulting from
the application of the anticipated proceeds from the anticipated sale of EMS
to reduce the borrowings under our amended and restated $2.1 billion
revolving credit facility and the income tax effects of the adjustments.
(8) "Fixed charges" consist of interest on debt, amortization of deferred
financing fees and that portion of rental expenses representative of
interest (deemed to be one-third of rental expenses). "Earnings" consist of
income before income taxes, fixed charges, undistributed earnings and
minority interests.
18
<PAGE> 23
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF APRIL 3, 1999
<TABLE>
<CAPTION>
UT ACQUISITION OPERATING AND LEAR/UT ELIMINATION
LEAR AUTOMOTIVE AND VALUATION OF FINANCING AUTOMOTIVE OF EMS
HISTORICAL HISTORICAL(1) UT AUTOMOTIVE(2) ADJUSTMENTS PRO FORMA PRO FORMA(7) PRO FORMA
---------- ------------- ---------------- ------------- ---------- ------------ ---------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash
equivalents........... $ 24.6 $ 83.7 $(2,308.2) $2,308.2(4) $ 108.3 $ (0.3) $ 108.0
Accounts receivable,
net................... 1,482.3 528.7 -- -- 2,011.0 (80.0) 1,931.0
Inventories............. 321.3 172.1 -- -- 493.4 (19.2) 474.2
Recoverable customer
engineering and
tooling............... 239.1 -- -- -- 239.1 -- 239.1
Other current assets.... 243.4 83.7 (14.1)(3) -- 313.0 (1.0) 312.0
-------- -------- --------- -------- -------- ------- --------
2,310.7 868.2 (2,322.3) 2,308.2 3,164.8 (100.5) 3,064.3
-------- -------- --------- -------- -------- ------- --------
Property, plant and
equipment, net.......... 1,183.2 703.1 -- -- 1,886.3 (67.7) 1,818.6
Goodwill and other
intangibles, net........ 1,990.9 329.0 979.0 -- 3,298.9 (218.3) 3,080.6
Other..................... 298.9 83.4 (26.5)(3) 28.2(5) 384.0 (13.2) 370.8
-------- -------- --------- -------- -------- ------- --------
$5,783.7 $1,983.7 $(1,369.8) $2,336.4 $8,734.0 $(399.7) $8,334.3
======== ======== ========= ======== ======== ======= ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings... $ 80.3 $ 6.7 $ -- $ -- $ 87.0 $ (0.1) $ 86.9
Accounts payable and
drafts................ 1,728.5 366.5 -- -- 2,095.0 (55.8) 2,039.2
Accrued liabilities..... 811.4 192.4 (29.2)(3) -- 974.6 (15.6) 959.0
Current portion of
long-term debt........ 14.7 1.3 -- -- 16.0 -- 16.0
-------- -------- --------- -------- -------- ------- --------
2,634.9 566.9 (29.2) -- 3,172.6 (71.5) 3,101.1
Long-term liabilities:
Long-term debt.......... 1,411.6 4.7 -- 2,336.4(6) 3,752.7 (312.5) 3,440.2
Deferred national income
taxes................. 42.9 37.2 -- -- 80.1 (0.7) 79.4
Other................... 397.1 97.1 (62.8)(3) -- 431.4 (15.0) 416.4
-------- -------- --------- -------- -------- ------- --------
1,851.6 139.0 (62.8) 2,336.4 4,264.2 (328.2) 3,936.0
Stockholders' equity...... 1,297.2 1,277.8 (1,277.8) -- 1,297.2 -- 1,297.2
-------- -------- --------- -------- -------- ------- --------
$5,783.7 $1,983.7 $(1,369.8) $2,336.4 $8,734.0 $(399.7) $8,334.3
======== ======== ========= ======== ======== ======= ========
</TABLE>
- -------------------------
(1) The UT Automotive historical information represents amounts obtained from
the unaudited balance sheet of UT Automotive as of April 3, 1999. Certain
amounts have been reclassified to conform to Lear's presentation.
(2) Assumes a purchase price of $2,308.2 million, which consists of $2,300.0
million to acquire UT Automotive and $8.2 million to pay estimated fees and
expenses related to the acquisition of UT Automotive. The acquisition of UT
Automotive was accounted for using the purchase method of accounting, and
the total purchase price was allocated first to assets and liabilities based
on their respective fair values, with the remainder ($1,308.0 million)
allocated to goodwill. The adjustment to stockholders' equity reflects the
elimination of UT Automotive's equity. The allocation of the purchase price
above is based on historical costs and management's estimates which may
differ from the final allocation due to appraisals of fixed assets and the
finalization of plans of restructuring.
(3) Represents the elimination of certain items which are being retained by the
seller of UT Automotive.
(4) Reflects proceeds of borrowings under our primary credit facilities of
$2,308.2 million.
(5) Reflects the capitalization of fees incurred in establishing our new credit
facilities of $11.6 million and fees incurred in connection with the
offering of the original securities of $16.6 million.
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<PAGE> 24
(6) Reflects the effects of the Transactions as follows:
<TABLE>
<S> <C>
Borrowings under our primary credit facilities to finance
the acquisition of UT Automotive.......................... $ 2,308.2
Issuance of the original securities......................... 1,400.0
Borrowings under our primary credit facilities to pay fees
and expenses incurred in establishing the new credit
facilities................................................ 11.6
Application of the estimated net proceeds of the offering of
the original securities to repay a portion of the interim
term loan................................................. (1,383.4)
Borrowings under our amended and restated revolving credit
facility to repay a portion of the interim term loan...... 16.6
Application of the borrowings under our amended and restated
revolving credit facility to repay a portion of the
interim term loan......................................... (16.6)
---------
$ 2,336.4
=========
</TABLE>
(7) The pro forma EMS information reflects (i) the elimination of EMS's
historical unaudited balance sheet as of April 3, 1999, including $218.3
million of goodwill recorded in connection with the acquisition of UT
Automotive and (ii) an adjustment to reflect reduced borrowings under the
amended and restated $2.1 billion revolving credit facility resulting from
the application of the anticipated proceeds of $310.0 million from the
proposed sale of EMS.
20
<PAGE> 25
SELECTED CONSOLIDATED FINANCIAL DATA
Set forth below are certain selected historical financial data. This
information should be read in conjunction with our financial statements and the
notes thereto and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included or incorporated by reference in this
prospectus. The financial data for, and as of the end of, each of the five
fiscal years ended December 31, 1998, 1997, 1996, 1995 and 1994 were derived
from our audited financial statements. Our audited consolidated financial
statements for each of the five fiscal years ended December 31, 1998, 1997,
1996, 1995 and 1994 have been audited by Arthur Andersen LLP. The financial data
for, and as of the end of, the three months ended April 3, 1999 and March 28,
1998 are unaudited; however, in our opinion, they reflect all adjustments,
consisting only of normal recurring items, necessary for a fair presentation of
the financial position and results of operations of such periods. The results
for the three months ended April 3, 1999 are not necessarily indicative of the
results to be expected for the full fiscal year.
<TABLE>
<CAPTION>
AS OF OR FOR THE THREE
MONTHS ENDED
---------------------- AS OF OR FOR THE YEAR ENDED DECEMBER 31,
APRIL 3, MARCH 28, --------------------------------------------------------
1999 1998 1998(1) 1997 1996 1995 1994
-------- --------- ------- ---- ---- ---- ----
(IN MILLIONS(2))
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales........................ $2,687.2 $2,032.1 $9,059.4 $7,342.9 $6,249.1 $4,714.4 $3,147.5
Gross profit..................... 218.7 200.2 861.4 809.4 619.7 403.1 263.6
Selling, general and
administrative expenses........ 84.3 78.0 337.0 286.9 210.3 139.0 82.6
Restructuring and other
charges........................ -- -- 133.0 -- -- -- --
Amortization of goodwill......... 14.0 11.5 49.2 41.4 33.6 19.3 11.4
-------- -------- -------- -------- -------- -------- --------
Operating income................. 120.4 110.7 342.2 481.1 375.8 244.8 169.6
Interest expense, net............ 30.1 24.7 110.5 101.0 102.8 75.5 46.7
Other expense, net(3)............ 7.9 8.0 22.3 28.8 19.6 12.0 8.1
-------- -------- -------- -------- -------- -------- --------
Income before income taxes and
extraordinary items............ 82.4 78.0 209.4 351.3 253.4 157.3 114.8
Income taxes..................... 32.1 30.7 93.9 143.1 101.5 63.1 55.0
-------- -------- -------- -------- -------- -------- --------
Income before extraordinary
items.......................... 50.3 47.3 115.5 208.2 151.9 94.2 59.8
Extraordinary items(4)........... -- -- -- 1.0 -- 2.6 --
-------- -------- -------- -------- -------- -------- --------
Net income....................... $ 50.3 $ 47.3 $ 115.5 $ 207.2 $ 151.9 $ 91.6 $ 59.8
BALANCE SHEET DATA:
Current assets................... $2,310.7 $1,893.6 $2,198.0 $1,614.9 $1,347.4 $1,207.2 $ 818.3
Total assets..................... 5,783.7 4,736.8 5,677.3 4,459.1 3,816.8 3,061.3 1,715.1
Current liabilities.............. 2,634.9 1,946.9 2,497.5 1,854.0 1,499.3 1,276.0 981.2
Long-term debt................... 1,411.6 1,202.7 1,463.4 1,063.1 1,054.8 1,038.0 418.7
Stockholders' equity............. 1,297.2 1,245.1 1,300.0 1,207.0 1,018.7 580.0 213.6
OTHER DATA:
EBITDA(5)........................ $ 182.7 $ 165.6 $ 561.9 $ 665.5 $ 518.1 $ 336.8 $ 225.7
Ratio of EBITDA to interest
expense, net................... 6.1x 6.7x 5.1x 6.6x 5.0x 4.5x 4.8x
Ratio of earnings to fixed
charges(6)..................... 3.4x 3.7x 2.7x 4.1x 3.3x 2.9x 3.2x
Diluted net income per share..... $ .75 $ .69 $ 1.70 $ 3.04 $ 2.38 $ 1.74 $ 1.26
Number of facilities(7).......... 206 180 206 179 148 107 79
North American content per
vehicle(8)..................... $ 422 $ 325 $ 369 $ 320 $ 292 $ 227 $ 169
North American vehicle
production(9).................. 4.2 4.0 15.5 15.6 15.0 14.9 15.2
Western Europe content per
vehicle(10).................... $ 185 $ 148 $ 176 $ 123 $ 109 $ 92 $ 44
Western Europe vehicle
production(11)................. 4.3 4.0 15.8 15.1 14.4 13.9 13.2
South American content per
vehicle(12).................... $ 95 $ 150 $ 134 $ 129 $ 74 $ 1 N/A
South American vehicle
production(13)................. .3 .5 2.0 2.4 2.1 1.8 1.4
</TABLE>
- ---------------
(1) Results include the effect of the $133 million restructuring and other
charges ($92.5 million after tax).
(2) Except for ratios, per share data, number of facilities and content per
vehicle.
21
<PAGE> 26
(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) "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. Excluding the $133 million restructuring and other
charges recorded in 1998, EBITDA would have been $694.9 million.
(6) "Fixed charges" consist of interest on debt, amortization of deferred
financing fees and that portion of rental expenses representative of
interest (deemed to be one-third of rental expenses). "Earnings" consist of
income before income taxes, fixed charges, undistributed earnings and
minority interests.
(7) Includes facilities operated by Lear's less than majority-owned affiliates
and facilities under construction.
(8) "North American content per vehicle" is Lear's net sales in North America
divided by estimated total North American vehicle production.
(9) "North American vehicle production" includes car and light truck production
in the United States, Canada and Mexico estimated from industry sources.
(10) "Western Europe content per vehicle" is Lear's net sales in Western Europe
divided by estimated total Western Europe vehicle production.
(11) "Western Europe vehicle production" includes car and light truck production
in Austria, Belgium, France, Germany, Italy, The Netherlands, Portugal,
Spain, Sweden, and the United Kingdom estimated from industry sources.
(12) "South American content per vehicle" is Lear's net sales in South America
divided by estimated total South American vehicle production.
(13) "South American vehicle production" includes car and light truck production
in South America estimated from industry sources.
22
<PAGE> 27
BUSINESS
GENERAL
We are one of the ten largest independent automotive suppliers in the
world. We are:
- the leading supplier of automotive interior systems in the estimated $50
billion global automotive interior market;
- the third largest supplier in the estimated $20 billion global automotive
electrical distribution systems market;
- the largest supplier in the estimated $24 billion global seat systems
market; and
- one of the four largest suppliers worldwide in each of the other North
American automotive interior segments.
We are the only supplier with the capability to integrate electronics and
electrical distribution systems into all five automotive interior systems,
providing us the opportunity to manufacture and supply fully integrated
automotive interior modules to our customers globally. As of April 3, 1999, on a
pro forma basis, we employed over 106,000 people in 33 countries and operated
over 320 manufacturing, advanced technology, product engineering and
administration facilities. We are 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.
STRATEGY
Our principal objective is to expand our position as the leading supplier
of automotive interior systems in the world with the goal of capturing at least
one-third of the principal markets in which we compete. We intend to build on
our full service capabilities, strong customer relationships and worldwide
presence to increase our share of the global automotive interior market. To this
end, our strategy is to capitalize on three significant trends in the automotive
industry:
- the increasing emphasis on the automotive interior by automotive
manufacturers as they seek to differentiate their vehicles in the
marketplace;
- the increasing demand for fully integrated modular assemblies, such as
cockpits, overhead and door panel modules; and
- the consolidation and globalization of the supply base of automotive
manufacturers.
These trends are rooted in the competitive pressures on automotive
manufacturers to improve quality and reduce time to market, capital needs, labor
costs, overhead and inventory. We believe that these trends will result in
automotive manufacturers outsourcing entire modules or "chunks" of the interior
and, ultimately, complete automotive interiors. We believe that the criteria for
selection of automotive interior suppliers will include not only cost, quality
and responsiveness, but will increasingly include worldwide presence and certain
full-service capabilities, such as the capability to supply fully integrated
systems and modules.
Elements of our strategy include:
- Enhance Strong Relationships with our Customers. We have developed strong
relationships with our customers which allow us to identify business
opportunities and anticipate customer needs in the early stages of vehicle
design. We believe that working closely with our customers in the early stages
of designing and engineering vehicle interior systems gives us a competitive
advantage in securing new business. We maintain "Customer Focused Divisions" for
most of our major customers. This organizational structure consists of several
dedicated groups, most of which are focused on serving the needs of an
individual customer and supporting that customer's programs and product
development. Each division can provide all of the interior systems and
components the customer needs, allowing that
23
<PAGE> 28
customer's purchasing agents, engineers and designers to have a single point of
contact. We work to maintain an excellent reputation with our customers for
timely delivery and customer service and for providing world class quality at
competitive prices. As a result of our service and performance record, many of
our facilities have won awards from automotive manufacturers with which we do
business. For example, General Motors named us its "Supplier of the Year" in
1997 and 1998 for seat systems.
- Capitalize on Module and Integration Opportunities. We believe that the
same competitive pressures that led automotive manufacturers to outsource the
individual interior components to independent suppliers, such as Lear, will
cause our customers to demand delivery of fully integrated modules for new
vehicle models. As automotive manufacturers continue to seek ways to improve
quality and reduce costs, we believe customers will increasingly look to
independent suppliers to:
- supply fully integrated modules of the automotive interior; and
- act as systems integrators, by managing the design, purchase and supply
of the total automotive interior.
Because electrical distribution systems and electrical/electronic products
are an increasingly important part of interior systems, we believe that we will
have a competitive advantage in securing new business and taking advantage of
integration opportunities as a result of our acquisition of UT Automotive. The
potential for integration opportunities can be seen in recent program awards:
- In 1997 and 1998, we were named the interior systems integrator for a
high profile Chrysler minivan program and we were awarded the total
interior program for two North American produced vehicles and for the
Mahindra & Mahindra Scorpio SUV program. In addition to designing and
producing interior components for these new programs, we will be
responsible for coordinating the activities of a number of the vehicle's
other interior suppliers.
- In 1998, UT Automotive was awarded the opportunity to supply the fully
integrated cockpit assembly in North America for a General Motor's small
car program. We will be responsible for the overall design, integration,
assembly and sequential delivery of the cockpit assemblies. In addition,
we will be responsible for supplying the basic instrument panel, the
structural cross vehicle beam, numerous molded parts and a variety of
electrical/electronic components.
- Continue Global Expansion. Global expansion will continue to be an
important element of our growth strategy. In 1998, approximately two-thirds of
automotive interior production was made outside of North America. In recent
years, automotive manufacturers in Western Europe have outsourced to a greater
number of automotive suppliers than automotive manufacturers in North America.
As a result, we believe that we have excellent opportunities for continued
growth through supplier consolidation in Western Europe. Markets such as South
America and the Asia/Pacific Rim region also present long-term growth
opportunities as demand for automotive vehicles increases and automotive
manufacturers expand production in these markets. As a result of our strong
customer relationships and worldwide presence, we believe that we are well
positioned to continue to grow with our customers as they expand their
operations worldwide.
- Invest in Product Technology and Design Capability. We intend to continue
to make significant investments in technology and design capability to support
our products. We maintain 6 advanced technology centers and 22 customer focused
product engineering centers where we design and develop new products and conduct
extensive product testing. We also have state-of-the-art acoustics testing,
instrumentation and data analysis capabilities. With the acquisition of UT
Automotive, we acquired numerous engineering and design facilities in North
America, Europe and Asia.
We believe that in order to effectively develop total interior systems, it
is necessary to integrate the research, design, development, styling and
validation of all interior subsystems concurrently. We recently expanded our
advance technology center at our world headquarters in Southfield, Michigan. As
a result, we are the only automotive supplier with engineering, research,
development and validation capabilities for all five interior systems at one
location. Our investments in research and development are consumer-driven
24
<PAGE> 29
and customer-focused. We conduct extensive analysis and testing of consumer
responses to automotive interior styling and innovations. Because automotive
manufacturers increasingly view the vehicle interior as a major selling point to
their customers, the focus of our research and development efforts is to
identify new interior features that make vehicles safer, more comfortable and
attractive to consumers.
- Increase Use of "Just-in-Time" Facility Network. We have established
facilities that allow our customers to receive interior products on a
"just-in-time" basis. The "just-in-time" manufacturing process minimizes
inventories and fixed costs for both us and our customers and enables us to
deliver products on as little as 90 minutes notice. Most of our "just-in-time"
manufacturing facilities are dedicated to individual customers. In many cases,
by carefully managing floor space and overall efficiency, we can move the final
assembly and sequencing of other interior systems and components from centrally
located facilities to our existing "just-in-time" facilities. We believe that
combining our "just-in-time" manufacturing techniques with our systems
integration capabilities provides us with an important competitive advantage in
delivering total interior systems to automotive manufacturers. In addition, we
believe that our "just-in-time" and asset management techniques can be
instituted throughout the interior facilities acquired in the UT Automotive
acquisition, resulting in operational efficiencies and reduced working capital
requirements.
- Growth Through Strategic Acquisitions. Strategic acquisitions have been
an important element in our worldwide growth and in our efforts to capitalize on
the globalization, integration and supplier consolidation trends. We intend to
continue to review attractive acquisition opportunities that preserve our
financing flexibility. We will focus on acquisitions:
- that strengthen our relationships with automotive manufacturers;
- enhance our existing product, process and technological capabilities;
- lower our systems costs;
- provide us with growth opportunities in new markets; and
- provide attractive financial returns.
ACQUISITIONS
To supplement our internal growth and implement our business strategy, we
have made several strategic acquisitions. As a result of internal growth and
acquisitions, our sales have grown from $3.1 billion in 1994 to $12.3 billion,
on a pro forma basis, in 1998, a compound annual growth rate of 41%. Our
acquisitions include the following:
UT Automotive Acquisition
On May 4, 1999, we acquired UT Automotive for a purchase price of
approximately $2.3 billion, subject to post-closing adjustments. UT Automotive
is a leading independent supplier of automotive electrical distribution systems
and produces a broad portfolio of automotive interior products, including
instrument panels, headliners and door panels. With the acquisition of UT
Automotive, we became the third largest supplier of automotive electrical
distribution systems in the estimated $20 billion global automotive electrical
distribution systems market. In addition, we significantly increased our
presence in the headliner and instrument panel segments of the global automotive
interiors market as a result of UT Automotive's position in North America as the
second largest headliner supplier and the fourth largest instrument panel
supplier. On May 7, 1999, we entered into a definitive purchase agreement with
Johnson Electric Holdings Limited to sell the Electric Motor Systems business we
acquired in the UT Automotive acquisition for $310 million, subject to certain
post-closing adjustments. The EMS business had net sales, operating income and
EBITDA of approximately $351 million, $27 million and $47 million, respectively,
for the year ended December 31, 1998. The proposed sale of EMS is subject to
customary conditions.
Consumers are demanding more electronics in their vehicles, such as
cellular phones, navigational equipment and keyless entry systems. At the same
time, automotive manufacturers are continuing to seek
25
<PAGE> 30
ways to reduce costs and improve quality. As a result, we believe that we will
be able to utilize UT Automotive's technical capabilities and products to secure
new business and provide fully integrated interior systems and modules, thereby
increasing our content per vehicle and providing us with a strong platform for
future growth. In addition, we believe that the integration of UT Automotive's
business into our own will provide significant opportunities to improve the
combined business's operating performance. As we leverage our existing research
and development efforts and reduce duplicative overhead costs, we believe that
we will have the opportunity to realize significant operating synergies and cost
savings.
Delphi Seating Acquisition
In September 1998, we acquired the seating business of Delphi Automotive
Systems, formerly a division of General Motors Corporation. Delphi Seating was a
leading supplier of seat systems to General Motors with sixteen facilities
located in ten countries. The Delphi Seating acquisition strengthened our
relationship with General Motors and expanded our product lines, technological
capabilities and market share. The aggregate purchase price for the Delphi
Seating acquisition was approximately $247 million.
Borealis Acquisition
In December 1996, we acquired Borealis Industrier, a leading Western
European supplier of instrument panels, door panels and other automotive
components. The Borealis acquisition provided us with the technology and
facilities to manufacture instrument panels, giving us the ability to produce
complete interior systems. Borealis also produced 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 our presence in Western Europe and strengthened our relationships with
Volvo, Saab and Scania.
Masland Acquisition
In July 1996, we acquired Masland Corporation. The Masland acquisition gave
us the manufacturing capabilities to produce flooring and acoustic systems. In
1998, primarily as a result of the Masland acquisition, we held a 38% share in
the estimated $1.5 billion North American flooring and acoustic systems market.
Also as a result of the Masland acquisition, we became a major supplier of
interior and luggage trim components and other acoustical products which are
designed to minimize noise, vibration and harshness for passenger cars and light
trucks.
Automotive Industries Acquisition
In August 1995, we acquired Automotive Industries, a leading designer and
manufacturer of high quality interior systems and blow molded plastic parts for
automobile and light truck manufacturers. Prior to the Automotive Industries
acquisition, we had participated primarily in the seat systems segment of the
interior market. By providing us with substantial manufacturing capabilities to
produce door panels and headliners, the Automotive Industries acquisition made
us one of the largest independent direct suppliers of automotive interior
systems in the North American light vehicle interior market.
Other Acquisitions
Since January 1, 1994, we have completed eleven acquisitions in addition to
the five described above, including the acquisitions of:
- Italian automotive interiors manufacturers Pianfei and Strapazzini in
1998;
- Keiper Car Seating in 1997; and
- the primary automotive seat systems supplier to Fiat in 1994.
26
<PAGE> 31
PRODUCTS
Our products have evolved as a result of our many years of manufacturing
experience in the automotive seat frame market, where we have been a supplier to
Ford and General Motors since our 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 our emergence as a premier supplier of
entire seat systems and seat components. Through the acquisitions discussed
above, we have expanded our product offerings and can now manufacture and supply
our customers with completely integrated interiors, including flooring and
acoustic systems, door panels, headliners, instrument panels and electrical
distribution systems. We also produce a variety of blow molded products and
other automotive components. We believe that automotive manufacturers will
continue to seek ways to improve vehicle quality while reducing the costs of
vehicle components. As automotive manufacturers pursue these objectives, we
expect that they will increasingly look to suppliers such as Lear, with the
capability to test, design, engineer and deliver products for a complete vehicle
interior. We believe that we will be able to design fully integrated modules of
the automotive interior to:
- reduce the number and complexity of parts used;
- improve quality and warranty performance; and
- reduce automotive manufacturer's installation costs.
We also believe that automotive manufacturers will continue their move to
modular production by sourcing to key suppliers, such as Lear, the development
and manufacture of complete interior modules.
With the acquisition of UT Automotive, we strengthened our position in
certain of our existing product categories, particularly in the headliner and
instrument panel segments. In addition, the UT Automotive acquisition provided
us with extensive capabilities in automotive electrical distribution systems and
electrical/electronic automotive products. We believe that this broadened
product portfolio substantially enhances our ability to supply complete
automotive interiors. Specifically, we believe that we will be able to combine
UT Automotive's electrical distribution system capabilities with our existing
interior capabilities to design, develop and supply fully integrated modular
assemblies, such as fully integrated instrument panels or "cockpits," overhead
systems and door panels.
Our products fall into the following categories:
- 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. We
produce seat systems for automobiles and light trucks that are fully finished
and ready 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 our product technology and product design strengths, we have
been a leader in incorporating convenience features and safety improvements into
seat designs. In 1998, we adopted a new methodology for developing automotive
interiors, "People-Vehicle-Interface" or PVI Method(TM). PVI Method(TM) is the
innovation development discipline that we use to understand what consumers
really want inside their vehicles, while developing automotive interiors that
meet both federal safety standards and customer requirements. We have also
developed methods to reduce our customer's costs throughout the automotive
interior. For example, in 1997, we showcased the Revolution(TM) Seat Module. The
Revolution(TM) Seat Module utilizes a unique seat frame that can be fitted with
a wide variety of our seat backs and cushions to meet the needs of a range of
different vehicles. The Revolution(TM) Seat Module simplifies and standardizes
seat system assembly, enhances interior room and lowers total vehicle costs.
Additionally, we are producing a ventilated seat for Saab, which draws heat and
moisture away from the seat with fans that are embedded in the seat cushions. We
have also increased production of our new integrated restraint seat system that
increases occupant comfort and convenience. Licensed exclusively to Lear, this
patented
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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.
Our position as a market leader in seat systems is largely attributable to
seating programs on new vehicle models launched in the past ten years. We are
currently working with customers in the development of a number of seat systems
products to be introduced by automotive manufacturers in the future.
- Electrical Distribution Systems and Electrical/Electronic Products. The
function of a basic automotive electrical distribution system is to provide the
electrical interconnections necessary to convey or distribute electrical power
and signals. The distribution of such power and signals is essential for
activating, controlling, operating and/or monitoring electric devices and
systems throughout the vehicle. Primarily, electrical distribution systems
consist of wire harness assemblies, terminal and connector products, fuse boxes
and junction boxes. This electrical network extends to virtually every part of a
vehicle, including powered comfort/convenience accessories, lighting and
signaling, heating and cooling systems, powertrain, chassis, safety restraints
systems, audio systems and other devices. With the acquisition of UT Automotive,
we have the capability to design and supply complete electrical distribution
systems on a global basis.
The electrical/electronic products group consists of two related groups of
products: automotive electrical switches and automotive electronic controls. The
switches group includes products for activation and control of lighting,
wiper/washers, turn signals, ignition, powered accessories including windows,
door locks, seats and mirrors, heating, ventilation, and air conditioning and
keypad entry. The switch products include designs for both low- and high-current
using a variety of activation methods (rotary, slide, push-pull, momentary, and
latching), and increasingly focus on ergonomic and aesthetic considerations. The
electronic controls group includes a variety of body controllers for electronic
control of many comfort and convenience features, including memory functions and
timer units. With the acquisition of UT Automotive, we also acquired a
significant industry presence in remote keyless entry products employing
advanced encryption technology.
Electrical and electronic content per vehicle continues to grow as
installation of powered accessories and new features such as on-board phones and
navigation systems increases. At the same time, many vehicle functions which had
previously been hydraulically or mechanically activated are being replaced by
electrical/electronic actuation. This has resulted in a higher number of
circuits and electromechanical and electronic controls and switches per vehicle.
For example, the 1993 top-of-the-line Ford Explorer had 963 electrical circuits,
while a comparable model in 1997 had more than 1,800. With the acquisition of UT
Automotive, we believe that we will be well positioned to capitalize on this
trend by integrating UT Automotive's broad range of electrical/electronic
products into our line of interior products and systems.
The automotive electrical distribution systems and electrical/electronic
automotive products businesses have been rapidly evolving in recent years as
electronic functionality is added to traditional wiring systems. This
progression has involved the integration of existing products and the
development of new products, competencies and technologies. We believe that the
progressive increase in the content and complexity of electrical and electronic
components requires a broader, overall design perspective. This shift in design
philosophy is described as "moving from the wire itself to the wire ends,"
reflecting a view that design should include both wiring systems and the
electromechanical and electronic devices to which they are connected. We believe
that the migration from electrical distribution systems to electrical and
electronic distribution systems will both facilitate integration of wiring,
electronics, and switching/control products within the overall electrical
architecture of a vehicle and generate significant design benefits for
customers. For example, we expect this integrated approach to help designers
optimize the number of circuits and electronic control modules/microprocessors,
and help program managers validate the performance of all of the individual
components in a vehicle's electronic systems.
The migration from electrical distribution systems to electrical and
electronic distribution systems can be seen in a number of new and next
generation products. For example, our smart junction box combines traditional
junction box function with electronics capabilities. Unlike earlier junction box
designs which provided the mechanical interconnection of electrical wire
harnesses, smart junction boxes can incorporate
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electronic control functions traditionally located elsewhere in the vehicle. We
are also positioned to participate in the development of advanced vehicle
operating systems. Advanced vehicle operating systems will combine technologies
ranging from computer-based communication to entertainment and traffic
management.
- Flooring and Acoustic Systems. Flooring 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 maintenance characteristics, are used primarily in commercial
and fleet vehicles. We are one of the largest independent suppliers of vinyl
automotive flooring systems in North America and one of the few suppliers of
both carpet and vinyl automotive flooring systems. With the Masland acquisition,
we acquired Maslite(TM), a material that is 40% lighter than vinyl, which has
replaced vinyl accessory mats on selected applications.
The automotive flooring system is multi-purpose. Performance is based on
the correct selection of materials to achieve an attractive, quiet 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 us to meet these specialized needs.
Carpet flooring systems generally consist of tufted carpet with a thermoplastic
backcoating which, when heated, allows the carpet to be fitted precisely to the
interior of the vehicle. Additional insulation materials are added to provide
noise, vibration and harshness resistance. Flooring 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.
Our primary acoustic product, after flooring systems, is the dash
insulator. The dash insulator separates the passenger compartment from the
engine compartment, and is the primary component for preventing engine noise and
heat from entering the passenger compartment. Our ability to produce both the
dash insulator and the flooring system enables us to accelerate the design
process and supply an integrated system. We believe that automotive
manufacturers, recognizing the cost and quality advantages of producing the dash
insulator and the flooring system as an integrated system, will increasingly
seek suppliers to coordinate the design, development and manufacture of the
entire floor and acoustic system.
- 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. In addition, door
panels often incorporate electrical distribution systems and
electrical/electronic products, including switches and wire harnesses for the
control of power seats, windows, mirrors and door locks. Upon assembly, each
component must fit precisely and must match the color of the base substrate. In
1997, we introduced the One-Step(TM) door and One-Step(TM) liftgate which
consolidate all internal mechanisms, including glass, window regulators and
latches, providing customers with a fully assembled higher quality product at a
lower price. The One-Step(TM) door and One-Step(TM) liftgate can be shipped to
automotive manufacturers fully assembled, tested and ready to install. We
believe that both the One-Step(TM) door and One-Step(TM) liftgate, while not yet
in production, offer us significant opportunities to capture a major share of
the estimated $9 billion modular door market.
- 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 module, air
distribution ducts, air vents, cross car structure, glove compartment
assemblies, electrical/electronic components, wiring harness, radio system and
passenger airbag units. As the primary occupant focal point of the vehicle
interior, the instrument panel is designed to be aesthetically pleasing while
also housing various components.
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Over the past several years, the automotive industry has seen a rapid
increase in the complexity of instrument panels. We believe automotive
manufacturers will begin to require that suppliers produce integrated instrument
panels that combine electrical/electronic products with other traditional
instrument panel components. This movement will provide suppliers with the
opportunity to capitalize on the ability of instrument panels to incorporate
more higher margin, value-added components, such as telecommunications and
navigational equipment. In July 1998, UT Automotive was awarded the opportunity
to supply General Motors a fully integrated cockpit assembly in North America
for a small car program beginning in 2002. This was one of the first integrated
cockpit programs awarded by an automotive manufacturer. In addition to being
responsible for the overall design, integration and assembly of the cockpit
system, we will supply the basic instrument panel, the structural cross vehicle
beam, numerous molded parts and a variety of electrical/electronic components.
We believe that UT Automotive's strength in designing and manufacturing
electrical distribution systems and electrical/electronic products will enhance
our position as a leading supplier of instrument panels and better position us
as automotive manufacturers continue to demand more complex instrument panels
with progressively higher levels of integration.
Another on-going trend in the instrument panel segment concerns safety
issues surrounding air bag technologies. We intend to increase our presence in
this area through our 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.
- Headliners. In 1997, we created a joint venture with Donnelly Corporation
for the design, development, marketing and production of overhead systems for
the global automotive interior market. Headliners consist of a substrate as well
as a finished interior layer made of a variety of fabrics and materials. While
headliners are an important contributor to interior aesthetics, they also
provide insulation from road noise and can serve as carriers for a variety of
other components, such as visors, overhead consoles, grab handles, coat hooks,
electrical wiring, speakers, lighting and other electrical/electronic products.
As electrical and electronic content available in vehicles has increased,
headliners have emerged as an important carrier of technology since electronic
features ranging from garage door openers to lighting systems are often
optimally situated in the headliner system. The UT Automotive acquisition
provided us with the technical capabilities and electrical distribution products
to take advantage of the significant integration opportunities that exist in the
headliner market.
The headliner market is highly fragmented, with no dominant independent
supplier. As automotive manufacturers continue to seek ways to improve vehicle
quality and simultaneously reduce costs, we believe that headliners will
increasingly be outsourced to suppliers, such as Lear, with extensive
technological and systems integration capabilities. In addition, as with door
panels and instrument panels, the ability of headliners to incorporate more
components, provides us with the opportunity to increase the number of high
margin, value added products we supply to automotive manufacturers.
- Component Products. In addition to the interior systems and other
products described above, we are able to supply a variety of interior trim, blow
molded plastic parts and other automotive components.
We produce seat covers for integration into our own seat systems and for
delivery to external customers. Our major external customers for seat covers are
other independent seat systems suppliers as well as automotive manufacturers.
The expansion of our seat cover business gives us 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.
We produce 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. Our seat
frames are either delivered to our own plants, where they become part of a
complete seat system that is sold to the automotive manufacturer customer, or
are delivered to other independent seating suppliers for use in the manufacture
of assembled seating systems.
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We also produce 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.
CUSTOMERS
We serve the worldwide automobile and light truck market, which produces
approximately 50 million vehicles annually. Our automotive manufacturer
customers currently include Ford, General Motors, DaimlerChrysler, Fiat,
Volkswagen, BMW, Volvo, Saab, Toyota, Honda USA, Mitsubishi, Mazda, Subaru,
Nissan, Isuzu, Peugeot, Porsche, Renault, Gaz, Mahindra & Mahindra, Suzuki,
Hyundai and Daewoo. During the year ended December 31, 1998, on a pro forma
basis, Ford and General Motors, the two largest automobile and light truck
manufacturers in the world, each accounted for approximately 25% of our net
sales.
In the past ten years, in the course of retooling and reconfiguring plants
for new models and model changeovers, certain automotive manufacturers 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, we became a
supplier of these products for a significant number of new models, many on a
"just-in-time" basis.
The purchase of seat systems and other interior systems and components from
full-service independent suppliers like Lear has allowed our customers to
realize a competitive advantage as a result of:
- a reduction in net overhead expenses and capital investment due to the
availability of significant floor space for the expansion of other
manufacturing operations;
- the elimination of working capital and personnel costs associated with
the production of interior systems by the automotive manufacturer;
- a reduction in labor costs since suppliers like Lear generally have lower
direct labor and benefit rates; and
- a reduction in transaction costs by utilizing a limited number of
sophisticated system suppliers instead of numerous individual component
suppliers.
In addition, we offer improved quality and on-going cost reductions to our
customers through continuous, Lear-initiated design improvements.
We maintain "Customer Focused Divisions" for most of our major customers.
This organizational structure consists of several dedicated groups, each of
which is primarily focused on serving the needs of a single customer and
supporting that customer's programs and product development. Each division is
capable of providing fully integrated interior systems or 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.
We receive blanket purchase orders from our 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, we do not believe that any of our customers have
terminated a material purchase order prior to the end of the life of a model.
Our primary risk is that an automotive manufacturer will produce fewer units of
a model than anticipated. In order to reduce our reliance on any one model, we
produce interior systems and components for a broad cross-section of both new
and more established models.
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, we
believe that automotive manufacturers' commitment to purchasing seat
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systems and other interior systems and components from outside suppliers,
particularly on a "just-in-time" basis, will increase. However, under the
contracts currently in effect in the United States and Canada between each of
General Motors, Ford and DaimlerChrysler 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 automotive manufacturer. Factors that will normally be
taken into account by the UAW, the CAW and the automotive manufacturer include:
- whether the proposed new supplier is technologically more advanced than
the automotive manufacturer;
- whether the new supplier is unionized;
- whether cost benefits exist; and
- whether the automotive manufacturer will be able to reassign union
members whose jobs are being displaced to other jobs within the same
factories.
As part of our agreement with General Motors, we operate our Rochester Hills,
Michigan and Wentzville, Missouri facilities with General Motors' employees and
reimburse General Motors for the wages of such employees on the basis of our
employee wage structure. We enter into these arrangements to enhance our
relationship with customers. As of January 1, 1998, the General Motors'
employees working at our Lordstown, Ohio facility under this agreement became
Lear employees.
General Motors and DaimlerChrysler have experienced work stoppages over the
past few years, primarily relating to the outsourcing of automotive components.
These work stoppages halted the production of certain vehicle models and
adversely affected our operations.
Our contracts with 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
our suppliers have generally offset changes in selling prices. Our cost
structure is comprised of a high percentage of variable costs. We believe that
this structure provides us with additional flexibility during economic cycles.
MARKETING AND SALES
We market our products by maintaining strong customer relationships. We
have developed these relationships over our 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 is an integral part
of our marketing strategy. Recognizing this, we are 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 installation. By
moving the decision-making process closer to the customer and by instilling a
philosophy of "cooperative autonomy," we are more responsive to, and have
strengthened our relationships with, our customers. Automotive manufacturers
have generally continued to reduce the number of their suppliers as part of a
strategy to purchase interior systems rather than individual components. This
process favors suppliers like Lear with established ties to automotive
manufacturers and the demonstrated ability to adapt to the new competitive
environment in the automotive industry.
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Our sales are originated almost entirely by our sales staff. This marketing
effort is augmented by design and manufacturing engineers who work closely with
automotive manufacturers from the preliminary design to the manufacture and
supply of interior systems or components. Manufacturers have increasingly looked
to suppliers like Lear 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 we are engaged to develop the design for the interior system or component
of a specific vehicle model, we are also generally engaged to supply these items
when the vehicle goes into production. We have devoted substantial resources
toward improving our engineering and technical capabilities and developing
advanced technology centers in the United States and in Europe. We have also
developed full-scope engineering capabilities, including all aspects of safety
and functional testing, acoustics testing and comfort assessment. In addition,
we have established numerous product engineering sites in close proximity to our
automotive manufacturer customers to enhance customer relationships and design
activity. Finally, we have 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 our
customers and help avoid duplication of sales and engineering efforts.
COMPETITION
We are the leading supplier of automotive interior products with
manufacturing capabilities in all five automotive interior segments: seat
systems; flooring and acoustic systems; door panels; headliners; and instrument
panels. Within each segment, we compete with a variety of independent suppliers
and automotive manufacturer in-house operations. Set forth below is a summary of
our primary independent competitors.
- Seat Systems. We are one of two primary independent suppliers in the
outsourced North American seat systems market. Our main independent competitor
in North America is Johnson Controls, Inc. Our major independent competitors in
Western Europe are Johnson Controls, Inc. and Faurecia (headquartered in
France).
- Electrical Distribution Systems and Electrical/Electronic Products. With
the acquisition of UT Automotive, we became one of the leading independent
suppliers of automotive electrical distribution systems in North America and
Europe. Our major independent competitors in the electrical distribution systems
market include Delphi, Yazaki and Sumitomo. The electrical/electronic automotive
products industry remains highly fragmented. Other participants in the
electrical/ electronic products industry include Eaton, Tokai Rika, Kostal,
Methode, Pollack, Cherry, Niles, Omron and others.
- Flooring and Acoustic Systems. We are one of the three primary
independent suppliers in the outsourced North American flooring and acoustic
systems market. Our primary independent competitors are Collins & Aikman Corp.
and the Magee Carpet Company. Our major independent competitors in Western
Europe include Sommer Alibert Industrie, Emfisint Automotive SA, Radici, Treves
ETS and Rieter Automotive.
- Other Interior Systems and Components. Our major independent competitors
in the headliner, door panel and instrument panel segments include Johnson
Controls, Inc., Magna International, Inc., Davidson Interior Trim (a division of
Textron, Inc.), Delphi, Plastic Omnium, Sommer Alibert Industrie and a large
number of smaller operations. Visteon also competes in these markets.
SEASONALITY
Our principal operations are directly related to the automotive industry.
Consequently, we 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, our sales and operating
profit have been the strongest in the second and fourth calendar quarters.
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EMPLOYEES
As of April 3, 1999, on a pro forma basis, we employed approximately 47,000
persons in the United States and Canada, 22,000 in Mexico, 31,000 in Europe and
6,000 in other regions of the world. A substantial number of our employees are
members of unions. We have 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 our 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 our other labor
contracts. The majority of our 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. We have
experienced some labor disputes at our plants, none of which has significantly
disrupted production or had a materially adverse effect on our operations. We
have been able to resolve all such labor disputes and believe our relations with
our employees are generally good.
In addition, as part of our long-term agreements with General Motors, we
currently operate two facilities with an aggregate of approximately 600 General
Motors' employees and reimburse General Motors for the wages of such employees
on the basis of our wage structure.
PROPERTIES
As of April 3, 1999, on a pro forma basis, our operations were conducted
through 323 facilities, some of which are used for multiple purposes, including
232 manufacturing facilities, 23 product engineering centers and 6 advanced
technology centers, in 33 countries. Our world headquarters is located in
Southfield, Michigan.
No facility is materially underutilized. Of the 323 facilities (which
include facilities owned by our less than majority-owned affiliates), 158 are
owned and 165 are leased with expiration dates ranging from 1999 through 2010.
We believe substantially all of our property and equipment is in good condition
and that we have sufficient capacity to meet our current and expected
manufacturing and distribution needs.
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THE EXCHANGE OFFER
INTRODUCTION
Lear hereby offers to exchange up to $600,000,000 aggregate principal
amount of its 7.96% Series B Senior Notes due 2005 which have been registered
under the Securities Act for a like aggregate principal amount of its original
unregistered 7.96% Senior Notes due 2005 and up to $800,000,000 aggregate
principal amount of its 8.11% Series B Senior Notes due 2009 which have been
registered under the Securities Act for a like aggregate principal amount of its
original unregistered 8.11% Senior Notes due 2009, in each case on the terms and
subject to the conditions set forth in this prospectus and the accompanying
letter of transmittal. The offer described in the immediately preceding sentence
is referred to in this prospectus as the "exchange offer." Holders may tender
some or all of their original securities pursuant to the exchange offer.
However, original securities tendered in the exchange offer must be in
denominations of $1,000 or any integral multiple of $1,000.
As of the date of this prospectus, $600,000,000 aggregate principal amount
of the original unregistered 7.96% Senior Notes due 2005 and $800,000,000
aggregate principal amount of original unregistered 8.11% Senior Notes due 2009
are outstanding. This prospectus, together with the letter of transmittal, is
first being sent to holders of original securities on or about , 1999.
TERMS OF THE EXCHANGE OFFER
On the terms and subject to the conditions set forth in this prospectus and
in the accompanying letter of transmittal, Lear will accept for exchange
pursuant to the exchange offer original securities that are validly tendered and
not withdrawn prior to the expiration date. As used in this prospectus, the term
"expiration date" means 5:00 p.m., New York City time, on , 1999.
However, if Lear, in its sole discretion, extends the period of time for which
the exchange offer is open, the term "expiration date" will mean the latest time
and date to which Lear shall have extended the expiration of the exchange offer.
The exchange offer is subject to the conditions set forth in "-- Conditions
to the Exchange Offer." Lear reserves the right, but will not be obligated, to
waive any or all of the conditions to the exchange offer.
Lear reserves the right, at any time or from time to time, to extend the
period of time during which the exchange offer is open by giving written notice
of such extension to the exchange agent and by making a public announcement of
such extension. There can be no assurance that Lear will exercise its right to
extend the exchange offer. During any extension period, all original securities
previously tendered will remain subject to the exchange offer and may be
accepted for exchange by Lear. Assuming the prior satisfaction or waiver of the
conditions to the exchange offer, Lear will accept for exchange, and exchange,
promptly after the expiration date, in accordance with the terms of the exchange
offer, all original securities validly tendered pursuant to the exchange offer
and not withdrawn prior to the expiration date. Any original securities not
accepted by Lear for exchange for any reason will be returned without expense to
the tendering holder promptly after the expiration or termination of the
exchange offer.
Lear reserves the right, at any time or from time to time, to (1) terminate
the exchange offer, and not to accept for exchange any original securities not
previously accepted for exchange, upon the occurrence of any of the events set
forth in "-- Conditions to the Exchange Offer," by giving written notice of such
termination to the exchange agent and (2) waive any conditions or otherwise
amend the exchange offer in any respect, by giving written notice to the
exchange agent. An extension, termination, or amendment of the exchange offer
will be followed as promptly as practicable by public announcement, the
announcement in the case of an extension to be issued no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
expiration date. Without limiting the manner in which Lear may choose to make
any public announcement, Lear will have no obligation to make or communicate any
such announcement otherwise than by issuing a release to the Dow Jones News
Service or as otherwise may be required by law.
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Holders of original securities do not have any appraisal or dissenters'
rights under the General Corporation Law of the State of Delaware, the
indenture, or the supplemental indenture in connection with the exchange offer.
Lear intends to conduct the exchange offer in accordance with the applicable
requirements of the Securities Act, the Exchange Act, and the rules and
regulations of the Securities and Exchange Commission promulgated under those
Acts.
PROCEDURES FOR TENDERING
Except as set forth below, any holder of original securities that wishes to
tender original securities must cause the following to be transmitted to and
received by The Bank of New York, the exchange agent, at the address set forth
below under "-- Exchange Agent" no later than 5:00 p.m., New York City time, on
the expiration date:
- The certificates representing the tendered original securities or, in the
case of a book-entry tender as described below, a confirmation of the
book-entry transfer of the tendered original securities into the exchange
agent's account at DTC, as book-entry transfer facility;
- A properly completed and duly executed letter of transmittal in the form
accompanying this prospectus (with any required signature guarantees) or,
at the option of the tendering holder in the case of a book-entry tender,
an agent's message in lieu of such letter of transmittal; and
- Any other documents required by the letter of transmittal.
The method of delivery of original securities, letters of transmittal, and
all other required documents is at your election and risk. If the delivery is by
mail, Lear recommends that you use registered mail, properly insured, with
return receipt requested. In all cases, you should allow sufficient time to
assure timely delivery. You should not send letters of transmittal or
certificates representing original securities to Lear.
Any beneficial owner of original securities that are registered in the name
of a broker, dealer, commercial bank, trust company, or other nominee who wishes
to participate in the exchange offer should promptly contact the person through
which it beneficially owns such original securities and instruct that person to
tender original securities on behalf of such beneficial owner.
Any registered holder of original securities that is a participant in DTC's
Book-Entry Transfer Facility system may tender original securities by book-entry
delivery by causing DTC to transfer the original securities into the exchange
agent's account at DTC in accordance with DTC's procedures for such transfer.
However, a properly completed and duly executed letter of transmittal in the
form accompanying this prospectus (with any required signature guarantees) or an
agent's message, and any other required documents, must nonetheless be
transmitted to and received by the exchange agent at the address set forth below
under "-- Exchange Agent" prior to the expiration date. DELIVERY OF DOCUMENTS TO
DTC IN ACCORDANCE WITH ITS PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE
EXCHANGE AGENT.
The term "agent's message" means a message transmitted by DTC to, and
received by, the exchange agent and forming a part of a confirmation of the
book-entry tender of their original securities into the exchange agent's account
at DTC which states that DTC has received an express acknowledgment from each
participant tendering through DTC's automated Tender Offer Program that the
participant has received and agrees to be bound by, and makes the
representations and warranties contained in, the letter of transmittal and that
Lear may enforce the letter of transmittal against the participant.
Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the original securities surrendered for
exchange are tendered:
- by a registered holder of the original securities who has not completed
the box entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on the letter of transmittal; or
- for the account of an eligible institution.
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In the event that signatures on a letter of transmittal or a notice of
withdrawal, as the case may be, are required to be guaranteed, the guarantees
must be made by a firm that is an eligible institution -- including most banks,
savings and loan associations, and brokerage houses -- that is a participant in
the Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Program, or the Stock Exchanges Medallion Program.
If the letter of transmittal is signed by a person or persons other than
the registered holder or holders of the original securities, the letter of
transmittal must be accompanied by a written instrument or instruments of
transfer or exchange in a form satisfactory to Lear, in its sole discretion, and
duly executed by the registered holder or holders with the signature guaranteed
by an eligible institution. Certificates representing the original securities
must be endorsed or accompanied by appropriate powers of attorney, in either
case signed exactly as the name or names of the registered holder or holders
appear on the certificates representing the original securities.
If the letter of transmittal or any certificates representing original
securities, instruments of transfer or exchange, or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations, or others acting in a fiduciary or representative
capacity, the persons should so indicate when signing, and, unless waived by
Lear, proper evidence satisfactory to Lear of their authority to so act must be
submitted.
By tendering original securities pursuant to the exchange offer, each
holder will represent to Lear that, among other things:
- the holder has full power and authority to tender, sell, assign,
transfer, and exchange the original securities tendered;
- when such original securities are accepted by Lear for exchange, Lear
will acquire good and unencumbered title to the original securities, free
and clear of all liens, restrictions, charges, encumbrances, and adverse
claims;
- the exchange securities acquired pursuant to the exchange offer are being
acquired in the ordinary course of business of the person receiving the
exchange securities (whether or not the person is the holder of the
original securities);
- neither the holder nor any such other person is engaging in or intends to
engage in a distribution of the exchange securities;
- neither the holder nor any such other person has an arrangement or
understanding with any person to participate in a distribution of the
exchange securities; and
- neither the holder nor any such other person is an affiliate of Lear, or
if either is an affiliate, it will comply with the registration and
prospectus delivery requirements of the Securities Act.
In addition, each broker-dealer that is to receive exchange securities for
its own account in exchange for original securities must represent that such
original securities were acquired by such broker-dealer as a result of
market-making activities or other trading activities, and must acknowledge that
it will deliver a prospectus that meets the requirements of the Securities Act
in connection with any resale of the exchange securities. The letter of
transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. See "Plan of Distribution."
Lear will interpret the terms and conditions of the exchange offer,
including the letter of transmittal and the instructions to the letter of
transmittal, and will resolve all questions as to the validity, form,
eligibility (including time of receipt), and acceptance of original securities
tendered for exchange. Lear's determinations in this regard will be final and
binding on all parties. Lear reserves the absolute right to reject any and all
tenders of any particular original securities not properly tendered or to not
accept any particular original securities if the acceptance might, in Lear's or
its counsel's judgment, be unlawful. Lear also reserves the absolute right to
waive any defects or irregularities or conditions of the exchange offer as
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to any particular original securities either before or after the expiration
date, including the right to waive the ineligibility of any holder who seeks to
tender original securities in the exchange offer.
Unless waived, any defects or irregularities in connection with tenders of
original securities for exchange must be cured within such reasonable period of
time as Lear determines. Neither Lear, the exchange agent, nor any other person
will be under any duty to give notification of any defect or irregularity with
respect to any tender of original securities for exchange, nor will any of them
incur any liability for any failure to give notification. Any original
securities received by the exchange agent that are not properly tendered and as
to which the irregularities have not been cured or waived will be returned by
the exchange agent to the tendering holder, unless otherwise provided in the
letter of transmittal, promptly after the expiration date.
ACCEPTANCE OF ORIGINAL SECURITIES FOR EXCHANGE; DELIVERY OF EXCHANGE SECURITIES
Upon satisfaction or waiver of all of the conditions to the exchange offer,
Lear will accept, promptly after the expiration date, all original securities
that have been validly tendered and not withdrawn, and will issue the applicable
exchange securities in exchange for such original securities promptly after its
acceptance of such original securities. See "-- Conditions to the Exchange
Offer" below.
For purposes of the exchange offer, Lear will be deemed to have accepted
validly tendered original securities for exchange when, as, and if Lear has
given written notice of such acceptance to the exchange agent.
For each original note accepted for exchange, the holder of the original
note will receive an exchange note having a principal amount equal to that of
the surrendered original note. The exchange notes will accrue interest from the
date of completion of the exchange offer. Holders of original notes that are
accepted for exchange will receive accrued and unpaid interest on such original
notes to, but not including, the date of completion of the exchange offer. Such
interest will be paid on the first interest payment date for the exchange notes
and will be paid to the holders on the relevant record date of the exchange
notes issued in respect of the original notes being exchanged. Interest on the
original notes being exchanged in the exchange offer will cease to accrue on the
date of completion of the exchange offer.
In all cases, issuance of exchange securities for original securities that
are accepted for exchange pursuant to the exchange offer will be made only after
timely receipt by the exchange agent of:
- the certificates representing the original securities, or a timely
confirmation of book-entry transfer of the original securities into the
exchange agent's account at the book-entry transfer facility;
- a properly completed and duly executed letter of transmittal (or, in the
case of a book-entry tender, an agent's message); and
- all other required documents.
If any tendered original securities are not accepted for any reason or if
original securities are submitted for a greater principal amount than the holder
desires to exchange, such unaccepted or non-exchanged original securities will
be returned without expense to the tendering holder of the original securities
or, if the original securities were tendered by book-entry transfer, the
non-exchanged original securities will be credited to an account maintained with
the book-entry transfer facility. In either case, the return of such original
securities will be effected promptly after the expiration or termination of the
exchange offer.
BOOK-ENTRY TRANSFER
The exchange agent has advised Lear that it will establish an account with
respect to the original securities at The Depository Trust Company, as
book-entry transfer facility, for purposes of the exchange offer within two
business days after the date of this prospectus. Any financial institution that
is a participant in the book-entry transfer facility's system may make
book-entry delivery of original securities by causing the book-entry transfer
facility to transfer the original securities into the exchange agent's
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account at the facility in accordance with the facility's procedures for
transfer. However, although delivery of original securities may be effected
through book-entry transfer at the facility, a properly completed and duly
executed letter of transmittal (with any required signature guarantees) or an
agent's message, and any other required documents, must nonetheless be
transmitted to, and received by, the exchange agent at the address set forth
below under "-- Exchange Agent" prior to the expiration date, unless the holder
has strictly complied with the guaranteed delivery procedures described below.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of original securities desires to tender its
original securities, and the original securities are not immediately available,
or time will not permit the holder's original securities or other required
documents to reach the exchange agent before the expiration date, or the
procedure for book-entry transfer described above cannot be completed on a
timely basis, a tender may nonetheless be effected if:
- the tender is made through an eligible institution;
- prior to the expiration date, the exchange agent receives from an
eligible institution a properly completed and duly executed letter of
transmittal (or, in the case of a book-entry tender, an agent's message)
and notice of guaranteed delivery, substantially in the form provided by
Lear, by facsimile transmission, mail, or hand delivery, (a) setting
forth the name and address of the holder of original securities and the
amount of original securities tendered, (b) stating that the tender is
being made thereby, and (c) guaranteeing that, within three NYSE trading
days after the expiration date, the certificates for all physically
tendered original securities, in proper form for transfer, or a
book-entry confirmation, as the case may be, and any other documents
required by the letter of transmittal will be deposited by the eligible
institution with the exchange agent; and
- the certificates for all physically tendered original securities, in
proper form for transfer, or a book-entry confirmation, as the case may
be, and all other documents required by the letter of transmittal, are
received by the exchange agent within three NYSE trading days after the
expiration date.
WITHDRAWAL RIGHTS
You may withdraw tenders of original securities at any time prior to 5:00
p.m., New York City time, on the expiration date. Withdrawals may be made of any
portion of such original securities in integral multiples of $1,000 principal
amount.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the exchange agent at the address or, in the case of eligible
institutions, at the facsimile number, set forth below under "-- Exchange Agent"
prior to 5:00 p.m., New York City time, on the expiration date. Any such notice
of withdrawal must:
- specify the name of the person who tendered the original securities to be
withdrawn;
- identify the original securities to be withdrawn, including the
certificate number or numbers and principal amount of the original
securities;
- contain a statement that the holder is withdrawing his election to have
the original securities exchanged;
- be signed by the holder in the same manner as the original signature on
the letter of transmittal by which the original securities were tendered,
including any required signature guarantees, or be accompanied by
documents of transfer to have the registrar with respect to the original
securities (i.e., the trustee) register the transfer of such original
securities in the name of the person withdrawing the tender; and
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- specify the name in which such original securities are registered, if
different from that of the person who tendered the original securities.
If original securities have been tendered pursuant to the procedure for
book-entry transfer described above, any notice of withdrawal must specify the
name and number of the account at the book-entry transfer facility to be
credited with the withdrawn original securities and otherwise comply with the
procedures of the facility. All questions as to the validity, form, and
eligibility, including time of receipt, of notices of withdrawal will be
determined by Lear, whose determination will be final and binding on all
parties. Any original securities so withdrawn will be deemed not to have been
validly tendered for exchange for purposes of the exchange offer. Properly
withdrawn original securities may be retendered by following the procedures
described under "-- Procedures for Tendering" above at any time prior to 5:00
p.m., New York City time, on the expiration date.
CONDITIONS TO THE EXCHANGE OFFER
Lear need not exchange any original securities, may terminate the exchange
offer or may waive any conditions to the exchange offer or amend the exchange
offer, if any of the following conditions have occurred:
- the Securities and Exchange Commission's staff no longer allows the
exchange securities to be offered for resale, resold and otherwise
transferred by certain holders without compliance with the registration
and prospectus delivery provisions of the Securities Act;
- a government body passes any law, statute, rule or regulation which, in
Lear's opinion, prohibits or prevents the exchange offer, or
- the Securities and Exchange Commission or any state securities authority
issues a stop order suspending the effectiveness of the registration
statement or initiates or threatens to initiate a proceeding to suspend
the effectiveness of the registration statement.
If Lear reasonably believes that any of the above conditions has occurred,
it may (1) terminate the exchange offer, whether or not any original securities
have been accepted for exchange, (2) waive any condition to the exchange offer
or (3) amend the terms of the exchange offer in any respect. Lear's failure at
any time to exercise any of these rights will not waive such rights, and each
right will be deemed an ongoing right which may be asserted at any time or from
time to time. However, Lear does not intend to terminate the exchange offer if
none of the preceding conditions has occurred.
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EXCHANGE AGENT
The Bank of New York has been appointed as the exchange agent for the
exchange offer. The Bank of New York also acts as trustee under the indenture.
All executed letters of transmittal should be directed to the exchange agent at
the address set forth below. Questions and requests for assistance, requests for
additional copies of this prospectus or of the letter of transmittal, and
requests for notices of guaranteed delivery should be directed to the exchange
agent addressed as follows:
DELIVERY TO: THE BANK OF NEW YORK, EXCHANGE AGENT
<TABLE>
<CAPTION>
Facsimile Transmissions:
By Hand or Overnight Delivery (Eligible Institutions Only) By Registered or Certified Mail:
<S> <C> <C>
The Bank of New York (212) 815-4699 The Bank of New York
101 Barclay Street 101 Barclay Street, 7E
Corporate Trust Services Window To Confirm by Telephone New York, New York 10286
Ground Level or for Information Call: Attention: Tolutope Adeyujo
Attention: Tolutope Adeyujo (212) 815-2824 Reorganization Section
Reorganization Section
</TABLE>
---------------------
IF YOU DELIVER THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMIT INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE, SUCH DELIVERY OR INSTRUCTIONS WILL NOT BE EFFECTIVE.
FEES AND EXPENSES
Lear will not make any payment to brokers, dealers, or others for
soliciting acceptances of the exchange offer. Lear will pay the estimated cash
expenses to be incurred in connection with the exchange offer. Lear estimates
these expenses, excluding the registration fee paid to the Securities and
Exchange Commission, will be approximately $1 million.
ACCOUNTING TREATMENT
Lear will not recognize any gain or loss for accounting purposes upon the
consummation of the exchange offer. Lear will amortize the expense of the
exchange offer over the term of the exchange securities under generally accepted
accounting principles.
TRANSFER TAXES
Holders who tender their original securities for exchange will not be
obligated to pay any related transfer taxes, except that holders who instruct
Lear to register exchange securities in the name of, or request that original
securities not tendered or not accepted in the exchange offer be returned to, a
person other than the registered tendering holder will be responsible for the
payment of any applicable transfer taxes on such transfer.
RESTRICTIONS ON TRANSFER OF ORIGINAL SECURITIES
The original securities were originally issued in a transaction exempt from
registration under the Securities Act, and may be offered, sold, pledged, or
otherwise transferred only:
- in the United States to a person whom the seller reasonably believes is a
qualified institutional buyer (as defined in Rule 144A under the
Securities Act);
- outside the United States in an offshore transaction in accordance with
Rule 904 under the Securities Act;
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- pursuant to an exemption from registration under the Securities Act
provided by Rule 144, if available; or
- pursuant to an effective registration statement under the Securities Act.
The offer, sale, pledge, or other transfer of original securities must also
be made in accordance with any applicable securities laws of any state of the
United States, and the seller must notify any purchaser of the original
securities of the restrictions on transfer described above. Holders of original
securities who do not exchange their original securities for exchange securities
pursuant to the exchange offer will continue to be subject to the restrictions
on transfer of such original securities. Lear does not currently anticipate that
it will register original securities under the Securities Act. See "Risk Factors
- -- Failure to Exchange."
TRANSFERABILITY OF EXCHANGE SECURITIES
Based on interpretations by the staff of the Securities and Exchange
Commission, as set forth in no-action letters issued to third parties, Lear
believes that exchange securities issued pursuant to the exchange offer may be
offered for resale, resold, or otherwise transferred by holders that are not
affiliates of Lear within the meaning of Rule 405 under the Securities Act,
without compliance with the registration and prospectus delivery provisions of
the Securities Act if such exchange securities are acquired in the ordinary
course of such holders' business and such holders do not engage in, and have no
arrangement or understanding with any person to participate in, a distribution
of such exchange securities. However, the Securities and Exchange Commission has
not considered the exchange offer in the context of a no-action letter. Lear
cannot assure that the staff of the Securities and Exchange Commission would
make a similar determination with respect to the exchange offer. If any holder
of original securities is an affiliate of Lear or is engaged in or intends to
engage in, or has any arrangement or understanding with any person to
participate in a distribution of the exchange securities to be acquired pursuant
to the exchange offer, such holder:
- cannot rely on the interpretations of the staff of the Securities
and Exchange Commission set forth in the no-action letters referred
to above; and
- must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale or
transfer of the original securities or the exchange securities.
Each broker-dealer that is to receive exchange securities for its own
account in exchange for original securities must represent that such original
securities were acquired by such broker-dealer as a result of market-making
activities or other trading activities and must acknowledge that it will deliver
a prospectus in connection with any resale of the exchange securities. In
addition, to comply with the securities laws of certain jurisdictions, if
applicable, the exchange securities may not be offered or sold unless they have
been registered or qualified for sale in such jurisdiction or an exemption from
registration or qualification, with which there has been compliance, is
available. See "Plan of Distribution."
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DESCRIPTION OF OTHER MATERIAL INDEBTEDNESS
PRIMARY CREDIT FACILITIES
The following is a summary of certain provisions of our primary credit
facilities. The following summary does not purport to be complete and is subject
to, and qualified in its entirety by reference to, all of the provisions of our
primary credit facilities, including all of the definitions therein of terms not
defined in this prospectus. The agreements governing our primary credit
facilities were filed with the Securities and Exchange Commission on May 6, 1999
as exhibits to our Current Report on Form 8-K dated May 4, 1999.
Amended and Restated Revolving Credit Facility. Our amended and restated
revolving credit facility currently provides for:
- borrowings in a principal amount of up to $2.1 billion outstanding at any
one time;
- swing line loans in a maximum aggregate amount of $150 million, the
commitment for which is part of the aggregate amended and restated
revolving credit facility commitment;
- letters of credit in an aggregate face amount of up to $250 million, the
commitment for which is part of the aggregate amended and restated
revolving credit facility commitment; and
- multicurrency borrowings in a maximum aggregate amount of up to $500
million, the commitment for which is part of the aggregate amended and
restated revolving credit facility commitment.
The entire unpaid balance under our amended and restated revolving credit
facility will be payable on September 30, 2001.
New Credit Facilities. In addition to our amended and restated revolving
credit facility, our primary credit facilities are comprised of:
- a new revolving credit facility providing for borrowings of up to $500
million and maturing on May 4, 2004;
- a new $500 million term loan having scheduled amortization beginning in
October 31, 2000 and a final maturity of May 4, 2004; and
- multicurrency borrowings in a maximum aggregate amount of up to $165
million, the commitment for which is part of the aggregate new revolving
credit facility commitment.
The loans under our amended and restated revolving credit facility, our new
revolving loans and our new term loan are collectively referred to in this
prospectus as the "Loans."
Interest. For purposes of calculating interest, the U.S. dollar Loans can
be, at our election, ABR Loans or Eurodollar Loans or a combination thereof. ABR
Loans bear interest at the higher of (a) The Chase Manhattan Bank's, or any
replacement agent's, prime rate and (b) the federal funds rate plus 0.50%.
Eurodollar Loans bear interest at the relevant Eurodollar Rate plus a margin
based on the level of a specified financial ratio or Lear's credit ratings on
its long-term senior unsecured debt.
Repayment. Subject to the provisions of our primary credit facilities, we
may, from time to time, borrow, repay and reborrow under our amended and
restated revolving credit facility and our new revolving credit facility. Our
new term loan provides for scheduled repayments of $50 million in 2000, $100
million in 2001, $125 million in 2002, $150 million in 2003 and $75 million in
2004. Amounts repaid under our new term loan may not be reborrowed. We can
prepay our new term loan at any time prior to maturity.
Security and Guarantees. With certain exceptions, the Loans are guaranteed
by our direct and indirect domestic subsidiaries that account for 10% or more of
our consolidated assets or revenues, on a pro forma basis. With certain
exceptions, the Loans are secured by a pledge to the Agent for the ratable
benefit of the banks party to our primary credit facilities of all or a portion
of the capital stock of our subsidiaries comprising 10% or more of our
consolidated assets or revenues, on a pro forma basis. The
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stock pledges also equally and ratably secure our obligations under term loans
having an aggregate principal amount of $75 million. Pursuant to the terms of
our primary credit facilities, the guarantees and the stock pledges shall be
released when and if:
- Lear attains "Release Status" or achieves a leverage ratio (as calculated
pursuant to our primary credit facilities) of less than 2.50 to 1.00;
- the agent has no actual knowledge of the existence of a default;
- Lear delivers an officer's certificate that such officer has obtained no
knowledge of a default or an event or default; and
- the guarantees of the notes shall have been released or shall be released
simultaneously with the guarantees of our primary credit facilities.
Under our primary credit facilities, "Release Status" is generally defined to
exist at any time when the actual or implied rating of our senior long-term
unsecured debt is at or above "BBB-" from Standard & Poor's Ratings Group or at
or above "Baa3" from Moody's Investors Service, Inc.
Covenants. Our primary credit facilities contain financial covenants
relating to ratios of consolidated operating profit to consolidated interest
expense and of consolidated indebtedness to consolidated operating profit. Our
primary credit facilities also contain restrictive covenants pertaining to the
management and operation of Lear. The covenants include, among others,
limitations on indebtedness, guarantees, mergers, acquisitions, fundamental
corporate changes, asset sales, investments, loans and advances, liens,
dividends and other stock payments, transactions with affiliates and optional
payments and modification of debt instruments.
Events of Default. Our primary credit facilities provide for events of
default customary in facilities of these types, including:
- failure to make payments when due;
- breach of certain covenants;
- breach of representations or warranties in any material respect when
made;
- default under any agreement relating to debt for borrowed money in excess
of $40 million in the aggregate;
- bankruptcy defaults;
- unsatisfied judgments in excess of $40 million;
- ERISA defaults;
- any security document or guarantee ceasing to be in full force and effect
other than as otherwise contemplated by the relevant primary credit
facility;
- the subordination provisions in the instruments under which subordinated
debt (or any refinancings thereof) were created ceasing to be in full
force and effect or enforceable to the same extent purported to be
created thereby; and
- a change of control of Lear.
SUBORDINATED NOTES
We currently have outstanding $136 million of 8 1/4% subordinated notes due
2002 and $200 million of 9 1/2% subordinated notes due 2006 (collectively the
"Subordinated Notes") which will remain outstanding. The Subordinated Notes are
subordinated in right of payment to all of our existing and future senior
indebtedness, including the exchange notes and obligations arising under our
primary credit facilities. Interest on the Subordinated Notes is payable in
arrears semi-annually.
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The indentures governing the Subordinated Notes (the "Subordinated Note
Indentures") limit, among other things:
- the making of any Restricted Payment (as defined in the Subordinated Note
Indentures);
- the incurrence of indebtedness unless we satisfy a specified cash flow to
interest expense coverage ratio;
- the creation of liens;
- the incurrence of payment restrictions affecting subsidiaries;
- entering into transactions with stockholders and affiliates;
- the sale of assets;
- the issuance of preferred stock; and
- the merger, consolidation or sale of all or substantially all of our
assets.
The Subordinated Note Indentures also provide that a holder of the Subordinated
Notes may, under certain circumstances, have the right to require that we
repurchase such holder's securities upon a change of control of Lear at 101% of
their principal amount plus accrued and unpaid interest (if any) to the date of
repurchase.
The 8 1/4% subordinated notes mature on February 1, 2002 and may, at our
option, be redeemed in whole or in part, on at least 30 days' but not more then
60 days' notice to each holder of the notes to be redeemed at 100% of their
principal amount together with accrued and unpaid interest (if any) to the
redemption date. The 9 1/2% subordinated notes mature on July 15, 2006 and may,
at our option, be redeemed in whole or in part at any time on or after July 15,
2001, on at least 30 days' but not more than 60 days' notice to each holder of
the notes to be redeemed at specified redemption prices.
OTHER DEBT
As of April 3, 1999, on a pro forma basis, we would have had outstanding
approximately $261 million of debt other than the debt under our primary credit
facilities, our Subordinated Notes and the original notes. This debt consisted
primarily of U.S. term loans, foreign subsidiary working capital indebtedness,
industrial revenue bonds and capital leases. The U.S. term loans, having an
aggregate principal amount of $75 million, are secured by an equal and ratable
pledge of the subsidiary stock securing our primary credit facilities and are
guaranteed by the same domestic subsidiaries that guarantee the Loans under our
primary credit facilities. The stock pledge shall be released when and if the
stock pledge securing our primary credit facilities is released. Approximately
$92 million of the remaining debt was incurred by subsidiaries and, in certain
cases, is guaranteed by Lear.
Several of our European subsidiaries factor their accounts receivable with
financial institutions subject to limited recourse provisions and are charged a
discount fee. The amount of such factored receivables, at April 3, 1999, was
approximately $168 million.
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DESCRIPTION OF EXCHANGE SECURITIES
GENERAL
The forms and terms of the exchange securities and the original securities
are identical in all respects except that the registration rights and related
liquidated damages provisions, and the transfer restrictions, applicable to the
original securities do not apply to the exchange securities. Except where the
context otherwise requires, references below to "notes" or "securities" are
references to both original notes and exchange notes or both original securities
and exchange securities, as the case may be.
The exchange securities will be issued under the Indenture dated as of May
15, 1999 (the "Indenture"), among Lear, the Guarantors and The Bank of New York,
as Trustee (the "Trustee"). The following discussion includes a summary of
certain material provisions of the Indenture and the exchange securities.
Because this discussion is a summary, it does not include all of the provisions
of the Indenture, including the definitions therein of certain terms and those
terms made part of the Indenture by the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"), and the exchange securities. You should read the
Indenture and the exchange securities carefully and in their entirety. Copies of
the Indenture and the form of exchange securities have been filed as exhibits to
the registration statement of which this prospectus is part.
The exchange notes will be limited to an aggregate principal amount of up
to $1,400,000,000, consisting of $600,000,000 aggregate principal amount of
7.96% Series B Senior Notes due 2005 (the "Exchange Notes Due 2005") and
$800,000,000 aggregate principal amount of 8.11% Series B Senior Notes due 2009
(the "Exchange Notes Due 2009").
Exchange Notes Due 2005. The Exchange Notes Due 2005 will mature on May
15, 2005. The Exchange Notes Due 2005 will bear interest from the date of
issuance, at 7.96% per annum, payable semiannually on May 15 and November 15 of
each year, commencing on November 15, 1999. Interest will be payable to the
person in whose name an Exchange Note Due 2005 (or any predecessor Exchange Note
Due 2005) is registered, subject to certain exceptions set forth in the
Indenture, at the close of business on May 1 or November 1, as the case may be,
immediately preceding such May 15 or November 15. Interest on the Exchange Notes
Due 2005 will be calculated on the basis of a 360-day year consisting of 12
months of 30 days each.
Exchange Notes Due 2009. The Exchange Notes Due 2009 will mature on May
15, 2009. The Exchange Notes Due 2009 will bear interest from the date of
issuance, at 8.11% per annum, payable semiannually on May 15 and November 15 of
each year, commencing on November 15, 1999. Interest will be payable to the
person in whose name an Exchange Note Due 2009 (or any predecessor Exchange Note
Due 2009) is registered, subject to certain exceptions set forth in the
Indenture, at the close of business on May 1 or November 1, as the case may be,
immediately preceding such May 15 or November 15. Interest on the Exchange Notes
Due 2009 will be calculated on the basis of a 360-day year consisting of 12
months of 30 days each.
Principal of and premium, if any, and interest on the exchange notes will
be payable, and the exchange notes will be exchangeable and transfers thereof
will be registrable, at an office or agency of Lear, one of which will be
maintained for such purpose in New York, New York (which initially will be the
corporate trust office of the Trustee) or such other office or agency permitted
under the Indenture. So long as the exchange notes are represented by global
notes, the interest payable on such exchange notes will be paid to Cede & Co.,
the nominee of The Depository Trust Company ("DTC"), or its registered assigns
as the registered owner of such global notes, by wire transfer of immediately
available funds on each applicable interest payment date. If any of the exchange
notes are no longer represented by global notes, payment of interest thereon
may, at our option, be made by check mailed to the address of the person
entitled thereto.
The original notes and the exchange notes of each tranche constitute a
single class of securities and will vote and consent together on all matters as
one series, and neither the original notes nor the exchange
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notes of the same tranche will have the right to vote or consent as a class or
series separate from one another on any matter.
The exchange notes will be issued only in registered form without coupons,
in denominations of $1,000 or integral multiples thereof. To the extent
described under "-- Book Entry; Delivery and Form" below, the principal of and
interest on the exchange notes will be payable and transfer of the exchange
notes will be registrable through DTC. No service charge will be made for any
registration of transfer or exchange of exchange notes, but we may require
payment of a sum sufficient to cover any tax or other governmental charge
imposed in connection therewith.
The Indenture does not contain any provisions that would limit the ability
of Lear or the Guarantors to incur indebtedness or that would require the
maintenance of financial ratios or specified levels of net worth or liquidity.
In addition, the Indenture does not contain any provisions that would require
Lear to repurchase or redeem or otherwise modify the terms of any of the
exchange securities upon a change in control or other events involving Lear that
may adversely affect the creditworthiness of the exchange securities. However,
the Indenture does:
- provide that, subject to certain exceptions, neither Lear nor any
Restricted Subsidiary will subject its property or assets to any mortgage
or other encumbrance unless the exchange notes are secured equally and
ratably with such other indebtedness thereby secured; and
- contain certain limitations on the ability of Lear and its Restricted
Subsidiaries to enter into certain sale and lease-back arrangements.
See "-- Certain Covenants."
OPTIONAL REDEMPTION
The Exchange Notes Due 2005 and the Exchange Notes Due 2009 will be
redeemable as a whole at any time or in part from time to time, at our option,
at a redemption price equal to the greater of (i) 100% of the principal amount
of such Exchange Notes and (ii) the sum of the present values of the remaining
scheduled payments of principal and interest thereon from the redemption date to
the maturity date discounted, to the redemption date on a semiannual basis
(assuming a 360-day year consisting of 12 months of 30 days each) at the
Treasury Rate plus 50 basis points, in each case, together with any interest
accrued but not paid to the date of redemption.
"Treasury Rate" means, with respect to any redemption date for the Exchange
Notes Due 2005 and the Exchange Notes Due 2009, as the case may be, (1) the
yield, under the heading which represents the average for the immediately
preceding week, appearing in the most recently published statistical release
designated "H.15(519)" or any successor publication which is published weekly by
the Board of Governors of the Federal Reserve System and which establishes
yields on actively traded United States Treasury securities adjusted to constant
maturity under the caption "Treasury Constant Maturities," for the maturity
corresponding to the Comparable Treasury Issue (if no maturity is within three
months before or after the maturity date for the Exchange Notes Due 2005 or the
Exchange Notes Due 2009, as the case may be, yields for the two published
maturities most closely corresponding to the Comparable Treasury Issue shall be
determined and the Treasury Rate shall be interpolated or extrapolated from such
yields on a straight line basis, rounding to the nearest month) or (2) if such
release (or any successor release) is not published during the week preceding
the calculation date or does not contain such yields, the rate per annum equal
to the semi-annual equivalent yield to maturity of the Comparable Treasury
Issue, calculated using a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date. The Treasury Rate shall be calculated on the third
Business Day preceding the redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Exchange Notes Due 2005 or the Exchange Notes Due
2009, as the case may be, to be redeemed that would be utilized, at the
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time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such Notes.
"Comparable Treasury Price" means with respect to any redemption date for
the Exchange Notes Due 2005 or the Exchange Notes Due 2009, as the case may be,
(1) the average of four Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest of such Reference Treasury Dealer
Quotations, or (2) if the Trustee obtains fewer than four such Reference
Treasury Dealer Quotations, the average of all such quotations.
"Independent Investment Banker" means one of the Reference Treasury Dealers
appointed by the Trustee after consultation with us.
"Reference Treasury Dealer" means Morgan Stanley & Co. Incorporated and
three other primary U.S. Government securities dealers in New York City (each, a
"Primary Treasury Dealer") appointed by the Trustee after consultation with us;
provided, however, that if any of the foregoing shall cease to be a Primary
Treasury Dealer, we shall substitute therefor another Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. (New York
City time) on the third Business Day preceding such redemption date.
Notice of redemption will be mailed at least 30 days but no more than 60
days before the redemption date to each holder of exchange notes to be redeemed.
Unless we default in payment of the redemption price, on and after the
redemption date, interest will cease to accrue on the exchange notes or portions
thereof called for redemption.
STATUS OF EXCHANGE NOTES
The exchange notes will be unsecured obligations of Lear, ranking pari
passu with all other unsecured and unsubordinated indebtedness of Lear, and
ranking senior in right of payment to the outstanding subordinated indebtedness
of Lear and any future subordinated indebtedness of Lear. As of April 3, 1999,
on a pro forma basis after giving effect to the Transactions, we would have had
outstanding approximately $3,207 million of senior indebtedness and
approximately $336 million of subordinated indebtedness. In addition, the
exchange notes will be structurally subordinated to indebtedness of our
subsidiaries other than indebtedness of the Guarantors. As of April 3, 1999, on
a pro forma basis after giving effect to the Transactions, the Guarantors would
have had outstanding approximately $22 million of indebtedness (excluding
indebtedness represented by guarantees of our Principal Credit Facilities and
the exchange notes and intercompany debt) and our subsidiaries other than the
Guarantors had outstanding approximately $425 million of indebtedness (including
$333 million under our primary credit facilities).
Indebtedness under our Principal Credit Facilities is secured by pledges of
all or a portion of the stock of certain of our subsidiaries, including the
Guarantors. The exchange notes will not have the benefit of such pledges and the
Indenture does not contain any restriction upon indebtedness, whether secured or
unsecured, that Lear and its subsidiaries may incur in the future. The total
amount of secured indebtedness as of April 3, 1999, on a pro forma basis after
giving effect to the Transactions, would have been approximately $41 million
(excluding indebtedness under the Principal Credit Facilities). Secured
creditors of Lear will have a claim on the assets which secure the obligations
of Lear prior to any claims of holders of the exchange notes against such
assets.
GUARANTEES
Each of certain of our domestic subsidiaries (the "Guarantors") will
irrevocably and unconditionally guarantee on a joint and several basis the
punctual payment when due, whether at stated maturity, by acceleration or
otherwise, all of our obligations under the Indenture and the exchange notes,
including our
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obligations to pay principal, premium, if any, and interest with respect to the
exchange notes. Each of the Guarantees shall be a guarantee of payment and not
of collection. The obligations of each Guarantor under its guarantee (each a
"Guarantee") are limited to the maximum amount which, after giving effect to all
other contingent and fixed liabilities of such Guarantor and after giving effect
to any collections from or payment made by or on behalf of any other Guarantor
in respect of the obligations of such other Guarantor under its Guarantee can be
guaranteed by such Guarantor without resulting in the obligations of such
Guarantor under its Guarantee constituting a fraudulent conveyance or fraudulent
transfer under applicable federal or state law. Notwithstanding the foregoing,
there is a risk that the Guarantees will involve a fraudulent conveyance or
transfer or otherwise be void, and thus will be unenforceable.
The Guarantors on the date of the Indenture were Lear Operations
Corporation and Lear Corporation Automotive Holdings (formerly, UT Automotive).
The Indenture provides that each subsidiary of Lear that becomes a guarantor
under our Principal Credit Facilities after the date of the Indenture will
become a Guarantor.
In the event that a subsidiary that is a Guarantor ceases to be a guarantor
under our Principal Credit Facilities, such subsidiary will also cease to be a
Guarantor, whether or not a Default or Event of Default is then outstanding,
subject to reinstatement as a Guarantor in the event that such subsidiary should
thereafter become a guarantor under our Principal Credit Facilities. A
subsidiary may cease to be a Guarantor upon sale or other disposal of such
subsidiary or otherwise. We are not restricted from selling or otherwise
disposing of any of the Guarantors or any or all of the assets of any of the
Guarantors.
The Indenture provides that if the exchange notes are defeased in
accordance with the terms of the Indenture, including pursuant to a covenant
defeasance, then the Guarantors shall be released and discharged of their
obligations under the Guarantees. See "Description of Other Material
Indebtedness -- Primary Credit Facilities -- Security and Guarantees."
CERTAIN COVENANTS
Limitation on Liens
The Indenture provides that Lear will not, nor will it permit any of its
Restricted Subsidiaries to, create, incur, assume or permit to exist any Lien on
any of their respective properties or assets, whether now owned or hereafter
acquired, or upon any income or profits therefrom, without effectively providing
that the notes shall be equally and ratably secured until such time as such
Indebtedness is no longer secured by such Lien, except:
(1) Permitted Liens;
(2) Liens on shares of capital stock of Subsidiaries of Lear (and the
proceeds thereof) securing obligations under the Principal Credit
Facilities;
(3) Liens on receivables subject to a Receivable Financing
Transaction;
(4) Liens arising in connection with industrial development bonds or
other industrial development, pollution control or other tax-favored or
government-sponsored financing transactions, provided that such Liens do
not at any time encumber any property other than the property financed by
such transaction and other property, assets or revenues related to the
property so financed on which Liens are customarily granted in connection
with such transactions (in each case, together with improvements and
attachments thereto);
(5) Liens granted after the Closing Date on any assets or properties
of Lear or any of its Restricted Subsidiaries to secure obligations under
the exchange notes;
(6) Extensions, renewals and replacements of any Lien described in
subsections (1) through (5) above; and
(7) Other Liens in respect of Indebtedness of Lear and its Restricted
Subsidiaries in an aggregate principal amount at any time not exceeding 5%
of Consolidated Assets at such time.
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Limitation on Sale and Lease-Back Transactions
The Indenture provides that Lear will not, nor will it permit any of its
Restricted Subsidiaries to, enter into any sale and lease-back transaction for
the sale and leasing back of any property or asset, whether now owned or
hereafter acquired, of Lear or any of its Restricted Subsidiaries (except such
transactions (1) entered into prior to the Closing Date, (2) for the sale and
leasing back of any property or asset by a Restricted Subsidiary of Lear to Lear
or any other Restricted Subsidiary of Lear, (3) involving leases for less than
three years or (4) in which the lease for the property or asset is entered into
within 120 days after the later of the date of acquisition, completion of
construction or commencement of full operations of such property or asset)
unless:
(a) Lear or such Restricted Subsidiary would be entitled under the
"Limitation on Liens" covenant above to create, incur, assume or permit to
exist a Lien on the assets to be leased in an amount at least equal to the
Attributable Value in respect of such transaction without equally and
ratably securing the exchange notes, or
(b) the proceeds of the sale of the assets to be leased are at least
equal to their fair market value and the proceeds are applied to the
purchase, acquisition, construction or refurbishment of assets or to the
repayment of Indebtedness of Lear or any of its Restricted Subsidiaries
which on the date of original incurrence had a maturity of more than one
year.
CERTAIN DEFINITIONS
The following terms shall have the meanings set forth below.
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Restricted Subsidiaries existing at the time such Person becomes a Restricted
Subsidiary of Lear or assumed in connection with the acquisition of assets from
such Person and not incurred by such Person in contemplation of such Person
becoming a Restricted Subsidiary of Lear or such acquisition, and any
refinancings thereof.
"Attributable Value" means, in connection with a sale and lease-back
transaction, the lesser of (1) the fair market value of the assets subject to
such transaction and (2) the present value (discounted at a rate per annum equal
to the rate of interest implicit in the lease involved in such sale and
lease-back transaction, as determined in good faith by us) of the obligations of
the lessee for rental payments during the term of the related lease.
"Closing Date" means the date on which the original notes were issued.
"Consolidated Assets" means at a particular date, all amounts which would
be included under total assets on a consolidated balance sheet of Lear and its
Restricted Subsidiaries as at such date, determined in accordance with GAAP.
"Financing Lease" means (a) any lease of property, real or personal, the
obligations under which are capitalized on a consolidated balance sheet of Lear
and its Restricted Subsidiaries and (b) any other such lease to the extent that
the then present value of the minimum rental commitment thereunder should, in
accordance with GAAP, be capitalized on a balance sheet of the lessee.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are applicable from time to time.
"Indebtedness" of a Person means all obligations which would be treated as
liabilities upon a balance sheet of such Person prepared on a consolidated basis
in accordance with GAAP.
"Investment" by any Person means (i) all investments by such Person in any
other Person in the form of loans, advances or capital contributions, (ii) all
guarantees of Indebtedness or other obligations of any other Person by such
Person, (iii) all purchases (or other acquisitions for consideration) by such
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Person of Indebtedness, capital stock or other securities of any other Person;
(iv) all other items that would be classified as investments (including, without
limitation, purchases outside the ordinary course of business) on a balance
sheet of such Person prepared in accordance with GAAP.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement or any Financing Lease having substantially the same
economic effect as any of the foregoing).
"Permitted Liens" means:
(1) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings; provided that adequate reserves with
respect thereto are maintained on the books of Lear or its Restricted
Subsidiaries, as the case may be, in accordance with GAAP (or, in the case
of Restricted Subsidiaries organized outside the United States, generally
accepted accounting principles in effect from time to time in their
respective jurisdictions of organization);
(2) statutory Liens of landlords, carriers, warehousemen, mechanics,
materialmen, repairmen, suppliers or other like Liens arising in the
ordinary course of business relating to obligations not overdue for a
period of more than 60 days or which are bonded or being contested in good
faith by appropriate proceedings;
(3) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation, including any
Lien securing letters of credit issued in the ordinary course of business
in connection therewith and deposits securing liabilities to insurance
carriers under insurance and self-insurance programs;
(4) Liens (other than any Lien imposed by ERISA) incurred on deposits
to secure the performance of bids, trade contracts (other than for borrowed
money), leases, statutory obligations, surety and appeal bonds, performance
bonds, utility payments and other obligations of a like nature incurred in
the ordinary course of business;
(5) easements, rights-of-way, restrictions and other similar
encumbrances incurred which, in the aggregate, do not materially interfere
with the ordinary conduct of the business of Lear and its Restricted
Subsidiaries taken as a whole;
(6) attachment, judgment or other similar Liens arising in connection
with court or arbitration proceedings fully covered by insurance or
involving, individually or in the aggregate, no more than $40,000,000 at
any one time, provided that the same are discharged, or that execution or
enforcement thereof is stayed pending appeal, within 60 days or, in the
case of any stay of execution or enforcement pending appeal, within such
lesser time during which such appeal may be taken;
(7) Liens securing obligations (other than obligations representing
Indebtedness for borrowed money) under operating, reciprocal easement or
similar agreements entered into in the ordinary course of business;
(8) statutory Liens and rights of offset arising in the ordinary
course of business of Lear and its Restricted Subsidiaries;
(9) Liens in connection with leases or subleases granted to others and
the interest or title of a lessor or sublessor (other than Lear or any of
its Subsidiaries) under any lease; and
(10) Liens securing Indebtedness in respect of interest rate agreement
obligations or currency agreement obligations entered into to protect
against fluctuations in interest rates or exchange rates and not for
speculative reasons.
"Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature.
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"Principal Credit Facilities" means
(1) the Second Amended and Restated Credit and Guarantee Agreement,
dated as of May 4, 1999, among Lear, Lear Corporation Canada Ltd., the
Foreign Subsidiary Borrowers (as defined therein), the Lenders Party
thereto, Bankers Trust Company and Bank of America National Trust & Savings
Association, as Co-Syndication Agents, The Bank of Nova Scotia, as
Documentation Agent and Canadian Administrative Agent, and The Chase
Manhattan Bank, as General Administrative Agent;
(2) the Interim Term Loan Agreement, dated as of May 4, 1999, among
Lear, the Lenders parties thereto, Citicorp USA, Inc. and Credit Suisse
First Boston, as Co-Syndication Agents, Deutsche Bank AG New York Branch,
as Documentation Agent, the other Agents named therein, and The Chase
Manhattan Bank, as Administrative Agent;
(3) the Revolving Credit and Term Loan Agreement, dated as of May 4,
1999, among Lear, certain of its Foreign Subsidiaries, the Lenders parties
thereto, Citicorp USA, Inc. and Morgan Stanley Senior Funding, Inc., as
Co-Syndication Agents, Toronto Dominion (Texas), Inc., as Documentation
Agent, the other Agents named therein, and The Chase Manhattan Bank, as
Administrative Agent;
(4) the Term Loan Agreement, dated November 17, 1998, between Lear and
Toronto Dominion (Texas), Inc., as amended by that certain amendment dated
as of May 4, 1999; and
(5) the Term Loan Agreement, dated as of December 3, 1998, between
Lear and Deutsche Bank AG, New York Branch and/or Cayman Islands Branch, as
amended by that certain amendment dated as of May 4, 1999,
in each case, including any related notes, collateral documents, security
documents, instruments and agreements entered into in connection therewith and,
in each case, as the same may be amended, supplemented or otherwise modified
(including any agreement extending the maturity of, increasing the total
commitment under or otherwise restructuring all or any portion of the
Indebtedness under any such agreement or any successor or replacement
agreement), renewed, refunded, replaced, restated or refinanced from time to
time.
"Receivable Financing Transaction" means any transaction or series of
transactions involving a sale for cash of accounts receivable, without recourse
based upon the collectibility of the receivables sold, by Lear or any of its
Restricted Subsidiaries to a Special Purpose Subsidiary and a subsequent sale or
pledge of such accounts receivable (or an interest therein) by such Special
Purpose Subsidiary, in each case without any guarantee by Lear or any of its
Restricted Subsidiaries (other than the Special Purpose Subsidiary).
"Restricted Subsidiary" means any Subsidiary other than a Unrestricted
Subsidiary.
"Significant Subsidiary" means any Subsidiary which has (i) consolidated
assets or in which Lear and its other Subsidiaries have Investments, equal to or
greater than 5% of the total consolidated assets of Lear at the end of its most
recently completed fiscal year or (ii) consolidated gross revenue equal to or
greater than 5% of the consolidated gross revenue of Lear for its most recently
completed fiscal year.
"Special Purpose Subsidiary" means any wholly owned Restricted Subsidiary
of Lear created by Lear for the sole purpose of facilitating a Receivable
Financing Transaction.
"Subsidiary" of any Person means (1) a corporation a majority of whose
capital stock with voting power, under ordinary circumstances, to elect
directors is at the time, directly or indirectly, owned by such Person or by
such Person and a subsidiary or subsidiaries of such Person or by a subsidiary
or subsidiaries of such Person or (2) any other Person (other than a
corporation) in which such Person or such Person and a subsidiary or
subsidiaries of such Person or a subsidiary or subsidiaries of such Persons, at
the time, directly or indirectly, owns at least a majority voting interest under
ordinary circumstances.
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"Unrestricted Subsidiary" means any Subsidiary designated as such by the
Board of Directors of Lear; provided, however, that at the time of any such
designation by the Board of Directors, such Subsidiary does not constitute a
Significant Subsidiary; and provided, further, that at the time that any
Unrestricted Subsidiary becomes a Significant Subsidiary it shall cease to be an
Unrestricted Subsidiary.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Indenture provides that Lear will not consolidate or merge with or
into, or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets to, any Person unless:
(1) the Person formed by or surviving any such consolidation or merger
(if other than Lear), or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made, is a corporation
organized and existing under the laws of the United States of America, any
state thereof or the District of Columbia;
(2) the Person formed by or surviving any such consolidation or merger
(if other than Lear), or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made, assumes all our
obligations under the exchange notes and the Indenture; and
(3) immediately after such transaction, and giving effect thereto, no
Default (as defined in the Indenture) or Event of Default shall have
occurred and be continuing. Notwithstanding the foregoing, we may merge
with another Person or acquire by purchase or otherwise all or any part of
the property or assets of any other corporation or Person in a transaction
in which we are the surviving entity.
EVENTS OF DEFAULT
The Indenture provides that the following events will constitute Events of
Default with respect to the notes of each series:
- failure to pay principal of any note of such series when due and payable
at stated maturity, upon acceleration, redemption or otherwise;
- failure to pay any interest on any note of such series when due, and the
Default continues for 30 days;
- failure to comply with any of our other agreements of the notes of such
series or in the Indenture (other than covenants or agreements included
in the Indenture solely for the benefit of the other series of notes) and
the Default continues for the period of 30 days after either the Trustee
or the holders of at least 25% in principal amount of the then
outstanding notes of such series have given written notice as provided in
the Indenture;
- any Guarantee of the notes of such series ceases to be in full force and
effect or any Guarantor denies or disaffirms its obligations under its
Guarantee of the notes of such series, except, in each case, in
connection with a release of a Guarantee in accordance with the terms of
the Indenture;
- the nonpayment at maturity or other default (beyond any applicable grace
period) under any agreement or instrument relating to any other
Indebtedness of Lear or its Subsidiaries (the unpaid principal amount of
which is not less than $40 million), which default results in the
acceleration of the maturity of such Indebtedness prior to its stated
maturity or occurs at the final maturity thereof;
- the entry of any final judgment or orders against Lear or its
Subsidiaries in excess of $40 million individually or in the aggregate
(not covered by insurance) that is not paid, discharged or otherwise
stayed (by appeal or otherwise) within 60 days after the entry of such
judgments or orders; and
- certain events of bankruptcy, insolvency or reorganization of Lear or any
Significant Subsidiary.
If an Event of Default with respect to outstanding notes of any series
(other than an Event or Default relating to certain events of bankruptcy,
insolvency or reorganization, in which case the unpaid principal
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amount of, and any accrued and unpaid interest on, all notes of that series are
due and payable immediately) shall occur and be continuing, either the Trustee
or the holders of at least 25% in principal amount of the outstanding notes of
such series by notice, as provided in the Indenture, may declare the unpaid
principal amount of, and any accrued and unpaid interest on, all notes of that
series to be due and payable immediately. However, at any time after a
declaration of acceleration with respect to notes of such series has been made,
but before a judgment or decree based on such acceleration has been obtained,
the holders of a majority in principal amount of the outstanding notes of that
series may, under certain circumstances, rescind and annul such acceleration.
For information as to waiver of defaults, see "Amendment, Supplement and Waiver"
below.
The Indenture provides that, subject to the duty of the Trustee during an
Event of Default to act with the required standard of care, the Trustee will be
under no obligation to exercise any of its rights or powers under the applicable
Indenture at the request or direction of any of the holders, unless such holders
shall have offered to the Trustee reasonable security or indemnity. Subject to
certain provisions, including those requiring security or indemnification of the
Trustee, the holders of a majority in principal amount of the outstanding notes
of each series have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred on the Trustee, with respect to the notes of such series.
We will be required to furnish to the Trustee under the Indenture annually
a statement as to the performance by us of our obligations under the Indenture
and as to any default in such performance.
DISCHARGE OF INDENTURE AND DEFEASANCE
We may terminate our obligations under the notes of any series (and the
corresponding obligations under the Indenture) when we irrevocably deposit with
the Trustee funds or U.S. government obligations in an amount certified to be
sufficient (without reinvestment thereof) to pay at maturity all outstanding
notes of such series, including all interest thereon (other than destroyed, lost
or stolen notes of such series which have not been replaced or paid), and
(1) all outstanding notes of such series have been delivered (other
than destroyed, lost or stolen notes of such series which have not been
replaced or paid) to the Trustee for cancellation; or
(2) all outstanding notes of such series have become due and payable
(whether at stated maturity, early redemption or otherwise),
and, in either case, we have paid all other sums payable under the Indenture.
In addition, we may terminate substantially all our obligations under the
notes of any series (and the corresponding obligations under the Indenture) if
we deposit, or cause to be deposited with the Trustee, in trust an amount of
cash or U.S. government obligations maturing as to principal and interest in
such amounts and at such times as are certified to be sufficient to pay
principal of and interest on the then outstanding notes of such series to
maturity or redemption, as the case may be, and
(1) such deposit will not result in a breach of, or constitute a
Default under, the Indenture;
(2) no Default or Event of Default shall have occurred and be
continuing on the date of deposit and no bankruptcy Event of Default or
event which with the giving of notice or the lapse of time would become a
bankruptcy Event of Default shall have occurred and be continuing on the
91st day after such date;
(3) we deliver to the Trustee an opinion of counsel to the effect that
we have received from, or there has been published by, the United States
Internal Revenue Service a ruling, or there has been a change in tax law,
in either case to the effect that the holders of the notes will not
recognize income, gain or loss for Federal income tax purposes as a result
of our exercise of such option and shall be subject to Federal income tax
on the same amounts and in the same manner and at the same times as would
have been the case if such option had not been exercised; and
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(4) certain other conditions are met.
We shall be released from our obligations with respect to the covenants
described under "-- Certain Covenants" and certain other covenants contained in
the Indenture and any Event of Default occurring because of a Default with
respect to such covenants as they related to any series of notes if we deposit,
or cause to be deposited with the Trustee, in trust an amount of cash or U.S.
government obligations certified to be sufficient to pay and discharge when due
the entire unpaid principal of and interest on all outstanding notes of such
series, and
(1) such deposit will not result in a breach of, or constitute a
Default under, the Indenture;
(2) no Default or Event of Default shall have occurred and be
continuing on the date of deposit and no bankruptcy Event of Default or
event which with the giving of notice or the lapse of time would become a
bankruptcy Event of Default shall have occurred and be continuing on the
91st day after such date;
(3) we deliver to the Trustee an opinion of counsel to the effect that
the holders of the notes will not recognize income, gain or loss for
Federal income tax purposes as a result of our exercise of such option and
shall be subject to Federal income tax on the same amounts and in the same
manner and at the same times as would have been the case if such option had
not been exercised; and
(4) certain other conditions are met.
Upon satisfaction of such conditions, our obligations under the Indenture with
respect to the notes of such series, other than with respect to the covenants
and Events of Default referred to above, shall remain in full force and effect.
Notwithstanding the foregoing, no discharge or defeasance described above
shall affect the following obligations to or rights of the holders of the notes
of the series subject to such discharge or defeasance: (1) rights of
registration of transfer and exchange of notes of such series, (2) rights of
substitution of mutilated, defaced, destroyed, lost or stolen notes of such
series, (3) rights of holders of notes of such series to receive payments of
principal thereof and premium, if any, and interest thereon when due, (4) the
rights, obligations, duties and immunities of the Trustee, (5) rights of holders
of notes of such series as beneficiaries with respect to property deposited with
the Trustee and payable to all or any of them, and (6) our obligations to
maintain an office or agency in respect of the notes of such series.
TRANSFER AND EXCHANGE
A holder may transfer or exchange notes in accordance with the Indenture.
The Registrar may require a holder, among other things, to furnish appropriate
endorsements and transfer documents, and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar is not required to transfer or
exchange any note selected for redemption or any note for a period of 15 days
before a selection of notes to be redeemed.
The registered holder of a note may be treated as the owner of it for all
purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Subject to certain exceptions, the terms of the Indenture or the notes may
be amended or supplemented by us and the Trustee with the written consent of the
holders of at least a majority in principal amount of such then outstanding
notes of each series affected thereby by the amendment and any existing Default
may be waived with the consent of the holders of at least a majority in
principal amount of the then outstanding notes of the series affected thereby.
Without the consent of any holder of the notes, we and the Trustee may amend the
terms of the Indenture or the notes to cure any ambiguity, defect or
inconsistency, to provide for the assumption of our obligations to holders of
the notes by a successor corporation, to provide for uncertificated notes in
addition to certificated notes, to make any change that does not adversely
affect the rights of any holder of the notes in any material respect, to add to
our covenants or take any other action for the benefit of the holders of the
notes or to comply with any
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requirement of the Securities and Exchange Commission in connection with the
qualification of the Indenture under the Trust Indenture Act. Without the
consent of each holder of notes of the series affected, we may not:
- reduce the principal amount of notes the holders of which must consent to
an amendment, supplement or waiver of any provision of the Indenture;
- reduce the rate or extend the time for payment of interest on any note;
- reduce the principal of or change the stated maturity of any notes;
- change the date on which any note may be subject to redemption, or reduce
the redemption price therefor;
- make any note payable in currency other than that stated in the note;
- modify or change any provision of the Indenture affecting the ranking of
the notes in a manner which adversely affects the holders thereof;
- impair the right of any holder to institute suit for the enforcement of
any payment in or with respect to any note;
- modify or change any provision of any Guarantee in a manner which
adversely affects the holders of the notes; or
- make any change in the foregoing amendment provisions which require each
holder's consent.
The consent of the holders of notes is not necessary to approve the
particular form of any proposed amendment to any Indenture. It is sufficient if
any consent approves the substance of the proposed amendment.
REPLACEMENT SECURITIES
Any mutilated certificate representing a note will be replaced by us at the
expense of the holder thereof upon surrender of such certificate to the Trustee.
Certificates representing notes that become destroyed, stolen or lost will be
replaced by us at the expense of the holder upon delivery to us and the Trustee
of evidence of any destruction, loss or theft thereof satisfactory to us and the
Trustee (provided that neither we nor the Trustee has been notified that such
certificate has been acquired by a bona fide purchaser). In the case of a
destroyed, lost or stolen certificate representing the note, an indemnity
satisfactory to the Trustee and us may be required at the expense of the holder
of such note before a replacement certificate will be issued.
GOVERNING LAW
The Indenture, the notes and the Guarantees will be governed by, and will
be construed in accordance with the laws of, the State of New York.
REGARDING THE TRUSTEE
The Indenture and provisions of the Trust Indenture Act incorporated by
reference therein contain certain limitations on the rights of the Trustee,
should it become a creditor of Lear, to obtain payment of claims in certain
cases, or to realize on certain property received in respect of any such claim,
as security or otherwise. The Trustee and its affiliates may engage in, and will
be permitted to continue to engage in, other transactions with us and our
affiliates; provided, however, that if it acquires any conflicting interest (as
defined in the Trust Indenture Act), it must eliminate such conflict or resign.
The holders of a majority in principal amount of the then outstanding notes
of each series will have the right to direct, the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee.
The Trust Indenture Act and the Indenture provide that in case an Event of
Default shall occur (and be continuing), the Trustee will be required, in the
exercise of its rights and powers, to use the degree of care and skill of a
prudent man in the conduct of his own affairs. Subject to such provision, the
Trustee will be under no obligation to exercise any of its rights or powers
under the
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Indenture at the request of any of the holders of the notes issued thereunder,
unless they have offered to the Trustee indemnity satisfactory to it.
BOOK-ENTRY; DELIVERY AND FORM
Book-Entry System
Lear will initially issue the exchange notes in respect of original notes
held in global form in the form of one or more global notes. The global notes
will be deposited with, or on behalf of, DTC and registered in the name of DTC
or its nominee. Except as set forth below, the global notes may be transferred,
in whole but not in part, only to DTC or another nominee of DTC. You may hold
your beneficial interests in the global notes directly through DTC if you have
an account with DTC or indirectly through organizations which have accounts with
DTC.
DTC has advised us that it is:
(1) a limited purpose trust company organized under the laws of the State
of New York,
(2) a "banking organization" within the meaning of the New York Banking
Law,
(3) a member of the Federal Reserve System,
(4) a "clearing corporation" within the meaning of the Uniform Commercial
Code, as amended, and
(5) a "clearing agency" registered pursuant to Section 17A of the Exchange
Act.
DTC was created to hold securities for its participants (collectively,
"Participants") and facilitates the clearance and settlement of securities
transactions between Participants through electronic book-entry changes to the
accounts of its Participants, thereby eliminating the need for physical transfer
and delivery of certificates. DTC's Participants include securities brokers and
dealers, banks and trust companies, clearing corporations and certain other
organizations. Indirect access to DTC's system is also available to other
entities such as banks, brokers, dealers and trust companies (collectively,
"Indirect Participants") that clear through or maintain a custodial relationship
with a Participant, either directly or indirectly. Investors who are not
Participants may beneficially own securities held by or on behalf of DTC only
through Participants or Indirect Participants.
We expect that pursuant to procedures established by DTC (1) upon deposit
of each global note with DTC, DTC will credit, on its book-entry registration
and transfer system, the principal amount of exchange notes represented by such
global notes to the accounts of Participants and (2) ownership of the exchange
notes will be shown on, and the transfer of ownership thereof will be effected
only through, records maintained by DTC (with respect to the interests of
Participants) and the records of Participants and the Indirect Participants
(with respect to the interests of persons other than Participants).
The laws of some jurisdictions may require that certain purchasers of
securities take physical delivery of such securities in definitive form.
Accordingly, the ability to transfer interests in the exchange notes represented
by a global note to such persons may be limited. In addition, because DTC can
act only on behalf of its Participants, who in turn act on behalf of persons who
hold interests through Participants, the ability of a person having an interest
in exchange notes represented by a global note to pledge or transfer such
interest to persons or entities that do not participate in DTC's system, or to
otherwise take actions in respect of such interest, may be affected by the lack
of a physical definitive security in respect of such interest.
So long as DTC or its nominee is the registered owner of a global note, DTC
or such nominee, as the case may be, will be considered the sole owner or holder
of the securities represented by such global note for all purposes under the
Indenture. Except as provided below, owners of beneficial interests in a global
note will not be entitled to have exchange notes represented by such global note
registered in their names, will not receive or be entitled to receive physical
delivery of certificated exchange notes (except in connection with a transfer to
an Institutional Accredited Investor), and will not be considered the owners or
holders thereof under the Indenture for any purpose, including with respect to
the giving of any
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direction, instruction or approval to the Trustee thereunder. Accordingly, each
holder owning a beneficial interest in a global note must rely on the procedures
of DTC and, if such holder is not a Participant or an Indirect Participant, on
the procedures of the Participant through which such holder owns its interest,
to exercise any rights of a holder of notes under the applicable Indenture or
such global note. We understand that under existing industry practice, in the
event that the owner of a beneficial interest in a global note desires to give
any notice or take any action that DTC, as the holder of such global note, is
entitled to give or take, DTC would authorize the Participants to give such
notice or take such action and the Participants would authorize holders owning
through such Participants to give such notice or take such action or would
otherwise act upon the instruction of such holders. Neither we nor the Trustee
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of notes by DTC, or for maintaining, supervising
or reviewing any records of DTC relating to such notes.
Payments with respect to the principal of, and premium, if any, and
interest on, any exchange notes represented by a global note registered in the
name of DTC or its nominee on the applicable record date will be payable by the
Trustee to or at the direction of DTC or its nominee in its capacity as the
registered holder of such global note representing such exchange notes under the
Indenture. Under the terms of the Indenture, we and the Trustee may treat the
persons in whose names the exchange notes, including the global notes, are
registered as the owners thereof for the purpose of receiving payment thereon
and for any and all other purposes whatsoever. Accordingly, neither we nor the
Trustee has or will have any responsibility or liability for the payment of such
amounts to owners of beneficial interests in a global note (including principal,
premium, if any, and interest). Payments by Participants and Indirect
Participants to the owners of beneficial interests in a global note will be
governed by standing instructions and customary industry practice and will be
the responsibility of such Participants or Indirect Participants and DTC.
Transfers between Participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same day funds.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interests in the global notes among Participants of DTC, it is under no
obligation to perform or to continue to perform such procedures, and such
procedures may be discontinued at any time. Neither we nor the Trustee will have
any responsibility for the performance by DTC or its Participants or Indirect
Participants of their respective obligations under the rules and procedures
governing their operations.
DTC and Year 2000 Problems. DTC's management is aware that some computer
applications, systems, and the like for processing data ("Systems") that are
dependent upon calendar dates, including dates before, on and after January 1,
2000, may encounter "Year 2000 problems." DTC has informed Participants and
other members of the financial community that it has developed and is
implementing a program so that its Systems, as the same relate to the timely
payment of distributions (including principal and income payments) to
securityholders, book-entry deliveries, and settlement of trades within DTC
("DTC Services"), continue to function appropriately. This program includes a
technical assessment and a remediation plan, each of which is complete.
Additionally, DTC's plan includes a testing phase, which is expected to be
completed within appropriate time frames. However, DTC's ability to perform its
services properly is also dependent upon other parties, including but not
limited to issuers and their agents, as well as third party vendors from whom
DTC licenses software and hardware, and third party vendors on whom DTC relies
for information or the provision of services, including telecommunication and
electrical utility service providers, among others. DTC has informed the
financial community that it is contacting, and will continue to contact, third
party vendors from whom DTC acquires services to impress upon them the
importance of such services being Year 2000 compliant, and to determine the
extent of their efforts for Year 2000 remediation and, as appropriate, testing
of their services. In addition, DTC is in the process of developing such
contingency plans as it deems appropriate.
According to DTC, the foregoing information with respect to DTC has been
provided to the financial community for informational purposes only and is not
intended to serve as a representation, warranty or contract modification of any
kind.
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Certificated Exchange Notes
Upon the occurrence of any of the following:
- we notify the Trustee in writing that DTC is no longer willing or able to
act as a depositary or DTC ceases to be registered as clearing agency
under the Securities Exchange Act and a successor depositary is not
appointed within 90 days of such notice or cessation,
- we, at our option, notify the Trustee in writing that we elect to cause
the issuance of the applicable notes in definitive form under the
Indenture or
- certain other events as provided in the Indenture,
then, upon surrender by DTC of such global note, certificated notes will be
issued to each person that DTC identifies as the beneficial owner of the notes
represented by such global note. Upon any such issuance, the Trustee is required
to register such certificated notes in the name of such person or persons (or
the nominee of any thereof) and cause the same to be delivered thereto.
Neither we nor the Trustee shall be liable for any delay by DTC or any
Participant or Indirect Participant in identifying the beneficial owners of the
related notes and each such person may conclusively rely on, and shall be
protected in relying on, instructions from DTC for all purposes (including with
respect to the registration and delivery, and the respective principal amounts,
of the notes to be issued).
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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of certain United States federal
income tax consequences associated with the exchange of the original securities
for the exchange securities pursuant to the exchange offer and the ownership and
disposition of the exchange securities. This summary applies only to a holder of
an exchange security who acquired an original security from an Initial Purchaser
and who acquires the exchange security pursuant to the exchange offer. This
discussion is based on provisions of the Internal Revenue Code of 1986 ("Code"),
Treasury regulations promulgated thereunder, and administrative and judicial
interpretations of the foregoing, all as in effect on the date hereof and all of
which are subject to change, possibly with retroactive effect. This discussion
does not address tax consequences (1) of the purchase, ownership, or disposition
(other than pursuant to the exchange offer) of the original securities to any
holder of the original securities, or (2) of the purchase, ownership, or
disposition of the exchange securities to subsequent purchasers of the exchange
securities, and is limited to investors who hold the original securities and the
exchange securities as capital assets. The tax treatment of the holders of the
securities may vary depending upon their particular situations. In addition,
certain holders (including insurance companies, tax exempt organizations,
financial institutions, broker-dealers, and Non-U.S. Holders (as defined below)
that are engaged in a trade or business in the United States or that have ceased
to be United States citizens or to be taxed as resident aliens) may be subject
to special rules not discussed below. EACH HOLDER SHOULD CONSULT ITS TAX ADVISOR
REGARDING THE PARTICULAR TAX CONSEQUENCES TO SUCH HOLDER OF THE EXCHANGE OF THE
ORIGINAL SECURITIES FOR THE EXCHANGE SECURITIES PURSUANT TO THE EXCHANGE OFFER
AND THE OWNERSHIP DISPOSITION OF THE SECURITIES, AS WELL AS ANY ESTATE TAX
CONSEQUENCES AND ANY TAX CONSEQUENCES THAT MAY ARISE UNDER THE LAWS OF ANY
RELEVANT FOREIGN, STATE, LOCAL, OR OTHER TAXING JURISDICTION.
UNITED STATES HOLDERS
As used herein, the term "United States Holder" means a holder of an
exchange security that is, for United States federal income tax purposes, (1) a
citizen or resident of the United States, (2) a corporation or other entity
treated as a corporation, created or organized in or under the laws of the
United States or of any political subdivision thereof, (3) an estate the income
of which is subject to United States federal income taxation regardless of its
source, (4) a trust if (a) a United States court is able to exercise primary
supervision over the administration of the trust and one or more United States
persons have the authority to control all substantial decisions of the trust or
(b) the trust was in existence on August 20, 1996, was treated as a United
States person prior to that date, and elected to continue to be treated as a
United States person, and (5) a partnership, or other entity treated as a
partnership, created or organized in or under the laws of the United States or
of any political subdivision thereof, except as Treasury regulations may
otherwise provide.
Exchange Offer
The exchange of an original security for an exchange security pursuant to
the exchange offer will not constitute a "significant modification" of the
original security for United States federal income tax purposes and,
accordingly, the exchange security received will be treated as a continuation of
the original security in the hands of the holder. As a result, there will be no
United States federal income tax consequences to a United States Holder who
exchanges an original security for an exchange security pursuant to the exchange
offer and any such holder will have the same adjusted tax basis and holding
period in the exchange security as that holder had in the original security
immediately before the exchange.
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Payment of Interest
Interest payable on a exchange security generally will be included in the
gross income of a United States Holder as ordinary interest income at the time
accrued or received, in accordance with such United States Holder's method of
accounting for United States federal income tax purposes.
Disposition of the Exchange Securities
Upon the sale, exchange, retirement at maturity, or other taxable
disposition of an exchange security (collectively, a "disposition"), a United
States Holder generally will recognize capital gain or loss equal to the
difference between the amount realized by such holder (except to the extent such
amount is attributable to accrued interest, which will be treated as ordinary
interest income) and such holder's adjusted tax basis in the exchange security.
Such capital gain or loss will be long-term capital gain or loss if such United
States Holder's holding period for the exchange security exceeds one year at the
time of the disposition.
Backup Withholding and Information Reporting
Backup withholding tax at a rate of 31%, and information reporting
requirements, will apply in certain circumstances to interest and principal
payments on, and proceeds from the disposition of, an exchange security held by
a United States Holder other than a corporation. Backup withholding will apply
to such a United States Holder in the event of a failure by that United States
Holder to furnish his, her or its correct taxpayer identification number to the
relevant payor or otherwise to comply with, or to establish an exemption from,
the backup withholding requirements. Corporate United States Holders generally
will be exempt from information reporting and backup withholding requirements,
but may be required to certify their status on a Form W-9 in order to secure
that exemption.
Backup withholding is not an additional tax. Any amounts withheld from a
payment to a United States Holder under the backup withholding rules will be
allowed as a credit against the holder's United States federal income tax
liability and may entitle the holder to a refund, provided that the required
information is furnished to the United States Internal Revenue Service.
Under current Treasury Regulations, payments on the sale, exchange, or
other disposition of an exchange security made to or through a foreign office of
a foreign broker generally will not be subject to backup withholding or
information reporting. However, if such broker is, for United States federal
income tax purposes, a United States person, a controlled foreign corporation, a
foreign person 50% or more of whose gross income is effectively connected with a
United States trade or business for a specified three-year period or (in the
case of payments made after December 31, 2000) a foreign partnership with
certain connections to the United States, then information reporting will be
required unless the broker has in its records documentary evidence that the
beneficial owner is not a United States person and certain other conditions are
met or the beneficial owner otherwise establishes an exemption. Backup
withholding may apply to any payment that such broker is required to report if
the broker has actual knowledge that the payee is a United States person.
Payments to or through the United States office of a broker will be subject to
backup withholding and information reporting unless the holder certifies, under
penalties of perjury, that it is not a United States person or otherwise
establishes an exemption.
NON-UNITED STATES HOLDERS
As used herein, the term "Non-U.S. Holder" means any beneficial owner of an
exchange security that is not a United States Holder.
Exchange Offer
The exchange of an original security for an exchange security pursuant to
the exchange offer will not constitute a "significant modification" of the
original security for United States federal income tax purposes and,
accordingly, the exchange security received will be treated as a continuation of
the original
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security in the hands of the holder. As a result, there will be no United States
federal income tax consequences to a Non-U.S. Holder who exchanges an original
security for an exchange security pursuant to the exchange offer and any such
holder will have the same adjusted tax basis and holding period in the exchange
security as that holder had in the original security immediately before the
exchange.
Payment of Interest
Subject to the discussion below concerning backup withholding, payment of
interest on the exchange securities to any Non-U.S. Holder will not be subject
to United States federal withholding tax, provided that (1) such holder does not
own, actually or constructively, 10% or more of the total combined voting power
of all classes of stock of Lear entitled to vote, is not a controlled foreign
corporation related, directly or indirectly, to Lear through stock ownership,
and is not a bank receiving interest described in Section 881(c)(3)(a) of the
Code and (2) the requirement to certify such holder's non-U.S. status, as set
forth in Section 871(h) or Section 881(c) of the Code, has been fulfilled with
respect to the beneficial owner.
Disposition of the Exchange Securities
Subject to the discussion below concerning backup withholding, a Non-U.S.
Holder of an exchange security will not be subject to United States federal
income tax on gain realized on the sale, exchange, or other disposition of that
exchange security, unless (1) the Non-U.S. Holder is an individual who is
present in the United States for 183 days or more in the taxable year of
disposition, and certain other conditions are met, or (2) the gain is
effectively connected with the conduct by the Non-U.S. Holder of a trade or
business in the United States.
Backup Withholding and Information Reporting
Under current United States federal income tax law, backup withholding at a
rate of 31% will not apply to payments by Lear or any paying agent thereof on an
exchange security if the certifications required by Sections 871(h) and 881(c)
of the Code are received, provided in each case that Lear or such paying agent,
as the case may be, does not have actual knowledge that the payee is a United
States person.
Under current Treasury Regulations, payments on the sale, exchange, or
other disposition of an exchange security made to or through a foreign office of
a foreign broker generally will not be subject to backup withholding or
information reporting. However, if such broker is, for United States federal
income tax purposes, a United States person, a controlled foreign corporation, a
foreign person 50% or more of whose gross income is effectively connected with a
United States trade or business for a specified three-year period, or (in the
case of payments made after December 31, 2000) a foreign partnership with
certain connections to the United States, then information reporting will be
required unless the broker has in its records documentary evidence that the
beneficial owner is not a United States person and certain other conditions are
met or the beneficial owner otherwise establishes an exemption. Backup
withholding may apply to any payment that such broker is required to report if
the broker has actual knowledge that the payee is a United States person.
Payments to or through the United States office of a broker will be subject to
backup withholding and information reporting unless the holder certifies, under
penalties of perjury, that it is not a United States person or otherwise
establishes an exemption. Recently enacted Treasury Regulations, effective for
payments after December 31, 2000, provide certain presumptions under which
Non-U.S. Holders will be subject to backup withholding or information reporting
unless such holder certifies its non-U.S. status.
Non-U.S. Holders of exchange securities should consult their tax advisors
regarding the application of information reporting and backup withholding in
their particular situations, the availability of an exemption therefrom, and the
procedure for obtaining such an exemption, if available. Any amounts withheld
from a payment to a Non-U.S. Holder under the backup withholding rules will be
allowed as a credit against that holder's United States federal income tax
liability and may entitle that holder to a refund, provided that the required
information is furnished to the United States Internal Revenue Service.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange securities for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange securities. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of exchange securities received in
exchange for original securities where such original securities were acquired as
a result of market-making activities or other trading activities. Lear has
agreed that, for a period of 90 days after the expiration date, it will make
this prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale.
Lear will not receive any proceeds from any sale of exchange securities by
broker-dealers. Exchange securities received by broker-dealers for their own
account pursuant to the exchange offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the exchange securities, or through a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices, or at negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such exchange
securities. Any broker-dealer that resells exchange securities that were
received by it for its own account pursuant to the exchange offer and any broker
or dealer that participates in a distribution of such exchange securities may be
deemed to be an "underwriter" within the meaning of the Securities Act and any
profit on any such resale of exchange securities and any commission or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The letter of transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
Lear has agreed, for a period of 90 days after the expiration date to
promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests such documents
in the letter of transmittal. Lear has also agreed to pay all expenses incident
to the exchange offer and will indemnify the holders of the securities
(including any broker-dealers) against certain liabilities, including
liabilities under the Securities Act to the extent they arise out of or are
based upon (1) any untrue statement or alleged untrue statement of a material
fact contained in the registration statement or prospectus or (2) an omission or
alleged omission to state in the registration statement or the prospectus a
material fact that is necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. This indemnification
obligation does not extend to statements or omissions in the registration
statement or prospectus made in reliance upon and in conformity with written
information pertaining to the holder that is furnished to Lear by or on behalf
of the holder.
LEGAL MATTERS
Certain legal matters relating to the exchange securities offered hereby
will be passed upon for Lear by Winston & Strawn, New York, New York.
EXPERTS
The audited financial statements and schedule of Lear included in this
prospectus and elsewhere in the registration statement 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 the
authority of said firm as experts in giving said reports.
The audited historical financial statements of UT Automotive, Inc.,
formerly a wholly-owned operating segment of United Technologies Corporation, as
of December 31, 1998 and 1997 and for each of
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the three years in the period ended December 31, 1998, incorporated in this
prospectus by reference to Lear's Current Report on Form 8-K dated May 4, 1999,
have been so incorporated in reliance on the report on PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The financial statements of the Seating Business formerly of the Delphi
Interior Systems Division of Delphi Automotive Systems Corporation as of
December 31, 1997 and 1996 and for each of the three years in the period ended
December 31, 1997, incorporated by reference in this prospectus from Lear's
Current Report on Form 8-K/A dated September 1, 1998 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
LEAR CORPORATION AND SUBSIDIARIES
Report of Independent Public Accountants.................... F-2
Consolidated Balance Sheets as of December 31, 1998 and
1997...................................................... F-3
Consolidated Statements of Income for the years ended
December 31, 1998, 1997 and 1996.......................... F-4
Consolidated Statements of Stockholders' Equity for the
years ended December 31, 1998, 1997 and 1996.............. F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996.......................... F-6
Notes to Consolidated Financial Statements.................. F-7
Report of Independent Public Accountants.................... F-39
Schedule II-Valuation and Qualifying Accounts............... F-40
Consolidated Balance Sheets as of April 3, 1999 (unaudited)
and December 31, 1998..................................... F-41
Consolidated Statements of Income for the three months ended
April 3, 1999 and March 28, 1998 (unaudited).............. F-42
Consolidated Statements of Cash Flows for the three months
ended April 3, 1999 and March 28, 1998 (unaudited)........ F-43
Notes to the Consolidated Financial Statements.............. F-44
UT AUTOMOTIVE, INC.
Introduction to the Unaudited Combined Financial
Statements................................................ F-55
Unaudited Combined Balance Sheets -- March 31, 1999 and
December 31, 1998......................................... F-56
Unaudited Combined Statements of Income -- Three Month
Periods Ended March 31, 1999 and March 31, 1998........... F-57
Unaudited Combined Statements of Cash Flows -- Three Month
Periods Ended March 31, 1999 and March 31, 1998........... F-58
Notes to the Unaudited Combined Financial Statements........ F-59
</TABLE>
F-1
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Lear Corporation:
We have audited the accompanying consolidated balance sheets of LEAR
CORPORATION AND SUBSIDIARIES ("the Company") as of December 31, 1998 and 1997,
and the related consolidated statements of income, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Company as of December
31, 1998 and 1997, and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 1998 in conformity with
generally accepted accounting principles.
/s/ Arthur Andersen LLP
Detroit, Michigan,
January 29, 1999 (except with respect to the matters discussed
in Note 18, as to which the date is May 18, 1999).
F-2
<PAGE> 71
LEAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1998 1997
---- ----
(IN MILLIONS,
EXCEPT SHARE DATA)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 30.0 $ 12.9
Accounts receivable, net of reserves of $16.0 in 1998 and
$14.7 in 1997.......................................... 1,373.9 1,065.8
Inventories............................................... 349.6 231.4
Recoverable customer engineering and tooling.............. 221.4 152.6
Other..................................................... 223.1 152.2
-------- --------
Total current assets................................... 2,198.0 1,614.9
-------- --------
LONG-TERM ASSETS:
Property, plant and equipment, net........................ 1,182.3 939.1
Goodwill, net............................................. 2,019.8 1,692.3
Other..................................................... 277.2 212.8
-------- --------
Total long-term assets................................. 3,479.3 2,844.2
-------- --------
$5,677.3 $4,459.1
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings..................................... $ 82.7 $ 37.9
Accounts payable and drafts............................... 1,600.8 1,186.5
Accrued liabilities....................................... 797.5 620.5
Current portion of long-term debt......................... 16.5 9.1
-------- --------
Total current liabilities.............................. 2,497.5 1,854.0
-------- --------
LONG-TERM LIABILITIES:
Deferred national income taxes............................ 39.0 61.7
Long-term debt............................................ 1,463.4 1,063.1
Other..................................................... 377.4 273.3
-------- --------
Total long-term liabilities............................ 1,879.8 1,398.1
-------- --------
STOCKHOLDERS' EQUITY:
Common Stock, par value $.01 per share, 150,000,000 shares
authorized and 67,194,314 and 66,872,188 shares issued
at December 31,1998 and 1997, respectively............. .7 .7
Additional paid-in capital................................ 859.3 851.9
Notes receivable from sale of common stock................ (.1) (.1)
Common stock held in treasury, 510,230 and 10,230 shares
at December 31, 1998 and 1997, respectively, at cost... (18.3) (.1)
Retained earnings......................................... 504.7 401.3
Accumulated other comprehensive income.................... (46.3) (46.7)
-------- --------
Total stockholders' equity............................. 1,300.0 1,207.0
-------- --------
$5,677.3 $4,459.1
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-3
<PAGE> 72
LEAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------
1998 1997 1996
---- ---- ----
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Net sales................................................... $9,059.4 $7,342.9 $6,249.1
Cost of sales............................................... 8,198.0 6,533.5 5,629.4
Selling, general and administrative expenses................ 337.0 286.9 210.3
Restructuring and other charges............................. 133.0 -- --
Amortization of goodwill.................................... 49.2 41.4 33.6
-------- -------- --------
Operating income.......................................... 342.2 481.1 375.8
Interest expense............................................ 110.5 101.0 102.8
Other expense, net.......................................... 16.9 34.3 19.6
-------- -------- --------
Income before provision for national income taxes,
minority interests in consolidated subsidiaries, equity
in net income of affiliates and extraordinary item..... 214.8 345.8 253.4
Provision for national income taxes......................... 93.9 143.1 101.5
Minority interests in consolidated subsidiaries............. 6.9 3.3 4.0
Equity in net income of affiliates.......................... (1.5) (8.8) (4.0)
-------- -------- --------
Income before extraordinary item.......................... 115.5 208.2 151.9
Extraordinary loss on early extinguishment of debt.......... -- (1.0) --
-------- -------- --------
Net income................................................ $ 115.5 $ 207.2 $ 151.9
======== ======== ========
Basic net income per share:
Income before extraordinary item.......................... $1.73 $3.14 $2.51
Extraordinary loss........................................ -- (.01) --
-------- -------- --------
Basic net income per share.................................. $1.73 $3.13 $2.51
======== ======== ========
Diluted net income per share:
Income before extraordinary item.......................... $1.70 $3.05 $2.38
Extraordinary loss........................................ -- (.01) --
-------- -------- --------
Diluted net income per share................................ $1.70 $3.04 $2.38
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-4
<PAGE> 73
LEAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------
1998 1997 1996
---- ---- ----
(IN MILLIONS, EXCEPT SHARE DATA)
<S> <C> <C> <C>
COMMON STOCK
Balance at beginning of period.............................. $ .7 $ .7 $ .6
Sale of common stock (Note 5)............................... -- -- .1
-------- -------- --------
Balance at end of period.................................... $ .7 $ .7 $ .7
======== ======== ========
ADDITIONAL PAID-IN CAPITAL
Balance at beginning of period.............................. $ 851.9 $ 834.5 $ 559.1
Sale of common stock (Note 5)............................... -- -- 242.7
Stock options exercised..................................... 3.4 8.4 6.7
Stock options cancelled..................................... -- (5.8) --
Tax benefit of stock options exercised...................... 4.0 14.8 17.0
Conversion of Masland stock options......................... -- -- 9.0
-------- -------- --------
Balance at end of period.................................... $ 859.3 $ 851.9 $ 834.5
======== ======== ========
NOTES RECEIVABLE FROM SALE OF COMMON STOCK
Balance at beginning of period.............................. $ (.1) $ (.6) $ (.9)
Repayment of stockholders' notes receivable................. -- .5 .3
-------- -------- --------
Balance at end of period.................................... $ (.1) $ (.1) $ (.6)
======== ======== ========
TREASURY STOCK
Balance at beginning of period.............................. $ (.1) $ (.1) $ (.1)
Purchases, 500,000 shares at an average price of $36.50 per
share..................................................... (18.2) -- --
-------- -------- --------
Balance at end of period.................................... $ (18.3) $ (.1) $ (.1)
======== ======== ========
RETAINED EARNINGS
Balance at beginning of period.............................. $ 401.3 $ 194.1 $ 42.2
Net income.................................................. 115.5 207.2 151.9
Net loss from change in consolidation policy (Note 1)....... (12.1) -- --
-------- -------- --------
Balance at end of period.................................... $ 504.7 $ 401.3 $ 194.1
======== ======== ========
ACCUMULATED OTHER COMPREHENSIVE INCOME
Minimum Pension Liability
Balance at beginning of period.............................. $ (.5) $ (1.0) $ (3.5)
Minimum pension liability adjustment........................ (11.3) .5 2.5
-------- -------- --------
Balance at end of period.................................... $ (11.8) $ (.5) $ (1.0)
======== ======== ========
CUMULATIVE TRANSLATION ADJUSTMENTS
Balance at beginning of period.............................. $ (46.2) $ (8.9) $ (17.4)
Cumulative translation adjustments.......................... 11.7 (37.3) 8.5
-------- -------- --------
Balance at end of period.................................... $ (34.5) $ (46.2) $ (8.9)
-------- -------- --------
Accumulated other comprehensive income...................... $ (46.3) $ (46.7) $ (9.9)
-------- -------- --------
TOTAL STOCKHOLDERS' EQUITY.................................. $1,300.0 $1,207.0 $1,018.7
======== ======== ========
COMPREHENSIVE INCOME
Net income.................................................. $ 115.5 $ 207.2 $ 151.9
Net loss from change in consolidation policy, including tax
of $1.2 (Note 1).......................................... (12.1) -- --
Minimum pension liability adjustment, net of tax of $6.1,
$(.2) and $(1.3) in 1998, 1997 and 1996, respectively..... (11.3) .5 2.5
Cumulative translation adjustments.......................... 11.7 (37.3) 8.5
-------- -------- --------
Comprehensive income........................................ $ 103.8 $ 170.4 $ 162.9
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-5
<PAGE> 74
LEAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------
1998 1997 1996
---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................. $ 115.5 $ 207.2 $ 151.9
Adjustments to reconcile net income to net cash provided by
operating activities --
Depreciation and amortization of goodwill................. 219.7 184.4 142.3
Postretirement benefits accrued, net...................... 15.3 8.5 6.9
Loss on long-lived assets................................. 33.2 -- --
Net loss from change in consolidation policy (Note 1)..... (12.1) -- --
Recoverable customer engineering and tooling, net......... (119.1) (48.4) (35.3)
Extraordinary loss........................................ -- 1.0 --
Other, net................................................ (28.9) (3.7) (19.1)
Net change in working capital items....................... 61.8 100.4 215.9
------- ------- -------
Net cash provided by operating activities.............. 285.4 449.4 462.6
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment.................. (351.4) (187.9) (153.8)
Acquisitions................................................ (328.2) (332.2) (529.0)
Other, net.................................................. 1.8 .4 1.1
------- ------- -------
Net cash used in investing activities.................. (677.8) (519.7) (681.7)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term revolving credit borrowings, net (Note 9)......... 317.0 136.9 (211.3)
Other long-term debt borrowings, net........................ 58.3 (133.0) 203.6
Short-term borrowings, net.................................. 43.2 24.2 (7.5)
Proceeds from sale of common stock, net..................... 3.4 8.4 249.5
Purchase of treasury stock, net............................. (18.2) -- --
Increase (decrease) in drafts............................... (19.9) 2.2 (29.5)
Other, net.................................................. -- .3 (3.2)
------- ------- -------
Net cash provided by financing activities.............. 383.8 39.0 201.6
------- ------- -------
Effect of foreign currency translation...................... 25.7 18.2 9.4
------- ------- -------
NET CHANGE IN CASH AND CASH EQUIVALENTS..................... 17.1 (13.1) (8.1)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR.............. 12.9 26.0 34.1
------- ------- -------
CASH AND CASH EQUIVALENTS AT END OF YEAR.................... $ 30.0 $ 12.9 $ 26.0
======= ======= =======
CHANGES IN WORKING CAPITAL, NET OF EFFECTS OF ACQUISITIONS:
Accounts receivable, net.................................... $(218.6) $ (72.7) $ 42.5
Inventories................................................. (59.9) (10.3) 30.9
Accounts payable............................................ 322.1 150.4 52.7
Accrued liabilities and other............................... 18.2 33.0 89.8
------- ------- -------
Net change in working capital items......................... $ 61.8 $ 100.4 $ 215.9
======= ======= =======
SUPPLEMENTARY DISCLOSURE:
Cash paid for interest...................................... $ 109.0 $ 109.3 $ 97.0
======= ======= =======
Cash paid for income taxes.................................. $119.9 $ 91.9 $ 74.3
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-6
<PAGE> 75
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Lear
Corporation, a Delaware corporation ("Lear"), and its wholly-owned and
majority-owned subsidiaries (collectively, the "Company"). Investments in less
than majority-owned businesses are generally accounted for under the equity
method (Note 7).
The Company and its affiliates are involved in the design and manufacture
of interior systems and components for automobiles and light trucks. The
Company's main customers are automotive original equipment manufacturers. The
Company operates facilities worldwide (Note 14). Effective December 31, 1998,
certain international operating facilities, which had previously been included
in the consolidated financial statements based on fiscal years ending November
30, are now included in the consolidated financial statements based on fiscal
years ending December 31. Net sales at these international facilities for
December 1998 were $339.9 million, and the December 1998 net loss from these
international facilities was charged to retained earnings.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 millions):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1998 1997
---- ----
<S> <C> <C>
Raw materials............................................... $253.9 $165.7
Work-in-process............................................. 23.8 22.5
Finished goods.............................................. 71.9 43.2
------ ------
Inventories................................................. $349.6 $231.4
====== ======
</TABLE>
Recoverable Customer Engineering and Tooling
Costs incurred for certain engineering and tooling projects for which the
Company will receive customer recovery are capitalized and classified as either
recoverable customer engineering and tooling or other long-term assets,
dependent upon when recovery is anticipated. Provisions for losses are provided
at the time the Company anticipates engineering and tooling costs will exceed
anticipated customer recovery.
Property, Plant and Equipment
Property, plant and equipment is stated at cost. Depreciable property is
depreciated over the estimated useful lives of the assets, using principally the
straight-line method as follows:
<TABLE>
<S> <C>
Buildings and improvements.................................. 20 to 25 years
Machinery and equipment..................................... 5 to 15 years
</TABLE>
F-7
<PAGE> 76
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
A summary of property, plant and equipment is shown below (in millions):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1998 1997
---- ----
<S> <C> <C>
Land...................................................... $ 70.6 $ 60.5
Buildings and improvements................................ 429.6 345.9
Machinery and equipment................................... 1,197.8 919.4
Construction in progress.................................. 78.4 54.8
-------- --------
Total property, plant and equipment....................... 1,776.4 1,380.6
Less -- accumulated depreciation.......................... (594.1) (441.5)
-------- --------
Net property, plant and equipment......................... $1,182.3 $ 939.1
======== ========
</TABLE>
Goodwill
Goodwill is amortized on a straight-line basis over 40 years. Accumulated
amortization of goodwill amounted to $206.3 million and $156.9 million at
December 31, 1998 and 1997, respectively.
Long Term Assets
The Company complies with Statement of Financial Accounting Standards
("SFAS") No. 121, "Recognition of Impairment of Long-Lived Assets." In
accordance with this statement, the Company reevaluates the carrying values of
its long-term assets whenever circumstances arise which call into question the
recoverability of such carrying values. The evaluation takes into account all
future estimated cash flows from the use of assets, with an impairment being
recognized if the evaluation indicates that the future cash flows will not be
greater than the carrying value. An impairment charge of $33.2 million was
recognized in 1998 in connection with the restructuring (Note 3).
Research and Development
Costs incurred in connection with the development of new products and
manufacturing methods to the extent not recoverable from the Company's customers
are charged to selling, general and administrative expenses as incurred. These
costs amounted to $116.6 million, $90.4 million and $70.0 million for the years
ended December 31, 1998, 1997 and 1996, respectively.
Foreign Currency Translation
With the exception of foreign subsidiaries operating in highly inflationary
economies, which are measured in U.S. dollars, assets and liabilities of foreign
subsidiaries are translated into U.S. dollars at the exchange rates in effect at
the end of the period. Revenues and expenses of foreign subsidiaries are
translated using an average of exchange rates in effect during the period.
Translation adjustments that arise from translating a foreign subsidiary's
financial statements from the functional currency to U.S. dollars are reflected
in accumulated other comprehensive income in the consolidated balance sheets.
Transaction gains and losses that arise from exchange rate fluctuations on
transactions denominated in a currency other than the functional currency,
except those transactions which operate as a hedge of a foreign currency
investment position, are included in the results of operations as incurred.
Use of Estimates
The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported
F-8
<PAGE> 77
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
amounts of assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the
reporting period. Generally, assets and liabilities subject to estimation and
judgment include amounts related to unsettled pricing discussions with customers
and suppliers, pension and other postretirement costs (Note 11), plant
consolidation and reorganization reserves (Note 3), self-insurance accruals,
asset valuation reserves and accruals related to litigation and environmental
remediation costs. Management does not believe that the ultimate settlement of
any such assets or liabilities will materially affect the Company's financial
position or future results of operations.
Net Income Per Share
Basic net income per share is computed using the weighted average common
shares outstanding during the period. Diluted net income per share is computed
using the average share price during the period when calculating the dilutive
effect of stock options. Shares outstanding were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Weighted average common shares
outstanding............................... 66,947,135 66,304,770 60,485,696
Dilutive effect of stock options............ 1,076,240 1,943,313 3,275,938
---------- ---------- ----------
Diluted shares outstanding.................. 68,023,375 68,248,083 63,761,634
========== ========== ==========
</TABLE>
Comprehensive Income
During 1998, the Company adopted SFAS No. 130, "Reporting Comprehensive
Income," which establishes standards for the reporting and display of
comprehensive income. Comprehensive income is defined as all changes in a
Company's net assets except changes resulting from transactions with
shareholders. It differs from net income in that certain items currently
recorded to equity are included in comprehensive income. Prior years have been
restated to conform to the requirements of SFAS No. 130.
Reclassifications
Certain items in prior years' financial statements have been reclassified
to conform with the presentation used in the year ended December 31, 1998.
(3) RESTRUCTURING AND OTHER CHARGES
In the fourth quarter of 1998, the Company began to implement a
restructuring plan designed to lower its cost structure and improve the
long-term competitive position of the Company. As a result of this restructuring
plan, the Company recorded pre-tax charges of $133.0 million, consisting of
$110.5 million of restructuring charges and $22.5 million of other charges.
Included in this total are the costs to consolidate the Company's European
operations of $78.9 million, charges resulting from the consolidation of certain
manufacturing and administrative operations in North and South America of $31.6
million, other asset impairment charges of $15.0 million and contract
termination fees and other of $7.5 million.
The majority of the European countries in which the Company operates have
statutory requirements with regards to the minimum severance payments that must
be made to employees upon termination. The Company has accrued $37.7 million of
severance costs for approximately 210 salaried and 1,040 hourly employees under
SFAS No. 112, "Employers' Accounting for Postemployment Benefits," at December
31, 1998, as the Company anticipates this is the minimum aggregate severance
payments that will be made in accordance with these statutory requirements. The
Company has also accrued $5.5 million for separation pay for approximately 450
employees at European locations where the individuals have been notified of
their planned termination. The European consolidation has also resulted in lease
cancellation costs with a
F-9
<PAGE> 78
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
net present value of $22.1 million and asset impairment charges of $11.7
million. The amount of asset impairment represents the excess of the carrying
value of the abandoned assets over their respective net realizable value less
disposal costs. Other costs incurred to consolidate these facilities amount to
$1.9 million, consisting mainly of government grant repayments. The Company
anticipates incurring the majority of these costs in 1999 with the exception of
the lease cancellation costs, for which payments extend out for up to 9 years.
In addition, the Company is eliminating two manufacturing facilities in
North America and one in South America. Management feels that these
consolidations better position the Company in terms of capacity, location and
utilization in the future. The charge consists of severance of $5.2 million for
approximately 250 employees notified prior to December 31, 1998, a $6.5 million
write-down of assets to their net realizable value less disposal costs, lease
cancellation costs of $4.5 million and other costs to close the facilities of
$.4 million. The write-down of fixed assets has been recorded in 1998, while the
payments related to the other costs are anticipated to take place in 1999. Lear
also implemented a plan to consolidate certain administrative functions and to
reduce the U.S. salaried workforce. As of December 31, 1998, approximately 850
salaried employees were notified that their positions were being eliminated and
were presented with the severance packages that they will receive upon their
departure from the Company. As a result, the Company recorded a charge of $15.0
million to cover severance pay and benefits offered to these employees, $5.1
million of which had been paid as of December 31, 1998.
The Company has reevaluated the carrying value of its long-lived assets as
a result of changes in the economic condition of certain countries in which the
Company operates and the consolidation of specific operations in North and South
America. The carrying values of these assets were determined to be impaired as
the separately identifiable, anticipated, undiscounted future cash flows from
such assets were less than their respective carrying values. The resulting
charge of $15.0 million represents the excess of the carrying values of such
assets over future discounted cash flows.
The costs of contract terminations and other are comprised primarily of a
contract termination penalty related to a sales representation contract. The
following table summarizes the restructuring and other charges (in millions):
<TABLE>
<CAPTION>
UTILIZED
ORIGINAL --------------- BALANCE AT
ACCRUAL CASH NONCASH DECEMBER 31, 1998
-------- ---- ------- -----------------
<S> <C> <C> <C> <C>
European Operations Consolidation....... $ 78.9 $3.4 $11.7 $63.8
North and South America Operations
Consolidation......................... 31.6 5.1 6.5 20.0
Write-Down of Long-Lived Assets......... 15.0 -- 15.0 --
Contract Termination and Other.......... 7.5 -- -- 7.5
------ ---- ----- -----
Total.............................. $133.0 $8.5 $33.2 $91.3
====== ==== ===== =====
</TABLE>
(4) ACQUISITIONS
1998 ACQUISITIONS
Delphi Seating Systems
In September 1998, the Company purchased the seating business of Delphi
Automotive Systems, a division of General Motors Corporation ("Delphi Seating").
Delphi Seating was a leading supplier of seat systems to General Motors with
sixteen facilities located throughout ten countries. The aggregate purchase
price for the acquisition of Delphi Seating (the "Delphi Acquisition") was
$246.6 million. Funds for the Delphi Acquisition were provided by borrowings
under the Credit Agreement (Note 9).
F-10
<PAGE> 79
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The Delphi Acquisition was accounted for as a purchase, and accordingly,
the assets purchased and liabilities assumed have been reflected in the
accompanying consolidated balance sheet as of December 31, 1998. The operating
results of Delphi Seating have been included in the consolidated financial
statements of the Company since the date of acquisition. The purchase price and
related allocation were as follows (in millions):
<TABLE>
<S> <C>
Consideration paid to former owner, net of cash acquired of
$6.0 million.............................................. $212.9
Deferred purchase price..................................... 30.0
Debt assumed................................................ .5
Estimated fees and expenses................................. 3.2
------
Cost of acquisition.................................... $246.6
======
Property, plant and equipment............................... $ 50.8
Net working capital......................................... 15.1
Other assets purchased and liabilities assumed, net......... (15.6)
Goodwill.................................................... 196.3
------
Total cost allocation.................................. $246.6
======
</TABLE>
The purchase price and related allocation may be revised up to one year
from the date of acquisition based on the outcome of final negotiations with the
former owner and revisions of preliminary estimates of fair values made at the
date of purchase.
The following pro forma unaudited financial data is presented to illustrate
the estimated effects of the Delphi Acquisition as if this transaction had
occurred as of the beginning of each year presented (in millions, except per
share data).
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
------------------------
1998 1997
PRO FORMA PRO FORMA
--------- ---------
<S> <C> <C>
Net sales............................................... $9,728.4 $8,411.1
Income before extraordinary item........................ 97.8 164.6
Net income.............................................. 97.8 163.6
Diluted income per share before extraordinary item...... 1.44 2.41
Diluted net income per share............................ 1.44 2.40
</TABLE>
Other 1998 Acquisitions
In May 1998, the Company acquired, in separate transactions, Gruppo Pianfei
S.r.L. ("Pianfei"), Strapazzini Resine S.r.L. ("Strapazzini") and the A.W.
Chapman Ltd. and A.W. Chapman Belgium NV subsidiaries of the Rodd Group Limited
("Chapman"). Each of the acquired companies was a supplier of automotive
interiors to the European automotive market. These acquisitions were accounted
for as purchases, and accordingly, the assets purchased and liabilities assumed
have been reflected in the accompanying consolidated balance sheet as of
December 31, 1998. The operating results of these acquired companies have been
included in the consolidated financial statements of the Company since the date
of each acquisition. The aggregate cash paid for these acquisitions was $115.3
million, with funds provided by borrowings under the Credit Agreement (Note 9).
The pro forma effects of these acquisitions would not be materially different
from reported results.
F-11
<PAGE> 80
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
1997 ACQUISITIONS
In August 1997, the Company acquired the Seat Sub-Systems Unit of ITT
Automotive, a division of ITT Industries ("ITT Seat Sub-Systems"). ITT Seat
Sub-Systems was a North American supplier of power seat adjusters and power
recliners.
In July 1997, the Company acquired certain equity and partnership interests
in Keiper Car Seating GmbH & Co. and certain of its subsidiaries and affiliates
(collectively, "Keiper Seating") for approximately $252.5 million. Keiper
Seating was a leading supplier of automotive vehicle seat systems with
operations in Germany, Italy, Hungary, Brazil and South Africa.
As part of the Keiper Seating acquisition, the Company acquired a 25%
ownership interest in Euro American Seating Corporation ("EAS"). On December 12,
1997, the Company acquired the remaining 75% of EAS. EAS was a supplier of
automotive seat systems to original equipment manufacturers.
In June 1997, the Company acquired all of the outstanding shares of common
stock of Dunlop Cox Limited ("Dunlop Cox"). Dunlop Cox, based in Nottingham,
England, provided Lear with the ability to design and manufacture manual and
electronically-powered automotive seat adjusters.
The ITT Seat Sub-Systems, Keiper Seating and Dunlop Cox acquisitions
(collectively, the "1997 Acquisitions") were accounted for as purchases, and
accordingly, the assets purchased and liabilities assumed in the acquisitions
have been reflected in the accompanying consolidated balance sheets. The
operating results of the 1997 Acquisitions have been included in the
consolidated financial statements of the Company since the date of each
acquisition. Funds for the 1997 Acquisitions were provided by borrowings under
the Company's then existing credit agreements. The aggregate purchase price of
the 1997 Acquisitions and final allocation, which were not materially different
than preliminary estimates, were as follows (in millions):
<TABLE>
<S> <C>
Consideration paid to former owners, net of cash acquired of
$9.2 million.............................................. $332.2
Deferred purchase price..................................... 28.1
Debt assumed................................................ 4.4
Estimated fees and expenses................................. 3.5
------
Cost of acquisition.................................... $368.2
======
Property, plant and equipment............................... $ 85.0
Net working capital......................................... 12.5
Other assets purchased and liabilities assumed, net......... (4.9)
Goodwill.................................................... 275.6
------
Total cost allocation.................................. $368.2
======
</TABLE>
The pro forma effects of these acquisitions would not be materially
different from reported results.
1996 ACQUISITIONS
Borealis Industrier, AB
In December 1996, the Company acquired all of the issued and outstanding
capital stock of Borealis Industrier, AB ("Borealis") for an aggregate purchase
price of $91.1 million (including the assumption of $18.8 million of Borealis
existing net indebtedness and $1.5 million of fees and expenses). Borealis was a
supplier of instrument panels and other interior components to the European
automotive market. The Borealis acquisition was accounted for as a purchase, and
accordingly, the assets purchased and liabilities assumed have been reflected in
the accompanying consolidated balance sheets. The operating results of
F-12
<PAGE> 81
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Borealis have been included in the consolidated financial statements of the
Company since the date of acquisition.
Masland Corporation
In June 1996, the Company, through a wholly-owned subsidiary ("PA
Acquisition Corp."), acquired 97% of the issued and outstanding shares of common
stock of Masland Corporation ("Masland") 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 Masland were acquired and PA Acquisition
Corp. merged with and into Masland, such that Masland became a wholly-owned
subsidiary of the Company. The aggregate purchase price for the acquisition of
Masland (the "Masland Acquisition") was $473.8 million (including the assumption
of $80.7 million of Masland's existing net indebtedness and $8.1 million in fees
and expenses). Funds for the Masland Acquisition were provided by borrowings
under the Company's then existing credit agreements.
Masland was a leading supplier of flooring and acoustic systems to the
North American automotive market. Masland also was a major supplier of interior
luggage compartment trim components and other acoustical products which are
designed to minimize noise, vibration and harshness for passenger cars and light
trucks.
The Masland Acquisition was accounted for as a purchase, and accordingly,
the assets purchased and liabilities assumed in the acquisition have been
reflected in the accompanying consolidated balance sheets. The operating results
of Masland have been included in the consolidated financial statements of the
Company since the date of acquisition. The purchase price and final allocation,
which were not materially different than preliminary estimates, were as follows
(in millions):
<TABLE>
<S> <C>
Consideration paid to stockholders, net of cash acquired of
$16.1 million............................................. $337.8
Consideration paid to former Masland stock option holders... 22.1
Debt assumed................................................ 96.8
Stock options issued to former Masland option holders....... 9.0
Fees and expenses........................................... 8.1
------
Cost of acquisition.................................... $473.8
======
Property, plant and equipment............................... $125.8
Net working capital......................................... 31.5
Other assets purchased and liabilities assumed, net......... (15.7)
Goodwill.................................................... 332.2
------
Total cost allocation.................................. $473.8
======
</TABLE>
The pro forma unaudited financial data is presented to illustrate the
estimated effects of the Masland Acquisition, the related financing and
subsequent refinancing (Notes 5 and 6) as if these transactions had occurred as
of the beginning of the year presented as follows (in millions, except per share
data):
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
-----------------
PRO FORMA
---------
<S> <C>
Net sales................................................... $6,510.8
Net income.................................................. 153.9
Diluted net income per share................................ 2.27
</TABLE>
F-13
<PAGE> 82
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(5) PUBLIC STOCK OFFERINGS
COMPANY OFFERINGS
In July 1996, the Company issued and sold 7,500,000 shares of common stock
in a public offering (the "1996 Offering"). The total proceeds to the Company
from the stock issuance were $251.3 million. Fees and expenses related to the
1996 Offering totaled $8.5 million, including approximately $1.1 million paid to
Lehman Brothers Inc., an affiliate of the Lehman Funds. Net of issuance costs,
the Company received $242.8 million, which was used to repay debt incurred in
connection with the Masland Acquisition (Note 4).
SECONDARY OFFERINGS
In June 1997, the Company's then-largest stockholders, certain merchant
banking partnerships affiliated with Lehman Brothers Holdings, Inc., (the
"Lehman Funds"), sold all 10,284,854 of their remaining shares of common stock
of Lear in a secondary offering. Prior to the offering, the Lehman Funds held
approximately 16% of the outstanding common stock of the Company. The Company
received no proceeds from the sale of these shares.
Concurrent with the 1996 Offering, 7,500,000 shares were sold by certain
stockholders of the Company, including the Lehman Funds. The Company received no
proceeds from the sale of these shares.
(6) SUBORDINATED NOTES OFFERINGS
In July 1996, the Company completed a public offering of $200.0 million
principal amount of its 9 1/2% Subordinated Notes due 2006 (the "9 1/2% Notes").
Interest is payable on the 9 1/2% Notes semi-annually on January 15 and July 15.
Fees and expenses related to the issuance of the 9 1/2% Notes were approximately
$4.5 million. Net of issuance costs, the Company received $195.5 million, which
was used to repay debt incurred in connection with the Masland Acquisition (Note
4).
(7) INVESTMENTS IN AFFILIATES
The investments in affiliates, which are accounted for using the equity
method, are as follows:
<TABLE>
<CAPTION>
PERCENT BENEFICIAL
OWNERSHIP AS OF
DECEMBER 31,
--------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Sommer Masland UK Limited................................... 50% 50% 50%
Industrias Cousin Freres, S.L. (Spain)...................... 50 50 50
Lear -- Donnelly Overhead Systems, L.L.C. .................. 50 50 --
SALBI, A.B. ................................................ 50 50 50
Detroit Automotive Interiors, L.L.C. ....................... 49 49 49
Autoform Kunststoffteile GmbH............................... 45 -- --
Interiores Automotrices Summa, S.A. de C.V. (Mexico)........ 40 40 40
U.P.M. S.r.L. (Italy)....................................... 39 -- --
Markol Otomotiv Yan Sanayi Ve Ticaret (Turkey).............. 35 35 35
Jiangxi Jiangling Lear, Interior Systems Co., Ltd.
(China)................................................... 33 33 50
Guildford Kast Plastifol Dynamics, Ltd. (U.K.).............. 33 33 33
Precision Fabrics Group..................................... 29 29 29
Interni Interiores S.A. (Brazil)............................ 25 -- --
Pacific Trim Corporation Ltd. (Thailand).................... 20 20 20
</TABLE>
F-14
<PAGE> 83
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
In October 1997, the Company formed a joint venture with Donnelly
Corporation named Lear-Donnelly Overhead Systems, L.L.C. The joint venture
designs, develops, markets and produces overhead systems for the global
automotive market. The aggregate investment in affiliates was $73.9 million and
$71.3 million as of December 31, 1998 and 1997, respectively.
Summarized group financial information for affiliates accounted for under
the equity method is as follows (unaudited, in millions):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1998 1997
---- ----
<S> <C> <C>
Balance sheet data:
Current assets............................................ $162.0 $127.7
Non-current assets........................................ 137.0 78.1
Current liabilities....................................... 128.9 69.8
Non-current liabilities................................... 54.2 77.7
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Income statement data:
Net sales........................................... $579.4 $493.2 $471.0
Gross profit........................................ 80.0 75.4 68.1
Income (loss) before provision for income taxes..... (.1) 25.2 21.6
Net income (loss)................................... (1.6) 20.3 17.9
</TABLE>
The Company had sales to affiliates of approximately $62.9 million, $28.1
million and $22.2 million for the years ended December 31, 1998, 1997 and 1996,
respectively. Dividends of approximately $2.3 million, $3.9 million and $3.0
million were received by the Company for the years ended December 31, 1998, 1997
and 1996, respectively.
During 1998, the Company increased its ownership of General Seating of
America, Inc., General Seating of Canada, Ltd. and Lear Corporation Thailand. As
a result of these ownership increases, the Company acquired majority control and
included the results of operations and financial position of these entities in
its consolidated financial statements from the date of majority control.
(8) SHORT-TERM BORROWINGS
Lear utilizes uncommitted lines of credit to satisfy short-term working
capital requirements. At December 31, 1998, the Company had unsecured lines of
credit available from banks of approximately $470 million, subject to certain
restrictions imposed by the Credit Agreement (Note 9). Weighted average interest
rates on the outstanding borrowings at December 31, 1998 and 1997 were 4.7% and
7.2%, respectively.
F-15
<PAGE> 84
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(9) LONG-TERM DEBT
Long-term debt is comprised of the following (in millions):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1998 1997
---- ----
<S> <C> <C>
Credit agreement.......................................... $ 970.3 $ 647.7
Other..................................................... 173.6 88.5
-------- --------
1,143.9 736.2
Less -- Current Portion................................... 16.5 9.1
-------- --------
1,127.4 727.1
-------- --------
9 1/2% Subordinated Notes................................. 200.0 200.0
8 1/4% Subordinated Notes................................. 136.0 136.0
-------- --------
336.0 336.0
-------- --------
Long-Term Debt............................................ $1,463.4 $1,063.1
======== ========
</TABLE>
In May and December 1998, the Company amended its multi-currency revolving
credit agreement (the "Credit Agreement") to increase total borrowing
availability from $1.8 billion to $2.1 billion, eliminate the pledge of
subsidiary stock which secured the facility and provide for euro denominated
multi-currency loans. The Credit Agreement matures on September 30, 2001 and may
be used for general corporate purposes, including acquisitions.
As of December 31, 1998, the Company had $970 million outstanding under the
Credit Agreement and $60 million committed under outstanding letters of credit,
resulting in approximately $1.1 billion unused long-term revolving credit
commitments. The weighted average interest across all currencies was
approximately 5.4% and 5.8% at December 31, 1998 and 1997, respectively.
Borrowings and repayments on the Credit Agreement were as follows (in millions):
<TABLE>
<CAPTION>
YEAR BORROWINGS REPAYMENTS
---- ---------- ----------
<S> <C> <C>
1998..................................................... $3,994.8 $3,677.8
1997..................................................... 3,422.3 3,260.3
1996..................................................... 2,790.8 3,027.8
</TABLE>
Other senior debt at December 31, 1998 is principally made up of amounts
outstanding under U.S. term loans, industrial revenue bonds and capital leases.
The 8 1/4% Subordinated Notes, due in 2002, require interest payments
semi-annually on February 1 and August 1 and became callable at par on February
1, 1999. The 9 1/2% Subordinated Notes, due in 2006, require interest payments
semi-annually on January 15 and July 15 and are callable at par beginning July
15, 2001. In July 1997, the Company redeemed all of its 11 1/4% Senior
Subordinated Notes, due 2000 (the "11 1/4% Notes"), at par with borrowings under
the Credit Agreement. The accelerated amortization of deferred financing fees
related to the 11 1/4% Notes totaled approximately $1.6 million. This amount,
net of the related tax benefit of $.6 million, has been reflected as an
extraordinary loss in the consolidated statement of income in 1997.
The Credit Agreement and indentures relating to the Company's subordinated
debt contain restrictive covenants. The most restrictive of these covenants are
the financial covenants related to the maintenance of certain levels of leverage
and interest coverage. These agreements also restrict the Company's ability to
incur additional indebtedness, declare dividends, create liens, make investments
and advances and sell assets.
F-16
<PAGE> 85
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The scheduled maturities of long-term debt at December 31, 1998 for the
five succeeding years are as follows (in millions):
<TABLE>
<CAPTION>
YEAR MATURITIES
---- ----------
<S> <C>
1999........................................................ $ 16.5
2000........................................................ 31.2
2001........................................................ 1,026.3
2002........................................................ 138.1
2003........................................................ 5.1
</TABLE>
(10) NATIONAL INCOME TAXES
A summary of income before provision for national income taxes and
components of the provision for national income taxes is as follows (in
millions):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Income before provision for national income taxes, minority
interests in consolidated subsidiaries, equity in net
income of affiliates and extraordinary item:
Domestic.................................................. $ 98.9 $213.2 $135.7
Foreign................................................... 115.9 132.6 117.7
------ ------ ------
$214.8 $345.8 $253.4
====== ====== ======
Domestic provision for national income taxes:
Current provision......................................... $ 72.7 $109.8 $ 48.4
------ ------ ------
Deferred --
Deferred provision........................................ (14.2) (18.3) 2.8
Benefit of previously unbenefitted net operating loss
carryforwards.......................................... -- (5.9) --
------ ------ ------
(14.2) (24.2) 2.8
------ ------ ------
Total domestic provision.................................... 58.5 85.6 51.2
------ ------ ------
Foreign provision for national income taxes:
Current provision......................................... 58.1 65.1 51.0
------ ------ ------
Deferred --
Deferred provision........................................ (17.4) (1.9) 6.6
Benefit of previously unbenefitted net operating loss
carryforwards.......................................... (5.3) (5.7) (7.3)
------ ------ ------
(22.7) (7.6) (.7)
------ ------ ------
Total foreign provision..................................... 35.4 57.5 50.3
------ ------ ------
Provision for national income taxes......................... $ 93.9 $143.1 $101.5
====== ====== ======
</TABLE>
F-17
<PAGE> 86
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The differences between tax provisions calculated at the United States
Federal statutory income tax rate of 35% and the consolidated national income
tax provision are summarized as follows (in millions):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Income before provision for national income taxes,
minority interests in consolidated subsidiaries,
equity in net income of affiliates and extraordinary
item multiplied by the United States Federal
statutory rate...................................... $ 75.2 $121.0 $ 88.7
Differences between domestic and effective foreign tax
rates............................................... 6.4 3.9 1.3
Net operating losses not tax benefited................ 14.3 10.2 15.8
Decrease in valuation allowance....................... (0.3) (3.6) (8.3)
Foreign subsidiary basis adjustment................... (13.9) -- --
Amortization of goodwill.............................. 13.5 12.4 10.4
Utilization of net operating losses and other......... (1.3) (.8) (6.4)
------ ------ ------
$ 93.9 $143.1 $101.5
====== ====== ======
</TABLE>
Deferred national income taxes represent temporary differences in the
recognition of certain items for income tax and financial reporting purposes.
The components of the net deferred national income tax (asset) liability are
summarized as follows (in millions):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1998 1997
---- ----
<S> <C> <C>
Deferred national income tax liabilities:
Long-term asset basis differences........................ $ 52.5 $ 63.4
Taxes provided on unremitted foreign earnings............ -- 10.3
Deferred finance fees.................................... 1.7 2.9
Recoverable customer engineering and tooling............. 50.2 30.3
Other.................................................... 13.7 2.1
------- -------
$ 118.1 $ 109.0
======= =======
Deferred national income tax assets:
Tax credit carryforwards................................. $ -- $ (.3)
Tax loss carryforwards................................... (128.0) (78.7)
Retirement benefit plans................................. (28.6) (22.4)
Accruals................................................. (97.5) (64.8)
Self-insurance reserves.................................. (12.4) (11.6)
Asset valuations......................................... (0.8) (18.2)
Minimum pension liability................................ (6.4) (.3)
Deferred compensation.................................... (2.0) (2.4)
Other.................................................... (6.2) (8.8)
------- -------
(281.9) (207.5)
Valuation allowance........................................ 95.6 64.8
------- -------
$(186.3) $(142.7)
======= =======
Net deferred national income tax asset..................... $ (68.2) $ (33.7)
======= =======
</TABLE>
F-18
<PAGE> 87
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Deferred national income tax assets have been fully offset by a valuation
allowance in certain foreign tax jurisdictions due to a history of operating
losses. The classification of the net deferred national income tax asset is
summarized as follows (in millions):
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1998 1997
---- ----
<S> <C> <C>
Deferred national income tax assets:
Current................................................... $(100.7) $(85.9)
Long-term................................................. (13.5) (15.0)
Deferred national income tax liabilities:
Current................................................... 7.0 5.5
Long-term................................................. 39.0 61.7
------- ------
Net deferred national income tax asset...................... $ (68.2) $(33.7)
======= ======
</TABLE>
Deferred national income taxes have not been provided on the undistributed
earnings of the Company's foreign subsidiaries as such amounts are either
considered to be permanently reinvested or would not create any additional U.S.
tax upon repatriation. The cumulative undistributed earnings at December 31,
1998 on which the Company had not provided additional national income taxes were
approximately $173.7 million.
As of December 31, 1998, the Company had tax loss carryforwards of $326.0
million which relate to certain foreign subsidiaries. Of the total loss
carryforwards, $179.5 million have no expiration and $146.5 million expire in
1999 through 2006.
(11) PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS
The Company has noncontributory defined benefit pension plans covering
certain domestic employees and certain employees in foreign countries. The
Company's salaried plans provide benefits based on a five-year average earnings
formula. Hourly pension plans provide benefits under flat benefit formulas. The
Company also has contractual arrangements with certain employees which provide
for supplemental retirement benefits. In general, the Company's policy is to
fund these plans based on legal requirements, tax considerations and local
practices.
The Company has postretirement plans covering a portion of the Company's
domestic employees and Canadian employees. The plans generally provide for the
continuation of medical benefits for all employees who complete 10 years of
service after age 45 and retire from the Company at age 55 or older. The Company
does not fund its postretirement benefit obligation. Rather, payments are made
as costs are incurred by covered retirees.
F-19
<PAGE> 88
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Effective January 1, 1998, the Company adopted SFAS No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits". In accordance
with SFAS No. 132, the following tables provide a reconciliation of the change
in benefit obligation, the change in plan assets and the net amount recognized
in the consolidated balance sheets (based on a September 30 measurement date, in
millions):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
OTHER
PENSION POSTRETIREMENT
---------------- ----------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year................... $201.0 $154.1 $ 70.2 $ 66.3
Service cost.............................................. 14.8 14.7 4.8 4.6
Interest cost............................................. 13.9 13.4 4.7 4.9
Amendments................................................ 0.9 8.1 -- --
Actuarial (gain) loss..................................... 7.0 4.7 (9.4) (3.6)
Acquisitions.............................................. -- 17.2 3.9 --
Benefits paid............................................. (7.1) (6.6) (1.9) (1.3)
Translation adjustment.................................... (6.7) (4.6) (1.4) (0.7)
------ ------ ------ ------
Benefit obligation at end of year........................... $223.8 $201.0 $ 70.9 $ 70.2
====== ====== ====== ======
Change in plan assets:
Fair value of plan assets at beginning of year............ $138.0 $108.0 $ -- $ --
Actual return on plan assets.............................. (6.6) 20.1 -- --
Employer contributions.................................... 18.8 15.3 1.9 1.3
Acquisitions.............................................. -- 3.6 -- --
Benefits paid............................................. (6.3) (5.8) (1.9) (1.3)
Translation adjustment.................................... (5.8) (3.2) -- --
------ ------ ------ ------
Fair value of plan assets at end of year.................... $138.1 $138.0 $ -- $ --
====== ====== ====== ======
Funded status............................................... $(85.7) $(63.0) $(70.9) $(70.2)
Unrecognized net actuarial (gain) loss...................... 21.7 (1.9) (13.9) (6.9)
Unrecognized net transition (asset) obligation.............. (2.4) (3.0) 27.2 27.5
Unrecognized prior service cost............................. 26.7 29.4 (2.9) 0.3
------ ------ ------ ------
Net amount recognized....................................... $(39.7) $(38.5) $(60.5) $(49.3)
====== ====== ====== ======
Amounts recognized in the consolidated balance sheets:
Prepaid benefit cost...................................... $ 12.2 $ 10.4 $ -- $ --
Accrued benefit liability................................. (93.6) (75.8) (60.5) (49.3)
Intangible asset.......................................... 23.5 26.1 -- --
Deferred tax asset........................................ 6.4 0.3 -- --
Accumulated other comprehensive income.................... 11.8 0.5 -- --
------ ------ ------ ------
Net amount recognized....................................... $(39.7) $(38.5) $(60.5) $(49.3)
====== ====== ====== ======
</TABLE>
The projected benefit obligation, accumulated benefit obligation and fair
value of plan assets for the pension plans with accumulated benefit obligations
in excess of plan assets were $161.9 million, $156.8 million and $89.0 million,
respectively, as of December 31, 1998, and $136.0 million, $127.6 million and
$78.4 million, respectively, as of December 31, 1997.
F-20
<PAGE> 89
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Components of the Company's net periodic benefit costs are as follows (in
millions):
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------------
OTHER
PENSION POSTRETIREMENT
------------------------ -----------------------
1998 1997 1996 1998 1997 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Components of net periodic benefit cost:
Service cost................................... $ 14.8 $14.7 $10.6 $ 4.8 $ 4.6 $ 4.2
Interest cost.................................. 13.9 13.4 10.6 4.7 4.9 4.0
Expected return on plan assets................. (10.8) (8.9) (7.0) -- -- --
Amortization of actuarial (gain) loss.......... (0.2) 0.1 0.8 (1.2) (0.3) (0.5)
Amortization of transition (asset)
obligation.................................. (0.4) (0.3) (0.2) 1.7 1.7 1.8
Amortization of prior service cost............. 2.3 2.4 1.7 (0.4) 0.1 0.2
------ ----- ----- ----- ----- -----
Net periodic benefit cost........................ $ 19.6 $21.4 $16.5 $ 9.6 $11.0 $ 9.7
====== ===== ===== ===== ===== =====
</TABLE>
The actuarial assumptions used in determining the funded status information
and net periodic benefit cost information shown above were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------
OTHER
PENSION POSTRETIREMENT
--------------- --------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted-average assumptions:
Discount rate:
Domestic plans............................................ 6 3/4% 7 1/2% 6 3/4% 7 1/2%
Foreign plans............................................. 6-7% 4 1/2-7 1/2% 7% 8%
Expected return on plan assets:
Domestic plans............................................ 9% 9% N/A N/A
Foreign plans............................................. 7% 7 1/2% N/A N/A
Rate of compensation increase:
Domestic plans............................................ 4 1/4% 5% N/A N/A
Foreign plans............................................. 3-4 1/2% 1-5% N/A N/A
</TABLE>
For measurement purposes, domestic health care costs were assumed to
increase 8.8% in 1998, grading down over time to 5.5% in eight years. Foreign
health care costs were assumed to increase 8.0% in 1998, grading down over time
to 5.5% in fifteen years.
Assumed healthcare cost trend rates have a significant effect on the
amounts reported for the postretirement plans. A 1% rise in the assumed rate of
healthcare cost increases each year would increase the postretirement benefit
obligation as of December 31, 1998 by $10.7 million and increase the
postretirement net periodic benefit cost by $1.8 million for the year ended
December 31, 1998.
The Company also sponsors defined contribution plans and participates in
government sponsored programs in certain foreign countries. Contributions are
determined as a percentage of each covered employee's salary. The Company also
participates in multi-employer pension plans for certain of its hourly employees
and contributes to those plans based on collective bargaining agreements. The
aggregate cost of the defined contribution and multi-employer pension plans
charged to income was $12.1 million, $10.4 million and $4.7 million for the
years ended December 31, 1998, 1997 and 1996, respectively.
F-21
<PAGE> 90
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(12) COMMITMENTS AND CONTINGENCIES
The Company is the subject of various lawsuits, claims and environmental
contingencies. In addition, the Company has been identified as a potentially
responsible party under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended ("Superfund"), for the cleanup of
contamination from hazardous substances at one Superfund site and may incur
indemnification obligations for cleanup at three additional sites. In the
opinion of management, the expected liability resulting from these matters is
adequately covered by amounts accrued and will not have a material adverse
effect on the Company's consolidated financial position or future results of
operations.
Approximately 21,000 of the Company's workforce worldwide are subject to
collective bargaining agreements, 38% of which expire within one year.
Relationships with all unions are good, and management does not anticipate any
difficulties with respect to the agreements.
Lease commitments at December 31, 1998 under noncancelable operating leases
with terms exceeding one year are as follows (in millions):
<TABLE>
<S> <C>
1999........................................................ $ 37.2
2000........................................................ 30.6
2001........................................................ 24.3
2002........................................................ 20.0
2003........................................................ 15.5
2004 and thereafter......................................... 24.9
------
Total....................................................... $152.5
======
</TABLE>
The Company's operating leases cover principally buildings and
transportation equipment. Rent expense incurred under all operating leases and
charged to operations was $60.6 million, $37.8 million and $29.8 million for the
years ended December 31, 1998, 1997 and 1996, respectively.
(13) STOCK OPTION PLANS
The Company has four plans under which it has issued stock options, the
1992 Stock Option Plan, the 1994 Stock Option Plan, the 1996 Stock Option Plan
and the Long-Term Stock Incentive Plan. Options issued to date under these plans
generally vest over a three-year period and expire ten years from the original
plan date.
F-22
<PAGE> 91
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
As part of the Masland Acquisition (Note 4), outstanding Masland stock
options were converted into options to acquire 517,920 shares of the Company's
common stock at prices ranging from $11.63 to $30.17 per share. The value of the
Masland options converted as of the date of the acquisition was $9.0 million and
was included in the purchase price of the acquisition. A summary of options
transactions during each of the three years in the period ended December 31,
1998 is shown below:
<TABLE>
<CAPTION>
STOCK OPTIONS PRICE RANGE
------------- -----------
<S> <C> <C>
Outstanding at December 31, 1995.................. 4,476,910 $ 1.29 - $30.25
Granted......................................... 1,076,920 $11.63 - $33.00
Expired or cancelled............................ (36,000) $15.50 - $33.00
Exercised....................................... (1,832,588) $ 1.29 - $23.12
----------
Outstanding at December 31,1996................... 3,685,242 $ 1.29 - $33.00
Granted......................................... 554,000 $37.25
Expired or cancelled............................ (166,685) $ 1.29 - $37.25
Exercised....................................... (1,286,059) $ 1.29 - $33.00
----------
Outstanding at December 31, 1997.................. 2,786,498 $ 1.29 - $37.25
Granted......................................... 880,350 $54.22
Expired or cancelled............................ (84,378) $19.26 - $54.22
Exercised....................................... (320,379) $ 1.29 - $37.25
----------
Outstanding at December 31, 1998.................. 3,262,091 $ 5.00 - $54.22
==========
</TABLE>
At December 31, 1998, 1,397,143 stock options were exercisable at a
weighted average price of $11.83.
The Long-Term Stock Incentive Plan also permits the grants of stock
appreciation rights, restricted stock, restricted units, performance shares and
performance units (collectively "Incentive Units") to officers and other key
employees of the Company. As of December 31, 1998, the Company had outstanding
Incentive Units convertible into a maximum of 186,588 shares of common stock of
the Company.
Pro Forma
At December 31, 1998, the Company had several stock option plans, which are
described above. The Company applies APB Opinion 25 and related Interpretations
in accounting for its plans. Accordingly, compensation cost was calculated as
the difference between the exercise price of the option and the market value of
the stock at the date the option was granted. If compensation cost for the
Company's stock option plans was determined based on the fair value at the grant
dates consistent with the method prescribed in SFAS No. 123, "Accounting for
Stock-Based Compensation," the Company's net income
F-23
<PAGE> 92
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
and net income per share would have been reduced to the pro forma amounts
indicated below (unaudited, in millions, except per share data).
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
As Reported
Income before extraordinary item.................... $115.5 $208.2 $151.9
Net income.......................................... $115.5 $207.2 $151.9
Diluted income per share before extraordinary
item............................................. $ 1.70 $ 3.05 $ 2.38
Diluted net income per share........................ $ 1.70 $ 3.04 $ 2.38
Pro forma
Income before extraordinary item.................... $107.9 $204.3 $150.4
Net income.......................................... $107.9 $203.3 $150.4
Diluted income per share before extraordinary
item............................................. $ 1.59 $ 2.99 $ 2.36
Diluted net income per share........................ $ 1.59 $ 2.98 $ 2.36
</TABLE>
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted average
assumptions used for grants in 1998, 1997 and 1996: expected dividend yields of
0.0% and expected lives of 10 years. The risk-free interest rates used were
6 3/4% in 1998 and 7 1/2% in 1997 and 1996. The expected volatility used was
33.9% in 1998, 30.2% in 1997 and 31.5% in 1996.
(14) SEGMENT REPORTING
The Company has adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." SFAS No. 131 establishes standards for
reporting information about operating segments in annual financial statements
and requires selected information about operating segments in interim financial
reports issued to stockholders. It also establishes standards for related
disclosures about products and services, geographic areas and major customers.
The Company is organized based on customer-focused and geographic
divisions. Each division reports their results from operations and makes
requests for capital expenditures directly to the chief operating decision
making group. This group is comprised of the Chairman & Chief Executive Officer,
the Vice-Chairman, the President and Chief Operating Officer and the Chief
Financial Officer. Under this organizational structure, the Company's operating
segments have been aggregated into one reportable segment. This aggregated
segment consists of eight divisions, each with separate management teams and
infrastructures dedicated to providing complete automotive interiors to its
respective automotive OEM customers. Each of the Company's eight divisions
demonstrate similar economic performance, mainly driven by automobile production
volumes in the geographic regions in which they operate. Also, each division
operates in the competitive "Tier 1" automotive supplier environment and
continually is working with its customers to manage costs without sacrificing
quality. All of the Company's manufacturing facilities use Just-In-Time (JIT)
manufacturing techniques to produce and distribute their automotive interior
products. These techniques include maintaining constant computer and other
communication connections between personnel at the Company's plants and
personnel at the customers' plants to keep production current with the
customers' demand. The Other category includes the corporate office, geographic
headquarters, technology division and elimination of intercompany activities,
none of which meet the requirements of being classified as an operating segment.
The accounting policies of the operating segments are the same as those
described in the summary of significant accounting policies described in Note 2.
The Company evaluates the performance of its operating segments based primarily
on sales, operating income before amortization and cash flow, being defined as
EBITA less capital expenditures plus depreciation.
F-24
<PAGE> 93
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The following table presents revenues and other financial information by
business segment (in millions):
<TABLE>
<CAPTION>
1998
--------------------------------------
AUTOMOTIVE
INTERIORS OTHER CONSOLIDATED
---------- ----- ------------
<S> <C> <C> <C>
Revenues...................................... $9,050.4 $ 9.0 $9,059.4
EBITA......................................... 537.1 (145.7) 391.4
Depreciation.................................. 161.2 9.3 170.5
Capital expenditures.......................... 307.2 44.2 351.4
Total assets.................................. 3,812.5 1,864.8 5,677.3
</TABLE>
<TABLE>
<CAPTION>
1997
--------------------------------------
AUTOMOTIVE
INTERIORS OTHER CONSOLIDATED
---------- ----- ------------
<S> <C> <C> <C>
Revenues...................................... $7,330.0 $ 12.9 $7,342.9
EBITA......................................... 652.9 (130.4) 522.5
Depreciation.................................. 135.4 7.6 143.0
Capital expenditures.......................... 168.7 19.2 187.9
Total assets.................................. 2,937.2 1,521.9 4,459.1
</TABLE>
<TABLE>
<CAPTION>
1996
--------------------------------------
AUTOMOTIVE
INTERIORS OTHER CONSOLIDATED
---------- ----- ------------
<S> <C> <C> <C>
Revenues...................................... $6,249.1 $ -- $6,249.1
EBITA......................................... 496.6 (87.2) 409.4
Depreciation.................................. 103.4 5.3 108.7
Capital expenditures.......................... 139.4 14.4 153.8
Total assets.................................. 2,525.6 1,291.2 3,816.8
</TABLE>
The following table presents revenues and long-lived assets for each of the
geographic areas in which the Company operates (in millions):
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Revenues:
United States............................... $4,413.7 $3,609.4 $3,213.5
Canada...................................... 957.8 1,056.1 844.5
Germany..................................... 1,345.8 559.8 476.9
Other foreign countries..................... 2,342.1 2,117.6 1,714.2
-------- -------- --------
Total.................................... $9,059.4 $7,342.9 $6,249.1
======== ======== ========
</TABLE>
F-25
<PAGE> 94
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Long-lived assets:
United States............................... $ 705.0 $ 608.7 $554.5
Canada...................................... 82.9 62.9 66.4
Germany..................................... 132.6 101.1 58.3
Other foreign countries..................... 392.9 248.6 251.0
-------- -------- ------
Total.................................... $1,313.4 $1,021.3 $930.2
======== ======== ======
</TABLE>
A majority of the Company's revenues are from four automobile manufacturing
companies. The following is a summary of the percentage of revenues from major
customers:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
General Motors Corporation.................... 26% 27% 30%
Ford Motor Company............................ 23 29 32
DaimlerChrysler............................... 14 9 7
Fiat S.p.A.................................... 8 10 10
</TABLE>
In addition, a significant portion of the remaining revenues are to the
above automobile manufacturing companies through various other automotive
suppliers or to affiliates of these automobile manufacturing companies.
(15) FINANCIAL INSTRUMENTS
The Company hedges certain foreign currency risks through the use of
forward foreign exchange contracts and options. Such contracts are generally
deemed as, and are effective as, hedges of the related transactions. As such,
gains and losses from these contracts are deferred and are recognized on the
settlement date, consistent with the related transactions. The Company and its
subsidiaries contracted to exchange notional United States dollar equivalent
principal amounts of $289.8 million as of December 31, 1998 and $231.8 million
as of December 31, 1997. All contracts outstanding as of December 31, 1998
mature in 1999. The deferred gain on such contracts as of December 31, 1998 was
$.5 million compared to $.3 million as of December 31, 1997.
The carrying values of the Company's subordinated notes vary from the fair
values of these instruments. The fair values were determined by reference to
market prices of the securities in recent public transactions. As of December
31, 1998 and 1997, the aggregate carrying value of the Company's subordinated
notes was $336.0 million compared to an estimated fair value of $356.7 million
and $357.9 million, respectively. The carrying value of the Company's senior
indebtedness approximates its fair value which was determined based on rates
currently available to the Company for similar borrowings with like maturities.
The Company uses interest rate swap contracts to hedge against interest
rate risks in future periods. As of December 31, 1998, the Company had entered
into swap contracts with an aggregate notional value of $300.0 million with
maturities between fifteen months and ten years. Pursuant to each of the
contracts, the Company will make payments calculated at a fixed base rate of
between 4.6% and 6.0% of the notional value and will receive payments calculated
at the LIBOR rate. This effectively fixes the Company's interest rate on the
portion of the indebtedness under the Credit Agreement covered by the contracts.
The fair value of these contracts as of December 31, 1998 was a negative $12.2
million.
Several of the Company's European subsidiaries factor their accounts
receivable with financial institutions subject to limited recourse provisions
and are charged a discount fee ranging from 3.8% to
F-26
<PAGE> 95
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
4.7%. The amount of such factored receivables, which is not included in accounts
receivable in the consolidated balance sheets at December 31, 1998 and 1997, was
approximately $200.0 million and $137.0 million, respectively.
During 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," effective for fiscal years beginning after June 15,
1999. It requires all derivative instruments to be recorded in the balance sheet
at their fair value. Changes in the fair value of derivatives are required to be
recorded each period in current earnings or other comprehensive income,
depending on whether the derivative is designated as part of a hedge
transaction. We do not expect the effects of adoption to be significant.
(16) QUARTERLY FINANCIAL DATA
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
------------------------------------------------------
MARCH 28, JUNE 27, SEPTEMBER 26, DECEMBER 31,
1998 1998 1998 1998
--------- -------- ------------- ------------
(UNAUDITED, IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales........................................ $2,032.1 $2,175.0 $1,946.5 $2,905.8
Gross profit..................................... 200.2 231.6 162.0 267.6
Net income (loss)................................ 47.3 65.7 21.6 (19.1)
Diluted net income per share..................... .69 .96 .32 (.28)
</TABLE>
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
------------------------------------------------------
MARCH 29, JUNE 28, SEPTEMBER 27, DECEMBER 31,
1997 1997 1997 1997
--------- -------- ------------- ------------
(UNAUDITED, IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales........................................ $1,724.0 $1,839.3 $1,635.9 $2,143.7
Gross profit..................................... 177.9 213.5 175.3 242.7
Income before extraordinary item................. 41.9 61.1 36.6 68.6
Net income....................................... 41.9 61.1 35.6 68.6
Diluted net income per share before extraordinary
item........................................... .62 .90 .53 1.00
Diluted net income per share..................... .62 .90 .52 1.00
</TABLE>
F-27
<PAGE> 96
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(17) SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
DECEMBER 31, 1998
--------------------------------------------------------------------
NON-
PARENT GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
------ ---------- ---------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............. $ (3.8) $ .9 $ 32.9 $ -- $ 30.0
Accounts receivable, net.............. 138.4 294.2 941.3 -- 1,373.9
Inventories........................... 17.3 45.9 286.4 -- 349.6
Recoverable customer engineering and
tooling............................ 28.1 12.6 180.7 -- 221.4
Other................................. 44.6 29.5 149.0 -- 223.1
-------- -------- -------- --------- --------
Total current assets............. 224.6 383.1 1,590.3 -- 2,198.0
-------- -------- -------- --------- --------
LONG-TERM ASSETS:
Property, plant and equipment, net.... 110.6 320.7 751.0 -- 1,182.3
Goodwill, net......................... 274.6 615.3 1,129.9 -- 2,019.8
Investment in subsidiaries............ 1,794.4 21.1 -- (1,815.5) --
Other................................. 82.0 11.1 184.1 -- 277.2
-------- -------- -------- --------- --------
Total long-term assets........... 2,261.6 968.2 2,065.0 (1,815.5) 3,479.3
-------- -------- -------- --------- --------
$2,486.2 $1,351.3 $3,655.3 $(1,815.5) $5,677.3
======== ======== ======== ========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings................. $ 55.0 $ -- $ 27.7 $ -- $ 82.7
Accounts payable and drafts........... 191.0 254.5 1,155.3 -- 1,600.8
Accrued liabilities................... 133.9 141.9 521.7 -- 797.5
Current portion of long-term debt..... 3.5 .2 12.8 -- 16.5
-------- -------- -------- --------- --------
Total current liabilities........ 383.4 396.6 1,717.5 -- 2,497.5
-------- -------- -------- --------- --------
LONG-TERM LIABILITIES:
Deferred national income taxes........ (15.5) 31.2 23.3 -- 39.0
Long-term debt........................ 1,168.1 .8 294.5 -- 1,463.4
Intercompany accounts, net............ (484.1) 666.7 (182.6) -- --
Other................................. 134.3 53.1 190.0 -- 377.4
-------- -------- -------- --------- --------
Total long-term liabilities...... 802.8 751.8 325.2 -- 1,879.8
-------- -------- -------- --------- --------
STOCKHOLDERS' EQUITY.................... 1,300.0 202.9 1,612.6 (1,815.5) 1,300.0
-------- -------- -------- --------- --------
$2,486.2 $1,351.3 $3,655.3 $(1,815.5) $5,677.3
======== ======== ======== ========= ========
</TABLE>
F-28
<PAGE> 97
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(17) SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
(CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1997
--------------------------------------------------------------------
NON-
PARENT GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
------ ---------- ---------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............. $ (.6) $ .5 $ 13.0 $ -- $ 12.9
Accounts receivable, net.............. 73.4 255.5 736.9 -- 1,065.8
Inventories........................... 11.4 47.9 172.1 -- 231.4
Recoverable customer engineering and
tooling............................ 28.0 14.6 110.0 -- 152.6
Other................................. 38.6 25.9 87.7 -- 152.2
-------- -------- -------- --------- --------
Total current assets............. 150.8 344.4 1,119.7 -- 1,614.9
-------- -------- -------- --------- --------
LONG-TERM ASSETS:
Property, plant and equipment, net.... 80.6 310.2 548.3 -- 939.1
Goodwill, net......................... 113.3 626.8 952.2 -- 1,692.3
Investment in subsidiaries............ 1,098.1 13.1 -- (1,111.2) --
Other................................. 79.8 7.7 125.3 -- 212.8
-------- -------- -------- --------- --------
Total long-term assets........... 1,371.8 957.8 1,625.8 (1,111.2) 2,844.2
-------- -------- -------- --------- --------
$1,522.6 $1,302.2 $2,745.5 $(1,111.2) $4,459.1
======== ======== ======== ========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings................. $ 27.6 $ -- $ 10.3 $ -- $ 37.9
Accounts payable and drafts........... 115.8 190.7 880.0 -- 1,186.5
Accrued liabilities................... 91.4 154.8 374.3 -- 620.5
Current portion of long-term debt..... -- .3 8.8 -- 9.1
-------- -------- -------- --------- --------
Total current liabilities........ 234.8 345.8 1,273.4 -- 1,854.0
-------- -------- -------- --------- --------
LONG-TERM LIABILITIES:
Deferred national income taxes........ (19.4) 30.6 50.5 -- 61.7
Long-term debt........................ 754.5 1.0 307.6 -- 1,063.1
Intercompany accounts, net............ (737.7) 58.0 679.7 -- --
Other................................. 83.4 49.1 140.8 -- 273.3
-------- -------- -------- --------- --------
Total long-term liabilities...... 80.8 138.7 1,178.6 -- 1,398.1
-------- -------- -------- --------- --------
STOCKHOLDERS' EQUITY.................... 1,207.0 817.7 293.5 (1,111.2) 1,207.0
-------- -------- -------- --------- --------
$1,522.6 $1,302.2 $2,745.5 $(1,111.2) $4,459.1
======== ======== ======== ========= ========
</TABLE>
F-29
<PAGE> 98
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(17) SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
(CONTINUED)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1998
--------------------------------------------------------------------
NON-
PARENT GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
------ ---------- ---------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Net sales............................... $1,213.8 $2,629.2 $6,951.3 $(1,734.9) $9,059.4
Cost of sales........................... 1,210.4 2,279.9 6,442.6 (1,734.9) 8,198.0
Selling, general and administrative
expenses.............................. 122.6 31.6 182.8 -- 337.0
Restructuring and other changes......... 15.7 8.3 109.0 -- 133.0
Amortization of goodwill................ 4.1 16.7 28.4 -- 49.2
-------- -------- -------- --------- --------
Operating income (loss)............ (139.0) 292.7 188.5 -- 342.2
Interest expense........................ 35.3 47.7 27.5 -- 110.5
Intercompany charges, net............... (161.1) 115.4 45.7 -- --
Other expense (income), net............. 4.5 (11.7) 24.1 -- 16.9
-------- -------- -------- --------- --------
Income (loss) before provision
(credit) for national income
taxes, minority interests in
consolidated subsidiaries, equity
in net income of affiliates and
subsidiaries..................... (17.7) 141.3 91.2 -- 214.8
Provision (credit) for national income
taxes................................. (5.4) 48.5 50.8 -- 93.9
Minority interests in consolidated
subsidiaries.......................... -- (.5) 7.4 -- 6.9
Equity in net income of affiliates...... (1.5) -- -- -- (1.5)
Equity in net income of
subsidiaries.......................... (126.3) (7.2) -- 133.5 --
-------- -------- -------- --------- --------
Net income.............................. $ 115.5 $ 100.5 $ 33.0 $ (133.5) $ 115.5
======== ======== ======== ========= ========
</TABLE>
F-30
<PAGE> 99
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(17) SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
(CONTINUED)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1997
-------------------------------------------------------------------
NON-
PARENT GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
------ ---------- ---------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Net sales............................... $ 746.8 $2,039.5 $4,577.7 $ (21.1)_ $7,342.9
Cost of sales........................... 735.9 1,753.7 4,065.0 (21.1) 6,533.5
Selling, general and administrative
expenses.............................. 79.1 74.4 133.4 -- 286.9
Amortization of goodwill................ 3.5 16.6 21.3 -- 41.4
------- -------- -------- ------- --------
Operating income (loss)............ (71.7) 194.8 358.0 -- 481.1
Interest expense........................ 31.7 2.2 67.1 -- 101.0
Intercompany charges, net............... (108.9) 56.1 52.8 -- --
Other expense, net...................... 9.3 15.0 10.0 -- 34.3
------- -------- -------- ------- --------
Income (loss) before provision
(credit) for national income
taxes, minority interests in
consolidated subsidiaries, equity
in net income of affiliates and
subsidiaries and extraordinary
item............................. (3.8) 121.5 228.1 -- 345.8
Provision (credit) for national income
taxes................................. (1.8) 55.8 89.1 -- 143.1
Minority interests in consolidated
subsidiaries.......................... .7 (.8) 3.4 -- 3.3
Equity in net income of affiliates...... (5.2) (.6) (3.0) -- (8.8)
Equity in net income of subsidiaries.... (204.7) (20.0) -- 224.7 --
------- -------- -------- ------- --------
Income before extraordinary item... 207.2 87.1 138.6 (224.7) 208.2
Extraordinary loss on early
extinguishment of debt................ -- -- 1.0 -- 1.0
------- -------- -------- ------- --------
Net income.............................. $ 207.2 $ 87.1 $ 137.6 $(224.7) $ 207.2
======= ======== ======== ======= ========
</TABLE>
F-31
<PAGE> 100
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(17) SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
(CONTINUED)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996
-------------------------------------------------------------------
NON-
PARENT GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
------ ---------- ---------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Net sales............................... $ 765.5 $1,857.1 $3,636.7 $ (10.2) $6,249.1
Cost of sales........................... 746.2 1,625.7 3,267.7 (10.2) 5,629.4
Selling, general and administrative
expenses.............................. 58.0 86.1 66.2 -- 210.3
Amortization of goodwill................ 3.5 12.7 17.4 -- 33.6
------- -------- -------- ------- --------
Operating income (loss)............ (42.2) 132.6 285.4 -- 375.8
Interest expense........................ 43.3 1.3 58.2 -- 102.8
Intercompany charges, net............... (103.8) 50.4 53.4 -- --
Other expense (income), net............. (6.9) 9.2 17.3 -- 19.6
------- -------- -------- ------- --------
Income before provision for
national income taxes, minority
interests in consolidated
subsidiaries, equity in net loss
(income) of affiliates and
subsidiaries..................... 25.2 71.7 156.5 -- 253.4
------- -------- -------- ------- --------
Provision for national income taxes..... 7.4 21.1 73.0 -- 101.5
Minority interests in consolidated
subsidiaries.......................... (.4) -- 4.4 -- 4.0
Equity in net loss (income) of
affiliates............................ .5 -- (4.5) -- (4.0)
Equity in net income of subsidiaries.... (134.2) (15.6) -- 149.8 --
------- -------- -------- ------- --------
Net income.............................. $ 151.9 $ 66.2 $ 83.6 $(149.8) $ 151.9
======= ======== ======== ======= ========
</TABLE>
F-32
<PAGE> 101
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(17) SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
(CONTINUED)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1998
-------------------------------------------------------------------
NON-
PARENT GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
------ ---------- ---------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
NET CASH PROVIDED BY OPERATING
ACTIVITIES............................ $ 46.8 $ 177.3 $ 61.3 $-- $ 285.4
------- ------- ------- -- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and
equipment........................ (69.5) (54.3) (227.6) -- (351.4)
Acquisitions....................... (89.6) -- (238.6) -- (328.2)
Other, net......................... 2.6 -- (0.8) -- 1.8
------- ------- ------- -- -------
Net cash used in investing
activities.................. (156.5) (54.3) (467.0) -- (677.8)
------- ------- ------- -- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term revolving credit
borrowings, net.................. 365.1 -- (48.1) -- 317.0
Other long-term debt borrowings,
net.............................. 46.2 (0.2) (12.3) -- 58.3
Short-term borrowings, net......... 27.4 -- 15.8 -- 43.2
Proceeds from sale of common stock,
net.............................. 3.4 -- -- -- 3.4
Purchase of treasury stock, net.... (18.2) -- -- -- (18.2)
Decrease in drafts................. (0.1) (0.4) (19.4) -- (19.9)
Change in intercompany accounts.... (317.3) (122.0) 439.3 -- --
------- ------- ------- -- -------
Net cash provided by (used in)
financing activities........ 106.5 (122.6) 399.9 -- 383.8
------- ------- ------- -- -------
Effect of foreign currency
translation...................... -- -- 25.7 -- 25.7
------- ------- ------- -- -------
NET CHANGE IN CASH AND CASH
EQUIVALENTS........................... (3.2) 0.4 19.9 -- 17.1
CASH AND CASH EQUIVALENTS -- BEGINNING
OF YEAR............................... (0.6) 0.5 13.0 -- 12.9
------- ------- ------- -- -------
CASH AND CASH EQUIVALENTS -- END OF
YEAR.................................. $ (3.8) $ 0.9 $ 32.9 $-- $ 30.0
======= ======= ======= == =======
</TABLE>
F-33
<PAGE> 102
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(17) SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
(CONTINUED)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1997
-------------------------------------------------------------------
NON-
PARENT GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
------ ---------- ---------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES............................ $ (26.1) $ 156.0 $ 319.5 $-- $ 449.4
------- ------- ------- -- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and
equipment.......................... (12.9) (49.6) (125.4) -- (187.9)
Acquisitions.......................... (36.5) -- (295.7) -- (332.2)
Other, net............................ (14.6) (2.1) 17.1 -- 0.4
------- ------- ------- -- -------
Net cash used in investing
activities....................... (64.0) (51.7) (404.0) -- (519.7)
------- ------- ------- -- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term revolving credit borrowings,
net................................ (53.5) -- 190.4 -- 136.9
Other long-term debt borrowings,
net................................ (134.5) (1.4) 2.9 -- (133.0)
Short-term borrowings, net............ 27.6 -- (3.4) -- 24.2
Proceeds from sale of common stock,
net................................ 8.4 -- -- -- 8.4
Increase (decrease) in drafts......... 2.5 2.4 (2.7) -- 2.2
Change in intercompany accounts....... 237.9 (100.7) (137.2) -- --
Other, net............................ 0.3 -- -- -- 0.3
------- ------- ------- -- -------
Net cash provided by (used in)
financing activities............. 88.7 (99.7) 50.0 -- 39.0
------- ------- ------- -- -------
Effect of foreign currency
translation........................ -- -- 18.2 -- 18.2
------- ------- ------- -- -------
NET CHANGE IN CASH AND CASH
EQUIVALENTS........................... (1.4) 4.6 (16.3) -- (13.1)
CASH AND CASH EQUIVALENTS -- BEGINNING
OF YEAR............................... 0.8 (4.1) 29.3 -- 26.0
------- ------- ------- -- -------
CASH AND CASH EQUIVALENTS -- END OF
YEAR.................................. $ (0.6) $ 0.5 $ 13.0 $-- $ 12.9
======= ======= ======= == =======
</TABLE>
F-34
<PAGE> 103
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(17) SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
(CONTINUED)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996
-------------------------------------------------------------------
NON-
PARENT GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
------- ---------- ---------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
NET CASH PROVIDED BY OPERATING
ACTIVITIES............................. $ 31.0 $ 212.9 $ 218.7 $-- $ 462.6
------- ------- ------- -- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and
equipment........................... (20.0) (25.9) (107.9) -- (153.8)
Acquisitions........................... -- (326.1) (202.9) -- (529.0)
Other, net............................. 1.5 0.7 (1.1) -- 1.1
------- ------- ------- -- -------
Net cash used in investing
activities..................... (18.5) (351.3) (311.9) -- (681.7)
------- ------- ------- -- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term revolving credit borrowings,
net................................. (273.6) -- 62.3 -- (211.3)
Other long-term debt borrowings, net... 210.0 (5.0) (1.4) -- 203.6
Short-term borrowings, net............. -- (0.4) (7.1) -- (7.5)
Proceeds from sale of common stock,
net................................. 249.5 -- -- -- 249.5
Increase (decrease) in drafts.......... (8.9) 48.5 (69.1) -- (29.5)
Change in intercompany accounts........ (187.0) 91.4 95.6 -- --
Other, net............................. (3.2) -- -- -- (3.2)
------- ------- ------- -- -------
Net cash provided by (used in)
financing activities........... (13.2) 134.5 80.3 -- 201.6
------- ------- ------- -- -------
Effect of foreign currency
translation......................... -- -- 9.4 -- 9.4
------- ------- ------- -- -------
NET CHANGE IN CASH AND CASH
EQUIVALENTS............................ (0.7) (3.9) (3.5) -- (8.1)
CASH AND CASH EQUIVALENTS --
BEGINNING OF YEAR...................... 1.5 (0.2) 32.8 -- 34.1
------- ------- ------- -- -------
CASH AND CASH EQUIVALENTS --
END OF YEAR............................ $ 0.8 $ (4.1) $ 29.3 $-- $ 26.0
======= ======= ======= == =======
</TABLE>
F-35
<PAGE> 104
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(17) SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
(CONTINUED)
Basis of Presentation -- In connection with the acquisition of UT
Automotive, Inc., a wholly-owned subsidiary of United Technologies Corporation
("UT Automotive")(see Note 18), the Company issued $1.4 billion in securities,
which consist of $600 million aggregate principal amount of 7.96% Senior Notes
due May 15, 2005 and $800 million aggregate principal amount of 8.11% Senior
Notes due May 15, 2009 (collectively, the "May 1999 Notes"). Certain of the
Company's domestic wholly-owned subsidiaries (the "Guarantors") irrevocably and
unconditionally guarantee on a joint and several basis the punctual payment when
due, whether at stated maturity, by acceleration or otherwise, all of the
Company's obligations under the May 1999 Notes indenture, including the
Company's obligations to pay principal, premium, if any, and interest with
respect to the May 1999 Notes. The Guarantors on the date of the indenture were
Lear Operations Corporation and Lear Corporation Automotive Holdings (formerly,
UT Automotive). In lieu of providing separate audited financial statements for
the Guarantors, the Company has included the audited consolidating condensed
financial statements on pages F-28 to F-35. Management does not believe that
separate financial statements of the Guarantors are material to investors.
Therefore, separate financial statements and other disclosures concerning the
Guarantors are not presented.
Distributions -- There are no significant restrictions on the ability of
the Company to sell or otherwise dispose of any or all of the assets of any of
the Guarantors or on the ability of the Guarantors to make distributions to the
Company.
Selling, General and Administrative Expenses -- During 1998, 1997 and 1996,
Lear Corporation (the "Parent") allocated $64.5 million, $67.4 million and $53.5
million, respectively, of corporate selling, general and administrative expenses
to its operating subsidiaries. The allocations were based on various factors
which estimate usage of particular corporate functions, and in certain
instances, other relevant factors were used, such as the revenues or headcount
of the Company's subsidiaries.
Long-term Debt of the Parent Corporation and the Guarantors -- Long-term
debt of the Parent and the Guarantors on a combined basis consisted of the
following at December 31 (in millions):
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Credit agreement............................................ $ 755.1 $390.0
Other long-term debt........................................ 81.5 29.8
Subordinated notes.......................................... 336.0 336.0
-------- ------
1,172.6 755.8
Less current portion........................................ (3.7) (0.3)
-------- ------
$1,168.9 $755.5
======== ======
</TABLE>
The obligations of foreign subsidiary borrowers under the credit agreement
are guaranteed by the Parent.
For a more detailed description of the above indebtedness, see Note 9 to
the Consolidated Financial Statements.
F-36
<PAGE> 105
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(17) SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
(CONTINUED)
Aggregate minimum principal payment requirements on long-term debt,
including capital lease obligations, in each of the five years subsequent to
December 31, 1998 are as follows:
<TABLE>
<S> <C>
1999........................................................ $ 3.7
2000........................................................ 31.3
2001........................................................ 731.9
2002........................................................ 138.1
2003........................................................ 5.1
Thereafter.................................................. 262.5
</TABLE>
(18) SUBSEQUENT EVENTS
Acquisition of UT Automotive
On May 4, 1999, the Company acquired UT Automotive for approximately $2.3
billion, subject to certain post-closing adjustments. UT Automotive is a
supplier of electrical, electronic, motor and interior products and systems to
the global automotive industry. Headquartered in Dearborn, Michigan, UT
Automotive has annual sales of approximately $3 billion, 44,000 employees and 90
facilities located in 18 countries. The purchase price for the UT Automotive
acquisition was financed through borrowings under the Company's primary credit
facilities.
Primary Credit Facilities and the Senior Notes Offering
In connection with the UT Automotive acquisition, the Company amended and
restated its existing $2.1 billion revolving credit facility and entered into
new credit facilities. The new credit facilities consisted of $500 million
revolving credit facility, which matures on May 4, 2004, a $500 million term
loan having a scheduled amortization beginning on October 31, 2000 and a final
maturity of May 4, 2004, and a $1.4 billion interim term loan maturing on May 3,
2000.
On May 18, 1999, the Company completed the private offering of the May 1999
Notes. Interest is payable on the May 1999 Notes on May 15 and November 15 of
each year. The Company used the net proceeds from the May 1999 Notes offering to
repay the $1.4 billion interim term loan under its new credit facilities, which
was used to fund a portion of the UT Automotive acquisition purchase price. The
Company intends to file a registration statement with the Securities and
Exchange Commission to register substantially identical notes that will be
exchanged for the May 1999 Notes after the registration statement becomes
effective.
The May 1999 Notes are senior unsecured obligations of the Company and rank
pari passu in right of payment with all of the Company's existing and future
unsubordinated unsecured indebtedness. The Company's obligations under the May
1999 Notes are guaranteed, on a joint and several basis, by certain of the
Company's domestic subsidiaries. Indebtedness under the Company's primary credit
facilities is secured by the pledge of all or a portion of the capital stock of
certain of the Company's subsidiaries. The May 1999 Notes do not have the
benefit of such pledges. The primary credit facilities are guaranteed by the
same domestic subsidiaries of the Company that guarantee the May 1999 Notes.
Pursuant to the terms of the primary credit facilities, the guarantees and stock
pledges shall be released when and if the Company achieves a certain leverage
ratio or its senior long-term unsecured debt is at or above "BBB-" from Standard
& Poor's Ratings Group or at or above "Baa3" from Moody's Investors Service,
Inc., and certain other conditions are satisfied. In the event that any such
subsidiary ceases to be a guarantor under the primary credit facilities, such
subsidiary will be released as a guarantor of the May 1999 Notes. The Company
may redeem all or part of either series of the May 1999 Notes, at its option, at
any time, at the redemption price equal to the greater of (a) 100% of the
principal amount of the notes to be redeemed
F-37
<PAGE> 106
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
and (b) the sum of the present values of the remaining scheduled payments of
principal and interest thereon from the redemption date to the maturity date
discounted to the redemption date on a semiannual basis at the applicable
treasury rate plus 50 basis points, in each case, together with any interest
accrued but not paid to the date of the redemption.
The primary credit facilities contain numerous restrictive covenants
relating to maintenance of certain financial ratios and to the management and
operation of the Company. The covenants include, among others, limitations on
indebtedness, guarantees, mergers, acquisitions, fundamental corporate changes,
asset sales, investments, loans and advances, liens, dividends and other stock
payments, transactions with affiliates and optional payments and modification of
debt instruments. The May 1999 Notes also contain covenants restricting the
ability of the Company and its subsidiaries to incur liens and enter into sale
and leaseback transactions, and limiting the ability of the Company to
consolidate or merge with or into, or sell or otherwise dispose of all or
substantially all of its assets to, any person.
Sale of Electric Motor Systems
On May 7, 1999, the Company entered into a definitive purchase agreement
with Johnson Electric Holdings Limited to sell the recently acquired Electric
Motor Systems ("EMS") business for $310 million, subject to certain post-closing
adjustments. The Company acquired the EMS business as a part of the acquisition
of UT Automotive. EMS is a supplier of industrial and automotive electric motors
and starter motors for small gasoline engines. EMS had gross sales of $351
million and has approximately 3,300 employees operating at locations in 10
countries.
Consummation of the sale is contingent upon expiration or termination of
applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements
Act, applicable foreign competition act approvals and certain other customary
conditions.
F-38
<PAGE> 107
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Lear Corporation:
We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements of LEAR CORPORATION AND SUBSIDIARIES ("the
Company") included in this Form S-4 , and have issued our report thereon dated
January 29, 1999 (except with respect to the matters discussed in Note 18, as to
which the date is May 18, 1999). Our audit was made for the purpose of forming
an opinion on those statements taken as a whole. The schedule on page F-40 is
the responsibility of the Company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic consolidated financial statements. This schedule has been subjected to
the auditing procedures applied in the audit of the basic consolidated financial
statements and, in our opinion, fairly states in all material respects the
financial data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
Detroit, Michigan
January 29, 1999.
F-39
<PAGE> 108
LEAR CORPORATION AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
BALANCE AT BALANCE
BEGINNING OTHER AT END
OF PERIOD ADDITIONS RETIREMENTS CHANGES OF PERIOD
---------- --------- ----------- ------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 31, 1996:
Valuation of accounts deducted from related
assets:
Allowance for doubtful accounts................ $ 4.0 $ 3.3 $ (.6) $ 2.3 $ 9.0
Reserve for unmerchantable inventories......... 6.3 4.6 (1.0) (.6) 9.3
----- ------ ------ ----- ------
$10.3 $ 7.9 $ (1.6) $ 1.7 $ 18.3
===== ====== ====== ===== ======
FOR THE YEAR ENDED DECEMBER 31, 1997:
Valuation of accounts deducted from related
assets:
Allowance for doubtful accounts................ $ 9.0 $ 5.1 $ (2.6) $ 3.2 $ 14.7
Reserve for unmerchantable inventories......... 9.3 3.6 (3.7) 3.2 12.4
----- ------ ------ ----- ------
$18.3 $ 8.7 $ (6.3) $ 6.4 $ 27.1
===== ====== ====== ===== ======
FOR THE YEAR ENDED DECEMBER 31, 1998:
Valuation of accounts deducted from related
assets:
Allowance for doubtful accounts................ $14.7 $ 8.4 $ (5.8) $(1.3) $ 16.0
Reserve for unmerchantable inventories......... 12.4 8.0 (5.6) .1 14.9
Reserve for restructuring and other charges.... -- 133.0 (41.7) -- 91.3
----- ------ ------ ----- ------
$27.1 $149.4 $(53.1) $(1.2) $122.2
===== ====== ====== ===== ======
</TABLE>
F-40
<PAGE> 109
LEAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
APRIL 3, DECEMBER 31,
1999 1998
-------- ------------
(UNAUDITED)
(IN MILLIONS,
EXCEPT SHARE DATA)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................... $ 24.6 $ 30.0
Accounts receivable, net.................................... 1,482.3 1,373.9
Inventories................................................. 321.3 349.6
Recoverable customer engineering and tooling................ 239.1 221.4
Other....................................................... 243.4 223.1
-------- --------
Total current assets........................................ 2,310.7 2,198.0
-------- --------
LONG-TERM ASSETS:
Property, plant and equipment, net.......................... 1,183.2 1,182.3
Goodwill, net............................................... 1,990.9 2,019.8
Other....................................................... 298.9 277.2
-------- --------
Total long-term assets...................................... 3,473.0 3,479.3
-------- --------
$5,783.7 $5,677.3
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings....................................... $ 80.3 $ 82.7
Accounts payable and drafts................................. 1,728.5 1,600.8
Accrued liabilities......................................... 811.4 797.5
Current portion of long-term debt........................... 14.7 16.5
-------- --------
Total current liabilities................................... 2,634.9 2,497.5
-------- --------
LONG-TERM LIABILITIES:
Deferred national income taxes.............................. 42.9 39.0
Long-term debt.............................................. 1,411.6 1,463.4
Other....................................................... 397.1 377.4
-------- --------
Total long-term liabilities................................. 1,851.6 1,879.8
-------- --------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, 150,000,000 authorized;
67,247,442 issued at April 3, 1999 and 67,194,314
issued at December 31, 1998............................... .7 .7
Additional paid-in capital.................................. 860.0 859.3
Note receivable from sale of common stock................... (.1) (.1)
Less -- Common stock held in treasury, 510,230 shares at
cost...................................................... (18.3) (18.3)
Retained earnings........................................... 555.0 504.7
Accumulated other comprehensive income...................... (100.1) (46.3)
-------- --------
Total stockholders' equity.................................. 1,297.2 1,300.0
-------- --------
$5,783.7 $5,677.3
======== ========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
F-41
<PAGE> 110
LEAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------
APRIL 3, MARCH 28,
1999 1998
-------- ---------
(UNAUDITED, IN
MILLIONS, EXCEPT PER
SHARE DATA)
<S> <C> <C>
Net sales................................................... $2,687.2 $2,032.1
Cost of sales............................................... 2,468.5 1,831.9
Selling, general and administrative expenses................ 84.3 78.0
Amortization of goodwill.................................... 14.0 11.5
-------- --------
Operating income.......................................... 120.4 110.7
Interest expense............................................ 30.1 24.7
Other expense, net.......................................... 7.9 8.0
-------- --------
Income before provision for national income taxes......... 82.4 78.0
Provision for national income taxes......................... 32.1 30.7
-------- --------
Net income................................................ $ 50.3 $ 47.3
======== ========
Basic net income per share................................ $ .75 $ .71
======== ========
Diluted net income per share.............................. $ .75 $ .69
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
F-42
<PAGE> 111
LEAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------
APRIL 3, MARCH 28,
1999 1998
-------- ---------
(UNAUDITED, IN
MILLIONS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................. $ 50.3 $ 47.3
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................. 62.3 54.9
Other, net................................................ (16.2) (22.8)
Change in working capital items........................... 47.3 (167.6)
------- -------
Net cash provided by (used in) operating activities.... 143.7 (88.2)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment.................. (71.6) (48.2)
Acquisitions................................................ (59.0) --
Other, net.................................................. -- .5
------- -------
Net cash used in investing activities.................. (130.6) (47.7)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in long-term debt, net............................... (33.8) 149.9
Short-term borrowings, net.................................. (.4) (7.2)
Other, net.................................................. .7 2.6
------- -------
Net cash provided by (used in) financing activities.... (33.5) 145.3
------- -------
Effect of foreign currency translation...................... 15.0 (4.0)
NET CHANGE IN CASH AND CASH EQUIVALENTS..................... (5.4) 5.4
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............ 30.0 12.9
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 24.6 $ 18.3
======= =======
CHANGES IN WORKING CAPITAL:
Accounts receivable......................................... $(134.9) $(205.6)
Inventories................................................. 27.2 (16.0)
Accounts payable............................................ 176.4 45.3
Accrued liabilities and other............................... (21.4) 8.7
------- -------
$ 47.3 $(167.6)
======= =======
SUPPLEMENTARY DISCLOSURE:
Cash paid for interest...................................... $ 34.4 $ 29.6
======= =======
Cash paid for income taxes.................................. $ 16.0 $ 26.0
======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
F-43
<PAGE> 112
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Lear
Corporation, a Delaware corporation, and its wholly-owned and majority-owned
subsidiaries. Investments in less than majority-owned businesses are generally
accounted for under the equity method. Certain items in prior year's quarterly
financial statements have been reclassified to conform with the presentation
used in the quarter ended April 3, 1999.
(2) 1999 ACQUISITIONS
Peregrine
On April 1, 1999, the Company acquired certain assets of Peregrine Windsor,
Inc. ("Peregrine"), a division of Peregrine Incorporated. Peregrine produces
just-in-time seat assemblies and door panels for several General Motors models.
Polovat / Ovatex
In February 1999, the Company acquired Polovat and the automotive business
of Ovatex. Polovat and Ovatex automotive supply flooring and acoustic products
for the automotive market. The acquired operations have three plants in Poland
and two in Italy and employ more than 600 people.
(3) 1998 ACQUISITION
Delphi Seating
In September 1998, the Company purchased the seating business of Delphi
Automotive Systems, a division of General Motors Corporation ("Delphi Seating"),
for approximately $250 million. Delphi Seating was a leading supplier of seat
systems to General Motors with 16 locations in 10 countries.
The Delphi Seating acquisition was accounted for as a purchase, and
accordingly, the assets purchased and liabilities assumed in the acquisition
have been reflected in the accompanying consolidated balance sheets and the
operating results of Delphi Seating have been included in the consolidated
financial statements since the date of acquisition.
The following pro forma financial data is presented to illustrate the
estimated effects of the Delphi Seating acquisition, as if the transaction had
occurred as of January 1, 1998. (Unaudited; in millions, except per share data):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 28, 1998
------------------
<S> <C>
Net sales................................................... $2,255.9
Net income.................................................. 43.0
Diluted income per share.................................... .63
</TABLE>
The pro forma information above does not purport to be indicative of the
results that actually would have been achieved if the operations were combined
during the periods presented, and is not intended to be a projection of future
results or trends.
(4) RESTRUCTURING AND OTHER CHARGES
In the fourth quarter of 1998, the Company began to implement a
restructuring plan designed to lower its cost structure and improve the
long-term competitive position of the Company. As a result of this restructuring
plan, the Company recorded pre-tax charges of $133.0 million, consisting of
$110.5 million of
F-44
<PAGE> 113
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
restructuring charges and $22.5 million of other charges. Included in this total
are the costs to consolidate the Company's European operations of $78.9 million,
charges resulting from the consolidation of certain manufacturing and
administrative operations in North and South America of $31.6 million, other
asset impairment charges of $15.0 million and contract termination fees and
other of $7.5 million.
The restructuring plan is progressing as scheduled, and there have been no
significant changes to the original restructuring plan. The following table
summarizes the restructuring and other charges (in millions):
<TABLE>
<CAPTION>
UTILIZED BALANCE
ORIGINAL ---------------- APRIL 3,
ACCRUAL CASH NONCASH 1999
-------- ---- ------- --------
<S> <C> <C> <C> <C>
European Operations Consolidation........................... $ 78.9 $ 3.4 $11.9 $63.6
North and South America Operations Consolidation............ 31.6 15.9 6.5 9.2
Write-Down of Long-Lived Assets............................. 15.0 -- 15.0 --
Contract Termination and Other.............................. 7.5 7.2 -- 0.3
------ ----- ----- -----
Total....................................................... $133.0 $26.5 $33.4 $73.1
------ ----- ----- -----
</TABLE>
(5) INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined
principally using the first-in, first-out method. Finished goods and
work-in-process inventories include material, labor and manufacturing overhead
costs. Inventories are comprised of the following (in millions):
<TABLE>
<CAPTION>
APRIL 3, DECEMBER 31,
1999 1998
-------- ------------
<S> <C> <C>
Raw materials............................................. $230.9 $253.9
Work-in-process........................................... 25.0 23.8
Finished goods............................................ 65.4 71.9
------ ------
Inventories............................................... $321.3 $349.6
====== ======
</TABLE>
(6) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost. Depreciable property is
depreciated over the estimated useful lives of the assets, using principally the
straight-line method. A summary of property, plant and equipment is shown below
(in millions):
<TABLE>
<CAPTION>
APRIL 3, DECEMBER 31,
1999 1998
-------- ------------
<S> <C> <C>
Land.................................................... $ 75.0 $ 70.6
Buildings and improvements.............................. 408.1 429.6
Machinery and equipment................................. 1,303.7 1,197.8
Construction in progress................................ 9.5 78.4
-------- --------
Total property, plant and equipment..................... 1,796.3 1,776.4
Less -- accumulated depreciation........................ (613.1) (594.1)
-------- --------
Net property, plant and equipment....................... $1,183.2 $1,182.3
======== ========
</TABLE>
F-45
<PAGE> 114
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(7) LONG-TERM DEBT
Long-term debt is comprised of the following (in millions):
<TABLE>
<CAPTION>
APRIL 3, DECEMBER 31,
1999 1998
-------- ------------
<S> <C> <C>
Credit agreement.................................. $ 921.9 $ 970.3
Other............................................. 168.4 173.6
-------- --------
1,090.3 1,143.9
Less -- Current portion........................... 14.7 16.5
-------- --------
1,075.6 1,127.4
-------- --------
9 1/2% Subordinated Notes......................... 200.0 200.0
8 1/4% Subordinated Notes......................... 136.0 136.0
-------- --------
336.0 336.0
-------- --------
Long-term debt.................................... $1,411.6 $1,463.4
======== ========
</TABLE>
(8) FINANCIAL INSTRUMENTS
Certain foreign currency contracts entered into by the Company qualify for
hedge accounting as only firm foreign currency commitments are hedged. Gains and
losses from these contracts are deferred and generally recognized in cost of
sales as of the settlement date. Other foreign currency contracts entered into
by the Company, which do not receive hedge accounting treatment, are marked to
market with unrealized gains or losses recognized in other expense in the income
statement. Interest rate swaps are accounted for by recognizing interest expense
and interest income in the amount of anticipated interest payments.
(9) FINANCIAL ACCOUNTING STANDARDS
Net Income Per Share
Basic net income per share is computed using the weighted average common
shares outstanding during the period. Diluted net income per share is computed
using the average share price during the period when calculating the dilutive
effect of stock options. Shares outstanding for the periods presented were as
follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------
APRIL 3, MARCH 28,
1999 1998
-------- ---------
<S> <C> <C>
Weighted average shares outstanding................... 66,709,148 66,965,473
Dilutive effect of stock options...................... 835,038 1,482,563
---------- ----------
Diluted shares outstanding............................ 67,544,186 68,448,036
========== ==========
</TABLE>
Comprehensive Income
Comprehensive income is defined as all changes in a Company's net assets
except changes resulting from transactions with shareholders. It differs from
net income in that certain items currently recorded to
F-46
<PAGE> 115
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
equity would be a part of comprehensive income. Comprehensive income for the
periods is as follows (in millions):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------
APRIL 3, MARCH 28,
1999 1998
-------- ---------
<S> <C> <C>
Net income.................................................. $ 50.3 $ 47.3
Other comprehensive income:
Foreign currency translation adjustment................... (53.8) (11.7)
------ ------
Other comprehensive income.................................. (53.8) (11.7)
------ ------
Comprehensive income........................................ $ (3.5) $ 35.6
====== ======
</TABLE>
(10) SEGMENT REPORTING
The Company is organized based on customer-focused and geographic
divisions. Each division reports their results from operations and makes
requests for capital expenditures directly to the chief operating decision
making group. Under this organizational structure, the Company's operating
segments have been aggregated into one reportable segment. This aggregated
segment consists of eight divisions, each with separate management teams. The
Other category includes the corporate office, geographic headquarters,
technology division and elimination of intercompany activities, none of which
meet the requirements of being classified as an operating segment.
The following table presents revenues and other financial information by
business segment (in millions):
<TABLE>
<CAPTION>
THREE MONTHS ENDED APRIL 3, 1999
--------------------------------------
AUTOMOTIVE
INTERIORS OTHER CONSOLIDATED
---------- ----- ------------
<S> <C> <C> <C>
Revenues...................................... $2,684.8 $ 2.4 $2,687.2
EBITA......................................... 172.7 (38.3) 134.4
Depreciation.................................. 45.8 2.5 48.3
Capital expenditures.......................... 68.9 2.7 71.6
Total assets.................................. 3,981.4 1,802.3 5,783.7
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 28,1998
--------------------------------------
AUTOMOTIVE
INTERIORS OTHER CONSOLIDATED
---------- ----- ------------
<S> <C> <C> <C>
Revenues...................................... $2,030.0 $ 2.1 $2,032.1
EBITA......................................... 160.0 (37.8) 122.2
Depreciation.................................. 40.9 2.5 43.4
Capital expenditures.......................... 43.3 4.9 48.2
Total assets.................................. 3,170.8 1,566.0 4,736.8
</TABLE>
F-47
<PAGE> 116
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(11) SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
APRIL 3, 1999
--------------------------------------------------------------------
NON-
PARENT GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
------ ---------- ---------- ------------ ------------
(UNAUDITED, IN MILLIONS)
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............. $ 2.8 $ .6 $ 21.2 $ -- $ 24.6
Accounts receivable, net.............. 181.0 255.3 1,046.0 -- 1,482.3
Inventories........................... 15.7 27.6 278.0 -- 321.3
Recoverable customer engineering and
tooling............................ 45.7 10.8 182.6 -- 239.1
Other................................. 31.1 35.4 176.9 -- 243.4
-------- -------- -------- --------- --------
Total current assets............. 276.3 329.7 1,704.7 -- 2,310.7
-------- -------- -------- --------- --------
LONG-TERM ASSETS:
Property, plant and equipment, net.... 108.9 250.2 824.1 -- 1,183.2
Goodwill, net......................... 272.6 412.4 1,305.9 -- 1,990.9
Investment in subsidiaries............ 1,653.6 292.9 -- (1,946.5) --
Other................................. 100.2 7.5 191.2 -- 298.9
-------- -------- -------- --------- --------
Total long-term assets........... 2,135.3 963.0 2,321.2 (1,946.5) 3,473.0
-------- -------- -------- --------- --------
$2,411.6 $1,292.7 $4,025.9 $(1,946.5) 5,783.7
======== ======== ======== ========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings................. $ 51.8 $ -- $ 28.5 $ -- $ 80.3
Accounts payable and drafts........... 202.8 219.4 1,306.3 -- 1,728.5
Accrued liabilities................... 151.5 131.1 528.8 -- 811.4
Current portion of long-term debt..... 9.0 .2 5.5 -- 14.7
-------- -------- -------- --------- --------
Total current liabilities........ 415.1 350.7 1,869.1 -- 2,634.9
-------- -------- -------- --------- --------
LONG-TERM LIABILITIES:
Deferred national income taxes........ (15.6) 31.2 27.3 -- 42.9
Long-term debt........................ 1,019.8 .8 391.0 -- 1,411.6
Intercompany accounts, net............ (452.0) 708.7 (256.7) -- --
Other................................. 147.1 60.2 189.8 -- 397.1
-------- -------- -------- --------- --------
Total long-term liabilities...... 699.3 800.9 351.4 -- 1,851.6
-------- -------- -------- --------- --------
STOCKHOLDERS' EQUITY.................... 1,297.2 141.1 1,805.4 (1,946.5) 1,297.2
-------- -------- -------- --------- --------
$2,411.6 $1,292.7 $4,025.9 $(1,946.5) $5,783.7
======== ======== ======== ========= ========
</TABLE>
F-48
<PAGE> 117
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(11) SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
(CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1998
--------------------------------------------------------------------
NON-
PARENT GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
------ ---------- ---------- ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............. $ (3.8) $ .9 $ 32.9 $ -- $ 30.0
Accounts receivable, net.............. 138.4 294.2 941.3 -- 1,373.9
Inventories........................... 17.3 45.9 286.4 -- 349.6
Recoverable customer engineering and
tooling............................ 28.1 12.6 180.7 -- 221.4
Other................................. 44.6 29.5 149.0 -- 223.1
-------- -------- -------- --------- --------
Total current assets............. 224.6 383.1 1,590.3 -- 2,198.0
-------- -------- -------- --------- --------
LONG-TERM ASSETS:
Property, plant and equipment, net.... 110.6 320.7 751.0 -- 1,182.3
Goodwill, net......................... 274.6 615.3 1,129.9 -- 2,019.8
Investment in subsidiaries............ 1,794.4 21.1 -- (1,815.5) --
Other................................. 82.0 11.1 184.1 -- 277.2
-------- -------- -------- --------- --------
Total long-term assets........... 2,261.6 968.2 2,065.0 (1,815.5) 3,479.3
-------- -------- -------- --------- --------
$2,486.2 $1,351.3 $3,655.3 $(1,815.5) $5,677.3
======== ======== ======== ========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings................. $ 55.0 $ -- $ 27.7 $ -- $ 82.7
Accounts payable and drafts........... 191.0 254.5 1,155.3 -- 1,600.8
Accrued liabilities................... 133.9 141.9 521.7 -- 797.5
Current portion of long-term debt..... 3.5 .2 12.8 -- 16.5
-------- -------- -------- --------- --------
Total current liabilities........ 383.4 396.6 1,717.5 -- 2,497.5
-------- -------- -------- --------- --------
LONG-TERM LIABILITIES:
Deferred national income taxes........ (15.5) 31.2 23.3 -- 39.0
Long-term debt........................ 1,168.1 .8 294.5 -- 1,463.4
Intercompany accounts, net............ (484.1) 666.7 (182.6) -- --
Other................................. 134.3 53.1 190.0 -- 377.4
-------- -------- -------- --------- --------
Total long-term liabilities...... 802.8 751.8 325.2 -- 1,879.8
-------- -------- -------- --------- --------
STOCKHOLDERS' EQUITY.................... 1,300.0 202.9 1,612.6 (1,815.5) 1,300.0
-------- -------- -------- --------- --------
$2,486.2 $1,351.3 $3,655.3 $(1,815.5) $5,677.3
======== ======== ======== ========= ========
</TABLE>
F-49
<PAGE> 118
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(11) SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
(CONTINUED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED APRIL 3, 1999
----------------------------------------------------------------------
PARENT GUARANTORS NON-GUARANTORS ELIMINATIONS CONSOLIDATED
------ ---------- -------------- ------------ ------------
(UNAUDITED, IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Net sales............................. $465.4 $510.1 $1,711.7 $ -- $2,687.2
Cost of sales......................... 458.0 442.1 1,568.4 -- 2,468.5
Selling, general and administrative
expenses............................ 34.9 8.3 41.1 -- 84.3
Amortization of goodwill.............. 2.0 2.9 9.1 -- 14.0
------ ------ -------- ------ --------
Operating income (loss)............. (29.5) 56.8 93.1 -- 120.4
Interest expense...................... 13.8 11.5 4.8 -- 30.1
Other expense (income), net........... (62.3) 26.5 43.7 -- 7.9
------ ------ -------- ------ --------
Income before provision for national
income taxes and equity in net
income of subsidiaries........... 19.0 18.8 44.6 -- 82.4
Provision for national income taxes... 6.5 6.5 19.1 -- 32.1
Equity in net income of
subsidiaries........................ (37.8) (31.8) -- 69.6 --
------ ------ -------- ------ --------
NET INCOME............................ $ 50.3 $ 44.1 $ 25.5 $(69.6) $ 50.3
====== ====== ======== ====== ========
</TABLE>
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 28, 1998
------------------------------------------------------------------
NON-
PARENT GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
------ ---------- ---------- ------------ ------------
(UNAUDITED, IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Net sales................................ $211.9 $ 602.2 $1,218.0 $ -- $2,032.1
Cost of sales............................ 200.3 520.3 1,111.3 -- 1,831.9
Selling, general and administrative
expenses............................... 29.8 9.8 38.4 -- 78.0
Amortization of goodwill................. 2.5 3.3 5.7 -- 11.5
------ ---------- -------- ------ --------
Operating income (loss)................ (20.7) 68.8 62.6 -- 110.7
Interest expense......................... 11.3 .6 12.8 -- 24.7
Other expense (income), net.............. (20.4) 2.1 26.3 -- 8.0
------ ---------- -------- ------ --------
Income (loss) before provision (credit)
for national income taxes and equity
in net income of subsidiaries....... (11.6) 66.1 23.5 -- 78.0
------ ---------- -------- ------ --------
Provision (credit) for national income
taxes.................................. (3.9) 22.7 11.9 -- 30.7
Equity in net income of subsidiaries..... (55.0) (2.7) -- 57.7 --
------ ---------- -------- ------ --------
NET INCOME............................... $ 47.3 $ 46.1 $ 11.6 $(57.7) $ 47.3
====== ========== ======== ====== ========
</TABLE>
F-50
<PAGE> 119
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(11) SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
(CONTINUED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED APRIL 3, 1999
-------------------------------------------------------------------
NON-
PARENT GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
------ ---------- ---------- ------------ ------------
(UNAUDITED, IN MILLIONS)
<S> <C> <C> <C> <C> <C>
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES.............................. $ (1.0) $ 42.9 $ 101.8 $ -- $ 143.7
------- ------ ------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and
equipment............................ (12.9) (10.2) (48.5) -- (71.6)
Acquisitions............................ -- -- (59.0) -- (59.0)
------- ------ ------- ------- -------
Net cash used in investing
activities......................... (12.9) (10.2) (107.5) -- (130.6)
------- ------ ------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in long-term debt, net........... (142.8) -- 109.0 -- (33.8)
Short-term borrowings, net.............. (3.1) -- 2.7 -- (.4)
Change in intercompany accounts......... 165.7 (33.0) (132.7) -- --
Other, net.............................. 0.7 -- -- -- .7
------- ------ ------- ------- -------
Net cash provided by (used in)
financing activities 20.5 (33.0) (21.0) -- (33.5)
------- ------ ------- ------- -------
Effect of foreign currency
translation.......................... -- -- 15.0 -- 15.0
------- ------ ------- ------- -------
NET CHANGE IN CASH AND CASH EQUIVALENTS... 6.6 (0.3) (11.7) -- (5.4)
CASH AND CASH EQUIVALENTS -- BEGINNING OF
PERIOD.................................. (3.8) 0.9 32.9 -- 30.0
------- ------ ------- ------- -------
CASH AND CASH EQUIVALENTS -- END OF
PERIOD.................................. $ 2.8 $ 0.6 $ 21.2 $ -- $ 24.6
======= ====== ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 28, 1998
------------------------------------------------------------------
NON-
PARENT GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
------ ---------- ---------- ------------ ------------
(UNAUDITED, IN MILLIONS)
<S> <C> <C> <C> <C> <C>
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES............................... $(81.5) $(14.6) $ 7.9 $ -- $(88.2)
------ ------ ------ ------- ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and
equipment............................. (7.6) (6.9) (33.7) -- (48.2)
Other, net............................... 1.3 -- (.8) -- .5
------ ------ ------ ------- ------
Net cash used in investing
activities.......................... (6.3) (6.9) (34.5) -- (47.7)
------ ------ ------ ------- ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in long-term debt, net............ 97.8 .3 51.8 -- 149.9
Short-term borrowings, net............... (7.6) -- .4 -- (7.2)
Change in intercompany accounts.......... (3.4) 21.6 (18.2) -- --
Other, net............................... 2.6 -- -- -- 2.6
------ ------ ------ ------- ------
Net cash provided by financing
activities.......................... 89.4 21.9 34.0 -- 145.3
------ ------ ------ ------- ------
Effect of foreign currency translation... -- -- (4.0) -- (4.0)
------ ------ ------ ------- ------
NET CHANGE IN CASH AND CASH EQUIVALENTS.... 1.6 .4 3.4 -- 5.4
CASH AND CASH EQUIVALENTS -- BEGINNING OF
PERIOD................................... (.6) .5 13.0 -- 12.9
------ ------ ------ ------- ------
CASH AND CASH EQUIVALENTS -- END OF
PERIOD................................... $ 1.0 $ .9 $ 16.4 $ -- $ 18.3
====== ====== ====== ======= ======
</TABLE>
F-51
<PAGE> 120
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(11) SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
(CONTINUED)
Basis of Presentation -- In connection with the acquisition of UT
Automotive, Inc., a wholly-owned subsidiary of United Technologies Corporation
("UT Automotive")(see Note 12), the Company issued $1.4 billion in securities,
which consisted of $600 million aggregate principal amount of 7.96% Senior Notes
due May 15, 2005 and $800 million aggregate principal amount of 8.11% Senior
Notes due May 15, 2009 (collectively, the "May 1999 Notes"). Certain of the
Company's domestic wholly-owned subsidiaries (the "Guarantors") irrevocably and
unconditionally guarantee on a joint and several basis the punctual payment when
due, whether at stated maturity, by acceleration or otherwise, all of the
Company's obligations under the May 1999 Notes indenture, including the
Company's obligations to pay principal, premium, if any, and interest with
respect to the May 1999 Notes. The Guarantors on the date of the indenture were
Lear Operations Corporation and Lear Corporation Automotive Holdings (formerly,
UT Automotive). In lieu of providing separate unaudited financial statements for
the Guarantors, the Company has included the unaudited consolidating condensed
financial statements on pages F-48 to F-51. Management does not believe that
separate financial statements of the Guarantors are material to investors.
Therefore, separate financial statements and other disclosures concerning the
Guarantors are not presented.
Distributions -- There are no significant restrictions on the ability of
the Company to sell or otherwise dispose of any or all of the assets of any of
the Guarantors or on the ability of the Guarantors to make distributions to the
Company.
Selling, General and Administrative Expenses -- Lear Corporation (the
"Parent") allocated $12.1 million and $10.8 million for the period ended April
3,1999 and March 28, 1998, respectively, of corporate selling, general and
administrative expenses to its operating subsidiaries. The allocations were
based on various factors which estimate usage of particular corporate functions,
and in certain instances, other relevant factors were used, such as the revenues
or headcount of the Company's subsidiaries.
Long-term debt of the Parent and the Guarantors -- Long-term debt of the
Parent and the Guarantors on a combined basis consisted of the following as of
April 3, 1999 and March 28, 1998 (unaudited, in millions):
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Credit agreement........................................ $ 589.2 $ 755.1
Other long-term debt.................................... 104.6 81.5
Subordinated notes...................................... 336.0 336.0
-------- --------
1,029.8 1,172.6
Less current portion.................................... (9.2) (3.7)
-------- --------
$1,020.6 $1,168.9
======== ========
</TABLE>
The obligations of foreign subsidiary borrowers under the credit agreement
are guaranteed by the Parent.
For a more detailed description of the above indebtedness, see Note 7 to
the Consolidated Financial Statements.
(12) SUBSEQUENT EVENTS
Acquisition of UT Automotive
On May 4, 1999, the Company acquired UT Automotive for approximately $2.3
billion, subject to certain post-closing adjustments. UT Automotive is a
supplier of electrical, electronic, motor and interior products and systems to
the global automotive industry. Headquartered in Dearborn, Michigan,
F-52
<PAGE> 121
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
UT Automotive has annual sales of approximately $3 billion, 44,000 employees and
90 facilities located in 18 countries. The purchase price for the UT Automotive
acquisition was financed through borrowings under the Company's primary credit
facilities.
Primary Credit Facilities and the Senior Notes Offering
In connection with the UT Automotive acquisition, the Company amended and
restated its existing $2.1 billion revolving credit facility and entered into
new credit facilities. The new credit facilities consisted of a $500 million
revolving credit facility, which matures on May 4, 2004, a $500 million term
loan having a scheduled amortization beginning on October 31, 2000 and a final
maturity of May 4, 2004, and a $1.4 billion interim term loan maturing on May 3,
2000.
On May 18,1999, the Company completed the private offering of the May 1999
Notes. Interest is payable on the May 1999 Notes on May 15 and November 15 of
each year. The Company used the net proceeds from the May 1999 Notes offering to
repay the $1.4 billion interim term loan under its new credit facilities, which
was used to fund a portion of the UT Automotive acquisition purchase price. The
Company intends to file a registration statement with the Securities and
Exchange Commission to register substantially identical notes that will be
exchanged for the May 1999 Notes after the registration statement becomes
effective.
The May 1999 Notes are senior unsecured obligations of the Company and rank
pari passu in right of payment with all of the Company's existing and future
unsubordinated unsecured indebtedness. The Company's obligations under the May
1999 Notes are guaranteed, on a joint and several basis, by certain of the
Company's domestic subsidiaries. Indebtedness under the Company's primary credit
facilities is secured by the pledge of all or a portion of the capital stock of
certain of the Company's subsidiaries. The May 1999 Notes do not have the
benefit of such pledges. The primary credit facilities are guaranteed by the
same domestic subsidiaries of the Company that guarantee the May 1999 Notes.
Pursuant to the terms of the primary credit facilities, the guarantees and stock
pledges shall be released when and if the Company achieves a certain leverage
ratio or its senior long-term unsecured debt is at or above "BBB-" from Standard
& Poor's Ratings Group or at or above "Baa3" from Moody's Investors Service,
Inc., and certain other conditions are satisfied. In the event that any such
subsidiary ceases to be a guarantor under the primary credit facilities, such
subsidiary will be released as a guarantor of the May 1999 Notes. The Company
may redeem all or part of either series of the May 1999 Notes, at its option, at
any time, at the redemption price equal to the greater of (a) 100% of the
principal amount of the notes to be redeemed and (b) the sum of the present
values of the remaining scheduled payments of principal and interest thereon
from the redemption date to the maturity date discounted to the redemption date
on a semiannual basis at the applicable treasury rate plus 50 basis points, in
each case, together with any interest accrued but not paid to the date of the
redemption.
The primary credit facilities contain numerous restrictive covenants
relating to maintenance of certain financial ratios and to the management and
operation of the Company. The covenants include, among others, limitations on
indebtedness, guarantees, mergers, acquisitions, fundamental corporate changes,
asset sales, investments, loans and advances, liens, dividends and other stock
payments, transactions with affiliates and optional payments and modification of
debt instruments. The May 1999 Notes also contain covenants restricting the
ability of the Company and its subsidiaries to incur liens and enter into sale
and leaseback transactions, and limiting the ability of the Company to
consolidate or merge with or into, or sell or otherwise dispose of all or
substantially all of its assets to, any person.
Sale of Electric Motor Systems
On May 7, 1999, the Company entered into a definitive purchase agreement
with Johnson Electric Holdings Limited to sell the recently acquired Electric
Motor Systems ("EMS") business for $310
F-53
<PAGE> 122
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
million, subject to certain post-closing adjustments. The Company acquired the
EMS business as a part of the acquisition of UT Automotive. EMS is a supplier of
industrial and automotive electric motors and starter motors for small gasoline
engines. EMS had gross sales of $351 million and has approximately 3,300
employees operating at locations in 10 countries.
Consummation of the sale is contingent upon expiration or termination of
applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements
Act, applicable foreign competition act approvals and certain other customary
conditions.
F-54
<PAGE> 123
UT AUTOMOTIVE, INC.
(FORMERLY WHOLLY-OWNED BY UNITED TECHNOLOGIES CORPORATION)
INTRODUCTION TO THE UNAUDITED COMBINED FINANCIAL STATEMENTS
We have prepared the combined financial statements of UT Automotive, Inc.,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. We believe that the disclosures are adequate to make the
information presented not misleading when read in conjunction with the financial
statements and the notes thereto included in Lear Corporation's Current Report
on Form 8-K dated May 4, 1999, and filed with the Securities and Exchange
Commission on May 6, 1999.
The financial information presented reflects all adjustments (consisting
only of normal recurring adjustments) which are, in our opinion, necessary for a
fair presentation of the results of operations and statements of financial
position for the interim periods presented. These results are not necessarily
indicative of a full year's results of operations.
F-55
<PAGE> 124
UT AUTOMOTIVE, INC.
(FORMERLY WHOLLY-OWNED BY UNITED TECHNOLOGIES CORPORATION)
COMBINED BALANCE SHEETS
(UNAUDITED, IN MILLIONS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
--------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 83.7 $ 43.4
Accounts receivable, net.................................. 528.7 575.2
Inventories............................................... 172.1 170.6
Other..................................................... 83.7 70.1
-------- --------
Total current assets................................... 868.2 859.3
-------- --------
LONG-TERM ASSETS:
Property, plant and equipment, net........................ 703.1 709.7
Goodwill, net............................................. 329.0 333.1
Other..................................................... 83.4 85.3
-------- --------
Total long-term assets................................. 1,115.5 1,128.1
-------- --------
$1,983.7 $1,987.4
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings..................................... $ 6.7 $ 9.5
Accounts payable and drafts............................... 366.5 377.0
Accrued liabilities....................................... 192.4 193.4
Current portion of long-term debt......................... 1.3 --
-------- --------
Total current liabilities.............................. 566.9 579.9
-------- --------
LONG-TERM LIABILITIES:
Deferred national income taxes............................ 37.2 38.4
Long-term debt............................................ 4.7 5.2
Other..................................................... 97.1 98.9
-------- --------
Total long-term liabilities............................ 139.0 142.5
-------- --------
STOCKHOLDERS' EQUITY:
UTC Investment............................................ 1,277.8 1,265.0
-------- --------
$1,983.7 $1,987.4
======== ========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
F-56
<PAGE> 125
UT AUTOMOTIVE, INC.
(FORMERLY WHOLLY-OWNED BY UNITED TECHNOLOGIES CORPORATION)
UNAUDITED COMBINED STATEMENTS OF INCOME
(UNAUDITED, IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------
MARCH 31, MARCH 31,
1999 1998
--------- ---------
(UNAUDITED)
<S> <C> <C>
Net sales................................................... $793.0 $715.8
Cost of sales............................................... 655.3 583.5
Selling, general and administrative expenses................ 90.6 83.3
Amortization of goodwill.................................... 3.3 3.2
------ ------
Operating income.......................................... 43.8 45.8
Interest expense............................................ 7.3 2.7
Other (income) / expense, net............................... (.7) .6
------ ------
Income before provision for national income taxes......... 37.2 42.5
Provision for national income taxes......................... 15.4 17.6
------ ------
Net income................................................ $ 21.8 $ 24.9
------ ------
</TABLE>
The accompanying notes are an integral part of these statements.
F-57
<PAGE> 126
UT AUTOMOTIVE, INC.
(FORMERLY WHOLLY-OWNED BY UNITED TECHNOLOGIES CORPORATION)
UNAUDITED COMBINED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------
MARCH 31, MARCH 31,
1999 1998
--------- ---------
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................. $21.8 $ 24.9
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................. 34.4 28.5
Other, net................................................ (.9) (3.4)
Change in working capital items........................... 12.8 20.2
----- ------
Net cash provided by (used in) operating activities.... 68.1 70.2
----- ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment.................. (38.0) (45.4)
Other, net.................................................. (.2) 6.5
----- ------
Net cash used in investing activities.................. (38.2) (38.9)
----- ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in long-term debt, net............................... (.2) (.8)
Short-term borrowings, net.................................. (.4) (2.2)
UTC Investment activity..................................... 3.4 (29.3)
Other, net.................................................. 9.2 --
----- ------
Net cash provided by (used in) financing activities.... 12.0 (32.3)
----- ------
Effect of foreign currency translation...................... (1.6) (.3)
NET CHANGE IN CASH AND CASH EQUIVALENTS..................... 40.3 (1.3)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............ 43.4 26.8
----- ------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $83.7 $ 25.5
===== ======
CHANGES IN WORKING CAPITAL:
Accounts receivable......................................... $29.0 $(11.6)
Inventories................................................. (6.4) 2.7
Accounts payable............................................ (.2) (5.5)
Accrued liabilities and other............................... (9.6) 34.6
----- ------
$12.8 $ 20.2
===== ======
SUPPLEMENTARY DISCLOSURE:
Cash paid for interest...................................... $ 7.3 $ 2.7
===== ======
Cash paid for income taxes.................................. $ -- $ --
===== ======
</TABLE>
The accompanying notes are an integral part of these statements.
F-58
<PAGE> 127
UT AUTOMOTIVE, INC.
(FORMERLY WHOLLY-OWNED BY UNITED TECHNOLOGIES CORPORATION)
NOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
UT Automotive, Inc. is a wholly-owned operating segment of United
Technologies Corporation ("UTC"). The accompanying combined financial statements
were prepared to show the historical operating results of the entities
comprising UTC's Automotive Business, which includes UT Automotive, Inc. and
certain affiliated entities which are subsidiaries of other UTC operating units
(collectively, "UT Automotive, Inc.", "UTA" or the "Company"). Throughout the
period covered by the combined financial statements, the Company was treated as
an operating segment of UTC.
The combined financial statements were prepared using UTC's historical
basis in the assets and liabilities of UTA. Changes in indebtedness between the
Company and UTC are reflected as part of the UTC investment in the accompanying
combined balance sheets.
(2) 1998 ACQUISITIONS
During 1998, the Company paid approximately $3.3 million for a 47% interest
in NTTF, an Indian components manufacturer; approximately $8.5 million for a 50%
interest in Ri Yong, a Chinese cooling fan module manufacturer; approximately
$4.0 million to buyout the remaining 25% minority interest in its Loewe
operation; and $2.0 million for a preferred share interest of 6% in Eclipse
International, Inc., a US based technology company specializing in software and
hardware critical to the development of the AutoPC. In addition, during 1998,
the Company assumed the remaining minority interest in its Xianfeng venture, to
facilitate its closure and redistribution of assets to the Company's other
Chinese operations, and contributed net assets of $3.1 million for a 45%
interest in a newly-formed battery cable joint venture with Saturn Electronics.
(3) RESTRUCTURING AND OTHER CHARGES
During 1998, 1997 and 1996, the Company recorded pre-tax charges related to
ongoing efforts to reduce costs in response to industry conditions and to
enhance cost structure and competitive position. Included in these charges were
amounts for facility closures, workforce reduction actions and the restructuring
of certain operations. The actions are progressing as scheduled, and there have
been no significant changes to the plans since December 31, 1998. As of March
31, 1999, the remaining balance of these charges to be utilized is less than
$5.0 million.
(4) INVENTORIES
Inventories are stated at the lower of cost or market. Approximately 18%
and 20% of total inventories were carried on the last-in, first-out (LIFO) cost
method at March 31, 1999 and 1998, respectively. The remaining inventories are
carried on the first-in, first-out (FIFO) method. Finished goods and work-in-
process inventories include material, labor and manufacturing overhead costs.
Inventories are comprised of the following (in millions):
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
--------- ------------
<S> <C> <C>
Raw materials and work-in-progress....................... $143.2 $137.0
Finished goods........................................... 65.6 67.3
LIFO reserve............................................. (23.1) (23.1)
Other reserves........................................... (13.6) (10.6)
------ ------
Inventories.............................................. $172.1 $170.6
------ ------
</TABLE>
F-59
<PAGE> 128
UT AUTOMOTIVE, INC.
(FORMERLY WHOLLY-OWNED BY UNITED TECHNOLOGIES CORPORATION)
NOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTS -- CONTINUED
(5) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost. Depreciable property is
depreciated over the estimated useful lives of the assets, using principally the
straight-line method. A summary of property, plant and equipment is shown below
(in millions):
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
--------- ------------
<S> <C> <C>
Land..................................................... $ 16.4 $ 16.5
Buildings and improvements............................... 228.6 224.7
Machinery and equipment.................................. 1,061.4 1,062.3
Construction in progress................................. 53.3 47.3
-------- --------
Total property, plant and equipment...................... $1,359.7 $1,350.8
Less -- accumulated depreciation......................... (656.6) (641.1)
-------- --------
Net property, plant and equipment........................ $ 703.1 $ 709.7
======== ========
</TABLE>
(6) LONG-TERM DEBT
Long-term debt is comprised of the following (in millions):
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
--------- ------------
<S> <C> <C>
Notes and other debt..................................... $2.3 $2.4
Capital lease obligations................................ 3.7 4.4
---- ----
6.0 6.8
Less -- Current portion.................................. 1.3 1.6
---- ----
Long-term debt........................................... $4.7 $5.2
---- ----
</TABLE>
(7) SEGMENT REPORTING
The Company and its subsidiaries design, develop, manufacture and sell
products, classified in four principle operating segments. The Company's
operating segments were generally determined on the basis of geographic regions
and product segments.
Electrical Systems -- Americas. Products include electrical distribution,
electronic and electromechanical systems and components such as wire assemblies,
control modules, switches, actuators, relays, terminals and connectors, smart
junction boxes, power network boxes, in addition to, starter motors and wiper
systems, manufactured principally in North America.
Interior Systems -- International. Products include instrument panels,
modular headliners, door panels, door and sidewall trim, painted and decorated
trim components, exterior mirrors and acoustic and sealing products,
manufactured principally in the United States.
European Managed Operations. Products include electrical distribution,
electronic and electromechanical systems and components such as wire assemblies,
control modules, switches, actuators, relays, terminals and connectors, smart
junction boxes, power network boxes, in addition to fractional horsepower DC
motors, analog and digital auto amplifiers and video modules, manufactured
principally in Europe.
Asia Pacific Operations. Products include electronic and electromechanical
systems and components such as wire assemblies, control modules, in addition to
fractional horsepower DC motors, manufactured principally in Asia.
F-60
<PAGE> 129
UT AUTOMOTIVE, INC.
(FORMERLY WHOLLY-OWNED BY UNITED TECHNOLOGIES CORPORATION)
NOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTS -- CONTINUED
The following table presents revenues and other financial information by
business segment (in millions):
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
----------------
1999 1998
---- ----
<S> <C> <C>
NET SALES
Electrical Systems America................................ $366.4 $340.7
Interior Systems International............................ 154.4 145.2
European Managed Operations............................... 284.7 243.9
Asia Pacific Operations................................... 4.8 3.0
Headquarters, Eliminations, Other......................... (17.3) (17.0)
------ ------
Total net sales........................................ $793.0 $715.8
====== ======
OPERATING PROFITS
Electrical Systems America................................ $ 38.6 $ 45.2
Interior Systems International............................ 4.3 7.1
European Managed Operations............................... 27.3 23.7
Asia Pacific Operations................................... .8 (.4)
Headquarters, Eliminations, Other......................... (27.2) (29.8)
------ ------
Total operating profits................................ $ 43.8 $ 45.8
====== ======
CAPITAL EXPENDITURES
Electrical Systems America................................ $ 10.0 $ 17.5
Interior Systems International............................ 10.6 8.5
European Managed Operations............................... 14.1 21.0
Asia Pacific Operations................................... .1 .3
Headquarters, Eliminations, Other......................... 3.2 (1.9)
------ ------
Total capital expenditures............................. $ 38.0 $ 45.4
====== ======
DEPRECIATION AND AMORTIZATION
Electrical Systems America................................ $ 11.2 $ 11.2
Interior Systems International............................ 6.2 5.2
European Managed Operations............................... 12.5 8.2
Asia Pacific Operations................................... .1 .1
Headquarters, Eliminations, Other......................... 4.4 3.8
------ ------
Total depreciation and amortization.................... $ 34.4 $ 28.5
====== ======
</TABLE>
(8) SUBSEQUENT EVENTS
Acquisition of UT Automotive
On May 4, 1999, UT Automotive, Inc. was acquired by Lear Corporation for
approximately $2.3 billion, subject to certain post-closing adjustments. The
combined financial statements do not give effect to this transaction.
Sale of Electric Motor Systems
On May 7, 1999, Lear entered into a definitive purchase agreement with
Johnson Electric Holdings Limited to sell the recently acquired Electric Motor
Systems ("EMS") business for $310 million, subject
F-61
<PAGE> 130
UT AUTOMOTIVE, INC.
(FORMERLY WHOLLY-OWNED BY UNITED TECHNOLOGIES CORPORATION)
NOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTS -- CONTINUED
to certain post-closing adjustments. Lear acquired the EMS business in the
acquisition of UT Automotive. EMS is a supplier of industrial and automotive
electric motors and starter motors for small gasoline engines. EMS had 1998
sales of $351 million and has approximately 3,300 employees operating at
locations in 10 countries.
Consummation of the sale is contingent upon expiration or termination of
applicable waiting periods provided under the Hart-Scott-Rodino Antitrust
Improvements Act, applicable foreign competition act approvals and certain other
customary conditions.
F-62
<PAGE> 131
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LEAR CORPORATION
$600,000,000 7.96% SENIOR NOTES DUE 2005
$800,000,000 8.11% SENIOR NOTES DUE 2009
------------------------
PROSPECTUS
------------------------
, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 132
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law permits a corporation
to indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action. In an action brought to obtain a judgment in the corporation's favor,
whether by the corporation itself or derivatively by a stockholder, the
corporation may only indemnify for expenses, including attorney's fees, actually
and reasonably incurred in connection with the defense or settlement of such
action, and the corporation may not indemnify for amounts paid in satisfaction
of a judgment or in settlement of the claim. In any such action, no such person
shall have been adjudged liable to the corporation except as claim was brought.
In any type of proceeding, the indemnification may extend to judgments, fines
and amounts paid in settlement, actually and reasonably incurred in connection
with such other proceeding, as well as to expenses.
The statute does not permit indemnification unless the person seeking
indemnification has acted in good faith and in a manner reasonably believed to
be in, or not opposed to, the best interests of the corporation and, in the case
of criminal actions or proceedings, the person had no reasonable cause to
believe his conduct was unlawful. The statute contains additional limitations
applicable to criminal actions and to actions brought by or in the name of the
corporation. The determination as to whether a person seeking indemnification
has met the required standard of conduct is to be made (1) by a majority vote of
a quorum of disinterested members of the board of directors, (2) by independent
legal counsel in a written opinion, if such a quorum does not exist or if the
disinterested directors so direct, or (3) by the stockholders.
Lear's Certificate of Incorporation and Bylaws require Lear to indemnify
its directors to the fullest extent permitted under Delaware law. Pursuant to
employment agreements entered into by Lear with certain of its executive
officers and other key employees, Lear must indemnify such officers and
employees in the same manner and to the same extent that, Lear is required to
indemnify its directors under the Lear's Bylaws. Lear's Certificate of
Incorporation limits the personal liability of a director to the corporation or
its stockholders to damages for breach of the director's fiduciary duty.
Lear has purchased insurance on behalf of its directors and officers
against certain liabilities that may be asserted against, or incurred by, such
persons in their capacities as directors or officers of the registrant, or that
may arise out of their status as directors or officers of the registrant,
including liabilities under the federal and state securities laws.
II-1
<PAGE> 133
ITEM 21. EXHIBITS AND FINANCIAL DATA SCHEDULES.
(A) Exhibits
The following is a list of all the exhibits filed as part of the
Registration Statement.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<C> <S>
3.1 Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended March
30, 1996).
3.2 Amended and Restated By-laws of the Company (incorporated by
reference to Exhibit 3.4 to Lear's Registration Statement on
Form S-1 (No. 33-52565)).
*3.3 Certificate of Incorporation of Lear Operations Corporation.
*3.4 By-laws of Lear Operations Corporation.
*3.5 Amended and Restated Certificate of Incorporation of Lear
Corporation Automotive Holdings.
*3.6 By-laws of Lear Corporation Automotive Holdings.
4.1 Indenture dated as of July 1, 1996 by and between the
Company and the Bank of New York, as trustee, relating to
the 9 1/2% Subordinated Notes due 2006 (incorporated by
reference to Exhibit 4.1 to the Company's Quarterly Report
on Form 10-Q for the quarter ended September 28, 1996).
4.2 Indenture dated as of February 1, 1994 by and between Lear
and The First National Bank of Boston, as Trustee, relating
to the 8 1/4% Subordinated Notes (incorporated by reference
to Exhibit 4.1 to the Company's Transition Report on Form
10-K filed on March 31, 1994).
4.3 Indenture dated as of May 15, 1999, by and among Lear
Corporation as Issuer, the Guarantors party thereto from
time to time and the Bank of New York as Trustee
(incorporated by reference to Exhibit 10.8 to the Company's
Quarterly Report on Form 10-Q for the quarter ended April 3,
1999).
*5.1 Opinion of Winston & Strawn.
10.1 Second Amended and Restated Credit and Guarantee Agreement,
dated as of May 4, 1999, among Lear, Lear Corporation Canada
Ltd., the Foreign Subsidiary Borrowers (as defined therein),
the Lenders Party thereto, Bankers Trust Company and Bank of
America National Trust & Savings Association, as
Co-Syndication Agents, The Bank of Nova Scotia, as
Documentation Agent and Canadian Administrative Agent, and
The Chase Manhattan Bank, as General Administrative Agent
(incorporated by reference to Exhibit 10.1 to the Company's
Current Report on Form 8-K dated May 4, 1999).
10.2 Revolving Credit and Term Loan Agreement, dated as of May 4,
1999, among Lear, certain of its Foreign Subsidiaries, the
Lenders parties thereto, Citicorp USA, Inc. and Morgan
Stanley Senior Funding, Inc., as Co-Syndication Agents,
Toronto Dominion (Texas), Inc., as Documentation Agent, the
other Agents named therein, and The Chase Manhattan Bank, as
Administrative Agent (incorporated by reference to Exhibit
10.3 to the Company's Current Report on Form 8-K dated May
4, 1999).
10.3 Employment Agreement dated March 20, 1995 between the
Company and Kenneth L. Way (incorporated by reference to
Exhibit 10.9 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1994).
10.4 Employment Agreement dated March 20, 1995 between the
Company and Robert E. Rossiter (incorporated by reference to
Exhibit 10.10 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1994).
10.5 Employment Agreement dated March 20, 1995 between the
Company and James H. Vandenberghe (incorporated by reference
to Exhibit 10.11 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1994).
</TABLE>
II-2
<PAGE> 134
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<C> <S>
10.6 Employment Agreement dated May 29, 1996 between the Masland
Corporation and Dr. Frank J. Preston, (incorporated by
reference to Exhibit 10.7 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1997).
10.7 Employment Agreement dated March 20, 1995 between the
Company and Donald J. Stebbins (incorporated by reference to
Exhibit 10.8 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1998).
10.8 Lear's 1992 Stock Option Plan (incorporated by reference to
Exhibit 10.7 to the Company's Annual Report on Form 10-K for
the year ended June 30, 1993).
10.9 Amendment to Lear's 1992 Stock Option Plan (incorporated by
reference to Exhibit 10.26 to the Company's Transition
Report on Form 10-K filed on March 31, 1994).
10.10 Lear's 1994 Stock Option Plan (incorporated by reference to
Exhibit 10.27 to the Company's Transition Report on Form
10-K filed on March 31, 1994).
10.11 Masland Holdings, Inc. 1991 Stock Purchase and Option Plan
(incorporated by reference to Exhibit 99.4 to the Company's
Current Report on Form 8-K dated June 27, 1996).
10.12 Masland Corporation 1993 Stock Option Incentive Plan
(incorporated by reference to Exhibit 99.5 to the Company's
Current Report on Form 8-K dated June 27, 1995).
10.13 Lear's Supplemental Executive Retirement Plan, dated as of
January 1, 1995 (incorporated by reference to Exhibit 10.28
to the Company's Annual Report on Form 10-K for the year
ended December 31, 1994).
10.14 Share Purchase Agreement dated as of December 10, 1996,
between the Company and Borealis Holding AB, (incorporated
by reference to Exhibit 10.23 to the Company's Report on
Form 10-K for the year ended December 31, 1996).
10.15 Agreement and Plan of Merger dated as of May 23, 1996, by
and among the Company, PA Acquisition Corp. and Masland
Corporation (incorporated by reference to Exhibit 2.1 to the
Company's Registration Statement on Form S-3 (No.
333-05809)).
10.16 Agreement and Plan of Merger dated as of July 16, 1995,
among the Company, AIHI Acquisition Corp. and Automotive
Industries Holding, Inc. (incorporated by reference to the
Exhibit 2.1 to the Company's Current Report on Form 8-K
dated August 17, 1995).
10.17 Lear Corporation 1996 Stock Option Plan, as amended and
restated (incorporated by reference to Exhibit 10.1 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 28, 1997).
10.18 Lear Corporation Long-Term Stock Incentive Plan, as amended
and restated (incorporated by reference to Exhibit 10.2 to
the Company's quarterly Report on Form 10Q for the quarter
ended June 28, 1997.
10.19 Lear Corporation Outside Directors Compensation Plan, as
amended and restated (incorporated by reference to Exhibit
10.3 to the Company's quarterly Report on Form 10-Q for the
quarter ended June 28, 1997).
10.20 Purchase Agreement dated as of May 26, 1997 amend Keiper
GmbH & Co., Putsch GmbH & Co. KG, Keiper Recaro GmbH, Keiper
Car Seating Verwaltungs GmbH, Lear Corporation GmbH & Co.,
and Lear Corporation (incorporated by reference to Exhibit
10.5 to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 28, 1997.
10.21 Operating Agreement of Lear Donnelly Overhead Systems,
L.L.C. dated as of the 1st day of November, 1997, by and
between the Company and Donnelly Corporation, (incorporated
by reference to Exhibit 10.28 to the Company's Annual Report
on Form 10-K for the year ended December 31, 1997).
</TABLE>
II-3
<PAGE> 135
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<C> <S>
10.22 Form of the Lear Corporation Long-Term Stock Incentive Plan
Deferral and Restricted Stock Unit Agreement, (incorporated
by reference to Exhibit 10.29 to the Company's Annual Report
on Form 10-K for the year ended December 31, 1997).
10.23 Form of the Lear Corporation 1996 Stock Option Plan Stock
Option Agreement, (incorporated by reference to Exhibit
10.30 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1997).
10.24 Restricted Property Agreement dated as of December 17, 1997
between the Company and Robert E. Rossiter (incorporated by
reference to Exhibit 10.29 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1997).
10.25 Lear Corporation 1992 Stock Option Plan, 3rd amendment dated
March 14, 1997 (incorporated by reference to Exhibit 10.30
to the Company's Annual Report of Form 10-K for the year
ended December 31, 1997).
10.26 Lear Corporation 1992 Stock Option plan, 4th amendment dated
August 4, 1997 (incorporated by reference to Exhibit 10.31
to the Company's Annual Report of Form 10-K for the year
ended December 31, 1997).
10.27 Lear Corporation 1994 Stock Option Plan, Second Amendment
effective January 1, 1996, (incorporated by reference to
Exhibit 10.28 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1998).
10.28 Lear Corporation 1994 Stock Option Plan, Third Amendment
effective March 14, 1997 (incorporated by reference to
Exhibit 10.29 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1998).
10.29 Lear Corporation Long-Term Stock Incentive Plan, Third
Amendment effective February 26, 1998 (incorporated by
reference to Exhibit 10.30 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1998).
10.30 The Master Sale and Purchase Agreement between General
Motors Corporation and the Company, dated August 31, 1998,
relating to the sale and purchase of the world-wide seating
business operated by The Delphi Interior & Lighting System
Division of General Motors Corporation's Delphi Automotive
Systems business sector (incorporated by reference to
Exhibit 10.31 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1998).
10.31 Stock Purchase Agreement dated as of March 16, 1999 by and
between Nevada Bond Investment Corp. II and Lear Corporation
(incorporated by reference to Exhibit 99.1 to the Company's
Current Report on Form 8-K dated March 16, 1999).
10.32 Stock Purchase Agreement, dated as of May 7, 1999, between
Lear Corporation and Johnson Electric Holdings Limited
(incorporated by reference to Exhibit 10.1 to the Company's
Current Report on Form 8-K dated May 7, 1999).
10.33 Purchase Agreement dated as of May 13, 1999, among Lear
Corporation, Lear Operations Corporation, Lear Corporation
Automotive Holdings and Morgan Stanley & Co. Incorporated,
Salomon Smith Barney Inc., Chase Securities Inc., Credit
Suisse First Boston Corporation, Deutsche Bank Securities
Inc., NationsBanc Montgomery Securities LLC, Scotia Capital
Markets (USA) Inc. and TD Securities (USA) Inc.
(incorporated by reference to Exhibit 10.6 to the Company's
Quarterly Report on Form 10-Q for the quarter ended April 3,
1999).
</TABLE>
II-4
<PAGE> 136
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<C> <S>
10.34 Registration Rights Agreement dated as of May 18, 1999,
among Lear Corporation, Lear Operations Corporation, Lear
Corporation Automotive Holdings and Morgan Stanley & Co.
Incorporated, Salomon Smith Barney Inc., Chase Securities
Inc., Credit Suisse First Boston Corporation, Deutsche Bank
Securities Inc., NationsBanc Montgomery Securities LLC,
Scotia Capital Markets (USA) Inc. and TD Securities (USA)
Inc. (incorporated by reference to Exhibit 10.7 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended April 3, 1999).
*11.1 Computation of income (loss) per share.
*12.1 Statement re computation of ratios (Historical).
*12.2 Statement re computation of ratios (Pro forma).
**21.1 List of subsidiaries of Lear Corporation.
*23.1 Consent of Arthur Andersen LLP.
*23.2 Consent of PricewaterhouseCoopers LLP.
*23.3 Consent of Deloitte & Touche LLP.
*23.4 Consent of Winston & Strawn (included in Exhibit 5.1).
*24.1 Powers of Attorney (included on the signature pages hereof).
*25.1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 on Form T-1 of The Bank of New York as
Trustee under the Indenture.
*27.1 Financial Data Schedule for the Year Ended December 31,
1998.
*27.2 Financial Data Schedule for the Quarter Ended April 3, 1999.
*99.1 Form of Letter of Transmittal.
*99.2 Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
*99.3 Form of Letter to Clients.
*99.4 Form of Notice of Guaranteed Delivery.
</TABLE>
- ---------------
* Filed herewith.
** To be filed by amendment.
(B) Financial Statement Schedules
Schedules are omitted since the information required to be submitted has
been included in the Supplemental Consolidated Financial Statements of Lear or
the notes thereto, or the required information is not applicable.
ITEM 22. UNDERTAKINGS
The Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Securities and
Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
II-5
<PAGE> 137
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) that, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment 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.
(3) to remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering;
(4) to respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this form,
within one business day of receipt of such request, and to send the incorporated
documents by first class mail or equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
(5) to supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the registration statement when it became
effective.
(6) that, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the 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.
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 Act 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 it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-6
<PAGE> 138
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Lear
Corporation, certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-4 and it 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 the 18th day
of June, 1999.
Lear Corporation
By: /s/ KENNETH L. WAY
------------------------------------
Kenneth L. Way
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
Each of the undersigned hereby appoints James H. Vandenberghe, Donald J.
Stebbins and Joseph F. McCarthy and each of them (with full power to act alone),
as attorney and agents for the undersigned, with full power of substitution, for
and in the name, place and stead of the undersigned, to sign and file with the
Securities and Exchange Commission under the Securities Act any and all
amendments and exhibits to this Registration Statement and any and all
applications, instruments and other documents to be filed with the Securities
and Exchange Commission pertaining to the registration of the securities covered
hereby, with full power and authority to do and perform any and all acts and
things whatsoever requisite or desirable.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and as of the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ KENNETH L. WAY Chairman of the Board and Chief Executive June 18, 1999
- --------------------------------------- Officer (Principal Executive Officer)
Kenneth L. Way
/s/ ROBERT E. ROSSITER President and Chief Operating Officer and June 18, 1999
- --------------------------------------- Director
Robert E. Rossiter
/s/ JAMES H. VANDENBERGHE Vice Chairman of the Board June 18, 1999
- ---------------------------------------
James H. Vandenberghe
/s/ DONALD J. STEBBINS Senior Vice President and Chief Financial June 18, 1999
- --------------------------------------- Officer (Principal Financial and
Donald J. Stebbins Accounting Officer)
Director
- ---------------------------------------
David Bing
/s/ GIAN ANDREA BOTTA Director June 18, 1999
- ---------------------------------------
Gian Andrea Botta
/s/ IRMA B. ELDER Director June 18, 1999
- ---------------------------------------
Irma B. Elder
/s/ LARRY W. MCCURDY Director June 18, 1999
- ---------------------------------------
Larry W. McCurdy
/s/ ROY E. PARROTT Director June 18, 1999
- ---------------------------------------
Roy E. Parrott
</TABLE>
II-7
<PAGE> 139
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ROBERT W. SHOWER Director June 18, 1999
- ---------------------------------------
Robert W. Shower
/s/ DAVID P. SPALDING Director June 18, 1999
- ---------------------------------------
David P. Spalding
/s/ JAMES A. STERN Director June 18, 1999
- ---------------------------------------
James A. Stern
</TABLE>
II-8
<PAGE> 140
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Lear Operations
Corporation, certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-4 and it 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 the 18th day
of June, 1999.
Lear Operations Corporation
By: /s/ DONALD J. STEBBINS
------------------------------------
Donald J. Stebbins
Vice President and Assistant
Treasurer
POWER OF ATTORNEY
Each of the undersigned hereby appoints Donald J. Stebbins and Joseph F.
McCarthy and each of them (with full power to act alone), as attorney and agents
for the undersigned, with full power of substitution, for and in the name, place
and stead of the undersigned, to sign and file with the Securities and Exchange
Commission under the Securities Act any and all amendments and exhibits to this
Registration Statement and any and all applications, instruments and other
documents to be filed with the Securities and Exchange Commission pertaining to
the registration of the securities covered hereby, with full power and authority
to do and perform any and all acts and things whatsoever requisite or desirable.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and as of the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ KENNETH L. WAY Chairman of the Board and Chief Executive June 18, 1999
- --------------------------------------- Officer (Principal Executive Officer)
Kenneth L. Way
/s/ JAMES H. VANDENBERGHE Executive Vice President, Chief Financial June 18, 1999
- --------------------------------------- Officer and Director (Principal Financial
James H. Vandenberghe and Accounting Officer)
/s/ JOSEPH F. MCCARTHY Vice President, Secretary, General Counsel June 18, 1999
- --------------------------------------- and Director
Joseph F. McCarthy
</TABLE>
II-9
<PAGE> 141
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Lear
Corporation Automotive Holdings, certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-4 and it 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 the 18th day of June, 1999.
Lear Corporation Automotive Holdings
By: /s/ DONALD J. STEBBINS
------------------------------------
Donald J. Stebbins
Vice President, Chief Financial
Officer
and Assistant Secretary
POWER OF ATTORNEY
Each of the undersigned hereby appoints Donald J. Stebbins and Joseph F.
McCarthy and each of them (with full power to act alone), as attorney and agents
for the undersigned, with full power of substitution, for and in the name, place
and stead of the undersigned, to sign and file with the Securities and Exchange
Commission under the Securities Act any and all amendments and exhibits to this
Registration Statement and any and all applications, instruments and other
documents to be filed with the Securities and Exchange Securities and Exchange
Commission pertaining to the registration of the securities covered hereby, with
full power and authority to do and perform any and all acts and things
whatsoever requisite or desirable.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and as of the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ JAMES H. VANDENBERGHE President and Director June 18, 1999
- --------------------------------------- (Principal Executive Officer)
James H. Vandenberghe
/s/ DONALD J. STEBBINS Vice President, Chief Financial Officer, June 18, 1999
- --------------------------------------- Assistant Secretary and Director
Donald J. Stebbins (Principal Financial and Accounting
Officer)
/s/ JOSEPH F. MCCARTHY Vice President, Secretary and Director June 18, 1999
- ---------------------------------------
Joseph F. McCarthy
/s/ DOUGLAS G. DELGROSSO Vice President and Director June 18, 1999
- ---------------------------------------
Douglas G. DelGrosso
</TABLE>
II-10
<PAGE> 142
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<S> <C>
3.1 Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended March
30, 1996).
3.2 Amended and Restated By-laws of the Company (incorporated by
reference to Exhibit 3.4 to Lear's Registration Statement on
Form S-1 (No. 33-52565)).
*3.3 Certificate of Incorporation of Lear Operations Corporation.
*3.4 By-laws of Lear Operations Corporation.
*3.5 Amended and Restated Certificate of Incorporation of Lear
Corporation Automotive Holdings.
*3.6 By-laws of Lear Corporation Automotive Holdings.
4.1 Indenture dated as of July 1, 1996 by and between the
Company and the Bank of New York, as trustee, relating to
the 9 1/2% Subordinated Notes due 2006 (incorporated by
reference to Exhibit 4.1 to the Company's Quarterly Report
on Form 10-Q for the quarter ended September 28, 1996).
4.2 Indenture dated as of February 1, 1994 by and between Lear
and The First National Bank of Boston, as Trustee, relating
to the 8 1/4% Subordinated Notes (incorporated by reference
to Exhibit 4.1 to the Company's Transition Report on Form
10-K filed on March 31, 1994).
4.3 Indenture dated as of May 15, 1999, by and among Lear
Corporation as Issuer, the Guarantors party thereto from
time to time and the Bank of New York as Trustee
(incorporated by reference to Exhibit 10.8 to the Company's
Quarterly Report on Form 10-Q for the quarter ended April 3,
1999).
*5.1 Opinion of Winston & Strawn.
10.1 Second Amended and Restated Credit and Guarantee Agreement,
dated as of May 4, 1999, among Lear, Lear Corporation Canada
Ltd., the Foreign Subsidiary Borrowers (as defined therein),
the Lenders Party thereto, Bankers Trust Company and Bank of
America National Trust & Savings Association, as
Co-Syndication Agents, The Bank of Nova Scotia, as
Documentation Agent and Canadian Administrative Agent, and
The Chase Manhattan Bank, as General Administrative Agent
(incorporated by reference to Exhibit 10.1 to the Company's
Current Report on Form 8-K dated May 4, 1999).
10.2 Revolving Credit and Term Loan Agreement, dated as of May 4,
1999, among Lear, certain of its Foreign Subsidiaries, the
Lenders parties thereto, Citicorp USA, Inc. and Morgan
Stanley Senior Funding, Inc., as Co-Syndication Agents,
Toronto Dominion (Texas), Inc., as Documentation Agent, the
other Agents named therein, and The Chase Manhattan Bank, as
Administrative Agent (incorporated by reference to Exhibit
10.3 to the Company's Current Report on Form 8-K dated May
4, 1999).
10.3 Employment Agreement dated March 20, 1995 between the
Company and Kenneth L. Way (incorporated by reference to
Exhibit 10.9 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1994).
10.4 Employment Agreement dated March 20, 1995 between the
Company and Robert E. Rossiter (incorporated by reference to
Exhibit 10.10 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1994).
10.5 Employment Agreement dated March 20, 1995 between the
Company and James H. Vandenberghe (incorporated by reference
to Exhibit 10.11 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1994).
10.6 Employment Agreement dated May 29, 1996 between the Masland
Corporation and Dr. Frank J. Preston, (incorporated by
reference to Exhibit 10.7 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1997).
</TABLE>
<PAGE> 143
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<S> <C>
10.7 Employment Agreement dated March 20, 1995 between the
Company and Donald J. Stebbins (incorporated by reference to
Exhibit 10.8 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1998).
10.8 Lear's 1992 Stock Option Plan (incorporated by reference to
Exhibit 10.7 to the Company's Annual Report on Form 10-K for
the year ended June 30, 1993).
10.9 Amendment to Lear's 1992 Stock Option Plan (incorporated by
reference to Exhibit 10.26 to the Company's Transition
Report on Form 10-K filed on March 31, 1994).
10.10 Lear's 1994 Stock Option Plan (incorporated by reference to
Exhibit 10.27 to the Company's Transition Report on Form
10-K filed on March 31, 1994).
10.11 Masland Holdings, Inc. 1991 Stock Purchase and Option Plan
(incorporated by reference to Exhibit 99.4 to the Company's
Current Report on Form 8-K dated June 27, 1996).
10.12 Masland Corporation 1993 Stock Option Incentive Plan
(incorporated by reference to Exhibit 99.5 to the Company's
Current Report on Form 8-K dated June 27, 1995).
10.13 Lear's Supplemental Executive Retirement Plan, dated as of
January 1, 1995 (incorporated by reference to Exhibit 10.28
to the Company's Annual Report on Form 10-K for the year
ended December 31, 1994).
10.14 Share Purchase Agreement dated as of December 10, 1996,
between the Company and Borealis Holding AB, (incorporated
by reference to Exhibit 10.23 to the Company's Report on
Form 10-K for the year ended December 31, 1996).
10.15 Agreement and Plan of Merger dated as of May 23, 1996, by
and among the Company, PA Acquisition Corp. and Masland
Corporation (incorporated by reference to Exhibit 2.1 to the
Company's Registration Statement on Form S-3 (No.
333-05809)).
10.16 Agreement and Plan of Merger dated as of July 16, 1995,
among the Company, AIHI Acquisition Corp. and Automotive
Industries Holding, Inc. (incorporated by reference to the
Exhibit 2.1 to the Company's Current Report on Form 8-K
dated August 17, 1995).
10.17 Lear Corporation 1996 Stock Option Plan, as amended and
restated (incorporated by reference to Exhibit 10.1 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 28, 1997).
10.18 Lear Corporation Long-Term Stock Incentive Plan, as amended
and restated (incorporated by reference to Exhibit 10.2 to
the Company's quarterly Report on Form 10Q for the quarter
ended June 28, 1997.
10.19 Lear Corporation Outside Directors Compensation Plan, as
amended and restated (incorporated by reference to Exhibit
10.3 to the Company's quarterly Report on Form 10-Q for the
quarter ended June 28, 1997).
10.20 Purchase Agreement dated as of May 26, 1997 amend Keiper
GmbH & Co., Putsch GmbH & Co. KG, Keiper Recaro GmbH, Keiper
Car Seating Verwaltungs GmbH, Lear Corporation GmbH & Co.,
and Lear Corporation (incorporated by reference to Exhibit
10.5 to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 28, 1997.
10.21 Operating Agreement of Lear Donnelly Overhead Systems,
L.L.C. dated as of the 1st day of November, 1997, by and
between the Company and Donnelly Corporation, (incorporated
by reference to Exhibit 10.28 to the Company's Annual Report
on Form 10-K for the year ended December 31, 1997).
10.22 Form of the Lear Corporation Long-Term Stock Incentive Plan
Deferral and Restricted Stock Unit Agreement, (incorporated
by reference to Exhibit 10.29 to the Company's Annual Report
on Form 10-K for the year ended December 31, 1997).
10.23 Form of the Lear Corporation 1996 Stock Option Plan Stock
Option Agreement, (incorporated by reference to Exhibit
10.30 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1997).
</TABLE>
<PAGE> 144
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<C> <S>
10.24 Restricted Property Agreement dated as of December 17, 1997
between the Company and Robert E. Rossiter (incorporated by
reference to Exhibit 10.29 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1997).
10.25 Lear Corporation 1992 Stock Option Plan, 3rd amendment dated
March 14, 1997 (incorporated by reference to Exhibit 10.30
to the Company's Annual Report of Form 10-K for the year
ended December 31, 1997).
10.26 Lear Corporation 1992 Stock Option plan, 4th amendment dated
August 4, 1997 (incorporated by reference to Exhibit 10.31
to the Company's Annual Report of Form 10-K for the year
ended December 31, 1997).
10.27 Lear Corporation 1994 Stock Option Plan, Second Amendment
effective January 1, 1996, (incorporated by reference to
Exhibit 10.28 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1998).
10.28 Lear Corporation 1994 Stock Option Plan, Third Amendment
effective March 14, 1997 (incorporated by reference to
Exhibit 10.29 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1998).
10.29 Lear Corporation Long-Term Stock Incentive Plan, Third
Amendment effective February 26, 1998 (incorporated by
reference to Exhibit 10.30 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1998).
10.30 The Master Sale and Purchase Agreement between General
Motors Corporation and the Company, dated August 31, 1998,
relating to the sale and purchase of the world-wide seating
business operated by The Delphi Interior & Lighting System
Division of General Motors Corporation's Delphi Automotive
Systems business sector (incorporated by reference to
Exhibit 10.31 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1998).
10.31 Stock Purchase Agreement dated as of March 16, 1999 by and
between Nevada Bond Investment Corp. II and Lear Corporation
(incorporated by reference to Exhibit 99.1 to the Company's
Current Report on Form 8-K dated March 16, 1999).
10.32 Stock Purchase Agreement, dated as of May 7, 1999, between
Lear Corporation and Johnson Electric Holdings Limited
(incorporated by reference to Exhibit 10.1 to the Company's
Current Report on Form 8-K dated May 7, 1999).
10.33 Purchase Agreement dated as of May 13, 1999, among Lear
Corporation, Lear Operations Corporation, Lear Corporation
Automotive Holdings and Morgan Stanley & Co. Incorporated,
Salomon Smith Barney Inc., Chase Securities Inc., Credit
Suisse First Boston Corporation, Deutsche Bank Securities
Inc., NationsBanc Montgomery Securities LLC, Scotia Capital
Markets (USA) Inc. and TD Securities (USA) Inc.
(incorporated by reference to Exhibit 10.6 to the Company's
Quarterly Report on Form 10-Q for the quarter ended April 3,
1999).
10.34 Registration Rights Agreement dated as of May 18, 1999,
among Lear Corporation, Lear Operations Corporation, Lear
Corporation Automotive Holdings and Morgan Stanley & Co.
Incorporated, Salomon Smith Barney Inc., Chase Securities
Inc., Credit Suisse First Boston Corporation, Deutsche Bank
Securities Inc., NationsBanc Montgomery Securities LLC,
Scotia Capital Markets (USA) Inc. and TD Securities (USA)
Inc. (incorporated by reference to Exhibit 10.7 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended April 3, 1999).
*11.1 Computation of income (loss) per share.
*12.1 Statement re computation of ratios (Historical).
*12.2 Statement re computation of ratios (Pro forma).
**21.1 List of subsidiaries of Lear Corporation.
*23.1 Consent of Arthur Andersen LLP.
*23.2 Consent of PricewaterhouseCoopers LLP.
</TABLE>
<PAGE> 145
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<C> <S>
*23.3 Consent of Deloitte & Touche LLP.
*23.4 Consent of Winston & Strawn (included in Exhibit 5.1).
*24.1 Powers of Attorney (included on the signature pages hereof).
*25.1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 on Form T-1 of The Bank of New York as
Trustee under the Indenture.
*27.1 Financial Data Schedule for the Year Ended December 31,
1998.
*27.2 Financial Data Schedule for the Quarter Ended April 3, 1999.
*99.1 Form of Letter of Transmittal.
*99.2 Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
*99.3 Form of Letter to Clients.
*99.4 Form of Notice of Guaranteed Delivery.
</TABLE>
- ---------------
* Filed herewith.
** To be filed by amendment.
<PAGE> 1
EXHIBIT 3.3
CERTIFICATE OF INCORPORATION
OF
LEAR OPERATIONS CORPORATION
--------------------------------------------------------
ARTICLE I
The name of the Corporation is:
LEAR OPERATIONS CORPORATION
ARTICLE 2
The address of the Corporation's registered office in the
State of Delaware is 1209 Orange Street in the City of Wilmington, County of New
Castle. The name of the Corporation's registered agent at that address is The
Corporation Trust Company.
ARTICLE 3
The purpose of the Corporation is to engage in any lawful act
or activity for which a corporation may be organized under the General
Corporation Law of the State of Delaware (the "Delaware General Corporation
Law").
ARTICLE 4
4.1 The total number of shares of stock which the Corporation
shall have authority to issue is 1000 shares of Common Stock, each having a par
value of $.01 (the "Common Stock").
4.2 Each holder of record of shares of Common Stock shall be
entitled to vote at all meetings of the stockholders and shall have one vote for
each share held by him or her of record.
4.3 Subject to all of the rights of the holders of all classes
or series of stock at the time outstanding having prior rights as to dividends,
the holders of the common Stock shall be entitled to receive dividends at such
times and in such amounts as may be determined by the Board of Directors of the
Corporation.
ARTICLE 5
The name of the incorporator is Joseph F. McCarthy. The
address of the incorporator is 21557 Telegraph Road, Southfield, Michigan 48034.
<PAGE> 2
ARTICLE 6
The following provisions are inserted for the management of
the business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
(a) The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors.
(b) The Board of Directors shall have concurrent power with
the stockholders to make, alter, amend, change, add to or repeal the
By-Laws of the Corporation.
(c) The number of directors of the Corporation shall be as
from time to time fixed by, or in the manner provided in, the By-Laws
of the Corporation. Election of directors need not be by written ballot
unless the By-Laws so provide.
(d) At each annual meeting of the stockholders, directors
shall be elected for a one-year term. If the number of directors is
decreased, such decrease shall not shorten the term of any incumbent
director. A director shall hold office until the annual meeting for the
year in which his or her term expires, and until his or her successor
shall be elected and shall qualify, subject, however, to prior death,
resignation, retirement or removal from office.
(e) No director shall be personally liable to the Corporation
or any of 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 loyally 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) pursuant to Section 174
of the Delaware General Corporation Law or (iv) for any transaction
from which the director derived an improper personal benefit.
(f) In addition to the powers and authority by statute
expressly conferred upon them, the directors are hereby empowered to
exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation, subject, nevertheless, to the
provisions of the Delaware General Corporation Law and any By-Laws
adopted by the stockholders; provided, however, that no By-Laws
hereafter adopted by the stockholders shall invalidate any prior act of
the directors which would have been valid if such By-Laws had not been
adopted.
ARTICLE 7
The Corporation shall indemnify, in accordance with and to the
full extent now or hereafter permitted by law, any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (including, without limitation, an action by or in the right of
the
2
<PAGE> 3
Corporation), by reason of his acting as a director of the Corporation (and the
Corporation, in the discretion of the Board of Directors, may so indemnify a
person by reason of the fact that he is or was an officer or employee of the
Corporation or is or was serving at the request of the Corporation in any other
capacity for or on behalf of the Corporation) against any liability or expense
actually or reasonably incurred by such person in respect thereof; provided,
however, that the Corporation shall not be obligated to indemnify any such
person: (i) with respect to proceedings, claims or actions initiated or brought
voluntarily without the authorization or consent of the Corporation by such
person and not by way of defense; or (ii) for any amounts paid in settlement of
an action effected without the prior written consent of the corporation to ouch
settlement. Such indemnification is not exclusive of any other right of
indemnification, provided by law, agreement or otherwise.
ARTICLE 8
No amendment to or repeal to Articles 6(f) or 7 of this
Certificate of Incorporation shall apply to or have any effect on the rights of
any individual referred to in Articles 6(f) or 7 for or with respect to acts or
omissions of such individual occurring prior to such amendment or repeal.
ARTICLE 9
Meetings of stockholders may be held within or without the
State of Delaware, as the By-Laws may provide. The books of the Corporation may
be kept (subject to any provision contained in the Delaware General Corporation
Law) outside the State of Delaware at such place or places as may be designated
from time to time by the Board of Directors or in the By-Laws of the
Corporation.
ARTICLE 10
No stockholder of the Corporation shall by reason of holding
shares of any class of stock have any pre-emptive or preferential right to
purchase or subscribe of any shares to any class of stock of the Corporation,
now or hereafter to be authorized, or any notes, debentures, bonds, or other
securities convertible into or carrying options or warrants to purchase shares
of any case of such stock, now or hereafter to be authorized, whether or not the
issuance of any such shares, or such notes, debentures, bonds or other
securities would adversely affect the dividend or voting rights of such
stockholder, other than such rights, if any, as the Board of Directors, in its
discretion from time to time, may grant and at such price as the Board of
Directors in its discretion may fix; and the Board of Directors may issue shares
of any class of stock of the Corporation, or any notes, debentures, bonds or
other securities convertible into or carrying options or warrants to purchase
shares of any class of such stock, without offering any such shares of any
class, either in whole or in part, to the existing stockholders of any class of
such stock.
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ARTICLE 11
Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware my, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of Section 291 of the Delaware General Corporation Law or on the
application of trustees in dissolution or of any receiver or receivers appointed
for the Corporation under the provisions of Section 279 of the Delaware General
Corporation Law, order a meeting of the creditors or class of creditors, and/or
of the stockholders or class of stockholders of the Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of the
Corporation, as the case may be, agree to any compromise or arrangement, and to
any reorganization of the Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of the Corporation, as the case may be,
and also on the Corporation.
ARTICLE 12
The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate this 12th day of December, 1995.
/s/ Joseph F. McCarthy
-----------------------------
Joseph F. McCarthy
Sole Incorporator
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<PAGE> 5
CERTIFICATE OF MERGER
MERGING
ASAA, INC.,
CAPITOL PLASTICS OF OHIO, INC.,
AND
MASLAND SPECIALTY TECHNOLOGIES, INC.
WITH AND INTO
LEAR OPERATIONS CORPORATION
----------------------------------------------------------------------------
PURSUANT TO SECTION 252 OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
-----------------------------------------------------------------------------
Lear Operations Corporation, a Delaware corporation, (the
"Corporation"), ASAA, Inc., a Wisconsin corporation ("ASAA"), Capitol Plastics
of Ohio, Inc., an Ohio corporation ("Capitol Plastics"), Masland Specialty
Technologies, Inc., a Delaware corporation ("Masland Specialty" and together
with ASAA and Capitol Plastics, the "Terminating Corporations"), do hereby
certify to the following facts relating to the merger (the "Merger") of the
Terminating Corporations with and into the Corporation, with the Corporation
remaining as the surviving corporation (the "Surviving Corporation"):
FIRST: The names and states of incorporation of each of the constituent
corporations of the Merger are Lear Operations Corporation which is incorporated
pursuant to the General Corporation Law of the State of Delaware (the "DGCL")
the provisions of which permit the merger of a corporation organized and
existing under the DGCL and the merger of a corporation organized and existing
under the laws of the DGCL or another state to be merged into a corporation
organized and existing under the DGCL, Capitol Plastics of Ohio, Inc. which is
incorporated pursuant to the General Corporation Law of the State of Ohio (the
"OGCL") the provisions of which permit the merger of a corporation organized and
existing under the OGCL into a corporation organized under the laws of another
state, ASAA, Inc. which is incorporated pursuant to the Business Corporation Law
of the State of Wisconsin (the "WBCL") the provisions of which permit the merger
of a corporation organized under the WBCL into a corporation organized under the
laws of another state and Masland Specialty Technologies, Inc. which is
incorporated pursuant to the DGCL.
SECOND: That the Agreement and Plan of Merger (the "Agreement") between
the parties to the Merger has been approved, adopted, certified, executed and
acknowledged by each of the Surviving Corporation and the Terminating
Corporations in accordance with the requirements of Section 252 of the DGCL,
Section 1103 of the WBCL and Section 1701.79 of the OGCL.
THIRD: That the name of the corporation surviving the merger is Lear
Operations Corporation, a Delaware corporation.
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FOURTH: That the Certificate of Incorporation of the Corporation shall
continue in full force and effect as the articles of Incorporation of the
Surviving Corporation.
FIFTH: That the executed Agreement is on file at the principal place of
business of the Surviving Corporation, the address of which is 21557 Telegraph
Road, Southfield, Michigan 48086-5008.
SIXTH: That a copy of the Agreement will be furnished, on request and
without cost, to any stockholder of any of the Surviving Corporation or the
Terminating Corporations.
SEVENTH: That ASAA, prior to and up until the effective date of the
Merger, had authorized capital stock of 2,800 shares without par value and that
Capitol Plastics, prior to and up until the effective date of the Merger, had
authorized capital stock of 10,000 shares without par value.
EIGHTH: That pursuant to Section 251(d) of the DGCL, Section
1800.1103(6) of the WBCL, Section 1701.79(E) of the OGCL and the Agreement and
Plan of Merger authorizing the Merger, the Boards of Directors of the
Corporation or the Terminating Corporation may terminate the Merger at any time
before the filing of the Certificate of Ownership and Merger with the Secretary
of the State of Delaware or the Articles of Merger with the Wisconsin Department
of Financial Institutions.
NINTH: That pursuant to Section 103(d) of the DGCL. the Merger shall
become effective as of 11:59 P.M. Delaware and Ohio time (10:59 P.M. Wisconsin
time) on December 31, 1997.
IN WITNESS WHEREOF, the undersigned has executed this Certificate,
pursuant to the approval and authority duly given by resolutions adopted by the
Board of Directors of Lear Operations Corporation this 12th day of December,
1997.
LEAR OPERATIONS CORPORATION
By: /s/ Joseph F. McCarthy
-------------------------------
Name: Joseph F. McCarthy
Title: Vice President, Secretary
and General Counsel
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<PAGE> 7
CERTIFICATE OF MERGER
MERGING
EURO-AMERICAN SEATING, L.L.C.
(a Delaware limited liability company)
INTO
LEAR OPERATIONS CORPORATION
(a Delaware corporation)
CERTIFICATE OF MERGER (this "Certificate") made as of June 30, 1998, by
Lear Operations Corporation, a corporation organized and existing under the laws
of Delaware (the "Company" or the "Surviving Corporation") for the merger of
Euro-American Seating, L.L.C., a Delaware limited liability company (the
"Terminating Company"), with and into the Company (the "Merger") .
THE COMPANY DOES HEREBY CERTIFY:
FIRST: That the names and states of incorporation or formation, as the
case may be, of each of the constituent corporation or limited liability
company, as the case may be, of the Merger are Lear Operations Corporation,
which was incorporated on the 12th day of December, 1995 pursuant to the General
Corporation Law of the State of Delaware (the "Delaware GCL") and Euro-American
Seating, L.L.C., which limited liability company was formed on the 21st day of
December, 1995 pursuant to the Limited Liability Company Act of the State of
Delaware (the "Delaware LLCA").
SECOND: That an Agreement and Plan of Merger (the "Agreement") between
the parties to the Merger has been approved, adopted, certified, executed and
acknowledged by each of the Surviving Corporation and the Terminating Company in
accordance with the requirements of Section 264 of the Delaware GCL and Section
18-209 of the Delaware LLCA, respectively.
THIRD: That the name of the surviving corporation of the Merger is Lear
Operations Corporation, a Delaware corporation.
FOURTH: That the Certificate of Incorporation of the Company shall
continue in full force and effect as the Certificate of Incorporation of the
corporation surviving the Merger.
FIFTH: That the executed Agreement is on file at the principal place of
business of the surviving Corporation, the address of which is 21557 Telegraph
Road, P.O. Box 5008, Southfield, Michigan 48086-5008.
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<PAGE> 8
SIXTH: That a copy of the Agreement will be furnished, on request and
without cost, to any stockholder or holder of a limited liability company
interest, as the case may be, of either the surviving corporation or the
Terminating Company.
SEVENTH: That this Certificate of merger shall be effective upon the
date of its filing.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed and delivered by its respective officers thereunto duly
authorized, all as of the day and year first written above.
LEAR OPERATIONS CORPORATION
By: /s/ Joseph F. McCarthy
--------------------------------------
Name: Joseph F. McCarthy
Title: V.P., Secretary & General Counsel
Attest:
By:
------------------
EURO-AMERICAN SEATING, L.L.C.
By: /s/ Joseph F. McCarthy
--------------------------------------
Name: Joseph F. McCARTHY
Title: V.P., Secretary & General Counsel
Attest:
By:
------------------
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<PAGE> 1
EXHIBIT 3.4
BY-LAWS
OF
LEAR OPERATIONS CORPORATION
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
Section 11. Registered Office. The registered office of the
Corporation shall be in the City of Wilmington, County of New Castle, State of
Delaware.
Section 1.2. Other Offices. The Corporation may also have offices at
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.1. Place of Meetings. Meetings of the stockholders for the
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Delaware, as shall be designated
from time to time by the Board of Directors and stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
Section 2.2. Annual Meetings. The Annual Meetings of stockholders
shall be held on such date and at such time as shall be designated from time to
time by the Board of Directors and stated
<PAGE> 2
in the notice of the meeting, at which meetings the stockholders shall elect by
a plurality vote a Board of Directors, and transact such other business as may
properly be brought before the meeting.
Section 2.3. Special Meetings. Unless otherwise prescribed by law or by
the Certificate of Incorporation, Special Meetings of stockholders, for any
purpose or purposes, may be called by either (i) the Chairman, if there be one,
or (ii) the President, (iii) any Vice President, if there be one, (iv) the
Secretary or (v) any Assistant Secretary, if there be one, and shall 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 Corporation issued and outstanding and
entitled to vote.
Section 2.4. Waiver of Notice. Notice of the time, place and purpose or
purposes of any meeting of stockholders may be waived by a written waiver
thereof, signed by the person entitled to notice. Such waiver, whether before or
after the time stated therein, shall be deemed equivalent to notice. Attendance
of a person at a meeting shall constitute a waiver of notice of such meeting,
except when the person attends a meeting for the express purpose of objecting,
at the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
Section 2.5. Record Date. In order that the Corporation may determine
the stockholders entitled to vote at any meeting of stockholders or any
adjournment thereof, or entitled to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix a record
date, which shall not precede the date upon which the resolution
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fixing the record date is adopted, and which shall be (i) not more than 60 nor
less than 10 days before the date of a meeting, and (ii) not more than 60 days
prior to the other action. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting; provided, however, that the Board of Directors may fix a new
record date for any adjourned meeting.
Section 2.6. List of Stockholders Entitled to Vote. The officer who has
charge of the stock ledger of the Corporation shall prepare and make, at least
10 days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder for any purpose germane to the meeting, during ordinary business
hours, for a period of at least 10 days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof and may be inspected by any
stockholder who is present.
Section 2.7. Stock Ledger. The stock ledger of the Corporation shall be
the only evidence as to who are the stockholders entitled to examine the stock
ledger, the list required by Section 2.8. of this Article II or the books of the
Corporation, or to vote in person or by proxy at a meeting of stockholders.
Section 2.8. Quorum. Except as otherwise provided by law or by the
Certificate of Incorporation, the holders of a majority of the capital stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of
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<PAGE> 4
the stockholders for the transaction of business. If, however, such quorum shall
not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally noticed. If the adjournment is for more than 30 days,
or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder
entitled to vote at the meeting.
Section 2.9. Voting. When a quorum is present at any meeting, the
affirmative vote of the holders of a majority of the stock represented and
entitled to vote thereat shall decide any question brought before such meeting,
unless the question is one upon which by express provision of applicable law,
the Certificate of Incorporation or these By-Laws, a different vote is required
in which case such express provision shall govern and control the decision of
such question.
Section 2.10. Proxy. Unless otherwise provided in the Certificate of
Incorporation, each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on
after three years from its date, unless the proxy provides for a longer period.
At any meeting of the stockholders, every stockholder entitled to vote may vote
in person or by proxy authorized by an instrument in writing or by a
transmission permitted by law filed in accordance with the procedure established
for the meeting. Any copy, facsimile telecommunication or other reliable
reproduction of the writing or transmission created pursuant to this paragraph
may be
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<PAGE> 5
substituted, or used in lieu of the original writing or transmission for any and
all purposes for which the original writing or transmission could be used;
provided that, such copy, facsimile telecommunication or other reproduction
shall be a complete reproduction of the entire original writing or transmission.
All voting, excepting where otherwise required by law, the Certificate of
Incorporation or the Board of Directors may be by a voice vote.
Section 2.11. Chairman of Meeting. The Chairman of the Board of
Directors shall preside at all meetings of the stockholders. In the absence or
inability to act of the Chairman, the Vice Chairman, the Chief Executive
Officer, the President or a Vice President (in that order) shall preside, and in
their absence or inability to act another person designated by one of them shall
preside. The Secretary of the Corporation shall act as secretary of each meeting
of the stockholders. In the event of his absence or inability to act, the
chairman of the meeting shall appoint a person who need not be a stockholder to
act as secretary of the meeting.
Section 2.12. Conduct of Meetings. Meetings of the stockholders shall
be conducted in a fair manner but need not be governed by any prescribed rules
of order. The presiding officer's rulings on procedural matters shall be final.
The presiding officer is authorized to impose reasonable time limits on the
remarks of individual stockholders and may take such steps as such officer may
deem necessary or appropriate to assure that the business of the meeting is
conducted in a fair and orderly manner.
Section 2.13. Action Without a Meeting. Unless otherwise provided in
the Certificate of Incorporation, any action required or permitted to be taken
at any Annual or Special Meeting of stockholders of the Corporation, may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by the holders of
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<PAGE> 6
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
Section 3.1. Duties and Number of Directors. The business and affairs
of the Corporation shall be managed by or under the direction of a Board of
Directors consisting of not less than one (1) nor more than eleven (11)
directors. The exact number shall be determined from time to time by resolution
adopted by the affirmative vote of a majority of the directors in office at the
time of adoption of such resolution.
Section 3.2. Resignation, Removal and Vacancies. Each director shall
hold office until his or her successor is elected and qualified, subject,
however, to his or her prior death, resignation, retirement or removal from
office. Any director may resign at any time upon written notice to the
Corporation directed to the Board of Directors or the Secretary of the
Corporation. Such resignation shall take effect at the time specified therein,
and unless otherwise specified therein no acceptance of such resignation shall
be necessary to make it effective. Any director or the entire Board of Directors
may be removed, either with or without cause, by the vote of the holders of at
least a majority of shares of capital stock then entitled to vote at an election
of directors. Unless otherwise provided by the Certificate of Incorporation,
vacancies and newly created directorships resulting from any increase in the
authorized number of directors may be filled by the vote of a majority of
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the directors then in office Provided that a quorum is present, and any other
vacancy occurring in the Board of Directors may be filled by a majority of the
directors then in office, even if less than a quorum, unless otherwise provided
in the Certificate of Incorporation.
Section 3.3. Interested Directors. No contract or transaction between
the Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose if (i) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board of Directors
or committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or (ii) the material facts as to
his or their relationship or interest and as to the contract or transaction are
disclosed or are known to the stockholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
stockholders; or (iii) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified by the Board of Directors,
a committee thereof or the stockholders. Common or interested directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee which authorizes the contract or transaction.
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<PAGE> 8
MEETINGS OF THE BOARD OF DIRECTORS
Section 3.4. General. The Board of Directors of the Corporation may
hold meetings, both regular and special, either within or without the State of
Delaware. Members of the Board of Directors may participate in any such meeting
by means of conference telephone or similar communications equipment through
which all persons participating in the meeting can hear each other, and
participation by such means shall constitute presence in person at such meeting.
Section 3.5. Special Meetings. Special Meetings of the Board of
Directors may be called by the Chairman of the Board of Directors or the
President either personally, or by courier, telephone, telefax, mail or
telegram. Special Meetings shall be called by the Chairman or President in like
manner and on like notice at the written request of a majority of the directors
comprising the Board of Directors stating the purpose or purposes for which such
meeting is requested.
Section 3.6. Quorum. At all meetings of the Board of Directors a
majority of the then duly elected directors shall constitute a quorum for the
transaction of business and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the Board of
Directors, except as may be otherwise specifically provided by statute or by the
Certificate of Incorporation. If a quorum shall not be present at any meeting of
the Board of Directors, the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum shall be present.
Section 3.7. Action Without a Meeting. Unless otherwise provided by
the Certificate of Incorporation, any action required or permitted to be taken
at any meeting of the Board of Directors or any committee designated by the
Board of Directors may be taken without a meeting if all
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writing, and the writing or writings are filed with the minutes of proceedings
of the Board of Directors or such committee.
Section 3.8. Chairman of the Meeting. Meetings of the Board of
Directors shall be presided over by the Chairman, if any, or in his absence by
the Vice Chairman, if any, or in his absence by the President, or in their
absence by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
COMMITTEES OF DIRECTORS
Section 3.9. General. The Board of Directors may, by resolution passed
by a majority of the entire Board of Directors, designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. In the absence or disqualification of a
member of a committee, and in the absence or a designation by the Board of
Directors of an alternate member to replace the absent or disqualified member,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he, she or they constitute a quorum, may unanimously
appoint another member of the Board of Directors to act at the meeting in the
place of any such absent or disqualified member. Any such committee, to the
extent allowed by law and provided in the resolution of the Board of Directors
establishing such committee, shall have and may exercise all the powers and
authority of the Board of Directors in the management of the business and
affairs of the Corporation.
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Section 3.10. Meeting. Each committee shall keep regular minutes of its
meetings and shall file such minutes and all written consents executed by its
members with the Secretary of the Corporation. Each committee may determine the
procedural rules for meeting and conducting its business and shall act in
accordance therewith, except as otherwise provided herein or required by law.
Adequate provision shall be made for notice to members of all meetings; a
majority of the members shall constitute a quorum unless the committee shall
consist of one or two members, in which event one member shall constitute a
quorum; and all matters shall be determined by a majority vote of the members
present. Action may be taken by any committee without a meeting if all members
thereof consent thereto in writing, and the writing or writings are filed with
the minutes of the proceedings of such committee. Members of any committee of
the Board of Directors may participate in any meeting of such committee by means
of conference telephone or similar communications equipment by means of which
all persons participating may hear each other, and participation in a meeting by
such means shall constitute presence in person at such meeting.
COMPENSATION OF DIRECTORS
Section 3.11. General. In the discretion of the Board of Directors, the
directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors and may be paid a fixed sum for attendance at each
meeting of the Board of Directors. In addition, in the discretion of the Board
of Directors, the directors may receive a stated salary for serving as directors
or any other form of compensation deemed appropriate. No such payment shall
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor. Members of
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special or standing committees may be allowed like compensation for serving on
or attending committee meetings.
ARTICLE IV
OFFICERS
Section 4.1. General. The officers of the Corporation shall be chosen
by the Board of Directors and shall be a Chief Executive Officer, a President, a
Secretary and a Treasurer. The Board of Directors, in its discretion, may also
choose a Chairman of the Board of Directors (who must be a director) and one or
more Vice Presidents, Assistant Secretaries, Assistant Treasurers and other
officers. Any number of offices may be held by the same person, unless otherwise
prohibited by law, the Certificate of Incorporation or these By-Laws. The
officers of the Corporation need not be stockholders of the Corporation nor,
except in the case of the Chairman of the Board of Directors, need such officers
be directors of the Corporation.
Section 4.2. Election. The Board of Directors shall elect the officers
of the Corporation who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board of Directors; and all officers of the Corporation shall hold
office until their successors are chosen and qualified, or until their earlier
resignation or removal. Any officer may resign at any time upon written notice
to the Corporation directed to the Board of Directors and the Secretary. Such
resignation shall take effect at the time specified therein, and unless
otherwise specified therein no acceptance of such resignation shall be necessary
to make it effective. The Board of Directors may remove any officer or agent
with or without cause at any time by the affirmative vote of a majority of the
Board of Directors. Any such
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removal shall be without prejudice to the contractual rights of such officer or
agent, if any, with the Corporation, but the election of an officer or agent
shall not of itself create any contractual rights. Any vacancy occurring in any
office of the Corporation by death, resignation, removal or otherwise may be
filled by the Board of Directors. The salaries of all officers of the
Corporation shall be fixed by the Board of Directors.
Section 4.3. Voting Securities Owned by the Corporation.
Notwithstanding anything to the contrary contained herein, powers of attorney,
proxies, waivers of notice of meeting, consents and other instruments relating
to securities owned by the Corporation may be executed in the name of and on
behalf of the Corporation by the President or any Vice President and any such
officer may, in the name of and on behalf of the Corporation, take all such
action as any such officer may deem advisable to vote in person or by proxy at
any meeting of security holders of any corporation in which the Corporation may
own securities and at any such meeting shall possess and may exercise any and
all rights and powers incident to the ownership of such securities and which, as
the owner thereof, the Corporation might have exercised and possessed if
present. The Board of Directors may, by resolution, from time to time confer
like powers upon any other person or persons.
Section 4.4. Chairman of the Board of Directors. The Chairman of the
Board of Directors, if there be one, shall preside at all meetings of the
stockholders and of the Board of Directors. In the absence or disability of the
Chief Executive Officer, the Chairman of the Board of Directors shall be the
Chief Executive Officer of the Corporation, and except where by law the
signature of the President is required, the Chairman of the Board of Directors
shall possess the same power as the President to sign all contracts,
certificates and other instruments of the Corporation which may be authorized by
the Board of Directors. During the absence or disability of the President, the
Chairman
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of the Board of Directors shall exercise all the powers and discharge all the
duties of the President. The Chairman of the Board of Directors shall also
perform such other duties and may exercise such other powers as from time to
time may be assigned to him by these By-Laws or by the Board of Directors.
Section 4.5. Chief Executive Officer. The Chief Executive Officer shall
be the principal executive officer of the Corporation. The Chief Executive
Officer, except where by law the signature of the President is required, shall
possess the same power as the President to sign all contracts, certificates and
other instruments of the Corporation which may be authorized by the Board of
Directors. During the absence or disability of the President and the Chairman of
the Board of Directors, the Chief Executive officer shall exercise all the
powers and discharge all the duties of the President. The Chief Executive
Officer shall also perform such other duties and may exercise such other powers
as from time to time may be assigned to him by these By-Laws or by the Board of
Directors.
Section 4.6. President. The President shall, subject to the control of
the Board of Directors, the Chairman of the Board of Directors, if there be one,
and the Chief Executive Officer, have general supervision of the business of the
Corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect. He shall execute all bonds, mortgages,
contracts and other instruments of the Corporation requiring a seal under the
seal of the Corporation, except where required or permitted by law to be
otherwise signed and executed and except that the other officers of the
Corporation may sign and execute documents when so authorized by these By-Laws,
the Board of Directors or the President. In the absence or disability of the
Chairman of the Board of Directors, if there be one, and the Chief Executive
Officer, the President shall preside
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at all meetings of the stockholders and the Board of Directors. If there be no
Chairman of the Board of Directors or Chief Executive Officer, the President
shall be the Chief Executive Officer of the Corporation. The President shall
also perform such other duties and may exercise such other powers as from time
to time may be assigned to him by these By-Laws or by the Board of Directors.
Section 4.7. Senior Vice Presidents and Vice Presidents. At the request
of the President or in his absence or in the event of his inability or refusal
to act (and if there be no Chairman of the Board of Directors or Chief Executive
Officer), the Senior Vice President and Vice President or the Senior Vice
Presidents and Vice Presidents if there are more than one (in the order
designated by the Board of Directors) shall perform the duties of the President,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the President. Each Senior Vice President and Vice President
shall perform such other duties and have such other powers as the Board of
Directors from time to time may prescribe. If there be no Chairman of the Board
of Directors, no Chief Executive Officer, no Senior Vice President and no Vice
President, the Board of Directors shall designate the officer of the Corporation
who, in the absence of the President or in the event of the inability or refusal
of the President to act, shall perform the duties of the President, and when so
acting, shall have all the powers of and be subject to all the restrictions upon
the President.
Section 4.8. Secretary. The Secretary shall attend all meetings of the
Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for the standing and special committees
of the Board of Directors when required. The Secretary shall give, or cause to
be given, notice of all meetings of the stockholders and Special Meetings of the
Board of Directors, and, shall perform such other duties as may be prescribed by
the Board of Directors or Chief Executive Officer, under
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<PAGE> 15
whose supervision he shall be. If the Secretary shall be unable or shall refuse
to cause to be given notice of all meetings of the stockholders and Special
Meetings of the Board of Directors, and if there be no Assistant Secretary, then
either the Board of Directors or the Chief Executive Officer may choose another
officer to cause such notice to be given. The Secretary shall have custody of
the seal of the Corporation and the Secretary or any Assistant Secretary, if
there be one, shall have authority to affix the same to any instrument requiring
it and when so affixed, it may be attested by the signature of the Secretary or
by the signature of any such Assistant Secretary. The Board of Directors may
give general authority to any other officer to affix the seal of the Corporation
and to attest the affixing by his signature. The Secretary shall see that all
books, reports, statements, certificates and other documents and records
required by law to be kept or filed are properly kept or filed, as the case may
be.
Section 4.9. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the Chief Executive Officer and the Board of
Directors, at its regular meetings, or when the Board of Directors so requires,
an account of all his transactions as Treasurer and of the financial condition
of the Corporation. If required by the Board of Directors, the Treasurer shall
give the Corporation a bond in such sum and with such surety or sureties as
shall be satisfactory to the Board of Directors for the faithful performance of
the duties of his office and for the restoration to the Corporation, in case of
his death,
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resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in his possession or under his control
belonging to the Corporation.
Section 4.10. Assistant Secretaries. Except as may be otherwise
provided in these By-Laws, Assistant Secretaries, if there be any, shall perform
such duties and have such powers as from time to time may be assigned to them by
the Board of Directors, the Chief Executive Officer, the President, any Senior
Vice President or Vice President, if there be one, or the Secretary, and in the
absence of the Secretary or in the event of his disability or refusal to act,
shall perform the duties of the Secretary, and when so acting, shall, have all
the powers of and be subject to all the restrictions upon the Secretary.
Section 4.11. Assistant Treasurers. Assistant Treasurers, if there be
any, shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the Chief Executive Officer, the
President, any Senior Vice President or Vice President, if there be one, or the
Treasurer, and in the absence of the Treasurer or in the event of his disability
or refusal to act, shall perform the duties of the Treasurer, and when so
acting, shall have all the powers of and be subject to all the restrictions upon
the Treasurer. If required by the Board of Directors, an Assistant Treasurer
shall give the Corporation a bond in such sum and with such surety or sureties
as shall be satisfactory to the Board of Directors for the faithful performance
of the duties of his office and for the restoration to the Corporation, in case
of his death, resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in his possession or
under his control belonging to the Corporation.
Section 4.12. Other Officers. Such other officers as the Board of
Directors may choose shall perform such duties and have such powers as from time
to time may be assigned to them by
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the Board of Directors. The Board of Directors may delegate to any other officer
of the Corporation the power to choose such other officers and to prescribe
their respective duties and powers.
ARTICLE V
STOCK
Section 5.1. Form of Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed, in the name of the
Corporation (i) by the Chairman of the Board of Directors, the Chief Executive
Officer, the President or a Vice President and (ii) by the Treasurer or an
Assistant Treasurer, or the Secretary or an Assistant Secretary of the
Corporation, certifying the number of shares owned by such person in the
Corporation.
Section 5.2. Signatures. Where a certificate is countersigned by (i) a
transfer agent other than the Corporation or its employee, or (ii) a registrar
other than the Corporation or its employee, any other signature on the
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
Section 5.3. Lost Certificates. The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the
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owner of such lost, stolen or destroyed certificate, or his legal
representative, to advertise the same in such manner as the Board of Directors
shall require and/or to give the Corporation a bond in such sum as it may direct
as indemnity against any claim that may be made against the Corporation with
respect to the certificate alleged to have been lost, stolen or destroyed.
Section 5.4. Transfers. Stock of the Corporation shall be transferable
in the manner prescribed by law and in these By-Laws. Transfers of stock shall
be made on the books of the Corporation only by the person named in the
certificate or by his attorney lawfully constituted in writing and upon the
surrender of the certificate therefor, which shall be canceled before a new
certificate shall be issued. Upon surrender to the Corporation or the transfer
agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person or persons entitled thereto, cancel the old certificate and record
the transaction upon its books.
ARTICLE VI
NOTICES
Section 6.1. Notices. Whenever written notice is required by law to be
given to any director, member of a committee or stockholder, such notice may be
given by mail, addressed to such director, member of a committee or stockholder
at his address as it appears on the records of the Corporation, with postage
thereon prepaid, and such notice shall be deemed to be given at the time when
the same shall be deposited in the United States mail. Written notice may also
be given personally or by telegram, telex, telecopy, facsimile or cable.
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Section 6.2. Waivers of Notice. Whenever any notice is required by law
to be given to any director, member of a committee or stockholder, a waiver
thereof in writing signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed equivalent
thereto.
ARTICLE VII
GENERAL PROVISIONS
Section 7.1. Dividends. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or Special
Meeting, and may be paid in cash, in property, or in shares of the capital stock
or rights to acquire the same. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the Board of Directors from time to time, in its absolute discretion,
deems proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
for any proper purpose, and the Board of Directors may modify or abolish any
such reserve.
Section 7.2. Disbursements. All checks or demands for money and notes
of the Corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time designate.
Section 7.3. Fiscal Year. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
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Section 7.4. Corporate Seal. The Corporation may have a corporate seal
which shall have the name of the Corporation inscribed thereon and shall be in
such form as may be approved from .time. to time by the Board of Directors. The
seal may be used by causing it or a facsimile thereof to be impressed or affixed
or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
Section 8.1. Power to Indemnify in Actions, Suits or Proceedings Other
Than Those by or in the Right of the Corporation. Subject to Section 8.3 of this
Article VIII, the Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was a director or officer of the Corporation serving
at the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
the Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in
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a manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceedings, had reasonable cause to believe that his conduct was unlawful.
Section 8.2. Power to Indemnify in Actions, Suits or Proceedings by or
in the Right of the Corporation. Subject to Section 8.3 of this Article VIII,
the Corporation shall 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
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was a director or officer of the Corporation serving
at the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Corporation; except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
Section 8.3. Authorization of Indemnification. Any indemnification
under this Article VIII (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper
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in the circumstances because he has met the applicable standard of conduct set
forth in Section 8.1 or Section 8.2 of this Article VIII, as the case may be.
Such determination shall be made (i) by the Board of Directors by a majority
vote of a quorum consisting of directors who were not parties to such action,
suit or proceeding, or (ii) if such a quorum is not obtainable, or, even if
obtainable a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or (iii) by the stockholders. To the extent,
however, that a director, officer, employee or agent of the Corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding described above, or in defense of any claim, issue or matter therein,
he shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection therewith, without the necessity of
authorization in the specific case.
Section 8.4. Good Faith Defined. For purposes of any determination
under this Article VIII, a person shall be deemed to have acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, or, with respect to any criminal action or
proceeding, to have had no reasonable cause to believe his conduct was unlawful,
if his action is based on the records or books of account of the Corporation at
another enterprise, or on information supplied to him by the officers of the
Corporation or another enterprise in the course of their duties, or on the
advice of legal counsel for the Corporation or another enterprise or on
information or records given or reports made to the Corporation or another
enterprise by an independent certified public accountant or by an appraiser or
other expert selected with reasonable care by the Corporation or another
enterprise. The term "another enterprise" as used in this Section 8.4 shall mean
any other corporation or any partnership, joint venture, trust, employee benefit
plan or other enterprise of which such person is or was serving at the request
of the Corporation as
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a director, officer, employee or agent. The provisions of this Section 8.4 shall
not be deemed to be exclusive or to limit in any way the circumstances in which
a person may be deemed to have met the applicable standard of conduct set forth
in Sections 8.1 or 8.2 of this Article VIII, as the case may be.
Section 8.5. Indemnification by a Court. Notwithstanding any contrary
determination in the specific case under Section 8.3 of this Article VIII, and
notwithstanding the absence of any determination thereunder, any director,
officer, employee or agent may apply to any court of competent jurisdiction in
the State of Delaware for indemnification to the extent otherwise permissible
under Sections 8.1 and 8.2 of this Article VIII. The basis of such
indemnification by a court shall be a determination by such court that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standards of conduct set forth
in Section 8.1 or 8.2 of this Article VIII, as the case may be. Neither a
contrary determination in the specific case under Section 8.3 of this Article
VIII nor the absence of any determination thereunder shall be a defense to such
application or create a presumption that the director, officer, employee or
agent seeking indemnification has not met any applicable standard of conduct.
Notice of any application for indemnification pursuant to this Section 8.5 shall
be given to the Corporation promptly upon the filing of such application. If
successful, in whole or in part, the director, officer, employee or agent
seeking indemnification shall also be entitled to be paid the expense of
prosecuting such application.
Section 8.6. Expenses Payable in Advance. Expenses incurred by a
director or officer in defending or investigating a threatened or pending
action, suit or proceeding shall be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
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undertaking by or on behalf of such director, officer, employee or agent to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the Corporation as authorized in this Article VIII.
Section 8.7. Nonexclusivity of Indemnification and Advancement of
Expenses. The indemnification and advancement of expenses provided by or granted
pursuant to this Article VIII shall not be deemed exclusive of any other rights
to which a person seeking indemnification or advancement of expenses may be
entitled under any By-Law, agreement, contract, vote of stockholders or
disinterested directors or pursuant to the direction (howsoever embodied) of any
court of competent jurisdiction or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, it
being the policy of the Corporation that indemnification of the persons
specified in Section 8.1 and 8.2 of this Article VIII shall be made to the
fullest extent permitted by law. The provisions of this Article VIII shall not
be deemed to preclude the indemnification of any person who is not specified in
Section 8.1 or 8.2 of this Article VIII but whom the Corporation has the power
or obligation to indemnify under the provisions of the General Corporation Law
of the State of Delaware, or otherwise.
Section 8.8. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
Corporation, or is or was a director, officer, employee or agent of the
Corporation serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power or the obligation to
indemnify him against such liability under the provisions of this Article VIII.
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Section 8.9. Certain Definitions. For purposes of this Article VIII,
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, employees or agents, so that any person who is or was a
director or officer of such constituent corporation, or is or was a director,
officer, employee or agent of such constituent corporation serving at the
request of such constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, shall stand in the same position under the
provisions of this Article VIII with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued. For purposes of this Article VIII, references
to "fines" shall include any excise taxes assessed on a person with respect to
an employee benefit plan; and references to "serving at the request of the
Corporation" shall include any service as a director, officer, employee or agent
of the Corporation which imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an employee benefit plan,
its participants or beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation" as referred to in
this Article VIII.
Section 8.10. Survival of Indemnification and Advancement of Expenses.
The indemnification and advancement of expenses provided by, or granted pursuant
to, this Article VIII
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shall continue as to a person who has ceased to be a director, officer, employee
or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Section 8.11. Limitation on Indemnification. Notwithstanding anything
contained in this Article VIII to the contrary, except for proceedings to
enforce rights to indemnification (which shall be governed by Section 8.5
hereof), the Corporation shall not be obligated to indemnify any director,
officer, employee or agent in connection with a proceeding (or part thereof)
initiated by such person unless such proceeding (or part thereof) was authorized
or consented to by the Board of Directors of the Corporation.
Section 8.12. Indemnification of Employees and Agents. The Corporation
may, to the extent authorized from time to time by the Board of Directors,
provide rights to indemnification and to the advancement of expenses to
employees and agents of the Corporation similar to those conferred in this
Article VIII to directors and officers of the Corporation.
Section 8.13. No amendment to or repeal of this Article VIII shall
apply to or have any effect on the rights of any person for or with respect to
acts or omissions of such person occurring prior to such amendment or repeal.
ARTICLE IX
AMENDMENTS
Section 9.1. These By-Laws may be altered, amended or repealed, in
whole or in part, or new By-Laws may be adopted by the stockholders or by the
Board of Directors, provided, however, that notice of such alteration,
amendment, repeal or adoption of new By-Laws be contained in the notice of such
meeting of stockholders or Board of Directors as the case may be. All such
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amendments must be approved by either the holders of a majority of the
outstanding capital stock entitled to vote thereon or by a majority of the
entire Board of Directors then in office.
Section 9.2. Entire Board of Directors. As used in this Article IX and
in these By-Laws generally, the term "entire Board of Directors" means the total
number of directors which the corporation would have if there were no vacancies.
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EXHIBIT 3.5
AMENDED AND
RESTATED
CERTIFICATE OF INCORPORATION
OF
UT AUTOMOTIVE, INC
Pursuant to Sections 242 and 245
of the General Corporation Law of the State of Delaware
----------------------------
Original Certificate of Incorporation filed
with the Secretary of State of the State
of Delaware on April 5, 1978
and the name under which the Corporation
was originally incorporated as UTA Corporation
------------------------------
FIRST: The name of the corporation is UT AUTOMOTIVE, INC. (the
"Corporation").
SECOND: The registered office or place of business of the Corporation
in the State of Delaware is located at Corporation Trust Center, 1209 Orange
Street, in the City of Wilmington, County of New Castle. The name of its
registered agent is The Corporation Trust company and the address of the said
registered agent is Corporation Trust Center, 1209 Orange Street, in the said
City of Wilmington.
THIRD: The nature of the business of, and objects or purposes to be
transacted, promoted or carried on by, the Corporation are those necessary to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of stock of all classes which the
Corporation shall have authority to issue is 131,700,000 shares, of which
5,000,000 shares shall be Preferred stock, with no par value (hereinafter called
"Preferred Stock"), 100,000,000 shares shall be Class A Common Stock of the par
value of $0.01 each (hereinafter called Class A Common Stock"), and 26,700, 000
shares shall be Class B Common Stock of the par value of $0.01 each (hereinafter
called "Class B Common Stock, and together with Class A Common Stock "Common
Stock").
<PAGE> 2
The designations and the powers, preferences and rights and the
qualifications, limitations or restrictions thereof of the shares of each class
of capital stock of the Corporation are as follows:
1. The Preferred Stock may be issued from time to time in one
or more series, the shares of each series to have such voting powers,
full or limited, and such designations, preferences and relative,
participating, optional or other special rights and qualifications,
limitations or restrictions thereof as are stated and expressed herein
or in the resolution or resolutions providing for the issue of such
series, adopted by the Board of Directors as hereinafter provided,
2. Authority is hereby expressly granted to the Board of
Directors of the Corporation, subject to the provisions of this Article
Fourth and to the limitations prescribed by law, to authorize the
issuance of one or more series of Preferred Stock and with respect to
each such series to fix by resolution or resolutions providing for the
issuance of such series the voting powers, full or limited, if any, of
the shares of such series and the designations, preferences and
relative, participating, optional or other special rights and the
qualifications, limitations or restrictions thereof. The authority of
the Board of Directors with respect to each series shall include, but
not be limited to, the determination or fixing of the following:
(a) The designation of such series.
(b) The dividend rate of such series, the conditions and
dates upon which such dividends shall be payable, the relation
which such dividends shall bear to the dividends payable on
any other class or classes of stock, and whether such
dividends shall be cumulative or non-cumulative.
(c) The extent, if any, to which the holders of the shares
of such series shall be entitled to vote with respect to the
election of directors or otherwise.
(d) Whether or not the shares of such series shall be
convertible into or exchangeable for shares of any other class
or classes or of any other series of any class or classes of
stock of the Corporation, and, if provision be made for
conversion or exchange, the times, prices, rates, adjustments,
and other terms and conditions of such conversion or exchange.
(e) Whether the shares of such series shall be subject to
redemption by the Corporation and, if made subject to such
redemption, the times, prices and other terms and conditions
of such redemption.
(f) The terms and amount of any sinking fund provided for
the purchase or redemption of the shares of such series.
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(g) The rights of the holders of the shares of such series
upon the dissolution of, or upon the distribution of assets
of, the Corporation.
(h) The restrictions, if any, on the issue or re-issue of
any additional classes of Preferred Stock.
3. Except as otherwise required by law and except for such
voting powers with respect to the election of directors or other
matters as may be stated in the resolution or resolutions of the Board
of Directors providing for the issue of any series of Preferred Stock,
the holders of any such series of Preferred Stock shall have no voting
power whatsoever. Subject to such restrictions as may be stated in the
resolution or resolutions of the Board of Directors providing for the
issue of any series of Preferred Stock, any amendment to the
Certificate of Incorporation which shall increase or decrease the
authorized stock of any class or classes may be adopted by the
affirmative vote of the holders of a majority of the outstanding shares
of the voting stock of the Corporation.
4. Class A Common Stock and Class B Common Stock shall be
identical in all respects and shall have equal powers, rights and
privileges, except as otherwise expressly provided herein. The relative
powers, preferences, rights, qualifications, limitations and
restrictions of the shares of each of the classes of Common Stock are
as follows:
(a) Cash or Property Dividends. Subject to the rights and
preferences of the Preferred Stock as set forth in any
resolution or resolutions of the Board of Directors providing
for the issuance of such stock pursuant to Section 2 of this
Article Fourth, and except as otherwise provided for herein,
the holders of Class A Common Stock and Class B Common Stock
shall be entitled to receive ratably cash or property
dividends as may from time to time be declared by the Board
out of funds legally available therefore.
(b) Stock-Dividends. If at any time a dividend is to be
paid in shares of Class B Common Stock or shares of Class A
Common Stock (a "stock dividend"), such stock dividend may be
declared and paid only as follows: Class A Common Stock may be
paid only to holders of Class A Common Stock and Class B
Common Stock may be paid only to holders of Class B Common
Stock, and whenever a stock dividend is paid, the same rate or
ratio of shares shall be paid in respect of each outstanding
share of Class A Common Stock or Class B Common Stock.
(c) Stock Subdivisions and Combinations. The Corporation
shall not subdivide, reclassify or combine stock of any class
of Common Stock without at the same time making a
proportionate subdivision or combination of the other class.
(d) Voting. Voting power shall be divided between classes
of stock as follows:
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(1) With respect to the election of directors, holders
of Class A Common Stock and holders of any series of
Preferred Stock (to the extent that holders of Preferred
Stock are entitled to vote in accordance with Section 2 (c)
of this Article Fourth and not otherwise required by law to
vote as a separate class) voting together shall be entitled
to elect that number of directors which constitutes 20% of
the authorized number of members of the Board and, if such
20% is not a whole number, then the holders of Class A
Common Stock and holders of any series of Preferred Stock
(to the extent they are entitled to vote thereon) voting
together shall be entitled to elect the nearest lower whole
number of directors that is closest to 20% of such
membership. Holders of Class B Common Stock shall be
entitled to elect the remaining directors.
(2) Holders of Class A Common Stock and holders of any
series of Preferred Stock (to the extent they are entitled
to vote thereon) shall be entitled to vote together on the
removal, with or without cause, of any director elected by
the holders of Class A Common Stock and holders of any
series of Preferred Stock (to the extent they are entitled
to vote thereon) . Holders of Class B Common Stock shall be
entitled to vote on the removal, with or without cause, of
any director elected by the holders of Class B Common
Stock.
(3) Except as specified herein, the holders of the
Class A Common Stock and the holders of the Class B Common
Stock shall be entitled to vote as separate classes only
when required by law to do so or as provided herein.
(4) Any vacancy in the office of a director created by
the death, resignation or removal of a director elected by
the holders of Class A Common Stock and holders of any
series of Preferred Stock (to the extent they are entitled
to vote thereon) may be filled by a vote of holders of
Class A Common Stock and holders of any series of Preferred
Stock (to the extent they are entitled to vote thereon)
voting together. Any vacancy in the office of a director
created by the death, resignation or removal of a director
elected by the holders of Class B Common Stock may be
filled by a vote of holders of Class B Common Stock.
Notwithstanding anything in this Section (d) to the
contrary, any vacancy in the office of a director may be
filled by the vote of the majority of the directors (or
director) elected by the same class or classes of stock
that elected that director whose death, resignation or
removal created the vacancy, or in the event that there are
no such directors, by the vote of the majority of the other
directors or by the sole remaining director, regardless, in
each instance, of any quorum requirements set out in the
Bylaws. Any director elected by some or all of the
directors or by the
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<PAGE> 5
stockholders to fill a vacancy shall serve until the next
Annual meeting of Stockholders and until his or her
successor has been elected and has qualified unless removed
and replaced pursuant to this subsection (d)(4), The Board
may increase the number of directors and any newly-created
directorship so created may be filled by the Board,
provided that the Board may be so enlarged by the Board
only to the extent that 20%, or, if such 20% is not a whole
number, then the nearest lower whole number of directors
that is closest to 20%, of such membership of the enlarged
Board consists of directors elected by the holders of Class
A Common Stock and the holders of any series of Preferred
Stock (to the extent they are entitled to vote thereon) or
by the vote of the majority of the directors (or director)
elected by the holders of Class A Common Stock and the
holders of any series of Preferred Stock (to the extent
they are entitled to vote thereon).
(5) Holders of Class A Common Stock and Class B Common
Stock shall in all matters not otherwise specified in this
Section (d) vote together, with each share of Class A
Common Stock and Class B Common Stock having one vote.
(6) Notwithstanding anything in this Section (d) to the
contrary, the holders of Class A common Stock shall have
exclusive voting power (except for voting powers, if any,
of any series of Preferred Stock) on all matters at any
time when no Class B Common stock is issued and out
standing, and the holders of Class B Common Stock shall
have exclusive voting power on all matters at any time when
no Class A Common Stock is issued and outstanding.
(e) Conversion. (1) Subject to the provisions of this
Article Fourth, each holder of record of Class B Common Stock
may at any time prior to the first 355 Transaction (as defined
in paragraph 4(e)(2) of this Article Fourth) to occur or from
time to time before the first 355 Transaction to occur, in
such holder's sole discretion and at such holder's option,
convert any whole number or all of such holder's shares of
Class B Common Stock into shares of Class A Common Stock at
the rate of one share of Class A Common Stock for each share
of Class B Common Stock surrendered for conversion. Any such
conversion may be effected by any holder of Class B Common
Stock surrendering such holder's certificate or certificates
representing the Class B Common Stock to be converted, duly
endorsed, at the office of the Corporation or any transfer
agent for the Class B Common Stock, together with a written
notice to the Corporation at such office that such holder
elects to convert all or a specified number of shares of Class
B Common Stock and stating the name or names in which such
holder desires the certificate or certificates representing
such Class A Common Stock to be issued. Promptly thereafter,
the corporation shall issue and deliver to such holder, or
such holder's nominee or nominees, a certificate
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<PAGE> 6
or certificates representing the number of shares of Class A
Common Stock to which such holder shall be entitled as
aforesaid. Such conversion shall be deemed to have been made
at the close of business at the date of such surrender and the
person or persons entitled to receive the Class A Common Stock
issuable on such conversion shall be treated for all purposes
as the record holder or holders of such Class A Common Stock
as of the close of business on that date.
(2) Any shares of Class B Common Stock sold,
transferred or otherwise disposed of by United
Technologies Corporation ("UTC") or any subsidiary
that is directly or indirectly wholly-owned by UTC (a
"Permitted Transferee") shall automatically convert
to shares of Class A Common Stock on a share for
share basis upon such disposition, except (i) for a
disposition to UTC or a Permitted Transferee; and
(ii) for any distribution to the shareholders of UTC
as part of a transaction intended to qualify as a tax
free transaction under section 355 of the Internal
Revenue Code, as such section may be amended or
modified from time to time (a "355 Transaction"). In
addition, if any Person other than UTC acquires any
shares of Class B Common Stock and such shares are
not converted as a result of subparagraph 4(e)(2)(i),
any such shares owned by such Person shall
automatically convert to shares of Class A Common
Stock on a share for share basis at such time, if
any, that such Person ceases to be a Permitted
Transferee.
(3) Except as described in paragraph 4(e)(4) and
4(e)(5) of this Article Fourth, and notwithstanding
any other provision of this Article Fourth, in the
event of a 355 Transaction, shares of Class B Common
Stock shall not be convertible into shares of Class A
Common Stock for a period of five years commencing on
the effective date of such 355 Transaction. Upon the
expiration of the aforementioned five year period,
all shares of Class B Common Stock shall
automatically convert on a share for share basis to
shares of Class A Common Stock.
(4) From and after the distribution of shares of
Class B Common Stock to the shareholders of UTC as a
part of a 355 Transaction:
(a) all Excess Shares, as defined herein, of Class B
Common Stock acquired by any Person, as defined herein, shall
automatically convert to shares of Class A Common Stock on a
share for share basis immediately upon such acquisition. For
the purposes of this section, a "Person" shall be any natural
person or persons, corporation, partnership, government, or
any political subdivision, agency or instrumentality of a
government, or other entity, except for a Permitted
Transferee. For the purposes of this section, an acquisition
of shares of Class B Common Stock hereunder shall be deemed to
include any such shares that a Person acquires, directly
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<PAGE> 7
or indirectly, in one transaction or in a series of
transactions, or with respect to which the Person has acquired
a beneficial interest.
(b) The number of shares of Class B Common Stock
deemed hereunder to be Excess Shares of Class B Common Stock
shall be determined by application of the following formula:
(i) the percentage which the number of shares of
Class B Common Stock acquired by the Person after the
first 355 Transaction (disregarding any shares of
Class B Common Stock received by such Person as part
of a 355 Transaction) to occur bears to the aggregate
number of outstanding shares of Class B Common Stock
at the time of such acquisition;
(ii) minus 15%;
(iii) minus the percentage which the number of shares
of Class A Common Stock acquired by that Person after
the first 355 Transaction to occur bears to the
aggregate number of outstanding shares of Class A
Common Stock at the time of such acquisition;
(iv) times the aggregate number of outstanding shares
of Class B Common Stock.
For purposes of this determination, any shares of Class A
Common Stock or of Class B Common Stock repurchased by the Corporation since the
last date on which a Person acquired any shares of Class A Common Stock or of
Class B Common Stock (whether in treasury or retired) shall be deemed still to
be outstanding.
(c) An acquisition of shares of Class B Common Stock
shall not include for the purposes of this subsection (4) an
acquisition upon issuance or sale by the Corporation, by
operation of law, by will or the laws of descent and
distribution, by gift, by foreclosure of a bona fide loan or
upon a purchase from the foreclosing pledgee.
(d) Unless there are affirmative attributes of
beneficial ownership, acting or agreeing to act in concert
with any other Person shall not include for purposes of this
subsection (4) actions taken or agreed to be taken by Persons
acting in their official capacities as directors or officers
of the Corporation or actions by Persons merely because they
are related by blood or marriage.
(5) Notwithstanding any other provision of this
Certificate of Incorporation, all shares of Class B
Common Stock shall convert automatically into shares
of Class A Common Stock on a share for share
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<PAGE> 8
basis if the number of issued and outstanding shares
of Class B Common Stock is ever below 25% of the
aggregate number of issued and outstanding shares of
Class A Common Stock as of the date of the initial
public issuance of the Class A Common Stock, and
issued and outstanding shares of Class B Common
Stock,
(6) Authorized but unissued shares of Class
A Common Stock, to the extent that such stock may be
necessary to meet any exercise of the conversion
privilege or automatic conversion of issued and
outstanding Class B Common Stock, shall be held by
the Corporation, without the necessity of a
declaration by the Board of Directors, in reserve, to
be issued in satisfaction of the conversion privilege
of the issued and outstanding Class B Common Stock.
No Class E Common Stock may be issued unless the
authorized but unissued and unreserved shares of
Class A Common Stock are sufficient to satisfy the
conversion privilege which will exist with respect to
such Class B Common Stock when issued and
outstanding.
(f) Liquidation. In the event of any liquidation,
dissolution or winding up of the Corporation, the holders of
the Class A Common Stock and the holders of Class B Common
Stock shall participate equally per share in any distribution
to stockholders, without distinction between classes.
5. No holder of stock of any class of stock of the Corporation
shall as such holder have under this Certificate of Incorporation any
preemptive or preferential right of subscription to any stock of any
class of stock of the Corporation or to any obligations convertible
into stock of the Corporation, issued or sold, or to any right of
subscription to, or to any warrant or option for the purchase of any
thereof.
6. Except as otherwise stated in this Certificate of
Incorporation, the Corporation may from time to time issue and dispose
of any of the authorized and unissued shares of Common Stock or of
Preferred Stock for such consideration, not less than its par value, as
may be fixed from time to time by the Board of Directors, without
action by the stockholders. The Board of Directors may provide for
payment therefor to be received by the Corporation in cash, property or
services. Any and all such shares of the Preferred or Common Stock of
the Corporation the issuance of which has been so authorized, and for
which consideration so fixed by the Board of Directors has been paid or
delivered, shall be deemed full paid stock and shall not be liable to
any further call or assessment thereon.
FIFTH: The minimum amount of capital with which the
Corporation will commence business is One Thousand Dollars.
SIXTH: The Corporation is to have perpetual existence.
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<PAGE> 9
SEVENTH: The private property of the stockholders shall not be
subject to the payment of corporate debts.
EIGHTH: Subject to the provisions of the laws of the state of
Delaware, the following provisions are adopted for the management of the
business and for the conduct of the affairs of the Corporation, and for
defining, limiting and regulating the powers of the Corporation, the directors
and the stockholders:
(a) The books of the Corporation may be kept outside
the State of Delaware at such place or places as may, from
time to time, be designated by the Board of Directors.
(b) The business of the Corporation shall be managed
by its Board of Directors; and the Board of Directors shall
have power to exercise all the powers of the Corporation,
including (but without limiting the generality hereof) the
power to create mortgages upon the whole or any part of the
property of the Corporation, real or personal, without any
action of or by the stockholders, except as otherwise provided
by statute or by the Bylaws.
(c) Subject to the provisions of Article Fourth of
this Certificate of Incorporation, the number of the directors
shall be fixed by the Bylaws, subject to alteration, from time
to time, by amendment of the Bylaws either by the, Board of
Directors or the stockholders. Subject to the provisions of
Article Fourth of this Certificate of Incorporation, an
increase in the number of directors shall be deemed to create
vacancies in the Board, to be filled in the manner provided in
this Certificate of Incorporation. Subject to the provisions
of Article Fourth of this Certificate of Incorporation, any
director or any officer elected or appointed by the
stockholders or by the Board of Directors may be removed at
any time, in such manner as shall be provided in this
Certificate of Incorporation. Directors of the Corporation
need not be elected by written ballot, unless otherwise
required by the Bylaws of the Corporation.
(d) The Board of Directors shall have power to make
and alter Bylaws, subject to such restrictions upon the
exercise of such power as may be imposed by this Certificate
of Incorporation.
(e) The Board of Directors shall have power, in its
discretion, to fix, determine and vary, from time to time, the
amount to be retained as surplus and the amount or amounts to
be set apart out of any of the funds of the Corporation
available for dividends as working capital or a reserve or
reserves for any proper purpose, and to abolish any such
reserve in the manner in which it was created.
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<PAGE> 10
(f) The Board of Directors shall have power, in its
discretion, from time to time, to determine whether and to
what extent and at what times and places and under what
conditions and regulations the books and accounts of the
corporation, or any of them, other than the stock ledger,
shall be open to the inspection of stockholders; and no
stockholder shall have any right to inspect any account or
book or document of the Corporation, except as conferred by
law or authorized by resolution of the directors or of the
stockholders.
(g) Subject to the provisions of law, in case the
Corporation shall enter into any contract or transact any
business with one or more of its directors, or with any firm
of which any director is a member, or with any corporation or
association of which any director is a stockholder, director
or officer, such contract or transaction shall not be
invalidated or in any way affected by the fact that such
director has or may have an interest therein which is or might
be adverse to the interests of the Corporation, even though
the vote of such director might have been necessary to
obligate the Corporation upon such contract or transaction;
provided, that the fact of such interest shall have been
disclosed to the other directors or the stockholders of the
Corporation, as the case may be, acting upon or with reference
to such contract or transaction.
(h) Whenever a compromise or arrangement is proposed
between this Corporation and its creditors or any class of
them and/or between this Corporation and its stockholders or
any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way
of this Corporation or of any creditor or stockholder thereof
or on the application of any receiver or receivers appointed
for this Corporation under the provisions of Section 291 of
Title 8 of the Delaware General Corporation Law (the "DGCL")
or on the application of trustees in dissolution or of any
receiver or receivers appointed for this corporation under the
provisions of Section 279 of Title 8 of the DGCL order a
meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as
the case may be, to be summoned in such manner as the said
court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this Corporation as a
consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall,
if sanctioned by the court to which the said application has
been made, be binding on all the creditors or class of
creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and
also on this Corporation.
(i) The Corporation shall not be governed by Section
203 of the DGCL (section 203"), and the restrictions contained
in Section 203 shall not apply to the Corporation, until such
time, if ever, as both of the following conditions exist: (a)
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<PAGE> 11
Section 203 by its terms would, but for the provisions of this
paragraph, apply to the Corporation; and (b) there exists no
person that is the owner of more than 25% of the outstanding
voting stock of the corporation. Once the Corporation shall
become governed by Section 203 pursuant to the preceding
sentence the Corporation shall be governed by Section 203 for
so long as Section 203 by its terms shall apply to the
Corporation, regardless of whether any person shall thereafter
become the owner of more than 25% of the outstanding voting
stock of the corporation. For purposes of this paragraph, the
terms "person", "owners" and "voting stock" shall have the
meanings ascribed to them in Section 203, as Section 203 may
be amended from time to time.
(j) The Corporation reserves the right to amend,
alter, change, add to or repeal any provision contained in
this Certificate of Incorporation in the manner now or
hereafter prescribed by statute; and all rights herein
conferred are granted subject to this reservation.
NINTH: 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 DGCL for payment of
unlawful dividends or unlawful stock repurchases or redemption, or (iv) for any
transaction from which the director derived an improper personal benefit.
IN WITNESS WHEREOF, this Restated Certificate of Incorporation has been
duly adopted in accordance with the provisions of Sections 242 and 245 of the
DGCL and by the unanimous written consent of the sole shareholder in accordance
with Section 228 of the DGCL and has been signed this 19th day of April 1994 by
Evelyn Simon, its Vice President and General Counsel and attested to by William
0. Ross, its Assistant Secretary.
By: /s/ Evelyn Simon
---------------------------------------
Evelyn Simon
Vice President and General Counsel
By: /s/ William D. Ross
---------------------------------------
William D. Ross
Assistant Secretary
11
<PAGE> 12
CERTIFICATE OF AMENDMENT OF AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
UT Automotive, Inc., a corporation organized and existing under and by
virtue of the General corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
FIRST: That the Board of Directors or UT Automotive, Inc., by the
unanimous written consent of its members, filed with the minutes of the board,
duly adopted resolutions setting forth a proposed amendment to the Amended and
Restated Certificate of Incorporation of said corporation, declaring said
amendment to be advisable and calling a meeting of the shareholders of said
corporation for consideration thereof. The resolution setting forth the proposed
amendment is as follows:
RESOLVED, That the Amended and Restated Certificate of Incorporation of
this corporation be amended by changing the Fourth Article thereof so that, as
amended said Article shall be and read as follows:
"FOURTH: The total number of shares of stock which the
corporation shall have authority to issue in two hundred (200)
and the par value of each of such shares is Ten Dollars
($10.00) amounting in the aggregate to Two Thousand Dollars
($2,000.00)."
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, a special meeting of the shareholders of said corporation was duly
called and upon written waiver of notice signed by all shareholders in
accordance with Section 222 of the General Corporation Law of the State of
Delaware at which meeting the necessary number of shares as required by statute
were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said UT Automotive, Inc. has caused this
certificate to be signed by Norma Bodine, its President and Chief Executive
Officer this 31st day of October, 1995.
/s/ Norman R. Bodine
------------------------------
Norman R. Bodine
President and Chief Executive Officer
<PAGE> 13
CERTIFICATE OF AMENDMENT
OR
CERTIFICATE OF INCORPORATION
UT Automotive, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, by the
unanimous written consent of its members, filed with the minutes of the Board
adopted a resolution proposing and declaring advisable the following amendment
to the Certificate of Incorporation of said corporation:
RESOLVED, that the First Article to the Certificate of incorporation of
UT Automotive Inc. be deleted and replaced in its entirety with the
following:
FIRST: The name of the corporation is Lear Corporation Automotive
Holdings
SECOND: That in lieu of a meeting and vote of stockholders, the
stockholders have given unanimous written consent to said amendment in
accordance with the provisions of Section 228 of the General Corporation Law of
the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of Sections 242 and 228 of the General Corporation Law
of the State of Delaware.
IN WITNESS WHEREOF, said UT Automotive Inc. has caused this certificate to
be signed by Lawrence V. Mowell, its Vice President this 4th day of May, 1999.
UT Automotive, Inc.
By:________________________________
Vice President
<PAGE> 1
EXHIBIT 3.6
LEAR CORPORATION AUTOMOTIVE HOLDINGS
BY LAWS
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places
both within and without the State of Delaware as the board of
directors may from time to time determine or the business of
the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of
directors shall be held in the City of Hartford, State of
Connecticut, at such place as may be fixed from time to time
by the board of directors, or at such other place either
within, or without the State of Delaware as shall be
designated from time to time by the board of directors and
stated in the notice of the meeting. Meetings of stockholders
for any other purpose may be held at such time and place,
within or without the State of Delaware, as shall be stated in
the notice of the meeting or in a duly executed waiver of
notice thereof.
Section 2. Annual meetings of stockholders, commencing with the year
1978, shall be held on the second Tuesday of April if not a
legal holiday, and if a legal holiday, then on the next
secular day following, at 10:30 a.m., or at such other date
and time as shall be designated from time to time by the board
of directors and stated in the notice of the meeting, at which
they shall elect by a plurality vote a board of directors, and
transact such other business as may properly be brought before
the meeting.
Section 3. Written notice of the annual meeting stating the place,
date and hour of the meeting shall be given to each
stockholder entitled to vote at such meeting not less than
ten, nor more than sixty, days before the date of the meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before
every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination
of any
<PAGE> 2
stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days
prior to the meeting, either at a place within the city where
the meeting is to be held, which place shall be specified in
the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during
the whole time thereof, and may be inspected by any
stockholder who is present.
Section 5. Special meetings of the stockholder, for any purpose or
purposes, unless otherwise prescribed by statute or by the
certificate of incorporation, may be called by the president
and shall be called by the president or secretary at the
request in writing of a majority of the board of directors, or
at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued
and outstanding and entitled to vote. Such request shall state
the purpose or purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the place, date
and hour of the meeting and the purpose or purposes for which
the meeting is called, shall be given not less than ten, nor
more than sixty, days before the date of the meeting, to each
stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented
by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business except as
otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present
or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the meeting
from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented.
At such adjourned meeting at which a quorum shall be present
or represented any business may be transacted which might have
been transacted at the meeting as originally notified. If the
adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present
in person or represented by proxy shall decide any question
brought before such meeting, unless the question is one upon
which by express provision of the statutes or of the
certificate of incorporation, a different vote is required in
which case such express provision shall govern and control the
decision of such question.
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<PAGE> 3
Section 10. Unless otherwise provided in the certificate of
incorporation each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for
each share of the capital stock having voting power held by
such stockholder, but no proxy shall be voted on after three
years from its date, unless the proxy provides for a longer
period.
Section 11. Unless otherwise provided in the certificate of incorporation,
any action required to be taken at any annual or special
meeting of stockholders of the corporation, or any action
which may be taken at any annual or special meeting of such
stockholders may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting
forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of the
corporate action without a meeting by less then unanimous
written consent shall be given to those stockholders who have
not consented in writing.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole
board shall be fixed from time to time by the board of
directors or by the stockholder but shall not be less than
four (4). The directors shall be elected at the annual meeting
of the stockholders, except as provided in Section 2 of the
Article, and each director elected shall hold office until his
successor is elected and qualified. Directors need not be
stockholders.
Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less
than a quorum, or by a sole remaining director, and the
directors so chosen shall hold office until the next annual
election and until their successors are duly elected and shall
qualify, unless sooner displaced. If there are no directors in
office, then an election of directors may be held in the
manner provided by statute. If, at the time of filling any
vacancy or any newly created directorship, the directors then
in office shall constitute less than a majority of the whole
board (as constituted immediately prior to any such increase),
the Court of Chancery, may, upon application of any
stockholder or stockholders holding at least ten percent of
the total number of the shares at the time outstanding having
the fight to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly
created directorships, or to replace the directors chosen by
the directors then in office.
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<PAGE> 4
Section 3. The business of the corporation shall be managed by or under
the direction of its board of directors which may exercise all
such powers of the corporation and do all such lawful acts and
things as are not by statute or by the certificate of
incorporation or by these bylaws directed or required to be
exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold meetings
both regular and special, either within or without the State
of Delaware.
Section 5. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by the
vote of the stockholders at the annual meeting and no notice
of such meeting shall be necessary to the newly elected
directors in order legally to constitute the meeting, provided
a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of
the newly elected board of directors, or in the event such
meeting is not held at the time and place so fixed by the
stockholders, the meeting may be held at such time and place
as shall be specified in a notice given as hereinafter
provided for special meetings of the board of directors, or as
shall be specified in a written waiver signed by all of the
directors.
Section 6. Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to
time be determined by the board.
Section 7. Special meetings of the board may be called by the president
on one day's notice to each director, either personally or by
mail or by telegram; special meetings shall be called by the
president or secretary in like manner and on like notice on
the written request of two directors unless the board consists
of only one director; in which case special meetings shall be
called by the president or secretary in like manner and on
like notice on the written request of the sole director.
Section 8. At all meetings of the board a majority of the directors shall
constitute a quorum for the transaction of business and the
act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the board of
directors, except as may be otherwise specifically provided by
statute or by the certificate of incorporation. If a quorum
shall not be present at any meeting of the board of directors,
the directors present thereat may adjourn the meeting from
time to time, without notice other than announcement at the
meeting until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of
incorporation or these bylaws, any action required or
permitted to be taken at any meeting of the board of directors
or of any committee thereof may be taken without a meeting, if
all members of the
4
<PAGE> 5
board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
Section 10. Unless otherwise restricted by the certificate of
incorporation or these bylaws, members of the board of
directors, or any committee designated by the board of
directors, may participate in a meeting of the board of
directors, or any committee, by means of conference telephone
or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and
such participation in a meeting shall constitute presence in
person at the meeting.
COMMITTEES OF DIRECTORS
Section 11. The board of directors may, by resolution passed by a
majority of the whole board, designate one or more committees,
each committee to consist of one or more of the directors of
the corporation. The board may designate one or more directors
as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee.
Any such committee, to the extent provided in the resolution
of the board of directors, shall have and may exercise all of
the powers and authority of the board of directors in the
management of the business and affairs of the corporation, and
may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have
the power or authority in reference to amending the
certificate of incorporation, adopting an agreement of merger
or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the
stockholders a dissolution of the corporation or a revocation
of a dissolution, or amending the bylaws of the corporation;
and, unless the resolution or the certificate of incorporation
expressly so provide, no such committee shall have the power
or authority to declare a dividend or to authorize the
issuance of stock. Such committee or committees shall have
such name or names as may be determined from time to time by
resolution adopted by the board of directors.
Section 12. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate of
incorporation or these bylaws, the board of directors shall
have the authority to fix the compensation of directors. The
directors may be paid their expenses, if any, of attendance at
each meeting of the board of directors and may be paid a fixed
sum for attendance at each meeting of the
5
<PAGE> 6
board of directors or a stated salary as director. No such
payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be
allowed like compensation for attending committee meetings.
REMOVAL OF DIRECTORS
Section 14. Unless otherwise restricted by the certificate of
incorporation or by law, any director or the entire board of
directors may be removed, with or without cause, by the
holders of a majority of shares entitled to vote at an
election of directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these bylaws, notice is
required to be given to any director or stockholder, it shall
not be construed to mean personal notice, but such notice may
be given in writing, by mail, addressed to such director or
stockholder, at his address as it appears on the records of
the corporation, with postage thereon prepaid, and such notice
shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Notice to directors may
also be given by telegram.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of
incorporation or of these bylaws, a waiver thereof in writing,
signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be
deemed equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board
of directors and shall be a president, a vice-president, a
secretary and a treasurer. The board of directors may also
choose additional vice-presidents, and one or more assistant
secretaries and assistant treasurers. Any number of offices
may be held by the same persons unless the certificate of
incorporation or these bylaws otherwise provide.
Section 2. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a president, one or more
vice-presidents, a secretary and a treasurer.
6
<PAGE> 7
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices
for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the board.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected
or appointed by the board of directors may be removed at any
time by the affirmative vote of a majority of the board of
directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the stockholders
and the board of directors, shall have general and active
management of the business of the corporation and shall see
that all orders and resolutions of the board of directors are
carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except
where required or permitted by law to be otherwise signed and
executed and except where the signing and execution thereof
shall be expressly delegated by the board of directors to some
other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 8. In the absence of the president or in the event of his
inability or refusal to act, the vice-president (or in the
event there be more than one vice-president, the vice
presidents in the order designated by the directors or in the
absence of any designation, then in the order of their
election) shall perform the duties of the president, and when
so acting, shall have all the powers of and be subject to all
the restrictions upon the president. The vice-presidents shall
perform such other duties and have such other powers as the
board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all
the proceedings of the meetings of the corporation and of the
board of directors in a book to be kept for that purpose and
shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the board
7
<PAGE> 8
of directors and shall perform such other duties as may be
prescribed by the board of directors or president, under whose
supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant
secretary, shall have authority to affix the same to any
instrument requiring it and when so affixed, it may be
attested by his signature or by the signature of such
assistant secretary. The board of directors may give general
authority to any other officer to affix the seal of the
corporation and to attest the affixing by his signature.
Section 10. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of
directors (or if there be no such determination, then in the
order of their election) shall, in the absence of the
secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary
and shall perform such other duties and have such other powers
as the board of directors may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have custody of the corporate funds and
securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the
corporation and shall deposit all moneys and other valuable
effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of
directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for
such disbursements, and shall render to the president and the
board of directors, at its regular meetings, or when the board
of directors so requires, an account of all his transactions
as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) in
such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful
performance of the duties of his office and for the
restoration to the corporation, in case of his death,
resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in
his possession or under his control belonging to the
corporation.
Section 14. The assistant treasurer, or if there shall be more than one,
the assistant treasurers in the order determined by the board
of directors (or if there be no such determination, then in
the order of their election), shall, in the absence of the
treasurer or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the treasurer
and shall perform such other duties and have such other powers
as the board of directors may from time to time prescribe.
8
<PAGE> 9
ARTICLE VI
CERTIFICATE OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled to
have a certificate, signed by, or in the name of the
corporation by, the chairman or vice-chairman of the board of
directors, or the president or a vice-president and the
treasurer or an assistant treasurer, or the secretary or an
assistant secretary of the corporation, certifying the number
of shares owned by him in the corporation.
Section 2. Any of or all the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued,
it may be issued by the corporation with the same effect as if
he were such officer, transfer agent or registrar at the date
of issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to
have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate
of stock to be lost, stolen or destroyed. When authorizing
such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent
to the issuance thereof, require the owner of such lost,
stolen or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it
shall require and/or to give the corporation a bond in such
sum as it may direct as indemnity against any claim that may
be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of
the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or
authority to transfer, it shall be the duty of the corporation
to issue a new certificate to the person entitled thereto,
cancel the old certificate and record the transaction upon its
books.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof or to express consent
to corporate action in writing without a meeting, or entitled
to receive
9
<PAGE> 10
payment of any dividend or other distribution or allotment of
any rights, or entitled to exercise any rights in respect of
any change, conversion or exchange of stock or for the purpose
of any other lawful action, the board of directors may fix, in
advance, a record date, which shall not be more than sixty nor
less than ten days before the date of such meeting, nor more
than sixty days prior to any other action. A determination of
stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the
meeting: provided, however, that the board of directors may
fix a new record date for the adjourned meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such
owner, and to hold liable for calls and assessments a person
registered on its books as the owner of shares, and shall not
be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice
thereof, except as otherwise provided by the laws of Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject
to the provisions of the certificate of incorporation, if any,
may be declared by the board of directors at any regular or
special meeting, pursuant to law. Dividends may be paid in
cash, in property, or in shares of the capital stocks subject
to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum
or sums as the directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing
or maintaining any property of the corporation, or for such
other purpose as the directors shall think conducive to the
interest of the corporation, and the directors may modify or
abolish any such reserve in the manner in which it was
created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual meeting,
and at any special meeting of the stockholders when called for
by vote of the stockholders, a full and clear statement of the
business and condition of the corporation.
10
<PAGE> 11
CHECKS
Section 4. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other
person or persons as the board of directors may from time to
time dissipate.
FISCAL YEAR
Section 5. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 6. The corporate seal shall have inscribed thereon the name of
the corporation, the year of its organization and the words
"Corporate Seal, Delaware". The seal may be used by causing it
or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
INDEMNIFICATION OF OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS AND FIDUCIARIES; INSURANCE
Section 7. (a) The corporation may indemnify, in accordance with and
to the full extent permitted by the laws of the State
of Delaware as in effect at the time of the adoption
of this Section 7 or as such laws may be amended from
time to time, and shall so indemnify to the full
extent permitted by such laws, any person (and the
heirs and legal representatives of any such person)
made or threatened to be made a party to any
threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative,
or investigative, by reason of the fact that such
person is or was a director, officer, employee, agent
or fiduciary of the corporation, any subsidiary of
the corporation or any constituent corporation
absorbed in a consolidation or merger, or serves as
such with another corporation, or with a partnership,
joint venture, trust or other enterprise at the
request of the corporation, any subsidiary of the
corporation or any such constituent corporation. The
corporation shall be required to indemnify a person
in connection with a proceeding (or part thereof)
initiated by such person only if the proceeding (or
part thereof) was authorized by the board of
directors of the corporation.
(b) By action of the board of directors notwithstanding
any interest of the directors in such action, the
corporation may purchase and maintain insurance in
such amounts as the board of directors deems
appropriate on behalf of any person who is or was a
director, officer, employee, agent or fiduciary of
the corporation, or is or was serving at the request
of the corporation as a director, officer, employee,
agent or fiduciary of another
11
<PAGE> 12
corporation, partnership, joint venture, trust or
other enterprise against any liability asserted
against him and incurred by him in any such capacity,
or arising out of his status as such, whether or not
the corporation shall have the power to indemnify him
against such liability under the provisions of this
section.
ARTICLE VIII
AMENDMENTS
Section 1. These bylaws may be altered, amended or repealed or new bylaws
may be adopted by the stockholders or by the board of
directors, when such power is conferred upon the board of
directors by the certificate of incorporation at any regular
meeting of the stockholders or of the board of directors or at
any special meeting of the stockholders or of the board of
directors if notice of such alteration, amendment, repeal or
adoption of new bylaws be contained in the notice of such
special meeting. If the power to adopt, amend or repeal bylaws
is conferred upon the board of directors by the certificate of
incorporation it shall not divest or limit the power of the
stockholders to adopt, amend or repeal bylaws.
12
<PAGE> 1
EXHIBIT 5.1
[WINSTON & STRAWN LETTERHEAD]
June 22, 1999
Lear Corporation
Lear Operations Corporation
Lear Corporation Automotive Holdings
21557 Telegraph Road
Southfield, MI 48086-5008
Re: Registration Statement on Form S-4
of Lear Corporation and the
Guarantors (as defined below)
Ladies and Gentlemen:
We have acted as special counsel to Lear Corporation, a Delaware
corporation (the "Company"), Lear Operations Corporation ("LOC") and Lear
Corporation Automotive Holdings ("LCAH," and together with LOC, the
"Guarantors") in connection with the preparation of the Registration Statement
on Form S-4 (the "Registration Statement") filed on behalf of the Company and
the Guarantors with the Securities and Exchange Commission (the "Commission")
relating to the Company's offer to exchange $600,000,000 aggregate principal
amount of its 7.96% Series B Senior Notes due 2005 and $800,000,000 aggregate
principal amount of its 8.11% Series B Senior Notes due 2009, respectively,
which have been registered under the Securities Act of 1933, as amended (the
"Securities Act") (collectively, the "Exchange Notes"), and the Guarantees
thereof by the Guarantors, for its original unregistered 7.96% Senior Notes due
2005 and 8.11% Senior Notes due 2009, respectively, which were issued and sold
in a transaction exempt from registration under the Securities Act
(collectively, the "Original Notes"), all as more fully described in the
Registration Statement. The New Notes will be issued under that certain
Indenture dated as of May 15, 1999 (the "Indenture") among the Company, the
Guarantors and The Bank of New York, as trustee. Capitalized terms used herein
and not otherwise defined shall have the meanings assigned to such terms in the
prospectus (the "Prospectus") contained in the Registration Statement.
This opinion letter is delivered in accordance with the requirements of
Item 601(b)(5) of Regulation S-K under the Securities Act.
In connection with this opinion letter, we have examined and are familiar
with originals or copies, certified or otherwise identified to our satisfaction,
of (i) the Registration Statement, in the form filed with the Commission and as
amended through the date hereof; (ii) the Certificates of Incorporation of the
Company and each of the Guarantors, as currently in effect; (iii) the By-laws of
the Company and each of the Guarantors, as currently in effect; (iv) the
Indenture; (v) the form of the Exchange Notes; and (vi) resolutions of the
Boards of Directors of the Company and each of the Guarantors relating to, among
other things, the issuance and exchange of the Exchange Notes for the Original
Notes, the issuance of the Guarantees and the filing of the Registration
Statement. We also have examined such other documents as we have deemed
necessary or appropriate as a basis for the opinions set forth below.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies, and the
authenticity of the originals of such latter documents. As to certain facts
material to this opinion letter, we have relied
<PAGE> 2
June 22, 1999
Page 2
without independent verification upon oral or written statements and
representations of officers and other representatives of the Company, the
Guarantors and others.
Based upon and subject to the foregoing, we are of the opinion that:
1. The issuance and exchange of the Exchange Notes for the Original
Notes and the issuance of the Guarantees have been duly authorized by
requisite corporate action on the part of the Company and the Guarantors,
respectively.
2. The Exchange Notes and the Guarantees will be valid and binding
obligations of the Company and the Guarantors, respectively, entitled to
the benefits of the Indenture and enforceable against the Company and the
Guarantors, respectively, in accordance with their terms, except to the
extent that the enforceability thereof may be limited by (x) bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (y) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity) when (i)
the Registration Statement, as finally amended (including all necessary
post-effective amendments), shall have become effective under the
Securities Act; (ii) the Exchange Notes are duly executed and authenticated
in accordance with the provisions of the Indenture; and (iii) the Exchange
Notes shall have been issued and delivered in exchange for the Original
Notes pursuant to the terms set forth in the Prospectus.
The foregoing opinions are limited to the laws of the United States, the
State of New York and the General Corporation Law of the State of Delaware. We
express no opinion as to the application of the securities or blue sky laws of
the various states to the issuance or exchange of the Exchange Notes.
We hereby consent to the reference to our firm under the heading "Legal
Matters" in the Prospectus and to the filing of this opinion letter with the
Commission as an exhibit to the Registration Statement. In giving such consent,
we do not concede that we are experts within the meaning of the Securities Act
or the rules and regulations thereunder or that this consent is required by
Section 7 of the Securities Act.
Very truly yours,
/s/ Winston & Strawn
<PAGE> 1
EXHIBIT 11.1
COMPUTATION OF NET INCOME PER SHARE
(In millions, except share information)
<TABLE>
<CAPTION>
For the Year Ended For the Year Ended For the Year Ended
December 31, 1998 December 31, 1997 December 31, 1996
--------------------------- --------------------------- ---------------------------
Basic Diluted Basic Diluted Basic Diluted
------------- ------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Income before
extraordinary items $ 115.5 $ 115.5 $ 208.2 $ 208.2 $ 151.9 $ 151.9
Extraordinary items - - (1.0) (1.0) - -
------------- ------------- ------------- ------------- ------------- ------------
Net income $ 115.5 $ 115.5 $ 207.2 $ 207.2 $ 151.9 $ 151.9
============= ============= ============= ============= ============= ============
Weighted Average Shares:
Common shares outstanding 66,947,135 66,947,135 66,304,770 66,304,770 60,485,696 60,485,696
Exercise of stock options (1) - 1,076,240 - 1,943,313 - 3,275,938
Exercise of warrants (2) - - - - - -
------------- ------------- ------------- ------------- ------------- ------------
Common and equivalent shares
outstanding 66,947,135 68,023,375 66,304,770 68,248,083 60,485,696 63,761,634
============= ============= ============= ============= ============= ============
Per Common and Equivalent Share:
Income before
extraordinary items $ 1.73 $ 1.70 $ 3.14 $ 3.05 $ 2.51 $ 2.38
Extraordinary items - - (0.01) (0.01) - -
------------- ------------- ------------- ------------- ------------- ------------
Net income per share $ 1.73 $ 1.70 $ 3.13 $ 3.04 $ 2.51 $ 2.38
============= ============= ============= ============= ============= ============
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended For the Year Ended
December 31, 1995 December 31, 1994
-------------------------- ---------------------------
Basic Diluted Basic Diluted
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Income before
extraordinary items $ 94.2 $ 94.2 $ 59.8 $ 59.8
Extraordinary items (2.6) (2.6) - -
------------ ------------ ------------ -------------
Net income $ 91.6 $ 91.6 $ 59.8 $ 59.8
============ ============ ============ =============
Weighted Average Shares:
Common shares outstanding 48,944,181 48,944,181 42,602,167 42,602,167
Exercise of stock options (1) - 3,544,757 - 3,321,954
Exercise of warrants (2) - - - 1,514,356
------------ ------------ ------------ -------------
Common and equivalent shares
outstanding 48,944,181 52,488,938 42,602,167 47,438,477
============ ============ ============ =============
Per Common and Equivalent Share:
Income before
extraordinary items $ 1.92 $ 1.79 $ 1.40 $ 1.26
Extraordinary items (0.05) (0.05) - -
------------ ------------ ------------ -------------
Net income per share $ 1.87 $ 1.74 $ 1.40 $ 1.26
============ ============ ============ =============
</TABLE>
- ---------------------
(1) Amount represents the number of shares issued assuming exercise of stock
options, reduced by the number of shares which could have been purchased
with the proceeds from the exercise of such options.
(2) Amount represents the number of common shares issued assuming exercise of
warrants outstanding.
<PAGE> 1
EXHIBIT 12.1 -- COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN MILLIONS, EXCEPT RATIO OF EARNINGS TO FIXED CHARGES)
<TABLE>
<CAPTION>
Three Months Ended,
--------------------------
4/3/99 3/28/98
---------- -----------
<S> <C> <C>
Income before provision for national income taxes,
minority interests in net income (loss) of subsidiaries,
equity (income) loss of affiliates, and extraordinary items $ 83.7 $ 77.7
Fixed charges 35.0 28.9
Distributed income of affiliates - -
---------- -----------
Earnings $ 118.7 $ 106.6
========== ===========
Interest expense $ 30.1 $ 24.7
Portion of lease expense representative of interest 4.9 4.2
---------- -----------
Fixed Charges $ 35.0 $ 28.9
========== ===========
Ratio of Earnings to Fixed Charges 3.4 3.7
Fixed Charges in Excess of Earnings - -
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Income before provision for national income taxes,
minority interests in net income (loss) of subsidiaries,
equity (income) loss of affiliates, and extraordinary items $ 214.8 $ 345.8 $ 253.4 $ 152.9 $ 114.6
Fixed charges 130.7 113.6 112.7 82.6 52.2
Distributed income of affiliates 2.3 3.9 3.0 1.3 0.9
---------- ----------- ----------- ----------- -----------
Earnings $ 347.8 $ 463.3 $ 369.1 $ 236.8 $ 167.7
========== =========== =========== =========== ===========
Interest expense $ 110.5 $ 101.0 $ 102.8 $ 75.5 $ 46.7
Portion of lease expense representative of interest 20.2 12.6 9.9 7.1 5.5
---------- ----------- ----------- ----------- -----------
Fixed Charges $ 130.7 $ 113.6 $ 112.7 $ 82.6 $ 52.2
========== =========== =========== =========== ===========
Ratio of Earnings to Fixed Charges 2.7 4.1 3.3 2.9 3.2
Fixed Charges in Excess of Earnings - - - - -
</TABLE>
<PAGE> 1
EXHIBIT 12.2 -- COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN MILLIONS, EXCEPT RATIO OF EARNINGS TO FIXED CHARGES)
<TABLE>
<CAPTION>
Pro Forma
-----------------------------------------
Year Three Months
Ended Ended
12/31/98 4/3/99
--------------- ---------------------
<S> <C> <C>
Income before provision for national income taxes,
minority interests in net income (loss) of subsidiaries,
equity (income) loss of affiliates, and extraordinary items $138.9 $ 73.3
Fixed charges 310.7 78.7
Distributed income of affiliates 2.3 -
-------------- --------------------
Earnings $451.9 $ 152.0
============== ====================
Interest expense $283.7 $ 71.9
Portion of lease expense representative of interest (1) 27.0 6.8
-------------- --------------------
Fixed Charges $310.7 $ 78.7
============== ====================
Ratio of Earnings to Fixed Charges 1.5 1.9
Fixed Charges in Excess of Earnings - -
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports included in this registration statement and to the incorporation by
reference in this registration statement of our report dated January 29, 1999
(except with respect to the matter discussed in Note 17, as to which the date is
March 16, 1999) included in Lear Corporation's Form 10-K for the year ended
December 31, 1998, and to all references to our firm included in this
registration statement.
/s/ Arthur Andersen LLP
Detroit, Michigan,
June 16, 1999.
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of Lear Corporation of our report dated March 31, 1999
relating to the financial statements of UT Automotive, Inc. (formerly a
wholly-owned operating segment of United Technologies Corporation), appearing in
Lear Corporation's Current Report on Form 8-K dated May 4, 1999. We also consent
to the reference to us under the heading "Experts" in such Registration
Statement.
/s/ PricewaterhouseCoopers LLP
Detroit, Michigan
June 18, 1999
<PAGE> 1
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Lear Corporation on Form S-4 of our report dated August 21, 1998 on the
Seating Business, formerly of the Delphi Interior Systems Division of Delphi
Automotive Systems Corporation, appearing in the Current Report of Lear
Corporation on Form 8-K/A dated September 1, 1998, and to the reference to us
under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
/s/ Deloitte & Touche LLP
Detroit, Michigan
June 18, 1999
<PAGE> 1
EXHIBIT 25.1
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------
LEAR CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 13-3386776
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Lear Operations Corporation
(Exact name of obligor as specified in its charter)
Delaware 38-3265872
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Lear Corporation Automotive Holdings
(Exact name of obligor as specified in its charter)
Delaware 11-2462850
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
21557 Telegraph Road
Southfield, MI 48086-5008
(Address of principal executive offices) (Zip code)
-------------
7.96% Series B Senior Notes due 2005
8.11% Series B Senior Notes due 2009
(Title of the indenture securities)
================================================================================
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE
TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Name Address
- -------------------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(D).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed
with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1
filed with Registration Statement No. 33-21672 and Exhibit 1 to Form
T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 11th day of June, 1999.
THE BANK OF NEW YORK
By: /s/ ILIANA A. ARCIPRETE
---------------------------------------
Name: ILIANA A. ARCIPRETE
Title: ASSISTANT TREASURER
<PAGE> 4
- --------------------------------------------------------------------------------
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business March 31, 1999,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS In Thousands
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin.. $4,508,742
Interest-bearing balances........................... 4,425,071
Securities:
Held-to-maturity securities......................... 836,304
Available-for-sale securities....................... 4,047,851
Federal funds sold and Securities purchased under
agreements to resell................................ 1,743,269
Loans and lease financing receivables:
Loans and leases, net of unearned
income............................................ 39,349,679
LESS: Allowance for loan and
lease losses...................................... 603,025
LESS: Allocated transfer risk
reserve........................................... 15,906
Loans and leases, net of unearned income,
allowance, and reserve............................ 38,730,748
Trading Assets......................................... 1,571,372
Premises and fixed assets (including capitalized
leases)............................................. 685,674
Other real estate owned................................ 10,331
Investments in unconsolidated subsidiaries and
associated companies................................ 182,449
Customers' liability to this bank on acceptances
outstanding......................................... 1,184,822
Intangible assets...................................... 1,129,636
Other assets........................................... 2,632,309
-----------
Total assets........................................... $61,688,578
===========
LIABILITIES
Deposits:
In domestic offices................................. $25,731,036
Noninterest-bearing................................. 10,252,589
Interest-bearing.................................... 15,478,447
In foreign offices, Edge and Agreement
subsidiaries, and IBFs............................ 18,756,302
Noninterest-bearing................................. 111,386
Interest-bearing.................................... 18,644,916
Federal funds purchased and Securities sold under
agreements to repurchase............................ 3,276,362
Demand notes issued to the U.S.Treasury................ 230,671
Trading liabilities.................................... 1,554,493
Other borrowed money:
With remaining maturity of one year or less......... 1,154,502
With remaining maturity of more than one year
through three years............................... 465
With remaining maturity of more than three years.... 31,080
Bank's liability on acceptances executed and
outstanding......................................... 1,185,364
Subordinated notes and debentures...................... 1,308,000
Other liabilities...................................... 2,743,590
-----------
Total liabilities...................................... 55,971,865
===========
EQUITY CAPITAL
Common stock........................................... 1,135,284
Surplus................................................ 764,443
Undivided profits and capital reserves................. 3,807,697
Net unrealized holding gains (losses) on
available-for-sale securities....................... 44,106
Cumulative foreign currency translation adjustments....
( 34,817)
-----------
Total equity capital................................... 5,716,713
-----------
Total liabilities and equity capital................... $61,688,578
===========
</TABLE>
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this Report
of Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Reyni
Alan R. Griffith Directors
Gerald L. Hassell
- --------------------------------------------------------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<NAME> Lear Corporation
<CIK> 0000842162
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 30
<SECURITIES> 0
<RECEIVABLES> 1,374
<ALLOWANCES> 16
<INVENTORY> 350
<CURRENT-ASSETS> 2,198
<PP&E> 1,776
<DEPRECIATION> 594
<TOTAL-ASSETS> 5,677
<CURRENT-LIABILITIES> 2,498
<BONDS> 1,463
0
0
<COMMON> 1
<OTHER-SE> 1,299
<TOTAL-LIABILITY-AND-EQUITY> 5,677
<SALES> 9,059
<TOTAL-REVENUES> 9,059
<CGS> 8,198
<TOTAL-COSTS> 8,198
<OTHER-EXPENSES> 22
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 111
<INCOME-PRETAX> 210
<INCOME-TAX> 94
<INCOME-CONTINUING> 116
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 116
<EPS-BASIC> 1.73
<EPS-DILUTED> 1.70
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<NAME> Lear Corporation
<CIK> 0000842162
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> APR-3-1999
<CASH> 25
<SECURITIES> 0
<RECEIVABLES> 1482
<ALLOWANCES> 14
<INVENTORY> 321
<CURRENT-ASSETS> 2311
<PP&E> 1796
<DEPRECIATION> 613
<TOTAL-ASSETS> 5784
<CURRENT-LIABILITIES> 2635
<BONDS> 1412
0
0
<COMMON> 1
<OTHER-SE> 1296
<TOTAL-LIABILITY-AND-EQUITY> 5784
<SALES> 2687
<TOTAL-REVENUES> 2687
<CGS> 2469
<TOTAL-COSTS> 2469
<OTHER-EXPENSES> 8
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30
<INCOME-PRETAX> 82
<INCOME-TAX> 32
<INCOME-CONTINUING> 50
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 50
<EPS-BASIC> .75
<EPS-DILUTED> .75
</TABLE>
<PAGE> 1
EXHIBIT 99.1
LETTER OF TRANSMITTAL
EXCHANGE OFFER FOR ALL OUTSTANDING
7.96% SENIOR NOTES DUE 2005
AND
8.11% SENIOR NOTES DUE 2009
OF
LEAR CORPORATION
Pursuant to the Prospectus dated , 1999
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ,
1999
UNLESS EXTENDED (THE "EXPIRATION DATE").
The Exchange Agent for the Exchange Offer is:
THE BANK OF NEW YORK
By Hand or Overnight Delivery:
The Bank of New York
101 Barclay Street
Corporate Trust Services Window
Ground Level
Attention: Tolutope Adeyujo
Reorganization Section
Facsimile Transmissions:
(Eligible Institutions Only)
(212) 815-4699
To Confirm by Telephone
or for Information Call:
(212) 815-2824
By Registered or Certified Mail:
The Bank of New York
101 Barclay Street, 7E
New York, New York 10286
Attention: Tolutope Adeyujo
Reorganization Section
------------------------
IF YOU DELIVER THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMIT INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE, SUCH DELIVERY OR INSTRUCTIONS WILL NOT BE EFFECTIVE. YOU MUST SIGN THIS
LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE PROVIDED THEREFOR AND COMPLETE
THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
The instructions accompanying this Letter of Transmittal should be read
carefully before this Letter of Transmittal is completed.
Lear Corporation (the "Company") is offering, upon the terms and subject to
the conditions set forth in the Prospectus, dated , 1999 (the
"Prospectus"), and in this Letter of Transmittal (which, together with any
supplements or amendments hereto or thereto, collectively constitute the
"Exchange Offer") to exchange up to $600,000,000 aggregate principal amount of
its 7.96% Series B Senior Notes due 2005 (the "7.96% Exchange Notes") which have
been registered under the Securities Act for a like aggregate principal amount
of its original unregistered 7.96% Senior Notes due 2005 (the "7.96% Original
Notes") and up to $800,000,000 aggregate principal amount of its 8.11% Series B
Senior Notes due 2009 (the "8.11% Exchange Notes," and together with the 7.96%
Exchange Notes, the "Exchange Securities") which have been registered under the
Securities Act for a like aggregate principal amount of its original
unregistered 8.11% Senior Notes due 2009 (the "8.11% Original Notes," and
together with the 7.96% Original Notes, the "Original Securities"). Terms used
herein with initial capital letters but not otherwise defined herein have the
respective meanings ascribed to them in the Prospectus.
This Letter of Transmittal is to be completed by holders of Original
Securities (i) if certificates representing Original Securities ("Certificates")
are to be forwarded herewith or (ii) unless an agent's message (as defined in
the Prospectus) is utilized, if delivery of Original Securities is to be made by
book-entry transfer to the account maintained by the Exchange Agent at the
Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the
procedures set forth in the Prospectus under the caption "The Exchange Offer --
Book-Entry Transfer." Holders whose Certificates are not immediately available
or who cannot deliver their Certificates and all other required documents to the
Exchange Agent prior to the Expiration Date, or who cannot complete the
procedures for book-entry transfer on a timely basis, may tender their Original
Securities pursuant to the guaranteed delivery procedures set forth in the
Prospectus under the caption "The Exchange Offer -- Guaranteed Delivery
Procedures." See Instruction 1. Delivery of documents to the Book-Entry Transfer
Facility does not constitute delivery to the Exchange Agent.
<PAGE> 2
List below the Original Securities to which this Letter of Transmittal
relates. If the space provided below is inadequate, list the certificate numbers
and principal amount of Original Securities on a separate signed schedule and
affix the list to this Letter of Transmittal.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
DESCRIPTION OF 7.96% ORIGINAL NOTES
- -------------------------------------------------------------------------------------------------------------------
AGGREGATE PRINCIPAL
AMOUNT OF 7.96% AGGREGATE PRINCIPAL
ORIGINAL AMOUNT OF 7.96%
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDERS CERTIFICATE NOTES REPRESENTED ORIGINAL
(PLEASE COMPLETE, IF BLANK) NUMBER(S)* BY CERTIFICATE(S) NOTES TENDERED**
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
TOTAL PRINCIPAL
AMOUNT TENDERED:
- -------------------------------------------------------------------------------------------------------------------
* Need not be completed if Original Securities are being tendered by book-entry.
** Unless otherwise indicated in this column, a holder will be deemed to have tendered the entire principal amount
of its Original Securities.
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
DESCRIPTION OF 8.11% ORIGINAL NOTES
- -------------------------------------------------------------------------------------------------------------------
AGGREGATE PRINCIPAL
AMOUNT OF 8.11% AGGREGATE PRINCIPAL
ORIGINAL AMOUNT OF 8.11%
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDERS CERTIFICATE NOTES REPRESENTED ORIGINAL
(PLEASE COMPLETE, IF BLANK) NUMBER(S)* BY CERTIFICATE(S) NOTES TENDERED**
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
TOTAL PRINCIPAL
AMOUNT TENDERED:
- -------------------------------------------------------------------------------------------------------------------
* Need not be completed if Original Securities are being tendered by book-entry.
** Unless otherwise indicated in this column, a holder will be deemed to have tendered the entire principal amount
of its Original Securities.
</TABLE>
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED ORIGINAL SECURITIES ARE BEING DELIVERED BY BOOK-
ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
---------------------------------------------
Account Number:
------------------------------------------------------------
Transaction Code Number:
---------------------------------------------------
[ ]CHECK HERE IF TENDERED ORIGINAL SECURITIES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s) of Original Securities:
---------------------
Window Ticket Number (if any):
----------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-------------------------
Name of Institution that Guaranteed Delivery:
-------------------------------
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO AND COMPLETE THE FOLLOWING.
Name:
----------------------------------------------------------------------
Address:
-------------------------------------------------------------------
2
<PAGE> 3
Ladies and Gentlemen:
On the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of
Original Securities indicated above. Subject to, and effective upon, the
acceptance for exchange of the Original Securities tendered hereby, the
undersigned hereby (i) sells, assigns, and transfers to, or upon the order of,
the Company all right, title, and interest in and to the Original Securities
tendered hereby and (ii) irrevocably constitutes and appoints the Exchange Agent
as its true and lawful agent and attorney-in-fact (with full knowledge that the
Exchange Agent also acts as the agent of the Company) with respect to such
Original Securities, with full power of substitution (such power of attorney
deemed to be an irrevocable power of attorney coupled with an interest), to (a)
deliver Certificates evidencing such Original Securities, or transfer ownership
of such Original Securities on the account books maintained by the Book-Entry
Transfer Facility, together, in any such case, with all accompanying evidences
of transfer and authenticity to, or upon the order of, the Company, (b) present
such Original Securities for transfer on the books of the registrar for the
Original Securities, and (c) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Original Securities.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign, transfer, and exchange the
Original Securities tendered hereby and that, when the same are accepted by the
Company for exchange, the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges, encumbrances, and
adverse claims. The undersigned hereby further represents that (i) any Exchange
Securities acquired in exchange for Original Securities tendered hereby are
being acquired in the ordinary course of business of the person receiving such
Exchange Securities, whether or not such person is the holder of such Original
Securities, (ii) neither the undersigned nor any such other person is engaging
in or intends to engage in a distribution of the Exchange Securities, (iii)
neither the undersigned nor any such other person has an arrangement or
understanding with any person to participate in the distribution of such
Exchange Securities, and (iv) neither the undersigned nor any such other person
is an "affiliate" (as defined in Rule 405 under the Securities Act) of the
Company, or, if either is an affiliate, it will comply with the registration and
prospectus delivery requirements of the Securities Act. If the undersigned is a
broker-dealer that is to receive Exchange Securities for its own account in
exchange for Original Securities, it further represents that such Original
Securities were acquired as a result of market-making activities or other
trading activities, and acknowledges that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such
Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" with respect to such Exchange Securities within the meaning of the
Securities Act.
The undersigned acknowledges that this Exchange Offer is being made in
reliance upon interpretations by the staff of the Securities and Exchange
Commission, as set forth in no-action letters issued to third parties, that
indicate that the Exchange Securities issued in exchange for the Original
Securities pursuant to the Exchange Offer may be offered for resale, resold, or
otherwise transferred by the holders thereof (other than any such holder that is
an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act), without compliance with the registration and prospectus
delivery provisions of the Securities Act, if such Exchange Securities are
acquired in the ordinary course of such holders' business and such holders have
no arrangement or understanding with any person to participate in a distribution
of such Exchange Securities. However, the Securities and Exchange Commission has
not considered the Exchange Offer in the context of a no-action letter and there
can be no assurance that the staff of the Securities and Exchange Commission
would make a similar determination with respect to the Exchange Offer. If any
holder of Original Securities is an affiliate of the Company or is engaged in,
or intends to engage in or has any arrangement or understanding with any person
to participate in, the distribution of the Exchange Securities to be acquired
pursuant to the Exchange Offer, such holder (i) cannot rely on the applicable
interpretations of the staff of the Securities and Exchange Commission and (ii)
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction.
3
<PAGE> 4
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the sale, assignment, and transfer of the Original
Securities tendered hereby.
All authority conferred or agreed to be conferred by this Letter of
Transmittal and every obligation of the undersigned hereunder shall be binding
upon the undersigned's heirs, executors, administrators, trustees in bankruptcy,
legal representatives, successors, and assigns and shall survive the death,
incapacity, or dissolution of the undersigned.
The undersigned understands that the valid tender of Original Securities
pursuant to the procedures set forth in the Prospectus under the caption "The
Exchange Offer -- Procedures for Tendering" and in the instructions hereto will
constitute a binding agreement between the undersigned and the Company upon the
terms and subject to the conditions of the Exchange Offer.
Unless otherwise indicated herein under "Special Issuance Instructions,"
please issue the Certificates representing the Exchange Securities and return
any Original Securities not tendered or not accepted for exchange in the name(s)
of the undersigned or, in the case of a book-entry delivery of Original
Securities, please credit the account indicated above maintained at the
Book-Entry Transfer Facility. Similarly, unless otherwise indicated herein under
"Special Delivery Instructions," please mail the Certificates representing the
Exchange Securities issued in exchange for the Original Securities accepted for
exchange and any certificates for Original Securities not tendered or not
accepted for exchange (and accompanying documents, as appropriate) to the
undersigned at the address shown below the undersigned's signature(s). The
undersigned recognizes that the Company has no obligation pursuant to the
"Special Issuance Instructions" and "Special Delivery Instructions" to transfer
any Original Securities from the name of the registered holder(s) thereof if the
Company does not accept for exchange any of the Original Securities so tendered.
THE UNDERSIGNED, BY COMPLETING THE BOXES ENTITLED "DESCRIPTION OF 7.96%
ORIGINAL NOTES" AND/OR "DESCRIPTION OF 8.11% ORIGINAL NOTES" ABOVE AND SIGNING
THIS LETTER OF TRANSMITTAL, WILL BE DEEMED TO HAVE TENDERED THE ORIGINAL
SECURITIES AS SET FORTH IN SUCH BOXES ABOVE.
4
<PAGE> 5
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3, 4 AND 6)
To be completed ONLY (i) if Certificates for Exchange Securities and any
Original Securities that are not accepted for exchange are to be issued in the
name of and sent to someone other than the undersigned or (ii) if Original
Securities tendered by book-entry transfer that are not accepted for exchange
are to be returned by credit to an account maintained at the Book-Entry Transfer
Facility other than the account indicated above.
Issue Certificate(s) to:
Name:
----------------------------------------------
(Please Print)
Address:
-------------------------------------------
- ----------------------------------------------------
(Include Zip Code)
[ ] Credit unexchanged Original Securities delivered by book-entry transfer to
the Book-Entry Transfer Facility Account set forth below.
- --------------------------------------------------------------------------------
(Taxpayer Identification or Social Security No.)
(Please Also Complete Substitute Form W-9)
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3, 4 AND 6)
To be completed ONLY if Certificates for Exchange Securities and any Original
Securities that are not accepted for exchange are to be sent to someone other
than the undersigned, or to the undersigned at an address other than that shown
above.
Mail Certificate(s) to:
Name:
------------------------------------------------
(Please Print)
Address:
---------------------------------------------
- ------------------------------------------------------
(Include Zip Code)
IMPORTANT: THIS LETTER OF TRANSMITTAL (TOGETHER WITH THE CERTIFICATES FOR
ORIGINAL SECURITIES OR A BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED
DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY) MUST BE RECEIVED BY THE EXCHANGE
AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
BROKER-DEALER STATUS
[ ] Check this box if the beneficial owner of the Original Securities is a
broker-dealer and such broker-dealer acquired the Original Securities for
its own account as a result of market-making activities or other trading
activities. IF THIS BOX IS CHECKED, PLEASE SEND A COPY OF THIS LETTER OF
TRANSMITTAL TO JOSEPH F. MCCARTHY, ESQ., VIA FACSIMILE: (248) 447-1677.
- --------------------------------------------------------------------------------
5
<PAGE> 6
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
IMPORTANT:
SIGN HERE AND COMPLETE SUBSTITUTE FORM W-9 BELOW
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Signature(s) of Holder(s) of Original Securities
Dated: , 1999
------------------
(Must be signed by the registered holder(s) of Original Securities as
their name(s) appear(s) on the certificates for the Original Securities or
on a security position listing, or by person(s) authorized to become
registered holder(s) by endorsements and documents transmitted herewith.
If signature is by trustees, executors, administrators, guardians,
attorneys-in-fact, agents, officers of corporations, or others acting in a
fiduciary or representative capacity, please provide the following
information. See Instruction 3.)
Name:
--------------------------------------------------------------------
--------------------------------------------------------------------------
(Please Type or Print)
Capacity (Full Title):
---------------------------------------------------
Address:
-----------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(Include a Zip Code)
Area Code and Telephone No.:
---------------------------------------------
(Home)
---------------------------------------------
(Business)
Tax Identification or Social Security No.:
-------------------------------
(Complete Substitute Form W-9
Below)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTION 3)
Authorized Signature(s):
-------------------------------------------------
Name:
--------------------------------------------------------------------
(Please Type or Print)
Title:
-------------------------------------------------------------------
Name of Firm:
------------------------------------------------------------
Address:
-----------------------------------------------------------------
(Include a Zip Code)
Area Code and Telephone No.:
---------------------------------------------
Dated: , 1999
-------------------------
6
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. Delivery of this Letter of Transmittal and Original Securities;
Guaranteed Delivery Procedures. This Letter of Transmittal is to be completed by
holders of Original Securities (a) if Certificates are to be forwarded herewith
or (b) unless an agent's message (as defined in the Prospectus) is utilized, if
delivery of Original Securities is to be made by book-entry transfer pursuant to
the procedures set forth in the Prospectus under the caption "The Exchange
Offer -- Book-Entry Transfer." Certificates for all physically tendered Original
Securities, or Book-Entry Confirmation (as defined below), as the case may be,
as well as a properly completed and duly executed Letter of Transmittal (or, at
the option of the holder in the case of a book-entry tender of Original
Securities, an agent's message) and any other documents required by this Letter
of Transmittal, must be received by the Exchange Agent at the address set forth
herein prior to the Expiration Date, or the tendering holder must comply with
the guaranteed delivery procedures set forth below. Original Securities tendered
hereby must be in denominations of principal amount of $1,000 and any integral
multiple thereof. Holders whose Certificates are not immediately available or
who cannot deliver their Certificates and all other required documents to the
Exchange Agent prior to the Expiration Date, or who cannot complete the
procedures for book-entry transfer on a timely basis, may tender their Original
Securities pursuant to the guaranteed delivery procedures set forth in the
Prospectus under the caption "The Exchange Offer -- Guaranteed Delivery
Procedures." Pursuant to such procedures, (a) such tender must be made through
an Eligible Institution (as defined in Instruction 3 below) prior to 5:00 p.m.,
New York City time, on the Expiration Date, (b) the Exchange Agent must receive
from such Eligible Institution a properly completed and duly executed Letter of
Transmittal (or, at the option of the holder in the case of a book-entry tender
of Original Securities, an agent's message) and Notice of Guaranteed Delivery,
substantially in the form provided by the Company (by facsimile transmission,
mail or hand delivery), setting forth the name and address of the holder of
Original Securities and the amount of Original Securities tendered, stating that
the tender is being made thereby, and guaranteeing that within three New York
Stock Exchange ("NYSE") trading days after the Expiration Date, the Certificates
for all physically tendered Original Securities, in proper form for transfer, or
confirmation of the book-entry transfer of the Original Securities into the
Exchange Agent's account at the Book-Entry Transfer Facility (a "Book-Entry
Confirmation"), as the case may be, and any other documents required by this
Letter of Transmittal will be deposited by the Eligible Institution with the
Exchange Agent, and (c) the Certificates for all physically tendered Original
Securities, in proper form for transfer, or a Book-Entry Confirmation, as the
case may be, and all other documents required by this Letter of Transmittal,
must be received by the Exchange Agent within three NYSE trading days after the
Expiration Date. The method of delivery of this Letter of Transmittal, the
Original Securities, and all other required documents is at the election and
risk of the tendering holders, but the delivery will be deemed made only when
actually received or confirmed by the Exchange Agent. If Original Securities are
sent by mail, it is suggested that the mailing be registered mail, properly
insured, with return receipt requested, made sufficiently in advance of the
Expiration Date to permit delivery to the Exchange Agent prior to 5:00 p.m., New
York City time, on the Expiration Date. See "The Exchange Offer" in the
Prospectus.
2. Partial Tenders (Not Applicable to Security Holders Who Tender by
Book-Entry Transfer). If less than all of the Original Securities evidenced by a
submitted Certificate are to be tendered, the tendering holder(s) should fill in
the aggregate principal amount of Original Securities to be tendered in the
boxes above entitled "Description of 7.96% Original Notes -- Aggregate Principal
Amount of 7.96% Original Notes Tendered" and "Description of 8.11% Original
Notes -- Aggregate Principal Amount of 8.11% Original Notes Tendered." A
reissued Certificate representing the balance of nontendered Original Securities
will be sent to such tendering holder, unless otherwise provided in the
appropriate box on this Letter of Transmittal, promptly after the Expiration
Date. ALL OF THE ORIGINAL SECURITIES DELIVERED TO THE EXCHANGE AGENT WILL BE
DEEMED TO HAVE BEEN TENDERED UNLESS OTHERWISE INDICATED.
7
<PAGE> 8
3. Signatures on this Letter; Bond Powers and Endorsements; Guarantee of
Signatures. If this Letter of Transmittal is signed by the registered holder of
the Original Securities tendered hereby, the signature must correspond exactly
with the name as written on the face of the Certificates without any change
whatsoever. If any tendered Original Securities are owned of record by two or
more joint owners, all of such owners must sign this Letter of Transmittal. If
any tendered Original Securities are registered in different names on several
Certificates, it will be necessary to complete, sign, and submit as many
separate copies of this Letter of Transmittal as there are different
registrations of Certificates. When this Letter of Transmittal is signed by the
registered holder or holders of the Original Securities specified herein and
tendered hereby, no endorsements of Certificates or separate bond powers are
required. If, however, the Exchange Securities are to be issued, or any
untendered Original Securities are to be reissued, to a person other than the
registered holder, then endorsements of any Certificates transmitted hereby or
separate bond powers are required. Signatures on such Certificate(s) must be
guaranteed by an Eligible Institution. If this Letter of Transmittal is signed
by a person other than the registered holder or holders of any Certificate(s)
specified herein, such Certificate(s) must be endorsed or accompanied by
appropriate bond powers, in either case signed exactly as the name or names of
the registered holder or holders appear(s) on the Certificate(s) and signatures
on such Certificate(s) must be guaranteed by an Eligible Institution. If this
Letter of Transmittal or any Certificates or bond powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations, or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted. ENDORSEMENTS ON CERTIFICATES FOR ORIGINAL SECURITIES OR SIGNATURES ON
BOND POWERS REQUIRED BY THIS INSTRUCTION 3 MUST BE GUARANTEED BY A FIRM THAT IS
A FINANCIAL INSTITUTION (INCLUDING MOST BANKS, SAVINGS AND LOAN ASSOCIATIONS,
AND BROKERAGE HOUSES) THAT IS A PARTICIPANT IN THE SECURITIES TRANSFER AGENTS
MEDALLION PROGRAM, THE NEW YORK STOCK EXCHANGE MEDALLION SIGNATURE PROGRAM, OR
THE STOCK EXCHANGES MEDALLION PROGRAM (EACH AN "ELIGIBLE INSTITUTION").
SIGNATURES ON THIS LETTER OF TRANSMITTAL NEED NOT BE GUARANTEED BY AN ELIGIBLE
INSTITUTION, PROVIDED THE ORIGINAL SECURITIES ARE TENDERED: (i) BY A REGISTERED
HOLDER OF ORIGINAL SECURITIES (WHICH TERM, FOR PURPOSES OF THE EXCHANGE OFFER,
INCLUDES ANY PARTICIPANT IN THE BOOK-ENTRY TRANSFER FACILITY SYSTEM WHOSE NAME
APPEARS ON A SECURITY POSITION LISTING AS THE HOLDER OF SUCH ORIGINAL
SECURITIES) WHO HAS NOT COMPLETED THE BOX ENTITLED "SPECIAL ISSUANCE
INSTRUCTIONS" OR "SPECIAL DELIVERY INSTRUCTIONS" ON THIS LETTER OF TRANSMITTAL
OR (ii) FOR THE ACCOUNT OF AN ELIGIBLE INSTITUTION.
4. Special Issuance and Delivery Instructions. Tendering holders of
Original Securities should indicate in the applicable box the name and address
to which Exchange Securities issued pursuant to the Exchange Offer and or
substitute Certificates evidencing Original Securities not exchanged are to be
issued or sent, if different from the name or address of the person signing this
Letter of Transmittal. In the case of issuance in a different name, the employer
identification or social security number of the person named must also be
indicated. Security holders tendering Original Securities by book-entry transfer
may request that Original Securities not exchanged be credited to such account
maintained at the Book-Entry Transfer Facility as such security holder may
designate hereon. If no such instructions are given, such Original Securities
not exchanged will be returned to the name and address of the person signing
this Letter of Transmittal.
5. Taxpayer Identification Number. Federal income tax law generally
requires that a tendering holder whose Original Securities are accepted for
exchange must provide the Company (as payer) with such holder's correct Taxpayer
Identification Number ("TIN") on Substitute Form W-9 below, which in the case of
a tendering holder who is an individual, is his or her social security number.
If the Company is not provided with the current TIN or an adequate basis for an
exemption from backup withholding, such tendering holder may be subject to a $50
penalty imposed by the Internal Revenue Service. In addition,
8
<PAGE> 9
the Exchange Agent may be required to withhold 31% of the amount of any
reportable payments made after the exchange to such tendering holder of Exchange
Securities. If withholding results in an overpayment of taxes, a refund may be
obtained. Exempt holders of Original Securities (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. See the enclosed Guidelines of
Certification of Taxpayer Identification Number on Substitute Form W-9 (the "W-9
Guidelines") for additional instructions. To prevent backup withholding, each
tendering holder of Original Securities must provide its correct TIN by
completing the Substitute Form W-9 set forth below, certifying, under penalties
of perjury, that the TIN provided is correct (or that such holder is awaiting a
TIN) and that (a) the holder is exempt from backup withholding, (b) the holder
has not been notified by the Internal Revenue Service that such holder is
subject to backup withholding as a result of a failure to report all interest or
dividends, or (c) the Internal Revenue Service has notified the holder that such
holder is no longer subject to backup withholding. If the tendering holder of
Original Securities is a nonresident alien or foreign entity not subject to
backup withholding, such holder must give the Exchange Agent a completed Form
W-8, Certificate of Foreign Status. These forms may be obtained from the
Exchange Agent. If the Original Securities are in more than one name or are not
in the name of the actual owner, such holder should consult the W-9 Guidelines
for information on which TIN to report. If such holder does not have a TIN, such
holder should consult the W-9 Guidelines for instructions on applying for a TIN,
check the box in Part 2 of the Substitute Form W-9 and write "applied for" in
lieu of its TIN. Note: Checking this box and writing "applied for" on the form
means that such holder has already applied for a TIN or that such holder intends
to apply for one in the near future. If the box in Part 2 of the Substitute Form
W-9 is checked, the Exchange Agent will retain 31% of reportable payments made
to a holder during the 60-day period following the date of the Substitute Form
W-9. If the holder furnishes the Exchange Agent with his or her TIN within 60
days of the Substitute Form W-9, the Exchange Agent will remit such amounts
retained during such 60-day period to such holder and no further amounts will be
retained or withheld from payments made to the holder thereafter. If, however,
such holder does not provide its TIN to the Exchange Agent within such 60-day
period, the Exchange Agent will remit such previously withheld amounts to the
Internal Revenue Service as backup withholding and will withhold 31% of all
reportable payments to the holder thereafter until such holder furnishes its TIN
to the Exchange Agent.
6. Transfer Taxes. The Company will pay all transfer taxes, if any,
applicable to the transfer of Original Securities to it or its order pursuant to
the Exchange Offer. If, however, Exchange Securities and/or substitute Original
Securities not exchanged are to be delivered to, or are to be registered or
issued in the name of, any person other than the registered holder of the
Original Securities tendered hereby, or if tendered Original Securities are
registered in the name of any person other than the person signing this Letter
of Transmittal, or if a transfer tax is imposed for any reason other than the
transfer of Original Securities to the Company or its order pursuant to the
Exchange Offer, the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted herewith, the amount of such transfer taxes will be billed directly to
such tendering holder. EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE
NECESSARY FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE ORIGINAL SECURITIES
SPECIFIED IN THIS LETTER OF TRANSMITTAL.
7. Waiver of Conditions. The Company reserves the absolute right to waive
satisfaction of any or all conditions to the Exchange Offer set forth in the
Prospectus.
8. No Conditional Tenders. No alternative, conditional, irregular, or
contingent tenders will be accepted. All tendering holders of Original
Securities, by execution of this Letter of Transmittal, shall waive any right to
receive notice of the acceptance of their Original Securities for exchange.
Neither the Company, the Exchange Agent, nor any other person is obligated to
give notice of any defect or irregularity with respect to any tender of Original
Securities nor shall any of them incur any liability for failure to give any
such notice.
9
<PAGE> 10
9. Mutilated, Lost, Stolen, or Destroyed Original Securities. Any holder
whose Original Securities have been mutilated, lost, stolen, or destroyed should
contact the Exchange Agent at the address indicated above for further
instructions.
10. Withdrawal Rights. Tenders of Original Securities may be withdrawn at
any time prior to 5:00 p.m., New York City time, on the Expiration Date. For a
withdrawal of a tender of Original Securities to be effective, a written notice
of withdrawal must be received by the Exchange Agent at the address, or in the
case of eligible institutions, at the facsimile number set forth above prior to
5:00 p.m., New York City time, on the Expiration Date. Any such notice of
withdrawal must (a) specify the name of the person who tendered the Original
Securities to be withdrawn (the "Depositor"), (b) identify the Original
Securities to be withdrawn (including certificate number or numbers and the
principal amount of such Original Securities), (c) contain a statement that such
holder is withdrawing his election to have such Original Securities exchanged,
(d) be signed by the holder in the same manner as the original signature on the
Letter of Transmittal by which such Original Securities were tendered (including
any required signature guarantees) or be accompanied by documents of transfer to
have the registrar with respect to the Original Securities register the transfer
of such Original Securities in the name of the person withdrawing the tender,
and (e) specify the name in which such Original Securities are registered, if
different from that of the Depositor. If Original Securities have been tendered
pursuant to the procedure for book-entry transfer set forth in the Prospectus
under the caption "The Exchange Offer -- Book-Entry Transfer," any notice of
withdrawal must specify the name and number of the account at the Book-Entry
Transfer Facility to be credited with the withdrawn Original Securities and
otherwise comply with the procedures of such facility. All questions as to the
validity, form, and eligibility (including time of receipt) of such notices will
be determined by the Company, whose determination shall be final and binding on
all parties. Any Original Securities so withdrawn will be deemed not to have
been validly tendered for exchange for purposes of the Exchange Offer. Any
Original Securities that have been tendered for exchange but which are not
exchanged for any reason will be returned to the holder thereof without cost to
such holder (or, in the case of Original Securities tendered by book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility
pursuant to the book-entry transfer procedures set forth in the Prospectus under
the caption "The Exchange Offer -- Book-Entry Transfer," such Original
Securities will be credited to an account maintained with the Book-Entry
Transfer Facility for the Original Securities) promptly after the expiration or
termination of the Exchange Offer. Properly withdrawn Original Securities may be
retendered by following the procedures described above at any time prior to 5:00
p.m., New York City time, on the Expiration Date.
11. Requests for Assistance or Additional Copies. Questions relating to the
procedure for tendering, requests for additional copies of the Prospectus and
this Letter of Transmittal, and requests for Notices of Guaranteed Delivery and
other related documents may be directed to the Exchange Agent, at the address
and telephone number indicated above.
10
<PAGE> 11
PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW.
- --------------------------------------------------------------------------------
PAYER'S NAME: THE BANK OF NEW YORK
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUBSTITUTE Part 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX --------------------------------
FORM W-9 AT RIGHT AND CERTIFY BY SIGNING AND DATING SOCIAL SECURITY NUMBER
BELOW OR EMPLOYER
IDENTIFICATION NUMBER
DEPARTMENT OF THE TREASURY Part 2 -- TIN Applied For [ ]
INTERNAL REVENUE SERVICE
PAYER'S REQUEST FOR TAXPAYER Part 3 -- CERTIFICATION -- Under penalties of perjury, I certify that (1) the
IDENTIFICATION NUMBER CERTIFICATION number shown on this form is my correct taxpayer identification
("TIN") CERTIFICATION number (or I am waiting for a number to be issued to me) AND (2) I am not
subject to backup withholding because (a) I am exempt from backup withholding,
or (b) I have not been notified by the Internal Revenue Service (the "IRS") that
I am subject to backup withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has notified me that I am no longer
subject to backup withholding. (You must cross out Item (2) above if you have
been notified by the IRS that you are subject to backup withholding because of
underreporting of interest or dividends on your return.)
---------------------------------------------------------------------------------
SIGNATURE DATE
----------------------------------- -----------------
</TABLE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED THE BOX IN PART 2 OF SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Center or Social Security Administration Office or (b) I
intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number at the time of the
exchange, 31% of all reportable payments made to me thereafter will be
withheld until I provide a number.
SIGNATURE DATE
----------------------------------- -----------------
- --------------------------------------------------------------------------------
11
<PAGE> 12
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. -- Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e. 00-0000000. The table below will help determine the number
to give the payer.
- ------------------------------------------------------
<TABLE>
<CAPTION>
GIVE THE SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- ------------------------------------------------------
<S> <C>
1. An individual's The individual
account
2. Two or more The actual owner of the
individuals account or, if combined
(joint account) funds, any one of the
individuals(1)
3. Custodian account of The minor
a minor (Uniform Gift
to Minors Act)
4. a. The usual The grantor-trustee(1)
revocable savings
trust account
(grantor is also
trustee)
b. So-called trust The actual owner(1)
account that is
not a legal or
valid trust under
State law
5. Sole proprietorship The owner(3)
account
6. A valid trust, The legal entity(4)
estate, or pension
trust
</TABLE>
- ------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE EMPLOYER
IDENTIFICATION
NUMBER OF--
- ------------------------------------------------------
<S> <C>
7. Corporate account The corporation
8. Association, club, The organization
religious,
charitable,
educational or
other tax-exempt
organization
9. Partnership The partnership
10. A broker or The broker or nominee
registered nominee
11. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
state or local
government, school
district, or prison)
that receives
agricultural program
payments
</TABLE>
- ------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's Social Security Number.
(3) Show the name of the owner. You may also enter your business name. You may
use your Social Security Number or Employer Identification Number.
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the identifying number of the personal representative or
trustee unless the legal entity itself is not designated in the account
title.)
If no name is circled when more than one name is listed, the number will be
considered to be that of the first name listed.
12
<PAGE> 13
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Section references are to the Internal Revenue Code.
OBTAINING A NUMBER
If you don't have a Taxpayer Identification Number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on broker transactions
include the following:
- A corporation.
- A financial institution.
- An organization exempt from tax under Section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency or instrumentality thereof.
- A dealer in securities or commodities registered in the United States or
a possession of the United States.
- A real estate investment trust.
- A common trust fund operated by a bank under Section 584(a).
- An entity registered at all times during the tax year under the
Investment Company Act of 1940.
- A foreign central bank of issue.
- A person registered under the Investment Advisors Act of 1940 who
regularly acts as a broker.
Payments of dividends and patronage dividends not generally subject to
backup withholding also include the following:
- Payments to nonresident aliens subject to withholding under Section 1441.
- Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
- Payments of patronage dividends not paid in money.
- Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding also
include the following:
- Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt interest dividends
under section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
13
<PAGE> 14
- Mortgage interest paid by you.
Payments that are not subject to information reporting are also not subject
to backup withholding. For details see sections 6041, 6041A(a), 6042, 6044,
6045, 6049, 6050A and 6050N, and the regulations under such sections.
Exempt payees described above should file Substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM,
SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Privacy Act Notice. -- Section 6109 requires you to give your correct
Taxpayer Identification Number to payers who must report the payments to the
IRS. The IRS uses the numbers for identification purposes. Payers must be given
the numbers whether or not you are required to file a tax return. Payers must
generally withhold 31% of taxable interest, dividend, and certain other payments
to a payee who does not furnish a Taxpayer Identification Number to a payer.
Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If
you fail to furnish your correct Taxpayer Identification Number to a
payer, you are subject to a penalty of $50 for each such failure unless
your failure is due to reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If
you make a false statement with no reasonable basis which results in no
imposition of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Wilfully falsifying
certifications or affirmations may subject you to criminal penalties
including fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE IRS.
14
<PAGE> 1
EXHIBIT 99.2
EXCHANGE OFFER FOR ALL OUTSTANDING
7.96% SENIOR NOTES DUE 2005
AND
8.11% SENIOR NOTES DUE 2009
OF
LEAR CORPORATION
PURSUANT TO THE PROSPECTUS DATED , 1999
To: Brokers, Dealers, Commercial Banks,
Trust Companies, and Other Nominees:
Lear Corporation (the "Company") is offering, upon the terms and subject to
conditions set forth in the Prospectus, dated , 1999 (the
"Prospectus"), and the enclosed Letter of Transmittal (the "Letter of
Transmittal"), to exchange up to $600,000,000 aggregate principal amount of its
7.96% Series B Senior Notes due 2005 (the "7.96% Exchange Notes") which have
been registered under the Securities Act for a like aggregate principal amount
of its original unregistered 7.96% Senior Notes due 2005 (the "7.96% Original
Notes") and up to $800,000,000 aggregate principal amount of its 8.11% Series B
Senior Notes due 2009 (the "8.11% Exchange Notes," and together with the 7.96%
Exchange Notes, the "Exchange Securities") which have been registered under the
Securities Act for a like aggregate principal amount of its original
unregistered 8.11% Senior Notes due 2009 (the "8.11% Original Notes," and
together with the 7.97% Original Notes, the "Original Securities"). The Exchange
Offer is being made in order to satisfy certain obligations of the Company
contained in the Registration Rights Agreement, dated May 18, 1999, by and among
the Company, Lear Operations Corporation, Lear Corporation Automotive Holdings
and the initial purchasers of the Original Securities from the Company.
Please forward to your clients for whose accounts you hold Original
Securities registered in your name or in the name of your nominee copies of the
following enclosed documents:
1. Prospectus dated , 1999;
2. The Letter of Transmittal to tender Original Securities for your
use and for the information of your clients;
3. A Notice of Guaranteed Delivery to be used to accept the Exchange
Offer if the other procedures for tendering Original Securities set forth
in the Prospectus cannot be completed on a timely basis;
4. A form of letter which may be sent to your clients for whose
account you hold Original Securities registered in your name or the name of
your nominee, with space provided for obtaining such clients' instructions
with regard to the Exchange Offer;
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
6. Return envelopes addressed to The Bank of New York, the Exchange
Agent for the Exchange Offer.
YOUR PROMPT ACTION IS REQUESTED. THE EXCHANGE OFFER WILL EXPIRE AT 5:00
P.M., NEW YORK CITY TIME, ON , 1999, UNLESS EXTENDED BY THE
COMPANY (THE "EXPIRATION DATE"). ORIGINAL SECURITIES TENDERED PURSUANT TO THE
EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME BEFORE THE EXPIRATION DATE.
To participate in the Exchange Offer, a duly executed and properly
completed Letter of Transmittal (with any required signature guarantees) or, at
the option of the tendering holder in the case of a book-entry tender, an
agent's message (as defined in the Prospectus), and any other required
documents, should be sent to the Exchange Agent and certificates representing
the Original Securities should be delivered to
<PAGE> 2
the Exchange Agent, all in accordance with the instructions set forth in the
Letter of Transmittal and the Prospectus.
If holders of Original Securities desire to tender their Original
Securities, but it is impracticable for them to deliver the certificates for
such Original Securities or other required documents or to complete the
procedures for book-entry transfer prior to the Expiration Date, a tender may be
effected by following the guaranteed delivery procedures described in the
Prospectus under the caption "The Exchange Offer -- Guaranteed Delivery
Procedures."
The Company will, upon request, reimburse brokers, dealers, commercial
banks, and trust companies for reasonable and necessary costs and expenses
incurred by them in forwarding the Prospectus and the related documents to the
beneficial owners of Original Securities held by them as nominee or in a
fiduciary capacity. The Company will pay or cause to be paid all stock transfer
taxes applicable to the exchange of Original Securities pursuant to the Exchange
Offer, except as set forth in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Exchange Offer, or requests
for additional copies of the enclosed materials, should be directed to The Bank
of New York, the Exchange Agent for the Exchange Offer, at its address and
telephone number set forth on the front of the Letter of Transmittal.
Very truly yours,
LEAR CORPORATION
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF
THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN
THE PROSPECTUS OR THE LETTER OF TRANSMITTAL.
Enclosures
2
<PAGE> 1
EXHIBIT 99.3
EXCHANGE OFFER FOR ALL OUTSTANDING
7.96% SENIOR NOTES DUE 2005
AND
8.11% SENIOR NOTES DUE 2009
OF
LEAR CORPORATION
PURSUANT TO THE PROSPECTUS DATED , 1999
To Our Clients:
Enclosed for your consideration is a Prospectus, dated , 1999
(the "Prospectus"), and the related Letter of Transmittal (the "Letter of
Transmittal"), relating to the offer (the "Exchange Offer") by Lear Corporation
(the "Company") to exchange up to $600,000,000 aggregate principal amount of its
7.96% Series B Senior Notes due 2005 (the "7.96% Exchange Notes") which have
been registered under the Securities Act for a like aggregate principal amount
of its original unregistered 7.96% Senior Notes due 2005 (the "7.96% Original
Notes") and up to $800,000,000 aggregate principal amount of its 8.11% Series B
Senior Notes due 2009 (the "8.11% Exchange Notes," and together with the 7.96%
Exchange Notes, the "Exchange Securities") which have been registered under the
Securities Act for a like aggregate principal amount of its original
unregistered 8.11% Senior Notes due 2009 (the "8.11% Original Notes," and
together with the 7.96% Original Notes, the "Original Securities"), upon the
terms and subject to the conditions described in the Prospectus and the Letter
of Transmittal. The Exchange Offer is being made in order to satisfy certain
obligations of the Company contained in the Registration Rights Agreement, dated
May 18, 1999, by and among the Company, Lear Operations Corporation, Lear
Corporation Automotive Holdings and the initial purchasers of the Original
Securities from the Company.
We are (or our nominee is) the holder of record of Original Securities held
by us for your account. A tender of such Original Securities can be made only by
the holder of record and pursuant to your instructions. The Letter of
Transmittal accompanying this letter is furnished to you for your information
only and cannot be used by you to tender Original Securities held by us for your
account.
Accordingly, we request instructions as to whether you wish us to tender on
your behalf the Original Securities held by us for your account, pursuant to the
terms and conditions set forth in the enclosed Prospectus and Letter of
Transmittal. Your instructions should be forwarded to us as promptly as possible
in order to permit us to tender Original Securities on your behalf (should you
so desire) in accordance with the provisions of the Exchange Offer.
Your attention is directed to the following:
1. The Company is offering to exchange the 7.96% Exchange Notes for any and
all of the 7.96% Original Notes and to exchange the 8.11% Exchange Notes for any
and all of the 8.11% Original Notes.
2. The terms of the Exchange Securities are identical in all respects to
the terms of the Original Securities, except that the registration rights and
related liquidated damages provisions, and the transfer restrictions, applicable
to the Original Securities are not applicable to the Exchange Securities.
3. Subject to the satisfaction or waiver of certain conditions set forth in
the Prospectus in the section captioned "The Exchange Offer -- Conditions to the
Exchange Offer," the Company will exchange the applicable Exchange Securities
for all Original Securities that are validly tendered and not withdrawn prior to
the expiration of the Exchange Offer.
<PAGE> 2
4. The Exchange Offer will expire at 5:00 p.m., New York City time, on
, 1999, unless extended by the Company.
5. You may withdraw tenders of Original Securities at any time prior to the
expiration of the Exchange Offer.
6. The exchange of Original Securities for Exchange Securities pursuant to
the Exchange Offer generally will not be a taxable event for U.S. federal income
tax purposes. See "United States Federal Income Tax Considerations" in the
enclosed Prospectus.
If you wish to have us tender your Original Securities, please so instruct
us by completing, executing and returning to us the instruction form on the back
of this letter. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATION
ONLY AND CANNOT BE USED BY YOU TO TENDER ORIGINAL SECURITIES HELD BY US FOR YOUR
ACCOUNT.
2
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO
THE EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer made by Lear
Corporation with respect to the Original Securities. Terms used herein with
initial capital letters have the respective meanings ascribed to them in your
letter.
This will instruct you to tender the Original Securities held by you for
the account of the undersigned, upon and subject to the terms and conditions set
forth in the Prospectus and the related Letter of Transmittal.
[ ] Please tender the amount of Original Securities indicated below (or if no
amount is indicated below, all Original Securities) held by you for my
account.
$ Aggregate Principal Amount of 7.96% Original Notes
------------
$ Aggregate Principal Amount of 8.11% Original Notes
------------
[ ] Please do not tender any Original Securities held by you for my account.
Dated: 1999
------------, ------------------------------------
Signature(s)
------------------------------------
Print Name(s) here:
------------------------------------
------------------------------------
Print Address(es):
------------------------------------
Area Code and Telephone Number(s):
------------------------------------
Tax Identification or
Social Security Number(s):
None of the Original Securities held by us for your account will be
tendered unless we receive written instructions from you to do so. If you
authorize the tender of Original Securities held by us for your account, all
such Original Securities will be tendered unless a specific contrary instruction
is given in the space provided.
3
<PAGE> 1
EXHIBIT 99.4
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF
7.96% SENIOR NOTES DUE 2005
AND/OR
8.11% SENIOR NOTES DUE 2009
OF
LEAR CORPORATION
This notice or one substantially equivalent hereto must be used to accept
the Exchange Offer of Lear Corporation (the "Company") made pursuant to the
Prospectus, dated , 1999 (the "Prospectus"), if certificates for
the original unregistered 7.96% Senior Notes due 2005 and/or the original
unregistered 8.11% Senior Notes due 2009 of the Company (collectively, the
"Original Securities") are not immediately available or if the procedure for
book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach The Bank of New York, as exchange agent
(the "Exchange Agent"), prior to 5:00 p.m., New York City time, on the
Expiration Date of the Exchange Offer.
This notice may be delivered or transmitted by facsimile transmission,
mail, or hand delivery to the Exchange Agent as set forth below. In order to
utilize the guaranteed delivery procedure to tender Original Securities pursuant
to the Exchange Offer, both this notice and a properly completed and duly
executed Letter of Transmittal (or, at the option of the tendering holder in the
case of a book-entry tender of Original Securities, an agent's message (as
defined in the Prospectus)) must be received by the Exchange Agent prior to 5:00
p.m., New York City time, on the Expiration Date.
The Exchange Agent for the Exchange Offer is:
THE BANK OF NEW YORK
By Hand or Overnight Delivery:
The Bank of New York
101 Barclay Street
Corporate Trust Services Window
Ground Level
Attention: Tolutope Adeyujo
Reorganization Section
Facsimile Transmissions:
(Eligible Institutions Only)
(212) 815-4699
To Confirm by Telephone
or for Information Call:
(212) 815-2824
By Registered or Certified Mail:
The Bank of New York
101 Barclay Street, 7E
New York, New York 10286
Attention: Tolutope Adeyujo
Reorganization Section
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET
FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Lear Corporation (the "Company") the
principal amount of 7.96% Senior Notes due 2005 of the Company ("7.96% Original
Notes") and/or the principal amount of 8.11% Senior Notes due 2009 of the
Company ("8.11% Original Notes") set forth below pursuant to the guaranteed
delivery procedure described in "The Exchange Offer -- Guaranteed Delivery
Procedures" section of the Company's prospectus, dated , 1999
(the "Prospectus"). Terms used herein with initial capital letters but not
otherwise defined herein have the respective meanings ascribed to them in the
Prospectus.
Principal Amount of 7.96% Original Notes Tendered (must be an integral multiple
of $1,000):
$
-------------------------------------------------------------------------------
Certificate Nos. (if available):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
If 7.96% Original Notes will be delivered book-entry transfer to the Depository
Trust Company, provide account number below.
Principal Amount of 8.11% Original Notes Tendered (must be an integral multiple
of $1,000):
$
------------------------------------------------------------------------------
Certificate Nos. (if available):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
If 8.11% Original Notes will be delivered book-entry transfer to the Depository
Trust Company, provide account number below.
ALL AUTHORITY HEREIN CONFERRED OR AGREED TO BE CONFERRED SHALL SURVIVE
THE DEATH OR INCAPACITY OF THE UNDERSIGNED AND EVERY OBLIGATION OF THE
UNDERSIGNED HEREUNDER SHALL BE BINDING UPON THE HEIRS, PERSONAL
REPRESENTATIVES, SUCCESSORS AND ASSIGNS OF THE UNDERSIGNED.
IMPORTANT:
PLEASE SIGN HERE
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Signature(s) of Holder(s) of Original Securities
Dated: 1999
----------------------------------,
Must be signed by the registered holder(s) of Original Securities exactly
as their name(s) appear(s) on the certificates for the Original Securities or
on a security position listing, or by person(s) authorized to become
registered holder(s) by endorsement and documents transmitted with this Notice
of Guaranteed Delivery. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations, or
others acting in a fiduciary or representative capacity, please provide the
following information.
Name:
-------------------------------------------------------------------------
(Please Type or Print)
Capacity (Full Title):
--------------------------------------------------------
Address:
----------------------------------------------------------------------
(Include a Zip Code)
Area Code and Telephone No.:
---------------------------------------------------
(Home)
------------------------------------------------------------------------------
(Business)
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a financial institution that is a participant in the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Program, or the Stock Exchanges Medallion Program, hereby
guarantees that the certificates representing the principal amount of
Securities tendered hereby in proper form for transfer, or timely confirmation
of the book-entry transfer of such Original Securities into the Exchange
Agent's account at the Depository Trust Company pursuant to the procedures set
forth in "The Exchange Offer -- Guaranteed Delivery Procedures" section of the
Prospectus, together with any required signature guarantee and any other
documents required by the Letter of Transmittal, will be received by the
Exchange Agent at the address set forth above, no later than three New York
Stock Exchange trading days after the Expiration Date.
-----------------------------------------------------
Name of Firm
-----------------------------------------------------
-----------------------------------------------------
Address
-----------------------------------------------------
Telephone Number
-----------------------------------------------------
Authorized Signature
-----------------------------------------------------
Name of Person Signing
-----------------------------------------------------
Title of Person Signing
-----------------------------------------------------
Date
NOTE: DO NOT SEND CERTIFICATES FOR ORIGINAL SECURITIES WITH THIS FORM.
CERTIFICATES FOR ORIGINAL SECURITIES SHOULD BE SENT ONLY WITH A COPY OF YOUR
PREVIOUSLY EXECUTED LETTER OF TRANSMITTAL.
