Supplemental Guarantor Condensed Consolidating Financial Statements

9 Months Ended

Oct. 01, 2016

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Supplemental Guarantor Condensed Consolidating Financial Statements



	October 1, 2016
	Lear		Guarantors		Non- guarantors		Eliminations			Consolidated
	(Unaudited; in millions)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	408.7	$	0.3	$	932.6	$	—		$	1,341.6
Accounts receivable	65.7		655.0		2,388.8		—			3,109.5
Inventories	1.6		434.2		627.2		—			1,063.0
Intercompany accounts	38.2		150.5		—		(188.7		)	—
Other	90.7		14.1		434.9		—			539.7
Total current assets	604.9		1,254.1		4,383.5		(188.7		)	6,053.8
LONG-TERM ASSETS:
Property, plant and equipment, net	166.8		405.6		1,348.5		—			1,920.9
Goodwill	39.9		651.3		378.2		—			1,069.4
Investments in subsidiaries	3,590.2		1,189.2		—		(4,779.4		)	—
Intercompany loans receivable	1,054.0		1,389.5		109.1		(2,552.6		)	—
Other	560.2		189.9		506.9		(23.7		)	1,233.3
Total long-term assets	5,411.1		3,825.5		2,342.7		(7,355.7		)	4,223.6
Total assets	$	6,016.0	$	5,079.6	$	6,726.2	$	(7,544.4	)	$	10,277.4
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term borrowings	$	—	$	—	$	8.7	$	—		$	8.7
Accounts payable and drafts	77.2		810.9		1,885.1		—			2,773.2
Accrued liabilities	245.2		337.5		1,086.1		—			1,668.8
Intercompany accounts	—		—		188.7		(188.7		)	—
Current portion of long-term debt	31.3		—		1.3		—			32.6
Total current liabilities	353.7		1,148.4		3,169.9		(188.7		)	4,483.3
LONG-TERM LIABILITIES:
Long-term debt	1,902.2		—		5.1		—			1,907.3
Intercompany loans payable	511.0		687.0		1,354.5		(2,552.5		)	—
Other	170.6		168.5		328.4		(23.7		)	643.8
Total long-term liabilities	2,583.8		855.5		1,688.0		(2,576.2		)	2,551.1
EQUITY:
Lear Corporation stockholders’ equity	3,078.5		3,075.7		1,703.8		(4,779.5		)	3,078.5
Noncontrolling interests	—		—		164.5		—			164.5
Equity	3,078.5		3,075.7		1,868.3		(4,779.5		)	3,243.0
Total liabilities and equity	$	6,016.0	$	5,079.6	$	6,726.2	$	(7,544.4	)	$	10,277.4



	December 31, 2015
	Lear		Guarantors		Non- guarantors		Eliminations			Consolidated
	(In millions)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	526.4	$	0.4	$	669.8	$	—		$	1,196.6
Accounts receivable	46.4		534.5		2,009.1		—			2,590.0
Inventories	4.0		407.0		536.6		—			947.6
Intercompany accounts	45.9		79.5		—		(125.4		)	—
Other	114.0		25.8		412.6		—			552.4
Total current assets	736.7		1,047.2		3,628.1		(125.4		)	5,286.6
LONG-TERM ASSETS:
Property, plant and equipment, net	134.2		417.6		1,274.7		—			1,826.5
Goodwill	39.9		651.3		362.6		—			1,053.8
Investments in subsidiaries	3,101.3		1,458.5		—		(4,559.8		)	—
Intercompany loans receivable	904.1		836.7		77.7		(1,818.5		)	—
Other	566.3		203.9		493.8		(25.1		)	1,238.9
Total long-term assets	4,745.8		3,568.0		2,208.8		(6,403.4		)	4,119.2
Total assets	$	5,482.5	$	4,615.2	$	5,836.9	$	(6,528.8	)	$	9,405.8
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable and drafts	$	78.0	$	681.2	$	1,745.2	$	—		$	2,504.4
Accrued liabilities	144.0		277.0		891.1		—			1,312.1
Intercompany accounts	—		—		125.4		(125.4		)	—
Current portion of long-term debt	21.9		—		1.2		—			23.1
Total current liabilities	243.9		958.2		2,762.9		(125.4		)	3,839.6
LONG-TERM LIABILITIES:
Long-term debt	1,925.3		—		6.4		—			1,931.7
Intercompany loans payable	221.6		650.1		946.8		(1,818.5		)	—
Other	164.3		164.9		312.7		(25.1		)	616.8
Total long-term liabilities	2,311.2		815.0		1,265.9		(1,843.6		)	2,548.5
EQUITY:
Lear Corporation stockholders’ equity	2,927.4		2,842.0		1,717.8		(4,559.8		)	2,927.4
Noncontrolling interests	—		—		90.3		—			90.3
Equity	2,927.4		2,842.0		1,808.1		(4,559.8		)	3,017.7
Total liabilities and equity	$	5,482.5	$	4,615.2	$	5,836.9	$	(6,528.8	)	$	9,405.8



	Three Months Ended October 1, 2016
	Lear			Guarantors			Non- guarantors			Eliminations			Consolidated
	(Unaudited; in millions)
Net sales	$	106.9		$	1,991.1		$	3,742.9		$	(1,314.5	)	$	4,526.4
Cost of sales	163.5			1,744.1			3,419.4			(1,314.5		)	4,012.5
Selling, general and administrative expenses	77.3			4.7			71.6			—			153.6
Intercompany operating (income) expense, net	(79.8		)	62.1			17.7			—			—
Amortization of intangible assets	0.7			5.2			9.3			—			15.2
Interest expense	16.5			6.1			(2.0		)	—			20.6
Other (income) expense, net	10.6			(0.7		)	4.3			—			14.2
Consolidated income (loss) before income taxes and equity in net income of affiliates and subsidiaries	(81.9		)	169.6			222.6			—			310.3
Provision for income taxes	(30.9		)	64.4			54.7			—			88.2
Equity in net income of affiliates	(1.1		)	0.3			(12.1		)	—			(12.9		)
Equity in net income of subsidiaries	(264.3		)	(115.7		)	—			380.0			—
Consolidated net income	214.4			220.6			180.0			(380.0		)	235.0
Less: Net income attributable to noncontrolling interests	—			—			20.6			—			20.6
Net income attributable to Lear	$	214.4		$	220.6		$	159.4		$	(380.0	)	$	214.4

Consolidated comprehensive income	$	224.7		$	215.9		$	194.6		$	(389.9	)	$	245.3
Less: Comprehensive income attributable to noncontrolling interests	—			—			20.6			—			20.6
Comprehensive income attributable to Lear	$	224.7		$	215.9		$	174.0		$	(389.9	)	$	224.7



	Three Months Ended September 26, 2015
	Lear			Guarantors			Non- guarantors			Eliminations			Consolidated
	(Unaudited; in millions)
Net sales	$	106.3		$	2,044.1		$	3,433.1		$	(1,253.2	)	$	4,330.3
Cost of sales	146.9			1,824.3			3,159.1			(1,253.2		)	3,877.1
Selling, general and administrative expenses	74.5			2.9			60.2			—			137.6
Intercompany operating (income) expense, net	(73.7		)	50.0			23.7			—			—
Amortization of intangible assets	0.5			5.2			7.3			—			13.0
Interest expense	16.4			6.1			(1.1		)	—			21.4
Other expense, net	12.6			2.8			6.3			—			21.7
Consolidated income (loss) before income taxes and equity in net income of affiliates and subsidiaries	(70.9		)	152.8			177.6			—			259.5
Provision for income taxes	(26.3		)	53.8			48.6			—			76.1
Equity in net income of affiliates	(0.4		)	(1.0		)	(8.5		)	—			(9.9		)
Equity in net income of subsidiaries	(225.2		)	(100.9		)	—			326.1			—
Consolidated net income	181.0			200.9			137.5			(326.1		)	193.3
Less: Net income attributable to noncontrolling interests	—			—			12.3			—			12.3
Net income attributable to Lear	$	181.0		$	200.9		$	125.2		$	(326.1	)	$	181.0

Consolidated comprehensive income	$	94.8		$	186.6		$	62.9		$	(239.6	)	$	104.7
Less: Comprehensive income attributable to noncontrolling interests	—			—			9.9			—			9.9
Comprehensive income attributable to Lear	$	94.8		$	186.6		$	53.0		$	(239.6	)	$	94.8



	Nine Months Ended October 1, 2016
	Lear			Guarantors			Non- guarantors			Eliminations			Consolidated
	(Unaudited; in millions)
Net sales	$	317.5		$	6,111.2		$	11,467.6		$	(3,982.2	)	$	13,914.1
Cost of sales	486.7			5,367.1			10,452.5			(3,982.2		)	12,324.1
Selling, general and administrative expenses	229.0			14.9			213.0			—			456.9
Intercompany operating (income) expense, net	(312.9		)	210.3			102.6			—			—
Amortization of intangible assets	2.2			15.6			23.9			—			41.7
Interest expense	49.0			18.0			(5.0		)	—			62.0
Other (income) expense, net	30.2			(0.7		)	(30.3		)	—			(0.8		)
Consolidated income (loss) before income taxes and equity in net income of affiliates and subsidiaries	(166.7		)	486.0			710.9			—			1,030.2
Provision for income taxes	(62.4		)	181.8			168.0			—			287.4
Equity in net income of affiliates	(1.6		)	(0.7		)	(46.9		)	—			(49.2		)
Equity in net income of subsidiaries	(847.9		)	(403.0		)	—			1,250.9			—
Consolidated net income	745.2			707.9			589.8			(1,250.9		)	792.0
Less: Net income attributable to noncontrolling interests	—			—			46.8			—			46.8
Net income attributable to Lear	$	745.2		$	707.9		$	543.0		$	(1,250.9	)	$	745.2

Consolidated comprehensive income	$	771.8		$	697.7		$	621.3		$	(1,274.8	)	$	816.0
Less: Comprehensive income attributable to noncontrolling interests	—			—			44.2			—			44.2
Comprehensive income attributable to Lear	$	771.8		$	697.7		$	577.1		$	(1,274.8	)	$	771.8



	Nine Months Ended September 26, 2015
	Lear			Guarantors			Non- guarantors			Eliminations			Consolidated
	(Unaudited; in millions)
Net sales	$	319.2		$	6,151.3		$	10,925.4		$	(3,909.1	)	$	13,486.8
Cost of sales	465.1			5,549.0			10,052.7			(3,909.1		)	12,157.7
Selling, general and administrative expenses	197.5			50.7			192.6			—			440.8
Intercompany operating (income) expense, net	(331.1		)	204.1			127.0			—			—
Amortization of intangible assets	1.3			15.6			22.6			—			39.5
Interest expense	54.5			17.3			(5.5		)	—			66.3
Other expense, net	26.0			1.5			32.9			—			60.4
Consolidated income (loss) before income taxes and equity in net income of affiliates and subsidiaries	(94.1		)	313.1			503.1			—			722.1
Provision for income taxes	(32.1		)	117.1			125.9			—			210.9
Equity in net income of affiliates	1.0			(2.1		)	(30.6		)	—			(31.7		)
Equity in net income of subsidiaries	(573.2		)	(271.9		)	—			845.1			—
Consolidated net income	510.2			470.0			407.8			(845.1		)	542.9
Less: Net income attributable to noncontrolling interests	—			—			32.7			—			32.7
Net income attributable to Lear	$	510.2		$	470.0		$	375.1		$	(845.1	)	$	510.2

Consolidated comprehensive income	$	325.8		$	442.0		$	237.7		$	(649.5	)	$	356.0
Less: Comprehensive income attributable to noncontrolling interests	—			—			30.2			—			30.2
Comprehensive income attributable to Lear	$	325.8		$	442.0		$	207.5		$	(649.5	)	$	325.8



	Nine Months Ended October 1, 2016
	Lear			Guarantors			Non- guarantors			Eliminations			Consolidated
	(Unaudited; in millions)
Net Cash Provided by Operating Activities	$	122.6		$	380.6		$	614.8		$	(24.1	)	$	1,093.9
Cash Flows from Investing Activities:
Additions to property, plant and equipment	(29.2		)	(77.0		)	(194.1		)	—			(300.3		)
Intercompany transactions	202.1			32.2			(31.4		)	(202.9		)	—
Other, net	(10.2		)	0.8			61.2			—			51.8
Net cash used in investing activities	162.7			(44.0		)	(164.3		)	(202.9		)	(248.5		)
Cash Flows from Financing Activities:
Credit agreement repayments	(15.6		)	—			—			—			(15.6		)
Short-term borrowings	—			—			8.9			—			8.9
Repurchase of common stock	(557.7		)	—			—			—			(557.7		)
Dividends paid to Lear Corporation stockholders	(68.1		)	—			—			—			(68.1		)
Dividends paid to noncontrolling interests	—			—			(14.8		)	—			(14.8		)
Intercompany transactions	289.4			(336.7		)	(179.7		)	227.0			—
Other, net	(51.0		)	—			(1.1		)				(52.1		)
Net cash used in financing activities	(403.0		)	(336.7		)	(186.7		)	227.0			(699.4		)

Effect of foreign currency translation	—			—			(1.0		)	—			(1.0		)
Net Change in Cash and Cash Equivalents	(117.7		)	(0.1		)	262.8			—			145.0
Cash and Cash Equivalents as of Beginning of Period	526.4			0.4			669.8			—			1,196.6
Cash and Cash Equivalents as of End of Period	$	408.7		$	0.3		$	932.6		$	—		$	1,341.6



	Nine Months Ended September 26, 2015
	Lear			Guarantors			Non- guarantors			Eliminations			Consolidated
	(Unaudited; in millions)
Net Cash Provided by Operating Activities	$	109.3		$	87.2		$	623.0		$	(133.5	)	$	686.0
Cash Flows from Investing Activities:
Additions to property, plant and equipment	(26.4		)	(79.8		)	(221.5		)	—			(327.7		)
Acquisitions, net of cash acquired and use of $350 million restricted cash (see non-cash investing activities below)	(485.5		)	1.2			19.0			—			(465.3		)
Intercompany transactions	385.4			(23.3		)	126.4			(488.5		)	—
Other, net	(31.1		)	7.8			12.7			—			(10.6		)
Net cash used in investing activities	(157.6		)	(94.1		)	(63.4		)	(488.5		)	(803.6		)
Cash Flows from Financing Activities:
Credit agreement borrowings	500.0			—			—			—			500.0
Credit agreement repayments	(3.1		)	—			—			—			(3.1		)
Repurchase of senior notes, net of use of $250 million restricted cash (see non-cash financing activities below) (Note 7)	(5.0		)	—			—			—			(5.0		)
Repurchase of common stock	(383.0		)	—			—			—			(383.0		)
Dividends paid to Lear Corporation stockholders	(60.0		)	—			—			—			(60.0		)
Dividends paid to noncontrolling interests	—			—			(16.2		)	—			(16.2		)
Intercompany transactions	30.4			7.0			(659.4		)	622.0			—
Other, net	(53.5		)	—			(0.1		)	—			(53.6		)
Net cash provided by (used in) financing activities	25.8			7.0			(675.7		)	622.0			(20.9		)

Effect of foreign currency translation	—			—			(32.8		)	—			(32.8		)
Net Change in Cash and Cash Equivalents	(22.5		)	0.1			(148.9		)	—			(171.3		)
Cash and Cash Equivalents as of Beginning of Period	377.8			0.1			716.2			—			1,094.1
Cash and Cash Equivalents as of End of Period	$	355.3		$	0.2		$	567.3		$	—		$	922.8

Non-cash Investing Activities
Cash restricted for use — acquisition of Eagle Ottawa	$	(350.0	)	$	—		$	—		$	—		$	(350.0	)

Non-cash Financing Activities
Cash restricted for use — repurchase of senior notes	$	(250.0	)	$	—		$	—		$	—		$	(250.0	)

Certain of the Company’s domestic 100% owned subsidiaries (the "Guarantors") have jointly and severally unconditionally guaranteed, on a senior unsecured basis, the performance and the full and punctual payment when due, whether at stated maturity, by acceleration or otherwise, of the Company’s obligations under its Credit Agreement and the indentures governing the Notes, including the Company’s obligations to pay principal, premium, if any, and interest with respect to the Notes. The Notes consist of $500 million in aggregate principal amount of 4.75% senior unsecured notes due 2023, $325 million in aggregate principal amount of 5.375% senior unsecured notes due 2024 and $650 million in aggregate principal amount of 5.25% senior unsecured notes due 2025.

The Guarantors include Guilford Mills, LLC, Lear Corporation EEDS and Interiors, Lear Mexican Seating Corporation and Lear Operations Corporation. Eagle Ottawa North America, LLC was released as a guarantor in 2016. In lieu of providing separate financial statements for the Guarantors, the Company has included the supplemental guarantor consolidating financial statements above. These financial statements reflect the Guarantors listed above for all periods presented. 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.

The 2015 supplemental guarantor condensed consolidating financial statements have been restated to reflect certain changes to the equity investments of the Guarantors.

Distributions

There are no significant restrictions on the ability of the Guarantors to make distributions to the Company.

Selling, General and Administrative Expenses

Corporate and division selling, general and administrative expenses are allocated to the operating subsidiaries based on various factors, which estimate usage of particular corporate and division functions, and in certain instances, other relevant factors, such as the revenues or the number of employees of the Company’s subsidiaries. During the three months ended October 1, 2016 and September 26, 2015, $36.4 million and $33.4 million, respectively, of selling, general and administrative expenses were allocated from Lear. During the nine months ended October 1, 2016 and September 26, 2015, $103.9 million and $97.2 million, respectively, of selling, general and administrative expenses were allocated from Lear.

Long-Term Debt of Lear and the Guarantors

A summary of long-term debt of Lear and the Guarantors on a combined basis is shown below (in millions):



	October 1, 2016			December 31, 2015
Credit agreement	$	473.2		$	488.4
Senior notes	1,460.3			1,458.8
	1,933.5			1,947.2
Less — Current portion	(31.3		)	(21.9		)
Long-term debt	$	1,902.2		$	1,925.3