Supplemental Guarantor Condensed Consolidating Financial Statements

6 Months Ended

Jul. 01, 2017

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Supplemental Guarantor Condensed Consolidating Financial Statements



	July 1, 2017
	Lear		Guarantors		Non- guarantors		Eliminations			Consolidated
	(Unaudited; in millions)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	352.7	$	0.3	$	813.7	$	—		$	1,166.7
Accounts receivable	398.7		268.3		2,690.7		—			3,357.7
Inventories	58.7		387.8		680.9		—			1,127.4
Intercompany accounts	70.2		159.8		—		(230.0		)	—
Other	132.8		25.8		531.5		—			690.1
Total current assets	1,013.1		842.0		4,716.8		(230.0		)	6,341.9
LONG-TERM ASSETS:
Property, plant and equipment, net	317.5		326.6		1,622.6		—			2,266.7
Goodwill	172.1		519.9		580.1		—			1,272.1
Investments in subsidiaries	4,609.7		1,801.5		—		(6,411.2		)	—
Intercompany loans receivable	1,000.9		1,142.8		107.6		(2,251.3		)	—
Other	509.5		132.9		738.1		(24.0		)	1,356.5
Total long-term assets	6,609.7		3,923.7		3,048.4		(8,686.5		)	4,895.3
Total assets	$	7,622.8	$	4,765.7	$	7,765.2	$	(8,916.5	)	$	11,237.2
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term borrowings	$	—	$	—	$	3.9	$	—		$	3.9
Accounts payable and drafts	391.8		568.7		2,242.4		—			3,202.9
Accrued liabilities	321.5		131.8		1,240.2		—			1,693.5
Intercompany accounts	—		—		230.0		(230.0		)	—
Current portion of long-term debt	40.6		—		1.4		—			42.0
Total current liabilities	753.9		700.5		3,717.9		(230.0		)	4,942.3
LONG-TERM LIABILITIES:
Long-term debt	1,873.0		—		4.1		—			1,877.1
Intercompany loans payable	1,105.1		63.7		1,082.5		(2,251.3		)	—
Other	268.9		10.5		406.2		(24.0		)	661.6
Total long-term liabilities	3,247.0		74.2		1,492.8		(2,275.3		)	2,538.7
EQUITY:
Lear Corporation stockholders’ equity	3,621.9		3,991.0		2,420.2		(6,411.2		)	3,621.9
Noncontrolling interests	—		—		134.3		—			134.3
Equity	3,621.9		3,991.0		2,554.5		(6,411.2		)	3,756.2
Total liabilities and equity	$	7,622.8	$	4,765.7	$	7,765.2	$	(8,916.5	)	$	11,237.2



	December 31, 2016
	Lear		Guarantors		Non- guarantors		Eliminations			Consolidated
	(In millions)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	480.4	$	0.3	$	790.9	$	—		$	1,271.6
Accounts receivable	314.0		238.7		2,193.8		—			2,746.5
Inventories	67.9		364.7		588.0		—			1,020.6
Intercompany accounts	87.0		94.3		—		(181.3		)	—
Other	119.4		15.3		475.9		—			610.6
Total current assets	1,068.7		713.3		4,048.6		(181.3		)	5,649.3
LONG-TERM ASSETS:
Property, plant and equipment, net	309.4		313.4		1,396.5		—			2,019.3
Goodwill	172.1		519.9		429.3		—			1,121.3
Investments in subsidiaries	4,002.3		1,037.6		—		(5,039.9		)	—
Intercompany loans receivable	308.9		1,206.9		91.1		(1,606.9		)	—
Other	456.6		146.8		525.1		(17.8		)	1,110.7
Total long-term assets	5,249.3		3,224.6		2,442.0		(6,664.6		)	4,251.3
Total assets	$	6,318.0	$	3,937.9	$	6,490.6	$	(6,845.9	)	$	9,900.6
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term borrowings	$	—	$	—	$	8.6	$	—		$	8.6
Accounts payable and drafts	328.8		460.1		1,851.6		—			2,640.5
Accrued liabilities	228.6		197.5		1,071.5		—			1,497.6
Intercompany accounts	—		—		181.3		(181.3		)	—
Current portion of long-term debt	34.4		—		1.2		—			35.6
Total current liabilities	591.8		657.6		3,114.2		(181.3		)	4,182.3
LONG-TERM LIABILITIES:
Long-term debt	1,893.5		—		4.5		—			1,898.0
Intercompany loans payable	504.9		48.7		1,053.3		(1,606.9		)	—
Other	270.6		13.2		361.4		(17.8		)	627.4
Total long-term liabilities	2,669.0		61.9		1,419.2		(1,624.7		)	2,525.4
EQUITY:
Lear Corporation stockholders’ equity	3,057.2		3,218.4		1,821.5		(5,039.9		)	3,057.2
Noncontrolling interests	—		—		135.7		—			135.7
Equity	3,057.2		3,218.4		1,957.2		(5,039.9		)	3,192.9
Total liabilities and equity	$	6,318.0	$	3,937.9	$	6,490.6	$	(6,845.9	)	$	9,900.6



	Three Months Ended July 1, 2017
	Lear			Guarantors			Non- guarantors			Eliminations			Consolidated
	(Unaudited; in millions)
Net sales	$	882.3		$	1,318.8		$	4,445.0		$	(1,522.9	)	$	5,123.2
Cost of sales	889.0			1,126.9			4,052.4			(1,522.9		)	4,545.4
Selling, general and administrative expenses	78.5			7.3			71.4			—			157.2
Intercompany operating (income) expense, net	(76.6		)	67.1			9.5			—			—
Amortization of intangible assets	1.9			4.0			5.6			—			11.5
Interest expense	23.7			(0.8		)	(1.5		)	—			21.4
Other expense, net	1.8			0.6			3.4			—			5.8
Consolidated income (loss) before income taxes and equity in net income of affiliates and subsidiaries	(36.0		)	113.7			304.2			—			381.9
Provision for income taxes	(10.4		)	36.1			47.6			—			73.3
Equity in net income of affiliates	(1.4		)	—			(17.0		)	—			(18.4		)
Equity in net income of subsidiaries	(336.1		)	(181.2		)	—			517.3			—
Consolidated net income	311.9			258.8			273.6			(517.3		)	327.0
Less: Net income attributable to noncontrolling interests	—			—			15.1			—			15.1
Net income attributable to Lear	$	311.9		$	258.8		$	258.5		$	(517.3	)	$	311.9

Consolidated comprehensive income	$	433.7		$	289.4		$	372.8		$	(644.9	)	$	451.0
Less: Comprehensive income attributable to noncontrolling interests	—			—			17.3			—			17.3
Comprehensive income attributable to Lear	$	433.7		$	289.4		$	355.5		$	(644.9	)	$	433.7



	Three Months Ended July 2, 2016
	Lear			Guarantors			Non- guarantors			Eliminations			Consolidated
	(Unaudited; in millions)
Net sales	$	921.2		$	1,265.5		$	3,883.5		$	(1,345.4	)	$	4,724.8
Cost of sales	910.5			1,079.7			3,539.6			(1,345.4		)	4,184.4
Selling, general and administrative expenses	81.0			2.1			71.2			—			154.3
Intercompany operating (income) expense, net	(87.2		)	57.7			29.5			—			—
Amortization of intangible assets	2.0			4.0			7.3			—			13.3
Interest expense	23.1			(0.9		)	(1.9		)	—			20.3
Other (income) expense, net	9.5			0.2			(33.2		)	—			(23.5		)
Consolidated income (loss) before income taxes and equity in net income of affiliates and subsidiaries	(17.7		)	122.7			271.0			—			376.0
Provision for income taxes	(7.1		)	41.8			66.3			—			101.0
Equity in net income of affiliates	(1.1		)	—			(18.4		)	—			(19.5		)
Equity in net income of subsidiaries	(291.9		)	(161.0		)	—			452.9			—
Consolidated net income	282.4			241.9			223.1			(452.9		)	294.5
Less: Net income attributable to noncontrolling interests	—			—			12.1			—			12.1
Net income attributable to Lear	$	282.4		$	241.9		$	211.0		$	(452.9	)	$	282.4

Consolidated comprehensive income	$	229.2		$	230.5		$	178.4		$	(399.6	)	$	238.5
Less: Comprehensive income attributable to noncontrolling interests	—			—			9.3			—			9.3
Comprehensive income attributable to Lear	$	229.2		$	230.5		$	169.1		$	(399.6	)	$	229.2



	Six Months Ended July 1, 2017
	Lear			Guarantors			Non- guarantors			Eliminations			Consolidated
	(Unaudited; in millions)
Net sales	$	1,794.6		$	2,598.6		$	8,699.9		$	(2,971.4	)	$	10,121.7
Cost of sales	1,803.5			2,209.1			7,920.2			(2,971.4		)	8,961.4
Selling, general and administrative expenses	151.9			15.2			145.8			—			312.9
Intercompany operating (income) expense, net	(191.2		)	138.5			52.7			—			—
Amortization of intangible assets	3.8			8.0			9.8			—			21.6
Interest expense	47.2			(2.0		)	(3.0		)	—			42.2
Other (income) expense, net	(4.4		)	(2.2		)	16.1			—			9.5
Consolidated income (loss) before income taxes and equity in net income of affiliates and subsidiaries	(16.2		)	232.0			558.3			—			774.1
Provision for income taxes	(16.7		)	74.5			104.6			—			162.4
Equity in net income of affiliates	(2.0		)	—			(31.8		)	—			(33.8		)
Equity in net income of subsidiaries	(615.2		)	(329.8		)	—			945.0			—
Consolidated net income	617.7			487.3			485.5			(945.0		)	645.5
Less: Net income attributable to noncontrolling interests	—			—			27.8			—			27.8
Net income attributable to Lear	$	617.7		$	487.3		$	457.7		$	(945.0	)	$	617.7

Consolidated comprehensive income	$	842.0		$	565.6		$	640.4		$	(1,174.9	)	$	873.1
Less: Comprehensive income attributable to noncontrolling interests	—			—			31.1			—			31.1
Comprehensive income attributable to Lear	$	842.0		$	565.6		$	609.3		$	(1,174.9	)	$	842.0



	Six Months Ended July 2, 2016
	Lear			Guarantors			Non- guarantors			Eliminations			Consolidated
	(Unaudited; in millions)
Net sales	$	1,847.8		$	2,482.9		$	7,724.7		$	(2,667.7	)	$	9,387.7
Cost of sales	1,833.0			2,113.2			7,033.1			(2,667.7		)	8,311.6
Selling, general and administrative expenses	157.4			4.5			141.4			—			303.3
Intercompany operating (income) expense, net	(203.0		)	118.1			84.9			—			—
Amortization of intangible assets	3.9			8.0			14.6			—			26.5
Interest expense	46.1			(1.7		)	(3.0		)	—			41.4
Other (income) expense, net	20.0			(0.4		)	(34.6		)	—			(15.0		)
Consolidated income (loss) before income taxes and equity in net income of affiliates and subsidiaries	(9.6		)	241.2			488.3			—			719.9
Provision for income taxes	(3.6		)	89.5			113.3			—			199.2
Equity in net income of affiliates	(1.5		)	—			(34.8		)	—			(36.3		)
Equity in net income of subsidiaries	(535.3		)	(297.1		)	—			832.4			—
Consolidated net income	530.8			448.8			409.8			(832.4		)	557.0
Less: Net income attributable to noncontrolling interests	—			—			26.2			—			26.2
Net income attributable to Lear	$	530.8		$	448.8		$	383.6		$	(832.4	)	$	530.8

Consolidated comprehensive income	$	547.1		$	445.1		$	426.7		$	(848.2	)	$	570.7
Less: Comprehensive income attributable to noncontrolling interests	—			—			23.6			—			23.6
Comprehensive income attributable to Lear	$	547.1		$	445.1		$	403.1		$	(848.2	)	$	547.1



	Six Months Ended July 1, 2017
	Lear			Guarantors			Non- guarantors			Eliminations			Consolidated
	(Unaudited; in millions)
Net Cash Provided by Operating Activities	$	143.0		$	246.0		$	520.8		$	(64.5	)	$	845.3
Cash Flows from Investing Activities:
Additions to property, plant and equipment	(34.6		)	(67.1		)	(172.3		)	—			(274.0		)
Acquisition	—			—			(286.8		)	—			(286.8		)
Intercompany transactions	(463.1		)	64.1			(16.5		)	415.5			—
Other, net	(4.3		)	0.6			(1.8		)	—			(5.5		)
Net cash provided by (used in) investing activities	(502.0		)	(2.4		)	(477.4		)	415.5			(566.3		)
Cash Flows from Financing Activities:
Credit agreement repayments	(15.6		)	—			—			—			(15.6		)
Short-term borrowings, net	—			—			(4.9		)	—			(4.9		)
Repurchase of common stock	(239.7		)	—			—			—			(239.7		)
Dividends paid to Lear Corporation stockholders	(70.7		)	—			—			—			(70.7		)
Dividends paid to noncontrolling interests	—			—			(27.7		)	—			(27.7		)
Intercompany transactions	600.2			(243.6		)	(5.6		)	(351.0		)	—
Other, net	(42.9		)	—			(15.4		)	—			(58.3		)
Net cash provided by (used in) financing activities	231.3			(243.6		)	(53.6		)	(351.0		)	(416.9		)

Effect of foreign currency translation	—			—			33.0			—			33.0
Net Change in Cash and Cash Equivalents	(127.7		)	—			22.8			—			(104.9		)
Cash and Cash Equivalents as of Beginning of Period	480.4			0.3			790.9			—			1,271.6
Cash and Cash Equivalents as of End of Period	$	352.7		$	0.3		$	813.7		$	—		$	1,166.7



	Six Months Ended July 2, 2016
	Lear			Guarantors			Non- guarantors			Eliminations			Consolidated
	(Unaudited; in millions)
Net Cash Provided by Operating Activities	$	129.1		$	218.1		$	481.0		$	(10.6	)	$	817.6
Cash Flows from Investing Activities:
Additions to property, plant and equipment	(31.6		)	(36.7		)	(113.4		)	—			(181.7		)
Intercompany transactions	88.2			34.9			(24.0		)	(99.1		)	—
Other, net	(4.0		)	0.6			53.9			—			50.5
Net cash provided by (used in) investing activities	52.6			(1.2		)	(83.5		)	(99.1		)	(131.2		)
Cash Flows from Financing Activities:
Credit agreement repayments	(9.4		)	—			—			—			(9.4		)
Short-term borrowings, net	—			—			5.2			—			5.2
Repurchase of common stock	(367.1		)	—			—			—			(367.1		)
Dividends paid to Lear Corporation stockholders	(47.0		)	—			—			—			(47.0		)
Dividends paid to noncontrolling interests	—			—			(14.3		)	—			(14.3		)
Intercompany transactions	286.6			(217.1		)	(179.2		)	109.7			—
Other, net	(50.7		)	—			(0.6		)	—			(51.3		)
Net cash provided by (used in) financing activities	(187.6		)	(217.1		)	(188.9		)	109.7			(483.9		)

Effect of foreign currency translation	—			—			(4.4		)	—			(4.4		)
Net Change in Cash and Cash Equivalents	(5.9		)	(0.2		)	204.2			—			198.1
Cash and Cash Equivalents as of Beginning of Period	526.4			0.3			669.9			—			1,196.6
Cash and Cash Equivalents as of End of Period	$	520.5		$	0.1		$	874.1		$	—		$	1,394.7

Basis of Presentation

Certain of the Company’s domestic 100% owned subsidiaries (the "Guarantors") have fully and unconditionally guaranteed, jointly and severally, 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 the 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 $500.0 million in aggregate principal amount of 4.75% senior unsecured notes due 2023, $325.0 million in aggregate principal amount of 5.375% senior unsecured notes due 2024 and $650.0 million in aggregate principal amount 5.25% senior unsecured notes due 2025.

The Guarantors include Lear Corporation EEDS and Interiors and Lear Mexican Seating Corporation. In 2016, Guilford Mills, LLC and Lear Operations Corporation (previously guarantors) merged into Lear, and Eagle Ottawa North America, LLC was released as a guarantor. 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 2016 supplemental guarantor condensed consolidating financial statements have been restated to reflect changes in the Guarantor entities, as well as 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 July 1, 2017 and July 2, 2016, $22.5 million and $21.8 million, respectively, of selling, general and administrative expenses were allocated from Lear. During the six months ended July 1, 2017 and July 2, 2016, $44.7 million and $42.4 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):



	July 1, 2017			December 31, 2016
Credit agreement	$	451.8		$	467.1
Senior notes	1,461.8			1,460.8
	1,913.6			1,927.9
Less — Current portion	(40.6		)	(34.4		)
Long-term debt	$	1,873.0		$	1,893.5