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Executive Overview
−Removed: We are a leading Tier 1 vertically integrated supplier to the global automotive industry.
−Removed: We supply seating, electrical distribution and connection systems, electronic systems, and software and connected services, to all of the world's major automotive manufacturers.
−Removed: Built on a foundation and strong culture of innovation, operational excellence, and engineering and program management capabilities, we use our product, design and technological expertise, global reach and competitive manufacturing footprint to achieve our financial goals and objectives of continuing to deliver profitable growth (balancing risks and returns), investing in innovation to drive business growth and profitability, maintaining a strong balance sheet with investment grade credit metrics and consistently returning excess cash to our stockholders.
+Added: We are a global automotive technology leader in Seating and E-Systems, enabling superior in-vehicle experiences for consumers around the world.
+Added: We supply seating, electrical distribution and connection systems and electronic systems to all of the world's major automotive manufacturers.
+Added: Lear is built on a foundation and strong culture of innovation, operational excellence, and engineering and program management capabilities.
+Added: We use our product, design and technological expertise, as well as our global reach and competitive manufacturing footprint, to achieve our financial goals and objectives.
+Added: These include continuing to deliver profitable growth (balancing risks and returns);
+Added: investing in innovation to drive business growth and profitability;
+Added: maintaining a strong balance sheet with investment grade credit metrics;
+Added: and consistently returning capital to our stockholders.
+Added: Further, we have aligned our strategy with the key trends affecting our business — electrification, connectivity, autonomy and shared mobility.
+Added: At Lear, we are Making every drive better TM by providing technology for safer, smarter and more comfortable journeys, while adhering to our values — Be Inclusive.
+Added: Be Inventive.
+Added: Get Results the Right Way .
Our business is organized under two reporting segments:
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Our capabilities in operations and supply chain management enable synchronized (just-in-time) assembly and delivery of high volumes of complex complete seat systems to our customers.
−Removed: Included in our complete seat system and subsystem solutions are advanced comfort, wellness, safety and sound offerings, as well as configurable seating product technologies, all of which are compatible with traditional internal combustion engine ("ICE") architectures and the full range of hybrid, plug-in hybrid and battery electric architectures.
−Removed: Our advanced comfort, wellness, safety and sound offerings are facilitated by our system, component and integration capabilities, together with our in-house electronics, sensor, software and algorithm competencies.
+Added: Included in our complete seat system and subsystem solutions are advanced comfort, wellness and safety offerings, as well as configurable seating product technologies.
+Added: All of these products are compatible with traditional internal combustion engine ("ICE") architectures and the full range of hybrid, plug-in hybrid and battery electric architectures (collectively, "electrified powertrains").
+Added: Our advanced comfort, wellness and safety offerings are facilitated by our system, component and integration capabilities, together with our in-house electronics, sensor, software and algorithm competencies.
+Added: We anticipate that our comfort offerings will be enhanced by the acquisition of substantially all of Kongsberg Automotive's Interior Comfort Systems business unit ("Kongsberg"), which is expected to close in the first quarter of 2022.
As the most vertically integrated global seat supplier, our key seat component product offerings include seat trim covers, surface materials such as leather and fabric, seat mechanisms, seat foam and headrests.
−Removed: Our E-Systems business consists of the design, development, engineering and manufacture of complete electrical distribution and connection systems, electronic systems, and software and connected services.
−Removed: The unique combination of these capabilities enables us to provide our customers with customizable solutions with optimized designs at a competitive cost.
−Removed: Electrical distribution and connection systems utilize low voltage, high voltage, high speed data cables and flat wiring to connect networks and electrical signals and manage electrical power within the vehicle for all types of powertrains – from traditional ICE architectures to the full range of hybrid, plug-in hybrid and battery electric architectures.
−Removed: Key components in our electrical distribution portfolio include wire harnesses, terminals and connectors, and engineered components for both ICE and electrified vehicle architectures that require management of higher voltage and power.
+Added: Our E-Systems business consists of the design, development, engineering and manufacture of complete electrical distribution and connection systems and electronic systems.
+Added: The combination of these capabilities enables us to provide our customers with customizable solutions with optimized designs at a competitive cost.
+Added: Electrical distribution and connection systems utilize low voltage wire, high voltage wire, high speed data cables and flat wiring to connect networks and electrical signals and manage electrical power within the vehicle for all types of powertrains – from traditional ICE architectures to the full range of electrified powertrains.
+Added: Key components in our electrical distribution and connection systems portfolio include wire harnesses, terminals and connectors and engineered components for both ICE architectures and electrified powertrains that require management of higher voltage and power.
Electronic systems facilitate signal, data and power management within the vehicle and include the associated software required to facilitate these functions.
−Removed: Key components in our electronic systems portfolio include body domain control modules and products specific to electrification and connectivity trends.
+Added: Key components in our electronic systems portfolio include body domain control modules and products specific to electrification and connectivity.
Electrification products include on-board battery chargers, power conversion modules, high voltage battery management systems and high voltage power distribution systems.
−Removed: Connectivity products include gateway modules and communication modules to manage both wired and wireless networks and data in vehicles.
+Added: Connectivity products include telematics control units ("TCU") and gateway modules to manage both wired and wireless networks and data in vehicles.
In addition to electronic modules, we offer software that includes cybersecurity, advanced vehicle positioning for automated and autonomous driving applications and full capabilities in both dedicated short-range communication and cellular protocols for vehicle connectivity.
−Removed: Our software and connected services offerings include embedded control software and cloud and mobile device-based software and services.
−Removed: Our customers traditionally have sourced our electronic hardware together with the software that we embed in it, but such software may also be sourced by our customers independently of the hardware.
−Removed: Our connected services software solutions include award-winning Xevo Market, an in-vehicle commerce and service platform that connects customers with their favorite brands and services by delivering highly-contextual sales offers through vehicle touch screens and vehicle-branded mobile applications.
+Added: Our software offerings include embedded control software and cloud and mobile device-based software and services.
+Added: Our customers traditionally have sourced our electronic hardware together with the software that we embed in it.
We serve all of the world's major automotive manufacturers across both our Seating and E-Systems businesses, and we have automotive content on more than 450 vehicle nameplates worldwide.
−Removed: It is common to have both seating and electrical content on the same and multiple vehicle platforms with a single customer.
−Removed: Further, with the seat becoming a more dynamic and integrated system requiring increased levels of electrical and electronic integration, the combined capabilities of our Seating and E-Systems businesses are a competitive advantage.
+Added: It is common for us to have both seating and electrical and/or electronic content on the same vehicle platform.
Our businesses benefit globally from leveraging common operating standards and disciplines, including world-class product development and manufacturing processes, as well as common customer support and regional infrastructures, all of which contribute to our reputation for operational excellence.
−Removed: Our core capabilities are shared across component categories and include high-precision manufacturing and assembly with short lead times, management of complex supply chains, global engineering and program management skills, the agility to establish and/or transfer production between facilities quickly and a unique customer-focused culture.
−Removed: Our businesses utilize proprietary, industry-specific processes and standards, leverage common low-cost engineering centers and share centralized operating support functions, such as logistics, supply chain management, quality and health and safety, as well as all major administrative functions.
−Removed: COVID-19 Pandemic
−Removed: Our sales are driven by the number of vehicles produced by the automotive manufacturers, which is ultimately dependent on consumer demand for automotive vehicles, and our content per vehicle.
−Removed: Unprecedented industry disruptions related to the COVID-19 pandemic impacted operations in every region of the world.
+Added: Our core capabilities are shared across component categories and include:
+Added: high-precision manufacturing and assembly with short lead times;
+Added: management of complex supply chains;
+Added: global engineering and program management skills;
+Added: the agility to establish and/or transfer production between facilities quickly;
+Added: and, a unique customer-focused culture.
+Added: Our businesses utilize proprietary, industry-specific processes and standards, leverage
+Added: common low-cost engineering centers and share centralized operating support functions.
+Added: These functions include logistics, supply chain management, quality, health and safety, and all major administrative functions.
+Added: Industry Overview
+Added: Our sales are driven by the number of vehicles produced by the automotive manufacturers, which is ultimately dependent on the availability of raw materials and components and consumer demand for automotive vehicles, and our content per vehicle.
+Added: In 2020, unprecedented industry disruptions related to the COVID-19 pandemic, particularly in the first half of the year, impacted our operations in every region of the world.
+Added: Alth ough industry production increased 3% in 2021 over 2020, production remains well below recent historic levels and consumer demand.
+Added: Production in the second half of 2021 d ecreased 16% relative to the second half of 2020.
+Added: This was largely due to the continuing impact of the COVID-19 pandemic in 2021, particularly through supply shortages.
+Added: The most significant supply shortage relates to semiconductor chips, which impacted global vehicle production and resulted in reductions and cancellations of planned production.
+Added: In addition, we experienced increased costs related to labor shortages and inefficiencies and ongoing costs related to personal protective equipment, all of which are likely to continue for a period of time.
+Added: Increases in certain commodity costs, as well as transportation and logistics costs, are also impacting, and will continue to impact, our operating results for the foreseeable future.
+Added: Further, a resurgence of the COVID-19 virus or its variants, including corresponding "stay at home" or similar government orders impacting industry production, could impact our financial results.
+Added: For risks related to the COVID-19 pandemic, including supply shortages, see Item 1A, "Risk Factors."
Global automotive industry production volumes in 2021, as compared to 2020, are shown below (in thousands of units):
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(2) Production data for 2020 has been updated from our 2020 Annual Report on Form 10-K to reflect actual production levels.
−Removed: Our operations in China were impacted first, with most plants in the country closed for several weeks during the first quarter.
−Removed: At the end of the first quarter, all of our facilities in China were operating and capacity utilization was increasing.
−Removed: Beginning in mid-March, our operations in Europe, North America, South America and Asia (outside of China) were impacted, with virtually all of our plants closed at the end of the first quarter and closures continuing throughout April and, in most cases, a portion of May.
−Removed: Although manufacturing resumed gradually, most of our plants in our major markets were operating at pre-COVID-19 levels at the end of the second quarter and throughout the second half of 2020.
−Removed: We experienced significant inefficiencies and incremental costs related to the COVID-19 pandemic in the first half of the year, which diminished toward the end of the second quarter.
−Removed: In the second half of 2020, we experienced less significant but ongoing costs related to personal protective equipment, employee transportation and higher labor costs reflecting an increase in absenteeism.
−Removed: Although industry production has returned to pre-COVID-19 levels, partially due to our customers' need to replenish inventory levels, it is likely that, for a period of time, the global automotive industry will experience lower demand for new vehicles as a result of the global economic slowdown caused by the COVID-19 pandemic, as new vehicle sales are typically correlated with positive consumer confidence and low unemployment.
−Removed: We are also continuing to monitor our supply base, as well as related production constraints imposed by various governments, to minimize the impact on our manufacturing operations.
−Removed: Further, a resurgence of the virus with corresponding shelter-in-place orders impacting industry production in 2021 could also impact our financial results.
−Removed: Liquidity actions
−Removed: In response to the COVID-19 pandemic, we took a number of proactive steps to preserve cash and maximize our financial flexibility, including the reduction of discretionary spending, the implementation of salary reductions and deferrals, the reduction of capital expenditures, the aggressive management of working capital and the suspension of share repurchases and quarterly dividends.
−Removed: We are also continuing to seek opportunities offered under government incentive programs throughout the world.
−Removed: In March 2020, we borrowed $1.0 billion under our revolving credit facility, which was repaid in full in September 2020.
−Removed: With $1.3 billion of cash on hand at the end of the 2020, $1.75 billion of availability under our revolving credit facility and no near-term debt maturities, we believe that we are well positioned to withstand the continuing effects of the COVID-19 pandemic.
−Removed: Employee protection
−Removed: Our top priority is to ensure the health and safety of our employees.
−Removed: We have restricted business travel, established protocols for visitors entering our facilities, enhanced disinfection and cleaning procedures at our facilities and promoted social distancing.
−Removed: We have created a Safe Work Playbook, which provides a standardized approach for each of our facilities to create a consistent and safe work environment and offers insights into navigating operational challenges related to the COVID-19 pandemic.
−Removed: The playbook is publicly available and includes health and safety information related to plant operating protocols;
−Removed: employee education, training and feedback;
−Removed: facility assessments;
−Removed: and phased reopening of engineering and administrative centers.
−Removed: For risks related to the COVID-19 pandemic, see Part I — Item 1A, "Risk Factors — Pandemics or disease outbreaks, such as COVID-19, have disrupted, and may continue to disrupt, our business, which could adversely affect our financial performance."
−Removed: Industry Overview
Automotive sales and production can be affected by the age of the vehicle fleet and related scrappage rates, labor relations issues, fuel prices, regulatory requirements, government initiatives, trade agreements, the availability and cost of credit, the availability of critical components needed to complete the production of vehicles, restructuring actions of our customers and suppliers, facility closures, changing consumer attitudes toward vehicle ownership and usage and other factors.
−Removed: Our operating results are also significantly impacted by the overall commercial success of the vehicle platforms for which we supply particular products, as well as the profitability of the products that we supply for these platforms.
+Added: Our operating results are also significantly impacted by the overall commercial success of the vehicle platforms for which we supply particular products, as well as the level of vertical integration and profitability of the products that we supply for these platforms.
The loss of business with respect to any vehicle model for which we are a significant supplier, or a decrease in the production levels of any such models, could adversely affect our operating results.
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Our ability to reduce the risks inherent in certain concentrations of business, and thereby maintain our financial performance in the future, will depend, in part, on our ability to continue to diversify our sales on a customer, product, platform and geographic basis to reflect the market overall.
−Removed: Key trends affecting our business include electrification, connectivity and autonomy.
−Removed: In addition, our business is affected by the consolidation of automotive manufacturers, as well as new non-traditional entrants to the automotive industry, the collaboration of automotive manufacturers on commonized vehicle platforms, increasing demand for luxury and performance features, including increasing levels of electrical and electronic content, and China’s emergence as the largest automotive market in the world.
−Removed: In particular, we believe that we have a significant opportunity for growth in China with both global and domestic automotive manufacturers.
−Removed: Another key trend benefiting our business is the shift toward crossover and sport utility vehicles, where our content can be significantly higher than our average content per vehicle.
−Removed: In addition, we believe that demand for energy efficiency and reduced carbon emissions, as well as the demand for enhanced communications and safety, are driving the technology trends of electrification, connectivity and autonomy.
−Removed: We are focused on those trends which provide us with significant business opportunities where we have competitive differentiation and innovative technology.
−Removed: While both of our businesses are powertrain agnostic, we are well positioned to capitalize on these technology trends, each of which is likely to be at the forefront of our industry for the foreseeable future in light of the long-term convergence toward electric, connected and autonomous vehicles.
−Removed: Our sales and marketing approach addresses these trends, while our strategy focuses on the major imperatives for success as an automotive supplier:
−Removed: quality, service, cost and efficiency, and innovation and technology.
−Removed: We have expanded key component and software capabilities through organic investment and acquisitions to ensure a full complement of the best solutions for our customers.
+Added: The automotive industry, and our business, continue to be shaped by the broad trends of electrification, connectivity, autonomy, and shared mobility.
+Added: We also consider demand and regulatory developments for improved energy efficiency, sustainability,
+Added: enhanced safety and communications (e.g., government mandates related to fuel economy, carbon emissions and safety equipment) to be significant drivers of these trends, each of which is likely to be at the forefront of our industry for the foreseeable future.
+Added: In addition to key foundational attributes imperative for success as an automotive supplier (quality, service and cost), our strategic initiatives focus on furthering our competitive differentiation through vertical integration, disruptive innovation and advanced manufacturing technology.
+Added: We have expanded key component capabilities through organic investment and acquisitions to ensure a full complement of the best solutions for our customers.
We have restructured, and continue to align, our manufacturing and engineering footprint to attain a leading competitive cost position globally.
−Removed: We have established or expanded activities in new and growing markets, especially China, in support of our customers’ growth initiatives and in pursuit of opportunities with new customers.
+Added: We have established or expanded activities in new and growing markets, in support of our customers' growth initiatives and in pursuit of opportunities with new customers.
These initiatives have helped us achieve our financial goals overall, as well as a more balanced regional, customer and vehicle segment diversification in our business.
For further information related to these trends and our strategy, see Part 1 — Item 1, "Business — Industry and Strategy."
−Removed: Our customers typically require us to reduce our prices over the life of a vehicle model and, at the same time, assume significant responsibility for the design, development and engineering of our products.
−Removed: Our financial performance is largely dependent on our ability to achieve product cost reductions through product design enhancement and supply chain management, as well as manufacturing efficiencies and restructuring actions.
−Removed: We also seek to enhance our financial performance by investing in product development, design capabilities and new product initiatives that respond to the needs of our customers and consumers.
+Added: Our customers t ypically require us to reduce our prices over the life of a vehicle model and, at the same time, assume significant responsibility for the design, development and engineering of our products.
+Added: Our financial performance is largely dependent on our ability to offset these price reductions with product cost reductions through product design enhancement, supply chain management, manufacturing efficiencies and restructuring actions.
+Added: We also seek to enhance our financial performance by investing in product development, design capabilities and new product initiatives that respond to and anticipate the needs of our customers and consumers.
We continually evaluate operational and strategic alternatives to improve our business structure and align our business with the changing needs of our customers and major industry trends affecting our business.
−Removed: Our material cost as a percentage of net sales was 64.3% in 2020, as compared to 65.0% in 2019 and 64.4% in 2018.
+Added: Our material cost as a percentage of net sales was 65.4% in 2021, as compared to 64.3% in 2020 and 65.0% in 2019, reflecting increases in certain commodity costs.
Raw material, energy and commodity costs can be volatile, reflecting changes in supply and demand and global trade and tariff policies.
−Removed: We have developed and implemented strategies to mitigate the impact of higher raw material, energy and commodity costs, such as the selective in-sourcing of components, the continued consolidation of our supply base, longer-term purchase commitments and the selective expansion of low-cost country sourcing and engineering, as well as value engineering and product benchmarking.
−Removed: However, these strategies, together with commercial negotiations with our customers and suppliers, typically offset only a portion of the adverse impact.
−Removed: Certain of these strategies also may limit our opportunities in a declining commodity environment.
+Added: Our primary commodity cost exposures relate to steel, copper and leather.
+Added: We have developed and implemented strategies to mitigate the impact of higher raw material, energy and commodity costs, such as the selective in-sourcing of components, the continued consolidation of our supply base, longer-term purchase commitments, contractual recovery mechanisms and the selective expansion of low-cost country sourcing and engineering, as well as value engineering and product benchmarking.
+Added: Further, our exposure to changes in steel prices is primarily indirect, through purchased components, and a significant portion of our copper, leather and direct steel purchases are subject to price index agreements with our customers and suppliers.
+Added: However, these strategies, together with commercial negotiations with our customers and suppliers, typically do not offset all of the adverse impact.
+Added: Certain of these strategies also may limit our opportunities in a declining commodity price environment.
In addition, the availability of raw materials, commodities and product components fluctuates from time to time due to factors outside of our control.
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In evaluating our financial condition and operating performance, we focus primarily on earnings, operating margins, cash flows and return on invested capital.
−Removed: In addition to maintaining and expanding our business with our existing customers in our more established markets, our expansion plans are focused primarily on emerging markets.
−Removed: Asia, and China in particular, continues to present long-term growth opportunities, as we focus on expanding our market share and content per vehicle, as demand for luxury and performance features increases in this region.
−Removed: In addition to our wholly owned locations, we currently have eleven operating joint ventures with operations in Asia, as well as two additional joint ventures in North America dedicated to serving Asian automotive manufacturers.
−Removed: We also have aggressively pursued this strategy by selectively increasing our vertical integration capabilities globally, as well as expanding our component manufacturing capacity in Asia, Brazil, Eastern Europe, Mexico and Northern Africa.
−Removed: Furthermore, we have expanded our low-cost engineering capabilities in Asia, Eastern Europe and Northern Africa.
+Added: Our strategy includes expanding our business with new and existing customers globally through new products, including electrification.
+Added: Asia continues to present long-term growth opportunities, as we focus on expanding our market share and content per vehicle, as demand for luxury and performance features increases in this region.
+Added: In addition to our wholly owned locations, we currently have thirteen operating joint ventures with operations in Asia, as well as two additional joint ventures in North America dedicated to serving Asian automotive manufacturers.
+Added: We also have selectively increased our vertical integration capabilities globally, as well as expanded our component manufacturing capacity in Asia, Eastern Europe, Mexico and Northern Africa and our low-cost engineering capabilities in Asia, Eastern Europe and Northern Africa.
Our success in generating cash flow will depend, in part, on our ability to manage working capital effectively.
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Improvements in our return on invested capital will depend on our ability to maintain an appropriate asset base for our business and to increase productivity and operating efficiency.
+Added: In October 2021, we entered into a definitive agreement to acquire Kongsberg, which specializes in comfort seating solutions, including massage, lumbar, seat heat and ventilation.
+Added: With almost 50 years of experience, Kongsberg has cutting-edge technology, a well-balanced customer portfolio built on longstanding relationships with leading premium automotive manufacturers and an experienced and dedicated team.
+Added: The acquisition is expected to further advance our seat component capabilities into specialized comfort seating solutions that further differentiate our product offerings and improve vehicle performance and packaging - important features across various vehicle segments.
+Added: The transaction is valued at approximately €175 million, on a cash and debt free basis.
+Added: The acquisition, subject to regulatory approvals and customary closing conditions and adjustments, is expected to close in the first quarter of 2022.
+Added: In March 2021, we completed the acquisition of M&N Plastics, an injection molding specialist and manufacturer of engineered plastic components for automotive electrical distribution applications.
+Added: When combined with our continuing organic investments in connection systems, the addition of M&N Plastics enhances the ability of our E-Systems business to vertically integrate the engineering and production of complex parts for electrical distribution, including high-voltage wire harnesses and power electronics, creating a strong platform for future revenue growth and margin expansion in our overall E-Systems business.
+Added: The acquisition is not material to the consolidated financial statements included in this Report.
In April 2019, we completed the acquisition of Xevo Inc.
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Xevo is a supplier of software solutions for the cloud, vehicles and mobile devices that are deployed in millions of vehicles worldwide.
−Removed: For further information, see Note 4, "Acquisition," to the consolidated financial statements included in this Report.
+Added: For further information, see Note 4, "Acquisitions," to the consolidated financial statements included in this Report.
Operational Restructuring
−Removed: In 2020, we incurred pretax restructuring costs of $145 million and related manufacturing inefficiency charges of $5 million, as compared to pretax restructuring costs of $184 million and related manufacturing inefficiency charges of $6 million in 2019.
−Removed: The decrease in restructuring costs in 2020, as compared to 2019, is primarily related to reduced customer actions.
−Removed: N one of the individual restructuring actions initiated during 2020 were material.
+Added: In 2021, we incurred pretax restructuring costs of $101 million and related manufacturing inefficiency charges of approximately $12 million, as compared to pretax restructuring costs of $145 million and related manufacturing inefficiency charges of approximately $5 million in 2020.
+Added: None of the individual restructuring actions initiated during 2021 were material.
+Added: Further, there have been no changes in previously initiated restructuring actions that have resulted (or will result) in a material change to our restructuring costs.
Our restructuring actions include plant closures and workforce reductions and are initiated to maintain our competitive footprint or are in response to customer initiatives or changes in global and regional automotive markets.
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Restructuring actions are generally funded within twelve months of initiation and are funded by cash flows from operating activities and existing cash balances.
−Removed: There have been no changes in previously initiated restructuring actions that have resulted (or will result) in a material change to our restructuring costs.
−Removed: We expect to incur approximately $18 million of additional restructuring costs related to activities initiated as of December 31, 2020, all of which are expected to be incurred by the end of 2021.
+Added: We expect to incur approximately $44 million of additional restructuring costs related to activities initiated as of December 31, 2021, all of which are expected to be incurred in the next twelve months.
We plan to implement additional restructuring actions in order to align our manufacturing capacity and other costs with prevailing regional automotive production levels.
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Financing Transactions
−Removed: In February 2020, we issued $350 million in aggregate principal amount at maturity of 2030 notes (the "2030 Notes") and an additional $300 million in aggregate principal amount at maturity of 2049 notes (the "2049 Notes").
−Removed: The 2030 Notes have a stated coupon rate of 3.5% and were issued at 99.774% of par, resulting in a yield to maturity of 3.525%.
−Removed: The 2049 Notes have a stated coupon rate of 5.25% and were issued at 106.626% of par, resulting in a yield to maturity of 4.821%.
−Removed: The net proceeds from the offering were $669 million after original issue discount.
−Removed: The proceeds were used to redeem the $650 million in aggregate principal amount of 2025 notes (the "2025 Notes") at a redemption price equal to 102.625% of the principal amount of such 2025 Notes, plus accrued interest.
−Removed: In connection with these transactions, we recognized a loss of $21 million on the extinguishment of debt and paid related issuance costs of $6 million.
−Removed: In May 2019, we issued $375 million in aggregate principal amount at maturity of senior unsecured notes due in 2029 (the "2029 Notes") and $325 million in aggregate principal amount at maturity of 2049 Notes.
+Added: In November 2021, we issued $350 million in aggregate principal amount at maturity of 2032 notes (the "2032 Notes") and $350 million in aggregate principal amount at maturity of 2052 notes (the "2052 Notes").
The 2032 Notes have a stated coupon rate of 2.6% and were issued at 99.782% of par, resulting in a yield to maturity of 2.624%.
The 2052 Notes have a stated coupon rate of 3.55% and were issued at 99.845% of par, resulting in a yield to maturity of 3.558%.
−Removed: The net proceeds from the offering were $693 million after original issue discount.
−Removed: The proceeds were used to redeem the $325 million in aggregate principal amount of senior unsecured notes due in 2024 (the "2024 Notes") at a redemption price equal to 102.688% of the principal amount of such 2024 Notes, plus accrued interest, as well as to finance the acquisition of Xevo and for general corporate purposes.
+Added: Net proceeds from the offering of $699 million, after original issue discount, were used, in part, to fund the tender of $200 million in aggregate principal amount of our 3.8% senior notes due in 2027 (the "2027 Notes") and the repayment in full of $206 million outstanding on our term loan facility.
+Added: We expect to use the remaining net proceeds for general corporate purposes,
+Added: which may include the purchase price for the Kongsberg acquisition.
+Added: For further information, see Note 4, "Acquisitions," to the consolidated financial statements included in this Report.
In connection with these transactions, we recognized a loss of $24 million on the extinguishment of debt and paid related issuance costs of $7 million.
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Credit Agreement
−Removed: Our unsecured credit agreement (the "Credit Agreement"), dated August 8, 2017, consists of a $1.75 billion revolving credit facility (the "Revolving Credit Facility") and a $250 million term loan facility (the "Term Loan Facility").
−Removed: In February 2020, we entered into an agreement to extend the maturity date of the Revolving Credit Facility by one year to August 8, 2024, and paid related issuance costs of $1 million.
−Removed: The maturity date of the Term Loan Facility is August 8, 2022.
−Removed: In March 2020, as a proactive measure in response to the COVID-19 pandemic, we borrowed $1.0 billion under the Revolving Credit Facility, which was repaid in full in September 2020, resulting in availability of $1.75 billion as of December 31, 2020.
+Added: Our unsecured credit agreement consisted of a $1.75 billion revolving credit facility and a $250 million term loan facility.
+Added: In October 2021, we entered into an amended and restated credit agreement that increased the revolving credit facility to $2.0 billion and extended the maturity date to October 28, 2026.
+Added: In November 2021, we repaid in full $206 million outstanding on our term loan facility.
+Added: In connection with these transactions, we recognized a loss of $1 million on the extinguishment of debt and paid related issuance costs of $3 million.
For further information, see "— Liquidity and Financial Condition — Capitalization — Credit Agreement" below and Note 7, "Debt," to the consolidated financial statements included in this Report.
Share Repurchase Program and Quarterly Cash Dividends
+Added: We may implement share repurchases through a variety of methods, including, but not limited to, open market purchases, accelerated stock repurchase programs and structured repurchase transactions.
+Added: The extent to which we may repurchase our outstanding common stock and the timing of such repurchases will depend upon our financial condition, results of operations, capital requirements, prevailing market conditions, alternative uses of capital and other factors (see "— Forward-Looking Statements" below).
Since the first quarter of 2011, our Board of Directors has authorized $6.1 billion in share repurchases under our common stock share repurchase program.
−Removed: In March 2020, as a proactive measure in response to the COVID-19 pandemic, we suspended share repurchases under our share repurchase program.
−Removed: Prior to the suspension, we repurchased $70 million of shares in 2020 and have a remaining repurchase authorization of $1.4 billion, which will expire on December 31, 2022.
+Added: In March 2020, as a proactive measure in response to the COVID-19 pandemic, we suspended share repurchases under our common stock share repurchase program.
+Added: Share repurchases were reinstated in the second quarter of 2021.
+Added: Since the reinstatement through December 31, 2021, we repurchased approximately $100 million of shares.
+Added: As of December 31, 2021, we have a remaining repurchase authorization of $1.3 billion, which expires on December 31, 2022.
+Added: In 2021, our Board of Directors declared a quarterly cash dividend of $0.25 per share of common stock in the first and second quarters, a quarterly cash dividend of $0.50 per share of common stock in the third quarter and a quarterly cash dividend of $0.77 per share of common stock in the fourth quarter, returning our quarterly cash dividend to its pre-COVID-19 pandemic level.
+Added: In 2020, our Board of Directors declared a quarterly cash dividend of $0.77 per share of common stock in the first quarter.
In March 2020, as a proactive measure in response to the COVID-19 pandemic, we suspended our quarterly cash dividend.
−Removed: Prior to the suspension, our Board of Directors declared a cash dividend of $0.77 per share of common stock in the first quarter of 2020.
−Removed: The quarterly cash dividend was reinstated in the fourth quarter of 2020 at $0.25 per share of common stock.
−Removed: For further information related to our common stock share repurchase program and our quarterly dividends, see Item 5, "Market for the Company’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities," "— Liquidity and Financial Condition — Capitalization" below and Note 12, "Capital Stock, Accumulated Other Comprehensive Loss and Equity," to the consolidated financial statements included in this Report.
+Added: The quarterly cash dividend was reinstated in the fourth quarter at $0.25 per share of common stock.
+Added: For further information related to our common stock share repurchase program and our quarterly cash dividends, see Item 5, "Market for the Company's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities," "— Liquidity and Financial Condition — Capitalization" below and Note 12, "Capital Stock, Accumulated Other Comprehensive Loss and Equity," to the consolidated financial statements included in this Report.
Other Matters
+Added: In 2021, we recognized tax benefits of $39 million related to restructuring charges and various other items, partially offset by tax expense of $17 million related to the net increase in valuation allowances on deferred tax assets of foreign subsidiaries and $8 million on a $45 million gain related to a favorable indirect tax ruling in a foreign jurisdiction.
In 2020, we recognized tax benefits of $34 million related to restructuring charges and various other items and $15 million related to the U.S.
2 unchanged sentences
tax impact of the foreign tax credit regulations issued in the fourth quarter of 2019, $5 million related to net reductions in tax reserves, $3 million related to share-based compensation, $12 million related to various tax-related items, including the release of valuation allowances, tax rate changes and audit adjustments, and $52 million related to restructuring charges and various other items, offset by tax expense of $11 million related to the establishment of valuation allowances on the deferred tax assets of foreign subsidiaries.
−Removed: In 2018, we acquired an additional 20% interest in Changchun Lear FAWSN Automotive Electrical and Electronics Co., Ltd.
−Removed: ("Lear FAWSN") from a joint venture partner and amended the existing joint venture agreement to eliminate the substantive participating rights of the remaining joint venture partner.
−Removed: Prior to the amendment, Lear FAWSN was accounted for under the equity method.
−Removed: In conjunction with obtaining control of Lear FAWSN and the valuation of our prior equity investment in Lear FAWSN at fair value, we recognized a gain of approximately $10 million.
−Removed: In 2018, we recognized a $5 million settlement charge in connection with our annuity purchase for certain terminated vested plan participants of our U.S.
−Removed: defined benefit pension plans.
−Removed: In 2018, we recognized tax benefits of $83 million related to the reversal of valuation allowances on the deferred tax assets of certain foreign subsidiaries, share-based compensation, a tax rate change in a foreign subsidiary, an adjustment to the 2017 provisional income tax expense, restructuring charges and various other items, offset by tax expense of $34 million related to an increase in foreign withholding tax on certain undistributed foreign earnings and the establishment of valuation allowances on the deferred tax assets of certain foreign subsidiaries and various other items.
As discussed above, our results for the years ended December 31, 2021, 2020 and 2019, reflect the following items (in millions):
1 unchanged sentence
Costs related to restructuring actions, including manufacturing inefficiencies of $12 million in 2021, $5 million in 2020 and $6 million in 2019
+Added: $ 113 $ 150 $ 190
Acquisition and other related costs — — 2
−Removed: Pension settlement charge — — 5
Litigation — — 1
Favorable indirect tax ruling in a foreign jurisdiction (45) — (2)
+Added: Typhoon in the Philippines 13 — —
+Added: Intangible asset impairment 9 —
Loss on extinguishment of debt 25 21 11
1 unchanged sentence
Tax benefits, net (14) (20) (122)
−Removed: For further information regarding these items, see Note 4, "Acquisition," Note 5, "Restructuring," Note 6, "Investments in Affiliates and Other Related Party Transactions," Note 7, "Debt," Note 9, "Income Taxes," and Note 10, "Pension and Other Postretirement Benefit Plans," to the consolidated financial statements included in this Report.
+Added: For further information regarding these items, see Note 3, "Summary of Significant Accounting Policies," Note 4, "Acquisitions," Note 5, "Restructuring," Note 6, "Investments in Affiliates and Other Related Party Transactions," Note 7, "Debt," and Note 9, "Income Taxes," to the consolidated financial statements included in this Report.
This section includes forward-looking statements that are subject to risks and uncertainties.
17 unchanged sentences
Year Ended December 31, 2021, Compared With Year Ended December 31, 2020
−Removed: Net sales for the year ended December 31, 2020 were $17.0 billion, as compared to $19.8 billion for the year ended December 31, 2019, a decrease of $2.8 billion or 14%.
−Removed: Lower production volumes on Lear platforms globally, largely due to the COVID-19 pandemic, negatively impacted net sales by more than $3.3 billion.
−Removed: This decrease was partially offset by the impact of new business in all regions, which increased net sales by more than $0.7 billion.
+Added: Net sales for the year ended December 31, 2021 were $19.3 billion, as compared to $17.0 billion for the year ended December 31, 2020, an increase of $2.2 billion or 13%.
+Added: New business in North America, Europe and Africa, and Asia increased
+Added: net sales by $0.9 billion.
+Added: Net sales also benefited by $0.5 billion and $0.4 billion as a result of higher production volumes on Lear platforms in North America, South America and Asia and foreign exchange rate fluctuations, respectively.
(in millions) Cost of Sales
4 unchanged sentences
Cost of sales in 2021 was $17.9 billion, as compared to $15.9 billion in 2020.
−Removed: Lower production volumes on Lear platforms globally, largely due to the COVID-19 pandemic, reduced cost of sales by nearly $2.6 billion.
−Removed: This decrease was partially offset by the impact of new business in all regions, which increase cost of sales by nearly $0.7 billion.
+Added: New business in North America, Europe and Africa, and Asia increased cost of sales.
+Added: Cost of sales also increased as a result of higher production volumes on Lear platforms in North America, South America and Africa, and Asia and foreign exchange rate fluctuations.
Gross profit and gross margin were $1.4 billion and 7.2% of net sales in 2021, as compared to $1.1 billion and 6.5% of net sales in 2020.
−Removed: Lower production volumes on Lear platforms globally, largely due to the COVID-19 pandemic, and costs related to the COVID-19 pandemic negatively impacted gross profit by $792 million.
−Removed: Favorable operating performance, including the benefit of operational restructuring actions, and lower restructuring costs were partially offset by the impact of selling price reductions.
+Added: The impact of new business and higher production volumes on Lear platforms increased gross profit by $180 million.
+Added: Favorable operating performance, including the benefit of operational restructuring actions, and lower restructuring costs, were partially offset by the impact of selling price reductions and increased commodity costs.
These factors had a corresponding impact on gross margin.
−Removed: Selling, general and administrative expenses, including engineering and development expenses, were $589 million for the year ended December 31, 2020, as compared to $605 million for the year ended December 31, 2019.
−Removed: As a percentage of net sales, selling, general and administrative expenses were 3.5% in 2020, as compared to 3.1% in 2019, reflecting the significant decrease in net sales in 2020.
−Removed: Amortization of intangible assets was $66 million in 2020, as compared to $62 million in 2019.
+Added: Selling, general and administrative expenses, including engineering and development expenses, were $643 million for the year ended December 31, 2021, as compared to $589 million for the year ended December 31, 2020, primarily reflecting increases in restructuring costs and compensation-related costs related to our 2020 salary reduction and deferral actions.
+Added: As a percentage of net sales, selling, general and administrative expenses were 3.3% in 2021, as compared to 3.5% in 2020.
+Added: Amortization of intangible assets was $73 million in 2021, including an impairment charge of $9 million, as compared to $66 million in 2020.
Interest expense was $92 million in 2021, as compared to $100 million in 2020.
−Removed: Other expense, net, which includes non-income related taxes, foreign exchange gains and losses, gains and losses related to certain derivative instruments and hedging activities, losses on the extinguishment of debt, gains and losses on the disposal of fixed assets, gains and losses on the consolidation and deconsolidation of affiliates, the non-service cost components of net
−Removed: periodic benefit cost and other miscellaneous income and expense, was $55 million in 2020, as compared to $25 million in 2019.
+Added: Other expense, net, which includes non-income related taxes, foreign exchange gains and losses, gains and losses related to certain derivative instruments and hedging activities, losses on the extinguishment of debt, gains and losses on the disposal of fixed assets, gains and losses on the consolidation and deconsolidation of affiliates, the non-service cost components of net periodic benefit cost and other miscellaneous income and expense, was $0.1 million in 2021, as compared to $55 million in 2020.
+Added: In 2021, we recognized a gain of $45 million related to a favorable indirect tax ruling in a foreign jurisdiction and losses of $25 million related to the extinguishment of debt and $2 million related to the impairment and liquidation of an investment.
In 2020, we recognized losses of $21 million related to the extinguishment of debt, $13 million related to a pension settlement and $4 million related to the impairment of an investment.
−Removed: In 2019, we recognized losses of $11 million related to the extinguishment of debt and $5 million related to the impairment of an investment and a gain of $4 million related to the deconsolidation of an affiliate.
In 2021, the provision for income taxes was $138 million, representing an effective tax rate of 23.6% on pretax income before equity in net income of affiliates of $584 million.
1 unchanged sentence
In 2021 and 2020, the provision for income taxes was primarily impacted by the level and mix of earnings among tax jurisdictions.
+Added: In 2021, we recognized tax benefits of $39 million related to restructuring charges and various other items, offset by tax expense of $17 million related to the net increase in valuation allowances on deferred tax assets of foreign subsidiaries and $8 million on a $45 million gain related to a favorable indirect tax ruling in a foreign jurisdiction.
In 2020, we recognized tax benefits of $34 million related to restructuring charges and various other items and $15 million related to the U.S.
deferred tax effect of our foreign branches and tax expense of $29 million related to a net increase in valuation allowances on deferred tax assets.
−Removed: In 2019, we recognized tax benefits of $29 million related to an increase in our research and development tax credits for the years 2013 through 2018, $18 million related to changes in the tax status of certain affiliates, $14 million related to the U.S.
−Removed: tax impact of the foreign tax credit regulations issued in the fourth quarter of 2019, $5 million related to net reductions in tax reserves, $3 million related to share-based compensation, $12 million related to various tax-related items, including the release of valuation allowances, tax rate changes and audit adjustments, and $52 million related to restructuring charges and various other items, offset by tax expense of $11 million related to the establishment of valuation allowances on the deferred tax assets of foreign subsidiaries.
−Removed: In addition, we recognized a gain of $4 million related to the deconsolidation of an affiliate, for which no tax expense was provided.
For information related to our valuation allowances, see "Other Matters — Significant Accounting Policies and Critical Accounting Estimates — Income Taxes" below.
−Removed: Equity in net income of affiliates was $29 million for the year ended December 31, 2020, as compared to $23 million for the year ended December 31, 2019.
+Added: Equity in net income of affiliates was $16 million for the year ended December 31, 2021, as compared to $29 million for the year ended December 31, 2020, reflecting lower sales at certain of our affiliates in China.
Net income attributable to Lear was $374 million, or $6.19 per diluted share, in 2021, as compared to $159 million, or $2.62 per diluted share, in 2020.
Net income and diluted net income per share decreased for the reasons described above.
−Removed: In addition, diluted net income per share was impacted by the decrease in average shares outstanding between periods.
Reportable Operating Segments
16 unchanged sentences
(1) See definition above.
−Removed: Seating net sales were $12.7 billion for the year ended December 31, 2020, as compared to $15.1 billion for the year ended December 31, 2019, a decrease of $2.4 billion or (16%).
−Removed: Lower production volumes on Lear platforms globally, largely due to the COVID-19 pandemic, negatively impacted net sales by nearly $2.7 billion.
−Removed: This decrease was partially offset by the impact of new business, which increased net sales by more than $0.4 billion.
+Added: Seating net sales were $14.4 billion for the year ended December 31, 2021, as compared to $12.7 billion for the year ended December 31, 2020, an increase of $1.7 billion or 13%.
+Added: Higher production volumes on Lear platforms increased net sales by $679 million.
+Added: Net sales also benefited by $486 million and $295 million as a result of new business and foreign exchange rate fluctuations, respectively.
Segment earnings, including restructuring costs, and the related margin on net sales were $851 million and 5.9% in 2021, as compared to $591 million and 4.6% in 2020.
−Removed: Lower production volumes on Lear platforms globally, largely due to the COVID-19 pandemic, and costs related to the COVID-19 pandemic negatively impacted segment earnings by $586 million.
−Removed: Favorable operating performance, including the benefit of operational restructuring actions, and lower restructuring costs were partially offset by the impact of selling price reductions.
+Added: Higher production volumes on Lear platforms and the impact of new business increased segment earnings by $176 million.
+Added: Favorable operating performance, including the benefit of operational restructuring actions, and lower restructuring costs were partially offset by the impact of selling price reductions and increased commodity costs.
A summary of financial measures for our E-Systems segment is shown below (dollar amounts in millions):
4 unchanged sentences
(1) See definition above.
−Removed: E-Systems net sales were $4.3 billion for the year ended December 31, 2020, as compared to $4.7 billion for the year ended December 31, 2019, a decrease of $0.4 billion or 8%.
−Removed: Lower production volumes on Lear platforms globally, largely due to the COVID-19 pandemic, negatively impacted net sales by more than $0.6 billion.
−Removed: This decrease was partially offset by the impact of new business, which increased net sales by nearly $0.3 billion.
+Added: E-Systems net sales were $4.9 billion for the year ended December 31, 2021, as compared to $4.3 billion for the year ended December 31, 2020, an increase of $519 million or 12%.
+Added: New business, commodity recoveries and foreign exchange rate fluctuations increased net sales by $425 million, $175 million and $112 million, respectively.
+Added: These increases were partially offset by lower production volumes on Lear platforms which reduced net sales by $198 million.
Segment earnings, including restructuring costs, and the related margin on net sales were $121 million and 2.5% in 2021, as compared to $98 million and 2.3% in 2020.
−Removed: Lower production volumes on Lear platforms globally, largely due to the COVID-19 pandemic, and costs related to the COVID-19 pandemic negatively impacted segment earnings by $234 million.
−Removed: Improved operating performance was more than offset by the impact of selling price reductions and, to a lesser extent, higher restructuring costs.
+Added: The impact of new business was offset by lower production volumes on Lear platforms.
+Added: Improved operating performance was partially offset by the impact of selling price reductions and increased commodity costs.
A summary of financial measures for our other category, which is not an operating segment, is shown below (dollar amounts in millions):
5 unchanged sentences
(1) See definition above.
−Removed: Segment earnings related to our other category were ($235) million in 2020, as compared to ($257) million in 2019, primarily reflecting lower compensation-related costs in 2020.
+Added: Segment earnings related to our other category were ($297) million in 2021, as compared to ($235) million in 2020, primarily reflecting an increase in compensation-related costs related to our 2020 salary reduction and deferral actions, as well as 2020 reductions in discretionary spending.
Year Ended December 31, 2020, Compared With Year Ended December 31, 2019
For a discussion of our results of operations for the year ended December 31, 2020, compared with the year ended December 31, 2019, refer to our Annual Report on Form 10-K for the year ended December 31, 2020.
−Removed: Liquidity and Financial Condition
+Added: Liquidity and Capital Resources
Our primary liquidity needs are to fund general business requirements, including working capital requirements, capital expenditures, operational restructuring actions and debt service requirements.
Our principal sources of liquidity are cash flows from operating activities, borrowings under available credit facilities and our existing cash balance.
−Removed: Adequacy of Liquidity Sources
−Removed: As of December 31, 2020, we had approximately $1.3 billion of cash and cash equivalents on hand and $1.75 billion in available borrowing capacity under our Revolving Credit Facility.
−Removed: Together with cash provided by operating activities, we believe that this will enable us to meet our liquidity needs for the foreseeable future and to satisfy ordinary course business obligations.
−Removed: In response to the COVID-19 pandemic, we took a number of proactive steps to preserve cash and maximize our financial flexibility in order to efficiently manage through the COVID-19 pandemic, including:
−Removed: • Aggressively reducing operating costs, capital expenditures and working capital, including reducing discretionary spending
−Removed: • Reducing salaried employee costs throughout the organization through salary reductions and deferrals
−Removed: • Suspending share repurchases and quarterly dividends
−Removed: • Maximizing opportunities offered under government incentive programs throughout the world
−Removed: • Reducing the compensation of the Board of Directors
−Removed: • Reducing hourly factory worker costs through temporary layoffs
−Removed: • Delaying planned pension funding and deferring other retirement plan contributions
−Removed: In the second half of the year, we reversed certain of the employee-related austerity measures as industry production recovered and financial performance improved.
−Removed: Further, we announced the restoration of compensation levels for our Board of Directors and executive officers and reinstated the quarterly cash dividend at $0.25 per share of common stock.
−Removed: In addition, we expect to continue to pay quarterly cash dividends and resume share repurchases pursuant to our common stock share repurchase program (see Item 5, "Market for the Company’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities").
−Removed: Our future financial results and our ability to continue to meet our liquidity needs are subject to, and will be affected by, cash flows from operations, including the continuing effects of the COVID-19 pandemic, as well as restructuring activities, automotive industry conditions, the financial condition of our customers and suppliers and other related factors.
−Removed: Additionally, an economic downturn or reduction in production levels could negatively impact our financial condition.
−Removed: For further discussion of the risks and uncertainties affecting our cash flows from operations and our overall liquidity, see Part I — Item 1A, "Risk Factors," and "— Executive Overview" above and "— Forward-Looking Statements" below.
Cash Provided by Subsidiaries
4 unchanged sentences
For further information regarding potential dividends from our non-U.S.
−Removed: subsidiaries, see "— Adequacy of Liquidity Sources" above and Note 9, "Income Taxes," to the consolidated financial statements included in this Report.
+Added: subsidiaries, see "— Adequacy of Liquidity Sources" below and Note 9, "Income Taxes," to the consolidated financial statements included in this Report.
+Added: Adequacy of Liquidity Sources
+Added: As of December 31, 2021, we had approximately $1.3 billion of cash and cash equivalents on hand and $2.0 billion in available borrowing capacity under our revolving credit facility.
+Added: Together with cash provided by operating activities, we believe that this will enable us to meet our liquidity needs for the foreseeable future and to satisfy ordinary course business obligations.
+Added: In addition, we expect to continue to pay quarterly cash dividends and repurchase shares of our common stock pursuant to our authorized common stock share repurchase program, although such actions are at the discretion of our Board of Directors and will depend upon our financial condition, results of operations, capital requirements, prevailing market conditions, alternative uses of capital and other factors that our Board of Directors may consider at its discretion.
+Added: Our future financial results and our ability to continue to meet our liquidity needs are subject to, and will be affected by, cash flows from operations, including the continuing effects of the COVID-19 pandemic, as well as restructuring activities, automotive industry conditions, the financial condition of our customers and suppliers, supply chain disruptions and other related factors.
+Added: Additionally, an economic downturn or reduction in production levels could negatively impact our financial condition.
+Added: For further discussion of the risks and uncertainties affecting our cash flows from operations and our overall liquidity, see Part I — Item 1A, "Risk Factors," and "— Executive Overview" above and "— Forward-Looking Statements" below.
Year Ended December 31, 2021, Compared with Year Ended December 31, 2020
11 unchanged sentences
Net cash provided by operating activities $ 670 $ 663 $ 7
−Removed: In 2020 and 2019, net cash provided by operating activities was $663 million and $1,284 million, respectively.
−Removed: The overall decrease in operating cash flows of $621 million was primarily attributable to lower earnings in 2020.
−Removed: Increases in accounts receivable, inventory and accounts payable primarily reflect higher production volumes at the end of 2020, as compared to the end of 2019.
+Added: In 2021 and 2020, net cash provided by operating activ ities was $670 million and $663 million, respectively.
+Added: Higher earnings in 2021 were offset by an incremental increase in working capital in 2021, as compared to 2020, reflecting increased inventory levels due to unpredictable production schedules as a result of industry-wide supply shortages.
Net cash used in investing activities was $647 million in 2021, as compared to $469 million in 2020.
−Removed: In 2019, we paid $322 million for the acquisition of Xevo.
−Removed: In 2020, capital spending was $452 million, reflecting a delay in certain program launches and a reduction in discretionary spending in response to the COVID-19 pandemic, as compared to $604 million in 2019.
−Removed: Capital spending in 2021 is estimated at $600 million.
+Added: In 2021, capital spending was $585 million, as compared to $452 million in 2020.
+Added: Capital spending is estimated to be $650 million to $700 million in 2022.
Net cash used in financing activities was $14 million in 2021, as compared to $412 million in 2020.
−Removed: As a proactive measure in response to the COVID-19 pandemic, we borrowed $1.0 billion under the Revolving Credit Facility in the first quarter of 2020, which was repaid in full in the third quarter of 2020.
−Removed: In 2020, we received net proceeds of $669 million related to the issuance of 2030 and 2049 Notes and paid $6 million of related issuance costs and $667 million related to the redemption of the outstanding 2025 Notes.
−Removed: Also in 2020, we paid $70 million for repurchases of our common stock, $67 million of dividends to Lear stockholders and $123 million of dividends to noncontrolling interest holders.
−Removed: In 2019, we received net proceeds of $693 million related to the issuance of 2029 and 2049 Notes and paid $7 million of related issuance costs and $334 million related to the redemption of the outstanding 2024 Notes.
−Removed: Also in 2019, we paid $385 million for repurchases of our common stock, $186 million of dividends to Lear stockholders and $79 million of dividends to noncontrolling interest holders.
+Added: In 2021, we received net proceeds of $699 million related to the issuance of 2032 and 2052 Notes and paid $7 million of related issuance costs.
+Added: Also in 2021, we repurchased $200 million of our outstanding 2027 Notes for $222 million, including an early tender premium and fees, and made principal payments under our term loan facility of $220 million.
+Added: In 2020, we received net proceeds of $669 million related to the issuance of our senior notes due 2030 and 2049 and paid $6 million of related issuance costs.
+Added: Also in 2020, we paid $667 million related to the redemption of our outstanding senior notes due 2025.
+Added: In 2020, as a proactive measure in response to the COVID-19 pandemic, we borrowed $1.0 billion under our Revolving Credit Facility in the first quarter of 2020, which was repaid in full in the third quarter of 2020.
+Added: In 2021, we paid $100 million for repurchases of our common stock, $107 million of dividends to Lear stockholders and $81 million of dividends to noncontrolling interest holders.
+Added: In 2020, we paid $70 million for repurchases of our common stock, $67 million of dividends to Lear stockholders and $123 million of dividends to noncontrolling interest holders.
For further information regarding our 2021 and 2020 financing transactions, see "— Capitalization" below and Note 7, "Debt," and Note 12, "Capital Stock, Accumulated Other Comprehensive Loss and Equity," to the consolidated financial statements included in this Report.
3 unchanged sentences
From time to time, we utilize uncommitted lines of credit to fund our capital expenditures and working capital requirements at certain of our foreign subsidiaries, in addition to cash provided by operating activities.
−Removed: As of December 31, 2020, we had no short-term debt balances outstanding.
−Removed: As of December 31, 2019, we had short-term debt balances outstanding of $19 million.
+Added: As of December 31, 2021 and 2020, we had no short-term debt balances outstanding.
The availability of uncommitted lines of credit may be affected by our financial performance, credit ratings and other factors.
1 unchanged sentence
Note Aggregate Principal Amount at Maturity Stated Coupon Rate
+Added: 2027 Notes $ 550 3.80%
Senior unsecured notes due 2029 (the "2029 Notes") 375 4.25%
1 unchanged sentence
2032 Notes 350 2.60%
+Added: Senior unsecured notes due 2049 (the "2049 Notes") 625 5.25%
The issue, maturity and interest payment dates of the Notes are shown below:
3 unchanged sentences
2030 Notes February 2020 May 30, 2030 May 30 and November 30
+Added: 2032 Notes November 2021 January 15, 2032 January 15 and July 15 (1)
2049 Notes May 2019 and February 2020 May 15, 2049 May 15 and November 15
+Added: 2052 Notes November 2021 January 15, 2052 January 15 and July 15 (1)
+Added: (1) Commencing July 15, 2022.
+Added: In 2021, we issued $350 million in aggregate principal amount at maturity of 2032 Notes and $350 million in aggregate principal amount at maturity of 2052 Notes.
+Added: The 2032 Notes have a stated coupon rate of 2.6% and were issued at 99.782% of par, resulting in a yield to maturity of 2.624%.
+Added: The 2052 Notes have a stated coupon rate of 3.55% and were issued at 99.845% of par, resulting in a yield to maturity of 3.558%.
+Added: The net proceeds from the offering of $699 million, after original issue discount, were used, in part, to fund the tender of $200 million in aggregate principal amount of 2027 Notes and the repayment in full of $206 million outstanding on our term loan facility.
+Added: We expect to use the remaining net proceeds for general corporate purposes, which may include the purchase price for the Kongsberg acquisition (Note 4, "Acquisitions").
+Added: In connection with these transactions, we recognized a loss of $24 million on the extinguishment of debt and paid related issuance costs of $7 million.
In 2020, we issued $350 million in aggregate principal amount at maturity of 2030 Notes and an additional $300 million in aggregate principal amount at maturity of 2049 Notes.
1 unchanged sentence
The 2049 Notes have a stated coupon rate of 5.25% and were issued at 106.626% of par, resulting in a yield to maturity of 4.821%.
−Removed: The net proceeds from the offering were $669 million after original issue discount.
−Removed: The proceeds were used to redeem the $650 million in aggregate principal amount of 2025 Notes at a redemption price equal to 102.625% of the principal amount of such 2025 Notes, plus accrued interest.
+Added: The net proceeds from the offering of $669 million, after original issue discount, were used to redeem $650 million in aggregate principal amount of 2025 Notes at a redemption price equal to 102.625% of the principal amount of such 2025 Notes, plus accrued interest.
In connection with these transactions, we recognized a loss of $21 million on the extinguishment of debt and paid related issuance costs of $6 million.
+Added: In 2019, we issued $375 million in aggregate principal amount at maturity of 2029 Notes and $325 million in aggregate principal amount at maturity of 2049 Notes.
+Added: The 2029 Notes have a stated coupon rate of 4.25% and were issued at 99.691% of par, resulting in a yield to maturity of 4.288%.
+Added: The 2049 Notes have a stated coupon rate of 5.25% and were issued at 98.32% of par, resulting in a yield to maturity of 5.363%.
+Added: The net proceeds from the offering of $693 million, after original issue discount, were used to redeem $325 million in aggregate principal amount of senior unsecured notes due in 2024 (the "2024 Notes") at a redemption price equal to 102.688% of the
+Added: principal amount of such 2024 Notes, plus accrued interest, as well as to finance the Xevo acquisition and for general corporate purposes.
+Added: In connection with these transactions, we recognized a loss of $11 million on the extinguishment of debt and paid related issuance costs of $7 million.
The indentures governing the Notes contain certain restrictive covenants and customary events of default.
2 unchanged sentences
Credit Agreement
−Removed: Our Credit Agreement, dated August 8, 2017, consists of a $1.75 billion Revolving Credit Facility and a $250 million Term Loan Facility.
−Removed: In 2020, we entered into an agreement to extend the maturity date of the Revolving Credit Facility by one year to August 8, 2024, and paid related issuance costs of $1 million.
−Removed: The maturity date of the Term Loan Facility is August 8, 2022.
−Removed: As of December 31, 2020 and 2019, there were no borrowings outstanding under the Revolving Credit Facility and $220 million and $234 million, respectively, outstanding under the Term Loan Facility.
+Added: Our unsecured credit agreement, dated August 8, 2017, consisted of a $1.75 billion revolving credit facility (the "Revolving Credit Facility") and a $250 million term loan facility (the "Term Loan Facility").
+Added: In October 2021, we entered into an amended and restated credit agreement ( the "Credit Agreement") that increased the Revolving Credit Facility to $2.0 billion and extended the maturity date to October 28, 2026.
+Added: In November 2021, we repaid in full $206 million outstanding on the Term Loan facility.
+Added: In connection with these transactions, we rec ognized a loss of approximately $1 million on the extinguishment of debt and paid related issuance costs of approximately $3 million.
In March 2020, as a proactive measure in response to the COVID-19 pandemic, we borrowed $1.0 billion under the Revolving Credit Facility, which was repaid in full in September 2020.
1 unchanged sentence
As of December 31, 2021, we were in compliance with all covenants under the Credit Agreement .
−Removed: Although we expect to maintain compliance with all covenants, the impact of the COVID-19 pandemic may negatively affect our ability to comply with certain of these covenants.
−Removed: In the event that we are unable to maintain compliance with such covenants, we expect to obtain an amendment or waiver from our lenders, refinance the indebtedness subject to the covenants or take other mitigating actions prior to a potential breach.
−Removed: For further information related to the Credit Agreement, including information on pricing, covenants and events of default, see Note 7, "Debt," to the consolidated financial statements included in this Report and the amended and restated credit agreement, which has been incorporated by reference as an exhibit to this Report.
−Removed: Accounts Receivable Factoring
−Removed: During the second quarter of 2020, we entered into an uncommitted factoring arrangement which provides for aggregate purchases of specified customer accounts in North America.
−Removed: The factoring arrangement results in true sales of the factored receivables, which are excluded from amounts reported in the consolidated balance sheets when the receivables are factored in accordance with ASC 860, "Transfers and Servicing." There were no receivables factored during 2020.
−Removed: We cannot provide any assurances that the factoring arrangement will be available or utilized in the future.
−Removed: Contractual Obligations
−Removed: The scheduled maturities of the Notes, obligations under the Credit Agreement and scheduled interest payments on the Notes as of December 31, 2020, are shown below (in millions):
+Added: For further information related to the Credit Agreement , including information on pricing, covenants and events of default, see Note 7, "Debt," to the consolidated financial statements included in this Report and the Credit Agreement , which has been incorporated by reference as an exhibit to this Report.
+Added: Common Stock Share Repurchase Program
+Added: See Item 5, "Market for the Company's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities."
+Added: In 2021, our Board of Directors declared a quarterly cash dividend of $0.25 per share of common stock in the first and second quarters, a quarterly cash dividend of $0.50 per share of common stock in the third quarter and a quarterly cash dividend of $0.77 per share of common stock in the fourth quarter, returning our quarterly cash dividend to its pre-COVID-19 pandemic level.
+Added: In 2020, our Board of Directors declared a quarterly cash dividend of $0.77 per share of common stock in the first quarter.
+Added: In March 2020, as a proactive measure in response to the COVID-19 pandemic, we suspended our quarterly cash dividend.
+Added: The quarterly cash dividend was reinstated in the fourth quarter at $0.25 per share of common stock.
+Added: In 2019, our Board of Directors declared quarterly cash dividends of $0.75 per share of common stock.
+Added: We expect to continue to pay quarterly cash dividends in the future, although such payments are at the discretion of our Board of Directors and will depend upon our financial condition, results of operations, capital requirements, prevailing market conditions, alternative uses of capital and other factors that our Board of Directors may consider at its discretion.
+Added: See "— Forward-Looking Statements" below and Note 7, "Debt," to the consolidated financial statements included in this Report.
+Added: Contractual Obligations and Cash Requirements
+Added: Our material cash requirements include the following contractual and other obligations:
+Added: Debt obligations and interest expense associated with debt obligations
+Added: As of December 31, 2021, we had $2.6 billion of outstanding senior unsecured notes maturing in 2027 through 2052, as well as $2.0 billion available for borrowing under our Revolving Credit Facility.
+Added: Interest on the Notes is due biannually at varying dates.
+Added: Scheduled interest payments are shown below (in millions):
2022 2023 2024 2025 2026 Thereafter Total
−Removed: Senior notes $ — $ — $ — $ — $ — $ 2,100 $ 2,100
−Removed: Credit agreement — term loan facility 14 206 — — — — 220
Scheduled interest payments $ 97 $ 103 $ 103 $ 103 $ 103 $ 1,210 $ 1,719
−Removed: Total $ 104 $ 296 $ 90 $ 90 $ 90 $ 3,037 $ 3,707
+Added: For further information related to our debt, see "Capitalization — Senior Notes" and "— Credit Agreement" above and Note 7, "Debt," to the consolidated financial statements included in this Report.
+Added: Purchase obligations
We enter into agreements with our customers to produce products at the beginning of a vehicle's life cycle.
−Removed: Although such agreements do not provide for a specified quantity of products, once we enter into such agreements, we are generally required to fulfill our customers’ purchasing requirements for the production life of the vehicle.
+Added: Although these agreements do not provide for a specified quantity of products, once entered into, we are generally required to fulfill our customers' purchasing requirements for the production life of the vehicle.
Prior to being formally awarded a program, we typically work closely with our customers in the early stages of the design and engineering of a vehicle's systems.
−Removed: Failure to complete the design and engineering work related to a vehicle’s systems, or to fulfill a customer’s contract, could have a material adverse impact on our business.
+Added: Failure to complete the design and engineering work related to a vehicle's systems, or to fulfill a customer agreement, could have a material adverse impact on our business.
We also enter into agreements with suppliers to assist us in meeting our customers' production needs.
These agreements vary as to duration and quantity commitments.
−Removed: Historically, most have been short-term agreements, which do not provide for minimum purchases, or are requirements-based contracts.
+Added: Historically, most have been short-term agreements, which do not provide for minimum purchases, or are requirements-based agreements.
+Added: The Company has operating leases for production, office and warehouse facilities, manufacturing and office equipment, and vehicles with future lease obligations ranging from 2022 through 2047.
+Added: Maturities of operating leases obligations are shown below (in millions):
+Added: 2022 2023 2024 2025 2026 Thereafter Total
+Added: Operating lease obligations $ 143 $ 116 $ 98 $ 83 $ 73 $ 209 $ 722
+Added: For further information related to our lease obligations, see Note 8, "Leases," to the consolidated financial statements included in this Report.
We may be required to make significant cash outlays related to our unrecognized tax benefits, including interest and penalties.
+Added: As of December 31, 2021, we had unrecognized tax benefits, including interest and penalties, of $48 million.
However, due to the uncertainty of the timing of future cash flows associated with our unrecognized tax benefits, we are unable to make reasonably reliable estimates of the period of cash settlement, if any, with the respective taxing authorities.
−Removed: Accordingly, unrecognized tax benefits, including interest and penalties, of $49 million as of December 31, 2020, have been excluded from the contractual obligations table above.
For further information related to our unrecognized tax benefits, see Note 9, "Income Taxes," to the consolidated financial statements included in this Report.
−Removed: We also have minimum funding requirements with respect to our pension obligation.
+Added: Pension and postretirement obligations
+Added: We have minimum funding requirements with respect to certain of our pension benefit obligations.
We may elect to make contributions in excess of the minimum funding requirements in response to investment performance or changes in interest rates or when we believe that it is financially advantageous to do so and based on our other cash requirements.
1 unchanged sentence
Our minimum funding requirements may also be affected by changes in applicable legal requirements.
−Removed: Our minimum required contributions to our domestic and foreign pension plans, including distributions to participants in certain of our non-qualified defined benefit plans, are expected to be approximately $5 million to $10 million in 2021.
−Removed: We also have payments due with respect to our postretirement benefit obligation.
−Removed: We do not fund our postretirement benefit obligation.
−Removed: Rather, payments are made as costs are incurred by covered retirees.
−Removed: We expect payments related to our postretirement benefit obligation to be approximately $5 million in 2021.
+Added: Contributions to our defined benefit pension plans are expected to be approximately $2 million in 2022.
+Added: We do not fund our postretirement benefit obligations and certain of our pension benefit obligations.
+Added: Rather, benefit payments are made to eligible participants as incurred.
+Added: We expect benefit payments related to our unfunded pension and postretirement benefit obligations to be approximately $7 million and $6 million, respectively, in 2022.
For further information related to our pension and other postretirement benefit plans, see "— Other Matters — Pension and Other Postretirement Benefit Plans" below and Note 10, "Pension and Other Postretirement Benefit Plans," to the consolidated financial statements included in this Report.
−Removed: Common Stock Share Repurchase Program
−Removed: See Item 5, "Market for the Company’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities."
−Removed: In March 2020, as a proactive measure in response to the COVID-19 pandemic, we suspended our quarterly cash dividend.
−Removed: Prior to the suspension, our Board of Directors declared a cash dividend of $0.77 per share of common stock in the first quarter of 2020.
−Removed: The quarterly cash dividend was reinstated in the fourth quarter of 2020 at $0.25 per share of common stock.
−Removed: In 2019 and 2018, our Board of Directors declared quarterly cash dividends of $0.75 and $0.70, respectively, per share of common stock.
−Removed: We currently expect to pay quarterly cash dividends in the future, although such payments are at the discretion of our Board of Directors and will depend upon our financial condition, results of operations, capital requirements, alternative uses of capital and other factors that our Board of Directors may consider at its discretion.
−Removed: See "— Forward-Looking Statements" below and Note 7, "Debt," to the consolidated financial statements included in this Report.
+Added: Our acquisition of Kongsberg will be funded primarily by cash flows from operating activities and existing cash on hand, which may include proceeds from the issuance of our 2032 Notes and 2052 Notes.
+Added: For further information, see Note 4, "Acquisitions," and Note 7, "Debt," to the consolidated financial statements included in this Report.
Market Risk Sensitivity
13 unchanged sentences
Fair value 6 48
−Removed: Currently, our most significant foreign currency transactional exposures relate to the Mexican peso, various European currencies, the Chinese renminbi, the Thai baht, the Japanese yen, the Brazilian real and the Honduran lempira.
+Added: Currently, our most significant foreign currency transactional exposures relate to the Mexican peso, various European currencies, the Chinese renminbi, the Brazilian real, the Thai baht, the Japanese yen and the Honduran lempira.
A sensitivity analysis of our net transactional exposure is shown below (in millions):
1 unchanged sentence
December 31, Hypothetical Strengthening % (1)
−Removed: 10% $ 23 $ (16)
Euro 10% (7) (4)
9 unchanged sentences
dollar or Euro.
−Removed: In reality, some currencies may strengthen while others may weaken, causing the earnings impact to increase or decrease depending on the currency and the direction of the rate movement.
+Added: In reality, some currencies may strengthen while others may
+Added: weaken, causing the earnings impact to increase or decrease depending on the currency and the direction of the rate movement.
In addition to the transactional exposure described above, our operating results are impacted by the translation of our foreign operating income into U.S.
6 unchanged sentences
Raw material, energy and commodity costs can be volatile, reflecting changes in supply and demand and global trade and tariff policies.
−Removed: We have developed and implemented strategies to mitigate the impact of higher raw material, energy and commodity costs, such as the selective in-sourcing of components, the continued consolidation of our supply base, longer-term purchase commitments and the selective expansion of low-cost country sourcing and engineering, as well as value engineering and product benchmarking.
−Removed: However, these strategies, together with commercial negotiations with our customers and suppliers, typically offset only a portion of the adverse impact.
−Removed: Certain of these strategies also may limit our opportunities in a declining commodity cost environment.
+Added: Our primary commodity cost exposures relate to steel, copper and leather.
+Added: We have developed and implemented strategies to mitigate the impact of higher raw material, energy and commodity costs, such as the selective in-sourcing of components, the continued consolidation of our supply base, longer-term purchase commitments, contractual recovery mechanisms and the selective expansion of low-cost country sourcing and engineering, as well as value engineering and product benchmarking.
+Added: Further, our exposure to changes in steel prices is primarily indirect, through purchased components, and a significant portion of our copper, leather and direct steel purchases are subject to price index agreements with our customers and suppliers.
+Added: However, these strategies, together with commercial negotiations with our customers and suppliers, typically do not offset all of the adverse impact.
+Added: Certain of these strategies also may limit our opportunities in a declining commodity price environment.
If these costs increase, it could have an adverse impact on our operating results in the foreseeable future.
13 unchanged sentences
For a description of risks related to various legal proceedings and claims, see Part I — Item 1A, "Risk Factors." For a more complete description of our outstanding material legal proceedings, see Note 14, "Commitments and Contingencies," to the consolidated financial statements included in this Report.
−Removed: Significant Accounting Policies and Critical Accounting Estimates
−Removed: Our significant accounting policies are more fully described in Note 3, "Summary of Significant Accounting Policies," to the consolidated financial statements included in this Report.
+Added: Critical Accounting Estimates
Certain of our accounting policies require management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.
10 unchanged sentences
Contracts may also provide for annual price reductions over the production life of the vehicle, and prices may be adjusted on an ongoing basis to reflect changes in product content/cost and other commercial factors.
−Removed: Revenue is recognized at a point in time when control of the product is transferred to the customer under standard commercial terms, as we do not have an enforceable right to payment prior to such transfer.
+Added: Revenue is recognized at the point in time when control of the product is transferred to the customer under standard commercial terms, as we do not have an enforceable right to payment prior to such transfer.
The amount of revenue recognized reflects the consideration that we expect to be entitled to in exchange for those products based on the annual purchase orders, annual price reductions and ongoing price adjustments.
27 unchanged sentences
Foreign plans 2.5 % 3.1 %
−Removed: Net periodic benefit cost for the year ended December 31, 2020 $ 14 $ 1
+Added: Net periodic benefit (credit) cost for the year ended December 31, 2021
Discount rate -
4 unchanged sentences
Foreign plans 5.2 % N/A
−Removed: Net periodic benefit cost (credit) for the year ending December 31, 2021 (1)
+Added: Net periodic benefit (credit) cost for the year ending December 31, 2022 (1)
Discount rate -
6 unchanged sentences
The sensitivity to a 100 basis point ("bp") decrease in the discount rate and expected return on plan assets is shown below (in millions):
−Removed: Increase in Benefit Obligation Increase in 2021
+Added: Increase in Benefit Obligation Increase (Decrease) in 2022
Net Periodic Benefit Cost
51 unchanged sentences
• the operational and financial success of our joint ventures;
+Added: • our ability to attract, develop, engage and retain qualified employees;
+Added: • our ability to respond to the evolution of the global transportation industry;
+Added: • the outcome of an increased emphasis on global climate change and other ESG matters by stakeholders;
+Added: • the impact of global climate change;
• the impact and timing of program launch costs and our management of new program launches;
3 unchanged sentences
• limitations imposed by our existing indebtedness and our ability to access capital markets on commercially reasonable terms;
−Removed: • changes affecting the availability of LIBOR;
• disruptions to our information technology systems, or those of our customers or suppliers, including those related to cybersecurity;
1 unchanged sentence
• the outcome of legal or regulatory proceedings to which we are or may become a party;
+Added: • increases in the costs and restrictions on the availability of raw materials, energy, commodities and product components;
• the impact of pending legislation and regulations or changes in existing federal, state, local or foreign laws or regulations;
3 unchanged sentences
• the impact of potential changes in tax and trade policies in the United States and related actions by countries in which we do business;
−Removed: • the anticipated changes in economic and other relationships between the United Kingdom and the European Union;
• other risks, described in Part I — Item 1A, "Risk Factors," as well as the risks and information provided from time to time in our filings with the Securities and Exchange Commission.
3 unchanged sentences
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Reports of Ernst & Young LLP, Independent Registered Public Accounting Firm
+Added: Reports of Ernst & Young LLP, Independent Registered Public Accounting Firm (PCAOB ID:
Consolidated Balance Sheets as of December 31, 2021 and 2020
6 unchanged sentences
Report of Independent Registered Public Accounting Firm
−Removed: To the Stockholders and Board of Directors of Lear Corporation
+Added: To the Stockholders and the Board of Directors of Lear Corporation
Opinion on the Financial Statements
31 unchanged sentences
Report of Independent Registered Public Accounting Firm
−Removed: To the Stockholders and Board of Directors of Lear Corporation
+Added: To the Stockholders and the Board of Directors of Lear Corporation
Opinion on Internal Control over Financial Reporting
39 unchanged sentences
Current Liabilities:
−Removed: Short-term borrowings $ — $ 19.2
Accounts payable and drafts $ 2,952.4 $ 3,141.6
6 unchanged sentences
Total long-term liabilities 3,784.1 3,507.0
−Removed: Redeemable noncontrolling interest — 118.4
Preferred stock, 100,000,000 shares authorized (including 10,896,250 shares
2 unchanged sentences
Common stock, $ 0.01 par value, 300,000,000 shares authorized;
−Removed: 64,571,405 and 64,563,291 shares issued as of December 31, 2020 and 2019, respectively
+Added: 64,571,405 shares issued as of December 31, 2021 and 2020
Additional paid-in capital 1,019.4 963.6
56 unchanged sentences
Total comprehensive income (loss) — — — — 753.6
−Removed: Adoption of ASU 2016-16 (Note 9, "Income Taxes") — — — — 2.3
Stock-based compensation — — 23.3 — —
3 unchanged sentences
— — — ( 380.4 ) —
−Removed: Retirement of 8,000,000 shares held in treasury at average price of $ 146.27 per share
−Removed: — ( 0.1 ) ( 155.9 ) 1,170.2 ( 1,014.2 )
Dividends declared to Lear Corporation stockholders — — — — ( 186.3 )
Dividends declared to noncontrolling interests ( 2.7 ) — — — —
−Removed: Affiliate transaction — — — — —
−Removed: Acquisition of outstanding noncontrolling interests — — ( 2.0 ) — —
Noncontrolling interests — other
+Added: Disposal of noncontrolling interests — — — — —
Redeemable noncontrolling interest adjustment ( 37.0 ) — — — 37.0
1 unchanged sentence
Comprehensive income (loss):
−Removed: Net income 1.8 — — — 753.6
+Added: Net income (loss) ( 3.5 ) — — — 158.5
Other comprehensive income (loss) 7.7 — — — —
Total comprehensive income (loss) 4.2 — — — 158.5
+Added: Adoption of ASU 2016-13 — — — — ( 0.8 )
Stock-based compensation — — 40.0 — —
5 unchanged sentences
Dividends declared to noncontrolling interests ( 26.8 ) — — — —
−Removed: Noncontrolling interests — other
−Removed: Disposal of noncontrolling interests — — — — —
+Added: Acquisition of outstanding noncontrolling interests ( 96.9 ) — 1.4 — —
Redeemable noncontrolling interest adjustment 1.1 — — — ( 1.1 )
4 unchanged sentences
Total comprehensive income (loss) — — — — 373.9
−Removed: Adoption of ASU 2016-13 (Note 3, "Accounts Receivable") — — — — ( 0.8 )
Stock-based compensation — — 60.3 — —
5 unchanged sentences
Dividends declared to noncontrolling interests — — — — —
−Removed: Acquisition of outstanding noncontrolling interests ( 96.9 ) — 1.4 — —
−Removed: Redeemable noncontrolling interest adjustment 1.1 — — — ( 1.1 )
+Added: Affiliate transaction — — 28.6 — —
Balance as of December 31, 2021 $ — $ 0.6 $ 1,019.4 $ ( 679.2 ) $ 5,072.8
16 unchanged sentences
Total comprehensive income (loss) ( 44.8 ) 19.5 ( 41.6 ) 686.7 73.6 760.3
−Removed: Adoption of ASU 2016-16 (Note 9, "Income Taxes") — — — 2.3 — 2.3
Stock-based compensation — — — 23.3 — 23.3
3 unchanged sentences
— — — ( 380.4 ) — ( 380.4 )
−Removed: Retirement of 8,000,000 shares held in treasury at average price of $ 146.27 per share
Dividends declared to Lear Corporation stockholders — — — ( 186.3 ) — ( 186.3 )
Dividends declared to noncontrolling interests — — — — ( 76.3 ) ( 76.3 )
−Removed: Affiliate transaction — — — — 14.0 14.0
−Removed: Acquisition of outstanding noncontrolling interests — — — ( 2.0 ) — ( 2.0 )
Noncontrolling interests — other
— — — — ( 0.2 ) ( 0.2 )
+Added: Disposal of noncontrolling interests — — — — ( 5.6 ) ( 5.6 )
Redeemable noncontrolling interest adjustment — — — 37.0 — 37.0
1 unchanged sentence
Comprehensive income (loss):
−Removed: Net income — — — 753.6 75.3 828.9
+Added: Net income (loss) — — — 158.5 78.9 237.4
Other comprehensive income (loss) ( 59.3 ) 2.8 124.1 67.6 7.9 75.5
Total comprehensive income (loss) ( 59.3 ) 2.8 124.1 226.1 86.8 312.9
+Added: Adoption of ASU 2016-13 — — — ( 0.8 ) — ( 0.8 )
Stock-based compensation — — — 40.0 — 40.0
5 unchanged sentences
Dividends declared to noncontrolling interests — — — — ( 90.6 ) ( 90.6 )
−Removed: Noncontrolling interests — other
−Removed: — — — — ( 0.2 ) ( 0.2 )
−Removed: Disposal of noncontrolling interests — — — — ( 5.6 ) ( 5.6 )
+Added: Acquisition of outstanding noncontrolling interests — — — 1.4 — 1.4
Redeemable noncontrolling interest adjustment — — — ( 1.1 ) — ( 1.1 )
4 unchanged sentences
Total comprehensive income (loss) 77.5 ( 31.2 ) ( 111.4 ) 308.8 90.8 399.6
−Removed: Adoption of ASU 2016-13 (Note 3, "Accounts Receivable") — — — ( 0.8 ) — ( 0.8 )
Stock-based compensation — — — 60.3 — 60.3
5 unchanged sentences
Dividends declared to noncontrolling interests — — — — ( 81.0 ) ( 81.0 )
−Removed: Acquisition of outstanding noncontrolling interests — — — 1.4 — 1.4
−Removed: Redeemable noncontrolling interest adjustment — — — ( 1.1 ) — ( 1.1 )
+Added: Affiliate transaction — — — 28.6 7.6 36.2
Balance as of December 31, 2021 $ ( 199.4 ) $ ( 18.6 ) $ ( 552.2 ) $ 4,643.4 $ 165.0 $ 4,808.4
10 unchanged sentences
Impairment charges 20.1 31.9 14.5
−Removed: Deferred tax (benefit) provision
+Added: Deferred tax benefit
( 55.5 ) ( 84.7 ) ( 38.2 )
3 unchanged sentences
Net change in working capital items (see below) ( 351.0 ) ( 66.9 ) ( 25.5 )
−Removed: Changes in other long-term liabilities 8.3 5.0 ( 23.0 )
Changes in other long-term assets ( 35.7 ) ( 26.5 ) ( 10.1 )
+Added: Changes in other long-term liabilities ( 6.5 ) 8.3 5.0
Other, net 23.2 41.6 19.7
6 unchanged sentences
Cash Flows from Financing Activities:
−Removed: Revolving credit facility borrowings 1,000.0 — —
−Removed: Revolving credit facility repayments ( 1,000.0 ) — —
Proceeds from the issuance of senior notes 698.7 669.1 693.3
Redemption of senior notes ( 221.5 ) ( 667.1 ) ( 333.7 )
+Added: Revolving credit facility borrowings — 1,000.0 —
+Added: Revolving credit facility repayments — ( 1,000.0 ) —
Term loan repayments ( 220.3 ) ( 14.1 ) ( 7.8 )
28 unchanged sentences
The accompanying consolidated financial statements include the accounts of Lear, a Delaware corporation, and the wholly owned and less than wholly owned subsidiaries controlled by Lear.
−Removed: (2) Impact of COVID-19 Pandemic
−Removed: Unprecedented industry disruptions related to the COVID-19 pandemic impacted operations in every region of the world.
−Removed: The Company's operations in China were impacted first, with most plants in the country closed for several weeks during the first quarter.
−Removed: At the end of the first quarter, all of the Company's facilities in China were operating and capacity utilization was increasing.
−Removed: Beginning in mid-March, the Company's operations in Europe, North America, South America and Asia (outside of China) were impacted, with virtually all of its plants closed at the end of the first quarter and closures continuing throughout April and, in most cases, a portion of May.
−Removed: Although manufacturing resumed gradually, most of the Company's plants in its major markets were operating at pre-COVID-19 levels at the end of the second quarter and throughout the second half of 2020.
−Removed: The Company experienced significant inefficiencies and incremental costs related to the COVID-19 pandemic in the first half of the year, which diminished toward the end of the second quarter.
−Removed: In the second half of 2020, the Company experienced less significant but ongoing costs related to personal protective equipment, employee transportation and higher labor costs reflecting an increase in absenteeism.
−Removed: Various government programs have been enacted to provide financial relief for businesses affected by the COVID-19 pandemic.
−Removed: In the year ended December 31, 2020, the Company recognized approximately $ 98 million of government assistance primarily related to the reimbursement of certain employee costs.
−Removed: The Company recognizes such assistance as a reduction of the related costs as such costs are incurred and the Company is reasonably assured to receive payment.
−Removed: Although industry production has returned to pre-COVID-19 levels, partially due to the customers' need to replenish inventory levels, it is likely that, for a period of time, the global automotive industry will experience lower demand for new vehicles as a result of the global economic slowdown caused by the COVID-19 pandemic, as new vehicle sales are typically correlated with positive consumer confidence and low unemployment.
−Removed: The Company is also continuing to monitor its supply base, as well as related production constraints imposed by various governments, to minimize the impact on its manufacturing operations.
−Removed: Further, a resurgence of the virus with corresponding shelter-in-place orders impacting industry production in 2021 could also impact the Company's financial results.
+Added: (2) Current Operating Environment
+Added: In 2020, unprecedented industry disruptions related to the COVID-19 pandemic impacted the Company's operations in every region of the world.
+Added: Production disruptions continued in 2021 largely due to the continuing impact of the COVID-19 pandemic, particularly through supply shortages.
+Added: The most significant supply shortage relates to semiconductor chips, which impacted global vehicle production and resulted in reductions and cancellations of planned production.
+Added: In addition, the Company experienced increased costs related to labor shortages and inefficiencies and ongoing costs related to personal protective equipment, all of which are likely to continue for a period of time.
+Added: Increases in certain commodity costs, as well as transportation and logistics costs, are also impacting, and will continue to impact, the Company's operating results for the foreseeable future.
+Added: Further, a resurgence of the COVID-19 virus or its variants, including corresponding "stay at home" or similar government orders impacting industry production, could impact the Company's financial results.
The accompanying consolidated financial statements reflect estimates and assumptions made by management as of December 31, 2021, and for the year then ended.
−Removed: Such estimates and assumptions affect, among other things, the Company's goodwill, long-lived asset and indefinite-lived intangible asset valuations;
+Added: Such estimates and assumptions affect, among other things, the Company's goodwill;
+Added: long-lived asset and indefinite-lived intangible asset valuations;
inventory valuations;
−Removed: valuation of deferred income taxes and income tax contingencies;
−Removed: and credit losses related to our financial instruments.
+Added: valuations of deferred income taxes and income tax contingencies;
+Added: and credit losses related to the Company's financial instruments.
Events and circumstances arising after December 31, 2021, including those resulting from the impact of the COVID-19 pandemic, will be reflected in management's estimates and assumptions in future periods.
−Removed: For more information related to goodwill, see Note 3, "Summary of Significant Accounting Policies — Impairment of Goodwill and Intangible Assets." For more information related to income taxes, see Note 3, "Summary of Significant Accounting Policies — Income Taxes," and Note 9, "Income Taxes."
+Added: For more information related to goodwill, indefinite-lived intangible assets, inventory and credit losses, see Note 3, "Summary of Significant Accounting Policies." For more information related to income taxes, see Note 3, "Summary of Significant Accounting Policies — Income Taxes," and Note 9, "Income Taxes."
(3) Summary of Significant Accounting Policies
2 unchanged sentences
Investments in affiliates in which Lear does not have control, but does have the ability to exercise significant influence over operating and financial policies, are accounted for under the equity method (Note 6, "Investments in Affiliates and Other Related Party Transactions").
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
Fiscal Period Reporting
8 unchanged sentences
On January 1, 2020, the Company adopted Accounting Standards Update ("ASU") 2016-13, "Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments," using a modified retrospective approach.
−Removed: The standard amends several aspects of the measurement of credit losses related to certain financial instruments, including the replacement of the existing incurred credit loss model and other models with the current expected credit losses ("CECL") model.
+Added: The standard amends several aspects of the measurement of credit losses related to certain financial instruments, including the
+Added: Lear Corporation and Subsidiaries
+Added: Notes to Consolidated Financial Statements (continued)
+Added: replacement of the existing incurred credit loss model and other models with the current expected credit losses model.
The cumulative effect of adoption resulted in an increase of $ 0.8 million in the allowance for credit loss and a corresponding decrease in retained earnings as of January 1, 2020.
18 unchanged sentences
Engineering and Development ("E&D") and Tooling Costs
−Removed: In 2020, the Company recorded E&D costs of $ 557.0 million, including $ 280.7 million (or 2 % of related sales) in its Seating business, $ 259.8 million (or 6 % of related sales) in its E-Systems business and $ 16.5 million at its headquarters location.
+Added: In 2021, the Company incurred E&D costs of $ 608.5 million, including $ 327.3 million (or 2 % of related sales) in its Seating segment, $ 267.7 million (or 6 % of related sales) in its E-Systems segment and $ 13.5 million at its headquarters location.
Pre-Production Costs Related to Long-Term Supply Agreements
2 unchanged sentences
In addition, the Company expenses all pre-production tooling costs related to customer-owned tools for which reimbursement is not contractually guaranteed by the customer or for which the Company does not have a non-cancelable right to use the tooling.
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
During 2021 and 2020, the Company capitalized $ 298.3 million and $ 229.7 million, respectively, of pre-production E&D costs for which reimbursement is contractually guaranteed by the customer.
2 unchanged sentences
During 2021 and 2020, the Company collected $ 448.0 million and $ 354.6 million, respectively, of cash related to E&D and tooling costs.
+Added: Lear Corporation and Subsidiaries
+Added: Notes to Consolidated Financial Statements (continued)
The classification of recoverable customer E&D and tooling costs related to long-term supply agreements is shown below (in millions):
24 unchanged sentences
As of December 31, 2021, 2020 and 2019, capital expenditures recorded in accounts payable totaled $ 147.8 million, $ 118.4 million and $ 131.6 million, respectively.
+Added: As of December 31, 2021, property held for sale of $ 2.6 million and $ 17.5 million in the Company's Seating and E-Systems segments, respectively, was recorded in other current assets in the accompanying consolidated balance sheet.
+Added: The property is expected to be disposed of by sale within the next twelve months.
Impairment of Goodwill
3 unchanged sentences
If not, no further goodwill impairment testing is required.
−Removed: If it is more likely than not that a reporting unit’s fair value is less than its carrying amount, or if the Company elects not to perform a
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: qualitative assessment of a reporting unit, the Company then compares the fair value of the reporting unit to the related net book value.
+Added: If it is more likely than not that a reporting unit's fair value is less than its carrying amount, or if the Company elects not to perform a qualitative assessment of a reporting unit, the Company then compares the fair value of the reporting unit to the related net book value.
If the net book value of a reporting unit exceeds its fair value, an impairment loss is measured and recognized.
The Company utilizes an income approach to estimate the fair value of each of its reporting units and a market valuation approach to further support this analysis.
−Removed: The income approach is based on projected debt-free cash flow which is discounted to the present value using discount factors that consider the timing and risk of cash flows.
+Added: The income approach is based on projected debt-free cash flow which is discounted to
+Added: Lear Corporation and Subsidiaries
+Added: Notes to Consolidated Financial Statements (continued)
+Added: the present value using discount factors that consider the timing and risk of cash flows.
The Company believes that this approach is appropriate because it provides a fair value estimate based upon the reporting unit's expected long-term operating cash flow performance.
6 unchanged sentences
The market valuation approach is used to further support the Company's analysis and is based on recent transactions involving comparable companies.
−Removed: The annual goodwill impairment assessment was completed as of the first day of the Company's fourth quarter.
−Removed: The Company performed a qualitative assessment for each reporting unit except for one within the Seating operating segment where a quantitative analysis was performed.
+Added: The annual goodwill impairment assessment is completed as of the first day of the Company's fourth quarter.
+Added: The Company performed a qualitative assessment for each reporting unit.
The qualitative assessments indicated that it was more likely than not that the fair value of each reporting unit exceeded its respective carrying value.
−Removed: The quantitative analysis indicated that the fair value of the reporting unit exceeded its respective carrying value.
−Removed: The quantitative analysis reflected the Company’s best estimates of the COVID-19 pandemic’s ultimate impact on industry conditions, including consumer demand, as well as economic recovery.
−Removed: The reporting unit is at risk of failing a future quantitative assessment if the impact of the COVID-19 pandemic is more severe or if economic recovery is slower or weaker than anticipated.
−Removed: As of December 31, 2020, the goodwill of the reporting unit represents approximately 1 % of the Company’s total goodwill.
−Removed: The Company does not believe that any other reporting units is at risk for impairment.
A summary of the changes in the carrying amount of goodwill for each of the periods in the two years ended December 31, 2021, is shown below (in millions):
1 unchanged sentence
Balance as of December 31, 2019 $ 1,235.4 $ 378.9 $ 1,614.3
−Removed: Acquisition — 219.0 219.0
Foreign currency translation and other 33.4 8.1 41.5
2 unchanged sentences
Balance as of December 31, 2021 $ 1,249.3 $ 408.6 $ 1,657.9
−Removed: For further information related to the acquisition, see Note 4, "Acquisition."
Intangible Assets
1 unchanged sentence
in 2016, Grupo Antolin's automotive seating business in 2017 and Xevo Inc.
−Removed: ("Xevo") in 2019 (Note 4, "Acquisition").
+Added: ("Xevo") in 2019 (Note 4, "Acquisitions").
These intangible assets were recorded at their estimated fair value, based on independent appraisals, as of the transaction or acquisition date.
3 unchanged sentences
The value assigned to customer-based intangibles is based on the present value of future earnings attributable to the asset group after recognition of required returns to other contributory assets.
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
A summary of intangible assets as of December 31, 2021, is shown below (in millions):
8 unchanged sentences
Technology 21.8 ( 18.4 ) 3.4 8.5
+Added: Other 0.4 ( 0.1 ) 0.3 5.0
627.5 ( 333.9 ) 293.6 10.8
2 unchanged sentences
Balance as of December 31, 2021 $ 636.4 $ ( 333.9 ) $ 302.5
+Added: The Company recognized an impairment charge of $ 8.5 million related to certain intangible assets of its E-Systems segment resulting from a change in the intended use of the assets.
+Added: The impairment charge is included in amortization of intangible assets in the accompanying statement of income for the year ended December 31, 2021.
+Added: Lear Corporation and Subsidiaries
+Added: Notes to Consolidated Financial Statements (continued)
Intangible assets with a gross carrying value of $ 7.5 million became fully amortized in 2021 and are no longer included in the gross carrying value or accumulated amortization as of December 31, 2021.
9 unchanged sentences
Technology 35.1 ( 21.2 ) 13.9 7.2
−Removed: Other 1.4 ( 1.3 ) 0.1 2.5
635.0 ( 277.6 ) 357.4 10.8
2 unchanged sentences
Balance as of December 31, 2020 $ 645.8 $ ( 277.6 ) $ 368.2
+Added: Intangible assets with a gross carrying value of $ 25.6 million became fully amortized in 2020 and are no longer included in the gross carrying value or accumulated amortization as of December 31, 2020.
Excluding the impact of any future acquisitions, the Company's estimated annual amortization expense for the five succeeding years is shown below (in millions):
4 unchanged sentences
An impairment loss is measured as the difference between the net book value and the fair value of the long-lived assets.
−Removed: Fair value is estimated based upon a combination of market and cost approaches, as appropriate.
−Removed: For the years ended December 31, 2020, 2019 and 2018, the Company recognized asset impairment charges of $ 21.3 million, $ 8.7 million and $ 4.7 million, respectively, in conjunction with its restructuring actions (Note 5, "Restructuring").
+Added: Fair value estimates of property, plant and equipment and right-of-use assets are based on independent appraisals, giving consideration to the highest and best use of the assets.
+Added: Key assumptions used in the appraisals are based on a combination of market and cost approaches, as appropriate.
+Added: For the years ended December 31, 2021, 2020 and 2019, the Company recognized fixed asset impairment charges of $ 4.2 million, $ 21.3 million and $ 8.7 million, respectively, in conjunction with its restructuring actions (Note 5, "Restructuring").
For the years ended December 31, 2021 and 2020, the Company recognized additional asset impairment charges of $ 7.7 million and $ 4.6 million, respectively.
Asset impairment charges are recorded in cost of sales in the accompanying consolidated statements of income for the years ended December 31, 2021, 2020 and 2019.
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
Impairment of Investments in Affiliates
2 unchanged sentences
Fair value is generally determined using an income approach based on discounted cash flows or negotiated transaction values.
+Added: For the years ended December 31, 2021, 2020 and 2019, the Company recognized impairment charges of $ 1.0 million, $ 4.0 million and $ 5.0 million, respectively, related to its investments in affiliates.
+Added: Lear Corporation and Subsidiaries
+Added: Notes to Consolidated Financial Statements (continued)
Accrued Liabilities
27 unchanged sentences
Contracts may also provide for annual price reductions over the production life of the vehicle, and prices may be adjusted on an ongoing basis to reflect changes in product content/cost and other commercial factors.
−Removed: Revenue is recognized at a point in time when control of the product is transferred to the customer under standard commercial terms, as the Company does not have an enforceable right to payment prior to such transfer.
+Added: Revenue is recognized at the point in time when control of the product is transferred to the customer under standard commercial terms, as the Company does not have an enforceable right to payment prior to such transfer.
The amount of revenue recognized reflects the consideration that the Company expects to be entitled to in exchange for those products based on the annual purchase orders, annual price reductions and ongoing price adjustments.
−Removed: In 2020 and 2019, revenue recognized related to prior years represented less than 1 % of consolidated net sales.
+Added: Revenue recognized related to prior years represented approximately 1 % of consolidated net sales during the years ended December 31, 2021, 2020 and 2019.
The Company's customers pay for products received in accordance with payment terms that are customary within the industry.
The Company's contracts with its customers do not have significant financing components.
+Added: The Company records a contract liability for advances received from its customers.
+Added: As of December 31, 2021 and 2020, there were no significant contract liabilities recorded.
+Added: Further, there were no significant contract liabilities recognized in revenue during the years ended December 31, 2021, 2020 and 2019.
Lear Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
−Removed: The Company records a contract liability for advances received from its customers.
−Removed: As of December 31, 2020, there were no significant contract liabilities recorded.
−Removed: Further, there were no significant contract liabilities recognized in revenue during the year ended December 31, 2020.
Amounts billed to customers related to shipping and handling costs are included in net sales in the consolidated statements of income.
29 unchanged sentences
If, based on the weight of the evidence, it is more likely than not that all or a portion of the Company's deferred tax assets will not be realized, a valuation allowance is recorded.
−Removed: If operating results improve or decline on a continual basis in a particular jurisdiction, the Company’s decision regarding the need for a valuation allowance could change, resulting in either the initial
+Added: If operating results improve or decline on a continual basis in a particular jurisdiction, the Company's decision regarding the need for a valuation allowance could change, resulting in either the initial recognition or reversal of a valuation allowance in that jurisdiction, which could have a significant impact on income tax expense in the period recognized and subsequent periods.
+Added: In determining the provision for income taxes for financial statement
Lear Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
−Removed: recognition or reversal of a valuation allowance in that jurisdiction, which could have a significant impact on income tax expense in the period recognized and subsequent periods.
−Removed: In determining the provision for income taxes for financial statement purposes, the Company makes certain estimates and judgments, which affect its evaluation of the carrying value of its deferred tax assets, as well as its calculation of certain tax liabilities.
+Added: purposes, the Company makes certain estimates and judgments, which affect its evaluation of the carrying value of its deferred tax assets, as well as its calculation of certain tax liabilities.
+Added: The Company reclassifies taxes from accumulated other comprehensive loss to earnings as the items to which the tax effects relate are similarly reclassified.
The calculation of the Company's gross unrecognized tax benefits and liabilities includes uncertainties in the application of, and changes in, complex tax regulations in a multitude of jurisdictions across its global operations.
2 unchanged sentences
however, due to the complexity of these uncertainties and the impact of tax audits, the ultimate resolutions may differ significantly from the Company's estimates.
−Removed: The Tax Cuts and Jobs Act (the "Act") enacted on December 22, 2017, created the global intangible low-tax income ("GILTI") provision that imposes U.S.
−Removed: tax on certain earnings of foreign subsidiaries that are subject to foreign tax below a certain threshold.
−Removed: GILTI taxes are recorded in current income tax expense as incurred.
−Removed: Effective January 1, 2019, ASU 2018-02, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income," allows for the reclassification of "stranded" tax effects as a result of the Act from accumulated other comprehensive income to retained earnings.
−Removed: The Company elected not to reclassify such amounts.
−Removed: The Company reclassifies taxes from accumulated other comprehensive loss to earnings as the items to which the tax effects relate are similarly reclassified.
−Removed: In December 2019, the Financial Accounting Standards Board ("FASB") issued ASU 2019-12, "Income Taxes (Topic 740):
−Removed: Simplifying the Accounting for Income Taxes." The standard simplifies the accounting for income taxes by eliminating certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application.
−Removed: The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted.
−Removed: The Company did not early adopt this standard.
−Removed: The adoption of this standard is not expected to have a significant impact on the Company’s financial statements.
+Added: Effective January 1, 2021, ASU 2019-12, "Income Taxes (Topic 740):
+Added: Simplifying the Accounting for Income Taxes," simplified the accounting for income taxes by eliminating certain exceptions to the general principles in Topic 740 and amending prior guidance to improve consistent application.
+Added: The adoption of this standard did not have a significant impact on the Company's financial statements.
Foreign Currency
26 unchanged sentences
Diluted net income per share available to Lear common stockholders $ 6.19 $ 2.62 $ 12.75
−Removed: For further information related to the redeemable noncontrolling interest adjustment, see Note 6, "Investments in Affiliates and Other Related Party Transactions."
+Added: For further information related to the redeemable noncontrolling interest adjustment, see Note 12, "Capital Stock, Accumulated Other Comprehensive Loss and Equity."
Product Warranty
1 unchanged sentence
Segment Reporting
−Removed: The Company has two reportable operating segments:
−Removed: Seating, which consists of the design, development, engineering and manufacture of complete seat systems, seat subsystems and key seat components, and E-Systems, which consists of the design, development, engineering and manufacture of complete electrical distribution and connection systems, electronic systems, and software and connected services.
−Removed: Key components in the Company's complete seat system and subsystem solutions are advanced comfort, wellness, safety and sound offerings, as well as configurable seating product technologies, all of which are compatible with traditional internal combustion engine ("ICE") architectures and the full range of hybrid, plug-in hybrid and battery electric architectures.
−Removed: Key components in the Company's electrical distribution portfolio include wire harnesses, terminals and connectors, and engineered components for both ICE and electrified vehicle architectures that require management of higher voltage and power.
−Removed: Key components in the Company's electronic systems portfolio include body domain control modules and products specific to electrification and connectivity trends.
+Added: The Company is organized under two reportable operating segments:
+Added: Seating, which consists of the design, development, engineering and manufacture of complete seat systems, seat subsystems and key seat components, and E-Systems, which consists of the design, development, engineering and manufacture of complete electrical distribution and connection systems and electronic systems.
+Added: Key components in the Company's complete seat system and subsystem solutions are advanced comfort, wellness and safety offerings, as well as configurable seating product technologies.
+Added: All of these products are compatible with traditional internal combustion engine ("ICE") architectures and the full range of hybrid, plug-in hybrid and battery electric architectures (collectively, "electrified powertrains").
+Added: Key seat component product offerings include seat trim covers, surface materials such as leather and fabric, seat mechanisms, seat foam and headrests.
+Added: Key components in the Company's electrical distribution and connection systems portfolio include wire harnesses, terminals and connectors, and engineered components for both ICE architectures and electrified powertrains that require management of higher voltage and power.
+Added: Key components in the Company's electronic systems portfolio include body domain control modules and products specific to electrification and connectivity.
Electrification products include on-board battery chargers, power conversion modules, high voltage battery management systems and high voltage power distribution systems.
−Removed: Connectivity products include gateway modules and communication modules to manage both wired and wireless networks and data in vehicles.
+Added: Connectivity products include telematics control units ("TCU") and gateway modules to manage both wired and wireless networks and data in vehicles.
In addition to electronic modules, the Company offers software that includes cybersecurity, advanced vehicle positioning for automated and autonomous driving applications and full capabilities in both dedicated short-range communication and cellular protocols for vehicle connectivity.
−Removed: The Company's software and connected services offerings include embedded control software and cloud and mobile device-based software and services.
+Added: The Company's software offerings include embedded control software and cloud and mobile device-based software and services.
The other category includes unallocated costs related to corporate headquarters, regional headquarters and the elimination of intercompany activities, none of which meets the requirements for being classified as an operating segment.
4 unchanged sentences
The Company's production processes generally make use of hourly labor, dedicated facilities, sequential manufacturing and assembly processes and commodity raw materials.
−Removed: The Company evaluates the performance of its operating segments based primarily on (i) revenues from external customers, (ii) pretax income before equity in net income of affiliates, interest expense and other expense ("segment earnings") and (iii) cash flows, being defined as segment earnings less capital expenditures plus depreciation and amortization.
Lear Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
+Added: The Company evaluates the performance of its operating segments based primarily on (i) revenues from external customers, (ii) pretax income before equity in net income of affiliates, interest expense and other expense ("segment earnings") and (iii) cash flows, being defined as segment earnings less capital expenditures plus depreciation and amortization.
The accounting policies of the Company's operating segments are the same as those described in this note to the consolidated financial statements.
17 unchanged sentences
When it is determined that a hedged transaction is no longer probable to occur, the Company discontinues hedge accounting.
−Removed: On January 1, 2018, the Company early adopted ASU 2017-12, "Targeted Improvements to Accounting for Hedging Activities." The new standard eliminates the requirement to separately measure and report hedge ineffectiveness, due to a difference between the economic terms of the hedge instrument and the underlying transaction, and generally requires, for qualifying hedges, the entire change in the fair value of a hedge instrument to be presented in the same line as the hedged item in the consolidated statements of income.
−Removed: The standard also modifies the accounting for components excluded from the assessment of hedge effectiveness and simplifies the application of hedge accounting in certain situations.
−Removed: The provisions of the standard were applied on a modified retrospective basis, and the effects of adoption were not significant.
Use of Estimates
2 unchanged sentences
Other matters subject to estimation and judgment include amounts related to accounts receivable realization, inventory obsolescence, asset impairments, useful lives of fixed and intangible assets and unsettled pricing negotiations with customers and suppliers (Note 3, "Summary of Significant Accounting Policies");
−Removed: acquisitions (Note 4, "Acquisition");
+Added: acquisitions (Note 4, "Acquisitions");
restructuring accruals (Note 5, "Restructuring");
6 unchanged sentences
Notes to Consolidated Financial Statements (continued)
−Removed: (4) Acquisition
+Added: (4) Acquisitions
+Added: On October 28, 2021, the Company entered into a definitive agreement to acquire substantially all of Kongsberg Automotive's Interior Comfort Systems business unit ("Kongsberg").
+Added: Kongsberg specializes in comfort seating solutions, including massage, lumber, seat heat and ventilation.
+Added: The transaction is valued at approximately € 175 million ($ 199 million as of December 31, 2021), on a cash and debt free basis.
+Added: The acquisition, subject to regulatory approvals and customary closing conditions and adjustments, is expected to close in the first quarter of 2022.
+Added: The acquisition of Kongsberg will be accounted for as a business combination, and accordingly, the assets acquired and liabilities assumed will be recognized at fair value as of the acquisition date.
+Added: The operating results and cash flows of Kongsberg will be included in the consolidated financial statements from the date of acquisition in the Company's Seating segment.
On April 17, 2019, the Company completed the acquisition of Xevo, a Seattle-based, global leader in connected car software, by acquiring all of Xevo's outstanding shares for $ 321.7 million, net of cash acquired.
Xevo is a supplier of software solutions for the cloud, vehicles and mobile devices that are deployed in millions of vehicles worldwide.
−Removed: The acquisition of Xevo has been accounted for as a business combination, and accordingly, the assets acquired and liabilities assumed are included in the accompanying consolidated balances sheets as of December 31, 2020 and 2019.
+Added: The acquisition of Xevo was accounted for as a business combination, and accordingly, the assets acquired and liabilities assumed are included in the accompanying consolidated balance sheets as of December 31, 2021 and 2020.
The operating results and cash flows of Xevo are included in the accompanying consolidated financial statements from the date of acquisition and in the Company's E-Systems segment.
+Added: The pro-forma effects of this acquisition do not materially impact the Company's reported results for any period presented.
The Company incurred transaction costs of $ 1.6 million, which were expensed as incurred and are recorded in selling, general and administrative expenses in the accompanying consolidated statement of income for the year ended December 31, 2019.
The purchase price and allocation are shown below (in millions):
−Removed: 2019 Adjustments December 31,
Net purchase price $ 321.7
7 unchanged sentences
Developed technology represents the fair value of Xevo's technology with an estimated useful life of approximately five years .
−Removed: The pro-forma effects of this acquisition do not materially impact the Company's reported results for any period presented.
For further information related to acquired assets measured at fair value, see Note 16, "Financial Instruments."
1 unchanged sentence
In 2021, the Company recorded charges of $ 100.9 million in connection with its restructuring actions.
−Removed: These charges consist of $ 122.3 million recorded as cost of sales, $ 16.4 million recorded as selling, general and administrative expenses and $ 6.2 million recorded as other expense.
−Removed: The restructuring charges consist of employee termination costs of $ 104.2 million, asset impairment charges of $ 23.3 million, contract termination costs of $ 2.0 million and pension benefit plan settlement losses of $ 12.9 million, as well as other related costs of $ 2.5 million.
−Removed: Asset impairment charges relate to the disposal of buildings, leasehold improvements and/or machinery and equipment with carrying values of $ 21.3 million in excess of related estimated fair values and the impairment of right-of-use-assets of $ 2.0 million.
−Removed: The Company expects to incur approximately $ 18 million of additional restructuring costs related to activities initiated as of December 31, 2020, and expects that the components of such costs will be consistent with its historical experience.
−Removed: Any future restructuring actions will depend upon market conditions, customer actions and other factors.
+Added: These charges consist of $ 75.6 million recorded as cost of sales, $ 32.0 million recorded as selling, general and administrative expenses and $ 6.7 million recorded as other income.
+Added: The restructuring charges consist of employee termination costs of $ 85.1 million, asset impairment charges of $ 11.4 million and contract termination costs of $ 0.3 million, as well as other related costs of $ 4.1 million.
Lear Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
−Removed: A summary of 2020 activity, excluding the pension benefit plan settlement losses of $ 12.9 million, is shown below (in millions):
+Added: impairment charges relate to the disposal of buildings, leasehold improvements and/or machinery and equipment with carrying values of $ 4.2 million in excess of related estimated fair values and the impairment of right-of-use-assets of $ 7.2 million.
+Added: The Company expects to incur approximately $ 44 million of additional restructuring costs related to activities initiated as of December 31, 2021, and expects that the components of such costs will be consistent with its historical experience.
+Added: Any future restructuring actions will depend upon market conditions, customer actions and other factors.
+Added: A summary of 2021 activity is shown below (in millions):
Accrual as of 2021 Utilization Accrual as of
6 unchanged sentences
In 2020, the Company recorded charges of $ 144.9 million in connection with its restructuring actions.
−Removed: These charges consist of $ 173.8 million recorded as cost of sales, $ 16.4 million recorded as selling, general and administrative expenses and $ 6.6 million recorded as other income..
−Removed: The restructuring charges consist of employee termination costs of $ 167.8 million, asset impairment charges of $ 9.5 million, contract termination costs of $ 3.0 million and an other postretirement curtailment gain of $ 10.6 million, as well as other related costs of $ 13.9 million.
+Added: These charges consist of $ 122.3 million recorded as cost of sales, $ 16.4 million recorded as selling, general and administrative expenses and $ 6.2 million recorded as other expense.
+Added: The restructuring charges consist of employee termination costs of $ 104.2 million, asset impairment charges of $ 23.3 million, contract termination costs of $ 2.0 million, and pension benefit plan settlement losses of $ 12.9 million, as well as other related costs of $ 2.5 million.
Asset impairment charges relate to the disposal of buildings, leasehold improvements and/or machinery and equipment with carrying values of $ 21.3 million in excess of related estimated fair values and the impairment of right-of-use assets of $ 2.0 million.
−Removed: A summary of 2019 activity, excluding the other postretirement curtailment gain of $ 10.6 million, is shown below (in millions):
+Added: A summary of 2020 activity, excluding the pension benefit plan settlement losses of $ 12.9 million, is shown below (in millions):
Accrual as of 2020 Utilization Accrual as of
6 unchanged sentences
In 2019, the Company recorded charges of $ 183.6 million in connection with its restructuring actions.
−Removed: These charges consist of $ 63.7 million recorded as cost of sales, $ 24.0 million recorded as selling, general and administrative expenses and $ 0.3 million recorded as other expense.
−Removed: The restructuring charges consist of employee termination costs of $ 74.5 million, asset impairment charges of $ 4.7 million and contract termination costs of $ 1.5 million, as well as other related costs of $ 7.3 million.
−Removed: Asset impairment charges relate to the disposal of buildings, leasehold improvements and/or machinery and equipment with carrying values of $ 4.7 million in excess of related estimated fair values.
−Removed: A summary of 2018 activity is shown below (in millions):
+Added: These charges consist of $ 173.8 million recorded as cost of sales, $ 16.4 million recorded as selling, general and administrative expenses and $ 6.6 million recorded as other income.
+Added: The restructuring charges consist of employee termination costs of $ 167.8 million, asset impairment charges of $ 9.5 million, contract termination costs of $ 3.0 million and an other postretirement curtailment gain of $ 10.6 million, as well as other related costs of $ 13.9 million.
+Added: Asset impairment charges relate to the disposal of buildings, leasehold improvements and/or machinery and equipment with carrying values of $ 8.7 million in excess of related estimated fair values and the impairment of right-of-use assets of $ 0.8 million.
+Added: A summary of 2019 activity, excluding the other postretirement curtailment gain of $ 10.6 million, is shown below (in millions):
Accrual as of 2019 Utilization Accrual as of
12 unchanged sentences
(China) 50 % 50 % 50 %
+Added: Guangzhou Lear Automotive Components Co., Ltd.
+Added: (China) 50 50 50
Jiangxi Jiangling Lear Interior Systems Co., Ltd.
2 unchanged sentences
(China) 50 50 50
−Removed: Guangzhou Lear Automotive Components Co., Ltd.
−Removed: (China) 50 50 —
Changchun Lear FAWSN Automotive Seat Systems Co., Ltd.
3 unchanged sentences
Kyungshin-Lear Sales and Engineering LLC 49 49 49
+Added: Shenyang Jinbei Lear Automotive Seating Co.
+Added: (China) 49 — —
Beijing Lear Hyundai Transys Co., Ltd.
5 unchanged sentences
Trucks Venture Fund 2, L.P.
−Removed: Dong Kwang Lear Yuhan Hoesa (Korea) — — 50
Summarized group financial information for affiliates accounted for under the equity method as of December 31, 2021 and 2020, and for the years ended December 31, 2021, 2020 and 2019, is shown below (unaudited;
26 unchanged sentences
The Company has certain investments with beneficial ownership interests of less than 20% that are accounted for under the equity method as the Company's beneficial ownership interests in these entities are similar to partnership interests.
+Added: In 2021, the Company acquired a 49 % interest in Shenyang Jinbei Lear Automotive Seating Co.
+Added: ("Shenyang Jinbei") for $ 41.3 million.
+Added: The investment is accounted for under the equity method as the Company does not control Shenyang Jinbei but does have the ability to exercise significant influence over certain operating and financial policies of Shenyang Jinbei.
+Added: The acquisition cost is classified within cash flows used in investing activities in the accompanying consolidated statement of cash flows for the year ended December 31, 2021.
In 2019, the Company deconsolidated Guangzhou Automobile Group Component Co., Ltd.
("GACC") as it no longer controls this entity.
−Removed: As a result, the carrying values of the assets and liabilities of GACC are not reflected in the consolidated balance sheet as of December 31, 2019.
−Removed: In addition, the Company recorded a gain of $ 4.0 million related to the excess of the estimated fair value over the carrying value of its interest in GACC immediately prior to deconsolidation.
+Added: As a result, the carrying values of the assets and liabilities of GACC are not reflected in the consolidated balance sheet as of December 31, 2019 In addition, the Company recorded a gain of $ 4.0 million related to the excess of the estimated fair value over the carrying value of its interest in GACC immediately prior to deconsolidation.
The gain is included in other expense, net in the accompanying consolidated statement of income for the year ended December 31, 2019.
−Removed: In 2018, the Company gained control of Changchun Lear FAWSN Automotive Electrical and Electronics Co., Ltd.
−Removed: ("Lear FAWSN") by acquiring an additional 20 % interest from a joint venture partner and by amending the joint venture agreement to eliminate the substantive participating rights of the remaining joint venture partner.
−Removed: Prior to the amendment, Lear FAWSN was accounted for under the equity method.
−Removed: This transaction was accounted for as a business combination, and accordingly, the assets acquired and liabilities assumed are included in the accompanying consolidated balance sheet as of December 31, 2018.
−Removed: The operating results and cash flows of Lear FAWSN are included in the accompanying consolidated financial statements from the effective date of the amended joint venture agreement and are reflected in the Company’s E-Systems segment.
−Removed: A summary of the fair value of the assets acquired and liabilities assumed in conjunction with the transaction is shown below (in millions):
−Removed: Property, plant and equipment $ 11.0
−Removed: Other assets and liabilities assumed, net 5.7
−Removed: Goodwill 22.4
−Removed: Intangible assets 7.5
−Removed: Recognized goodwill is attributable to the assembled workforce, expected synergies and other intangible assets that do not qualify for separate recognition.
−Removed: Intangible assets consist of amounts recognized for the fair value of customer-based assets and were based on an independent appraisal.
−Removed: Customer-based assets include Lear FAWSN's established relationships with its customers and the ability of these customers to generate future economic profits for the Company.
−Removed: It is currently estimated that these intangible assets have a weighted average useful life of approximately ten years .
−Removed: As of the effective date of the transaction, the fair value of the Company’s previously held equity interest in Lear FAWSN was $ 23.0 million, and the fair value of the noncontrolling interest in Lear FAWSN was $ 14.0 million.
−Removed: As a result of valuing the Company’s previously held equity interest in Lear FAWSN at fair value, the Company recognized a gain of $ 10.0 million, which is included in other expense, net in the accompanying consolidated statement of income for the year ended December 31, 2018.
−Removed: The pro forma effects of this consolidation would not materially impact the Company’s reported results for any period presented.
For further information related to acquired assets measured at fair value, see Note 16, "Financial Instruments."
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
Short-Term Borrowings
1 unchanged sentence
As of December 31, 2021 and 2020, the Company had lines of credit from banks totaling $ 96.2 million and $ 94.3 million, respectively.
−Removed: As of December 31, 2020, the Company had no short-term debt balances outstanding related to draws on the lines of credit.
−Removed: As of December 31, 2019, the Company had short-term debt balances outstanding related to draws on the lines of credit of $ 19.2 million.
+Added: As of December 31, 2021 and 2020, the Company had no short-term debt balances outstanding related to draws on the lines of credit.
Long-Term Debt
3 unchanged sentences
Debt, Net Weighted
−Removed: Credit Agreement — Term Loan Facility $ 220.3 $ ( 0.6 ) $ — $ 219.7 1.36 %
3.8 % Senior Notes due 2027 (the "2027 Notes")
6 unchanged sentences
350.0 ( 3.1 ) ( 0.8 ) 346.1 2.624 %
+Added: 5.25 % Senior Notes due 2049 (the "2049 Notes")
+Added: 625.0 ( 6.1 ) 13.7 632.6 5.103 %
+Added: 3.55 % Senior Notes due 2052 (the "2052 Notes")
+Added: 350.0 ( 3.8 ) ( 0.5 ) 345.7 3.558 %
Other 7.5 — — 7.5 N/A
2 unchanged sentences
Long-term debt $ 2,595.2
+Added: Lear Corporation and Subsidiaries
+Added: Notes to Consolidated Financial Statements (continued)
December 31, 2020
−Removed: Debt Instrument Long-Term Debt Unamortized Debt Issuance Costs Unamortized Original Issue Discount Long-Term
+Added: Debt Instrument Long-Term Debt Unamortized Debt Issuance Costs Unamortized Original Issue Premium (Discount) Long-Term
Debt, Net Weighted
Credit Agreement — Term Loan Facility $ 220.3 $ ( 0.6 ) $ — $ 219.7 1.360 %
−Removed: 5.25 % Senior Notes due 2025 (the "2025 Notes")
−Removed: 650.0 ( 4.2 ) — 645.8 5.250 %
2027 Notes 750.0 ( 4.1 ) ( 3.5 ) 742.4 3.885 %
1 unchanged sentence
2030 Notes 350.0 ( 2.6 ) ( 0.7 ) 346.7 3.525 %
+Added: 2049 Notes 625.0 ( 6.3 ) 14.2 632.9 5.103 %
+Added: Other 1.4 — — 1.4 N/A
$ 2,321.7 $ ( 16.2 ) $ 9.0 2,314.5
1 unchanged sentence
Long-term debt $ 2,300.3
−Removed: The issuance, maturity and interest payment dates of the Company's senior unsecured 2027 Notes, 2029 Notes, 2030 Notes and 2049 Notes (collectively, the "Notes") are as shown below:
+Added: The issuance, maturity and interest payment dates of the Company's senior unsecured 2027 Notes, 2029 Notes, 2030 Notes, 2032 Notes, 2049 Notes and 2052 Notes (collectively, the "Notes") are shown below:
Note Issuance Date Maturity Date Interest Payment Dates
2 unchanged sentences
2030 Notes February 2020 May 30, 2030 May 30 and November 30
+Added: 2032 Notes November 2021 January 15, 2032 January 15 and July 15 (1)
2049 Notes May 2019 and February 2020 May 15, 2049 May 15 and November 15
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
+Added: 2052 Notes November 2021 January 15, 2052 January 15 and July 15 (1)
+Added: (1) Commencing July 15, 2022.
In 2017, the Company issued $ 750.0 million in aggregate principal amount at maturity of 2027 Notes at a stated coupon rate of 3.8 %.
1 unchanged sentence
The net proceeds from the offering of $ 744.7 million, after original issue discount, were used to redeem the outstanding $ 500.0 million in aggregate principal amount of the senior unsecured notes due 2023 at a redemption price equal to 100 % of the principal amount thereof, plus a "make-whole" premium of $ 17.0 million, as well as to refinance a portion of the Company's $ 500.0 million prior term loan facility (see "— Credit Agreement" below).
−Removed: Prior to June 15, 2027, the Company, at its option, may redeem some or all of the 2027 Notes at a redemption price equal to 100 % of the principal amount thereof, plus a "make-whole" premium as of, and accrued and unpaid interest to, the redemption date.
−Removed: At any time on or after June 15, 2027, but prior to the maturity date of September 15, 2027, the Company, at its option, may redeem some or all of the 2027 Notes at a redemption price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest to the redemption date.
+Added: In November 2021, the Company paid $ 221.5 million for the purchase of $ 200.0 million in aggregate principal amount of the 2027 Notes, including an early tender premium of $ 21.0 million and related fees of $ 0.5 million.
+Added: In connection with this transaction, the Company recognized a loss of $ 23.9 million on the extinguishment of debt.
+Added: Prior to June 15, 2027, the Company, at its option, may redeem the 2027 Notes, in whole or in part, at a redemption price equal to 100 % of the principal amount thereof, plus a "make-whole" premium as of, and accrued and unpaid interest to, the redemption date.
+Added: On or after June 15, 2027, but prior to the maturity date of September 15, 2027, the Company, at its option, may redeem the 2027 Notes, in whole or in part, at a redemption price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest to the redemption date.
2029 and 2049 Notes Issued in 2019
2 unchanged sentences
The 2049 Notes have a stated coupon rate of 5.25 % and were issued at 98.32 % of par, resulting in a yield to maturity of 5.363 %.
−Removed: The net proceeds from the offering were $ 693.3 million after original issue discount.
−Removed: The proceeds were used to redeem the $ 325.0 million in aggregate principal amount of the 2024 Notes at a redemption price equal to 102.688 % of the principal amount of such 2024 Notes, plus accrued interest, as well as to finance the acquisition of Xevo (Note 4, "Acquisition") and for general corporate purposes.
+Added: The net proceeds from the offering of $ 693.3 million, after original issue discount, were used to redeem $ 325.0 million in aggregate principal amount of the 2024 Notes at a redemption price equal to 102.688 % of the principal amount of such 2024
+Added: Lear Corporation and Subsidiaries
+Added: Notes to Consolidated Financial Statements (continued)
+Added: Notes, plus accrued interest, as well as to finance the Xevo acquisition (Note 4, "Acquisitions") and for general corporate purposes.
+Added: Prior to February 15, 2029, the Company, at its option, may redeem the 2029 Notes, in whole or in part, at a redemption price equal to 100 % of the principal amount thereof, plus the applicable premium, if any, as of, and accrued and unpaid interest to, but not including, the redemption date.
+Added: On or after February 15, 2029, the Company, at its option, may redeem the 2029 Notes, at any time, in whole or in part, on not less than 15 nor more than 60 days' prior notice, at a redemption price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest to, but not including, the redemption date.
+Added: Prior to November 15, 2048, the Company, at its option, may redeem the 2049 Notes, in whole or in part, at a redemption price equal to 100 % of the principal amount thereof, plus the applicable premium, if any, as of, and accrued and unpaid interest to, but not including, the redemption date.
+Added: On or after November 15, 2048, the Company, at its option, may redeem the 2049 Notes, at any time, in whole or in part, on not less than 15 nor more than 60 days' prior notice, at a redemption price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest to, but not including, the redemption date.
In connection with these transactions, the Company recognized a loss of $ 10.6 million on the extinguishment of debt and paid related issuance costs of $ 6.5 million.
4 unchanged sentences
The net proceeds from the offering were $ 669.1 million after original issue discount.
−Removed: The proceeds were used to redeem the $ 650.0 million in aggregate principal amount of 2025 Notes at a redemption price equal to 102.625 % of the principal amount of such 2025 Notes, plus accrued interest.
+Added: The proceeds were used to redeem $ 650.0 million in aggregate principal amount of 2025 Notes at a redemption price equal to 102.625 % of the principal amount of such 2025 Notes, plus accrued interest.
+Added: Prior to February 28, 2030, the Company, at its option, may redeem the 2030 Notes, in whole or in part, at a redemption price equal to 100 % of the principal amount thereof, plus the applicable premium, if any, as of, and accrued and unpaid interest to, but not including, the redemption date.
+Added: On or after February 28, 2030, the Company, at its option, may redeem the 2030 Notes, at any time, in whole or in part, on not less than 15 nor more than 60 days' prior notice, at a redemption price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest to, but not including, the redemption date.
+Added: Prior to November 15, 2048, the Company, at its option, may redeem the 2049 Notes, in whole or in part, at a redemption price equal to 100 % of the principal amount thereof, plus the applicable premium, if any, as of, and accrued and unpaid interest to, but not including, the redemption date.
+Added: On or after November 15, 2048, the Company, at its option, may redeem the 2049 Notes, at any time, in whole or in part, on not less than 15 nor more than 60 days' prior notice, at a redemption price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest to, but not including, the redemption date.
In connection with these transactions, the Company recognized a loss of $ 21.1 million on the extinguishment of debt and paid related issuance costs of $ 6.0 million.
+Added: 2032 Notes and 2052 Notes
+Added: In 2021, the Company issued $ 350.0 million in aggregate principal amount at maturity of 2032 Notes and $ 350.0 million in aggregate principal amount at maturity of 2052 Notes.
+Added: The 2032 Notes have a stated coupon rate of 2.6 % and were issued at 99.782 % of par, resulting in a yield to maturity of 2.624 %.
+Added: The 2052 Notes have a stated coupon rate of 3.55 % and were issued at 99.845 % of par, resulting in a yield to maturity of 3.558 %.
+Added: The net proceeds from the offering of $ 698.7 million, after original issue discount, were used to fund the tender of $ 200.0 million in aggregate principal amount of 2027 Notes (see "— 2027 Notes" above) and the repayment in full of $ 206.3 million outstanding on the term loan facility.
+Added: The Company expects to use the remaining net proceeds for general corporate purposes, which may include the purchase price for the Kongsberg acquisition (Note 4, "Acquisitions").
+Added: Prior to October 15, 2031, the Company, at its option, may redeem the 2032 Notes, in whole or in part, at a redemption price equal to 100 % of the principal amount thereof, plus the applicable premium, if any, as of, and accrued and unpaid interest to, but not including, the redemption date.
+Added: On or after October 15, 2031, the Company, at its option, may redeem the 2032 Notes, at any time, in whole or in part, on not less than 15 nor more than 60 days' prior notice, at a redemption price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest to, but not including, the redemption date.
+Added: Prior to July 15, 2051, the Company, at its option, may redeem the 2052 Notes, in whole or in part, at a redemption price equal to 100 % of the principal amount thereof, plus the applicable premium, if any, as of, and accrued and unpaid interest to, but not
+Added: Lear Corporation and Subsidiaries
+Added: Notes to Consolidated Financial Statements (continued)
+Added: including, the redemption date.
+Added: On or after July 15, 2051, the Company, at its option, may redeem the 2052 Notes, at any time, in whole or in part, on not less than 15 nor more than 60 days' prior notice, at a redemption price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest to, but not including, the redemption date.
+Added: In connection with these transactions, the Company paid related issuance costs of $ 7.1 million.
Subject to certain exceptions, the indentures governing the Notes contain restrictive covenants that, among other things, limit the ability of the Company to:
3 unchanged sentences
Credit Agreement
−Removed: In 2017, the Company entered into an unsecured credit agreement (the "Credit Agreement") consisting of a $ 1.75 billion revolving credit facility (the "Revolving Credit Facility") and a $ 250.0 million term loan facility (the "Term Loan Facility").
−Removed: In 2020, the Company entered into an agreement to extend the maturity date of the Revolving Credit Facility by one year to August 8, 2024, and paid related issuance costs of $ 1.0 million.
−Removed: The maturity date of the Term Loan Facility is August 8, 2022.
+Added: In 2017, the Company entered into an unsecured credit agreement consisting of a $ 1.75 billion revolving credit facility (the "Revolving Credit Facility") and a $ 250 million term loan facility (the "Term Loan Facility").
+Added: In October 2021, the Company entered into an amended and restated credit agreement (the "Credit Agreement") that increased the Revolving Credit Facility to $ 2.0 billion and extended the maturity date to October 28, 2026.
+Added: In connection with the amendment and restatement, the Company recognized a loss of $ 0.4 million on the extinguishment of debt and paid related issuance costs of $ 2.8 million.
+Added: In 2021, the Company made principal payments under the Term Loan Facility of $ 220.3 million, including full repayment of $ 206.3 million in November 2021.
+Added: In connection with the full repayment, the Company recognized a loss of $ 0.3 million on the extinguishment of debt.
+Added: In 2020 and 2019, the Company made required principal payments under the Term Loan Facility of $ 14.1 million and $ 7.8 million, respectively.
+Added: In 2021, there were no borrowings or repayments under the Revolving Credit Facility.
In the first quarter of 2020, as a proactive measure in response to the COVID-19 pandemic, the Company borrowed $ 1.0 billion under the Revolving Credit Facility, which was repaid in full in the third quarter of 2020.
In 2019, aggregate borrowings and repayments under the Revolving Credit Facility were $ 30.0 million.
−Removed: In 2018, there were no borrowings or repayments under the
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: Revolving Credit Facility.
As of December 31, 2021 and 2020, there were no borrowings outstanding under the Revolving Credit Facility.
−Removed: In 2020, 2019 and 2018, the Company made required principal payments under the Term Loan Facility of $ 14.1 million, $ 7.8 million and $ 6.3 million, respectively.
−Removed: Advances under the Revolving Credit Facility and the Term Loan Facility generally bear interest based on (i) the Eurocurrency Rate (as defined in the Credit Agreement) or (ii) the Base Rate (as defined in the Credit Agreement) plus a margin, determined in accordance with a pricing grid.
+Added: Advances under the Revolving Credit Facility and borrowings under the Term Loan Facility (1) generally bear interest based on (i) the Eurocurrency Rate (as defined in the Credit Agreement) or (ii) the Base Rate (as defined in the Credit Agreement ) plus a margin, determined in accordance with a pricing grid.
As of December 31, 2021, the ranges and rates are as follows (in percentages):
Eurocurrency Rate Base Rate
−Removed: Minimum Maximum Rate as of
−Removed: December 31, 2020 Minimum Maximum Rate as of
+Added: Minimum Maximum Rate as of December 31, 2021
+Added: Minimum Maximum Rate as of December 31, 2021
Revolving Credit Facility 0.925 % 1.450 % 1.125 % 0.000 % 0.450 % 0.125 %
Term Loan Facility 1
−Removed: A facility fee, which ranges from 0.125 % to 0.30 % of the total amount committed under the Revolving Credit Facility, is payable quarterly.
−Removed: The Credit Agreement contains various customary representations, warranties and covenants by the Company, including, without limitation, (i) covenants regarding maximum leverage, (ii) limitations on fundamental changes involving the Company or its subsidiaries and (iii) limitations on indebtedness and liens.
+Added: 1.125 % 1.900 % N/A 0.125 % 0.900 % N/A
+Added: (1) Paid in full in November 2021.
+Added: The facility fee, which ranges from 0.075 % to 0.20 % of the total amount committed under the Revolving Credit Facility, is payable quarterly.
+Added: The C redit Agreement contains various customary representations, warranties and covenants by the Company, including, without limitation, (i) covenants regarding maximum leverage, (ii) limitations on fundamental changes involving the Company or its subsidiaries and (iii) limitations on indebtedness and liens.
As of December 31, 2021, the Company was in compliance with all covenants under the Credit Agreement .
−Removed: As of December 31, 2020, other long-term debt, including the current portion, consisted of amounts outstanding under finance leases.
−Removed: Scheduled Maturities
−Removed: As of December 31, 2020, scheduled maturities related to the Credit Agreement — Term Loan Facility for the five succeeding years are shown below (in millions):
+Added: As of December 31, 2021, other long-term debt, including the current portion, consisted of amounts outstanding under an unsecured working capital loan and a finance lease agreement.
+Added: As of December 31, 2020, other long-term debt, including the current portion, consisted of amounts outstanding under a finance lease agreement.
+Added: Lear Corporation and Subsidiaries
+Added: Notes to Consolidated Financial Statements (continued)
Right-of-Use Assets and Lease Obligations
8 unchanged sentences
$ 649.2 $ 555.2
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
Maturities of lease obligations as of December 31, 2021, are shown below (in millions):
3 unchanged sentences
Lease obligations under operating leases $ 649.2
−Removed: The Company entered into two lease contracts, one of which is expected to commence in the first quarter of 2021 with a lease term of five years , and the other of which is expected to commence in the third quarter 2021 with a lease term of ten years .
−Removed: The aggregate right-of-use assets and related lease obligations are expected to be approximately $ 52.0 million.
+Added: The Company entered into a lease contract which commences in the first quarter of 2022.
+Added: The contract has a lease term of seven years and a right-of-use asset and related lease obligation of approximately $ 24.0 million.
Cash flow information related to operating leases is shown below (in millions):
13 unchanged sentences
Additionally, the Company evaluated its supply contracts with its customers and concluded that variable lease (income) expense in these arrangements is not material.
−Removed: For the year ended December 31, 2018, the Company recorded rent expense of $ 163.8 million.
−Removed: For the years ended December 31, 2020 and 2019, the Company recognized impairment charges of $ 2.0 million and $ 0.8 million, respectively, related to its right-of-use assets in conjunction with its restructuring actions (Note 5, "Restructuring").
+Added: Lear Corporation and Subsidiaries
+Added: Notes to Consolidated Financial Statements (continued)
+Added: For the years ended December 31, 2021, 2020 and 2019, the Company recognized impairment charges of $ 7.2 million, $ 2.0 million and $ 0.8 million, respectively, related to its right-of-use assets in conjunction with its restructuring actions (Note 5, "Restructuring").
The weighted average lease term and discount rate for operating leases as of December 31, 2021, are shown below:
2 unchanged sentences
The Company has entered into certain finance lease agreements which are not material to the consolidated financial statements (Note 7, "Debt").
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
(9) Income Taxes
5 unchanged sentences
$ 583.5 $ 299.3 $ 953.6
−Removed: Domestic (benefit) provision for income taxes:
+Added: Domestic benefit for income taxes:
Current provision $ 38.4 $ 29.0 $ 24.2
−Removed: Deferred (benefit) provision ( 106.2 ) ( 52.6 ) 91.5
−Removed: Total domestic (benefit) provision $ ( 77.2 ) $ ( 28.4 ) $ 126.5
+Added: Deferred benefit ( 76.6 ) ( 106.2 ) ( 52.6 )
+Added: Total domestic benefit $ ( 38.2 ) $ ( 77.2 ) $ ( 28.4 )
Foreign provision for income taxes:
Current provision $ 154.8 $ 149.6 $ 160.1
−Removed: Deferred (benefit) provision 21.5 14.4 ( 4.8 )
+Added: Deferred provision 21.1 21.5 14.4
Total foreign provision $ 175.9 $ 171.1 $ 174.5
Provision for income taxes $ 137.7 $ 93.9 $ 146.1
−Removed: The Act was enacted on December 22, 2017.
−Removed: The Act reduced the U.S.
−Removed: federal corporate income tax rate from 35% to 21% beginning in 2018, required companies to pay a one-time transition tax on all offshore earnings that were previously tax deferred and created new taxes on certain foreign sourced earnings.
−Removed: In March 2018, the FASB issued ASU 2018-05, "Income Taxes — Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.
−Removed: 118." The guidance provided for a provisional one-year measurement period for entities to finalize their accounting for certain tax effects related to the Act.
−Removed: Accordingly, for the year ended December 31, 2018, the Company recognized a favorable adjustment to the 2017 income tax expense of $ 5.3 million related to the remeasurement of the December 31, 2017 deferred tax balances, the one-time transition tax and numerous other items included in the Act.
−Removed: The Company also analyzed the impact of several new provisions of the Act that became effective as of January 1, 2018, such as the GILTI provision, foreign-derived intangible income ("FDII") deduction, a new minimum tax related to payments to foreign subsidiaries and affiliates known as base erosion anti-abuse tax, interest expense limitations under Internal Revenue Code ("IRC") section 163(j), executive compensation limitations under IRC section 162(m) and various other provisions.
−Removed: The domestic (benefit) provision includes withholding taxes related to dividends and royalties paid by the Company’s foreign subsidiaries, as well as state and local taxes.
−Removed: In 2020, 2019 and 2018, the foreign deferred (benefit) provision includes the benefit of prior unrecognized net operating loss carryforwards of $ 5.3 million, $ 1.8 million and $ 7.1 million, respectively.
+Added: The domestic current provision includes withholding taxes related to dividends and royalties paid by the Company's foreign subsidiaries, as well as state and local taxes.
+Added: In 2021, 2020 and 2019, the provision for income taxes includes the benefit of prior unrecognized net operating loss carryforwards of $ 2.9 million, $ 5.3 million and $ 1.8 million, respectively.
Lear Corporation and Subsidiaries
11 unchanged sentences
Change in the tax status of certain affiliates — — ( 18.1 )
−Removed: Transition tax on accumulated foreign earnings — — ( 15.1 )
−Removed: tax rate change and other tax reform items — — 9.8
Other ( 12.6 ) 1.2 8.7
3 unchanged sentences
tax impact of apportioning U.S.
−Removed: expenses against the GILTI and foreign branch baskets in calculating the foreign tax credit limitation resulting in no tax benefit for these expenses due to the Company’s excess foreign tax credit position in the GILTI basket for 2020, 2019 and 2018 and foreign branch basket for 2018.
+Added: expenses against the GILTI and foreign branch baskets in calculating the foreign tax credit limitation resulting in no tax benefit for these expenses due to the Company's excess foreign tax credit position in the GILTI basket for 2020 and 2019.
In 2020, as a result of the change in the foreign branch basket limitation, the Company recognized tax benefits of $ 15.5 million related to the U.S.
17 unchanged sentences
Deferred compensation 25.4 22.6
−Removed: Recoverable customer engineering, development and tooling 67.1 ( 10.5 )
+Added: Capitalized engineering, research and development 138.3 67.1
Undistributed earnings of foreign subsidiaries ( 74.0 ) ( 71.7 )
4 unchanged sentences
Net deferred income tax asset $ 609.4 $ 585.4
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
As of December 31, 2021 and 2020, the valuation allowance with respect to the Company's deferred tax assets was $ 406.9 million and $ 397.7 million, respectively, a net increase of $ 9.2 million.
Concluding that a valuation allowance is not required is difficult when there is significant negative evidence, such as cumulative losses in recent years, which is objective and verifiable.
−Removed: When measuring cumulative losses in recent years, the Company uses a rolling three-year period of pretax book income, adjusted for permanent differences between book and taxable income and certain other items.
−Removed: As of December 31, 2020, the Company continues to maintain a valuation allowance of $ 18.8 million with respect to certain of its U.S.
−Removed: deferred tax assets that, due to their nature, are not likely to be realized.
+Added: When measuring cumulative losses in recent years, the
+Added: Lear Corporation and Subsidiaries
+Added: Notes to Consolidated Financial Statements (continued)
+Added: Company uses a rolling three-year period of pretax book income, adjusted for permanent differences between book and taxable income and certain other items.
+Added: As of December 31, 2021, the Company continues to maintain a U.S.
+Added: valuation allowance of $ 24.5 million, primarily related to U.S.
+Added: state and local deferred tax assets that, due to their nature, are not likely to be realized.
In addition, the Company continues to maintain a valuation allowance of $ 382.4 million with respect to its deferred tax assets in several international jurisdictions.
12 unchanged sentences
research and development credits of $ 119.3 million that expire between 2025 and 2041 and other tax credits primarily in international jurisdictions of $ 43.4 million that generally expire between 2022 and 2041.
−Removed: On January 1, 2018, the Company adopted ASU 2016-16, "Income Taxes — Intra-Entity Transfers of Assets Other than Inventory." The new standard requires the recognition of the income tax effects of intercompany sales and transfers of assets other than inventory in the period in which the sale or transfer occurs.
−Removed: The standard also requires modified retrospective adoption.
−Removed: Accordingly, the Company recognized a deferred tax asset of $ 2.3 million and a corresponding credit to retained earnings in conjunction with the adoption.
−Removed: The effects of adopting the other provisions of ASU 2016-16 were not significant.
As of December 31, 2021 and 2020, the Company's gross unrecognized tax benefits were $ 34.9 million and $ 36.4 million (excluding interest and penalties), respectively, which is recorded in other long-term liabilities in the accompanying consolidated balance sheets.
4 unchanged sentences
Additions (reductions) based on tax positions related to current year 7.7 4.9 ( 0.3 )
−Removed: Additions based on tax positions related to prior years 3.6 2.0 0.1
+Added: Additions (reductions) based on tax positions related to prior years ( 4.0 ) 3.6 2.0
Settlements ( 0.3 ) ( 1.2 ) ( 3.7 )
5 unchanged sentences
The Company operates in multiple jurisdictions throughout the world, and its tax returns are periodically audited or subject to review by both domestic and foreign tax authorities.
−Removed: During the next twelve months, it is reasonably possible that, as a result of audit settlements, the conclusion of current examinations and the expiration of the statute of limitations in multiple jurisdictions,
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: the Company may decrease the amount of its gross unrecognized tax benefits by $ 8.4 million, all of which, if recognized, would affect the Company’s effective tax rate.
+Added: During the next twelve months, it is reasonably possible that, as a result of audit settlements, the conclusion of current examinations and the expiration of the statute of limitations in multiple jurisdictions, the Company may decrease the amount of its gross unrecognized tax benefits by $ 3.9 million, all of which, if recognized, would affect the Company's effective tax rate.
The gross unrecognized tax benefits subject to potential decrease involve issues related to transfer pricing and various other tax items in multiple jurisdictions.
3 unchanged sentences
state and local jurisdictions for years after 2016.
−Removed: Further, the Company or its subsidiaries remain subject to income tax examination in Spain for years after 2005, in Mexico for years after 2013, in Morocco for years after 2014, in Germany, Italy and the United Kingdom for years after 2015, in China for years after 2016 and in the United States generally for years after 2019.
+Added: Further, the Company or its subsidiaries remain subject to income tax examination in Spain for years after 2007, in Mexico for years after 2013, in Germany and Italy for years after 2015, in China
+Added: Lear Corporation and Subsidiaries
+Added: Notes to Consolidated Financial Statements (continued)
+Added: and Morocco for years after 2017, in the United Kingdom for years after 2018 and in the United States generally for years after 2019.
+Added: In 2021, the Brazilian Supreme Court ruled on certain matters, including the method of determining the amount of indirect tax credits that taxpayers are entitled to monetize in future periods.
+Added: As a result of the ruling, other expense, net includes a gain of $ 45.0 million for the year ended December 31, 2021, for which $ 8.0 million of tax expense was recognized.
(10) Pension and Other Postretirement Benefit Plans
16 unchanged sentences
Amendment — — — — — — 0.4 —
−Removed: Actuarial loss 66.4 39.9 63.0 55.8 6.9 2.1 4.5 0.4
+Added: Actuarial (gain) loss ( 23.0 ) ( 32.8 ) 66.4 39.9 ( 3.5 ) ( 2.4 ) 6.9 2.1
Benefits paid ( 19.4 ) ( 24.3 ) ( 19.3 ) ( 20.0 ) ( 3.1 ) ( 1.4 ) ( 3.2 ) ( 1.5 )
Benefits paid — settlements — — — ( 29.2 ) — — — —
−Removed: Curtailment — — — ( 2.4 ) — — — ( 10.9 )
Translation adjustment — ( 8.0 ) — 17.0 — 0.2 — 0.5
1 unchanged sentence
Actuarial losses
+Added: As of December 31, 2021, the decrease in pension and other postretirement benefit obligations attributable to actuarial gains primarily relates to an increase in the discount rate used to determine the benefit obligations (see assumptions below).
As of December 31, 2020, the increase in pension and other postretirement benefit obligations attributable to actuarial losses primarily relates to a decrease in the discount rate used to determine the benefit obligations (see assumptions below) and, to a lesser extent, changes in mortality assumptions for the Company's U.S.
With respect to the other postretirement benefit obligation, actuarial losses were offset by gains related to claims cost updates for the Company's foreign plans.
−Removed: As of December 31, 2019, the increase in pension and other postretirement benefit obligations attributable to actuarial losses primarily relates to a decrease in the discount rate used to determine the benefit obligations (see assumptions below).
Lear Corporation and Subsidiaries
12 unchanged sentences
Translation adjustment — 1.3 — 7.9 — — — —
−Removed: Fair value of plan assets at
−Removed: end of period $ 418.2 $ 383.0 $ 376.6 $ 396.8 $ — $ — $ — $ —
+Added: Fair value of plan assets at end of period 444.2 392.5 418.2 383.0 — — — —
Funded status $ ( 92.3 ) $ ( 87.4 ) $ ( 146.2 ) $ ( 146.2 ) $ ( 56.0 ) $ ( 24.5 ) $ ( 61.2 ) $ ( 27.4 )
6 unchanged sentences
Other long-term liabilities ( 89.0 ) ( 125.3 ) ( 143.7 ) ( 152.1 ) ( 52.0 ) ( 23.0 ) ( 57.2 ) ( 25.9 )
+Added: Funded status $ ( 92.3 ) $ ( 87.4 ) $ ( 146.2 ) $ ( 146.2 ) $ ( 56.0 ) $ ( 24.5 ) $ ( 61.2 ) $ ( 27.4 )
Accumulated Benefit Obligation
14 unchanged sentences
Reclassification adjustments $ 3.9 $ 6.0 $ 2.3 $ 5.2 $ ( 1.1 ) $ — $ ( 1.6 ) $ —
−Removed: Actuarial loss arising during the period ( 46.1 ) ( 39.7 ) ( 21.7 ) ( 33.8 ) ( 6.9 ) ( 2.1 ) ( 4.5 ) —
−Removed: Effect of curtailment — — — 0.1 — — — —
+Added: Actuarial gain (loss) arising during the period 42.5 40.1 ( 46.1 ) ( 39.7 ) 3.5 2.4 ( 6.9 ) ( 2.1 )
Effect of settlements 0.4 0.1 0.3 13.0 — — — —
9 unchanged sentences
Net unrecognized actuarial gain (loss) $ ( 102.6 ) $ ( 114.0 ) $ ( 149.4 ) $ ( 160.7 ) $ 13.6 $ ( 0.6 ) $ 11.2 $ ( 3.0 )
−Removed: Prior service (cost) credit — ( 1.5 ) — ( 1.2 ) 1.2 0.1 1.9 0.1
+Added: Prior service credit (cost) — ( 0.6 ) — ( 1.5 ) 1.1 0.1 1.2 0.1
$ ( 102.6 ) $ ( 114.6 ) $ ( 149.4 ) $ ( 162.2 ) $ 14.7 $ ( 0.5 ) $ 12.4 $ ( 2.9 )
14 unchanged sentences
Amortization of actuarial loss 3.9 6.1 2.3 5.2 1.8 7.8
−Removed: Curtailment (gain) loss — — — ( 2.3 ) — 0.4
+Added: Curtailment gain — — — — — ( 2.3 )
Settlement losses 0.4 — 0.3 13.0 0.1 —
6 unchanged sentences
Interest cost 1.4 0.7 1.7 0.7 2.1 1.3
−Removed: Amortization of actuarial (gain) loss ( 1.6 ) — ( 2.3 ) — ( 2.2 ) 0.2
+Added: Amortization of actuarial gain ( 1.1 ) — ( 1.6 ) — ( 2.3 ) —
Amortization of prior service credit ( 0.1 ) — ( 0.2 ) — ( 0.2 ) ( 0.2 )
3 unchanged sentences
For the year ended December 31, 2019, the Company recognized an other postretirement curtailment gain of $ 10.6 million related to its restructuring actions (Note 5, "Restructuring").
−Removed: For the year ended December 31, 2018, the Company recognized pension settlement losses of $ 5.4 million related to its annuity purchase for certain terminated vested plan participants of its U.S.
−Removed: defined benefit pension plans.
The weighted average actuarial assumptions used in determining the benefit obligations are shown below:
114 unchanged sentences
Contributions
−Removed: In 2021, the Company's minimum required contributions to its domestic and foreign pension plans are expected to be approximately $ 5 million to $ 10 million .
+Added: In 2022, the Company's minimum required contributions to its domestic and foreign pension plans are expected to be approximately $ 2 million .
The Company may elect to make contributions in excess of minimum funding requirements in response to investment performance or changes in interest rates or when the Company believes that it is financially advantageous to do so and based on its other cash requirements.
13 unchanged sentences
Labor-Management Group Pension Plan (EIN 51-6099782-001) and UNITE Here National Retirement Fund (EIN 13-6130178-001), for certain of its employees.
−Removed: Contributions to these plans are based on four collective bargaining agreements, which expire between January 31, 2021 and April 25, 2025.
+Added: Contributions to these plans are based on four collective bargaining agreements, which expire between June 30, 2022 and April 25, 2025.
Detailed information related to these plans is shown below (amounts in millions):
4 unchanged sentences
Certification FIP/RP (1)
−Removed: Implemented Surcharge Year Ended December 31, 2020 Year Ended December 31, 2019 Year Ended December 31, 2018
+Added: Surcharge Year Ended December 31, 2021 Year Ended December 31, 2020 Year Ended December 31, 2019
51-6099782-001 Green Green Yes No $ 0.7 $ 0.6 $ 0.5
13-6130178-001 Red Red Yes No 0.4 0.5 0.4
+Added: (1) Funding improvement plan or rehabilitation plan as defined by Employment Retirement Security Act of 1974.
For its plan years 2021 and 2020, the Company's contributions to the U.A.W.
43 unchanged sentences
Common Stock Share Repurchase Program
−Removed: Since the first quarter of 2011, the Company's Board of Directors has authorized $ 6.1 billion in share repurchases under its common stock share repurchase program.
−Removed: As of December 31, 2020, the Company has paid $ 4.7 billion in aggregate for repurchases of its common stock, at an average price of $ 90.07 per share, excluding commissions and related fees.
−Removed: In March 2020, as a proactive measure in response to the COVID-19 pandemic, the Company suspended share repurchases under its share repurchase program.
+Added: The Company may implement share repurchases through a variety of methods, including, but not limited to, open market purchases, accelerated stock repurchase programs and structured repurchase transactions.
+Added: The extent to which the Company may repurchase its outstanding common stock and the timing of such repurchases will depend upon its financial condition, results of operations, capital requirements, prevailing market conditions, alternative uses of capital and other factors.
+Added: The Company has a common stock share repurchase program (the "Repurchase Program") which permits the discretionary repurchase of its common stock.
+Added: Since its inception in the first quarter of 2011, the Company's Board of Directors has authorized $ 6.1 billion in share repurchases under the Repurchase Program.
+Added: As of December 31, 2021, the Company has repurchased, in aggregate, $ 4.8 billion of its outstanding common stock, at an average price of $ 90.97 per share, excluding commissions and related fees.
+Added: As of December 31, 2021, the Company has a remaining repurchase authorization of $ 1.3 billion under its Repurchase Program, which expires on December 31, 2022.
+Added: In March 2020, as a proactive measure in response to the COVID-19 pandemic, the Company suspended share repurchases under its Repurchase Program.
+Added: Share repurchases were reinstated in the second quarter of 2021.
Share repurchases are shown below (in millions except for shares and per share amounts):
3 unchanged sentences
2019 $ 380.4 $ 384.7 2,819,081 $ 134.95
−Removed: (1) Prior to suspension.
(1) Excludes commissions.
−Removed: As of December 31, 2020, the Company has a remaining repurchase authorization of $ 1.4 billion under its current common stock share repurchase program, which will expire on December 31, 2022.
−Removed: The Company may implement these share repurchases through a variety of methods, including, but not limited to, open market purchases, accelerated stock repurchase programs and structured repurchase transactions.
−Removed: The extent to which the Company will repurchase its outstanding common stock and the timing of such repurchases will depend upon its financial condition, prevailing market conditions, alternative uses of capital and other factors.
−Removed: In addition to shares repurchased under the Company’s common stock share repurchase program described above, the Company classified shares withheld from the settlement of the Company’s restricted stock unit and performance share awards to cover tax withholding requirements as common stock held in treasury in the accompanying consolidated balance sheets as of December 31, 2020 and 2019.
−Removed: In 2018, the Company’s Board of Directors approved the retirement of 8 million shares of common stock held in treasury.
−Removed: These retired shares are reflected as authorized, but not issued, in the accompanying consolidated balance sheets as of December 31, 2020 and 2019.
−Removed: The retirement of shares held in treasury resulted in a reduction in the par value of common stock, additional paid-in capital and retained earnings of $ 0.1 million, $ 155.9 million and $ 1,014.2 million, respectively.
−Removed: These reductions were offset by a corresponding reduction in shares held in treasury of $ 1,170.2 million.
−Removed: Accordingly, there was no effect on stockholders' equity as a result of this transaction.
+Added: In addition to shares repurchased under the Repurchase Program described above, the Company classifies shares withheld from the settlement of the Company's restricted stock unit and performance share awards to cover tax withholding requirements as common stock held in treasury in the consolidated balance sheet.
Quarterly Dividend
+Added: In 2021, the Company's Board of Directors declared a quarterly cash dividend of $ 0.25 per share of common stock in the first and second quarters, a quarterly cash dividend of $ 0.50 per share of common stock in the third quarter and a quarterly cash dividend of $ 0.77 per share of common stock in the fourth quarter, returning the quarterly cash dividend to its pre-COVID-19 pandemic level.
+Added: In 2020, the Company's Board of Directors declared a quarterly cash dividend of $ 0.77 per share of common stock in the first quarter.
In March 2020, as a proactive measure in response to the COVID-19 pandemic, the Company suspended its quarterly cash dividend.
−Removed: Prior to the suspension, the Company’s Board of Directors declared a cash dividend of $ 0.77 per share of common stock in the first quarter of 2020.
−Removed: The quarterly cash dividend was reinstated in the fourth quarter of 2020 at $ 0.25 per share of common stock.
−Removed: In 2019 and 2018, the Company’s Board of Directors declared quarterly cash dividends of $ 0.75 and $ 0.70 , respectively, per share of common stock.
+Added: The quarterly cash dividend was reinstated in the fourth quarter at $ 0.25 per share of common stock.
+Added: In 2019, the Company's Board of Directors declared quarterly cash dividends of $ 0.75 per share of common stock.
Dividends declared and paid are shown below (in millions):
25 unchanged sentences
Balance at beginning of year $ ( 440.8 ) $ ( 564.9 ) $ ( 523.3 )
−Removed: Other comprehensive income (loss) recognized during the period (net of tax benefit of $ 3.8 million in 2020, $ 0.9 million in 2019 and $ 2.3 million in 2018)
+Added: Other comprehensive income (loss) recognized during the period (net of tax benefit (expense) of ($ 4.1 ) million in 2021, $ 3.8 million in 2020 and $ 0.9 million in 2019)
( 111.4 ) 124.1 ( 41.6 )
1 unchanged sentence
For the years ended December 31, 2021, 2020 and 2019, other comprehensive income (loss) related to currency translation adjustments includes pretax losses related to intercompany transactions for which settlement is not planned or anticipated in the foreseeable future of $ 0.4 million, $ 0.6 million and $ 0.5 million, respectively.
−Removed: For the years ended December 31, 2020 and 2019, other comprehensive income (loss) related to currency translation adjustments also includes net investment hedge losses of $ 18.3 million and $ 4.4 million, respectively.
+Added: For the years ended December 31, 2021, 2020 and 2019, other comprehensive income (loss) related to currency translation adjustments also includes net investment hedge gains (losses) of $ 17.9 million, ($ 18.3 ) million and ($ 4.4 ) million, respectively.
Redeemable Noncontrolling Interest
8 unchanged sentences
Noncontrolling Interests
−Removed: In 2019, the Company deconsolidated GACC as it no longer controls the entity.
−Removed: In 2018, the Company gained control of Lear FAWSN.
−Removed: For further information related to these transactions, see Note 6, "Investments in Affiliates and Other Related Party Transactions."
+Added: In 2021, the Company sold a 49 % equity interest in its wholly owned consolidated subsidiary, Shenyang Lear Jinbei Automotive Systems Co., Ltd.
+Added: ("Shenyang Lear"), for $ 36.2 million.
+Added: The Company continues to control Shenyang Lear, and as a result, the operating results and cash flows of Shenyang Lear continue to be included in the Company's consolidated financial statements.
+Added: Noncontrolling interest of $ 7.6 million was recorded in conjunction with the transaction.
+Added: The difference between the consideration paid and the carrying value of the noncontrolling interest recorded is reflected in additional paid-in capital in the accompanying consolidated balance sheet as of December 31, 2021.
+Added: The proceeds from the sale are classified within cash flows
Lear Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
+Added: used in financing activities in the accompanying consolidated statement of cash flows for the year ended December 31, 2021.
+Added: In 2019, the Company deconsolidated GACC as it no longer controls the entity.
+Added: For further information related to these transactions, see Note 6, "Investments in Affiliates and Other Related Party Transactions."
(13) Stock-Based Compensation
3 unchanged sentences
The 2019 LTSIP reserves 2,526,858 shares of common stock plus shares of common stock awarded under the 2009 LTSIP that are cancelled subsequent to May 16, 2019, for issuance under stock option, restricted stock, restricted stock unit, restricted unit, performance share, performance unit and stock appreciation right awards.
−Removed: In addition, the Company adopted the Lear Corporation 2019 Inducement Grant Plan ("Inducement Plan") as of April 17, 2019, in conjunction with the acquisition of Xevo.
+Added: In addition, the Company adopted the Lear Corporation 2019 Inducement Grant Plan ("Inducement Plan") as of April 17, 2019, in conjunction with the Xevo acquisition.
The Inducement Plan reserved 146,516 shares of common stock for issuance under restricted stock and restricted stock unit awards, of which 145,202 awards were granted on April 17, 2019.
The remaining shares under the Inducement Plan will not be awarded.
−Removed: Under the 2009 LTSIP, the 2019 LTSIP and the Inducement Plan, the Company has granted restricted stock units, performance shares and stock options to certain of its employees, all of which generally vest in three years following the grant date.
+Added: Under the 2009 LTSIP, the 2019 LTSIP and the Inducement Plan, the Company has granted restricted stock units, performance shares and stock options to certain of its employees, all of which generally vest in one to three years following the grant date.
For the years ended December 31, 2021, 2020 and 2019, the Company recognized compensation expense related to these awards of $ 58.7 million, $ 39.0 million and $ 22.3 million, respectively.
8 unchanged sentences
Outstanding as of December 31, 2020
+Added: 616,584 $ 124.83 809,471 $ 143.48 108,446 $ 30.32
Granted 168,763 $ 165.28 175,546 $ 188.11 94,256 $ 35.33
4 unchanged sentences
Vested or expected to vest as of December 31, 2021
+Added: 567,891 397,755 202,702
(1) Outstanding performance shares are reflected at the maximum possible payout that may be earned during the relevant performance periods.
1 unchanged sentence
The weighted average grant date fair value of restricted stock units granted in 2020 and 2019 was $ 129.40 and $ 134.65 , respectively.
−Removed: The grant date fair value of performance shares was based on a Monte Carlo simulation in 2020 and 2019 and on the share price on the grant date in 2018.
+Added: The grant date fair value of performance shares is based on a Monte Carlo simulation.
The weighted average grant date fair value of performance shares granted in 2020 and 2019 was $ 147.53 and $ 124.48 , respectively.
The grant date fair value of stock options is based on a Black-Scholes model.
+Added: The grant date fair value of options granted in 2020 was $ 30.32 .
+Added: There were no stock options granted in 2019.
+Added: Lear Corporation and Subsidiaries
+Added: Notes to Consolidated Financial Statements (continued)
(14) Commitments and Contingencies
3 unchanged sentences
Product liability and warranty reserves are recorded separately from legal reserves, as described below.
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
Commercial Disputes
18 unchanged sentences
Foreign currency translation and other 0.9
−Removed: Balance as of December 31, 2019 32.0
+Added: Balance as of January 1, 2021 48.7
Expense, net (including changes in estimates) 12.7
7 unchanged sentences
As of December 31, 2021 and 2020, the Company had recorded environmental reserves of $ 8.0 million and $ 8.9 million, respectively.
−Removed: The Company does not believe that the environmental liabilities associated with its current and former properties will have a material adverse impact on its business, financial condition, results of operations or cash flows;
+Added: The Company does not believe that the environmental liabilities associated with its current and former properties
+Added: Lear Corporation and Subsidiaries
+Added: Notes to Consolidated Financial Statements (continued)
+Added: will have a material adverse impact on its business, financial condition, results of operations or cash flows;
however, no assurances can be given in this regard.
1 unchanged sentence
The Company is involved from time to time in various other legal proceedings and claims, including, without limitation, intellectual property matters, tax claims and employment matters.
−Removed: Although the outcome of any legal matter cannot be predicted with certainty, the Company does not believe that any of the other legal proceedings or claims in which the Company is
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: currently involved, either individually or in the aggregate, will have a material adverse impact on its business, financial condition, results of operations or cash flows.
+Added: Although the outcome of any legal matter cannot be predicted with certainty, the Company does not believe that any of the other legal proceedings or claims in which the Company is currently involved, either individually or in the aggregate, will have a material adverse impact on its business, financial condition, results of operations or cash flows.
However, no assurances can be given in this regard.
31 unchanged sentences
For the year ended December 31, 2021, segment earnings include restructuring charges of $ 52.4 million, $ 47.7 million and $ 7.5 million in the Seating and E-Systems segments and in the other category, respectively.
−Removed: The Company expects to incur approximately $ 11 million and approximately $ 7 million of additional restructuring costs in the Seating and E-Systems segments, respectively, related to activities initiated as of December 31, 2020, and expects that the components of such costs will be consistent with its historical experience.
−Removed: For the year ended December 31, 2019, segment earnings include restructuring charges of $ 150.1 million, $ 38.0 million and $ 2.1 million in the Seating and E-Systems segments and in the other category, respectively.
−Removed: For the year ended December 31, 2018, segment earnings include restructuring charges of $ 62.3 million, $ 20.9 million and $ 4.8 million in the Seating and E-Systems segments and in the other category, respectively.
+Added: The Company expects to incur approximately $ 25 million and approximately $ 19 million of additional restructuring costs in the Seating and E-Systems
Lear Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
+Added: segments, respectively, related to activities initiated as of December 31, 2021, and expects that the components of such costs will be consistent with its historical experience.
+Added: For the year ended December 31, 2020, segment earnings include restructuring charges of $ 83.1 million, $ 54.5 million and $ 1.1 million in the Seating and E-Systems segments and in the other category, respectively.
+Added: For the year ended December 31, 2019, segment earnings include restructuring charges of $ 150.1 million, $ 38.0 million and $ 2.1 million in the Seating and E-Systems segments and in the other category, respectively.
For further information, see Note 5, "Restructuring."
29 unchanged sentences
Ford 13.5 % 13.5 % 13.8 %
−Removed: Daimler 11.9 % 11.1 % 9.9 %
Volkswagen 11.8 % 11.7 % 10.9 %
+Added: Daimler 11.2 % 11.9 % 11.1 %
+Added: Stellantis 10.9 % 11.2 % 12.5 %
Lear Corporation and Subsidiaries
11 unchanged sentences
2,600.0 2,320.3
−Removed: (1) Includes Term Loan Facility and Notes (excludes "other" debt).
+Added: (1) Excludes "other" debt.
(2) Excludes the impact of unamortized debt issuance costs and unamortized original issue premium (discount).
7 unchanged sentences
Statement of cash flows — cash, cash equivalents and restricted cash $ 1,321.3 $ 1,314.5 $ 1,510.4
−Removed: Accounts Receivable Factoring
−Removed: During the second quarter of 2020, the Company entered into an uncommitted factoring arrangement which provides for aggregate purchases of specified customer accounts in North America.
−Removed: The factoring arrangement results in true sales of the factored receivables, which are excluded from amounts reported in the consolidated balance sheets when the receivables are factored in accordance with ASC 860, "Transfers and Servicing." There were no receivables factored during the year ended December 31, 2020.
−Removed: The Company cannot provide any assurances that the factoring arrangement will be available or utilized in the future.
Marketable Equity Securities
8 unchanged sentences
As of December 31, 2021 and 2020, investments in equity securities without readily determinable fair values of $ 15.4 million and $ 11.2 million, respectively, are included in other long-term assets in the accompanying consolidated balance sheets.
−Removed: Such investments are valued at cost, less any impairment, and adjusted for changes resulting from observable, orderly transactions for identical or similar securities.
−Removed: For the years ended December 31, 2020 and 2019, the Company recognized impairment charges
+Added: Such investments are valued at cost, less cumulative impairments and adjusted for changes resulting from observable, orderly transactions for identical or similar securities.
+Added: For the years ended December 31, 2021, 2020 and 2019, the Company recognized impairment charges of $ 1.0 million, $ 4.0 million and $ 5.0 million, respectively, and investments in equity securities without readily determinable fair values have been reduced for cumulative impairments of $ 10.0 million and $ 9.0 million as of December 31, 2021 and 2020, respectively.
Lear Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
−Removed: of $ 4.0 million and $ 5.0 million, respectively, related to investments in equity securities without readily determinable fair values.
Derivative Instruments and Hedging Activities
2 unchanged sentences
Gains and losses on the derivative instruments are intended to offset gains and losses on the hedged transaction in an effort to reduce exposure to fluctuations in foreign exchange rates.
−Removed: The principal currencies hedged by the Company include the Mexican peso, various European currencies, the Japanese yen, the Philippine peso, the Chinese renminbi, the Thai baht and the Brazilian real.
+Added: The principal currencies hedged by the Company include the Mexican peso, various European currencies, the Chinese renminbi, the Japanese yen, the Philippine peso and the Thai baht.
Foreign currency derivative contracts not designated as hedging instruments consist principally of hedges of cash transactions, intercompany loans and certain other balance sheet exposures.
1 unchanged sentence
The Company uses cross-currency interest rate swaps which are designated as net investment hedges of the foreign currency rate exposure of its investment in certain Euro-denominated subsidiaries.
−Removed: For the years ended December 31, 2020 and 2019, contra interest expense on net investment hedges of $ 6.5 million and $ 1.8 million, respectively, is included in interest expense in the accompanying consolidated statements of income.
+Added: Contra interest expense on net investment hedges was $ 6.5 million, $ 6.5 million and $ 1.8 million for the years ended December 31, 2021, 2020 and 2019, respectively, and is included in interest expense in the accompanying consolidated statements of income.
Balance Sheet Classification
9 unchanged sentences
Fair value of derivatives designated as net investment hedges:
+Added: Other current liabilities $ ( 3.2 ) $ —
Other long-term liabilities ( 1.6 ) ( 22.6 )
+Added: ( 4.8 ) ( 22.6 )
Notional amount $ 300.0 $ 300.0
3 unchanged sentences
Other current liabilities ( 3.3 ) ( 6.1 )
+Added: ( 1.1 ) ( 0.3 )
Notional amount $ 445.5 $ 1,140.8
19 unchanged sentences
Comprehensive income (loss) $ ( 20.8 ) $ ( 14.7 ) $ 21.1
−Removed: As of December 31, 2020 and 2019, pretax net gains $ 4.7 million and $ 19.4 million, respectively, related to the Company’s derivative instruments and hedge activities were recorded in accumulated other comprehensive loss.
+Added: As of December 31, 2021 and 2020, pretax net gains (losses) of ($ 16.1 ) million and $ 4.7 million, respectively, related to the Company's derivative instruments and hedge activities were recorded in accumulated other comprehensive loss.
During the next twelve month period, net gains (losses) expected to be reclassified into earnings are shown below (in millions):
2 unchanged sentences
Such gains and losses will be reclassified at the time that the underlying hedged transactions are realized.
−Removed: For the years ended December 31, 2020, 2019 and 2018, the Company recognized tax expense of $ 0.8 million, $ 5.5 million and $ 3.3 million, respectively, in other comprehensive income related to its derivative instruments and hedge activities.
+Added: For the years ended December 31, 2021, 2020 and 2019, the Company recognized tax benefit (expense) of $ 7.5 million, ($ 0.8 ) million and ($ 5.5 ) million, respectively, in other comprehensive income related to its derivative instruments and hedge activities.
Fair Value Measurements
40 unchanged sentences
The Level 3 fair value estimate of the reporting units was based on a third-party valuation and/or management's estimates, using a combination of the discounted cash flow method and guideline public company method.
−Removed: In 2019, as a result of the acquisition of Xevo (Note 4, "Acquisition"), Level 3 fair value estimates of $ 90.1 million related to intangible assets are recorded in the accompanying consolidated balance sheets as of December 31, 2020 and 2019.
+Added: In 2019, as a result of the Xevo acquisition (Note 4, "Acquisitions"), Level 3 fair value estimates of $ 90.1 million related to intangible assets are recorded in the accompanying consolidated balance sheet as of December 31, 2020.
The estimated fair values of these assets were based on third-party valuations and management's estimates, generally utilizing the income and cost approaches.
1 unchanged sentence
The Level 3 fair value estimate related to the Company's equity interest was based on the present value of future cash flows and reflects a discount for the lack of control and the lack of marketability associated with equity interests.
−Removed: In 2018, as a result of the Lear FAWSN transaction (Note 6, "Investments in Affiliates and Other Related Party Transactions"), Level 3 fair value estimates related to property, plant and equipment of $ 11.0 million, intangible assets of $ 7.5 million and noncontrolling interests of $ 14.0 million are recorded in the accompanying consolidated balance sheets as of December 31, 2020 and 2019.
−Removed: In addition, the Lear FAWSN transaction required a Level 3 fair value estimate related to the Company's
+Added: Fair value estimates of property, plant and equipment and right-of-use assets were based on independent appraisals, giving consideration to the highest and best use of the assets.
+Added: Key assumptions used in the appraisals were based on a combination of market and cost approaches, as appropriate.
Lear Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
−Removed: previously held equity interest of $ 23.0 million.
−Removed: These Level 3 fair value estimates were determined as of the effective date of the transaction.
−Removed: Fair value estimates of property, plant and equipment were based on independent appraisals, giving consideration to the highest and best use of the assets.
−Removed: Key assumptions used in the appraisals were based on a combination of market and cost approaches, as appropriate.
−Removed: Fair value estimates of customer-based intangible assets were based on the present value of future earnings attributable to the asset group after recognition of required returns to other contributory assets.
+Added: Fair value estimates of customer-based and licensing intangible assets were based on the present value of future earnings attributable to the asset group after recognition of required returns to other contributory assets.
+Added: Fair value estimates of developed technology intangible assets were based on management's estimates using a discounted cash flow method.
Fair value estimates of noncontrolling and equity interests were based on the present value of future cash flows and a value to earnings multiple approach and reflect discounts for the lack of control and the lack of marketability associated with noncontrolling and equity interests.
As of December 31, 2021 and 2020, there were no additional significant assets or liabilities measured at fair value on a non-recurring basis.
−Removed: (17) Quarterly Financial Data (unaudited)
−Removed: (In millions, except per share data)
−Removed: Thirteen Weeks Ended
−Removed: 2020 October 3,
−Removed: 2020 December 31,
−Removed: Net sales $ 4,457.7 $ 2,444.5 $ 4,900.1 $ 5,243.2
−Removed: Gross profit 334.2 ( 127.4 ) 442.8 459.3
−Removed: Consolidated net income (loss) 83.6 ( 269.5 ) 197.1 222.7
−Removed: Net income (loss) attributable to Lear 76.4 ( 293.9 ) 174.4 201.6
−Removed: Basic net income (loss) per share attributable to Lear 1.26 ( 4.89 ) 2.90 3.35
−Removed: Diluted net income (loss) per share attributable to Lear 1.26 ( 4.89 ) 2.89 3.33
−Removed: In the first quarter of 2020, the Company recognized tax benefits of $ 10.6 million related to a loss on the extinguishment of debt, restructuring charges and various other items.
−Removed: The Company also recognized a loss of $ 21.1 million related to the extinguishment of debt.
−Removed: In the second quarter of 2020, the Company recognized tax expense of $ 22.8 million related to the establishment of a valuation allowance on deferred tax assets of a foreign subsidiary and net tax benefits of $ 21.1 million related to restructuring charges and various other items.
−Removed: In the third quarter of 2020, the Company recognized tax benefits of $ 9.8 million related to the release of a valuation allowance on deferred tax assets and $ 5.0 million related to an increase in our research and development tax credits resulting from the completion of a research and development tax credit study and net tax expense of $ 10.2 million related to restructuring charges and various other items.
−Removed: The Company also recognized a pension benefit plan settlement loss of $ 10.2 million related to its restructuring actions.
−Removed: In the fourth quarter of 2020, the Company recognized tax benefits of $ 8.1 million related to restructuring charges and various other items and $ 15.5 million related to the U.S.
−Removed: deferred tax effect of our foreign branches and tax expense of $ 16.7 million related to a net increase in valuation allowances on deferred tax assets.
−Removed: The Company also recognized pension benefit plan settlement losses of $ 2.7 million related to its restructuring actions and an impairment charge of $ 4.0 million related to an investment.
−Removed: For further information, see Note 6, "Investments in Affiliates and Other Related Party Transactions," Note 7, "Debt," Note 9, "Income Taxes," and Note 10, "Pension and Other Postretirement Benefit Plans."
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: Thirteen Weeks Ended
−Removed: 2019 June 29,
−Removed: 2019 September 28,
−Removed: 2019 December 31,
−Removed: Net sales $ 5,160.1 $ 5,007.6 $ 4,825.0 $ 4,817.6
−Removed: Gross profit 473.2 478.2 459.3 326.8
−Removed: Consolidated net income 246.1 202.0 238.6 144.0
−Removed: Net income attributable to Lear 228.9 182.8 215.9 126.0
−Removed: Basic net income per share attributable to Lear 3.75 2.92 3.59 2.51
−Removed: Diluted net income per share attributable to Lear 3.73 2.92 3.58 2.50
−Removed: In the first quarter of 2019, the Company recognized tax benefits of $ 18.4 million related to changes in the tax status of certain affiliates, $ 3.2 million related to share-based compensation and $ 15.6 million related to restructuring charges and various other items.
−Removed: In the second quarter of 2019, the Company recognized tax benefits of $ 11.0 million related to restructuring charges and various other items and tax expense of $ 10.4 million related to the establishment of a valuation allowance on the deferred tax assets of a foreign subsidiary.
−Removed: The Company also recognized a loss of $ 10.6 million related to the extinguishment of debt.
−Removed: In the third quarter of 2019, the Company recognized tax benefits of $ 28.6 million related to research and development tax credits and $ 9.1 million related to restructuring charges and various other items.
−Removed: The Company also recognized a gain of $ 4.0 million related to the deconsolidation of an affiliate.
−Removed: In the fourth quarter of 2019, the Company recognized tax benefits of $ 14.1 million related to the U.S.
−Removed: tax impact of the foreign tax credit regulations and $ 32.2 million related to restructuring charges and various other items.
−Removed: The Company also recognized curtailment gains of $ 12.9 million related to certain foreign pension and postretirement benefit plans and an impairment charge of $ 5.0 million related to an investment.
−Removed: For further information see, Note 6, "Investments in Affiliates and Other Related Party Transactions," Note 7, "Debt," Note 9, "Income Taxes," and Note 10, "Pension and Other Postretirement Benefit Plans ."
( 17) Accounting Pronouncements
−Removed: The Company considers the applicability and impact of all ASUs issued by the FASB.
−Removed: The Company considered the ASUs summarized below, effective for 2020:
−Removed: Measurement of Credit Losses on Financial Instruments
−Removed: See Note 3, "Summary of Significant Accounting Policies — Accounts Receivable."
−Removed: Simplifying the Test for Goodwill Impairment
−Removed: Effective January 1, 2020, the standard simplifies the accounting for goodwill impairments and allows a goodwill impairment charge to be based on the amount of a reporting unit's carrying value in excess of its fair value.
−Removed: This eliminates the requirement to calculate the implied fair value of goodwill (i.e., "Step 2" under current guidance).
+Added: The Company considers the applicability and impact of all ASUs issued by the Financial Accounting Standards Board ("FASB").
+Added: Pronouncements adopted in 2021:
+Added: Simplifying the Accounting for Income Taxes
+Added: In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740):
+Added: Simplifying the Accounting for Income Taxes." See Note 3, "Summary of Significant Accounting Policies — Income Taxes."
+Added: Pronouncements not yet adopted:
Reference Rate Reform
−Removed: In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848):
−Removed: Facilitation of the Effects of Reference Rate Reform on Financial Reporting." The guidance provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates.
+Added: The FASB issued ASU 2020-04 and ASU 2021-01, "Reference Rate Reform (Topic 848)." The guidance provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates.
The guidance was effective upon issuance and generally can be applied to applicable contract modifications and hedge relationships prospectively through December 31, 2022.
The adoption of this guidance is not expected to have a significant impact on the Company's financial statements.
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: Disclosure Requirements for Defined Benefit Plans
−Removed: In December 2020, the Company adopted ASU 2018-14, "Compensation — Retirement Benefits — Defined Benefit Plans — General (Subtopic 715-20):
−Removed: Disclosure Framework — Changes to the Disclosure Requirements for Defined Benefit Plans," which provides minor changes to the disclosure requirements for employers that sponsor defined benefit pension and/or other postretirement benefit plans.
−Removed: The adoption of this standard did not have a significant impact on the Company's financial statements.
−Removed: The Company considered the ASUs summarized below, effective after 2020:
−Removed: Simplifying the Accounting for Income Taxes
−Removed: See Note 3 "Summary of Significant Accounting Policies — Income Taxes."
+Added: Government Assistance
+Added: The FASB issued ASU 2021-10, "Disclosures by Business Entities about Government Assistance." The guidance, effective January 1, 2022, requires disclosures about certain government assistance transactions.
+Added: The adoption of this guidance is not expected to have a significant impact on the Company's financial statements.
LEAR CORPORATION AND SUBSIDIARIES
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.