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We are a global automotive technology leader in Seating and E-Systems, enabling superior in-vehicle experiences for consumers around the world.
−Removed: We supply seating, electrical distribution and connection systems and electronic systems to all of the world's major automotive manufacturers.
+Added: We supply complete seat systems, key seat components, electrical distribution and connection systems, battery disconnect units ("BDUs") and other electronic products to all of the world's major automotive manufacturers.
Lear is built on a foundation and strong culture of innovation, operational excellence, and engineering and program management capabilities.
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and consistently returning capital to our stockholders.
−Removed: Further, we have aligned our strategy with the key trends affecting our business — electrification, connectivity, autonomy and shared mobility.
+Added: Further, we have aligned our strategy with the key trends affecting our business — electrification and shared mobility.
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.
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Seating and E-Systems.
−Removed: Each of these segments has a varied product and technology range across a number of component categories.
−Removed: Our Seating business consists of the design, development, engineering and manufacture of complete seat systems, seat subsystems and key seat components.
−Removed: 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 and safety offerings, as well as configurable seating product technologies.
−Removed: 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").
−Removed: 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.
−Removed: 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.
−Removed: 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 and electronic systems.
−Removed: The 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 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.
−Removed: 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.
−Removed: 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.
−Removed: 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 telematics control units ("TCU") and gateway modules to manage both wired and wireless networks and data in vehicles.
−Removed: 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 offerings include embedded control software and cloud and mobile device-based software and services.
+Added: Each of these segments has a varied product and technology portfolio across a number of component categories.
+Added: Our Seating business consists of the design, development, engineering and manufacture of complete seat systems and key seat components.
+Added: Our capabilities in operations and supply chain management enable synchronized assembly and just-in-time delivery of complex complete seat systems at high volumes to our customers.
+Added: Included in our complete seat systems and components are our advanced comfort solutions, including thermal, safety and wellness products, as well as configurable seating product technologies.
+Added: All of these products are compatible with traditional internal combustion engine ("ICE") architectures and electrified powertrains, including the full range of hybrid, plug-in hybrid and battery electric architectures.
+Added: Our advanced comfort solutions are facilitated by our seat system, component and integration capabilities, together with our competencies in electronics, sensors, software and algorithms.
+Added: As the most vertically integrated global seat supplier, our key seat component product offerings include seat trim covers;
+Added: surface materials such as leather and fabric;
+Added: seat mechanisms;
+Added: thermal comfort solutions such as seat massage, lumbar, heat and ventilation products;
+Added: and headrests.
+Added: Our E-Systems business consists of the design, development, engineering and manufacture of complete electrical distribution and connection systems, BDUs and other electronic products.
+Added: These capabilities enable us to provide our customers with customizable solutions with optimized designs at competitive costs for both low voltage and high voltage vehicle architectures.
+Added: Electrical distribution and connection systems utilize low voltage and 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 that require management of higher voltage and power.
+Added: Key components of our electrical distribution and connection systems portfolio include wire harnesses, terminals and connectors, high voltage battery connection systems and engineered components.
+Added: High voltage battery connection systems include intercell connect boards, bus bars and main battery connection systems.
+Added: BDUs control all electrical energy flowing into and out of high voltage batteries on electrified vehicles.
+Added: Our other electronic products facilitate signal, data and power management within the vehicle and include the associated software required to facilitate these functions.
+Added: Key components of our other electronic products portfolio include zone control modules, body domain control modules and low voltage and high voltage power distribution modules.
+Added: Our software offerings include embedded control, cybersecurity software and software to control hardware devices.
Our customers traditionally have sourced our electronic hardware together with the software that we embed in it.
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high-precision manufacturing and assembly with short lead times;
−Removed: management of complex supply chains;
−Removed: global engineering and program management skills;
+Added: complex, global supply chain management;
+Added: global engineering and program management;
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
−Removed: common low-cost engineering centers and share centralized operating support functions.
−Removed: These functions include logistics, supply chain management, quality, health and safety, and all major administrative functions.
+Added: In select instances, we are able to manufacture both Seating and E-Systems components in the same facility.
+Added: Our businesses also utilize proprietary, industry-specific processes and standards, leverage common low-cost engineering centers and share centralized operating support functions.
+Added: These functions include health and safety, logistics, quality, supply chain management and all major administrative functions such as corporate finance, executive administration, human resources, information technology and legal.
Industry Overview
−Removed: 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.
−Removed: 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.
−Removed: Alth ough industry production increased 3% in 2021 over 2020, production remains well below recent historic levels and consumer demand.
−Removed: Production in the second half of 2021 d ecreased 16% relative to the second half of 2020.
−Removed: This was largely due to the continuing impact of the COVID-19 pandemic in 2021, particularly through supply shortages.
−Removed: The most significant supply shortage relates to semiconductor chips, which impacted global vehicle production and resulted in reductions and cancellations of planned production.
−Removed: 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.
−Removed: 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.
−Removed: 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: 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 the availability of raw materials and components, and our content per vehicle.
+Added: Due to the evolving global economic co nditions since 2020, initially as a result of the COVID-19 pandemic, the automotive industry experienced a decline in global customer sales and production volumes.
+Added: Alth ough industry production has recovered modestly with production increasing 7% in 2022 compared to 2021 and expected to increase 3% in 2023 compared to 2022 (based on Janu ary 2023 S&P Global Mobility, formerly IHS Markit, projections), production remains well below recent historic levels.
+Added: Global industry production in 2022 was approximately 8% bel ow 2019 pre-pandemic levels and 16% below 2017 peak levels.
+Added: Since 2020, industry and economic conditions have been influenced directly and indirectly by macroeconomic events such as the COVID-19 pandemic and, beginning in the first quarter of 2022, the Russia-Ukraine conflict, resulting in unfavorable conditions, including shortages of semiconductor chips and other components, elevated inflation levels, higher interest rates, and labor and energy shortages in certain markets.
+Added: These factors, among others, are impacting consumer demand as well as the ability of automotive manufacturers to produce vehicles to meet demand.
+Added: Our strategy to mitigate these impacts encompasses our comprehensive cost management process, including value added value engineering (cost technology optimization), actions to further align our manufacturing capacity to the current industry production environment, investments in Industry 4.0 technologies to enhance operational efficiencies and utilization of existing capital to reduce future expenditures.
For risks related to the COVID-19 pandemic, including supply shortages, see Item 1A, "Risk Factors."
+Added: In March 2022, as our customers began to suspend their Russian operations as a result of Russia's invasion of Ukraine, we similarly began to suspend our Russian operations.
+Added: Since the first quarter of 2022, we have suspended all production in Russia (but for certain de minimis operations) and significantly decreased our workforce in the country.
+Added: In 2022, we recorded charges of approximately $19 million related to impairments of substantially all of our operating assets in Russia, including inventory, property, plant and equipment and right-of-use assets.
+Added: Although our net sales and total assets in Russia represented less than 1% of our consolidated net sales and total assets prior to the suspension of operations, the Russia-Ukraine conflict and sanctions imposed on Russia globally have resulted in economic and supply chain disruptions affecting the overall automotive industry, the ultimate financial impact of which cannot be reasonably estimated.
+Added: Further, although we do not have operations in Ukraine, the Ukrainian operations of certain of our suppliers and suppliers of our customers have been and will likely continue to be disrupted by the Russia-Ukraine conflict.
+Added: For further information, see Note 2, "Current Operating Environment," Note 3, "Summary of Significant Accounting Policies," Note 8, "Leases," and Note 16, "Financial Instruments," to the consolidated financial statements included in this Report.
Global automotive industry production volumes in 2022, as compared to 2021, are shown below (in thousands of units):
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Global light vehicle production 80,518.0 75,250.6 7 %
−Removed: (1) Production data based on IHS Markit.
+Added: (1) Production data based on S&P Global Mobility.
(2) Production data for 2021 has been updated from our 2021 Annual Report on Form 10-K to reflect actual production levels.
−Removed: 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.
+Added: In addition to the factors noted above, 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.
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.
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Total 100 % 100 %
−Removed: 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: The automotive industry, and our business, continue to be shaped by the broad trends of electrification, connectivity, autonomy, and shared mobility.
−Removed: We also consider demand and regulatory developments for improved energy efficiency, sustainability,
−Removed: 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.
−Removed: 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.
−Removed: We have expanded key component capabilities through organic investment and acquisitions to ensure a full complement of the best solutions for our customers.
−Removed: 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, in support of our customers' growth initiatives and in pursuit of opportunities with new customers.
−Removed: 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.
+Added: Our ability to reduce the risks inherent in certain concentrations of our 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.
+Added: The automotive industry, and our business, continue to be shaped by the broad trends of electrification and, to a lesser extent, shared mobility.
+Added: Demand for, and regulatory developments related to, improved energy efficiency, sustainability, and enhanced safety and communications (e.g., government mandates related to fuel economy, carbon emissions and safety equipment) are significant drivers of these trends.
+Added: Electrification, in particular, is likely to be at the forefront of our industry for the foreseeable future.
+Added: Through our products, technology and strategic initiatives, we are well positioned to capture business growth opportunities resulting from current industry tre nds.
+Added: We are focused on profitably growing our businesses and have implemented a strategy designed to deliver industry-leading, long-term financial returns.
+Added: This strategy is based upon the following four pillars designed to capitalize on current industry trends and drive growth and profitability in both of our business segments:
+Added: • Extend our market leadership position in Seating with priceable content;
+Added: • Transform our E-Systems business through accelerated growth in connection systems, vehicle architecture evolution and electrification;
+Added: • Build on our reputation for operational excellence through investment in Industry 4.0 technologies;
+Added: • Prioritize people and the planet through our Environmental, Social and Governance ("ESG") initiatives.
For further information related to these trends and our strategy, see Part 1 — Item 1, "Business — Industry" and "— Strategy."
−Removed: 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 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.
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.
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Our material cost as a percentage of net sales was 66.1% in 2022, as compared to 65.4% in 2021 and 64.3% in 2020, reflecting increases in certain commodity costs.
−Removed: Raw material, energy and commodity costs can be volatile, reflecting changes in supply and demand and global trade and tariff policies.
+Added: Raw material, energy, commodity and product component costs can be volatile, reflecting, among other things, changes in supply and demand, logistics issues, global trade and tariff policies, and geopolitical issues.
Our primary commodity cost exposures relate to steel, copper and leather.
−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, contractual recovery mechanisms and the selective expansion of low-cost country sourcing and engineering, as well as value engineering and product benchmarking.
+Added: We have developed and implemented strategies to mitigate the impact of such costs through 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.
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.
−Removed: However, these strategies, together with commercial negotiations with our customers and suppliers, typically do not offset all of the adverse impact.
−Removed: Certain of these strategies also may limit our opportunities in a declining commodity price environment.
−Removed: In addition, the availability of raw materials, commodities and product components fluctuates from time to time due to factors outside of our control.
+Added: Certain of these strategies also may limit our opportunities in a declining price environment.
+Added: In the current environment of escalating raw material, energy, commodity and product component costs, these strategies, together with commercial negotiations with our customers and suppliers, typically offset only a portion of the adverse impact.
+Added: In addition, the availability of raw materials, energy, commodities and product components fluctuates from time to time due to factors outside of our control.
If these costs increase or availability is restricted, it could have an adverse impact on our operating results in the foreseeable future.
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Our strategy includes expanding our business with new and existing customers globally through new products, including electrification.
−Removed: 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.
−Removed: 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.
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.
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Working capital can be significantly impacted by the timing of cash flows from sales and purchases.
−Removed: Historically, we generally have been successful in aligning our vendor payment terms with our customer payment terms.
−Removed: However, our ability to continue to do so may be impacted by adverse automotive industry conditions, changes to our customers' payment terms and the financial condition of our suppliers, as well as our financial condition.
+Added: Historically, we generally have been successful in aligning our supplier payment terms with our customer payment terms.
+Added: However, our ability to continue to do so may be impacted by adverse automotive industry conditions, including inconsistent production schedules due to supply shortages, changes to our customers' payment terms and the financial condition of our suppliers.
In addition, our cash flow is impacted by our ability to manage our inventory and capital spending 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.
−Removed: 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.
−Removed: 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.
−Removed: 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: In February 2022, we completed the acquisition of substantially all of Kongsberg Automotive's Interior Comfort Systems business unit ("Kongsberg ICS"), which specializes in thermal comfort solutions.
+Added: With almost 50 years of experience in thermal comfort solutions, Kongsberg ICS has leading technology, a well-balanced customer portfolio built on longstanding relationships with leading premium automotive manufacturers, and an experienced team.
+Added: The Kongsberg ICS acquisition is further advancing our seat component capabilities into specialized thermal comfort solutions such as seat massage, lumbar, heat and ventilation products that further differentiate our product offerings and improve vehicle performance and packaging — important features across various vehicle segments.
+Added: The transaction was valued at approximately $188 million, on a cash and debt free basis.
+Added: For further information, see Note 4, "Acquisition of Kongsberg ICS," to the consolidated financial statements included in this Report.
+Added: In May 2022, we completed the acquisition of Thagora Technology SRL ("Thagora"), a privately held company based in Iasi, Romania, to access scalable smart-manufacturing technology.
+Added: Thagora's proprietary solutions complement our sustainable manufacturing processes by reducing scrap generated by our Seating segment's surface materials operations and lowering energy usage during production.
+Added: In addition, Thagora's Industry 4.0 technologies bring significant advances to our manufacturing operations through engineering and logistics enhancements, including improved material traceability and facility footprint utilization capabilities.
+Added: The acquisition is not material to the consolidated financial statements included in this Report.
+Added: In May 2022, we entered into a definitive agreement to acquire I.G.
+Added: Bauerhin ("IGB"), a privately held supplier of automotive seat heating, ventilation and active cooling, steering wheel heating, seat sensors and electronic control modules, headquartered in Gruendau, Germany.
+Added: IGB has more than 4,000 employees at nine manufacturing plants in seven countries.
+Added: The acquisition of IGB is expected to further our vertical integration strategy and advance our vision of being a leading provider of innovative thermal comfort solutions.
The transaction is valued at approximately €140 million, on a cash and debt free basis.
−Removed: 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, subject to regulatory approvals and customary closing conditions and adjustments, is expected to close in 2023.
+Added: In November 2022, we completed the acquisition of InTouch Automation ("InTouch"), a privately held supplier of Industry 4.0 technologies and complex automated testing equipment critical in the production of automotive seats.
+Added: InTouch's product portfolio is aligned with our Industry 4.0 strategy to implement technologies designed to automate the testing and validation of seat components and complete seats.
+Added: The acquisition is not material to the consolidated financial statements included in this Report.
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.
−Removed: 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: When combined with our continuing organic investments in electrical distribution and connection systems, the addition of M&N Plastics significantly expands our capabilities and footprint in engineered components.
+Added: Engineered components are applicable to all vehicle architectures and are produced using
+Added: molding processes.
The acquisition is not material to the consolidated financial statements included in this Report.
−Removed: In April 2019, we completed the acquisition of Xevo Inc.
−Removed: ("Xevo"), a Seattle-based, global leader in connected car software, by acquiring all of Xevo's outstanding shares for $322 million, net of cash acquired.
−Removed: 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, "Acquisitions," to the consolidated financial statements included in this Report.
Operational Restructuring
In 2022, we incurred pretax restructuring costs of $154 million and related manufacturing inefficiency charges of approximately $5 million, as compared to pretax restructuring costs of $101 million and related manufacturing inefficiency charges of approximately $12 million in 2021.
−Removed: None of the individual restructuring actions initiated during 2021 were material.
+Added: None of the individual restructuring actions initiated in 2022 were material.
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.
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Such future restructuring actions are dependent on market conditions, customer actions and other factors.
−Removed: For further information, see Note 5, "Restructuring," and Note 15, "Segment Reporting," to the consolidated financial statements included in this Report.
+Added: For further information, see Note 5, "Restructuring," to the consolidated financial statements included in this Report.
Financing Transactions
−Removed: 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").
−Removed: 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%.
−Removed: 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: 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.
−Removed: We expect to use the remaining net proceeds for general corporate purposes,
−Removed: which may include the purchase price for the Kongsberg acquisition.
−Removed: For further information, see Note 4, "Acquisitions," to the consolidated financial statements included in this Report.
−Removed: 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.
−Removed: For further information, see "— Liquidity and Financial Condition — Capitalization — Senior Notes" below and Note 7 "Debt," to the consolidated financial statements included in this Report.
−Removed: Credit Agreement
−Removed: Our unsecured credit agreement consisted of a $1.75 billion revolving credit facility and a $250 million term loan facility.
−Removed: 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.
−Removed: In November 2021, we repaid in full $206 million outstanding on our term loan facility.
−Removed: 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.
−Removed: 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.
+Added: In December 2022, we entered into an unsecured $150 million committed delayed-draw term loan facility (the "Delayed-Draw Facility").
+Added: The Delayed-Draw Facility is expected to be used to finance the acquisition of IGB upon closing of the transaction and for general corporate purposes.
+Added: As of December 31, 2022, there were no amounts drawn under the Delayed-Draw Facility.
+Added: For further information, see "— Liquidity and Capital Resources — Capitalization — Delayed-Draw Facility" below and Note 7, "Debt," to the consolidated financial statements included in this Report.
Share Repurchase Program and Quarterly Cash Dividends
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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).
−Removed: 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 common stock share repurchase program.
−Removed: Share repurchases were reinstated in the second quarter of 2021.
−Removed: Since the reinstatement through December 31, 2021, we repurchased approximately $100 million of shares.
+Added: Since the first quarter of 2011, our Board of Directors (the "Board") has authorized $6.1 billion in share repurchases under our common stock share repurchase program.
+Added: In 2022, we repurchased $100 million of shares.
As of December 31, 2022, we have a remaining repurchase authorization of $1.2 billion, which expires on December 31, 2024.
−Removed: 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.
−Removed: 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 2022, our Board declared quarterly cash dividends of $0.77 per share of common stock in all quarters.
+Added: In 2021, our Board declared quarterly cash dividends 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.
+Added: In 2020, our Board 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: The quarterly cash dividend was reinstated in the fourth quarter at $0.25 per share of common stock.
−Removed: 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.
+Added: The quarterly cash dividend was reinstated in the fourth quarter of 2020 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 Capital Resources — 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 2022, we recognized tax benefits of $34 million related to restructuring charges and various other items and $2 million related to the release of tax reserves at several foreign subsidiaries, partially offset by tax expense of $2 million related to the net increase in valuation allowances on deferred tax assets of foreign subsidiaries.
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.
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deferred tax effect of our foreign branches, partially offset by 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 $11 million related to the establishment of valuation allowances on the deferred tax assets of foreign subsidiaries.
As discussed above, our results for the years ended December 31, 2022, 2021 and 2020, reflect the following items (in millions):
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$ 159 $ 113 $ 150
−Removed: Acquisition and other related costs — — 2
−Removed: Litigation — — 1
−Removed: Favorable indirect tax ruling in a foreign jurisdiction (45) — (2)
−Removed: Typhoon in the Philippines 13 — —
+Added: Acquisition costs 10 — —
+Added: Acquisition-related inventory fair value adjustment 1 — —
+Added: Gain on acquisition-related foreign exchange contracts (2) — —
+Added: Impairments related to Russian operations 19 — —
Intangible asset impairment 9 9 —
+Added: Costs (insurance recoveries) related to typhoon in the Philippines, net (1) 13 —
+Added: Foreign exchange losses due to foreign exchange rate volatility related to Russia 10 — —
+Added: Favorable indirect tax ruling in a foreign jurisdiction — (45) —
Loss on extinguishment of debt — 25 21
−Removed: (Gain) loss related to investments, net 2 4 (1)
+Added: Loss related to investments — 2 4
Tax benefits, net (34) (14) (20)
−Removed: 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.
+Added: For further information regarding these items, see Note 2, "Current Operating Environment," Note 3, "Summary of Significant Accounting Policies," Note 4, "Acquisition of Kongsberg ICS," Note 5, "Restructuring," Note 6, "Investments in Affiliates and Other Related Party Transactions," Note 7, "Debt," Note 8, "Leases," 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.
18 unchanged sentences
Net sales for the year ended December 31, 2022 were $20.9 billion, as compared to $19.3 billion for the year ended December 31, 2021, an increase of $1.6 billion or 8%.
−Removed: New business in North America, Europe and Africa, and Asia increased
−Removed: net sales by $0.9 billion.
−Removed: 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.
+Added: New business globally and higher production volumes on Lear platforms in North America, Europe and South America favorably impacted net sales by $1.1 billion and $0.8 billion, respectively.
+Added: Net sales also benefited by $0.6 billion and $0.2 billion due to commodity recoveries and our Kongsberg ICS acquisition, respectively.
+Added: These increases were partially offset by the impact of foreign exchange rate fluctuations, which reduced net sales by $1.1 billion.
(in millions) Cost of Sales
4 unchanged sentences
Cost of sales in 2022 was $19.5 billion, as compared to $17.9 billion in 2021.
−Removed: New business in North America, Europe and Africa, and Asia increased cost of sales.
−Removed: 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.
+Added: New business globally and higher production volumes on Lear platforms in North America, Europe and South America increased cost of sales.
+Added: Cost of sales also increased as a result of higher commodity costs and our Kongsberg ICS acquisition.
+Added: These increases were partially offset by the impact of foreign exchange fluctuations, which reduced cost of sales.
Gross profit and gross margin were $1.4 billion and 6.7% of net sales in 2022, as compared to $1.4 billion and 7.2% of net sales in 2021.
−Removed: The impact of new business and higher production volumes on Lear platforms increased gross profit by $180 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 and increased commodity costs.
+Added: New business and higher production volumes on Lear platforms positively impacted gross profit by $269 million.
+Added: The impact of selling price reductions, increased commodity costs and foreign exchange fluctuations was partially offset by favorable operating performance, including the benefit of restructuring actions.
These factors had a corresponding impact on gross margin.
−Removed: 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: Selling, general and administrative expenses, including engineering and development expenses, were $685 million for the year ended December 31, 2022, as compared to $643 million for the year ended December 31, 2021, primarily reflecting our Kongsberg ICS acquisition and an increase in engineering costs to support new business.
As a percentage of net sales, selling, general and administrative expenses were 3.3% in 2022, as compared to 3.3% in 2021.
−Removed: Amortization of intangible assets was $73 million in 2021, including an impairment charge of $9 million, as compared to $66 million in 2020.
−Removed: 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 periodic benefit cost and other miscellaneous income and expense, was $0.1 million in 2021, as compared to $55 million in 2020.
+Added: Amortization of intangible assets was $71 million in 2022, as compared to $73 million in 2021.
+Added: An impairment charge of $9 million was recognized in 2022 and 2021.
+Added: Interest expense was $99 million in 2022, as compared to $92 million in 2021, reflecting financing costs related to our Kongsberg ICS acquisition in 2022.
+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, the non-service cost components of net periodic benefit cost and other miscellaneous income and expense, was $46 million in 2022, as compared to $— million in 2021.
+Added: In 2022, we recognized foreign exchange losses of $10 million related to foreign exchange rate volatility in Russia following the invasion of Ukraine and foreign exchange gains of $2 million related to foreign exchange contracts on the €140 million IGB purchase price.
+Added: In 2022, we also recognized a gain of $1 million related to insurance recoveries.
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.
−Removed: 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.
In 2022, the provision for income taxes was $134 million, representing an effective tax rate of 26.3% on pretax income before equity in net income of affiliates of $509 million.
1 unchanged sentence
In 2022 and 2021, the provision for income taxes was primarily impacted by the level and mix of earnings among tax jurisdictions.
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: In 2022, we recognized tax benefits of $34 million related to restructuring charges and various other items and $2 million related to the release of tax reserves at several foreign subsidiaries, partially offset by tax expense of $2 million related to the net increase in valuation allowances on deferred tax assets of foreign subsidiaries.
+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.
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 $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.
+Added: Equity in net income of affiliates was $33 million for the year ended December 31, 2022, as compared to $16 million for the year ended December 31, 2021, primarily reflecting the earnings of our Shenyang Jinbei Lear Automotive Seating joint venture established in the third quarter of 2021.
Net income attributable to Lear was $328 million, or $5.47 per diluted share, in 2022, as compared to $374 million, or $6.19 per diluted share, in 2021.
19 unchanged sentences
Seating net sales were $15.7 billion for the year ended December 31, 2022, as compared to $14.4 billion for the year ended December 31, 2021, an increase of $1.3 billion or 9%.
−Removed: Higher production volumes on Lear platforms increased net sales by $679 million.
−Removed: Net sales also benefited by $486 million and $295 million as a result of new business and foreign exchange rate fluctuations, respectively.
+Added: New business and higher production volumes on Lear platforms favorably impacted net sales by $805 million and $540 million, respectively.
+Added: Net sales also benefited by $319 million and $198 million due to commodity recoveries and our Kongsberg ICS acquisition, respectively.
+Added: These increases were partially offset by foreign exchange fluctuations, which reduced net sales by $750 million.
Segment earnings, including restructuring costs, and the related margin on net sales were $893 million and 5.7% in 2022, as compared to $851 million and 5.9% in 2021.
−Removed: Higher production volumes on Lear platforms and the impact of new business increased segment earnings by $176 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 and increased commodity costs.
+Added: New business and higher production volumes on Lear platforms positively impacted segment earnings by $204 million.
+Added: The impact of selling price reductions, higher commodity costs, foreign exchange fluctuations and impairment charges related to our Russian operations was partially offset by favorable operating performance, including the benefit of operational restructuring actions.
A summary of financial measures for our E-Systems segment is shown below (dollar amounts in millions):
5 unchanged sentences
E-Systems net sales were $5.2 billion for the year ended December 31, 2022, as compared to $4.9 billion for the year ended December 31, 2021, an increase of $329 million or 7%.
−Removed: New business, commodity recoveries and foreign exchange rate fluctuations increased net sales by $425 million, $175 million and $112 million, respectively.
−Removed: These increases were partially offset by lower production volumes on Lear platforms which reduced net sales by $198 million.
+Added: New business and higher production volumes on Lear platforms favorably impacted net sales by $279 million and $200 million, respectively.
+Added: Net sales also benefited by $274 million due to commodity recoveries.
+Added: These increases were partially offset by foreign exchange fluctuations, which reduced net sales by $376 million.
Segment earnings, including restructuring costs, and the related margin on net sales were $74 million and 1.4% in 2022, as compared to $121 million and 2.5% in 2021.
−Removed: The impact of new business was offset by lower production volumes on Lear platforms.
−Removed: Improved operating performance was partially offset by the impact of selling price reductions and increased commodity costs.
+Added: The impact of selling price reductions, higher commodity costs, increased restructuring costs and foreign exchange fluctuations reduced segment earnings.
+Added: These decreases were partially offset by favorable operating performance, including the benefit of operational restructuring actions.
+Added: New business and higher production volumes on Lear platforms also positively impacted segment earnings of $65 million.
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 ($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.
+Added: Segment earnings related to our other category were ($313) million in 2022, as compared to ($297) million in 2021, primarily reflecting transaction costs of $10 million related to our Kongsberg ICS acquisition.
Year Ended December 31, 2021, Compared With Year Ended December 31, 2020
6 unchanged sentences
As a result, we are dependent on the earnings and cash flows of and the combination of dividends, royalties, intercompany loan repayments and other distributions and advances from our subsidiaries to provide the funds necessary to meet our obligations.
−Removed: As of December 31, 2021 and 2020, cash and cash equivalents of $661 million and $780 million, respectively, were held in foreign subsidiaries and can be repatriated, primarily through the repayment of intercompany loans and the payment of dividends, without creating additional income tax expense.
+Added: As of December 31, 2022 and 2021, cash and cash equivalents of $790 million and $661 million, respectively, were held in foreign subsidiaries and can be repatriated, primarily through the repayment of intercompany loans and the payment of dividends.
There are no significant restrictions on the ability of our subsidiaries to pay dividends or make other distributions to Lear.
2 unchanged sentences
Adequacy of Liquidity Sources
−Removed: 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: As of December 31, 2022, we had approximately $1.1 billion of cash and cash equivalents on hand, $2.0 billion in available borrowing capacity under our revolving credit facility and $150 million in available borrowing capacity under our Delayed-Draw Facility which is expected to be used to finance the acquisition of IGB upon closing of the transaction and for general corporate purposes.
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 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.
−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, supply chain disruptions and other related factors.
−Removed: Additionally, an economic downturn or reduction in production levels could negatively impact our financial condition.
+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 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 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, 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 further reduction in production levels could negatively impact our financial condition.
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.
1 unchanged sentence
A summary of net cash provided by operating activities is shown below (in millions):
−Removed: For the year ended December 31, 2021 2020 Increase (Decrease) in Operating
+Added: For the year ended December 31, 2022 2021 Increase (Decrease) in
Consolidated net income and depreciation and amortization $ 985 $ 1,036 $ (51)
8 unchanged sentences
Net cash provided by operating activities $ 1,021 $ 670 $ 351
−Removed: In 2021 and 2020, net cash provided by operating activ ities was $670 million and $663 million, respectively.
−Removed: 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.
+Added: Net cash used in investing activities $ (830) $ (647) $ (183)
+Added: Net cash used in financing activities $ (387) $ (14) $ (373)
+Added: Net cash provided by operating activ ities was $1,021 million i n 2022, as compared to $670 million in 2021 .
+Added: The increase in operating cash flow was largely driven by a relatively small increase in working capital in 2022 as compared to a larger increase in working capital in 2021.
Net cash used in investing activities was $830 million in 2022, as compared to $647 million in 2021.
+Added: In 2022, we paid $188 million for our Kongsberg ICS acquisition and $15 million related to investments in affiliates.
+Added: In 2021, we paid $50 million related to investments in affiliates.
In 2022, capital spending was $638 million, as compared to $585 million in 2021.
−Removed: Capital spending is estimated to be $650 million to $700 million in 2022.
+Added: Capital spending is estimated to be approximately $700 million in 2023.
Net cash used in financing activities was $387 million in 2022, as compared to $14 million in 2021.
+Added: In 2022, we paid $100 million for repurchases of our common stock, $186 million in dividends to Lear stockholders and $85 million in dividends to noncontrolling interest holders.
+Added: In 2021, we paid $100 million for repurchases of our common stock, $107 million in dividends to Lear stockholders and $81 million in dividends to noncontrolling interest holders.
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.
−Removed: 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.
−Removed: 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.
−Removed: Also in 2020, we paid $667 million related to the redemption of our outstanding senior notes due 2025.
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: Also in 2021, we
+Added: 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.
For further information regarding our 2022 and 2021 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.
2 unchanged sentences
Capitalization
−Removed: 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, 2021 and 2020, we had no short-term debt balances outstanding.
+Added: Short-Term Borrowings
+Added: We utilize uncommitted lines of credit as needed for our short-term working capital fluctuations.
+Added: As of December 31, 2022 and 2021, we had lines of credit from banks totaling $298 million and $96 million, respectively.
+Added: As of December 31, 2022, we had short-term debt balances outstanding related to draws on our lines of credit of $10 million.
+Added: As of December 31, 2021, there were no short-term debt balances outstanding related to draws on our lines of credit.
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
−Removed: 2027 Notes $ 550 3.80%
Senior unsecured notes due 2027 (the "2027 Notes") $ 550 3.80%
Senior unsecured notes due 2029 (the "2029 Notes") 375 4.25%
−Removed: 2032 Notes 350 2.60%
Senior unsecured notes due 2030 (the "2030 Notes") 350 3.50%
+Added: Senior unsecured notes due 2032 (the "2032 Notes") 350 2.60%
+Added: Senior unsecured notes due 2049 (the "2049 Notes") 625 5.25%
+Added: Senior unsecured notes due 2052 (the "2052 Notes") 350 3.55%
The issue, maturity and interest payment dates of the Notes are shown below:
6 unchanged sentences
2052 Notes November 2021 January 15, 2052 January 15 and July 15 (1)
−Removed: (1) Commencing July 15, 2022.
+Added: (1) Commenced July 15, 2022.
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.
2 unchanged sentences
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.
−Removed: 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: The remaining net proceeds were used to finance the 2022 acquisition of Kongsberg ICS and for general corporate
+Added: For further information related to the Kongsberg ICS acquisition, see Note 4, "Acquisition of Kongsberg ICS," 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.
4 unchanged sentences
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 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.
−Removed: 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%.
−Removed: 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 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
−Removed: principal amount of such 2024 Notes, plus accrued interest, as well as to finance the Xevo acquisition and for general corporate purposes.
−Removed: 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.
6 unchanged sentences
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.
+Added: In 2022, aggregate borrowings and repayments under the Revolving Credit Facility were $65 million.
+Added: In 2021, there were no borrowings or repayments under the Revolving Credit Facility.
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.
+Added: As of December 31, 2022 and 2021, there were no borrowings outstanding under the Revolving Credit Facility.
The Credit Agreement contains various financial and other covenants that require us to remain below a maximum leverage coverage ratio.
1 unchanged sentence
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: Delayed-Draw Term Loan Facility
+Added: In December 2022, we entered into an unsecured $150 million committed Delayed-Draw Facility.
+Added: The Delayed-Draw Facility is expected to be used to finance the acquisition of IGB upon closing of the transaction and for general corporate purposes.
+Added: As of December 31, 2022, there were no amounts drawn under the Delayed-Draw Facility.
+Added: For further information related to the Delayed-Draw Facility, see Note 7, "Debt," to the consolidated financial statements included in this Report
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: 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.
−Removed: 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 2022, our Board declared quarterly cash dividends of $0.77 per share of common stock in all quarters.
+Added: In 2021, our Board declared quarterly cash dividends 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.
+Added: In 2020, our Board 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: The quarterly cash dividend was reinstated in the fourth quarter at $0.25 per share of common stock.
−Removed: In 2019, our Board of Directors declared quarterly cash dividends of $0.75 per share of common stock.
−Removed: 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: The quarterly cash dividend was reinstated in the fourth quarter of 2020 at $0.25 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 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 may consider at its discretion.
See "— Forward-Looking Statements" below and Note 7, "Debt," to the consolidated financial statements included in this Report.
+Added: Commodity Prices
+Added: Raw material, energy and commodity costs can be volatile, reflecting, among other things, changes in supply and demand, logistics issues, global trade and tariff policies, and geopolitical issues.
+Added: We have commodity price risk with respect to purchases of certain raw materials, including steel, copper, diesel fuel, chemicals, resins and leather.
+Added: Our primary commodity cost exposures relate to steel, copper and leather.
+Added: We have developed and implemented strategies to mitigate the impact of such costs through 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, the majority of the steel used in our products is comprised of fabricated components that are integrated into a seat system, such as seat frames, recliner mechanisms, seat tracks and other mechanical components.
+Added: Therefore, our exposure to changes in steel prices is primarily indirect, through purchased components.
+Added: Additionally, approximately 90% of our copper purchases and a significant portion of our leather and direct steel purchases are subject to price index agreements with our customers and suppliers.
+Added: Certain of these strategies also may limit our opportunities in a declining commodity price environment.
+Added: In the current environment of escalating raw material, energy and commodity costs, these strategies, together with commercial negotiations with our customers and suppliers, typically offset only a portion of the adverse impact.
+Added: If these costs increase, it could have an adverse impact on our operating results in the foreseeable future.
+Added: See Part I — Item 1A, "Risk Factors — Increases in the costs and restrictions on the availability of raw materials, energy, commodities and product components could adversely affect our financial performance," and "— Forward-Looking Statements" below.
+Added: For further information related to the financial instruments described above, see Note 16, "Financial Instruments," to the consolidated financial statements included in this Report.
Contractual Obligations and Cash Requirements
1 unchanged sentence
Debt obligations and interest expense associated with debt obligations
−Removed: 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: As of December 31, 2022, we had $2.6 billion of outstanding senior unsecured notes maturing in 2027 through 2052, as well as $2.0 billion in available borrowing capacity under our Revolving Credit Facility and $150 million in available borrowing capacity under our Delayed-Draw Facility.
Interest on the Notes is due biannually at varying dates.
30 unchanged sentences
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: 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.
−Removed: For further information, see Note 4, "Acquisitions," and Note 7, "Debt," to the consolidated financial statements included in this Report.
−Removed: Market Risk Sensitivity
−Removed: In the normal course of business, we are exposed to market risks associated with fluctuations in foreign exchange rates, interest rates and commodity prices.
−Removed: We manage a portion of these risks through the use of derivative financial instruments in accordance with our policies.
−Removed: We enter into all hedging transactions for periods consistent with the underlying exposures.
−Removed: We do not enter into derivative instruments for trading purposes.
−Removed: Foreign Exchange
−Removed: Operating results may be impacted by our buying, selling and financing in currencies other than the functional currency of our operating companies ("transactional exposure").
−Removed: We may mitigate a portion of this risk by entering into forward foreign exchange, futures and option contracts.
−Removed: The foreign exchange contracts are executed with banks that we believe are creditworthy.
−Removed: Gains and losses related to foreign exchange contracts are deferred where appropriate and included in the measurement of the foreign currency transaction subject to the hedge.
−Removed: Gains and losses incurred related to foreign exchange contracts are generally offset by the direct effects of currency movements on the underlying transactions.
−Removed: A summary of the notional amount and estimated aggregate fair value of our outstanding foreign exchange contracts is shown below (in millions):
−Removed: December 31, 2021 2020
−Removed: Notional amount (contract maturities < 24 months) $ 1,523 $ 2,494
−Removed: 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 Brazilian real, the Thai baht, the Japanese yen and the Honduran lempira.
−Removed: A sensitivity analysis of our net transactional exposure is shown below (in millions):
−Removed: Potential Earnings Benefit (Adverse Earnings Impact)
−Removed: December 31, Hypothetical Strengthening % (1)
−Removed: Euro 10% (7) (4)
−Removed: (1) Relative to all other currencies to which it is exposed for a twelve-month period.
−Removed: A sensitivity analysis related to the aggregate fair value of our outstanding foreign exchange contracts is shown below (in millions):
−Removed: Estimated Change in Fair Value
−Removed: December 31, Hypothetical
−Removed: dollar 10% $ 48 $ 80
−Removed: Euro 10% 49 59
−Removed: (2) Relative to all other currencies to which it is exposed.
−Removed: There are certain shortcomings inherent in the sensitivity analyses above.
−Removed: The analyses assume that all currencies would uniformly strengthen or weaken relative to the U.S.
−Removed: dollar or Euro.
−Removed: In reality, some currencies may strengthen while others may
−Removed: weaken, causing the earnings impact to increase or decrease depending on the currency and the direction of the rate movement.
−Removed: In addition to the transactional exposure described above, our operating results are impacted by the translation of our foreign operating income into U.S.
−Removed: dollars ("translational exposure").
−Removed: In 2021, net sales outside of the United States accounted for 77% of our consolidated net sales, although certain non-U.S.
−Removed: sales are U.S.
−Removed: dollar denominated.
−Removed: We do not enter into foreign exchange contracts to mitigate our translational exposure.
−Removed: Commodity Prices
−Removed: Raw material, energy and commodity costs can be volatile, reflecting changes in supply and demand and global trade and tariff policies.
−Removed: Our primary commodity cost exposures relate to steel, copper and leather.
−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, contractual recovery mechanisms and the selective expansion of low-cost country sourcing and engineering, as well as value engineering and product benchmarking.
−Removed: 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.
−Removed: However, these strategies, together with commercial negotiations with our customers and suppliers, typically do not offset all of the adverse impact.
−Removed: Certain of these strategies also may limit our opportunities in a declining commodity price environment.
−Removed: If these costs increase, it could have an adverse impact on our operating results in the foreseeable future.
−Removed: See Part I — Item 1A, "Risk Factors — Increases in the costs and restrictions on the availability of raw materials, energy, commodities and product components could adversely affect our financial performance," and "— Forward-Looking Statements" below.
−Removed: We have commodity price risk with respect to purchases of certain raw materials, including steel, copper, diesel fuel, chemicals, resins and leather.
−Removed: Our main cost exposures relate to steel, copper and leather.
−Removed: The majority of the steel used in our products is comprised of fabricated components that are integrated into a seat system, such as seat frames, recliner mechanisms, seat tracks and other mechanical components.
−Removed: Therefore, our exposure to changes in steel prices is primarily indirect, through these purchased components.
−Removed: Approximately 92% of our copper purchases and a significant portion of our leather purchases are subject to price index agreements with our customers and suppliers.
−Removed: For further information related to the financial instruments described above, see Note 16, "Financial Instruments," to the consolidated financial statements included in this Report.
+Added: The purchase price for our acquisition of IGB, when paid, will be funded primarily by proceeds from our Delayed-Draw Facility.
+Added: For further information related to our Delayed-Draw Facility, see Note 7, "Debt," to the consolidated financial statements included in this Report.
Other Matters
Legal and Environmental Matters
−Removed: We are involved from time to time in various legal proceedings and claims, including, without limitation, commercial and contractual disputes, product liability claims and environmental and other matters.
−Removed: As of December 31, 2021, we had recorded reserves for pending legal disputes, including commercial disputes and other matters, of $20 million.
−Removed: In addition, as of December 31, 2021, we had recorded reserves for product liability and warranty claims and environmental matters of $46 million and $8 million, respectively.
+Added: We are involved from time to time in various legal proceedings and claims, including, without limitation, commercial and contractual disputes, product liability claims, environmental legal claims and other matters.
+Added: As of December 31, 2022, we had recorded reserves for pending legal disputes, including commercial disputes, product liability claims and other legal matters, of $16 million.
+Added: In addition, as of December 31, 2022, we had recorded reserves for product warranty and recall claims and environmental matters of $30 million and $8 million, respectively.
Although these reserves were determined in accordance with GAAP, the ultimate outcomes of these matters are inherently uncertain, and actual results may differ significantly from current estimates.
−Removed: 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.
+Added: For a description of risks related to various legal proceedings and claims, see Part I — Item 1A, "Risk Factors." For a
+Added: more complete description of our outstanding material legal proceedings, see Note 14, "Commitments and Contingencies," to the consolidated financial statements included in this Report.
Critical Accounting Estimates
11 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 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.
−Removed: 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.
+Added: 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: The amount of revenue recognized reflects the consideration that we expect to be entitled to in exchange for those products based on the current purchase orders, annual price reductions and ongoing price adjustments.
Our customers pay for products received in accordance with payment terms that are customary within the industry.
20 unchanged sentences
Adjustments made to the historical returns are based on recent return experience in the equity and fixed income markets and the belief that deviations from historical returns are likely over the relevant investment horizon.
−Removed: Key assumptions are shown below:
+Added: Benefit obligations and net periodic benefit (credit) cost, along with key actuarial assumptions, are shown below (in millions, except discount rate and expected return on plan assets):
Pension Other Postretirement
Benefit obligations as of December 31, 2022
−Removed: Discount rate -
−Removed: Domestic plans 3.0 % 2.8 %
−Removed: Foreign plans 2.5 % 3.1 %
−Removed: Net periodic benefit (credit) cost for the year ended December 31, 2021
+Added: Net periodic benefit (credit) cost for the year ending December 31, 2023 (1)
Discount rate -
4 unchanged sentences
Foreign plans 5.4 % N/A
−Removed: Net periodic benefit (credit) cost for the year ending December 31, 2022 (1)
+Added: Net periodic benefit (credit) cost for the year ended December 31, 2022 $ (4) $ 1
Discount rate -
11 unchanged sentences
100 bp decrease in expected return on plan assets N/A N/A 7 N/A
−Removed: For further information related to our pension and other postretirement benefit plans, see "— Liquidity and Financial Condition — Capitalization — Contractual Obligations" above and Note 10, "Pension and Other Postretirement Benefit Plans," to the consolidated financial statements included in this Report.
+Added: For further information related to our pension and other postretirement benefit plans, see "— Liquidity and Capital Resources — Capitalization — Contractual Obligations" above and Note 10, "Pension and Other Postretirement Benefit Plans," to the consolidated financial statements included in this Report.
We account for income taxes in accordance with GAAP.
6 unchanged sentences
We evaluate the realizability of our deferred tax assets on a quarterly basis.
−Removed: In completing this evaluation, we consider all available evidence in order to determine whether, based on the weight of the evidence, a valuation allowance for our deferred tax assets is necessary.
−Removed: Such evidence includes historical results, future reversals of existing taxable temporary differences and expectations for future taxable income (exclusive of the reversal of temporary differences and carryforwards),
−Removed: as well as the implementation of feasible and prudent tax planning strategies.
+Added: In completing this evaluation, we consider all available evidence in order to determine whether, based on the weight of the evidence, a valuation allowance for
+Added: our deferred tax assets is necessary.
+Added: Such evidence includes historical results, future reversals of existing taxable temporary differences and expectations for future taxable income (exclusive of the reversal of temporary differences and carryforwards), as well as the implementation of feasible and prudent tax planning strategies.
If, based on the weight of the evidence, it is more likely than not that all or a portion of our deferred tax assets will not be realized, a valuation allowance is recorded.
26 unchanged sentences
• the outcome of customer negotiations and the impact of customer-imposed price reductions;
−Removed: • the cost and availability of raw materials, energy, commodities and product components and our ability to mitigate such costs;
+Added: • increases in the costs and restrictions on the availability of raw materials, energy, commodities and product components and our ability to mitigate such costs and insufficient availability;
• disruptions in relationships with our suppliers;
• the financial condition of and adverse developments affecting our customers and suppliers;
−Removed: • risks associated with conducting business in foreign countries;
+Added: • risks associated with conducting business in foreign countries, including the risk of war or other geopolitical conflicts;
• currency controls and the ability to economically hedge currencies;
15 unchanged sentences
• the outcome of legal or regulatory proceedings to which we are or may become a party;
−Removed: • 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;
5 unchanged sentences
The forward-looking statements in this Report are made as of the date hereof, and we do not assume any obligation to update, amend or clarify them to reflect events, new information or circumstances occurring after the date hereof.
−Removed: ITEM 8 – CONSOLIDATED FINANCIAL STATEMENTS AND
−Removed: SUPPLEMENTARY DATA
−Removed: INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Reports of Ernst & Young LLP, Independent Registered Public Accounting Firm (PCAOB ID:
−Removed: Consolidated Balance Sheets as of December 31, 2021 and 2020
−Removed: Consolidated Statements of Income for the years ended December 31, 2021, 2020 and 2019
−Removed: Consolidated Statements of Comprehensive Income for the years ended December 31, 2021, 2020 and 2019
−Removed: Consolidated Statements of Equity for the years ended December 31, 2021, 2020 and 2019
−Removed: Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019
−Removed: Notes to Consolidated Financial Statements
−Removed: Schedule II – Valuation and Qualifying Accounts
−Removed: Report of Independent Registered Public Accounting Firm
−Removed: To the Stockholders and the Board of Directors of Lear Corporation
−Removed: Opinion on the Financial Statements
−Removed: We have audited the accompanying consolidated balance sheets of Lear Corporation and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the consolidated financial statements).
−Removed: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S.
−Removed: generally accepted accounting principles.
−Removed: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 10, 2022, expressed an unqualified opinion thereon.
−Removed: Basis for Opinion
−Removed: These financial statements are the responsibility of the Company's management.
−Removed: Our responsibility is to express an opinion on the Company's financial statements based on our audits.
−Removed: We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
−Removed: federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audits in accordance with the standards of the PCAOB.
−Removed: Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
−Removed: Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
−Removed: Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
−Removed: Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
−Removed: We believe that our audits provide a reasonable basis for our opinion.
−Removed: Critical Audit Matter
−Removed: The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:
−Removed: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective or complex judgments.
−Removed: The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.
−Removed: Revenue recognition
−Removed: Description of the Matter As discussed in Note 3, Summary of Significant Accounting Policies, the Company's sales contracts with its customers may provide for annual price reductions over the production life of the vehicle.
−Removed: Prices may also be adjusted on an ongoing basis to reflect changes in product content, product cost and other commercial factors.
−Removed: Some of these price adjustments are non-routine in nature.
−Removed: The amount of revenue recognized by the Company reflects the consideration that the Company expects to be entitled to in exchange for its products based on annual purchase orders, annual price reductions and ongoing price adjustments.
−Removed: Auditing the consideration that the Company expects to be entitled to in exchange for certain of its products which are subject to non-routine price adjustments is highly judgmental as it relates to evaluating the sufficiency of evidence available from commercial negotiations to support the ultimate consideration that the Company is entitled to in exchange for those products.
−Removed: How We Addressed the Matter in Our Audit We identified and tested controls over the identification and evaluation of product sales with non-routine price adjustments, including management's review of the evidence to support the Company's measurement of revenue related to those product sales.
−Removed: Our audit procedures included, among others, inspecting communications between the Company and its customers related to the pricing arrangements, auditing adjustments at period-end related to those product sales, performing retrospective reviews of management's estimates to identify contrary evidence, if any, and performing inquiries of and obtaining written representations from executives, within the Company, responsible for the respective customer relationships.
−Removed: /s/ Ernst & Young LLP
−Removed: We have served as the Company's auditor since 2002.
−Removed: Detroit, Michigan
−Removed: February 10, 2022
−Removed: Report of Independent Registered Public Accounting Firm
−Removed: To the Stockholders and the Board of Directors of Lear Corporation
−Removed: Opinion on Internal Control over Financial Reporting
−Removed: We have audited Lear Corporation and subsidiaries' internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).
−Removed: In our opinion, Lear Corporation and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria.
−Removed: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2021 consolidated financial statements of the Company and our report dated February 10, 2022, expressed an unqualified opinion thereon.
−Removed: Basis for Opinion
−Removed: The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Annual Report on Internal Control over Financial Reporting.
−Removed: Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.
−Removed: We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
−Removed: federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audit in accordance with the standards of the PCAOB.
−Removed: Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
−Removed: Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.
−Removed: We believe that our audit provides a reasonable basis for our opinion.
−Removed: Definition and Limitations of Internal Control Over Financial Reporting
−Removed: A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
−Removed: A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
−Removed: (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;
−Removed: and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
−Removed: Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
−Removed: Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
−Removed: /s/ Ernst & Young LLP
−Removed: Detroit, Michigan
−Removed: February 10, 2022
−Removed: LEAR CORPORATION AND SUBSIDIARIES
−Removed: CONSOLIDATED BALANCE SHEETS
−Removed: (In millions, except share data)
−Removed: December 31, 2021 2020
−Removed: Current Assets:
−Removed: Cash and cash equivalents $ 1,318.3 $ 1,306.7
−Removed: Accounts receivable 3,041.5 3,269.2
−Removed: Inventories 1,571.9 1,401.1
−Removed: Other 833.5 799.7
−Removed: Total current assets 6,765.2 6,776.7
−Removed: Long-Term Assets:
−Removed: Property, plant and equipment, net 2,720.1 2,736.2
−Removed: Goodwill 1,657.9 1,655.8
−Removed: Other 2,209.2 2,029.9
−Removed: Total long-term assets 6,587.2 6,421.9
−Removed: Total assets $ 13,352.4 $ 13,198.6
−Removed: Liabilities and Equity
−Removed: Current Liabilities:
−Removed: Accounts payable and drafts $ 2,952.4 $ 3,141.6
−Removed: Accrued liabilities 1,806.7 1,920.9
−Removed: Current portion of long-term debt 0.8 14.2
−Removed: Total current liabilities 4,759.9 5,076.7
−Removed: Long-Term Liabilities:
−Removed: Long-term debt 2,595.2 2,300.3
−Removed: Other 1,188.9 1,206.7
−Removed: Total long-term liabilities 3,784.1 3,507.0
−Removed: Preferred stock, 100,000,000 shares authorized (including 10,896,250 shares
−Removed: of Series A convertible preferred stock authorized);
−Removed: no shares outstanding
−Removed: Common stock, $ 0.01 par value, 300,000,000 shares authorized;
−Removed: 64,571,405 shares issued as of December 31, 2021 and 2020
−Removed: Additional paid-in capital 1,019.4 963.6
−Removed: Common stock held in treasury, 4,945,847 and 4,519,891 shares
−Removed: as of December 31, 2021 and 2020, respectively, at cost
−Removed: ( 679.2 ) ( 598.6 )
−Removed: Retained earnings 5,072.8 4,806.8
−Removed: Accumulated other comprehensive loss ( 770.2 ) ( 705.1 )
−Removed: Lear Corporation stockholders' equity 4,643.4 4,467.3
−Removed: Noncontrolling interests 165.0 147.6
−Removed: Equity 4,808.4 4,614.9
−Removed: Total liabilities and equity $ 13,352.4 $ 13,198.6
−Removed: The accompanying notes are an integral part of these consolidated balance sheets.
−Removed: LEAR CORPORATION AND SUBSIDIARIES
−Removed: CONSOLIDATED STATEMENTS OF INCOME
−Removed: (In millions, except share and per share data)
−Removed: For the year ended December 31, 2021 2020 2019
−Removed: Net sales $ 19,263.1 $ 17,045.5 $ 19,810.3
−Removed: Cost of sales 17,871.2 15,936.6 18,072.8
−Removed: Selling, general and administrative expenses 643.2 588.9 605.0
−Removed: Amortization of intangible assets 73.3 65.9 62.3
−Removed: Interest expense 91.8 99.6 92.0
−Removed: Other expense, net 0.1 55.2 24.6
−Removed: Consolidated income before provision for income taxes and equity in net income of affiliates 583.5 299.3 953.6
−Removed: Provision for income taxes 137.7 93.9 146.1
−Removed: Equity in net income of affiliates ( 15.8 ) ( 28.5 ) ( 23.2 )
−Removed: Consolidated net income 461.6 233.9 830.7
−Removed: Net income attributable to noncontrolling interests 87.7 75.4 77.1
−Removed: Net income attributable to Lear $ 373.9 $ 158.5 $ 753.6
−Removed: Basic net income per share available to Lear common stockholders $ 6.22 $ 2.63 $ 12.80
−Removed: Diluted net income per share available to Lear common stockholders $ 6.19 $ 2.62 $ 12.75
−Removed: Average common shares outstanding 60,082,833 60,254,380 61,697,192
−Removed: Average diluted shares outstanding 60,420,484 60,429,962 61,923,528
−Removed: The accompanying notes are an integral part of these consolidated financial statements.
−Removed: LEAR CORPORATION AND SUBSIDIARIES
−Removed: CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
−Removed: (In millions)
−Removed: For the year ended December 31, 2021 2020 2019
−Removed: Consolidated net income $ 461.6 $ 233.9 $ 830.7
−Removed: Other comprehensive income (loss), net of tax:
−Removed: Defined benefit plan adjustments 77.5 ( 59.3 ) ( 44.8 )
−Removed: Derivative instruments and hedging activities ( 31.2 ) 2.8 19.5
−Removed: Foreign currency translation adjustments ( 108.3 ) 139.7 ( 45.1 )
−Removed: Total other comprehensive income (loss) ( 62.0 ) 83.2 ( 70.4 )
−Removed: Consolidated comprehensive income 399.6 317.1 760.3
−Removed: Comprehensive income attributable to noncontrolling interests 90.8 91.0 73.6
−Removed: Comprehensive income attributable to Lear $ 308.8 $ 226.1 $ 686.7
−Removed: The accompanying notes are an integral part of these consolidated financial statements.
−Removed: LEAR CORPORATION AND SUBSIDIARIES
−Removed: CONSOLIDATED STATEMENTS OF EQUITY
−Removed: (In millions, except share data)
−Removed: Redeemable Non-
−Removed: controlling Interests Common
−Removed: Stock Additional Paid-in Capital Common
−Removed: Stock Held in Treasury Retained
−Removed: Balance as of December 31, 2018 $ 158.1 $ 0.6 $ 1,017.4 $ ( 225.1 ) $ 4,113.6
−Removed: Comprehensive income (loss):
−Removed: Net income 1.8 — — — 753.6
−Removed: Other comprehensive income (loss) ( 1.8 ) — — — —
−Removed: Total comprehensive income (loss) — — — — 753.6
−Removed: Stock-based compensation — — 23.3 — —
−Removed: Net issuances of 314,953 shares held in treasury in settlement of stock-based compensation
−Removed: — — ( 71.6 ) 42.4 ( 2.1 )
−Removed: Repurchases of 2,819,081 shares of common stock at an average price of $ 134.95 per share
−Removed: — — — ( 380.4 ) —
−Removed: Dividends declared to Lear Corporation stockholders — — — — ( 186.3 )
−Removed: Dividends declared to noncontrolling interests ( 2.7 ) — — — —
−Removed: Noncontrolling interests — other
−Removed: Disposal of noncontrolling interests — — — — —
−Removed: Redeemable noncontrolling interest adjustment ( 37.0 ) — — — 37.0
−Removed: Balance as of December 31, 2019 $ 118.4 $ 0.6 $ 969.1 $ ( 563.1 ) $ 4,715.8
−Removed: Comprehensive income (loss):
−Removed: Net income (loss) ( 3.5 ) — — — 158.5
−Removed: Other comprehensive income (loss) 7.7 — — — —
−Removed: Total comprehensive income (loss) 4.2 — — — 158.5
−Removed: Adoption of ASU 2016-13 — — — — ( 0.8 )
−Removed: Stock-based compensation — — 40.0 — —
−Removed: Net issuances of 249,064 shares held in treasury in settlement of stock-based compensation
−Removed: — — ( 46.9 ) 34.5 ( 3.5 )
−Removed: Repurchases of 641,149 shares of common stock at an average price of $ 109.22 per share
−Removed: — — — ( 70.0 ) —
−Removed: Dividends declared to Lear Corporation stockholders — — — — ( 62.1 )
−Removed: Dividends declared to noncontrolling interests ( 26.8 ) — — — —
−Removed: Acquisition of outstanding noncontrolling interests ( 96.9 ) — 1.4 — —
−Removed: Redeemable noncontrolling interest adjustment 1.1 — — — ( 1.1 )
−Removed: Balance as of December 31, 2020 $ — $ 0.6 $ 963.6 $ ( 598.6 ) $ 4,806.8
−Removed: Comprehensive income (loss):
−Removed: Net income — — — — 373.9
−Removed: Other comprehensive income (loss) — — — — —
−Removed: Total comprehensive income (loss) — — — — 373.9
−Removed: Stock-based compensation — — 60.3 — —
−Removed: Net issuances of 163,761 shares held in treasury in settlement of stock-based compensation
−Removed: — — ( 33.1 ) 19.7 —
−Removed: Repurchases of 589,717 shares of common stock at an average price of $ 170.03 per share
−Removed: — — — ( 100.3 ) —
−Removed: Dividends declared to Lear Corporation stockholders — — — — ( 107.9 )
−Removed: Dividends declared to noncontrolling interests — — — — —
−Removed: Affiliate transaction — — 28.6 — —
−Removed: Balance as of December 31, 2021 $ — $ 0.6 $ 1,019.4 $ ( 679.2 ) $ 5,072.8
−Removed: The accompanying notes are an integral part of these consolidated financial statements.
−Removed: LEAR CORPORATION AND SUBSIDIARIES
−Removed: CONSOLIDATED STATEMENTS OF EQUITY (continued)
−Removed: (In millions, except share data)
−Removed: Accumulated Other Comprehensive Loss, net of tax
−Removed: Benefit Plans Derivative
−Removed: Instruments and
−Removed: Activities Cumulative
−Removed: Adjustments Lear
−Removed: Stockholders'
−Removed: Equity Non-controlling
−Removed: Interests Equity
−Removed: Balance as of December 31, 2018 $ ( 172.8 ) $ ( 9.7 ) $ ( 523.3 ) $ 4,200.7 $ 159.9 $ 4,360.6
−Removed: Comprehensive income (loss):
−Removed: Net income — — — 753.6 75.3 828.9
−Removed: Other comprehensive income (loss) ( 44.8 ) 19.5 ( 41.6 ) ( 66.9 ) ( 1.7 ) ( 68.6 )
−Removed: Total comprehensive income (loss) ( 44.8 ) 19.5 ( 41.6 ) 686.7 73.6 760.3
−Removed: Stock-based compensation — — — 23.3 — 23.3
−Removed: Net issuances of 314,953 shares held in treasury in settlement of stock-based compensation
−Removed: — — — ( 31.3 ) — ( 31.3 )
−Removed: Repurchases of 2,819,081 shares of common stock at an average price of $ 134.95 per share
−Removed: — — — ( 380.4 ) — ( 380.4 )
−Removed: Dividends declared to Lear Corporation stockholders — — — ( 186.3 ) — ( 186.3 )
−Removed: Dividends declared to noncontrolling interests — — — — ( 76.3 ) ( 76.3 )
−Removed: Noncontrolling interests — other
−Removed: — — — — ( 0.2 ) ( 0.2 )
−Removed: Disposal of noncontrolling interests — — — — ( 5.6 ) ( 5.6 )
−Removed: Redeemable noncontrolling interest adjustment — — — 37.0 — 37.0
−Removed: Balance as of December 31, 2019 $ ( 217.6 ) $ 9.8 $ ( 564.9 ) $ 4,349.7 $ 151.4 $ 4,501.1
−Removed: Comprehensive income (loss):
−Removed: Net income (loss) — — — 158.5 78.9 237.4
−Removed: Other comprehensive income (loss) ( 59.3 ) 2.8 124.1 67.6 7.9 75.5
−Removed: Total comprehensive income (loss) ( 59.3 ) 2.8 124.1 226.1 86.8 312.9
−Removed: Adoption of ASU 2016-13 — — — ( 0.8 ) — ( 0.8 )
−Removed: Stock-based compensation — — — 40.0 — 40.0
−Removed: Net issuances of 249,064 shares held in treasury in settlement of stock-based compensation
−Removed: — — — ( 15.9 ) — ( 15.9 )
−Removed: Repurchases of 641,149 shares of common stock at an average price of $ 109.22 per share
−Removed: — — — ( 70.0 ) — ( 70.0 )
−Removed: Dividends declared to Lear Corporation stockholders — — — ( 62.1 ) — ( 62.1 )
−Removed: Dividends declared to noncontrolling interests — — — — ( 90.6 ) ( 90.6 )
−Removed: Acquisition of outstanding noncontrolling interests — — — 1.4 — 1.4
−Removed: Redeemable noncontrolling interest adjustment — — — ( 1.1 ) — ( 1.1 )
−Removed: Balance as of December 31, 2020 $ ( 276.9 ) $ 12.6 $ ( 440.8 ) $ 4,467.3 $ 147.6 $ 4,614.9
−Removed: Comprehensive income (loss):
−Removed: Net income — — — 373.9 87.7 461.6
−Removed: Other comprehensive income (loss) 77.5 ( 31.2 ) ( 111.4 ) ( 65.1 ) 3.1 ( 62.0 )
−Removed: Total comprehensive income (loss) 77.5 ( 31.2 ) ( 111.4 ) 308.8 90.8 399.6
−Removed: Stock-based compensation — — — 60.3 — 60.3
−Removed: Net issuances of 163,761 shares held in treasury in settlement of stock-based compensation
−Removed: — — — ( 13.4 ) — ( 13.4 )
−Removed: Repurchases of 589,717 shares of common stock at an average price of $ 170.03 per share
−Removed: — — — ( 100.3 ) — ( 100.3 )
−Removed: Dividends declared to Lear Corporation stockholders — — — ( 107.9 ) — ( 107.9 )
−Removed: Dividends declared to noncontrolling interests — — — — ( 81.0 ) ( 81.0 )
−Removed: Affiliate transaction — — — 28.6 7.6 36.2
−Removed: Balance as of December 31, 2021 $ ( 199.4 ) $ ( 18.6 ) $ ( 552.2 ) $ 4,643.4 $ 165.0 $ 4,808.4
−Removed: The accompanying notes are an integral part of these consolidated financial statements.
−Removed: LEAR CORPORATION AND SUBSIDIARIES
−Removed: CONSOLIDATED STATEMENTS OF CASH FLOWS
−Removed: (In millions)
−Removed: For the year ended December 31, 2021 2020 2019
−Removed: Cash Flows from Operating Activities:
−Removed: Consolidated net income $ 461.6 $ 233.9 $ 830.7
−Removed: Adjustments to reconcile consolidated net income to net cash provided by operating activities –
−Removed: Equity in net income of affiliates ( 15.8 ) ( 28.5 ) ( 23.2 )
−Removed: Loss on extinguishment of debt 24.6 21.1 10.6
−Removed: Impairment charges 20.1 31.9 14.5
−Removed: Deferred tax benefit
−Removed: ( 55.5 ) ( 84.7 ) ( 38.2 )
−Removed: Depreciation and amortization 573.9 539.9 509.9
−Removed: Stock-based compensation 60.3 40.0 23.3
−Removed: Net change in recoverable customer engineering, development and tooling ( 29.1 ) ( 47.0 ) ( 32.4 )
−Removed: Net change in working capital items (see below) ( 351.0 ) ( 66.9 ) ( 25.5 )
−Removed: Changes in other long-term assets ( 35.7 ) ( 26.5 ) ( 10.1 )
−Removed: Changes in other long-term liabilities ( 6.5 ) 8.3 5.0
−Removed: Other, net 23.2 41.6 19.7
−Removed: Net cash provided by operating activities 670.1 663.1 1,284.3
−Removed: Cash Flows from Investing Activities:
−Removed: Additions to property, plant and equipment ( 585.1 ) ( 452.3 ) ( 603.9 )
−Removed: Acquisition of Xevo, net of cash acquired — — ( 321.7 )
−Removed: Other, net ( 61.6 ) ( 16.5 ) 3.2
−Removed: Net cash used in investing activities ( 646.7 ) ( 468.8 ) ( 922.4 )
−Removed: Cash Flows from Financing Activities:
−Removed: Proceeds from the issuance of senior notes 698.7 669.1 693.3
−Removed: Redemption of senior notes ( 221.5 ) ( 667.1 ) ( 333.7 )
−Removed: Revolving credit facility borrowings — 1,000.0 —
−Removed: Revolving credit facility repayments — ( 1,000.0 ) —
−Removed: Term loan repayments ( 220.3 ) ( 14.1 ) ( 7.8 )
−Removed: Short-term borrowings (repayments), net — ( 19.3 ) 9.5
−Removed: Payment of debt issuance and other financing costs ( 9.9 ) ( 7.0 ) ( 6.5 )
−Removed: Repurchase of common stock ( 100.3 ) ( 70.0 ) ( 384.7 )
−Removed: Dividends paid to Lear Corporation stockholders ( 106.7 ) ( 67.3 ) ( 186.3 )
−Removed: Dividends paid to noncontrolling interests ( 81.1 ) ( 123.3 ) ( 78.9 )
−Removed: Other, net 27.5 ( 112.7 ) ( 66.8 )
−Removed: Net cash used in financing activities ( 13.6 ) ( 411.7 ) ( 361.9 )
−Removed: Effect of foreign currency translation ( 3.0 ) 21.5 ( 9.4 )
−Removed: Net Change in Cash, Cash Equivalents and Restricted Cash 6.8 ( 195.9 ) ( 9.4 )
−Removed: Cash, Cash Equivalents and Restricted Cash as of Beginning of Period 1,314.5 1,510.4 1,519.8
−Removed: Cash, Cash Equivalents and Restricted Cash as of End of Period $ 1,321.3 $ 1,314.5 $ 1,510.4
−Removed: Changes in Working Capital Items:
−Removed: Accounts receivable $ 160.9 $ ( 164.7 ) $ ( 116.2 )
−Removed: Inventories ( 213.4 ) ( 107.7 ) ( 69.1 )
−Removed: Accounts payable ( 129.6 ) 214.0 ( 5.5 )
−Removed: Accrued liabilities and other ( 168.9 ) ( 8.5 ) 165.3
−Removed: Net change in working capital items $ ( 351.0 ) $ ( 66.9 ) $ ( 25.5 )
−Removed: Supplementary Disclosure:
−Removed: Cash paid for interest $ 91.6 $ 117.8 $ 104.4
−Removed: Cash paid for income taxes, net of refunds received of $ 40.7 million in 2021, $ 32.5 million in 2020 and $ 69.4 million in 2019
−Removed: $ 148.3 $ 141.5 $ 172.1
−Removed: The accompanying notes are an integral part of these consolidated financial statements.
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements
−Removed: (1) Basis of Presentation
−Removed: Lear Corporation ("Lear," and together with its consolidated subsidiaries, the "Company") and its affiliates design and manufacture automotive seating and electrical distribution systems and related components.
−Removed: The Company's main customers are automotive original equipment manufacturers.
−Removed: The Company operates facilities worldwide.
−Removed: 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) Current Operating Environment
−Removed: In 2020, unprecedented industry disruptions related to the COVID-19 pandemic impacted the Company's operations in every region of the world.
−Removed: Production disruptions continued in 2021 largely due to the continuing impact of the COVID-19 pandemic, particularly through supply shortages.
−Removed: The most significant supply shortage relates to semiconductor chips, which impacted global vehicle production and resulted in reductions and cancellations of planned production.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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;
−Removed: long-lived asset and indefinite-lived intangible asset valuations;
−Removed: inventory valuations;
−Removed: valuations of deferred income taxes and income tax contingencies;
−Removed: and credit losses related to the Company's financial instruments.
−Removed: 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, 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."
−Removed: (3) Summary of Significant Accounting Policies
−Removed: Consolidation
−Removed: Lear consolidates all entities, including variable interest entities, in which it has a controlling financial interest.
−Removed: 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: Fiscal Period Reporting
−Removed: The Company's annual financial results are reported on a calendar year basis, and quarterly interim results are reported using a thirteen week reporting calendar.
−Removed: Cash, Cash Equivalents and Restricted Cash
−Removed: Cash and cash equivalents include all highly liquid investments with original maturities of ninety days or less.
−Removed: Restricted cash includes cash that is legally restricted as to use or withdrawal.
−Removed: Accounts Receivable
−Removed: The Company records accounts receivable as title is transferred to its customers.
−Removed: The Company's customers are the world's major automotive manufacturers.
−Removed: Generally, the Company does not require collateral for its accounts receivable.
−Removed: 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
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: replacement of the existing incurred credit loss model and other models with the current expected credit losses model.
−Removed: 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.
−Removed: The Company's allowance for credit losses on financial assets measured at amortized cost, primarily accounts receivable, reflects management's estimate of credit losses over the remaining expected life of such assets, measured primarily using historical experience, as well as current conditions and forecasts that affect the collectability of the reported amount.
−Removed: Expected credit losses for newly recognized financial assets, as well as changes to expected credit losses during the period, are recognized in earnings.
−Removed: The Company also considers geographic and segment specific risk factors in the development of expected credit losses.
−Removed: As of December 31, 2021 and 2020, accounts receivable are reflected net of reserves of $ 35.5 million and $ 35.3 million, respectively.
−Removed: Changes in expected credit losses were not significant during the year ended December 31, 2021.
−Removed: The Company receives bank notes from its customers, which are classified as other current assets in the consolidated balance sheets, for certain amounts of accounts receivable, primarily in Asia.
−Removed: The Company may hold such bank notes until maturity, exchange them with suppliers to settle liabilities or sell them to third-party financial institutions in exchange for cash.
−Removed: Inventories are stated at the lower of cost or net realizable value.
−Removed: Cost is determined using the first-in, first-out method.
−Removed: Finished goods and work-in-process inventories include material, labor and manufacturing overhead costs.
−Removed: The Company records reserves for inventory in excess of production and/or forecasted requirements and for obsolete inventory in production and service inventories.
−Removed: A summary of inventories is shown below (in millions):
−Removed: December 31, 2021 2020
−Removed: Raw materials $ 1,171.0 $ 1,051.6
−Removed: Work-in-process 119.9 109.8
−Removed: Finished goods 453.4 396.9
−Removed: Reserves ( 172.4 ) ( 157.2 )
−Removed: Inventories $ 1,571.9 $ 1,401.1
−Removed: Engineering and Development ("E&D") and Tooling Costs
−Removed: 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.
−Removed: Pre-Production Costs Related to Long-Term Supply Agreements
−Removed: The Company incurs pre-production E&D and tooling costs related to the products produced for its customers under long-term supply agreements.
−Removed: The Company expenses all pre-production E&D costs for which reimbursement is not contractually guaranteed by the customer.
−Removed: 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: 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.
−Removed: During 2021 and 2020, the Company also capitalized $ 164.4 million and $ 174.0 million, respectively, of pre-production tooling costs related to customer-owned tools for which reimbursement is contractually guaranteed by the customer or for which the Company has a non-cancelable right to use the tooling.
−Removed: These amounts are included in other current and long-term assets in the accompanying consolidated balance sheets as of December 31, 2021 and 2020.
−Removed: During 2021 and 2020, the Company collected $ 448.0 million and $ 354.6 million, respectively, of cash related to E&D and tooling costs.
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: The classification of recoverable customer E&D and tooling costs related to long-term supply agreements is shown below (in millions):
−Removed: December 31, 2021 2020
−Removed: Current $ 207.4 $ 212.0
−Removed: Long-term 143.5 121.4
−Removed: Recoverable customer E&D and tooling $ 350.9 $ 333.4
−Removed: Other E&D Costs
−Removed: Costs incurred in connection with product launches, to the extent not recoverable from the Company's customers, are recorded in cost of sales as incurred and totaled $ 139.5 million, $ 135.0 million and $ 138.2 million for the years ended December 31, 2021, 2020 and 2019, respectively.
−Removed: All other E&D costs are recorded in selling, general and administrative expenses as incurred and totaled $ 170.7 million, $ 192.3 million and $ 178.4 million for the years ended December 31, 2021, 2020 and 2019, respectively.
−Removed: Property, Plant and Equipment
−Removed: Property, plant and equipment is stated at cost.
−Removed: Costs associated with the repair and maintenance of the Company's property, plant and equipment are expensed as incurred.
−Removed: Costs associated with improvements which extend the life, increase the capacity or improve the efficiency or safety of the Company's property, plant and equipment are capitalized and depreciated over the remaining useful life of the related asset.
−Removed: Depreciable property is depreciated over the estimated useful lives of the assets, using principally the straight-line method as follows:
−Removed: Buildings and improvements 10 to 40 years
−Removed: Machinery and equipment 5 to 10 years
−Removed: A summary of property, plant and equipment is shown below (in millions):
−Removed: December 31, 2021 2020
−Removed: Land $ 108.7 $ 114.1
−Removed: Buildings and improvements 850.3 880.7
−Removed: Machinery and equipment 4,497.7 4,339.2
−Removed: Construction in progress 345.6 311.1
−Removed: Total property, plant and equipment 5,802.3 5,645.1
−Removed: Less – accumulated depreciation ( 3,082.2 ) ( 2,908.9 )
−Removed: Net property, plant and equipment $ 2,720.1 $ 2,736.2
−Removed: For the years ended December 31, 2021, 2020 and 2019, depreciation expense was $ 500.6 million, $ 474.0 million and $ 447.6 million, respectively.
−Removed: 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.
−Removed: 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.
−Removed: The property is expected to be disposed of by sale within the next twelve months.
−Removed: Impairment of Goodwill
−Removed: Goodwill is not amortized but is tested for impairment on at least an annual basis.
−Removed: Impairment testing is required more often than annually if an event or circumstance indicates that an impairment is more likely than not to have occurred.
−Removed: In conducting its annual impairment testing, the Company may first perform a qualitative assessment of whether it is more likely than not that a reporting unit's fair value is less than its carrying amount.
−Removed: 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 qualitative assessment of a reporting unit, the Company then compares the fair value of the reporting unit to the related net book value.
−Removed: If the net book value of a reporting unit exceeds its fair value, an impairment loss is measured and recognized.
−Removed: 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
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: the present value using discount factors that consider the timing and risk of cash flows.
−Removed: 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.
−Removed: This approach also mitigates the impact of cyclical trends that occur in the industry.
−Removed: Fair value is estimated using recent automotive industry and specific platform production volume projections, which are based on both third-party and internally developed forecasts, as well as commercial and discount rate assumptions.
−Removed: The discount rate used is the value-weighted average of the Company's estimated cost of equity and of debt ("cost of capital") derived using both known and estimated customary market metrics.
−Removed: The Company's weighted average cost of capital is adjusted by reporting unit to reflect a risk factor, if necessary.
−Removed: Other significant assumptions include terminal value growth rates, terminal value margin rates, future capital expenditures and changes in future working capital requirements.
−Removed: While there are inherent uncertainties related to the assumptions used and to management's application of these assumptions to this analysis, the Company believes that the income approach provides a reasonable estimate of the fair value of its reporting units.
−Removed: 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 is completed as of the first day of the Company's fourth quarter.
−Removed: The Company performed a qualitative assessment for each reporting unit.
−Removed: 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: 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):
−Removed: Seating E-Systems Total
−Removed: Balance as of December 31, 2019 $ 1,235.4 $ 378.9 $ 1,614.3
−Removed: Foreign currency translation and other 33.4 8.1 41.5
−Removed: Balance as of December 31, 2020 1,268.8 387.0 1,655.8
−Removed: Foreign currency translation and other ( 19.5 ) 21.6 2.1
−Removed: Balance as of December 31, 2021 $ 1,249.3 $ 408.6 $ 1,657.9
−Removed: Intangible Assets
−Removed: As of December 31, 2021, intangible assets consist primarily of certain intangible assets recorded in connection with the acquisitions of Guilford Mills in 2012, the parent company of Eagle Ottawa, LLC in 2015, AccuMED Holdings Corp.
−Removed: in 2016, Grupo Antolin's automotive seating business in 2017 and Xevo Inc.
−Removed: ("Xevo") in 2019 (Note 4, "Acquisitions").
−Removed: These intangible assets were recorded at their estimated fair value, based on independent appraisals, as of the transaction or acquisition date.
−Removed: The value assigned to technology intangibles is based on the royalty savings method, which applies a hypothetical royalty rate to projected revenues attributable to the identified technologies.
−Removed: Royalty rates were determined based primarily on analysis of market information.
−Removed: The customer-based intangible asset includes the acquired entity's established relationships with its customers and the ability of these customers to generate future economic profits for the Company.
−Removed: 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: A summary of intangible assets as of December 31, 2021, is shown below (in millions):
−Removed: Gross Carrying
−Removed: Value Accumulated
−Removed: Amortization Net Carrying
−Removed: Value Weighted
−Removed: Average Useful
−Removed: Amortized intangible assets:
−Removed: Customer-based $ 534.4 $ ( 277.6 ) $ 256.8 11.7
−Removed: Licensing agreements 70.9 ( 37.8 ) 33.1 5.0
−Removed: Technology 21.8 ( 18.4 ) 3.4 8.5
−Removed: Other 0.4 ( 0.1 ) 0.3 5.0
−Removed: 627.5 ( 333.9 ) 293.6 10.8
−Removed: Unamortized intangible assets:
−Removed: In-process research and development 8.9 — 8.9
−Removed: Balance as of December 31, 2021 $ 636.4 $ ( 333.9 ) $ 302.5
−Removed: 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.
−Removed: The impairment charge is included in amortization of intangible assets in the accompanying statement of income for the year ended December 31, 2021.
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: 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.
−Removed: A summary of intangible assets as of December 31, 2020, is shown below (in millions):
−Removed: Gross Carrying
−Removed: Value Accumulated
−Removed: Amortization Net Carrying
−Removed: Value Weighted
−Removed: Average Useful
−Removed: Amortized intangible assets:
−Removed: Customer-based $ 528.0 $ ( 232.0 ) $ 296.0 11.8
−Removed: Licensing agreements 71.9 ( 24.4 ) 47.5 5.0
−Removed: Technology 35.1 ( 21.2 ) 13.9 7.2
−Removed: 635.0 ( 277.6 ) 357.4 10.8
−Removed: Unamortized intangible assets:
−Removed: In-process research and development 10.8 — 10.8
−Removed: Balance as of December 31, 2020 $ 645.8 $ ( 277.6 ) $ 368.2
−Removed: 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.
−Removed: Excluding the impact of any future acquisitions, the Company's estimated annual amortization expense for the five succeeding years is shown below (in millions):
−Removed: Impairment of Long-Lived Assets
−Removed: The Company monitors its long-lived assets for impairment indicators on an ongoing basis in accordance with accounting principles generally accepted in the United States ("GAAP").
−Removed: If impairment indicators exist, the Company performs the required impairment analysis by comparing the undiscounted cash flows expected to be generated from the long-lived assets to the related net book values.
−Removed: If the net book value exceeds the undiscounted cash flows, an impairment loss is measured and recognized.
−Removed: 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 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.
−Removed: Key assumptions used in the appraisals are based on a combination of market and cost approaches, as appropriate.
−Removed: 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").
−Removed: 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.
−Removed: 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: Impairment of Investments in Affiliates
−Removed: The Company monitors its investments in affiliates for indicators of other-than-temporary declines in value on an ongoing basis in accordance with GAAP.
−Removed: If the Company determines that an other-than-temporary decline in value has occurred, it recognizes an impairment loss, which is measured as the difference between the recorded book value and the fair value of the investment.
−Removed: Fair value is generally determined using an income approach based on discounted cash flows or negotiated transaction values.
−Removed: 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.
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: Accrued Liabilities
−Removed: A summary of accrued liabilities as of December 31, 2021 and 2020, is shown below (in millions):
−Removed: December 31, 2021 2020
−Removed: Compensation and employee benefits $ 353.8 $ 297.7
−Removed: Income and other taxes payable 290.7 287.7
−Removed: Restructuring 129.4 139.0
−Removed: Current portion of lease obligations 125.6 116.3
−Removed: Other 907.2 1,080.2
−Removed: Accrued liabilities $ 1,806.7 $ 1,920.9
−Removed: Accounting Policy
−Removed: The Company determines if an arrangement contains a lease at inception.
−Removed: For all asset classes, the Company utilizes the short-term lease exemption as provided under GAAP.
−Removed: A short-term lease is a lease that, at the commencement date, has a term of twelve months or less and does not include an option to purchase the underlying asset.
−Removed: For all asset classes, the Company accounts for each lease component of a contract and its associated non-lease components as a single lease component, rather than allocating a standalone value to each component of a lease.
−Removed: For purposes of calculating operating lease obligations under the standard, the Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such option.
−Removed: The Company's leases do not contain material residual value guarantees or material restrictive covenants.
−Removed: Operating lease expense is recognized on a straight-line basis over the lease terms.
−Removed: Discount Rate
−Removed: The discount rate used to measure a lease obligation should be the rate implicit in the lease;
−Removed: however, the Company's operating leases generally do not provide an implicit rate.
−Removed: Accordingly, the Company uses its incremental borrowing rate at lease commencement to determine the present value of lease payments.
−Removed: The incremental borrowing rate is an entity-specific rate which represents the rate of interest a lessee would pay to borrow on a collateralized basis over a similar term with similar payments.
−Removed: Revenue Recognition and Sales Commitments
−Removed: The Company enters into contracts with its customers to provide production parts generally at the beginning of a vehicle's life cycle.
−Removed: Typically, these contracts do not provide for a specified quantity of products, but once entered into, the Company is often expected to fulfill its customers' purchasing requirements for the production life of the vehicle.
−Removed: Many of these contracts may be terminated by the Company's customers at any time.
−Removed: Historically, terminations of these contracts have been infrequent.
−Removed: The Company receives purchase orders from its customers, which provide the commercial terms for a particular production part, including price (but not quantities).
−Removed: 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 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.
−Removed: 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: Revenue recognized related to prior years represented approximately 1 % of consolidated net sales during the years ended December 31, 2021, 2020 and 2019.
−Removed: The Company's customers pay for products received in accordance with payment terms that are customary within the industry.
−Removed: The Company's contracts with its customers do not have significant financing components.
−Removed: The Company records a contract liability for advances received from its customers.
−Removed: As of December 31, 2021 and 2020, there were no significant contract liabilities recorded.
−Removed: Further, there were no significant contract liabilities recognized in revenue during the years ended December 31, 2021, 2020 and 2019.
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: Amounts billed to customers related to shipping and handling costs are included in net sales in the consolidated statements of income.
−Removed: Shipping and handling costs are accounted for as fulfillment costs and are included in cost of sales in the consolidated statements of income.
−Removed: Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction that are collected by the Company from a customer are excluded from revenue.
−Removed: Cost of Sales and Selling, General and Administrative Expenses
−Removed: Cost of sales includes material, labor and overhead costs associated with the manufacture and distribution of the Company's products.
−Removed: Distribution costs include inbound freight costs, purchasing and receiving costs, inspection costs, warehousing costs and other costs of the Company's distribution network.
−Removed: Selling, general and administrative expenses include selling, engineering and development and administrative costs not directly associated with the manufacture and distribution of the Company's products.
−Removed: Restructuring Costs
−Removed: Restructuring costs include employee termination benefits, asset impairment charges and contract termination costs, as well as other incremental costs resulting from the restructuring actions.
−Removed: Employee termination benefits are recorded based on existing union and employee contracts, statutory requirements, completed negotiations and Company policy.
−Removed: Other incremental costs principally include equipment and personnel relocation costs.
−Removed: In addition to restructuring costs, the Company also incurs incremental manufacturing inefficiency costs at the operating locations impacted by the restructuring actions during the related restructuring implementation period.
−Removed: Restructuring costs are recognized in the Company's consolidated financial statements in accordance with GAAP.
−Removed: Generally, charges are recorded as restructuring actions are approved and/or implemented.
−Removed: Other Expense, Net
−Removed: Other expense, net 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.
−Removed: A summary of other expense, net is shown below (in millions):
−Removed: For the year ended December 31, 2021 2020 2019
−Removed: Other expense $ 65.4 $ 72.2 $ 52.2
−Removed: Other income ( 65.3 ) ( 17.0 ) ( 27.6 )
−Removed: Other expense, net $ 0.1 $ 55.2 $ 24.6
−Removed: Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax loss and credit carryforwards.
−Removed: Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
−Removed: The Company's current and future provision for income taxes is impacted by the initial recognition of and changes in valuation allowances in certain countries.
−Removed: The Company intends to maintain these allowances until it is more likely than not that the deferred tax assets will be realized.
−Removed: The Company's future provision for income taxes will include no tax benefit with respect to losses incurred and, except for certain jurisdictions, no tax expense with respect to income generated in these countries until the respective valuation allowances are eliminated.
−Removed: Accordingly, income taxes are impacted by changes in valuation allowances and the mix of earnings among jurisdictions.
−Removed: The Company evaluates the realizability of its deferred tax assets on a quarterly basis.
−Removed: In completing this evaluation, the Company considers all available evidence in order to determine whether, based on the weight of the evidence, a valuation allowance for its deferred tax assets is necessary.
−Removed: Such evidence includes historical results, future reversals of existing taxable temporary differences and expectations for future taxable income (exclusive of the reversal of temporary differences and carryforwards), as well as the implementation of feasible and prudent tax planning strategies.
−Removed: 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 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
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: 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.
−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: 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.
−Removed: The Company recognizes tax benefits and liabilities based on its estimates of whether, and the extent to which, additional taxes will be due.
−Removed: The Company adjusts these benefits and liabilities based on changing facts and circumstances;
−Removed: 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: Effective January 1, 2021, ASU 2019-12, "Income Taxes (Topic 740):
−Removed: 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.
−Removed: The adoption of this standard did not have a significant impact on the Company's financial statements.
−Removed: Foreign Currency
−Removed: Assets and liabilities of foreign subsidiaries that use a functional currency other than the U.S.
−Removed: dollar are translated into U.S.
−Removed: dollars at the foreign exchange rates in effect at the end of the period.
−Removed: Revenues and expenses of foreign subsidiaries are translated into U.S.
−Removed: dollars using an average of the foreign exchange rates in effect during the period.
−Removed: Translation adjustments that arise from translating a foreign subsidiary's financial statements from the functional currency to the U.S.
−Removed: dollar are reflected in accumulated other comprehensive loss in the consolidated balance sheets.
−Removed: Transaction gains and losses that arise from foreign exchange rate fluctuations on transactions denominated in a currency other than the functional currency, except certain long-term intercompany transactions, are included in the consolidated statements of income as incurred.
−Removed: For the years ended December 31, 2021, 2020 and 2019, other expense, net includes net foreign currency transaction losses of $ 24.8 million, $ 19.9 million and $ 20.6 million, respectively.
−Removed: Stock-Based Compensation
−Removed: The Company measures stock-based employee compensation expense at fair value in accordance with GAAP and recognizes such expense over the vesting period of the stock-based employee awards.
−Removed: Net Income Per Share Attributable to Lear
−Removed: Basic net income per share available to Lear common stockholders is computed using the two-class method by dividing net income attributable to Lear, after deducting the redemption adjustment related to redeemable noncontrolling interest, by the average number of common shares outstanding during the period.
−Removed: Common shares issuable upon the satisfaction of certain conditions pursuant to a contractual agreement are considered common shares outstanding and are included in the computation of basic net income per share available to Lear common stockholders.
−Removed: Diluted net income per share available to Lear common stockholders is computed using the two-class method by dividing net income attributable to Lear, after deducting the redemption adjustment related to redeemable noncontrolling interest, by the average number of common shares outstanding, including the dilutive effect of common stock equivalents computed using the treasury stock method and the average share price during the period.
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: A summary of information used to compute basic and diluted net income per share available to Lear common stockholders is shown below (in millions, except share and per share data):
−Removed: For the year ended December 31, 2021 2020 2019
−Removed: Net income attributable to Lear $ 373.9 $ 158.5 $ 753.6
−Removed: Redeemable noncontrolling interest adjustment — — 35.9
−Removed: Net income available to Lear common stockholders $ 373.9 $ 158.5 $ 789.5
−Removed: Average common shares outstanding 60,082,833 60,254,380 61,697,192
−Removed: Dilutive effect of common stock equivalents 337,651 175,582 226,336
−Removed: Average diluted shares outstanding 60,420,484 60,429,962 61,923,528
−Removed: Basic net income per share available to Lear common stockholders $ 6.22 $ 2.63 $ 12.80
−Removed: 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 12, "Capital Stock, Accumulated Other Comprehensive Loss and Equity."
−Removed: Product Warranty
−Removed: Losses from warranty obligations are accrued when it is probable that a liability has been incurred and the related amounts are reasonably estimable.
−Removed: Segment Reporting
−Removed: The Company is organized under 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 and electronic systems.
−Removed: 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.
−Removed: 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").
−Removed: Key seat component product offerings include seat trim covers, surface materials such as leather and fabric, seat mechanisms, seat foam and headrests.
−Removed: 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.
−Removed: Key components in the Company's electronic systems portfolio include body domain control modules and products specific to electrification and connectivity.
−Removed: 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 telematics control units ("TCU") and gateway modules to manage both wired and wireless networks and data in vehicles.
−Removed: 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 offerings include embedded control software and cloud and mobile device-based software and services.
−Removed: 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.
−Removed: Corporate and regional headquarters costs include various support functions, such as information technology, advanced research and development, corporate finance, legal, executive administration and human resources.
−Removed: Each of the Company's operating segments reports its results from operations and makes its requests for capital expenditures directly to the chief operating decision maker.
−Removed: The economic performance of each operating segment is driven primarily by automotive production volumes in the geographic regions in which it operates, as well as by the success of the vehicle platforms for which it supplies products.
−Removed: Also, each operating segment operates in the competitive Tier 1 automotive supplier environment and is continually working with its customers to manage costs and improve quality.
−Removed: The Company's production processes generally make use of hourly labor, dedicated facilities, sequential manufacturing and assembly processes and commodity raw materials.
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−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.
−Removed: The accounting policies of the Company's operating segments are the same as those described in this note to the consolidated financial statements.
−Removed: Derivative Instruments and Hedge Activities
−Removed: The Company has used derivative financial instruments, including forwards, futures, options, swaps and other derivative contracts, to reduce the effects of fluctuations in foreign exchange rates and interest rates and the resulting variability of the Company's operating results.
−Removed: The Company is not a party to leveraged derivatives.
−Removed: The Company's derivative financial instruments are subject to master netting arrangements that provide for the net settlement of contracts, by counterparty, in the event of default or termination.
−Removed: On the date that a derivative contract for a hedge instrument is entered into, the Company designates the derivative as either (1) a hedge of the exposure to changes in the fair value of a recognized asset or liability or of an unrecognized firm commitment (a fair value hedge), (2) a hedge of the exposure of a forecasted transaction or of the variability in the cash flows of a recognized asset or liability (a cash flow hedge), (3) a hedge of a net investment in a foreign operation (a net investment hedge) or (4) a contract not designated as a hedge instrument.
−Removed: For a fair value hedge, the change in the fair value of the derivative is recorded in earnings and reflected in the consolidated statements of income on the same line as the gain or loss on the hedged item attributable to the hedged risk.
−Removed: For a cash flow hedge, the change in the fair value of the derivative is recorded in accumulated other comprehensive loss in the consolidated balance sheets.
−Removed: When the underlying hedged transaction is realized, the gain or loss included in accumulated other comprehensive loss is recorded in earnings and reflected in the consolidated statements of income on the same line as the gain or loss on the hedged item attributable to the hedged risk.
−Removed: For a net investment hedge, the change in the fair value of the derivative is recorded in cumulative translation adjustment, which is a component of accumulated other comprehensive loss in the consolidated balance sheets.
−Removed: When the related currency translation adjustment is required to be reclassified, usually upon the sale or liquidation of the investment, the gain or loss included in accumulated other comprehensive loss is recorded in earnings and reflected in other expense, net in the consolidated statements of income.
−Removed: Changes in the fair value of contracts not designated as hedge instruments are recorded in earnings and reflected in other expense, net in the consolidated statements of income.
−Removed: Cash flows attributable to derivatives used to manage foreign currency risks are classified on the same line as the hedged item attributable to the hedged risk in the consolidated statements of cash flows.
−Removed: Upon settlement, cash flows attributable to derivatives designated as net investment hedges are classified as investing activities in the consolidated statements of cash flows.
−Removed: Cash flows attributable to forward starting interest rate swaps are classified as financing activities in the consolidated statements of cash flows.
−Removed: The Company formally documents its hedge relationships, including the identification of the hedge instruments and the related hedged items, as well as its risk management objectives and strategies for undertaking the hedge transaction.
−Removed: Derivatives are recorded at fair value in other current and long-term assets and other current and long-term liabilities in the consolidated balance sheets.
−Removed: The Company also formally assesses whether a derivative used in a hedge transaction is highly effective in offsetting changes in either the fair value or the cash flows of the hedged item.
−Removed: When it is determined that a hedged transaction is no longer probable to occur, the Company discontinues hedge accounting.
−Removed: Use of Estimates
−Removed: The preparation of the consolidated financial statements in conformity with GAAP requires 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.
−Removed: During 2021, there were no material changes in the methods or policies used to establish estimates and assumptions.
−Removed: 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, "Acquisitions");
−Removed: restructuring accruals (Note 5, "Restructuring");
−Removed: deferred tax asset valuation allowances and income taxes (Note 9, "Income Taxes");
−Removed: pension and other postretirement benefit plan assumptions (Note 10, "Pension and Other Postretirement Benefit Plans");
−Removed: accruals related to litigation, warranty and environmental remediation costs (Note 14, "Commitments and Contingencies");
−Removed: and self-insurance accruals.
−Removed: Actual results may differ significantly from the Company's estimates.
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: (4) Acquisitions
−Removed: 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").
−Removed: Kongsberg specializes in comfort seating solutions, including massage, lumber, seat heat and ventilation.
−Removed: The transaction is valued at approximately € 175 million ($ 199 million as of December 31, 2021), on a cash and debt free basis.
−Removed: The acquisition, subject to regulatory approvals and customary closing conditions and adjustments, is expected to close in the first quarter of 2022.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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 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.
−Removed: 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.
−Removed: The pro-forma effects of this acquisition do not materially impact the Company's reported results for any period presented.
−Removed: 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.
−Removed: The purchase price and allocation are shown below (in millions):
−Removed: Net purchase price $ 321.7
−Removed: Other assets purchased and liabilities assumed, net $ 12.1
−Removed: Goodwill 219.5
−Removed: Intangible assets 90.1
−Removed: Purchase price allocation $ 321.7
−Removed: Goodwill recognized in this transaction is primarily attributable to expected synergies related to future growth and commercialization opportunities and is not deductible for tax purposes.
−Removed: Intangible assets consist primarily of amounts recognized for the fair value of licensing agreements and developed technology and are based on independent appraisals.
−Removed: Licensing agreements represent the fair values of the underlying licensing agreements with Xevo customers with estimated useful lives of approximately five years .
−Removed: Developed technology represents the fair value of Xevo's technology with an estimated useful life of approximately five years .
−Removed: For further information related to acquired assets measured at fair value, see Note 16, "Financial Instruments."
−Removed: (5) Restructuring
−Removed: In 2021, the Company recorded charges of $ 100.9 million in connection with its restructuring actions.
−Removed: 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.
−Removed: 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.
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: 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.
−Removed: 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.
−Removed: Any future restructuring actions will depend upon market conditions, customer actions and other factors.
−Removed: A summary of 2021 activity is shown below (in millions):
−Removed: Accrual as of 2021 Utilization Accrual as of
−Removed: January 1, 2021 Charges Cash Non-cash December 31, 2021
−Removed: Employee termination benefits $ 134.8 $ 85.1 $ ( 87.5 ) $ ( 6.3 ) $ 126.1
−Removed: Asset impairments — 11.4 — ( 11.4 ) —
−Removed: Contract termination costs 4.2 0.3 ( 1.2 ) — 3.3
−Removed: Other related costs — 4.1 ( 4.1 ) — —
−Removed: Total $ 139.0 $ 100.9 $ ( 92.8 ) $ ( 17.7 ) $ 129.4
−Removed: In 2020, the Company recorded charges of $ 144.9 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: A summary of 2020 activity, excluding the pension benefit plan settlement losses of $ 12.9 million, is shown below (in millions):
−Removed: Accrual as of 2020 Utilization Accrual as of
−Removed: January 1, 2020 Charges Cash Non-cash December 31, 2020
−Removed: Employee termination benefits $ 152.8 $ 104.2 $ ( 122.2 ) $ — $ 134.8
−Removed: Asset impairments — 23.3 — ( 23.3 ) —
−Removed: Contract termination costs 4.9 2.0 ( 2.7 ) — 4.2
−Removed: Other related costs — 2.5 ( 2.5 ) — —
−Removed: Total $ 157.7 $ 132.0 $ ( 127.4 ) $ ( 23.3 ) $ 139.0
−Removed: In 2019, the Company recorded charges of $ 183.6 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.
−Removed: 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.
−Removed: A summary of 2019 activity, excluding the other postretirement curtailment gain of $ 10.6 million, is shown below (in millions):
−Removed: Accrual as of 2019 Utilization Accrual as of
−Removed: January 1, 2019 Charges Cash Non-cash December 31, 2019
−Removed: Employee termination benefits $ 103.3 $ 167.8 $ ( 118.3 ) $ — $ 152.8
−Removed: Asset impairments — 9.5 — ( 9.5 ) —
−Removed: Contract termination costs 5.4 3.0 ( 3.5 ) — 4.9
−Removed: Other related costs — 13.9 ( 13.9 ) — —
−Removed: Total $ 108.7 $ 194.2 $ ( 135.7 ) $ ( 9.5 ) $ 157.7
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: (6) Investments in Affiliates and Other Related Party Transactions
−Removed: The Company's beneficial ownership in affiliates accounted for under the equity method is shown below:
−Removed: December 31, 2021 2020 2019
−Removed: Beijing BHAP Lear Automotive Systems Co., Ltd.
−Removed: (China) 50 % 50 % 50 %
−Removed: Guangzhou Lear Automotive Components Co., Ltd.
−Removed: (China) 50 50 50
−Removed: Jiangxi Jiangling Lear Interior Systems Co., Ltd.
−Removed: (China) 50 50 50
−Removed: Lear Dongfeng Automotive Seating Co., Ltd.
−Removed: (China) 50 50 50
−Removed: Changchun Lear FAWSN Automotive Seat Systems Co., Ltd.
−Removed: (China) 49 49 49
−Removed: Honduras Electrical Distribution Systems S.
−Removed: (Honduras) 49 49 49
−Removed: Kyungshin-Lear Sales and Engineering LLC 49 49 49
−Removed: Shenyang Jinbei Lear Automotive Seating Co.
−Removed: (China) 49 — —
−Removed: Beijing Lear Hyundai Transys Co., Ltd.
−Removed: Hyundai Transys Lear Automotive Private Limited (India) 35 35 35
−Removed: Techstars Corporate Partner 2017 LLC 34 34 38
−Removed: RevoLaze, LLC 20 20 20
−Removed: Maniv Mobility II A, L.P.
−Removed: Autotech Fund II, L.P.
−Removed: Trucks Venture Fund 2, L.P.
−Removed: 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;
−Removed: in millions):
−Removed: December 31, 2021 2020
−Removed: Balance sheet data:
−Removed: Current assets $ 1,217.5 $ 1,136.3
−Removed: Non-current assets 239.5 194.4
−Removed: Current liabilities 921.7 901.7
−Removed: Non-current liabilities 6.7 6.2
−Removed: For the year ended December 31, 2021 2020 2019
−Removed: Income statement data:
−Removed: Net sales $ 1,833.6 $ 1,597.5 $ 1,670.0
−Removed: Gross profit 50.1 83.0 89.2
−Removed: Income before provision for income taxes 104.5 73.8 85.7
−Removed: Net income attributable to affiliates 80.5 44.8 53.5
−Removed: A summary of amounts recorded in the Company's consolidated balance sheets related to its affiliates is shown below (in millions):
−Removed: December 31, 2021 2020
−Removed: Aggregate investment in affiliates $ 184.7 $ 142.9
−Removed: Receivables due from affiliates (including notes and advances) 143.0 142.0
−Removed: Payables due to affiliates 0.7 1.6
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: A summary of transactions with affiliates accounted for under the equity method and other related parties is shown below (in millions):
−Removed: For the year ended December 31, 2021 2020 2019
−Removed: Sales to affiliates $ 676.6 $ 656.4 $ 647.2
−Removed: Purchases from affiliates 4.4 1.9 1.6
−Removed: Management and other fees for services provided to affiliates 38.5 28.3 35.5
−Removed: Dividends received from affiliates 26.8 24.6 23.3
−Removed: 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.
−Removed: In 2021, the Company acquired a 49 % interest in Shenyang Jinbei Lear Automotive Seating Co.
−Removed: ("Shenyang Jinbei") for $ 41.3 million.
−Removed: 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.
−Removed: 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.
−Removed: In 2019, the Company deconsolidated Guangzhou Automobile Group Component Co., Ltd.
−Removed: ("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 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.
−Removed: The gain is included in other expense, net in the accompanying consolidated statement of income for the year ended December 31, 2019.
−Removed: For further information related to acquired assets measured at fair value, see Note 16, "Financial Instruments."
−Removed: Short-Term Borrowings
−Removed: The Company utilizes uncommitted lines of credit as needed for its short-term working capital fluctuations.
−Removed: 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, 2021 and 2020, the Company had no short-term debt balances outstanding related to draws on the lines of credit.
−Removed: Long-Term Debt
−Removed: A summary of long-term debt, net of unamortized debt issuance costs and unamortized original issue premium (discount) and the related weighted average interest rates is shown below (in millions):
−Removed: December 31, 2021
−Removed: Debt Instrument Long-Term Debt Unamortized Debt Issuance Costs Unamortized Original Issue Premium (Discount) Long-Term
−Removed: Debt, Net Weighted
−Removed: 3.8 % Senior Notes due 2027 (the "2027 Notes")
−Removed: $ 550.0 $ ( 2.5 ) $ ( 2.2 ) $ 545.3 3.885 %
−Removed: 4.25 % Senior Notes due 2029 (the "2029 Notes")
−Removed: 375.0 ( 2.3 ) ( 0.9 ) 371.8 4.288 %
−Removed: 3.5 % Senior Notes due 2030 (the "2030 Notes")
−Removed: 350.0 ( 2.3 ) ( 0.7 ) 347.0 3.525 %
−Removed: 2.6 % Senior Notes due 2032 (the "2032 Notes")
−Removed: 350.0 ( 3.1 ) ( 0.8 ) 346.1 2.624 %
−Removed: 5.25 % Senior Notes due 2049 (the "2049 Notes")
−Removed: 625.0 ( 6.1 ) 13.7 632.6 5.103 %
−Removed: 3.55 % Senior Notes due 2052 (the "2052 Notes")
−Removed: 350.0 ( 3.8 ) ( 0.5 ) 345.7 3.558 %
−Removed: Other 7.5 — — 7.5 N/A
−Removed: $ 2,607.5 $ ( 20.1 ) $ 8.6 2,596.0
−Removed: Less — Current portion ( 0.8 )
−Removed: Long-term debt $ 2,595.2
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: December 31, 2020
−Removed: Debt Instrument Long-Term Debt Unamortized Debt Issuance Costs Unamortized Original Issue Premium (Discount) Long-Term
−Removed: Debt, Net Weighted
−Removed: Credit Agreement — Term Loan Facility $ 220.3 $ ( 0.6 ) $ — $ 219.7 1.360 %
−Removed: 2027 Notes 750.0 ( 4.1 ) ( 3.5 ) 742.4 3.885 %
−Removed: 2029 Notes 375.0 ( 2.6 ) ( 1.0 ) 371.4 4.288 %
−Removed: 2030 Notes 350.0 ( 2.6 ) ( 0.7 ) 346.7 3.525 %
−Removed: 2049 Notes 625.0 ( 6.3 ) 14.2 632.9 5.103 %
−Removed: Other 1.4 — — 1.4 N/A
−Removed: $ 2,321.7 $ ( 16.2 ) $ 9.0 2,314.5
−Removed: Less — Current portion ( 14.2 )
−Removed: 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, 2032 Notes, 2049 Notes and 2052 Notes (collectively, the "Notes") are shown below:
−Removed: Note Issuance Date Maturity Date Interest Payment Dates
−Removed: 2027 Notes August 2017 September 15, 2027 March 15 and September 15
−Removed: 2029 Notes May 2019 May 15, 2029 May 15 and November 15
−Removed: 2030 Notes February 2020 May 30, 2030 May 30 and November 30
−Removed: 2032 Notes November 2021 January 15, 2032 January 15 and July 15 (1)
−Removed: 2049 Notes May 2019 and February 2020 May 15, 2049 May 15 and November 15
−Removed: 2052 Notes November 2021 January 15, 2052 January 15 and July 15 (1)
−Removed: (1) Commencing July 15, 2022.
−Removed: 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 %.
−Removed: The 2027 Notes were issued at 99.294 % of par, resulting in a yield to maturity of 3.885 %.
−Removed: 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: 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.
−Removed: In connection with this transaction, the Company recognized a loss of $ 23.9 million on the extinguishment of debt.
−Removed: 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.
−Removed: 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.
−Removed: 2029 and 2049 Notes Issued in 2019
−Removed: In 2019, the Company issued $ 375.0 million in aggregate principal amount at maturity of 2029 Notes and $ 325.0 million in aggregate principal amount at maturity of 2049 Notes.
−Removed: 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 %.
−Removed: 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 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
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: Notes, plus accrued interest, as well as to finance the Xevo acquisition (Note 4, "Acquisitions") and for general corporate purposes.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 2030 Notes and 2049 Notes Issued in 2020
−Removed: In 2020, the Company issued $ 350.0 million in aggregate principal amount at maturity of 2030 Notes and $ 300.0 million in aggregate principal amount at maturity of 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 $ 669.1 million after original issue discount.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 2032 Notes and 2052 Notes
−Removed: 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.
−Removed: 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 %.
−Removed: 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 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.
−Removed: 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").
−Removed: 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.
−Removed: 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.
−Removed: 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
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: including, the redemption date.
−Removed: 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.
−Removed: In connection with these transactions, the Company paid related issuance costs of $ 7.1 million.
−Removed: Subject to certain exceptions, the indentures governing the Notes contain restrictive covenants that, among other things, limit the ability of the Company to:
−Removed: (i) create or permit certain liens and (ii) consolidate, merge or sell all or substantially all of the Company's assets.
−Removed: The indentures governing the Notes also provide for customary events of default.
−Removed: As of December 31, 2021, the Company was in compliance with all covenants under the indentures governing the Notes.
−Removed: Credit Agreement
−Removed: 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").
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: In connection with the full repayment, the Company recognized a loss of $ 0.3 million on the extinguishment of debt.
−Removed: In 2020 and 2019, the Company made required principal payments under the Term Loan Facility of $ 14.1 million and $ 7.8 million, respectively.
−Removed: In 2021, there were no borrowings or repayments under the Revolving Credit Facility.
−Removed: 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.
−Removed: In 2019, aggregate borrowings and repayments under the Revolving Credit Facility were $ 30.0 million.
−Removed: As of December 31, 2021 and 2020, there were no borrowings outstanding under the Revolving Credit Facility.
−Removed: 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.
−Removed: As of December 31, 2021, the ranges and rates are as follows (in percentages):
−Removed: Eurocurrency Rate Base Rate
−Removed: Minimum Maximum Rate as of December 31, 2021
−Removed: Minimum Maximum Rate as of December 31, 2021
−Removed: Revolving Credit Facility 0.925 % 1.450 % 1.125 % 0.000 % 0.450 % 0.125 %
−Removed: Term Loan Facility 1
−Removed: 1.125 % 1.900 % N/A 0.125 % 0.900 % N/A
−Removed: (1) Paid in full in November 2021.
−Removed: The facility fee, which ranges from 0.075 % to 0.20 % of the total amount committed under the Revolving Credit Facility, is payable quarterly.
−Removed: 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.
−Removed: As of December 31, 2021, the Company was in compliance with all covenants under the Credit Agreement .
−Removed: 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.
−Removed: As of December 31, 2020, other long-term debt, including the current portion, consisted of amounts outstanding under a finance lease agreement.
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: Right-of-Use Assets and Lease Obligations
−Removed: The Company has operating leases for production, office and warehouse facilities, manufacturing and office equipment and vehicles.
−Removed: Operating lease assets and obligations included in the accompanying consolidated balance sheet are shown below (in millions):
−Removed: December 31, 2021 2020
−Removed: Right-of-use assets under operating leases:
−Removed: Other long-term assets $ 627.9 $ 540.3
−Removed: Lease obligations under operating leases:
−Removed: Accrued liabilities $ 125.6 $ 116.3
−Removed: Other long-term liabilities 523.6 438.9
−Removed: $ 649.2 $ 555.2
−Removed: Maturities of lease obligations as of December 31, 2021, are shown below (in millions):
−Removed: Thereafter 207.4
−Removed: Total undiscounted cash flows 721.6
−Removed: Imputed interest ( 72.4 )
−Removed: Lease obligations under operating leases $ 649.2
−Removed: The Company entered into a lease contract which commences in the first quarter of 2022.
−Removed: The contract has a lease term of seven years and a right-of-use asset and related lease obligation of approximately $ 24.0 million.
−Removed: Cash flow information related to operating leases is shown below (in millions):
−Removed: For the year ended December 31, 2021 2020 2019
−Removed: Non-cash activity:
−Removed: Right-of-use assets obtained in exchange for operating lease obligations $ 258.4 $ 135.1 $ 214.3
−Removed: Operating cash flows:
−Removed: Cash paid related to operating lease obligations $ 164.2 $ 143.8 $ 141.8
−Removed: Lease expense included in the accompanying consolidated statement of income is shown below (in millions):
−Removed: For the year ended December 31, 2021 2020 2019
−Removed: Operating lease expense $ 160.3 $ 148.6 $ 140.6
−Removed: Short-term lease expense 19.4 15.4 17.0
−Removed: Variable lease expense 7.9 8.0 6.5
−Removed: Total lease expense $ 187.6 $ 172.0 $ 164.1
−Removed: The Company's short-term lease expense excludes leases with a duration of one month or less, as permitted by the standard.
−Removed: Variable lease expense includes payments based on performance or usage, as well as changes to index and rate-based lease payments.
−Removed: Additionally, the Company evaluated its supply contracts with its customers and concluded that variable lease (income) expense in these arrangements is not material.
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: 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").
−Removed: The weighted average lease term and discount rate for operating leases as of December 31, 2021, are shown below:
−Removed: Weighted average remaining lease term Seven years
−Removed: Weighted average discount rate 3.0 %
−Removed: The Company has entered into certain finance lease agreements which are not material to the consolidated financial statements (Note 7, "Debt").
−Removed: (9) Income Taxes
−Removed: A summary of consolidated income before provision for income taxes and equity in net income of affiliates and the components of provision for income taxes is shown below (in millions):
−Removed: For the year ended December 31, 2021 2020 2019
−Removed: Consolidated income before provision for income taxes and equity in net income of affiliates:
−Removed: Domestic $ ( 110.9 ) $ ( 145.0 ) $ 317.4
−Removed: Foreign 694.4 444.3 636.2
−Removed: $ 583.5 $ 299.3 $ 953.6
−Removed: Domestic benefit for income taxes:
−Removed: Current provision $ 38.4 $ 29.0 $ 24.2
−Removed: Deferred benefit ( 76.6 ) ( 106.2 ) ( 52.6 )
−Removed: Total domestic benefit $ ( 38.2 ) $ ( 77.2 ) $ ( 28.4 )
−Removed: Foreign provision for income taxes:
−Removed: Current provision $ 154.8 $ 149.6 $ 160.1
−Removed: Deferred provision 21.1 21.5 14.4
−Removed: Total foreign provision $ 175.9 $ 171.1 $ 174.5
−Removed: Provision for income taxes $ 137.7 $ 93.9 $ 146.1
−Removed: 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.
−Removed: 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.
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: A summary of the differences between the provision for income taxes calculated at the United States federal statutory income tax rate of 21% and the consolidated provision for income taxes is shown below (in millions):
−Removed: For the year ended December 31, 2021 2020 2019
−Removed: Consolidated income before provision for income taxes and equity in net income of affiliates multiplied by the United States federal statutory income tax rate $ 122.5 $ 62.9 $ 200.2
−Removed: Differences in income taxes on foreign earnings, losses and remittances 30.4 20.7 14.1
−Removed: Valuation allowance adjustments 29.0 47.7 1.2
−Removed: Research and development and other tax credits ( 19.0 ) ( 11.8 ) ( 40.8 )
−Removed: FDII deduction ( 6.0 ) ( 14.6 ) ( 29.3 )
−Removed: tax impact of foreign earnings (1)
−Removed: ( 9.8 ) ( 21.1 ) 9.7
−Removed: Tax audits and assessments 3.2 8.9 0.4
−Removed: Change in the tax status of certain affiliates — — ( 18.1 )
−Removed: Other ( 12.6 ) 1.2 8.7
−Removed: Provision for income taxes $ 137.7 $ 93.9 $ 146.1
−Removed: (1) Reflects the impact on the domestic provision for income taxes related to foreign source income, including foreign branch earnings net of the applicable foreign tax credits in the general, foreign branch, GILTI and passive separate limitation categories.
−Removed: This amount includes the U.S.
−Removed: 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 and 2019.
−Removed: 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.
−Removed: deferred tax effect of the foreign branches.
−Removed: In 2019, the Company completed a U.S.
−Removed: research and development ("R&D") tax credit study for the years 2013 to 2018, the results of which were accepted by the Internal Revenue Service and pursuant to which the Company recognized a tax benefit of $ 28.6 million.
−Removed: The tax benefit is reflected in the table above in research and development and other tax credits.
−Removed: For the years ended December 31, 2021, 2020 and 2019, income in foreign jurisdictions with tax holidays was $ 55.6 million, $ 29.4 million and $ 89.4 million, respectively.
−Removed: Such tax holidays generally expire from 2021 through 2036.
−Removed: Deferred income taxes represent temporary differences in the recognition of certain items for financial reporting and income tax purposes.
−Removed: A summary of the components of the net deferred income tax asset is shown below (in millions):
−Removed: December 31, 2021 2020
−Removed: Deferred income tax assets (liabilities):
−Removed: Tax loss carryforwards $ 396.9 $ 423.9
−Removed: Tax credit carryforwards 266.4 280.6
−Removed: Retirement benefit plans 55.8 82.9
−Removed: Accrued liabilities 193.9 177.9
−Removed: Self-insurance reserves 6.7 7.1
−Removed: Current asset basis differences 41.4 43.3
−Removed: Long-term asset basis differences ( 24.2 ) ( 36.5 )
−Removed: Deferred compensation 25.4 22.6
−Removed: Capitalized engineering, research and development 138.3 67.1
−Removed: Undistributed earnings of foreign subsidiaries ( 74.0 ) ( 71.7 )
−Removed: Derivative instruments and hedging activities 2.0 ( 5.2 )
−Removed: Other ( 12.3 ) ( 8.9 )
−Removed: Net deferred income tax asset before valuation allowance 1,016.3 983.1
−Removed: Valuation allowance ( 406.9 ) ( 397.7 )
−Removed: Net deferred income tax asset $ 609.4 $ 585.4
−Removed: 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.
−Removed: 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
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: 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, 2021, the Company continues to maintain a U.S.
−Removed: valuation allowance of $ 24.5 million, primarily related to U.S.
−Removed: state and local deferred tax assets that, due to their nature, are not likely to be realized.
−Removed: 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.
−Removed: The classification of the net deferred income tax asset is shown below (in millions):
−Removed: December 31, 2021 2020
−Removed: Long-term deferred income tax assets $ 701.4 $ 670.2
−Removed: Long-term deferred income tax liabilities ( 92.0 ) ( 84.8 )
−Removed: Net deferred income tax asset $ 609.4 $ 585.4
−Removed: As of December 31, 2021, deferred income taxes have not been provided on the undistributed earnings of the Company's foreign subsidiaries since these earnings will not be taxable upon repatriation to the United States.
−Removed: These earnings will be primarily treated as previously taxed income from either the one-time transition tax or GILTI, or they will be offset with a 100 % dividend received deduction.
−Removed: However, the Company continues to provide a deferred tax liability for foreign withholding tax that will be incurred with respect to the undistributed foreign earnings that are not permanently reinvested.
−Removed: As of December 31, 2021, the Company had tax loss carryforwards of $ 1.7 billion.
−Removed: Of the total tax loss carryforwards, $ 1.4 billion have no expiration date, and $ 253.0 million expire between 2022 and 2038.
−Removed: In addition, the Company had tax credit carryforwards of $ 266.4 million, comprised principally of U.S.
−Removed: foreign tax credits of $ 103.7 million that expire between 2027 and 2031, U.S.
−Removed: 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: 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.
−Removed: If recognized, all of the Company's gross unrecognized tax benefits would affect the Company's effective tax rate.
−Removed: A summary of the changes in gross unrecognized tax benefits is shown below (in millions):
−Removed: For the year ended December 31, 2021 2020 2019
−Removed: Balance at beginning of period $ 36.4 $ 31.6 $ 36.7
−Removed: Additions (reductions) based on tax positions related to current year 7.7 4.9 ( 0.3 )
−Removed: Additions (reductions) based on tax positions related to prior years ( 4.0 ) 3.6 2.0
−Removed: Settlements ( 0.3 ) ( 1.2 ) ( 3.7 )
−Removed: Statute expirations ( 5.2 ) ( 4.7 ) ( 2.8 )
−Removed: Foreign currency translation 0.3 2.2 ( 0.3 )
−Removed: Balance at end of period $ 34.9 $ 36.4 $ 31.6
−Removed: The Company recognizes interest and penalties with respect to unrecognized tax benefits as income tax expense.
−Removed: As of December 31, 2021 and 2020, the Company had recorded gross reserves of $ 12.7 million and $ 12.2 million, respectively, related to interest and penalties, all of which, if recognized, would affect the Company's effective tax rate.
−Removed: 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, 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.
−Removed: The gross unrecognized tax benefits subject to potential decrease involve issues related to transfer pricing and various other tax items in multiple jurisdictions.
−Removed: However, as a result of ongoing examinations, tax proceedings in certain countries, additions to the gross unrecognized tax benefits for positions taken and interest and penalties, if any, arising in 2022, it is not possible to estimate the potential net increase or decrease to the Company's gross unrecognized tax benefits during the next twelve months.
−Removed: The Company considers its significant tax jurisdictions to include China, Germany, Italy, Mexico, Morocco, Spain, the United Kingdom and the United States.
−Removed: The Company or its subsidiaries generally remain subject to income tax examination in certain U.S.
−Removed: 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 2007, in Mexico for years after 2013, in Germany and Italy for years after 2015, in China
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: and Morocco for years after 2017, in the United Kingdom for years after 2018 and in the United States generally for years after 2019.
−Removed: 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.
−Removed: 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.
−Removed: (10) Pension and Other Postretirement Benefit Plans
−Removed: The Company has noncontributory defined benefit pension plans covering certain domestic employees and certain employees in foreign countries, principally Canada.
−Removed: The Company's salaried pension plans provide benefits based on final average earnings formulas.
−Removed: The Company's hourly pension plans provide benefits under flat benefit and cash balance formulas.
−Removed: The Company also has contractual arrangements with certain employees which provide for supplemental retirement benefits.
−Removed: In general, the Company's policy is to fund its pension benefit obligation based on legal requirements, tax and liquidity considerations and local practices.
−Removed: The Company has postretirement benefit plans covering certain domestic and Canadian retirees.
−Removed: The Company's postretirement benefit plans generally provide for the continuation of medical benefits for eligible retirees.
−Removed: The Company does not fund its postretirement benefit obligation.
−Removed: Rather, payments are made as costs are incurred by covered retirees.
−Removed: A reconciliation of the change in benefit obligation for the years ended December 31, 2021 and 2020, is shown below (in millions):
−Removed: Pension Other Postretirement
−Removed: December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020
−Removed: Change in benefit obligation:
−Removed: Benefit obligation at beginning of period $ 564.4 $ 529.2 $ 500.8 $ 504.3 $ 61.2 $ 27.4 $ 55.4 $ 25.6
−Removed: Service cost — 5.3 0.1 5.0 — — — —
−Removed: Interest cost 14.5 10.5 16.4 12.2 1.4 0.7 1.7 0.7
−Removed: Amendment — — — — — — 0.4 —
−Removed: Actuarial (gain) loss ( 23.0 ) ( 32.8 ) 66.4 39.9 ( 3.5 ) ( 2.4 ) 6.9 2.1
−Removed: Benefits paid ( 19.4 ) ( 24.3 ) ( 19.3 ) ( 20.0 ) ( 3.1 ) ( 1.4 ) ( 3.2 ) ( 1.5 )
−Removed: Benefits paid — settlements — — — ( 29.2 ) — — — —
−Removed: Translation adjustment — ( 8.0 ) — 17.0 — 0.2 — 0.5
−Removed: Benefit obligation at end of period $ 536.5 $ 479.9 $ 564.4 $ 529.2 $ 56.0 $ 24.5 $ 61.2 $ 27.4
−Removed: Actuarial losses
−Removed: 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).
−Removed: 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.
−Removed: 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: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: Plan Assets and Funded Status
−Removed: A reconciliation of the change in plan assets for the years ended December 31, 2021 and 2020, and the funded status as of December 31, 2021 and 2020, is shown below (in millions):
−Removed: Pension Other Postretirement
−Removed: December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020
−Removed: Change in plan assets:
−Removed: Fair value of plan assets at
−Removed: beginning of period $ 418.2 $ 383.0 $ 376.6 $ 396.8 $ — $ — $ — $ —
−Removed: Actual return on plan assets 43.0 26.9 41.7 19.8 — — — —
−Removed: Employer contributions 2.4 5.6 19.2 7.7 3.1 1.4 3.2 1.5
−Removed: Benefits paid ( 19.4 ) ( 24.3 ) ( 19.3 ) ( 20.0 ) ( 3.1 ) ( 1.4 ) ( 3.2 ) ( 1.5 )
−Removed: Benefits paid — settlements — — — ( 29.2 ) — — — —
−Removed: Translation adjustment — 1.3 — 7.9 — — — —
−Removed: Fair value of plan assets at end of period 444.2 392.5 418.2 383.0 — — — —
−Removed: Funded status $ ( 92.3 ) $ ( 87.4 ) $ ( 146.2 ) $ ( 146.2 ) $ ( 56.0 ) $ ( 24.5 ) $ ( 61.2 ) $ ( 27.4 )
−Removed: A summary of amounts recognized in the consolidated balance sheets as of December 31, 2021 and 2020, is shown below (in millions):
−Removed: Pension Other Postretirement
−Removed: December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020
−Removed: Amounts recognized in the consolidated balance sheet:
−Removed: Other long-term assets $ — $ 41.7 $ — $ 9.1 $ — $ — $ — $ —
−Removed: Accrued liabilities ( 3.3 ) ( 3.8 ) ( 2.5 ) ( 3.2 ) ( 4.0 ) ( 1.5 ) ( 4.0 ) ( 1.5 )
−Removed: Other long-term liabilities ( 89.0 ) ( 125.3 ) ( 143.7 ) ( 152.1 ) ( 52.0 ) ( 23.0 ) ( 57.2 ) ( 25.9 )
−Removed: Funded status $ ( 92.3 ) $ ( 87.4 ) $ ( 146.2 ) $ ( 146.2 ) $ ( 56.0 ) $ ( 24.5 ) $ ( 61.2 ) $ ( 27.4 )
−Removed: Accumulated Benefit Obligation
−Removed: As of December 31, 2021 and 2020, the accumulated benefit obligation for all of the Company's pension plans was $ 1,012.4 million and $ 1,079.6 million, respectively.
−Removed: As of December 31, 2021 and 2020, the majority of the Company's pension plans had accumulated benefit obligations in excess of plan assets.
−Removed: Information related to pension plans with accumulated benefit obligations in excess of plan assets is shown below (in millions):
−Removed: December 31, 2021 2020
−Removed: Projected benefit obligation $ 761.2 $ 813.7
−Removed: Accumulated benefit obligation 757.2 799.6
−Removed: Fair value of plan assets 539.8 512.2
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss
−Removed: Pretax amounts recognized in other comprehensive income (loss) for the years ended December 31, 2021 and 2020, are shown below (in millions):
−Removed: Pension Other Postretirement
−Removed: December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020
−Removed: Actuarial gains (losses) recognized:
−Removed: Reclassification adjustments $ 3.9 $ 6.0 $ 2.3 $ 5.2 $ ( 1.1 ) $ — $ ( 1.6 ) $ —
−Removed: Actuarial gain (loss) arising during the period 42.5 40.1 ( 46.1 ) ( 39.7 ) 3.5 2.4 ( 6.9 ) ( 2.1 )
−Removed: Effect of settlements 0.4 0.1 0.3 13.0 — — — —
−Removed: Prior service credit recognized:
−Removed: Reclassification adjustments — — — — ( 0.1 ) — ( 0.2 ) —
−Removed: Prior service cost arising during the period — — — — — — ( 0.4 ) —
−Removed: Translation adjustment — 1.4 — ( 3.6 ) — — — —
−Removed: $ 46.8 $ 47.6 $ ( 43.5 ) $ ( 25.1 ) $ 2.3 $ 2.4 $ ( 9.1 ) $ ( 2.1 )
−Removed: In addition, the Company recognized tax benefit (expense) in other comprehensive income (loss) related to its defined benefit plans of ($ 22.7 ) million, $ 18.5 million and $ 13.7 million for the years ended December 31, 2021, 2020 and 2019, respectively.
−Removed: Pretax amounts recorded in accumulated other comprehensive loss not yet recognized in net periodic benefit cost as of December 31, 2021 and 2020, are shown below (in millions):
−Removed: Pension Other Postretirement
−Removed: December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020
−Removed: Net unrecognized actuarial gain (loss) $ ( 102.6 ) $ ( 114.0 ) $ ( 149.4 ) $ ( 160.7 ) $ 13.6 $ ( 0.6 ) $ 11.2 $ ( 3.0 )
−Removed: Prior service credit (cost) — ( 0.6 ) — ( 1.5 ) 1.1 0.1 1.2 0.1
−Removed: $ ( 102.6 ) $ ( 114.6 ) $ ( 149.4 ) $ ( 162.2 ) $ 14.7 $ ( 0.5 ) $ 12.4 $ ( 2.9 )
−Removed: The Company uses the corridor approach when amortizing actuarial gains and losses.
−Removed: Under the corridor approach, net unrecognized actuarial gains and losses in excess of 10% of the greater of i) the projected benefit obligation or ii) the fair value of plan assets are amortized over future periods.
−Removed: For plans with little to no active participants, the amortization period is the remaining average life expectancy of the participants.
−Removed: For plans with active participants, the amortization period is the remaining average service period of the active participants.
−Removed: The amortization periods range from 4 to 32 years for the Company's defined benefit pension plans and from 1 to 17 years for the Company's other postretirement benefit plans.
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: Net Periodic Pension and Other Postretirement Benefit Cost (Credit)
−Removed: The components of the Company's net periodic pension benefit cost (credit) are shown below (in millions):
−Removed: Year Ended December 31,
−Removed: 2021 2020 2019
−Removed: Service cost $ — $ 5.3 $ 0.1 $ 5.0 $ 0.1 $ 6.3
−Removed: Interest cost 14.5 10.5 16.4 12.2 18.6 14.7
−Removed: Expected return on plan assets ( 23.5 ) ( 19.6 ) ( 21.4 ) ( 19.6 ) ( 20.2 ) ( 20.9 )
−Removed: Amortization of actuarial loss 3.9 6.1 2.3 5.2 1.8 7.8
−Removed: Curtailment gain — — — — — ( 2.3 )
−Removed: Settlement losses 0.4 — 0.3 13.0 0.1 —
−Removed: Net periodic benefit cost (credit) $ ( 4.7 ) $ 2.3 $ ( 2.3 ) $ 15.8 $ 0.4 $ 5.6
−Removed: The components of the Company's net periodic other postretirement benefit cost (credit) are shown below (in millions):
−Removed: Year Ended December 31,
−Removed: 2021 2020 2019
−Removed: Other Postretirement U.S.
−Removed: Service cost $ — $ — $ — $ — $ — $ 0.3
−Removed: Interest cost 1.4 0.7 1.7 0.7 2.1 1.3
−Removed: Amortization of actuarial gain ( 1.1 ) — ( 1.6 ) — ( 2.3 ) —
−Removed: Amortization of prior service credit ( 0.1 ) — ( 0.2 ) — ( 0.2 ) ( 0.2 )
−Removed: Curtailment gain — — — — — ( 10.6 )
−Removed: Net periodic benefit cost (credit) $ 0.2 $ 0.7 $ ( 0.1 ) $ 0.7 $ ( 0.4 ) $ ( 9.2 )
−Removed: For the year ended December 31, 2020, the Company recognized pension settlement losses of $ 12.9 million related to its restructuring actions (Note 5, "Restructuring").
−Removed: 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: The weighted average actuarial assumptions used in determining the benefit obligations are shown below:
−Removed: Pension Other Postretirement
−Removed: December 31, 2021 2020 2021 2020
−Removed: Discount rate:
−Removed: Domestic plans 3.0 % 2.6 % 2.8 % 2.4 %
−Removed: Foreign plans 2.5 % 2.0 % 3.1 % 2.5 %
−Removed: Rate of compensation increase:
−Removed: Foreign plans 3.5 % 3.3 % N/A N/A
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: The weighted average actuarial assumptions used in determining the net periodic benefit cost (credit) are shown below:
−Removed: For the year ended December 31, 2021 2020 2019
−Removed: Discount rate:
−Removed: Domestic plans 2.6 % 3.4 % 4.3 %
−Removed: Foreign plans 2.0 % 2.6 % 3.4 %
−Removed: Expected return on plan assets:
−Removed: Domestic plans 5.8 % 5.8 % 6.3 %
−Removed: Foreign plans 5.2 % 5.4 % 5.9 %
−Removed: Rate of compensation increase:
−Removed: Foreign plans 3.3 % 3.7 % 3.4 %
−Removed: Other postretirement
−Removed: Discount rate:
−Removed: Domestic plans 2.4 % 3.2 % 4.2 %
−Removed: Foreign plans 2.5 % 3.1 % 3.8 %
−Removed: The expected return on plan assets is determined based on several factors, including adjusted historical returns, historical risk premiums for various asset classes and target asset allocations within the portfolio.
−Removed: Adjustments made to the historical returns are based on recent return experience in the equity and fixed income markets and the belief that deviations from historical returns are likely over the relevant investment horizon.
−Removed: As of December 31, 2021 and 2020, the weighted-average interest crediting rate used by one of the Company's U.S.
−Removed: pension plans was a minimum of 4.0 %.
−Removed: Healthcare Trend Rate
−Removed: The assumed healthcare cost trend rates used to measure the postretirement benefit obligation as of December 31, 2021, are shown below:
−Removed: Plans Foreign Plans
−Removed: Initial healthcare cost trend rate 6.3 % 4.6 %
−Removed: Ultimate healthcare cost trend rate 4.5 % 4.0 %
−Removed: Year ultimate healthcare cost trend rate achieved 2028 2040
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: Fair value measurements and the related valuation techniques and fair value hierarchy level for the Company's pension plan assets measured at fair value on a recurring basis as of December 31, 2021 and 2020, are shown below (in millions):
−Removed: December 31, 2021
−Removed: Total Level 1 Level 2 Level 3 Valuation Technique
−Removed: Equity securities -
−Removed: Equity funds $ 100.9 $ 80.0 $ 20.9 $ — Market
−Removed: Common stock 87.1 56.3 30.8 — Market
−Removed: Fixed income -
−Removed: Fixed income funds 95.1 95.1 — — Market
−Removed: Corporate bonds 83.8 — 83.8 — Market
−Removed: Government obligations 5.2 — 5.2 — Market
−Removed: Preferred stock 1.2 0.4 0.8 — Market
−Removed: Cash and short-term investments 8.5 2.1 6.4 — Market
−Removed: Assets at fair value 381.8 $ 233.9 $ 147.9 $ —
−Removed: Investments measured at net asset value -
−Removed: Alternative investments 62.4
−Removed: Assets at fair value $ 444.2
−Removed: Foreign Plans:
−Removed: Equity securities -
−Removed: Equity funds $ 147.2 $ — $ 147.2 $ — Market
−Removed: Common stock 59.5 59.5 — — Market
−Removed: Fixed income -
−Removed: Fixed income funds 63.3 — 63.3 — Market
−Removed: Corporate bonds 28.8 — 28.8 — Market
−Removed: Government obligations 51.8 — 51.8 — Market
−Removed: Cash and short-term investments 13.0 7.9 5.1 — Market
−Removed: Assets at fair value 363.6 $ 67.4 $ 296.2 $ —
−Removed: Investments measured at net asset value -
−Removed: Alternative investments 28.9
−Removed: Assets at fair value $ 392.5
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: December 31, 2020
−Removed: Total Level 1 Level 2 Level 3 Valuation Technique
−Removed: Equity securities -
−Removed: Equity funds $ 104.3 $ 85.9 $ 18.4 $ — Market
−Removed: Common stock 85.2 53.9 31.3 — Market
−Removed: Fixed income -
−Removed: Fixed income funds 84.2 84.2 — — Market
−Removed: Corporate bonds 66.7 — 66.7 — Market
−Removed: Government obligations 6.2 — 6.2 — Market
−Removed: Preferred stock 1.4 0.9 0.5 — Market
−Removed: Cash and short-term investments 11.9 2.8 9.1 — Market
−Removed: Assets at fair value 359.9 $ 227.7 $ 132.2 $ —
−Removed: Investments measured at net asset value -
−Removed: Alternative investments 58.3
−Removed: Assets at fair value $ 418.2
−Removed: Foreign Plans:
−Removed: Equity securities -
−Removed: Equity funds $ 138.0 $ — $ 138.0 $ — Market
−Removed: Common stock 60.9 60.9 — — Market
−Removed: Fixed income -
−Removed: Fixed income funds 58.4 — 58.4 — Market
−Removed: Corporate bonds 30.8 — 30.8 — Market
−Removed: Government obligations 49.5 — 49.5 — Market
−Removed: Cash and short-term investments 15.1 7.0 8.1 — Market
−Removed: Assets at fair value 352.7 $ 67.9 $ 284.8 $ —
−Removed: Investments measured at net asset value -
−Removed: Alternative investments 30.3
−Removed: Assets at fair value $ 383.0
−Removed: For further information on the GAAP fair value hierarchy, see Note 16, "Financial Instruments." Pension plan assets for the foreign plans relate to the Company's pension plans primarily in Canada and the United Kingdom.
−Removed: The Company's investment policies incorporate an asset allocation strategy that emphasizes the long-term growth of capital.
−Removed: The Company believes that this strategy is consistent with the long-term nature of plan liabilities and ultimate cash needs of the plans.
−Removed: For the domestic portfolio, the Company targets a return seeking asset (e.g., equity securities, equity mutual funds and exchange traded funds ("ETFs") and alternative investments) allocation of 45 % — 65 % and a risk mitigating asset (e.g., fixed income securities and fixed income mutual funds and ETFs) allocation of 35 % — 55 %.
−Removed: As the funding ratio for the defined benefit pension plans covering certain domestic employees changes, the proportion of return seeking assets will be adjusted accordingly.
−Removed: For the foreign portfolio, the Company targets an equity allocation of 20 % — 60 % of plan assets, a fixed income allocation of 30 % — 70 %, an alternative investment allocation of 0 % — 25 % and a cash allocation of 0 % — 15 %.
−Removed: Differences in the target allocations of the domestic and foreign portfolios are reflective of differences in the underlying plan liabilities.
−Removed: Diversification within the investment portfolios is pursued by asset class and investment management style.
−Removed: The investment portfolios are reviewed on a quarterly basis to maintain the desired asset allocations, given the market performance of the asset classes and investment management styles.
−Removed: Alternative investments are redeemable in the near term, generally with 90 days notice.
−Removed: The Company utilizes investment management firms to manage these assets in accordance with the Company's investment policies.
−Removed: Excluding alternative investments, mutual funds and ETFs, retained investment managers are provided investment guidelines, which restrict the use of certain assets, including commodities contracts, futures contracts, options, venture capital, real estate, interest-only or principal-only strips and investments in the Company's own debt or equity.
−Removed: Derivative instruments
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: are also prohibited without the specific approval of the Company.
−Removed: Investment managers are limited in the maximum size of individual security holdings and the maximum exposure to any one industry relative to the total portfolio.
−Removed: Fixed income managers are provided further investment guidelines that indicate minimum credit ratings for debt securities and limitations on weighted average maturity and portfolio duration.
−Removed: The Company evaluates investment manager performance against market indices which the Company believes are appropriate to the investment management style for which the investment manager has been retained.
−Removed: The Company's investment policies incorporate an investment goal of aggregate portfolio returns which exceed the returns of the appropriate market indices by a reasonable spread over the relevant investment horizon.
−Removed: Contributions
−Removed: In 2022, the Company's minimum required contributions to its domestic and foreign pension plans are expected to be approximately $ 2 million .
−Removed: 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.
−Removed: After 2022, the Company's minimum funding requirements will depend on several factors, including investment performance and interest rates.
−Removed: The Company's minimum funding requirements may also be affected by changes in applicable legal requirements.
−Removed: Benefit Payments
−Removed: As of December 31, 2021, the Company's estimate of expected benefit payments in each of the five succeeding years and in the aggregate for the five years thereafter are shown below (in millions):
−Removed: Pension Other Postretirement
−Removed: 2022 $ 22.4 $ 22.6 $ 4.0 $ 1.6
−Removed: 2023 23.2 22.0 4.0 1.6
−Removed: 2024 23.3 22.7 4.0 1.5
−Removed: 2025 24.4 23.6 3.9 1.5
−Removed: 2026 25.5 26.0 3.8 1.5
−Removed: Five years thereafter 133.0 141.1 17.1 7.1
−Removed: Multi-Employer Pension Plans
−Removed: The Company currently participates in two multi-employer pension plans, the U.A.W.
−Removed: 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 June 30, 2022 and April 25, 2025.
−Removed: Detailed information related to these plans is shown below (amounts in millions):
−Removed: Pension Protection Act
−Removed: Zone Status Contributions to Multiemployer Pension Plans
−Removed: Employer Identification Number ("EIN") December 31,
−Removed: Certification December 31,
−Removed: Certification FIP/RP (1)
−Removed: Surcharge Year Ended December 31, 2021 Year Ended December 31, 2020 Year Ended December 31, 2019
−Removed: 51-6099782-001 Green Green Yes No $ 0.7 $ 0.6 $ 0.5
−Removed: 13-6130178-001 Red Red Yes No 0.4 0.5 0.4
−Removed: (1) Funding improvement plan or rehabilitation plan as defined by Employment Retirement Security Act of 1974.
−Removed: For its plan years 2021 and 2020, the Company's contributions to the U.A.W.
−Removed: Labor-Management Group Pension Plan represented more than 5 % of the plan's total contributions.
−Removed: Defined Contribution Plan
−Removed: The Company also sponsors defined contribution plans and participates in government-sponsored programs in certain foreign countries.
−Removed: Contributions are determined as a percentage of each covered employee's salary.
−Removed: For the years ended December 31, 2021, 2020 and 2019, the aggregate cost of the defined contribution plans was $ 16.4 million, $ 17.1 million and $ 14.0 million, respectively.
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: The Company also has a defined contribution retirement program for its salaried employees.
−Removed: Contributions to this program are determined as a percentage of each covered employee's eligible compensation.
−Removed: For the years ended December 31, 2021, 2020 and 2019, the Company recorded expense of $ 20.4 million, $ 18.3 million and $ 17.6 million, respectively, related to this program.
−Removed: (11) Revenue Recognition
−Removed: A summary of the Company's revenue by reportable operating segment and geography is shown below (in millions):
−Removed: For the year ended December 31, 2021
−Removed: Seating E-Systems Total
−Removed: North America $ 6,277.2 $ 1,271.0 $ 7,548.2
−Removed: Europe and Africa 4,805.5 1,939.8 6,745.3
−Removed: Asia 2,759.9 1,468.0 4,227.9
−Removed: South America 568.8 172.9 741.7
−Removed: $ 14,411.4 $ 4,851.7 $ 19,263.1
−Removed: For the year ended December 31, 2020
−Removed: Seating E-Systems Total
−Removed: North America $ 5,545.7 $ 1,084.8 $ 6,630.5
−Removed: Europe and Africa 4,371.4 1,868.9 6,240.3
−Removed: Asia 2,418.7 1,236.6 3,655.3
−Removed: South America 376.9 142.5 519.4
−Removed: $ 12,712.7 $ 4,332.8 $ 17,045.5
−Removed: For the year ended December 31, 2019
−Removed: Seating E-Systems Total
−Removed: North America $ 6,265.2 $ 1,100.3 $ 7,365.5
−Removed: Europe and Africa 5,620.2 2,165.3 7,785.5
−Removed: Asia 2,710.7 1,257.6 3,968.3
−Removed: South America 501.1 189.9 691.0
−Removed: $ 15,097.2 $ 4,713.1 $ 19,810.3
−Removed: (12) Capital Stock, Accumulated Other Comprehensive Loss and Equity
−Removed: The Company is authorized to issue up to 300,000,000 shares of Common Stock.
−Removed: The Company's Common Stock is listed on the New York Stock Exchange under the symbol "LEA" and has the following rights and privileges:
−Removed: • Voting Rights – All shares of the Company's common stock have identical rights and privileges.
−Removed: With limited exceptions, holders of common stock are entitled to one vote for each outstanding share of common stock held of record by each stockholder on all matters properly submitted for the vote of the Company's stockholders.
−Removed: • Dividend Rights – Subject to applicable law, any contractual restrictions and the rights of the holders of outstanding preferred stock, if any, holders of common stock are entitled to receive ratably such dividends and other distributions that the Company's Board of Directors, in its discretion, declares from time to time.
−Removed: • Liquidation Rights – Upon the dissolution, liquidation or winding up of the Company, subject to the rights of the holders of outstanding preferred stock, if any, holders of common stock are entitled to receive ratably the assets of the Company available for distribution to the Company's stockholders in proportion to the number of shares of common stock held by each stockholder.
−Removed: • Conversion, Redemption and Preemptive Rights – Holders of common stock have no conversion, redemption, sinking fund, preemptive, subscription or similar rights.
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: Common Stock Share Repurchase Program
−Removed: 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.
−Removed: 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.
−Removed: The Company has a common stock share repurchase program (the "Repurchase Program") which permits the discretionary repurchase of its common stock.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: In March 2020, as a proactive measure in response to the COVID-19 pandemic, the Company suspended share repurchases under its Repurchase Program.
−Removed: Share repurchases were reinstated in the second quarter of 2021.
−Removed: Share repurchases are shown below (in millions except for shares and per share amounts):
−Removed: For the year ended December 31, Aggregate Repurchases Cash paid for Repurchases Number of Shares Average Price per Share (1)
−Removed: 2021 $ 100.3 $ 100.3 589,717 $ 170.03
−Removed: 2020 $ 70.0 $ 70.0 641,149 $ 109.22
−Removed: 2019 $ 380.4 $ 384.7 2,819,081 $ 134.95
−Removed: (1) Excludes commissions.
−Removed: 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.
−Removed: Quarterly Dividend
−Removed: 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.
−Removed: 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.
−Removed: In March 2020, as a proactive measure in response to the COVID-19 pandemic, the Company suspended its quarterly cash dividend.
−Removed: The quarterly cash dividend was reinstated in the fourth quarter at $ 0.25 per share of common stock.
−Removed: In 2019, the Company's Board of Directors declared quarterly cash dividends of $ 0.75 per share of common stock.
−Removed: Dividends declared and paid are shown below (in millions):
−Removed: For the year ended December 31, 2021 2020 2019
−Removed: Dividends declared $ 107.9 $ 62.1 $ 186.3
−Removed: Dividends paid $ 106.7 $ 67.3 $ 186.3
−Removed: Dividends payable on common shares to be distributed under the Company's stock-based compensation program will be paid when such common shares are distributed.
−Removed: Accumulated Other Comprehensive Loss
−Removed: Comprehensive income is defined as all changes in the Company's net assets except changes resulting from transactions with stockholders.
−Removed: It differs from net income in that certain items recorded in equity are included in comprehensive income.
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: A summary of changes in accumulated other comprehensive loss, net of tax, is shown below (in millions):
−Removed: For the year ended December 31, 2021 2020 2019
−Removed: Defined benefit plans:
−Removed: Balance at beginning of year $ ( 276.9 ) $ ( 217.6 ) $ ( 172.8 )
−Removed: Reclassification adjustments (net of tax expense of $ 2.1 million in 2021, $ 4.7 million in 2020 and $ 2.0 million in 2019)
−Removed: Other comprehensive income (loss) recognized during the period (net of tax benefit (expense) of ($ 20.6 ) million in 2021, $ 23.2 million in 2020 and $ 15.7 million in 2019)
−Removed: 70.4 ( 73.6 ) ( 49.8 )
−Removed: Balance at end of year $ ( 199.4 ) $ ( 276.9 ) $ ( 217.6 )
−Removed: Derivative instruments and hedge activities:
−Removed: Balance at beginning of year $ 12.6 $ 9.8 $ ( 9.7 )
−Removed: Reclassification adjustments (net of tax benefit (expense) of $ 8.7 million in 2021, ($ 1.8 ) million in 2020 and $ 10.2 million in 2019)
−Removed: ( 36.0 ) 7.5 ( 38.0 )
−Removed: Other comprehensive income (loss) recognized during the period (net of tax benefit (expense) of ($ 1.2 ) million in 2021, $ 1.0 million in 2020 and ($ 15.7 ) million in 2019)
−Removed: 4.8 ( 4.7 ) 57.5
−Removed: Balance at end of year $ ( 18.6 ) $ 12.6 $ 9.8
−Removed: Currency translation adjustments:
−Removed: Balance at beginning of year $ ( 440.8 ) $ ( 564.9 ) $ ( 523.3 )
−Removed: 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)
−Removed: ( 111.4 ) 124.1 ( 41.6 )
−Removed: Balance at end of year $ ( 552.2 ) $ ( 440.8 ) $ ( 564.9 )
−Removed: 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, 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.
−Removed: Redeemable Noncontrolling Interest
−Removed: In accordance with GAAP, the Company records redeemable noncontrolling interests at the greater of (1) the initial carrying amount adjusted for the noncontrolling interest holder's share of total comprehensive income or loss and dividends ("noncontrolling interest carrying value") or (2) the redemption value as of and based on conditions existing as of the reporting date.
−Removed: Required redeemable noncontrolling interest adjustments are recorded as an increase to redeemable noncontrolling interests, with an offsetting adjustment to retained earnings.
−Removed: The redeemable noncontrolling interest is classified in mezzanine equity in the accompanying consolidated balance sheet as of December 31, 2019.
−Removed: In 2020, the noncontrolling interest holder in Shanghai Lear STEC Automotive Parts Co., Ltd.
−Removed: exercised its option requiring the Company to purchase its 45 % redeemable noncontrolling interest.
−Removed: The transaction was completed in the fourth quarter of 2020 for $ 95.5 million plus undistributed retained earnings of $ 26.8 million.
−Removed: These amounts are reflected in cash flows from financing activities in the accompanying statement of cash flows for the year ended December 31, 2020.
−Removed: For further information related to the redeemable noncontrolling interest adjustment, see Note 3, "Summary of Significant Accounting Policies — Net Income Per Share Attributable to Lear."
−Removed: Noncontrolling Interests
−Removed: In 2021, the Company sold a 49 % equity interest in its wholly owned consolidated subsidiary, Shenyang Lear Jinbei Automotive Systems Co., Ltd.
−Removed: ("Shenyang Lear"), for $ 36.2 million.
−Removed: 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.
−Removed: Noncontrolling interest of $ 7.6 million was recorded in conjunction with the transaction.
−Removed: 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.
−Removed: The proceeds from the sale are classified within cash flows
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: used in financing activities in the accompanying consolidated statement of cash flows for the year ended December 31, 2021.
−Removed: In 2019, the Company deconsolidated GACC as it no longer controls the entity.
−Removed: For further information related to these transactions, see Note 6, "Investments in Affiliates and Other Related Party Transactions."
−Removed: (13) Stock-Based Compensation
−Removed: As of November 9, 2009, the Company adopted the Lear Corporation 2009 Long-Term Stock Incentive Plan (as amended, the "2009 LTSIP").
−Removed: The 2009 LTSIP reserved 11,815,748 shares of common stock for issuance under stock option, restricted stock, restricted stock unit, restricted unit, performance share, performance unit and stock appreciation right awards.
−Removed: As of May 16, 2019, the Company adopted the Lear Corporation 2019 Long-Term Stock Incentive Plan (the "2019 LTSIP"), after which no awards will be issued under the 2009 LTSIP.
−Removed: 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 Xevo acquisition.
−Removed: 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.
−Removed: 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 one to three years following the grant date.
−Removed: 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.
−Removed: Unrecognized compensation expense related to these awards of $ 56.5 million will be recognized over th e next 1.7 years on a weighted average basis.
−Removed: In accordance with the provisions of the awards, the Company withholds shares from the settlement of such awards to cover minimum statutory tax withholding requirements.
−Removed: The withheld shares are classified as common stock held in treasury in the accompanying consolidated balance sheets as of December 31, 2021 and 2020.
−Removed: A summary of restricted stock units, performance shares and stock options for the year ended December 31, 2021, is shown below:
−Removed: Stock Units Weighted Average Grant Date
−Removed: Fair Value Performance
−Removed: Shares Weighted Average Grant Date
−Removed: Fair Value Stock Options Weighted Average Grant Date
−Removed: Outstanding as of December 31, 2020
−Removed: 616,584 $ 124.83 809,471 $ 143.48 108,446 $ 30.32
−Removed: Granted 168,763 $ 165.28 175,546 $ 188.11 94,256 $ 35.33
−Removed: Distributed (vested) ( 202,737 ) ( 21,119 ) —
−Removed: Cancelled ( 14,719 ) ( 183,354 ) —
−Removed: Outstanding as of December 31, 2021 (1)
−Removed: 567,891 $ 129.58 780,544 $ 156.56 202,702 $ 32.65
−Removed: Vested or expected to vest as of December 31, 2021
−Removed: 567,891 397,755 202,702
−Removed: (1) Outstanding performance shares are reflected at the maximum possible payout that may be earned during the relevant performance periods.
−Removed: The grant date fair value of restricted stock units is based on the share price on the grant date.
−Removed: 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 is based on a Monte Carlo simulation.
−Removed: The weighted average grant date fair value of performance shares granted in 2020 and 2019 was $ 147.53 and $ 124.48 , respectively.
−Removed: The grant date fair value of stock options is based on a Black-Scholes model.
−Removed: The grant date fair value of options granted in 2020 was $ 30.32 .
−Removed: There were no stock options granted in 2019.
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: (14) Commitments and Contingencies
−Removed: Legal and Other Contingencies
−Removed: As of December 31, 2021 and 2020, the Company had recorded reserves for pending legal disputes, including commercial disputes and other matters, of $ 19.5 million and $ 17.2 million, respectively.
−Removed: Such reserves reflect amounts recognized in accordance with GAAP and typically exclude the cost of legal representation.
−Removed: Product liability and warranty reserves are recorded separately from legal reserves, as described below.
−Removed: Commercial Disputes
−Removed: The Company is involved from time to time in legal proceedings and claims, including, without limitation, commercial or contractual disputes with its customers, suppliers and competitors.
−Removed: These disputes vary in nature and are usually resolved by negotiations between the parties.
−Removed: Product Liability and Warranty Matters
−Removed: In the event that use of the Company's products results in, or is alleged to result in, bodily injury and/or property damage or other losses, the Company may be subject to product liability lawsuits and other claims.
−Removed: Such lawsuits generally seek compensatory damages, punitive damages and attorneys' fees and costs.
−Removed: In addition, if any of the Company's products are, or are alleged to be, defective, the Company may be required or requested by its customers to participate in a recall or other corrective action involving such products.
−Removed: Certain of the Company's customers have asserted claims against the Company for costs related to recalls or other corrective actions involving its products.
−Removed: The Company can provide no assurances that it will not experience material claims in the future or that it will not incur significant costs to defend such claims.
−Removed: To a lesser extent, the Company is a party to agreements with certain of its customers, whereby these customers may pursue claims against the Company for contribution of all or a portion of the amounts sought in connection with product liability and warranty claims.
−Removed: In certain instances, allegedly defective products may be supplied by Tier 2 suppliers.
−Removed: The Company may seek recovery from its suppliers of materials or services included within the Company's products that are associated with product liability and warranty claims.
−Removed: The Company carries insurance for certain legal matters, including product liability claims, but such coverage may be limited.
−Removed: The Company does not maintain insurance for product warranty or recall matters.
−Removed: The Company records product warranty reserves when liability is probable and related amounts are reasonably estimable.
−Removed: A summary of the changes in reserves for product liability and warranty claims for each of the periods in the two years ended December 31, 2021, is shown below (in millions):
−Removed: Balance as of January 1, 2020 $ 32.0
−Removed: Expense, net (including changes in estimates) 26.1
−Removed: Settlements ( 10.3 )
−Removed: Foreign currency translation and other 0.9
−Removed: Balance as of January 1, 2021 48.7
−Removed: Expense, net (including changes in estimates) 12.7
−Removed: Settlements ( 13.7 )
−Removed: Foreign currency translation and other ( 1.7 )
−Removed: Balance as of December 31, 2021 $ 46.0
−Removed: Environmental Matters
−Removed: The Company is subject to local, state, federal and foreign laws, regulations and ordinances, which govern activities or operations that may have adverse environmental effects and which impose liability for clean-up costs resulting from past spills, disposals or other releases of hazardous wastes and environmental compliance.
−Removed: The Company's policy is to comply with all applicable environmental laws and to maintain an environmental management program based on ISO 14001 to ensure compliance with this standard.
−Removed: However, the Company currently is, has been and in the future may become the subject of formal or informal enforcement actions or procedures.
−Removed: 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
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: will have a material adverse impact on its business, financial condition, results of operations or cash flows;
−Removed: however, no assurances can be given in this regard.
−Removed: Other Matters
−Removed: 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 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.
−Removed: However, no assurances can be given in this regard.
−Removed: Although the Company records reserves for legal disputes, product liability and warranty claims and environmental and other matters in accordance with GAAP, the ultimate outcomes of these matters are inherently uncertain.
−Removed: Actual results may differ significantly from current estimates.
−Removed: Approximately 48 % of the Company's employees are members of industrial trade unions and are employed under the terms of various labor agreements.
−Removed: Labor agreements covering approximately 86 % of the Company's global unionized workforce of approximately 77,500 employees, including labor agreements in the United States and Canada covering approximately 3 % of the Company's global unionized workforce, are scheduled to expire in 2022.
−Removed: Management does not anticipate any significant difficulties with respect to the renewal of these agreements.
−Removed: (15) Segment Reporting
−Removed: A summary of revenues from external customers and other financial information by reportable operating segment is shown below (in millions):
−Removed: Year Ended December 31, 2021
−Removed: Seating E-Systems Other Consolidated
−Removed: Revenues from external customers $ 14,411.4 $ 4,851.7 $ — $ 19,263.1
−Removed: Segment earnings (1)
−Removed: 851.3 121.2 ( 297.1 ) 675.4
−Removed: Depreciation and amortization 362.6 195.7 15.6 573.9
−Removed: Capital expenditures 340.7 217.2 27.2 585.1
−Removed: Total assets 7,414.0 3,584.8 2,353.6 13,352.4
−Removed: Year Ended December 31, 2020
−Removed: Seating E-Systems Other Consolidated
−Removed: Revenues from external customers $ 12,712.7 $ 4,332.8 $ — $ 17,045.5
−Removed: Segment earnings (1)
−Removed: 590.5 98.1 ( 234.5 ) 454.1
−Removed: Depreciation and amortization 348.1 176.6 15.2 539.9
−Removed: Capital expenditures 257.2 179.3 15.8 452.3
−Removed: Total assets 7,596.1 3,403.3 2,199.2 13,198.6
−Removed: Year Ended December 31, 2019
−Removed: Seating E-Systems Other Consolidated
−Removed: Revenues from external customers $ 15,097.2 $ 4,713.1 $ — $ 19,810.3
−Removed: Segment earnings (1)
−Removed: 961.2 366.3 ( 257.3 ) 1,070.2
−Removed: Depreciation and amortization 331.0 163.0 15.9 509.9
−Removed: Capital expenditures 370.4 213.9 19.6 603.9
−Removed: (1) For a definition of segment earnings, see Note 3 , "Summary of Significant Accounting Policies — Segment Reporting."
−Removed: 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 $ 25 million and approximately $ 19 million of additional restructuring costs in the Seating and E-Systems
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: 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.
−Removed: 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.
−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 further information, see Note 5, "Restructuring."
−Removed: A reconciliation of segment earnings to consolidated income before provision for income taxes and equity in net income of affiliates is shown below (in millions):
−Removed: For the year ended December 31, 2021 2020 2019
−Removed: Segment earnings $ 972.5 $ 688.6 $ 1,327.5
−Removed: Corporate and regional headquarters and elimination of intercompany activity ("Other") ( 297.1 ) ( 234.5 ) ( 257.3 )
−Removed: Consolidated income before interest, other expense, provision for income taxes and equity in net income of affiliates 675.4 454.1 1,070.2
−Removed: Interest expense 91.8 99.6 92.0
−Removed: Other expense, net 0.1 55.2 24.6
−Removed: Consolidated income before provision for income taxes and equity in net income of affiliates $ 583.5 $ 299.3 $ 953.6
−Removed: Revenues from external customers and tangible long-lived assets for each of the geographic areas in which the Company operates is shown below (in millions):
−Removed: For the year ended December 31, 2021 2020 2019
−Removed: Revenues from external customers
−Removed: United States $ 4,410.7 $ 3,599.1 $ 3,658.5
−Removed: Mexico 2,465.8 2,528.4 3,058.6
−Removed: China 3,018.1 2,592.7 2,579.7
−Removed: Germany 1,309.9 1,288.3 1,698.7
−Removed: Other countries 8,058.6 7,037.0 8,814.8
−Removed: Total $ 19,263.1 $ 17,045.5 $ 19,810.3
−Removed: December 31, 2021 2020
−Removed: Tangible long-lived assets (1)
−Removed: United States $ 593.0 $ 534.0
−Removed: Mexico 691.6 689.9
−Removed: China 460.8 458.2
−Removed: Germany 189.2 205.8
−Removed: Other countries 1,413.4 1,388.6
−Removed: Total $ 3,348.0 $ 3,276.5
−Removed: (1) Tangible long-lived assets include property, plant and equipment and right-of-use assets.
−Removed: The following is a summary of the percentage of revenues from major customers:
−Removed: For the year ended December 31, 2021 2020 2019
−Removed: General Motors 18.2 % 18.7 % 18.2 %
−Removed: Ford 13.5 % 13.5 % 13.8 %
−Removed: Volkswagen 11.8 % 11.7 % 10.9 %
−Removed: Daimler 11.2 % 11.9 % 11.1 %
−Removed: Stellantis 10.9 % 11.2 % 12.5 %
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: (16) Financial Instruments
−Removed: Debt Instruments
−Removed: The carrying values of the Notes vary from their fair values.
−Removed: The fair values of the Notes were determined by reference to the quoted market prices of these securities (Level 2 input based on the GAAP fair value hierarchy).
−Removed: The carrying value of the Company's Term Loan Facility approximates its fair value (Level 3 input based on the GAAP fair value hierarchy).
−Removed: The estimated fair value, as well as the carrying value, of the Company's debt instruments are shown below (in millions):
−Removed: December 31, 2021 2020
−Removed: Estimated aggregate fair value (1)
−Removed: $ 2,868.6 $ 2,633.3
−Removed: Aggregate carrying value (1) (2)
−Removed: 2,600.0 2,320.3
−Removed: (1) Excludes "other" debt.
−Removed: (2) Excludes the impact of unamortized debt issuance costs and unamortized original issue premium (discount).
−Removed: Cash, Cash Equivalents and Restricted Cash
−Removed: The Company has cash on deposit that is legally restricted as to use or withdrawal.
−Removed: A reconciliation of cash and cash equivalents reported on the accompanying consolidated balance sheets to cash, cash equivalents and restricted cash reported on the consolidated statements of cash flows is shown below (in millions):
−Removed: December 31, 2021 2020 2019
−Removed: Balance sheet — cash and cash equivalents $ 1,318.3 $ 1,306.7 $ 1,487.7
−Removed: Restricted cash included in other current assets 1.4 5.1 15.9
−Removed: Restricted cash included in other long-term assets 1.6 2.7 6.8
−Removed: Statement of cash flows — cash, cash equivalents and restricted cash $ 1,321.3 $ 1,314.5 $ 1,510.4
−Removed: Marketable Equity Securities
−Removed: Marketable equity securities, which the Company accounts for under the fair value option, are included in the accompanying consolidated balance sheets as shown below (in millions):
−Removed: December 31, 2021 2020
−Removed: Other current assets $ 3.5 $ 9.3
−Removed: Other long-term assets 58.8 49.4
−Removed: $ 62.3 $ 58.7
−Removed: Unrealized gains and losses arising from changes in the fair value of the marketable equity securities are recognized in other expense, net in the accompanying consolidated statements of income.
−Removed: The fair value of the marketable equity securities is determined by reference to quoted market prices in active markets (Level 1 input based on the GAAP fair value hierarchy).
−Removed: Equity Securities Without Readily Determinable Fair Values
−Removed: 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 cumulative impairments and adjusted for changes resulting from observable, orderly transactions for identical or similar securities.
−Removed: 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.
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: Derivative Instruments and Hedging Activities
−Removed: Foreign Exchange
−Removed: The Company uses forwards, swaps and other derivative contracts to reduce the effects of fluctuations in foreign exchange rates on known foreign currency exposures.
−Removed: 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 Chinese renminbi, the Japanese yen, the Philippine peso and the Thai baht.
−Removed: Foreign currency derivative contracts not designated as hedging instruments consist principally of hedges of cash transactions, intercompany loans and certain other balance sheet exposures.
−Removed: Net Investment Hedges
−Removed: 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: 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.
−Removed: Balance Sheet Classification
−Removed: The notional amount, estimated aggregate fair value and related balance sheet classification of the Company's foreign currency and net investment hedge contracts are shown below (in millions, except for maturities):
−Removed: December 31, 2021 2020
−Removed: Fair value of foreign currency contracts designated as cash flow hedges:
−Removed: Other current assets $ 19.4 $ 49.7
−Removed: Other long-term assets 0.1 13.0
−Removed: Other current liabilities ( 10.1 ) ( 14.1 )
−Removed: Other long-term liabilities ( 2.8 ) ( 0.8 )
−Removed: Notional amount $ 1,077.6 $ 1,353.3
−Removed: Outstanding maturities in months, not to exceed 23 24
−Removed: Fair value of derivatives designated as net investment hedges:
−Removed: Other current liabilities $ ( 3.2 ) $ —
−Removed: Other long-term liabilities ( 1.6 ) ( 22.6 )
−Removed: ( 4.8 ) ( 22.6 )
−Removed: Notional amount $ 300.0 $ 300.0
−Removed: Outstanding maturities in months, not to exceed 33 45
−Removed: Fair value of foreign currency contracts not designated as hedge instruments:
−Removed: Other current assets $ 2.2 $ 5.8
−Removed: Other current liabilities ( 3.3 ) ( 6.1 )
−Removed: ( 1.1 ) ( 0.3 )
−Removed: Notional amount $ 445.5 $ 1,140.8
−Removed: Outstanding maturities in months, not to exceed 12 12
−Removed: Total fair value $ 0.7 $ 24.9
−Removed: Total notional amount $ 1,823.1 $ 2,794.1
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: Accumulated Other Comprehensive Loss — Derivative Instruments and Hedge Activities
−Removed: Pretax amounts related to foreign currency, interest rate swap and net investment hedge contracts that were recognized in and reclassified from accumulated other comprehensive loss are shown below (in millions):
−Removed: For the year ended December 31, 2021 2020 2019
−Removed: Gains (losses) recognized in accumulated other comprehensive loss:
−Removed: Foreign currency contracts $ 6.0 $ ( 5.7 ) $ 82.4
−Removed: Interest rate swap contracts — — ( 9.2 )
−Removed: Net investment hedges 17.9 ( 18.3 ) ( 4.4 )
−Removed: 23.9 ( 24.0 ) 68.8
−Removed: (Gains) losses reclassified from accumulated other comprehensive loss to:
−Removed: Net sales ( 4.4 ) ( 0.6 ) 3.8
−Removed: Cost of sales ( 42.7 ) 7.6 ( 52.6 )
−Removed: Interest expense 2.4 2.4 1.1
−Removed: Other expense, net — ( 0.1 ) —
−Removed: ( 44.7 ) 9.3 ( 47.7 )
−Removed: Comprehensive income (loss) $ ( 20.8 ) $ ( 14.7 ) $ 21.1
−Removed: 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.
−Removed: During the next twelve month period, net gains (losses) expected to be reclassified into earnings are shown below (in millions):
−Removed: Foreign currency contracts $ 9.3
−Removed: Interest rate swap contracts ( 2.4 )
−Removed: Such gains and losses will be reclassified at the time that the underlying hedged transactions are realized.
−Removed: 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.
−Removed: Fair Value Measurements
−Removed: GAAP provides that fair value is an exit price, defined as a market-based measurement that represents the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.
−Removed: Fair value measurements are based on one or more of the following three valuation techniques:
−Removed: This approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.
−Removed: This approach uses valuation techniques to convert future amounts to a single present value amount based on current market expectations.
−Removed: This approach is based on the amount that would be required to replace the service capacity of an asset (replacement cost).
−Removed: Further, GAAP prioritizes the inputs and assumptions used in the valuation techniques described above into a three-tier fair value hierarchy as follows:
−Removed: Observable inputs, such as quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date.
−Removed: Inputs, other than quoted market prices included in Level 1, that are observable either directly or indirectly for the asset or liability.
−Removed: Unobservable inputs that reflect the entity's own assumptions about the exit price of the asset or liability.
−Removed: Unobservable inputs may be used if there is little or no market data for the asset or liability at the measurement date.
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: The Company discloses fair value measurements and the related valuation techniques and fair value hierarchy level for its assets and liabilities that are measured or disclosed at fair value.
−Removed: Items Measured at Fair Value on a Recurring Basis
−Removed: Fair value measurements and the related valuation techniques and fair value hierarchy level for the Company's assets and liabilities measured at fair value on a recurring basis as of December 31, 2021 and 2020, are shown below (in millions):
−Removed: December 31, 2021
−Removed: Frequency Asset
−Removed: (Liability) Valuation
−Removed: Technique Level 1 Level 2 Level 3
−Removed: Foreign currency contracts, net Recurring $ 5.5 Market / Income $ — $ 5.5 $ —
−Removed: Net investment hedges Recurring ( 4.8 ) Market / Income — ( 4.8 ) —
−Removed: Marketable equity securities Recurring 62.3 Market 62.3 — —
−Removed: December 31, 2020
−Removed: Frequency Asset
−Removed: (Liability) Valuation
−Removed: Technique Level 1 Level 2 Level 3
−Removed: Foreign currency contracts, net Recurring $ 47.5 Market / Income $ — $ 47.5 $ —
−Removed: Net investment hedges Recurring ( 22.6 ) Market / Income — ( 22.6 ) —
−Removed: Marketable equity securities Recurring 58.7 Market 58.7 — —
−Removed: The Company determines the fair value of its derivative contracts using quoted market prices to calculate the forward values and then discounts such forward values to the present value.
−Removed: The discount rates used are based on quoted bank deposit or swap interest rates.
−Removed: If a derivative contract is in a net liability position, the Company adjusts these discount rates, if required, by an estimate of the credit spread that would be applied by market participants purchasing these contracts from the Company's counterparties.
−Removed: If an estimate of the credit spread is required, the Company uses significant assumptions and factors other than quoted market rates, which would result in the classification of its derivative liabilities within Level 3 of the fair value hierarchy.
−Removed: As of December 31, 2021 and 2020, there were no derivative contracts that were classified within Level 3 of the fair value hierarchy.
−Removed: In addition, there were no transfers in or out of Level 3 of the fair value hierarchy during 2021 and 2020.
−Removed: For further information on fair value measurements and the Company's defined benefit pension plan assets, see Note 10, "Pension and Other Postretirement Benefit Plans."
−Removed: Items Measured at Fair Value on a Non-Recurring Basis
−Removed: The Company measures certain assets and liabilities at fair value on a non-recurring basis, which are not included in the table above.
−Removed: As these non-recurring fair value measurements are generally determined using unobservable inputs, these fair value measurements are classified within Level 3 of the fair value hierarchy.
−Removed: In 2020 and 2019, the Company completed quantitative goodwill impairment analyses for selected reporting units (Note 3, "Summary of Significant Accounting Policies — Impairment of Goodwill").
−Removed: 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 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.
−Removed: The estimated fair values of these assets were based on third-party valuations and management's estimates, generally utilizing the income and cost approaches.
−Removed: In 2019, as a result of the deconsolidation of GACC (Note 6, "Investments in Affiliates and Other Related Party Transactions"), the Company is accounting for its investment in GACC under the equity method.
−Removed: 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: 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.
−Removed: Key assumptions used in the appraisals were based on a combination of market and cost approaches, as appropriate.
−Removed: Lear Corporation and Subsidiaries
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: 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.
−Removed: Fair value estimates of developed technology intangible assets were based on management's estimates using a discounted cash flow method.
−Removed: 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.
−Removed: 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) Accounting Pronouncements
−Removed: The Company considers the applicability and impact of all ASUs issued by the Financial Accounting Standards Board ("FASB").
−Removed: Pronouncements adopted in 2021:
−Removed: Simplifying the Accounting for Income Taxes
−Removed: In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740):
−Removed: Simplifying the Accounting for Income Taxes." See Note 3, "Summary of Significant Accounting Policies — Income Taxes."
−Removed: Pronouncements not yet adopted:
−Removed: Reference Rate Reform
−Removed: 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.
−Removed: The guidance was effective upon issuance and generally can be applied to applicable contract modifications and hedge relationships prospectively through December 31, 2022.
−Removed: The adoption of this guidance is not expected to have a significant impact on the Company's financial statements.
−Removed: Government Assistance
−Removed: 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.
−Removed: 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: SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS
−Removed: (In millions)
−Removed: as of Beginning
−Removed: of Period Additions Retirements Other
−Removed: Changes Balance
−Removed: For the year ended December 31, 2021
−Removed: Valuation of accounts deducted from related assets:
−Removed: Allowance for doubtful accounts $ 35.3 $ 8.2 $ ( 8.3 ) $ 0.3 $ 35.5
−Removed: Allowance for deferred tax assets 397.7 44.7 ( 17.7 ) ( 17.8 ) 406.9
−Removed: Total $ 433.0 $ 52.9 $ ( 26.0 ) $ ( 17.5 ) $ 442.4
−Removed: as of Beginning
−Removed: of Period Additions Retirements Other
−Removed: Changes Balance
−Removed: For the year ended December 31, 2020
−Removed: Valuation of accounts deducted from related assets:
−Removed: Allowance for doubtful accounts $ 36.0 $ 7.0 $ ( 9.8 ) $ 2.1 $ 35.3
−Removed: Allowance for deferred tax assets 344.8 81.4 ( 43.5 ) 15.0 397.7
−Removed: Total $ 380.8 $ 88.4 $ ( 53.3 ) $ 17.1 $ 433.0
−Removed: as of Beginning
−Removed: of Period Additions Retirements Other
−Removed: Changes Balance
−Removed: For the year ended December 31, 2019
−Removed: Valuation of accounts deducted from related assets:
−Removed: Allowance for doubtful accounts $ 33.2 $ 14.3 $ ( 10.9 ) $ ( 0.6 ) $ 36.0
−Removed: Allowance for deferred tax assets 350.4 31.3 ( 30.7 ) ( 6.2 ) 344.8
−Removed: Total $ 383.6 $ 45.6 $ ( 41.6 ) $ ( 6.8 ) $ 380.8
−Removed: ITEM 9 – CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
−Removed: ACCOUNTING AND FINANCIAL DISCLOSURE
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.