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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2026-02-13 compared with 2025-02-14 · 243 added, 230 removed, 1596 unchanged (23% of the section changed)

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Operating results may be impacted by our buying, selling and financing in currencies other than the functional currency of our operating companies ("transactional exposure").

Currently, our most significant foreign currency transactional exposures relate to the Mexican peso, various European currencies, the Moroccan dirham, the Chinese renminbi and the Honduran lempira.

We may mitigate a portion of this risk by entering into forward foreign exchange, futures and option contracts.

The foreign exchange contracts are executed with banks that we believe are creditworthy.

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.

Gains and losses incurred related to foreign exchange contracts are generally offset by the direct effects of currency movements on the underlying transactions.

A summary of the notional amount and estimated aggregate fair value of our outstanding foreign exchange contracts is shown below (in millions):

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Fair value 202 (154)

Currently, our most significant foreign currency transactional exposures relate to the Mexican peso, various European currencies, the Honduran lempira, the Chinese renminbi, the Japanese yen and the Philippine peso.

A sensitivity analysis of our net transactional exposure is shown below (in millions):

Potential Earnings Benefit (Adverse Earnings Impact)

December 31, Hypothetical Strengthening % (1)

10% $ 19 $ 15

Euro 10% 38 34

(1) Relative to all other currencies to which it is exposed for a twelve-month period.

A sensitivity analysis related to the aggregate fair value of our outstanding foreign exchange contracts is shown below (in millions):

Estimated Change in Fair Value

December 31, Hypothetical

dollar 10% $ 187 $ 156

Euro 10% 68 98

(2) Relative to all other currencies to which it is exposed.

There are certain shortcomings inherent in the sensitivity analyses above.

The analyses assume that all currencies would uniformly strengthen or weaken relative to the U.S.

dollar or Euro.

In reality, some currencies may strengthen while others may weaken, causing the earnings impact to increase or decrease depending on the currency and the direction of the rate movement.

As of December 31, 2025 and 2024, the potential change in fair value of our outstanding foreign exchange contracts assuming a hypothetical 10% adverse move in foreign currency exchange rates would result in a loss of approximately $292 million and $254 million, respectively.

As of December 31, 2025 and 2024, the potential change in fair value of our outstanding foreign exchange contracts assuming a hypothetical 10% favorable move in foreign currency exchange rates would result in a gain of approximately $351 million and $301 million, respectively.

As foreign currency exchange rates typically do not all move in the same direction, the estimated impact from changes in foreign currency exchange rates on the net fair value of the Company's foreign exchange contracts may be overstated.

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.

Gains and losses related to foreign exchange contracts are generally offset by the direct effects of foreign currency exchange rate movements on the underlying transactions.

In addition to the transactional exposure described above, our operating results are impacted by the translation of our foreign operating income into U.S.

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We do not enter into foreign exchange contracts to mitigate our translational exposure.

Interest Rates

Our variable rate obligations are sensitive to changes in interest rates.

As of December 31, 2024, we had $100 million outstanding under our Term Loan.

Advances under the Term Loan generally bear interest based on the Daily or Term SOFR (as defined in the Term Loan agreement) plus a margin, determined in accordance with a pricing grid, that ranges from 1.00% to 1.525%.

As of December 31, 2024, the interest rate was 5.835%.

A hypothetical 100 basis point increase in the interest rate on our Term Loan would increase annual interest expense and related cash interest payments by approximately $1 million.

ITEM 8 – CONSOLIDATED FINANCIAL STATEMENTS AND

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Dividends declared to noncontrolling interests — — — —

Affiliate transaction — — — —

Balance as of December 31, 2023 $ 0.6 $ 1,050.5 $ ( 1,044.6 ) $ 5,601.1

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Dividends declared to noncontrolling interests — — — —

Contribution from noncontrolling interest holder — — — —

Affiliate transaction — — — —

Balance as of December 31, 2025 $ 0.6 $ 1,111.1 $ ( 1,721.3 ) $ 6,189.0

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Dividends declared to noncontrolling interests — — — — ( 80.4 ) ( 80.4 )

Affiliate transaction — — — — 0.6 0.6

Balance as of December 31, 2023 $ ( 107.3 ) $ 107.9 $ ( 689.4 ) $ 4,918.8 $ 141.8 $ 5,060.6

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Dividends declared to noncontrolling interests — — — — ( 86.3 ) ( 86.3 )

Contribution from noncontrolling interest holder — — — — 2.1 2.1

Affiliate transaction — — — — 5.3 5.3

Balance as of December 31, 2025 $ ( 100.7 ) $ 146.2 $ ( 589.8 ) $ 5,035.1 $ 165.9 $ 5,201.0

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Changes in other long-term liabilities 31.6 25.2 17.2

Non-cash loss on pending disposal of a non-core business 24.4 — —

Non-cash loss on disposal of a non-core business 2.7 24.4 —

Other, net 38.7 36.5 ( 15.7 )

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Accounts Receivable

The Company records accounts receivable as title is transferred to its customers.

The Company records accounts receivable at a point in time when control of the product is transferred to the customer under standard commercial terms, as the Company does not have an enforceable right to payment prior to such transfer.

The Company's customers are the world's major automotive manufacturers.

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The criteria for classification as held for sale have been met, as management is committed to a plan to sell the assets, the assets are available for immediate sale in their present condition, an active program to locate a buyer has been initiated, the sale is probable and expected to be completed within one year, and the assets are being marketed at a price that is reasonable in relation to their current fair value.

As of December 31, 2024, $ 42.0 million of the assets held for sale relate to the pending disposal of a non-core business in the Company's Seating segment.

As of December 31, 2024, $ 42.0 million of the assets held for sale relate to the then-pending disposal of a non-core business in the Company's Seating segment.

The assets held for sale were measured at the lower of their carrying amount or fair value less costs to sell.

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The loss is included in other expense, net in the accompanying consolidated statement of income for the year ended December 31, 2024.

The sale was completed in the first quarter of 2025.

Accordingly, the assets classified as held from sale have been removed from the accompanying consolidated balance sheet as of December 31, 2025.

For the year ended December 31, 2025, an incremental loss of $ 2.7 million on the disposal of the non-core business was recognized to reflect adjustments to the carrying values of the assets and transaction expenses.

The loss is included in other expense, net in the accompanying consolidated statement of income for the year ended December 31, 2025.

Proceeds from the sale of $ 36.5 million are included in cash flows from investing activities in the accompanying consolidated statement of cash flows for the year ended December 31, 2025.

The remaining assets held for sale as of December 31, 2025 and 2024, are primarily buildings and improvements.

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If not, no further goodwill impairment testing is required.

If it is more likely than not that a reporting unit's fair value is less than its carrying amount, or if the Company elects not to perform a qualitative assessment of a reporting unit, the Company then compares the fair value of the reporting unit to the related net book value.

If the net book value of a reporting unit exceeds its fair value, an impairment loss is measured and recognized.

The Company utilizes an income approach to estimate the fair value of each of its reporting units and a market valuation approach to further support this analysis.

The income approach is based on projected debt-free cash flow which is discounted to the present value using discount factors that consider the timing and risk of cash flows.

The Company believes that this

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

Lear Corporation and Subsidiaries

Notes to Consolidated Financial Statements (continued)

approach is appropriate because it provides a fair value estimate based upon the reporting unit's expected long-term operating cash flow performance.

qualitative assessment of a reporting unit, the Company then compares the fair value of the reporting unit to the related net book value.

If the net book value of a reporting unit exceeds its fair value, an impairment loss is measured and recognized.

The Company utilizes an income approach to estimate the fair value of each of its reporting units and a market valuation approach, where applicable, to further support this analysis.

The income approach is based on projected debt-free cash flow which is discounted to the present value using discount factors that consider the timing and risk of cash flows.

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.

This approach also mitigates the impact of cyclical trends that occur in the industry.

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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.

The market valuation approach is used to further support the Company's analysis and is based on recent transactions involving comparable companies.

The market valuation approach is used, where applicable, to further support the Company's analysis and is based on recent transactions involving comparable companies.

The annual goodwill impairment assessment is completed as of the first day of the Company's fourth quarter.

The Company performed a qualitative assessment for each reporting unit, except for one within the E-Systems operating segment and two within the Seating operating segment where quantitative analyses were performed.

The Company performed a qualitative assessment for each reporting unit, except for one reporting unit within the E-Systems operating segment and one reporting unit within the Seating operating segment where quantitative analyses were performed.

The qualitative assessments indicated that it was more likely than not that the fair value of each reporting unit exceeded its respective carrying value.

The goodwill of the E-Systems reporting unit and Seating reporting units where quantitative analyses were performed account for 16.8 % and 11.7 %, respectively, of the Company's total goodwill.

The quantitative analyses indicated that the fair value of each of the three reporting units exceeded its respective carrying value.

The goodwill of the E-Systems and Seating reporting units where quantitative analyses were performed account for 16.1 % and 58.5 %, respectively, of the Company's total goodwill.

The quantitative analyses indicated that the fair value of each of the two reporting units exceeded its respective carrying value.

A summary of the changes in the carrying amount of goodwill for each of the periods in the two years ended December 31, 2025, is shown below (in millions):

2 unchanged sentences

Acquisition 3.3 — 3.3

Then-pending disposal of a non-core business

(classified as held for sale) ( 11.7 ) — ( 11.7 )

Foreign currency translation and other ( 27.2 ) ( 3.1 ) ( 30.3 )

Balance as of December 31, 2024 1,305.9 393.3 1,699.2

Acquisition 3.3 — 3.3

Pending disposal of a non-core business

(classified as held for sale) ( 11.7 ) — ( 11.7 )

Foreign currency translation and other 69.3 9.3 78.6

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Intangible Assets

As of December 31, 2024, intangible assets consist primarily of certain intangible assets recorded in connection with the Company's acquisitions, including I.G.

Bauerhin ("IGB") in 2023 (Note 3, "Acquisition").

As of December 31, 2025, intangible assets consist primarily of certain intangible assets recorded in connection with the Company's acquisitions.

These intangible assets were recorded at their estimated fair value, based on independent appraisals, as of the transaction or acquisition date.

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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.

Lear Corporation and Subsidiaries

Notes to Consolidated Financial Statements (continued)

A summary of intangible assets as of December 31, 2025, is shown below (in millions):

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Balance as of December 31, 2025 $ 250.1 $ ( 140.2 ) $ 109.9 13

Lear Corporation and Subsidiaries

Notes to Consolidated Financial Statements (continued)

A summary of intangible assets as of December 31, 2024, is shown below (in millions):

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Customer-based $ 199.5 $ ( 104.1 ) $ 95.4 14

Licensing agreements 71.0 ( 66.3 ) 4.7 5

Technology 25.7 ( 6.2 ) 19.5 11

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Balance as of December 31, 2024 $ 225.6 $ ( 110.6 ) $ 115.0 13

In 2024 and 2023, intangible assets with a gross carrying value of $ 325.6 million and $ 1.3 million, respectively, became fully amortized and are no longer included in the gross carrying value or accumulated amortization.

Also in 2024, intangible assets with a net carrying value of $ 21.0 million are classified as held for sale in connection with a pending disposal of a non-core business.

In 2024, intangible assets with a gross carrying value of $ 325.6 million became fully amortized and are no longer included in the gross carrying value or accumulated amortization as of December 31, 2025 and 2024.

In 2024, intangible assets with a net carrying value of $ 21.0 million were classified as held for sale in connection with the then-pending disposal of a non-core business.

Excluding the impact of any future acquisitions, the Company's estimated annual amortization expense for the five succeeding years is shown below (in millions):

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For the years ended December 31, 2025, 2024 and 2023, the Company recognized additional fixed asset impairment charges of $ 15.2 million, $ 4.4 million and $ 6.3 million, respectively.

For the year ended December 31, 2022, additional asset impairment charges include $ 4.4 million related to the Company's Russian operations.

Asset impairment charges are recorded in cost of sales in the accompanying consolidated statements of income for the years ended December 31, 2024, 2023 and 2022.

In 2023 and 2022, the Company recognized impairment charges of $ 1.9 million and $ 8.9 million, respectively, related to certain definite-lived and indefinite-lived intangible assets of its E-Systems segment resulting from a change in the intended use of such assets.

The impairment charges are included in amortization of intangible assets in the accompanying consolidated statements of income for the years ended December 31, 2023 and 2022.

For the year ended December 31, 2025, fixed asset impairment charges of $ 4.9 million and $ 49.0 million were recorded in the Seating and E-Systems segments, respectively.

Fixed asset impairment charges are recorded in cost of sales in the accompanying consolidated statements of income for the years ended December 31, 2025, 2024 and 2023.

In 2023, the Company recognized impairment charges of $ 1.9 million related to certain definite-lived intangible assets of its E-Systems segment resulting from a change in the intended use of such assets.

The impairment charges are included in amortization of intangible assets in the accompanying consolidated statement of income for the year ended December 31, 2023.

Lear Corporation and Subsidiaries

Notes to Consolidated Financial Statements (continued)

For information related to impairments of right-of-use assets, see Note 6, "Leases."

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Fair value is generally determined using an income approach based on discounted cash flows or negotiated transaction values.

For the year ended December 31, 2023, the Company recognized impairment charges of $ 7.0 million related to its investments

Lear Corporation and Subsidiaries

Notes to Consolidated Financial Statements (continued)

in affiliates.

The impairment charges are included in other expense, net in the accompanying consolidated statement of income for the year ended December 31, 2023.

There were no impairment charges recognized related to the Company's investments in affiliates for the years ended December 31, 2024 and 2022.

For the years ended December 31, 2025 and 2023, the Company recognized impairment charges of $ 2.6 million and $ 7.0 million, respectively, related to its investments in affiliates.

The impairment charges are included in other expense, net in the accompanying consolidated statements of income for the years ended December 31, 2025 and 2023.

There were no impairment charges recognized related to the Company's investments in affiliates for the year ended December 31, 2024.

Accrued Liabilities

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Revenue recognized related to prior years represented approximately 1 % of consolidated net sales during the years ended December 31, 2025, 2024 and 2023.

The Company's customers pay for products received in accordance with payment terms that are customary within the industry.

The Company's

Lear Corporation and Subsidiaries

Notes to Consolidated Financial Statements (continued)

customers pay for products received in accordance with payment terms that are customary within the industry.

The Company's contracts with its customers do not have significant financing components.

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Further, there were no significant contract liabilities recognized in revenue during the years ended December 31, 2025, 2024 and 2023.

Lear Corporation and Subsidiaries

Notes to Consolidated Financial Statements (continued)

Amounts billed to customers related to shipping and handling costs are included in net sales in the consolidated statements of income.

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Other expense, net $ 51.4 $ 48.6 $ 54.9

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.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income for the years in which those temporary differences are expected to be recovered or settled.

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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.

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 the Company's deferred tax assets will not be realized, a valuation allowance is recorded.

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.

In determining the provision for income taxes for financial statement

Such evidence includes historical results, future reversals of existing taxable temporary differences and expectations for future taxable income (exclusive of the reversal

Lear Corporation and Subsidiaries

Notes to Consolidated Financial Statements (continued)

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.

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 the Company's deferred tax assets will not be realized, a valuation allowance is recorded.

In determining the provision for income taxes for financial statement purposes, the Company makes certain estimates and judgments, which affect its evaluation of the carrying value of its deferred tax assets, as well as its calculation of certain tax liabilities.

The Company reclassifies taxes from accumulated other comprehensive loss to earnings as the items to which the tax effects relate are similarly reclassified.

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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.

Effective January 1, 2025, Accounting Standards Update ("ASU") 2023-09, "Improvements to Income Tax Disclosures," requires disclosure of specific categories in the effective tax rate reconciliation, as well as additional information for reconciling items that meet a quantitative threshold.

The update also requires disclosure of income taxes paid, net of refunds, disaggregated by federal, state and foreign taxes, and further disaggregated by jurisdiction based on a quantitative threshold.

Adoption of the update modified the Company's financial statement disclosures but did not have a significant impact on its consolidated financial statements.

Foreign Currency

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For the years ended December 31, 2025, 2024 and 2023, net foreign currency transaction losses include $ 10.3 million, $ 16.1 million and $ 30.6 million, respectively, related to the hyper-inflationary environment and significant currency devaluation in Argentina.

For the year ended December 31, 2022, net foreign currency transaction losses include $ 9.6 million related to foreign exchange rate volatility following Russia's invasion of Ukraine.

Stock-Based Compensation

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Diluted net income per share attributable to Lear is computed using the treasury stock method by dividing net income attributable to Lear by the average number of common shares outstanding, including the dilutive effect of common stock equivalents using the average share price during the period.

Lear Corporation and Subsidiaries

Notes to Consolidated Financial Statements (continued)

A summary of information used to compute basic and diluted net income per share attributable to Lear is shown below (in millions, except share and per share data):

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Diluted net income per share attributable to Lear $ 8.15 $ 8.97 $ 9.68

Lear Corporation and Subsidiaries

Notes to Consolidated Financial Statements (continued)

Product Warranty

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Further, the Company continuously evaluates this portfolio, aligning it with industry trends while balancing risk-adjusted returns, which allows the Company to offer value-added solutions to its customers.

Our Seating segment consists of the design, development, engineering and manufacture of complete seat systems and key seat components.

The Seating segment consists of the design, development, engineering and manufacture of complete seat systems and key seat components.

The Company's capabilities in operations and supply chain management enable synchronized assembly and just-in-time delivery of complex complete seat systems at high volumes to its customers.

Key seat components include seat trim covers;

Key seat component product offerings include seat trim covers;

surface materials such as leather and fabric;

seat mechanisms;

seat cushioning;

and thermal comfort systems such as seat heating, ventilation, active cooling, pneumatic lumbar and massage products.

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.

Our E-Systems segment consists of the design, development, engineering and manufacture of complete electrical distribution and connection systems;

Thermal comfort systems are facilitated by the Company's seat system, component and integration capabilities, together with our competencies in electronics, sensors, software and algorithms.

The E-Systems segment consists of the design, development, engineering and manufacture of complete electrical distribution and connection systems;

high-voltage power distribution products, including battery disconnect units ("BDUs");

and low-voltage power distribution products and electronic controllers.

• 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.

Key components of the Company's electrical distribution and connection systems portfolio include wire harnesses, terminals and connectors, high-voltage battery connection systems and engineered components.

• High-voltage battery connection systems include intercell connect boards, bus bars and main battery connection systems.

High-voltage power distribution products control the flow and distribution of high-voltage power throughout electrified vehicles and include BDUs which control all electrical energy flowing into and out of high-voltage batteries in electrified vehicles.

• Electrical distribution and connection systems utilize low-voltage and high-voltage wire and high-speed data cables to connect networks' 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.

Key components of our electrical distribution and connection systems portfolio include wire harnesses, terminals and connectors, high-voltage battery connection systems and engineered components.

High-voltage battery connection systems include intercell connect boards, bus bars and main battery interface connection systems.

• High-voltage power distribution products control the flow and distribution of high-voltage power throughout electric and hybrid vehicles and include BDUs, which control all electrical energy flowing into and out of high-voltage batteries in electrified vehicles.

• Low-voltage power distribution products and electronic controllers facilitate signal, data and/or power management within the vehicle and include the associated software required to facilitate these functions.

Key components of this portfolio include zonal controllers, body domain control modules and low-voltage and high-voltage power distribution modules.

Key components of this portfolio include zonal controllers, body domain control modules, and smart and passive power distribution modules.

The Company's software offerings include embedded control, cybersecurity software and software to control hardware devices.

The Company's customers traditionally have sourced the Company's electronic hardware together with the software that the Company integrates and embeds in it.

The Company's customers traditionally have sourced our electronic hardware together with the software that we integrate and embed in it.

The other category includes unallocated costs related to corporate headquarters, regional headquarters and the elimination of intercompany activities, including intersegment revenues and cost of sales, none of which meets the requirements for being classified as an operating segment.

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.

Corporate and regional headquarters costs include various support functions, such as

Lear Corporation and Subsidiaries

Notes to Consolidated Financial Statements (continued)

information technology, corporate finance, legal, executive administration and human resources.

Such costs are reflected in the operating segment results to the extent they are directly attributable to an operating segment.

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The CODM 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, net and other expense, net ("segment earnings") and (iii) cash flows, being defined as segment earnings less capital expenditures plus depreciation and amortization.

Lear Corporation and Subsidiaries

Notes to Consolidated Financial Statements (continued)

The accounting policies of the Company's operating segments are the same as those described in this note to the consolidated financial statements.

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During 2025, there were no material changes in the methods or policies used to establish estimates and assumptions.

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 2, "Summary of Significant Accounting Policies"), acquisitions (Note 3, "Acquisition"), restructuring accruals (Note 4, "Restructuring"), deferred tax asset valuation allowances and income taxes (Note 8, "Income Taxes"), pension and other postretirement benefit plan assumptions (Note 9, "Pension and Other Postretirement Benefit Plans") and accruals related to legal, warranty and environmental matters (Note 13, "Legal and Other Contingencies").

Actual results may differ significantly from the Company's estimates.

Lear Corporation and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(3) Acquisition

On April 26, 2023, the Company completed the acquisition of IGB, a privately held supplier of automotive seat heating, ventilation and active cooling, steering wheel heating, seat sensors and electronic control modules, headquartered in Grundau-Rothenbergen, Germany.

IGB has more than 4,600 employees at nine manufacturing plants in seven countries with annual sales of approximately $ 290 million.

The acquisition of IGB furthers the Company's comprehensive strategy to develop and integrate a complete portfolio of thermal comfort systems for automotive seating.

The acquisition of IGB 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, 2024 and 2023.

The operating results and cash flows of IGB are included in the accompanying consolidated financial statements from the date of acquisition in the Company's Seating segment.

The final purchase price and related allocation are shown below (in millions):

2023 Adjustments December 31,

Purchase price, net of acquired cash $ 174.5 $ 0.8 $ 175.3

Property, plant and equipment 47.5 ( 0.7 ) 46.8

Other assets purchased and liabilities assumed, net 38.1 ( 1.8 ) 36.3

Goodwill 73.5 3.3 76.8

Intangible assets 15.4 — 15.4

Purchase price allocation $ 174.5 $ 0.8 $ 175.3

Goodwill recognized is primarily attributable to the assembled workforce and expected synergies related to future growth.

Intangible assets consist of amounts recognized for the fair value of developed technology and customer-based assets which were both based on an independent appraisal.

Developed technology assets have a weighted average useful life of approximately nine years .

Customer-based assets include IGB's established relationships with its customers and the ability of these customers to generate future economic profits for the Company and have a weighted average useful life of approximately thirteen years .

For the year ended December 31, 2023, the Company incurred transaction costs of $ 0.5 million, which were expensed as incurred and are recorded in selling, general and administrative expenses in the accompanying consolidated statement of income.

The pro-forma effects of this acquisition do not materially impact the Company's reported results for any period presented.

For further information related to acquired assets measured at fair value, see Note 15, "Financial Instruments."

Other matters subject to estimation and judgment include

Lear Corporation and Subsidiaries

Notes to Consolidated Financial Statements (continued)

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 2, "Summary of Significant Accounting Policies"), restructuring accruals (Note 3, "Restructuring"), deferred tax asset valuation allowances and income taxes (Note 7, "Income Taxes"), pension and other postretirement benefit plan assumptions (Note 8, "Pension and Other Postretirement Benefit Plans") and accruals related to legal, warranty and environmental matters (Note 12, "Legal and Other Contingencies").

Actual results may differ significantly from the Company's estimates.

(3) Restructuring

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(China) 49 49 49

Hyundai Transys Lear Automotive Private Limited (India) 35 35 35

Hyundai Transys Lear Automotive India Private Limited (India) 35 35 35

RevoLaze, LLC 20 20 20

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Term Loan $ 100.0 $ ( 0.3 ) $ — $ 99.7 5.835 %

2027 Notes 550.0 ( 1.6 ) ( 1.4 ) 547.0 3.885 %

2029 Notes 375.0 ( 1.7 ) ( 0.6 ) 372.7 4.288 %

2030 Notes 350.0 ( 1.8 ) ( 0.5 ) 347.7 3.525 %

550.0 ( 1.2 ) ( 1.1 ) 547.7 3.885 %

375.0 ( 1.4 ) ( 0.5 ) 373.1 4.288 %

350.0 ( 1.5 ) ( 0.4 ) 348.1 3.525 %

2032 Notes 350.0 ( 2.2 ) ( 0.6 ) 347.2 2.624 %

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Credit Agreement

The Company has an amended and restated unsecured credit agreement (the "Credit Agreement"), which consists of a $ 2.0 billion revolving credit facility (the "Revolving Credit Facility").

In June 2023, the Company amended the Credit Agreement to implement the transition from the London Interbank Offered Rate to the Secured Overnight Financing Rate ("SOFR") in accordance with the existing terms of the Credit Agreement, adopting SOFR as the reference rate for certain U.S.

dollar-denominated borrowings.

In November 2023, the Company entered into an extension agreement (the "Extension Agreement") related to its Credit Agreement to extend the maturity date by one year to October 28, 2027, and replace the Canadian Dollar Offered Rate (CDOR) with term Canadian Overnight Repo Rate Average (CORRA) as the benchmark rate for term rate loans denominated in Canadian dollars.

In connection with the Extension Agreement, the Company paid related issuance costs of $ 1.2 million.

In July 2025, the Company amended and restated its unsecured credit agreement (the "Credit Agreement") to extend the maturity date to July 24, 2030.

The Credit Agreement consists of a $ 2.0 billion revolving credit facility (the "Revolving Credit Facility").

In connection with this transaction, the Company recognized a loss on the extinguishment of debt of $ 0.3 million, which is included in other expense, net in the accompanying consolidated statement of income for year ended December 31, 2025, and incurred related issuance costs of $ 3.2 million, which are included in other financing activities in the accompanying consolidated statement of cash flows for the year ended December 31, 2025.

In 2025, 2024 and 2023, there were no borrowings or repayments under the Revolving Credit Facility.

In 2022, aggregate borrowings and repayments under the Revolving Credit Facility were $ 65.0 million.

As of December 31, 2025 and 2024, there were no borrowings outstanding under the Revolving Credit Facility.

Advances under the Credit Agreement generally bear interest based on (i) Term Benchmark, Central Bank Rate and Risk Free Rate ("RFR") (in each case, as defined in the Credit Agreement) or (ii) Alternate Base Rate ("ABR") and Canadian Prime Rate (in each case, as defined in the Credit Agreement).

Advances under the Revolving Credit Facility generally bear interest based on (i) Term Benchmark, Central Bank Rate and Risk Free Rate ("RFR") (in each case, as defined in the Credit Agreement) or (ii) Alternate Base Rate ("ABR") and Canadian Prime Rate (in each case, as defined in the Credit Agreement).

As of December 31, 2025, the ranges and rates are as follows (in percentages):

5 unchanged sentences

The facility fee, which ranges from 0.075 % to 0.20 % of the total amount committed under the Revolving Credit Facility, is payable quarterly.

Lear Corporation and Subsidiaries

Notes to Consolidated Financial Statements (continued)

The C redit Agreement contains various customary representations, warranties and covenants by the Company, including, without limitation, (i) covenants regarding maximum leverage, (ii) limitations on fundamental changes involving the Company or its subsidiaries and (iii) limitations on indebtedness and liens.

As of December 31, 2025, the Company was in compliance with all covenants under the Credit Agreement .

In May 2023, the Company borrowed $ 150.0 million under its unsecured delayed-draw term loan facility (the "Term Loan") to finance, in part, the acquisition of IGB (Note 3, "Acquisition").

The Term Loan matures on May 1, 2026, three years after the funding date.

Lear Corporation and Subsidiaries

Notes to Consolidated Financial Statements (continued)

As of December 31, 2025 and 2024, the Company had $ 50.0 million and $ 100.0 million, respectively, outstanding under its unsecured delayed-draw term loan facility (the "Term Loan").

In June 2025, the Company amended the Term Loan to extend the maturity date to September 30, 2027, and reduce the pricing across the grid.

In connection with this transaction, the Company recognized a loss on the extinguishment of debt and incurred related issuance costs totaling $ 0.5 million, which is included in other expense, net in the accompanying consolidated statement of income for the year ended December 31, 2025.

In both 2025 and 2024, the Company made principal payments under the Term Loan of $ 50.0 million.

Advances under the Term Loan generally bear interest based on the Daily or Term SOFR (as defined in the Term Loan agreement) plus a margin determined in accordance with a pricing grid that ranges from 0.875 % to 1.375 %.

As of December 31, 2025, the interest rate was 4.772 %.

In December 2024, the Company made a principal payment under the Term Loan of $ 50.0 million.

The Term Loan contains the same covenants as the Credit Agreement.

As of December 31, 2025, the Company was in compliance with all covenants under the Term Loan.

As of December 31, 2024, other long-term debt, including the current portion, consisted of amounts outstanding under an unsecured working capital loan and finance lease agreements.

As of December 31, 2023, other long-term debt, including the current portion, consisted of amounts outstanding under finance lease agreements.

As of December 31, 2025 and 2024, other long-term debt, including the current portion, consisted of amounts outstanding under unsecured working capital loans and finance lease agreements.

The Company has operating leases for production, office and warehouse facilities, manufacturing and office equipment and vehicles.

12 unchanged sentences

Lease obligations under operating leases $ 764.3

In addition to the right-of-use assets obtained in exchange for operating lease obligations shown below, the Company acquired $ 14.3 million of right-of-use assets and related lease obligations in conjunction with its acquisition of IGB in 2023 (Note 3, "Acquisition").

In 2025, the Company entered into an operating lease with a lease term of fifteen years that is expected to commence in the fourth quarter of 2026.

The right-of-use asset and related lease obligation are expected to be approximately $ 11 million.

Lear Corporation and Subsidiaries

12 unchanged sentences

Total lease expense $ 229.0 $ 218.7 $ 213.3

For the year ended December 31, 2025, the Company incurred $ 42.7 million related to usage-based employee transportation costs.

The Company's short-term lease expense excludes leases with a duration of one month or less.

3 unchanged sentences

For the year ended December 31, 2024, the Company recognized additional right-of-use asset impairment charges of $ 0.9 million.

For the year ended December 31, 2022, the Company recognized additional right-of-use asset impairment charges of $ 7.0 million related to its Russian operations.

The impairment charges are included in cost of sales in the accompanying consolidated statements of income.

4 unchanged sentences

The gains are included in other expense, net in the accompanying consolidated statement of income.

The Company is party to finance lease agreements, which are not material to the accompanying consolidated financial statements (Note 5, "Debt").

Lear Corporation and Subsidiaries

7 unchanged sentences

$ 625.1 $ 732.9 $ 777.2

Domestic (benefit) provision for income taxes:

Current provision $ 40.0 $ 43.0 $ 35.3

Deferred benefit ( 70.6 ) ( 29.4 ) ( 41.4 )

Total domestic (benefit) provision $ ( 30.6 ) $ 13.6 $ ( 6.1 )

Foreign provision for income taxes:

Current provision $ 208.0 $ 196.6 $ 147.8

Deferred (benefit) provision 13.7 ( 29.4 ) ( 8.0 )

Total foreign provision $ 221.7 $ 167.2 $ 139.8

Current income tax expense:

federal $ 50.8 $ 37.6 $ 40.7

state and local 8.1 2.4 2.3

Foreign 208.1 208.0 196.6

Total current income tax expense $ 267.0 $ 248.0 $ 239.6

Deferred income tax expense (benefit):

federal $ ( 97.7 ) $ ( 66.0 ) $ ( 26.7 )

state and local ( 10.7 ) ( 4.6 ) ( 2.7 )

Foreign ( 8.6 ) 13.7 ( 29.4 )

Total deferred income tax benefit:

$ ( 117.0 ) $ ( 56.9 ) $ ( 58.8 )

Provision for income taxes $ 150.0 $ 191.1 $ 180.8

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.

federal current income tax expense includes foreign withholding taxes related to dividends and royalties paid by the Company's foreign subsidiaries.

In 2025, 2024 and 2023, the provision for income taxes includes the benefit of prior unrecognized net operating loss carryforwards of $ 3.3 million, $ 5.1 million and $ 8.0 million, respectively.

Lear Corporation and Subsidiaries

Notes to Consolidated Financial Statements (continued)

Effective January 1, 2025, the Company adopted ASU 2023-09, "Improvements to Income Tax Disclosures," on a prospective basis.

In accordance with the categories required by the update, the reconciliation 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 and as a percentage of pretax income):

For the year ended December 31, 2025

Provision for income taxes at U.S.

federal statutory income tax rate $ 131.3 21.0 %

Domestic federal tax effects -

Effect of cross-border tax laws

Global intangible low-taxed income, net of foreign tax credit 2.1 0.3

Foreign-derived intangible income ( 32.2 ) ( 5.2 )

Impact of foreign branches, net of tax credits 2.3 0.4

Foreign tax credits - other ( 35.5 ) ( 5.7 )

Other ( 0.4 ) ( 0.1 )

Research and development tax credits ( 12.1 ) ( 1.9 )

Changes in valuation allowances 1.9 0.3

Nondeductible compensation 9.5 1.5

Domestic state and local income tax, net of federal income tax effect (1)

( 2.6 ) ( 0.4 )

Other reconciling items ( 4.2 ) ( 0.7 )

Foreign tax effects -

Withholding taxes 32.0 5.1

Other ( 0.6 ) ( 0.1 )

Effect of changes in tax laws or rates enacted in the current period 9.9 1.6

Change in valuation allowance 6.7 1.1

Other ( 4.3 ) ( 0.7 )

Statutory tax rate difference 14.0 2.2

Change in valuation allowance 7.1 1.1

Other ( 2.8 ) ( 0.4 )

Other jurisdictions

Withholding taxes 34.4 5.6

Other ( 7.7 ) ( 1.2 )

Global changes in unrecognized tax benefits 1.2 0.2

Consolidated provision for income taxes $ 150.0 24.0 %

(1) Michigan and Illinois contribute the majority of this tax effect.

Lear Corporation and Subsidiaries

Notes to Consolidated Financial Statements (continued)

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):

5 unchanged sentences

Research and development and other tax credits (2)

4.7 ( 15.9 ) ( 15.0 )

FDII deduction ( 17.8 ) ( 20.1 )

tax impact of foreign earnings (3)

( 12.4 ) 3.4 ( 6.3 )

Tax audits and assessments 1.1 1.5

9 unchanged sentences

Such tax holidays generally expire from 2025 through 2036.

Lear Corporation and Subsidiaries

Notes to Consolidated Financial Statements (continued)

Deferred income taxes represent temporary differences in the recognition of certain items for financial reporting and income tax purposes.

16 unchanged sentences

(1) Included in the long-term asset basis differences for the years ended December 31, 2025 and 2024, are deferred tax assets of $ 133.0 million and $ 132.0 million, respectively, related to lease obligations and deferred tax liabilities of $ 133.0 million and $ 132.0 million, respectively, related to right-of-use assets.

As of December 31, 2024 and 2023, the valuation allowance with respect to the Company's deferred tax assets was $ 399.4 million and $ 429.0 million, respectively, a net decrease of $ 29.6 million.

Concluding that a valuation allowance is not required is difficult when there is significant negative evidence, such as cumulative losses in recent years, which is objective and verifiable.

As of December 31, 2025 and 2024, the valuation allowance with respect to the Company's deferred tax assets was $ 451.7 million and $ 399.4 million, respectively, a net increase of $ 52.3 million.

Valuation allowances are determined separately for each tax-paying component (i.e., individual entity or group of entities that are consolidated for tax purposes) in each tax jurisdiction.

A valuation allowance is established to reduce a deferred tax asset to the amount expected to be realized when management considers it more likely than not that all, or a portion of, a deferred tax asset will not be realized.

The determination as to whether a deferred tax asset will be realized is based on an evaluation of

Lear Corporation and Subsidiaries

Notes to Consolidated Financial Statements (continued)

positive and negative evidence, such as cumulative losses in recent years.

When measuring cumulative losses in recent years, the Company uses a rolling three-year period of pretax book income, adjusted for permanent differences between book and taxable income and certain other items.

14 unchanged sentences

In addition, the Company had tax credit carryforwards of $ 156.2 million, comprised principally of U.S.

foreign tax credits of $ 71.8 million that expire between 2027 and 2034, U.S.

research and development credits of $ 143.2 million that expire between 2029 and 2045 and other tax credits primarily in international jurisdictions of $ 13.0 million that generally expire between 2026 and 2043.

1 unchanged sentence

All of the Company's gross unrecognized tax benefits, if recognized, would affect the Company's effective tax rate.

Lear Corporation and Subsidiaries

Notes to Consolidated Financial Statements (continued)

A summary of the changes in gross unrecognized tax benefits is shown below (in millions):

2 unchanged sentences

Additions based on tax positions related to current year 6.3 6.6 5.1

Settlements — — ( 1.9 )

Statute expirations ( 4.7 ) ( 4.9 ) ( 5.1 )

3 unchanged sentences

As of December 31, 2025, 2024 and 2023, the Company had recorded gross reserves of $ 11.9 million, $ 10.9 million and $ 11.6 million, respectively, related to interest and penalties, all of which, if recognized, would affect the Company's effective tax rate.

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.

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 $ 4.1 million, all of which, if recognized, would affect the Company's effective tax rate.

The gross unrecognized tax benefits subject to potential decrease involve issues related to transfer pricing and various other tax items in multiple jurisdictions.

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 2025, 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.

The Company considers its significant tax jurisdictions to include China, Germany, Mexico, Morocco, Spain, the United Kingdom and the United States.

1 unchanged sentence

state and local jurisdictions for years after 2020.

Further, the Company or its subsidiaries remain subject to income tax examination in Spain for years after 2007, in Mexico for years after 2016, in Germany for years after 2018, in China, Morocco and the United Kingdom for years after 2020, and in the United States generally for years after 2022.

On August 16, 2022, the Inflation Reduction Act of 2022 ("IRA") was signed into law.

The IRA contains a number of revisions to the Internal Revenue Code, including a 15% corporate minimum tax and a 1% excise tax on share repurchases, which are effective for tax years beginning after December 31, 2022.

The tax-related provisions of the IRA did not have a material impact on the Company's consolidated financial statements.

For the year ended December 31, 2024 and 2023, the Company incurred $ 3.8 million and $ 2.9 million, respectively, of excise taxes on its share repurchases, which is included in repurchases of shares of common stock in the accompanying consolidated statements of equity.

Further, the Company or its subsidiaries remain subject to income tax examinations in Spain for years after 2007, in Mexico for years after 2017, in Germany for years after 2018, in China and Morocco for years after 2019, in the United Kingdom for years after 2021, and in the United States generally for years after 2023.

Lear Corporation and Subsidiaries

Notes to Consolidated Financial Statements (continued)

A summary of income taxes paid, net of refunds, is shown below (in millions):

For the year ended December 31, 2025

Federal $ ( 0.3 )

Czech Republic 15.1

All other foreign 66.7

2025 Budget Reconciliation Bill

In July 2025, the 2025 Budget Reconciliation Act or H.R.

1 (the "Act") was signed into law.

The Act includes a broad range of tax reform provisions, including extending and modifying various provisions of the Tax Cuts and Jobs Act and expanding certain incentives in the Inflation Reduction Act while accelerating the phase-out of other incentives.

The legislation has multiple effective dates, with certain provisions effective in 2025 and other provisions effective in 2026 and subsequent years.

The Act did not have a significant impact on the Company's 2025 consolidated financial statements.

Further, the Act is not expected to have a significant impact on the Company's 2026 consolidated financial statements, based on the guidance issued to date.

For the year ended December 31, 2025, 2024 and 2023, the Company incurred $ 3.1 million, $ 3.8 million and $ 2.9 million, respectively, of excise taxes on its share repurchases, which is included in repurchases of shares of common stock in the accompanying consolidated statements of equity.

(8) Pension and Other Postretirement Benefit Plans

24 unchanged sentences

Benefit obligation at end of period $ 336.4 $ 347.3 $ 328.1 $ 341.0 $ 28.0 $ 16.4 $ 27.9 $ 14.7

Actuarial gains

(1) See lump-sum payout below.

Actuarial (gains) losses

As of December 31, 2025, the increase in the U.S.

pension benefit obligation attributable to actuarial losses primarily relates to a decrease in the discount rate, and to a lesser extent, changes in mortality assumptions.

The decrease in the foreign pension benefit obligation attributable to actuarial gains primarily relates to increases in discount rates.

As of December 31, 2025, the increase in the U.S.

other postretirement benefit obligation attributable to actuarial losses primarily relates to a decrease in the discount rate, and to a lesser extent, changes in mortality assumptions.

The increase in the foreign other postretirement benefit obligation attributable to actuarial losses primarily relates to demographic and claims cost updates, partially offset by an increase in the discount rate.

As of December 31, 2024, the decrease in the U.S.

pension benefit obligation attributable to actuarial gains primarily relates to an increase in the discount rate.

The decrease in the foreign pension benefit obligation attributable to actuarial gains relates to increases in the discount rate and changes in demographics, partially offset by changes in mortality assumptions.

The decrease in the foreign pension benefit obligation attributable to actuarial gains primarily relates to increases in discount rates and changes in demographics, partially offset by changes in mortality assumptions.

As of December 31, 2024, the increase in the U.S.

other postretirement benefit obligation attributable to actuarial losses relates to the plans' biennial valuation update, offset by an increase in the discount rate.

The increase in the foreign other postretirement benefit obligation attributable to actuarial losses relates to changes in mortality assumptions.

As of December 31, 2023, the increase in pension and U.S.

other postretirement benefit obligations attributable to actuarial losses primarily relates to a decrease in the discount rate.

As of December 31, 2023, the decrease in the foreign other postretirement obligation attributable to actuarial gains primarily relates to demographic and claims cost updates (see assumptions below).

other postretirement benefit obligation attributable to actuarial losses primarily relates to the plans' biennial valuation update, offset by an increase in the discount rate.

The increase in the foreign other postretirement benefit obligation attributable to actuarial losses primarily relates to changes in mortality assumptions.

Lear Corporation and Subsidiaries

Notes to Consolidated Financial Statements (continued)

Plan Assets and Funded Status

13 unchanged sentences

(1) See lump-sum payout below.

Lear Corporation and Subsidiaries

Notes to Consolidated Financial Statements (continued)

A summary of amounts recognized in the consolidated balance sheets as of December 31, 2025 and 2024, is shown below (in millions):

14 unchanged sentences

As of December 31, 2025 and 2024, the accumulated benefit obligation for all of the Company's pension plans was $ 678.9 million and $ 661.5 million, respectively.

As of December 31, 2024 and 2023, the majority of the Company's pension plans had accumulated benefit obligations in excess of plan assets.

Information related to pension plans with accumulated benefit obligations in excess of plan assets is shown below (in millions):

Lear Corporation and Subsidiaries

Notes to Consolidated Financial Statements (continued)

As of December 31, 2025 and 2024, information related to defined benefit pension plans with accumulated benefit obligations in excess of plan assets is shown below (in millions):

December 31, 2025 2024

2 unchanged sentences

Fair value of plan assets 191.6 187.4

Lear Corporation and Subsidiaries

Notes to Consolidated Financial Statements (continued)

Other Comprehensive Income (Loss) ("OCIL") and Accumulated Other Comprehensive Loss ("AOCL")

2 unchanged sentences

December 31, 2025 December 31, 2024 December 31, 2025 December 31, 2024

Unrecognized amounts in AOCL at beginning of period $ ( 58.3 ) $ ( 72.1 ) $ ( 58.9 ) $ ( 61.2 ) $ 35.1 $ 5.9 $ 39.2 $ 4.2

Unrecognized income (loss) in AOCL at beginning of period $ ( 40.1 ) $ ( 61.5 ) $ ( 58.3 ) $ ( 72.1 ) $ 30.7 $ 4.1 $ 35.1 $ 5.9

Actuarial gains (losses) recognized:

6 unchanged sentences

Amounts recognized in OCIL during the period ( 8.8 ) 3.1 18.2 10.6 ( 4.4 ) ( 1.7 ) ( 4.4 ) ( 1.8 )

Unrecognized amounts in AOCL at end of period $ ( 40.1 ) $ ( 61.5 ) $ ( 58.3 ) $ ( 72.1 ) $ 30.7 $ 4.1 $ 35.1 $ 5.9

Unrecognized income (loss) in AOCL at end of period $ ( 48.9 ) $ ( 58.4 ) $ ( 40.1 ) $ ( 61.5 ) $ 26.3 $ 2.4 $ 30.7 $ 4.1

Pretax amounts recorded in accumulated other comprehensive loss not yet recognized in net periodic benefit cost (credit) as of December 31, 2025 and 2024, are shown below (in millions):

3 unchanged sentences

Prior service credit (cost) — ( 0.5 ) — ( 0.5 ) 0.6 — 0.7 0.1

Unrecognized amounts in AOCL at end of period $ ( 40.1 ) $ ( 61.5 ) $ ( 58.3 ) $ ( 72.1 ) $ 30.7 $ 4.1 $ 35.1 $ 5.9

Unrecognized income (loss) in AOCL at end of period $ ( 48.9 ) $ ( 58.4 ) $ ( 40.1 ) $ ( 61.5 ) $ 26.3 $ 2.4 $ 30.7 $ 4.1

In addition, the Company recognized tax benefit (expense) in other comprehensive income (loss) related to its defined benefit plans of $ 5.0 million, ($ 4.5 ) million and $ 2.2 million for the years ended December 31, 2025, 2024 and 2023, respectively.

7 unchanged sentences

Net Periodic Pension and Other Postretirement Benefit Cost (Credit)

The components of the Company's net periodic pension benefit cost (credit) are shown below (in millions):

The components of the Company's net periodic pension benefit cost are shown below (in millions):

Year Ended December 31,

6 unchanged sentences

Settlement (gains) losses ( 0.1 ) — 6.5 ( 0.1 ) ( 0.1 ) ( 0.4 )

Net periodic benefit cost (credit) $ 6.3 $ 6.0 $ 1.3 $ 5.4 $ ( 6.0 ) $ 2.1

Net periodic benefit cost $ 2.1 $ 5.7 $ 6.3 $ 6.0 $ 1.3 $ 5.4

The components of the Company's net periodic other postretirement benefit cost (credit) are shown below (in millions):

110 unchanged sentences

The Company utilizes investment management firms to manage these assets in accordance with the Company's investment policies.

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.

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 and investments in the Company's own debt or equity.

Derivative instruments are also prohibited without the specific approval of the Company.

Investment managers are limited in the maximum size of

Investment managers are limited in the maximum size of individual security holdings and the

Lear Corporation and Subsidiaries

Notes to Consolidated Financial Statements (continued)

individual security holdings and the maximum exposure to any one industry relative to the total portfolio.

maximum exposure to any one industry relative to the total portfolio.

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.

18 unchanged sentences

Labor-Management Group Pension Plan (EIN 51-6099782-001) and UNITE Here National Retirement Fund (EIN 13-6130178-001), for certain of its employees.

Contributions to these plans are based on four collective bargaining agreements, which expire between April 4, 2025 and July 31, 2028.

Contributions to these plans are based on four collective bargaining agreements, which expire between June 30, 2027 and April 5, 2029.

Detailed information related to these plans is shown below (amounts in millions):

Pension Protection Act

Zone Status Contributions to Multiemployer Pension Plans

Zone Status Contributions to Multi-Employer Pension Plans

Employer Identification Number ("EIN") December 31, 2024

54 unchanged sentences

The Company has a common stock share repurchase program (the "Repurchase Program") which permits the discretionary repurchase of its common stock.

Since its inception in the first quarter of 2011, the Board has authorized $ 6.7 billion in share repurchases, including an increase in the Company's share repurchase authorization to $ 1.5 billion on February 16, 2024.

As of December 31, 2024, the Company has repurchased, in aggregate, $ 5.6 billion of its outstanding common stock, at an average price of $ 94.54 per share, excluding commissions and related fees, and has a remaining repurchase authorization of $ 1.1 billion, which expires on December 31, 2026.

Since the inception of the Repurchase Program in the first quarter of 2011, the Board has authorized $ 6.7 billion in share repurchases.

As of December 31, 2025, the Company has repurchased, in aggregate, $ 5.9 billion of its outstanding common stock, at an average price of $ 95.01 per share, excluding commissions and related fees, and has a remaining repurchase authorization of $ 774.7 million, which expires on December 31, 2026.

Share repurchases are shown below (in millions, except for shares and per share amounts):

43 unchanged sentences

Balance at end of year $ ( 589.8 ) $ ( 908.9 ) $ ( 689.4 )

For the years ended December 31, 2024, 2023 and 2022, 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 $ 0.6 million, $ 0.1 million and $ 2.6 million, respectively.

For the years ended December 31, 2024, 2023 and 2022, other comprehensive income (loss) related to currency translation adjustments also includes net investment hedge gains (losses) of $ 8.2 million, ($ 5.9 ) million and $ 25.3 million, respectively.

Total accumulated other comprehensive loss $ ( 544.3 ) $ ( 1,133.7 ) $ ( 688.8 )

For the years ended December 31, 2025, 2024 and 2023, 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 $ 1.0 million, $ 0.6 million and $ 0.1 million, respectively, and net investment hedge gains (losses) of ($ 23.2 ) million, $ 8.2 million and ($ 5.9 ) million, respectively.

(11) Stock-Based Compensation

42 unchanged sentences

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 support warranty costs or to participate in a recall or other corrective action involving such products.

Certain of the Company's customers have asserted claims against the Company for costs related to recalls or other corrective actions involving its products.

The Company is 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 warranty and recall matters, and certain of the Company's customers have asserted such claims against the Company.

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.

In certain instances, allegedly defective products may be supplied by the Company's suppliers.

48 unchanged sentences

Approximately 46 % of the Company's employees are members of industrial trade unions and are employed under the terms of various labor agreements.

Labor agreements covering approximately 84 % of the Company's global unionized workforce of approximately 81,500 employees (including labor agreements in the United States and Canada covering approximately 5 % of the Company's global unionized workforce) are scheduled to expire in 2025.

Labor agreements covering approximately 67 % of the Company's global unionized workforce of approximately 75,000 employees are scheduled to expire in 2026.

Management does not anticipate any significant difficulties with respect to the renewal of these agreements.

9 unchanged sentences

Selling, general and administrative 355.2 144.9 207.5 707.6

Amortization of intangibles 37.2 11.9 — 49.1

Amortization of intangible assets 12.3 7.2 — 19.5

Intersegment support activities 7.8 9.7 ( 17.5 ) —

15 unchanged sentences

Selling, general and administrative 348.7 154.6 199.2 702.5

Amortization of intangibles 39.0 23.5 — 62.5

Amortization of intangible assets 37.2 11.9 — 49.1

Intersegment support activities 5.6 7.9 ( 13.5 ) —

13 unchanged sentences

Selling, general and administrative 346.5 156.6 211.6 714.7

Amortization of intangibles 38.6 32.2 — 70.8

Amortization of intangible assets 39.0 23.5 — 62.5

Intersegment support activities 7.0 3.6 ( 10.6 ) —

45 unchanged sentences

Poland 209.0 203.5

Germany 168.2 200.3

Spain 187.2 161.8

Other countries 1,213.0 1,098.5

5 unchanged sentences

Ford 11.5 % 11.1 % 11.4 %

Volkswagen 10.5 % 11.0 % 10.8 %

Mercedes-Benz 9.9 % 10.5 % 10.4 %

Volkswagen 9.8 % 10.5 % 11.0 %

Stellantis 8.9 % 8.6 % 10.2 %

31 unchanged sentences

Equity Securities Without Readily Determinable Fair Values

As of December 31, 2024 and 2023, investments in equity securities without readily determinable fair values of $ 11.2 million are included in other long-term assets in the accompanying consolidated balance sheets.

As of December 31, 2025 and 2024, investments in equity securities without readily determinable fair values of $ 8.7 million and $ 11.2 million, respectively, are included in other long-term assets in the accompanying consolidated balance sheets.

Such investments are valued at cost, less cumulative impairments and adjusted for changes resulting from observable, orderly transactions for identical or similar securities.

For the year ended December 31, 2023, the Company recognized impairment charges of $ 7.0 million related to certain investments.

Investments in equity securities without readily determinable fair values have been reduced for cumulative impairments of $ 17.0 million as of December 31, 2024 and 2023.

For the years ended December 31, 2025 and 2023, the Company recognized impairment charges of $ 2.6 million and $ 7.0 million, respectively, related to certain investments.

Investments in equity securities without readily determinable fair values have been reduced for cumulative impairments of $ 19.6 million and $ 17.0 million as of December 31, 2025 and 2024, respectively.

Derivative Instruments and Hedging Activities

1 unchanged sentence

The Company uses forwards, swaps and other derivative contracts to reduce the effects of fluctuations in foreign exchange rates on known foreign currency exposures.

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.

The principal currencies hedged

Gains and losses on the derivative instruments are intended to offset gains and losses on

Lear Corporation and Subsidiaries

Notes to Consolidated Financial Statements (continued)

by the Company include the Mexican peso, various European currencies, the Philippine peso, the Japanese yen, the Brazilian real and the Canadian dollar.

the hedged transaction in an effort to reduce exposure to fluctuations in foreign exchange rates.

The principal currencies hedged by the Company include the Mexican peso, various European currencies and the Moroccan dirham.

Foreign currency derivative contracts not designated as hedging instruments consist principally of hedges of cash transactions, intercompany loans and certain other balance sheet exposures.

1 unchanged sentence

The Company uses cross-currency interest rate swaps which are designated as net investment hedges of the foreign currency rate exposure of its investment in certain Euro-denominated subsidiaries.

Contra interest expense on net investment hedges was $ 2.3 million for the years ended December 31, 2024 and 2023, and $ 4.6 million for the year ended December 31, 2022, and is included in interest expense, net in the accompanying consolidated statements of income.

Contra interest expense on net investment hedges was $ 3.8 million for the year ended December 31, 2025, and $ 2.3 million for the years ended December 31, 2024 and 2023, and is included in interest expense, net in the accompanying consolidated statements of income.

Balance Sheet Classification

11 unchanged sentences

Other long-term assets $ — $ 7.1

Other current liabilities ( 11.0 ) —

Other long-term liabilities ( 5.1 ) —

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As of December 31, 2025 and 2024, pretax net gains (losses) of $ 192.3 million and ($ 138.2 ) million, respectively, related to the Company's derivative instruments and hedge activities were recorded in accumulated other comprehensive loss.

During the next twelve month period, net losses expected to be reclassified into earnings are shown below (in millions):

During the next twelve month period, net gains (losses) expected to be reclassified into earnings are shown below (in millions):

Foreign currency contracts $ 127.1

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Total $ 124.7

Such losses will be reclassified at the time that the underlying hedged transactions are realized.

Such gains (losses) will be reclassified at the time that the underlying hedged transactions are realized.

For the years ended December 31, 2025, 2024 and 2023, the Company recognized tax benefit (expense) of ($ 73.8 ) million, $ 61.1 million and ($ 15.9 ) million, respectively, in other comprehensive income (loss) related to its derivative instruments and hedge activities.

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Unobservable inputs may be used if there is little or no market data for the asset or liability at the measurement date.

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.

Lear Corporation and Subsidiaries

Notes to Consolidated Financial Statements (continued)

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.

Items Measured at Fair Value on a Recurring Basis

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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.

Assets held for sale

In 2024, as a result of a pending disposal of a non-core business (Note 2, "Summary of Significant Accounting Policies — Assets Held for Sale"), Level 3 fair value estimates related to the asset group held for sale are reflected in the accompanying consolidated balance sheet as of December 31, 2024.

The fair value estimates of the related asset group were based on the estimated disposal price less costs to sell.

In 2023, as a result of the acquisition of IGB (Note 3, "Acquisition"), Level 3 fair value estimates related to property, plant and equipment of $ 46.8 million, developed technology and customer-based intangible assets of $ 15.4 million and right-of-use assets of $ 14.3 million are recorded in the accompanying consolidated balance sheets as of December 31, 2024 and 2023.

Fair value estimates of property, plant and equipment were based on independent appraisals, giving consideration to the highest and best use of the assets.

Key assumptions used in the appraisals were based on a combination of market and cost approaches, as appropriate.

Fair value estimates of developed technology intangible assets were based on a relief from royalty approach.

Fair value estimates of customer-based intangible assets were based on the multi-period excess earnings method.

Fair value estimates of right-of-use assets were based on a market approach.

Long-Lived Assets

In 2025, 2024 and 2023, the Company completed impairment assessments related to certain fixed assets and right-of-use assets in conjunction with its restructuring (Note 3, "Restructuring") and other actions and recorded fixed asset impairment charges of $ 53.9 million, $ 7.3 million and $ 11.4 million, respectively, and right-of-use asset impairment charges of $ 7.6 million, $ 3.2 million and $ 10.9 million, respectively.

The fair value estimates of the related assets were based on management's estimates, using a discounted cash flow method.

For further information related to these impairment charges, see Note 2, "Summary of Significant Accounting Policies — Impairment of Long-Lived Assets," and Note 6, "Leases."

In 2025 and 2024, the Company completed quantitative goodwill impairment analyses for two reporting units (Note 2, "Summary of Significant Accounting Policies — Impairment of Goodwill").

The Level 3 fair value estimates of the reporting units were based on third-party valuations, using a combination of a discounted cash flow method and guideline public company method, where applicable.

Intangible Assets

In 2023, the Company completed an impairment assessment related to certain of its intangible assets resulting from a change in the intended use of such assets and recorded an impairment charge of $ 1.9 million (Note 2, "Summary of Significant Accounting Policies — Impairment of Long-Lived Assets").

The fair value estimate of the related assets was based on management's estimates, using a discounted cash flow method.

Lear Corporation and Subsidiaries

Notes to Consolidated Financial Statements (continued)

In 2024, 2023 and 2022, the Company completed impairment assessments related to certain fixed assets in conjunction with its restructuring (Note 4, "Restructuring") and other actions and recorded impairment charges of $ 7.3 million, $ 11.4 million and $ 15.6 million, respectively.

Impairment charges in 2022 include $ 4.4 million related to the Company's assets in Russia discussed below.

The fair value estimates of the related assets were based on management's estimates, using a discounted cash flow method.

In 2024, 2023 and 2022, the Company completed impairment assessments related to certain right-of-use assets in conjunction with its restructuring (Note 4, "Restructuring") and other actions and recorded impairment charges of $ 3.2 million, $ 10.9 million and $ 13.5 million, respectively.

Impairment charges in 2022 include $ 7.0 million related to the Company's assets in Russia discussed below.

The fair value estimates of the related assets were based on management's estimates, using a discounted cash flow method.

In 2023 and 2022, the Company completed impairment assessments related to certain of its intangible assets resulting from changes in the intended uses of such assets and recorded impairment charges of $ 1.9 million and $ 8.9 million, respectively.

The fair value estimate of the related asset group was based on management's estimates, using a discounted cash flow method.

In 2022, the Company completed impairment assessments related to substantially all of its operating assets in Russia and recorded charges of $ 19.4 million related to impairments of inventory, property, plant and equipment and right-of-use assets.

The fair value estimates of the related assets were based on management's estimates, using a discounted cash flow method.

For further information related to impairment charges, see Note 2, "Summary of Significant Accounting Policies — Impairment of Long-Lived Assets," and Note 7, "Leases."

Assets Held for Sale

In 2024, as a result of the then-pending disposal of a non-core business (Note 2, "Summary of Significant Accounting Policies — Assets Held for Sale"), Level 3 fair value estimates related to the asset group held for sale are reflected in the accompanying consolidated balance sheet as of December 31, 2024.

The fair value estimates of the related asset group were based on the estimated disposal price less costs to sell.

As of December 31, 2025 and 2024, there were no additional significant assets or liabilities measured at fair value on a non-recurring basis.

( 15) Accounting Pronouncements

Accounting Standards Updates ("ASU") Issued But Not Yet Adopted:

ASU 2023-09 (issued December 2023), "Improvements to Income Tax Disclosures." The ASU requires disclosure of specific categories in the effective tax rate reconciliation, as well as additional information for reconciling items that meet a quantitative threshold.

It also requires disclosure of income taxes paid, net of refunds, disaggregated by federal, state and foreign taxes, and further disaggregated by jurisdiction based on a quantitative threshold.

The update is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The update is to be adopted prospectively;

however, retrospective application is permitted.

The ASU will modify the Company's financial statement disclosures but will not have a significant impact on its consolidated financial statements.

ASUs Issued But Not Yet Adopted:

ASU 2024-03 (issued November 2024), "Disaggregation of Income Statement Expenses." The ASU requires the disaggregation of certain expenses presented on the face of the income statement in a tabular footnote disclosure.

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however, retrospective application is permitted.

The ASU will modify the Company's financial statement disclosures but will not have a significant impact on its consolidated financial statements.

The ASU will modify the Company's financial statement disclosures but is not expected to have a significant impact on its consolidated financial statements.

ASU 2025-06 (issued September 2025), "Targeted Improvements to the Accounting for Internal-Use Software." The ASU removes all references to project development stages and provides new guidance on evaluating whether the recognition threshold to capitalize software costs has been met.

The update is effective for fiscal years beginning after December 15, 2027, with early adoption permitted.

The update may be adopted prospectively, retrospectively or using a modified transition approach.

The ASU will not have a significant impact on the Company's consolidated financial statements.

ASU 2025-09 (issued November 2025), "Hedge Accounting Improvements." The ASU makes five targeted changes to the hedge accounting model including providing detailed guidance on how the analysis to demonstrate that individual transactions have a similar risk exposure is to be performed.

The update is effective for fiscal years beginning after December 15, 2026, with early adoption permitted, and is to be adopted prospectively.

The ASU will not have a significant impact on the Company's consolidated financial statements.

ASU 2025-10 (issued December 2025), "Accounting for Government Grants Received by Business Entities." The ASU leverages guidance in International Accounting Standard ("IAS") 20, "Accounting for Government Grants and Disclosure of Government Assistance," which is largely followed in the absence of current GAAP guidance.

The update provides recognition, measurement and presentation guidance related to government grants depending on whether the grant is related to an asset or to income.

The update also explicitly excludes certain items from government grant accounting not addressed by IAS 20.

The update is effective for fiscal years beginning after December 15, 2028, with early adoption permitted.

The update may be adopted using a modified prospective, modified retrospective or full retrospective approach.

The ASU will not have a significant impact on the Company's consolidated financial statements.

The Company considers the applicability and impact of all ASUs issued by the Financial Accounting Standards Board.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk