LEAR CORP

Previous wording

Lear is built on a foundation and strong culture of innovation, operational excellence, and engineering and program management capabilities. We use our product and process design and technological expertise, as well as our global reach and competitive manufacturing footprint, to achieve our financial goals and objectives. These include continuing to deliver profitable growth balancing risks and returns, investing in product and process innovations to drive business growth and profitability, maintaining a strong balance sheet with investment grade credit metrics, and consistently returning capital to our shareholders. Further, we have aligned our strategy with key trends affecting our business. 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. Be Inventive. Get Results the Right Way.

Current wording

Lear is built on a foundation and strong culture of innovation, operational excellence, and engineering and program management capabilities. We use our product and process design and technological expertise, as well as our global reach and competitive manufacturing footprint, to achieve our financial goals and objectives. These include continuing to deliver profitable growth while balancing risks and returns, investing in product and process innovations to drive business growth and profitability, maintaining a strong balance sheet with investment grade credit metrics, and consistently returning capital to our shareholders. Further, we have aligned our strategy with key trends affecting our business. 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. Be Inventive. Get Results the Right Way.

Previous wording

Since his inauguration in January 2025, President Donald J. Trump has announced various tariffs that impact industries around the world, including the automotive industry. As of the date of this Report, the tariffs announced by the current U.S. administration that could adversely impact our business include:

Current wording

Since his inauguration in January 2025, U.S. President Donald J. Trump has announced various tariffs that impact industries around the world, including the automotive industry. As of the date of this Report, the tariffs announced by the current U.S. administration that could adversely impact our business include:

Previous wording

•25% tariff on imports of automobiles and certain automobile parts into the United States from all countries (with respect to automotive parts, the "Automobile Parts Tariff"). Automobile parts that meet specific rules of origin under the United States-Mexico-Canada Agreement ("USMCA" and "USMCA-qualifying") are currently exempt from the Automobile Parts Tariff; however, this exemption may be modified to include only the U.S. content of USMCA-qualifying automobile parts.

Current wording

•25% tariff on imports of automobiles and certain automobile parts into the United States from all countries (with respect to automotive parts, the "Automobile Parts Tariff"). Automobile parts that meet specific rules of origin under the United States-Mexico-Canada Agreement ("USMCA" and "USMCA-qualifying") are currently exempt from the Automobile Parts Tariff; however, this exemption could be modified in the future to include only the U.S. content of USMCA-qualifying automobile parts. The U.S. administration has been negotiating agreements with several countries. It has reached an agreement with the United Kingdom and announced an agreement with Japan that include reductions in the Automobile Parts Tariff to 10% and 15%, respectively.

Previous wording

•25% tariff on all steel and aluminum imports into the United States from all countries (the "Steel/Aluminum Tariff"). The Steel/Aluminum Tariff does not apply to goods subject to the Automobile Parts Tariff or the Mexico/Canada Tariff.

Current wording

•50% tariff on all steel and aluminum imports into the United States from all countries (the "Steel/Aluminum Tariff"). The Steel/Aluminum Tariff does not apply to goods subject to the Automobile Parts Tariff. This tariff was increased from 25% to 50% effective June 4, 2025.

Previous wording

•25% tariff on all imports into the United States from Mexico and Canada except for USMCA-qualifying goods (the "Mexico/Canada Tariff"). The Mexico/Canada Tariff does not apply to goods subject to the Automobile Parts Tariff.

Current wording

•25% tariff on all imports into the United States from Mexico and Canada except for USMCA-qualifying goods (the "Mexico/Canada Tariff"). The Mexico/Canada Tariff does not apply to goods subject to the Automobile Parts Tariff or the Steel/Aluminum Tariff. On July 10, 2025, President Trump announced a 35% tariff on all imports into the United States from Canada effective August 1, 2025, and on July 12, 2025, announced a 30% tariff on all imports into the United States from Mexico. Although the exception for USMCA-qualifying goods is expected to remain in place, this has not yet been confirmed by the current U.S. administration.

Previous wording

•10% tariff on all imports into the United States from all countries that are not subject to the Automobile Parts, Mexico/Canada or Steel/Aluminum Tariffs. Country-specific tariffs were to have replaced the 10% tariffs effective April 9, 2025, but have been paused for ninety days with the exception of China (the "Reciprocal Tariffs"). The China Reciprocal Tariff is 125% and is additive to the China Tariff discussed above.

Current wording

•10% tariff on all imports into the United States from all countries that are not subject to the Automobile Parts, Mexico/Canada or Steel/Aluminum Tariffs. Country-specific tariffs were to replace the 10% tariffs effective April 9, 2025, but are currently paused, with the exception of China, until August 1, 2025 (the "Reciprocal Tariffs"). The China Reciprocal Tariff of 125% was reduced to 10% effective May 14, 2025 through August 12, 2025, and is additive to the China Tariff discussed above. On July 12, 2025, President Trump announced a 30% tariff on all imports into the United States from the European Union effective August 1, 2025. In addition, various country-specific proposals and agreements have been or are being negotiated directly with the affected countries.

Previous wording

Although U.S. tariffs did not have a material impact on our operating performance in the first quarter of 2025, the impact of the tariffs noted above could adversely affect our future financial condition and operating results if implemented as currently drafted and absent recovery of such costs from our customers or success of other mitigating actions.

Current wording

Although U.S. tariffs did not have a material impact on our operating performance in the first six months of 2025, the impact of the tariffs noted above could adversely affect our future financial condition and operating results if implemented and absent recovery of such costs from our customers or success of other mitigating actions.

Previous wording

The vast majority of products in both our Seating and E-Systems businesses are USMCA-qualifying and therefore exempt from the Mexico/Canada Tariff. Further, the vast majority of products in our Seating business are not subject to the Automobile Parts Tariff. However, the Automobile Parts Tariff does apply to the wire harnesses we assemble in our E-Systems business and import into the United States. While the wire harnesses we import from Mexico are USMCA-qualifying and currently exempt from the Automobile Parts Tariff, the wire harnesses we import from Honduras are subject to such tariff, which could materially impact cost of sales in our E-Systems business. Moreover, if the exemption under the Automobile Parts Tariff is modified to include only the U.S. content of USMCA-qualifying goods, this tariff also could materially impact cost of sales in our E-Systems business with respect to wire harnesses we import from Mexico. Although a less substantial impact than the Automobile Parts Tariff, the Mexico/Canada, Steel/Aluminum, China and Reciprocal Tariffs could impact our cost of sales relating to certain non-USMCA-qualifying goods imported from Mexico, small steel and aluminum parts imported globally, goods imported from China and other goods subject to Reciprocal Tariffs. In addition to these impacts on our cost of sales, the aforementioned tariffs, separately or in the aggregate, could materially impact our net sales and other aspects of our financial performance, if they negatively impact vehicle production volumes or result in disruptions in the supply chain, including disruptions with respect to our customers or suppliers.

Current wording

The vast majority of products in both our Seating and E-Systems businesses are USMCA-qualifying and therefore are currently exempt from the Mexico/Canada Tariff. Further, the vast majority of products in our Seating business are not currently subject to the Automobile Parts Tariff. However, the Automobile Parts Tariff does apply to the wire harnesses we assemble in our E-Systems business and import into the United States. While the wire harnesses we import from Mexico are USMCA-qualifying and currently exempt from the Automobile Parts Tariff, the wire harnesses we import from Honduras are subject to such tariff, which materially impacts cost of sales in our E-Systems business. Moreover, if the exemption under the Automobile Parts Tariff is modified to include only the U.S. content of USMCA-qualifying goods, this tariff also could materially impact cost of sales in our E-Systems business with respect to wire harnesses we import from Mexico. Although a less substantial impact than the Automobile Parts Tariff, the Mexico/Canada, Steel/Aluminum, China, Reciprocal and Copper Tariffs could impact our cost of sales relating to certain non-USMCA-qualifying goods imported from Mexico, small steel and aluminum parts imported globally, goods imported from China, goods subject to Reciprocal Tariffs and copper imports subject to the Copper Tariff. In addition to these impacts on our cost of sales, the aforementioned tariffs, separately or in the aggregate, could materially impact our net sales and other aspects of our financial performance, if they negatively impact vehicle production volumes or result in disruptions in the supply chain, including disruptions with respect to our customers or suppliers.

Previous wording

The actual impact of these tariffs on our business, financial condition and results of operations is subject to a number of factors that are not yet known or are subject to change, including the effect such tariffs may have on consumer demand and global automotive production volumes, the effective dates and duration of such tariffs, future changes in the amounts and scope of such tariffs, the potential withdrawal of such tariffs in whole or in part, the scope and effective date of any exemptions to such tariffs, any modification to existing exemptions to the tariffs, countermeasures that the target countries may take in response to such tariffs, and the impact such tariffs may have on our customers and our supply chain. We expect the ultimate cost of tariffs to be recovered from our customers and are implementing certain actions, and considering others, to counter the potential impact of such tariffs on our business, financial condition and results of operations, including, without limitation, participating in industry efforts to inform the U.S. and certain foreign administrations and legislatures of the impact of current trade and tariff policies on the automotive industry and evaluating our production footprint and alternatives in our supply chain. However, we can provide no assurance that we will be successful in recovering such costs from our customers or that any of these mitigating actions will be successful or will not disrupt and deteriorate our business, operations and financial performance.

Current wording

The actual impact of these tariffs on our business, financial condition and results of operations is subject to a number of factors that are not yet known or are subject to change, including the effect such tariffs may have on consumer demand and global automotive production volumes, the effective dates and duration of such tariffs, future changes in the amounts and scope of such tariffs, the potential withdrawal of such tariffs in whole or in part, the scope and effective date of any exemptions to such tariffs, any modification to existing exemptions to the tariffs, countermeasures that the target countries may take in response to such tariffs, and the impact such tariffs may have on our customers and our supply chain. We have entered into contractual agreements with our customers to recover substantially all tariff costs incurred to date and are implementing certain actions, and considering others, to counter the potential impact of such tariffs on our business, financial condition and results of operations, including, without limitation, participating in efforts to inform the U.S. and certain foreign administrations and legislatures of the impact of current trade and tariff policies on the automotive industry and evaluating our production footprint and alternatives in our supply chain. However, we can provide no assurance that we will continue to be successful in recovering such costs from our customers or that any of these mitigating actions will be successful or will not disrupt and deteriorate our business, operations and financial performance.

Previous wording

Although industry production returned to pre-pandemic levels in 2023, industry production in 2024 remained approximately 6% below 2017 peak levels, and 2024 industry production levels in North America and Europe, our two largest markets, remained approximately 9% and 23%, respectively, below prior peak levels. Industry production in 2025 is expected to decline approximately 2%, as compared to 2024 (based on April 2025 S&P Global Mobility projections). Since 2020, the global economy, as well as the automotive industry, have been influenced directly and indirectly by macroeconomic events resulting in unfavorable conditions, including increases in tariffs, shortages of semiconductor chips and other components, elevated inflation levels on commodities and labor, higher interest rates, and labor and energy shortages in certain markets. Certain of these factors, among others, continue to impact consumer demand. Our strategy to mitigate these impacts encompasses our comprehensive cost management process, including cost technology optimization, actions to further align our manufacturing capacity to the current industry production environment and investments in automation and other advanced manufacturing technologies, as well as commercial recovery mechanisms. This will allow us to enhance operational efficiencies, improve the utilization of existing facilities and equipment to reduce future expenditures, and streamline administrative functions.

Current wording

Although industry production returned to pre-pandemic levels in 2023, industry production in 2024 remained approximately 5% below 2017 peak levels, and 2024 industry production levels in North America and Europe, our two largest markets, remained approximately 9% and 23%, respectively, below prior peak levels. Industry production in 2025 is expected to be flat as compared to 2024 (based on July 2025 S&P Global Mobility projections). Since 2020, the global economy, as well as the automotive industry, have been influenced directly and indirectly by macroeconomic events resulting in unfavorable conditions, including increases in tariffs, shortages of semiconductor chips and other components, elevated inflation levels on commodities and labor, higher interest rates, and labor and energy shortages in certain markets. Certain of these factors, among others, continue to impact consumer demand. Our strategy to mitigate these impacts encompasses our comprehensive cost management process, including cost technology optimization, actions to further align our manufacturing capacity to the current industry production environment and investments in automation and other advanced manufacturing technologies, as well as commercial recovery mechanisms. This will allow us to enhance operational efficiencies, improve the utilization of existing facilities and equipment to reduce future expenditures, and streamline administrative functions.

Previous wording

Global automotive industry production volumes in the first three months of 2025, as compared to the first three months of 2024, are shown below (in thousands of units):

Current wording

Global automotive industry production volumes in the first six months of 2025, as compared to the first six months of 2024, are shown below (in thousands of units):

Previous wording

(2)Production data for 2024 has been updated from our first quarter 2024 Quarterly Report on Form 10-Q to reflect actual production levels

Current wording

(2)Production data for 2024 has been updated from our second quarter 2024 Quarterly Report on Form 10-Q to reflect actual production levels

Previous wording

Automotive sales and production can also be affected by the age of the vehicle fleet and related scrappage rates, labor relations issues, labor shortages, fuel prices, regulatory requirements, government initiatives and incentives, trade agreements, tariffs and other non-tariff trade barriers (including recent U.S. tariffs imposed or threatened to be imposed on Mexico, Canada and China, as well as other countries and any retaliatory actions taken by such countries), the availability and cost of credit, the availability and cost of raw materials and critical components, and logistics issues, as well as vehicle affordability and consumer preferences regarding vehicle powertrains (including preferences regarding hybrid and electric vehicles), size, configuration and features, among other factors. The impact of potential tariffs on our business and financial condition, if any, is subject to a number of factors that are not yet known, including the effective date and duration of such tariffs, the scope and nature of any tariffs, the amount of any tariffs, any countermeasures that the target countries may take in response to such tariffs. In light of these uncertainties, we can provide no assurance that any mitigating actions that may become available to us, such as our ability to pass along some or all of the costs of any tariffs to some or all of our customers, will be successful. Our sales and production may be further affected by new entrants to the industry, including domestic automakers in certain regions and non-traditional automakers, and the restructuring actions, including facility closures, of our customers and suppliers. Our operating results are also significantly impacted by the overall commercial success of the vehicle platforms for which we supply particular products, as well as the profitability of the products that we supply for these platforms, which is determined, in part, by the level of vertical integration. The loss of business with respect to any vehicle model for which we are a significant supplier, or a decrease in the production levels of any such models, could adversely affect our operating results. In addition, larger cars and light trucks, as well as vehicle platforms that offer more features and functionality, such as luxury, sport utility and crossover vehicles, typically have more content and, therefore, tend to have a more significant impact on our operating results.

Current wording

Automotive sales and production can also be affected by the age of the vehicle fleet and related scrappage rates, labor relations issues, labor shortages, fuel prices, regulatory requirements, government initiatives and incentives, trade agreements, tariffs and other non-tariff trade barriers (including recent U.S. tariffs imposed or threatened to be imposed on Mexico, Canada and China, as well as other countries and any retaliatory actions taken by such countries), the availability and cost of credit, the availability and cost of raw materials and critical components, and logistics issues, as well as vehicle affordability and consumer preferences regarding vehicle powertrains (including preferences regarding hybrid and electric vehicles), size, configuration and features, among other factors. The impact of potential tariffs on our business and financial condition, if any, is subject to a number of factors that are not yet known, including the effective date and duration of such tariffs, the scope and nature of any tariffs, the amount of any tariffs, any countermeasures that the target countries may take in response to such tariffs. In light of these uncertainties, we can provide no assurance that any mitigating actions that may become available to us, such as our ability to pass along some or all of the costs of any tariffs to some or all of our customers, will continue to be successful. Our sales and production may be further affected by new entrants to the industry, including domestic automakers in certain regions and non-traditional automakers, and the restructuring actions, including facility closures, of our customers and suppliers. Our operating results are also significantly impacted by the overall commercial success of the vehicle platforms for which we supply particular products, as well as the profitability of the products that we supply for these platforms, which is determined, in part, by the level of vertical integration. The loss of business with respect to any vehicle model for which we are a significant supplier, or a decrease in the production levels of any such models, could adversely affect our operating results. In addition, larger cars and light trucks, as well as vehicle platforms that offer more features and functionality, such as luxury, sport utility and crossover vehicles, typically have more content and, therefore, tend to have a more significant impact on our operating results.

Previous wording

Our percentage of consolidated net sales by region in the first three months of 2025 and 2024 is shown below:

Current wording

Our percentage of consolidated net sales by region in the first six months of 2025 and 2024 is shown below:

Previous wording

The automotive industry, and our business, continue to be shaped by the broad trend of electrification. Although the adoption of electrified vehicles has been slower than anticipated in certain regions, demand for, and regulatory developments related to, improved energy efficiency and sustainability (e.g., government mandates related to fuel economy and carbon emissions) remain significant drivers of this trend.

Current wording

The automotive industry, and our business, continue to be shaped by the broad trend of electrification. The adoption of electrified vehicles has been slower than anticipated in certain regions. Demand for, and regulatory developments related to, improved energy efficiency and sustainability (e.g., government mandates related to fuel economy and carbon emissions) could also have a significant impact on this trend.

Previous wording

Our material cost as a percentage of net sales was 63.5% in the first three months of 2025, as compared to 64.4% in the first three months of 2024. 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 (including recent U.S. tariffs imposed or threatened to be imposed on Mexico, Canada and China, as well as other countries and any retaliatory actions taken by such countries), and geopolitical issues. Our primary commodity cost exposures relate to steel, copper and leather. We have developed and implemented strategies to mitigate the impact of increases in such costs through the selective in-sourcing of components, the continued consolidation of our supply base, longer-term purchase commitments, commercial 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. Certain of these strategies also may limit our opportunities in a declining price environment. In the current environment of elevated raw material, energy, commodity and product component costs, these strategies, together with commercial negotiations with our customers and suppliers, have offset a significant portion of the adverse impact. 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. See "— Forward-Looking Statements" below and Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, 2024.

Current wording

Our material cost as a percentage of net sales was 63.7% in the first six months of 2025, as compared to 64.4% in the first six months of 2024. 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 (including recent U.S. tariffs imposed or threatened to be imposed on Mexico, Canada and China, as well as other countries and any retaliatory actions taken by such countries), and geopolitical issues. Our primary commodity cost exposures relate to steel, copper and leather. We have developed and implemented strategies to mitigate the impact of increases in such costs through the selective in-sourcing of components, the continued consolidation of our supply base, longer-term purchase commitments, commercial 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. Certain of these strategies also may limit our opportunities in a declining price environment. In the current environment of elevated raw material, energy, commodity and product component costs, these strategies, together with commercial negotiations with our customers and suppliers, have offset a significant portion of the adverse impact. 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. See "— Forward-Looking Statements" below and Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, 2024.

Previous wording

In evaluating our financial condition and operating performance, we focus primarily on earnings, operating margins, cash flows and return on invested capital. Our strategy includes expanding our business with new and existing customers globally through new products, including those aligned with the trend toward electrification. We also have increased our vertical integration capabilities globally, as well as expanded our component manufacturing capacity in Asia, Central America, Eastern Europe, Mexico and Northern Africa and our low-cost engineering capabilities in Asia, Eastern Europe and Northern Africa.

Current wording

In evaluating our financial condition and operating performance, we focus primarily on earnings, operating margins, cash flows and return on invested capital. Our strategy includes expanding our business with new and existing customers globally through new products.

Previous wording

Our success in generating cash flow will depend, in part, on our ability to manage working capital effectively. Working capital can be significantly impacted by the timing of cash flows from sales and purchases. Historically, we generally have been successful in aligning our supplier payment terms with our customer payment terms. However, our ability to continue to do so may be impacted by adverse automotive industry conditions, including inconsistent production schedules due to supply shortages and lower consumer demand, 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. We utilize return on invested capital as a measure of the efficiency with which our assets generate earnings. 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.

Current wording

Our success in generating cash flow will depend, in part, on our ability to manage working capital effectively. Working capital can be significantly impacted by the timing of cash flows from sales, purchases, and tariffs costs and recoveries. Historically, we generally have been successful in aligning our supplier payment terms with our customer payment terms. However, our ability to continue to do so may be impacted by adverse automotive industry conditions, including inconsistent production schedules due to supply shortages and lower consumer demand, 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. We utilize return on invested capital as a measure of the efficiency with which our assets generate earnings.

Previous wording

In the first three months of 2025, we incurred pretax restructuring costs of $84 million and related manufacturing inefficiency charges of approximately $4 million, as compared to pretax restructuring costs of $54 million in the first three months of 2024. None of the individual restructuring actions initiated in the first three months of 2025 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.

Current wording

In the first six months of 2025, we incurred pretax restructuring costs of $118 million and related manufacturing inefficiency charges of approximately $2 million, as compared to pretax restructuring costs of $84 million and related manufacturing inefficiency charges of approximately $3 million in the first six months of 2024. None of the individual restructuring actions initiated in the first six months of 2025 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.

Previous wording

Our restructuring actions include plant closures and workforce reductions and are initiated to maintain our competitive footprint or are in response to customer initiatives or changes in global and regional automotive markets. Our restructuring actions are designed to maintain or improve our operating results and profitability throughout the automotive industry cycles. Restructuring actions are generally funded within twelve months of initiation and are funded by cash flows from operating activities and existing cash balances. We expect to incur approximately $42 million of additional restructuring costs related to activities initiated as of March 29, 2025, all of which are expected to be incurred in the next twelve months. We plan to implement additional restructuring actions in order to align our manufacturing capacity and other costs with prevailing regional automotive production levels. Such future restructuring actions are dependent on market conditions, customer actions and other factors.

Current wording

Our restructuring actions include plant closures and workforce reductions and are initiated to maintain our competitive footprint or are in response to customer initiatives or changes in global and regional automotive markets. Our restructuring actions are designed to maintain or improve our operating results and profitability throughout the automotive industry cycles. Restructuring actions are generally funded within twelve months of initiation and are funded by cash flows from operating activities and existing cash balances. We expect to incur approximately $25 million of additional restructuring costs related to activities initiated as of June 28, 2025, all of which are expected to be incurred in the next twelve months. We plan to implement additional restructuring actions in order to align our manufacturing capacity and other costs with prevailing regional automotive production levels. Such future restructuring actions are dependent on market conditions, customer actions and other factors.

Previous wording

Since the first quarter of 2011, our Board of Directors (the "Board") has authorized $6.7 billion in share repurchases under our common stock share repurchase program (the "Repurchase Program"). In the first three months of 2025, we repurchased $25 million of shares. As of March 29, 2025, we have a remaining repurchase authorization of $1.1 billion, which expires on December 31, 2026.

Current wording

Since the first quarter of 2011, our Board of Directors (the "Board") has authorized $6.7 billion in share repurchases under our common stock share repurchase program (the "Repurchase Program"). As of June 28, 2025, we have repurchased, in aggregate, $5.6 billion of our outstanding common stock, at an average price of $94.53 per share, excluding commissions and related fees, and have a remaining repurchase authorization of $1.0 billion, which expires on December 31, 2026. In the first six months of 2025, we repurchased $50 million of our outstanding common stock.

Previous wording

Our Board declared a quarterly cash dividend of $0.77 per share of common stock in the first quarter of 2025.

Current wording

Our Board declared a quarterly cash dividend of $0.77 per share of common stock in the first and second quarters of 2025.

Previous wording

For further information related to our common stock share repurchase program and our quarterly cash dividends, see "— Liquidity and Capital Resources — Capitalization" below and Note 14, "Comprehensive Income and Equity," to the condensed consolidated financial statements included in this Report.

Current wording

For further information related to our common stock share repurchase program and our quarterly cash dividends, see "— Liquidity and Capital Resources — Capitalization" below and Note 14, "Comprehensive Income (Loss) and Equity," to the condensed consolidated financial statements included in this Report.

Previous wording

Our results for the three months ended March 29, 2025 and March 30, 2024, reflect the following items (in millions):

Current wording

Our results for the three and six months ended June 28, 2025 and June 29, 2024, reflect the following items (in millions):

Previous wording

For further information regarding these items, see Note 2, "Restructuring," Note 5, "Long-Lived Assets," and Note 12, "Income Taxes," to the condensed consolidated financial statements included in this Report.

Current wording

For further information regarding these items, see Note 2, "Restructuring," Note 5, "Long-Lived Assets," Note 7, "Debt," and Note 12, "Income Taxes," to the condensed consolidated financial statements included in this Report.

Previous wording

Net sales in the first quarter of 2025 were $5.6 billion, as compared to $6.0 billion in the first quarter of 2024, a decrease of $434 million or 7%. Lower production volumes on Lear platforms in North America, Europe and Africa, and Asia negatively impacted net sales by $372 million. The winddown and divestiture of certain business and the impact of foreign exchange rate fluctuations also reduced net sales by $123 million and $116 million, respectively. These decreases were offset by new business in Asia and North America, which increased net sales by $106 million. Commercial recoveries were partially offset by the impact of selling price reductions.

Current wording

Net sales in the second quarter of both 2025 and 2024 were $6.0 billion. New business in Asia and North and South America increased net sales by $135 million. The impact of foreign exchange rate fluctuations also benefited net sales by $79 million. These increases were offset by lower production volumes on Lear platforms in North America, Europe and Africa, and Asia and the winddown of certain business, which negatively impacted net sales by $266 million and $77 million, respectively. Commercial recoveries were partially offset by the impact of selling price reductions.

Previous wording

Gross profit and gross margin were $359 million and 6.5% of net sales, respectively, in the first quarter of 2025, as compared to $398 million and 6.6% of net sales, respectively, in the first quarter of 2024. Lower production volumes on Lear platforms, net of new business, reduced gross profit by $75 million. The impact of favorable operating performance, including the benefit of restructuring actions, was partially offset by selling price reductions and higher restructuring costs. These factors had a corresponding impact on gross margin.

Current wording

Gross profit and gross margin were $439 million and 7.3% of net sales, respectively, in the second quarter of 2025, as compared to $449 million and 7.5% of net sales, respectively, in the second quarter of 2024. Lower production volumes on Lear platforms, net of new business, reduced gross profit by $42 million. The impact of favorable operating performance, including the benefit of restructuring actions, was partially offset by selling price reductions. These factors had a corresponding impact on gross margin.

Previous wording

Selling, general and administrative expenses, including engineering and development expenses, were $172 million in the first quarter of 2025, as compared to $187 million in the first quarter of 2024, primarily reflecting lower compensation-related expenses. As a percentage of net sales, selling, general and administrative expenses were 3.1% in the first quarter of 2025 and the first quarter of 2024.

Current wording

Selling, general and administrative expenses, including engineering and development expenses, were $186 million in the second quarter of 2025, as compared to $175 million in the second quarter of 2024, primarily reflecting higher compensation-related expenses. As a percentage of net sales, selling, general and administrative expenses were 3.1% in the second quarter of 2025 and 2.9% in the second quarter of 2024.

Previous wording

Amortization of intangible assets was $5 million in the first quarter of 2025, as compared to $15 million in the first quarter of 2024, as certain of our intangible assets became fully amortized in 2024.

Current wording

Amortization of intangible assets was $5 million in the second quarter of 2025, as compared to $13 million in the second quarter of 2024, as certain of our intangible assets became fully amortized in 2024.

Previous wording

In the first quarter of 2025, the provision for income taxes was $45 million, representing an effective tax rate of 33.4% on pretax income before equity in net income of affiliates of $135 million. In the first quarter of 2024, the provision for income taxes was $41 million, representing an effective tax rate of 25.8% on pretax income before equity in net income of affiliates of $157 million, for the reasons described below. For further information, see Note 12, "Income Taxes," to the condensed consolidated financial statements included in this Report.

Current wording

In the second quarter of 2025, the provision for income taxes was $42 million, representing an effective tax rate of 19.1% on pretax income before equity in net income of affiliates of $218 million. In the second quarter of 2024, the provision for income taxes was $46 million, representing an effective tax rate of 20.4% on pretax income before equity in net income of affiliates of $227 million, for the reasons described below. For further information, see Note 12, "Income Taxes," to the condensed consolidated financial statements included in this Report.

Previous wording

In the first quarters of 2025 and 2024, the provision for income taxes was primarily impacted by the level and mix of earnings among tax jurisdictions. In the first quarters of 2025 and 2024, we recognized net tax benefits of $9 million and $13 million, respectively, related to restructuring charges and various other items.

Current wording

In the second quarters of 2025 and 2024, the provision for income taxes was primarily impacted by the level and mix of earnings among tax jurisdictions. In the second quarter of 2025, we recognized net tax benefits of $16 million related to the release of tax reserves at foreign subsidiaries, restructuring charges and various other items. In the second quarter of 2024, we recognized net tax benefits of $10 million, related to the release of tax reserves and audit settlements at foreign subsidiaries, restructuring charges and various other items.

Previous wording

Excluding these items, the effective tax rate for the first quarters of 2025 and 2024 approximated the U.S. federal statutory income tax rate of 21%, adjusted for income taxes on foreign earnings, losses and remittances, valuation allowances, tax credits, income tax incentives and other permanent items.

Current wording

Excluding these items, the effective tax rate for the second quarters of 2025 and 2024 approximated the U.S. federal statutory income tax rate of 21%, adjusted for income taxes on foreign earnings, losses and remittances, valuation allowances, tax credits, income tax incentives and other permanent items.

Previous wording

Segment earnings related to our other category were ($90) million in the first quarter of 2025, as compared to ($99) million in the first quarter of 2024, primarily reflecting lower compensation-related expenses.

Current wording

Segment earnings related to our other category were ($92) million in the second quarter of 2025, as compared to ($85) million in the second quarter of 2024, primarily reflecting higher compensation-related expenses.

Previous wording

Cost of sales was $5.2 billion in the first quarter of 2025, as compared to $5.6 billion in the first quarter of 2024. Lower production volumes on Lear platforms, the impact of foreign exchange rate fluctuations and the winddown and divestiture of certain business reduced cost of sales. These decreases were offset by new business, which increased cost of sales.

Current wording

Cost of sales was $10.8 billion in the first six months of 2025, as compared to $11.2 billion in the first six months of 2024. Lower production volumes on Lear platforms, the winddown and divestiture of certain business and the impact of foreign exchange rate fluctuations reduced cost of sales. These decreases were partially offset by new business, which increased cost of sales.

Previous wording

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, gains and losses on certain disposals of assets, the non-service cost components of net periodic benefit cost and other miscellaneous income and expense, was $20 million in the first quarter of 2025, as compared to $14 million in the first quarter of 2024. In the first quarter of 2025, we recognized a loss of $3 million on the disposal of a non-core business. In the first quarters of 2025 and 2024, we recognized foreign exchange losses of $10 million and $11 million, respectively, including losses of $2 million and $6 million, respectively, related to the hyper-inflationary environment and significant currency devaluation in Argentina.

Current wording

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, gains and losses on certain disposals of assets, the non-service cost components of net periodic benefit cost and other miscellaneous income and expense, was $26 million in the six months ended June 28, 2025, as compared to $21 million in the six months ended June 29, 2024. In the first six months of 2025, we recognized a loss of $3 million on the disposal of a non-core business. In the first six months of 2025 and 2024, we recognized foreign exchange losses of $17 million and $18 million, respectively, including losses of $5 million and $10 million, respectively, related to the hyper-inflationary environment and significant currency devaluation in Argentina.

Previous wording

Net income attributable to Lear was $81 million, or $1.49 per diluted share, in the first quarter of 2025, as compared to $110 million, or $1.90 per diluted share, in the first quarter of 2024. Net income and diluted net income per share decreased for the reasons described above.

Current wording

Net income attributable to Lear was $246 million, or $4.54 per diluted share, in the six months ended June 28, 2025, as compared to $283 million, or $4.92 per diluted share, in the six months ended June 29, 2024. Net income and diluted net income per share decreased for the reasons described above.

Previous wording

As of March 29, 2025 and December 31, 2024, cash and cash equivalents of $672 million and $705 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 restrictions on the ability of our subsidiaries to pay dividends or make other distributions to Lear that would have a material impact on Lear.

Current wording

As of June 28, 2025 and December 31, 2024, cash and cash equivalents of $576 million and $705 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 restrictions on the ability of our subsidiaries to pay dividends or make other distributions to Lear that would have a material impact on Lear.

Previous wording

As of March 29, 2025, we had $780 million of cash and cash equivalents on hand and $2.0 billion in available borrowing capacity under our credit agreement. 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. In addition, we expect to continue to pay quarterly cash dividends and repurchase shares of our common stock pursuant to our authorized 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.

Current wording

As of June 28, 2025, we had $888 million of cash and cash equivalents on hand and $2.0 billion in available borrowing capacity under our Credit Agreement. 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. In addition, we expect to continue to pay quarterly cash dividends and repurchase shares of our common stock pursuant to our authorized 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.

Previous wording

In the first three months of 2025 and 2024, net cash used in operating activities was $128 million and $35 million, respectively. The decrease in operating cash flow reflects lower earnings in the first quarter of 2025, as compared to the first quarter of 2024, and an incremental increase in working capital during the first three months of 2025, as compared to the first three months of 2024.

Current wording

Net cash provided by operating activities was $169 million in the first six months of 2025, as compared to $257 million in the first six months of 2024. The decrease in operating cash flow reflects lower earnings in the first six months of 2025, as compared to the first six months of 2024, and an incremental increase in working capital during the first half of 2025, as compared to the first half of 2024.

Previous wording

Net cash used in investing activities was $67 million in the first three months of 2025, as compared to $111 million in the first three months of 2024. Capital spending was $104 million in the first three months of 2025, as compared to $114 million in the first three months of 2024. In the first three months of 2025, we received proceeds of $36 million related to the sale of a non-core business in the Company's Seating segment. Capital spending is estimated to be $585 million to $625 million in 2025.

Current wording

Net cash used in investing activities was $190 million in the first six months of 2025, as compared to $230 million in the first six months of 2024. In the first six months of 2025, we received proceeds of $36 million related to the sale of a non-core business in the Company's Seating segment. Capital spending was $229 million in the first six months of 2025, as compared to $234 million in the first six months of 2024. Capital spending is estimated to be $590 million in 2025.