LEAR CORP

Previous wording

We continue to build on our reputation for operational excellence through organic and inorganic investments in automation and other advanced manufacturing technologies and the digital transformation of both our operations and administrative functions. These investments and transformation involve the integration of new technologies, such as artificial intelligence ("AI"), machine learning and advanced automation, into production facilities and business operations. These technologies enable smart and automated machines and smart factories to communicate, analyze and optimize products and processes, resulting in higher efficiency, quality and responsiveness to customers.

Current wording

We continue to build on our reputation for operational excellence through organic and inorganic investments in automation and other advanced manufacturing technologies and the digital transformation of both our operations and administrative functions. These investments and digital transformation involve the integration of new technologies, such as artificial intelligence ("AI"), machine learning and advanced automation, into production facilities and business operations. These technologies enable smart and automated machines and smart factories to communicate, analyze and optimize products and processes, resulting in higher efficiency, quality and responsiveness to customers.

Previous wording

Although tariffs did not have a material impact on our gross profit in the first six months of 2026, the tariff and trade landscape continues to evolve, including with respect to the type of tariff or export control, the tariff rates, the countries, components and materials to which such tariffs apply, and the existence and applicability of any credits, refunds or exemptions. In particular, in April 2025, with revisions in October 2025, the U.S. administration implemented a policy allowing U.S. automotive manufacturers to offset a portion of the tariffs imposed under Section 232 of the Trade Expansion Act of 1962 ("auto parts tariffs") through government-provided import adjustment offset amounts ("tariff offset credits"). In addition, the U.S. tariffs imposed under the International Emergency Economic Powers Act ("IEEPA") became subject to refund after the U.S. Supreme Court issued an opinion on February 20, 2026, invalidating such tariffs. In 2025, we paid approximately $110 million of auto parts tariffs, for which we were allocated tariff offset credits by our customers in the first six months of 2026, and $85 million of IEEPA tariffs, nearly all of which were recovered from our customers and are now subject to refund from the government.

Current wording

Although tariffs did not have a material impact on our gross profit in the first nine months of 2026, the tariff and trade landscape continues to evolve, including with respect to the type of tariff or export control, the tariff rates, the countries, components and materials to which such tariffs apply, and the existence and applicability of any credits, refunds or exemptions. In particular, in April 2025, with revisions in October 2025, the U.S. administration implemented a policy allowing U.S. automotive manufacturers to offset a portion of the tariffs imposed under Section 232 of the Trade Expansion Act of 1962 ("auto parts tariffs") through government-provided import adjustment offset amounts ("tariff offset credits"). In addition, the U.S. tariffs imposed under the International Emergency Economic Powers Act ("IEEPA") became subject to refund after the U.S. Supreme Court issued an opinion on February 20, 2026, invalidating such tariffs. In 2025, we paid approximately $110 million of auto parts tariffs, for which we were allocated tariff offset credits by our customers in the first nine months of 2026, and $85 million of IEEPA tariffs, nearly all of which were recovered from our customers and are now subject to refund from the government.

Previous wording

In addition to the above, the ongoing war in Iran and geopolitical tensions in the region could lead to significant disruption of global energy supplies and increases in global energy prices, adversely affect global supply chains, and heighten inflationary pressures on our costs and supply chain. We are continuing to evaluate the evolving macroeconomic environment; however, at this time, these factors have not had a material impact on our operations, our financial condition or our operating results. Any of the above factors could impact our supply chain, as well as our operations, and adversely affect our financial condition and operating results.

Current wording

In addition to the above, the ongoing war in Iran and geopolitical tensions in the region could lead to significant disruption of global energy supplies and increases in global energy prices, adversely affect global supply chains, and heighten inflationary pressures. We are continuing to evaluate the evolving macroeconomic environment. Although these factors have not yet had a material impact on our operations, any of the above factors could impact our operations, as well as our supply chain, and adversely affect our financial condition and operating results in the future.

Previous wording

Although industry production returned to pre-pandemic levels in 2023, industry production in 2025 remained approximately 2% below 2017 peak levels, and 2025 industry production levels in North America and Europe, our two largest markets, remained approximately 11% and 24%, respectively, below prior peak levels. Industry production in 2026 is expected to decrease approximately 2% as compared to 2025 (based on July 2026 Mobility Global projections). On a Lear sales-weighted basis(1), industry production in 2026 is expected to decrease approximately 2% as compared to 2025.

Current wording

Although industry production returned to pre-pandemic levels in 2023, industry production in 2025 remained approximately 2% below 2017 peak levels, and 2025 industry production levels in North America and Europe, our two largest markets, remained approximately 10% and 24%, respectively, below prior peak levels. Industry production in 2026 is expected to decrease approximately 2% as compared to 2025 (based on October 2026 Mobility Global projections). On a Lear sales-weighted basis(1), industry production in 2026 is expected to decrease approximately 1% as compared to 2025.

Previous wording

Global automotive industry production volumes in certain key regions in the first six months of 2026, as compared to the first six months of 2025, are shown below (in thousands of units):

Current wording

Global automotive industry production volumes in certain key regions in the first nine months of 2026, as compared to the first nine months of 2025, are shown below (in thousands of units):

Previous wording

(2)Production data for 2025 has been updated from our second quarter 2025 Quarterly Report on Form 10-Q to reflect actual production levels.

Current wording

(2)Production data for 2025 has been updated from our third quarter 2025 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 raw materials and critical components, logistics issues, cybersecurity incidents, and the availability and cost of credit, as well as vehicle affordability and consumer preferences regarding vehicle powertrains (including preferences regarding electric and hybrid vehicles), size, configuration and features, among other factors. In light of these uncertainties, we can provide no assurances that any mitigating actions that may become available to us. Our sales and production may be further affected by new entrants to the industry, as well as various automakers and suppliers entering or expanding in certain regions, 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 raw materials and critical components, logistics issues, cybersecurity incidents, and the availability and cost of credit, as well as vehicle affordability and consumer preferences regarding vehicle powertrains (including preferences regarding electric and hybrid vehicles), size, configuration and features, among other factors. In light of these uncertainties, we can provide no assurances that any mitigating actions that may become available to us will be successful. Our sales and production may be further affected by new entrants to the industry, as well as various automakers and suppliers entering or expanding in certain regions, 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 six months of 2026 and 2025 is shown below:

Current wording

Our percentage of consolidated net sales by region in the first nine months of 2026 and 2025 is shown below:

Previous wording

Our material cost as a percentage of net sales was 63.4% in the first six months of 2026, as compared to 63.7% in the first six months of 2025. Raw material, energy, commodity and product component costs can be volatile, reflecting, among other things, changes in supply and demand, logistics issues, global trade and tariff policies, and geopolitical issues. We have commodity price risk with respect to purchases of certain raw materials, including steel, copper, diesel fuel, chemicals, resins and leather. Our primary commodity cost exposures relate to steel, copper and leather. 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. We have developed and implemented additional strategies to mitigate the impact of any such cost increases, including 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. Certain of these strategies may limit our opportunities in a declining commodity 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 and improved manufacturing productivity through automation and other advanced technologies, have more than offset 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 further 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, 2025.

Current wording

Our material cost as a percentage of net sales was 63.5% in the first nine months of 2026 and 2025. Raw material, energy, commodity and product component costs, particularly electronic component costs, can be volatile, reflecting, among other things, changes in supply and demand, logistics issues, global trade and tariff policies, and geopolitical issues. We have commodity price risk with respect to purchases of certain raw materials, including steel, copper, diesel fuel, chemicals, resins and leather. Our primary commodity cost exposures relate to steel, copper and leather. 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. We have developed and implemented additional strategies to mitigate the impact of any such cost increases, including 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. Certain of these strategies may limit our opportunities in a declining commodity 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 and improved manufacturing productivity through automation and other advanced technologies, have more than offset 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 further 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, 2025.

Previous wording

In the first six months of 2026, we incurred pretax restructuring costs of $69 million and related manufacturing inefficiency and other charges of approximately $4 million, as compared to pretax restructuring costs of $118 million and related manufacturing inefficiency and other charges of approximately $2 million in the first six months of 2025. None of the individual restructuring actions initiated in the first six months of 2026 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 nine months of 2026, we incurred pretax restructuring costs of $114 million and related manufacturing inefficiency and other charges of approximately $7 million, as compared to pretax restructuring costs of $156 million and related manufacturing inefficiency and other charges of approximately $3 million in the first nine months of 2025. None of the individual restructuring actions initiated in the first nine months of 2026 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 $36 million of additional restructuring costs related to activities initiated as of July 4, 2026, 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 $33 million of additional restructuring costs related to activities initiated as of October 3, 2026, 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

For further information related to our senior notes and credit agreement, see Note 7, "Debt," to the condensed consolidated financial statements included in this Report and Note 5, "Debt," to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025.

Current wording

For further information related to our Debt, see Note 7, "Debt," to the condensed consolidated financial statements included in this Report and Note 5, "Debt," to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025.

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"). As of July 4, 2026, we have repurchased, in aggregate, $6.1 billion of our outstanding common stock, at an average price of $95.72 per share, excluding commissions and related fees, and have a remaining repurchase authorization of $600 million, which expires on December 31, 2026. In the first six months of 2026, we repurchased $175 million of our outstanding common stock.

Current wording

Since the first quarter of 2011, our Board of Directors (the "Board") has authorized $7.8 billion in share repurchases under our common stock share repurchase program (the "Repurchase Program"), including an increase in our repurchase authorization to $1.5 billion on September 24, 2026. As of October 3, 2026, we have repurchased, in aggregate, $6.3 billion of our outstanding common stock, at an average price of $96.38 per share, excluding commissions and related fees, and have a remaining repurchase authorization of $1.5 billion, which expires on December 31, 2029. In the first nine months of 2026, we repurchased $350 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 and second quarters of 2026.

Current wording

Our Board declared a quarterly cash dividend of $0.77 per share of common stock in the first, second and third quarters of 2026.

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 Note 14, "Comprehensive Income and Equity," to the condensed consolidated financial statements included in this Report.

Previous wording

We recognized net tax benefits of $10 million and $27 million, respectively, in the three and six months ended July 4, 2026, and $16 million and $24 million, respectively, in the three and six months ended June 28, 2025, related to the release of tax reserves at foreign subsidiaries, restructuring charges and various other items.

Current wording

We recognized net tax benefits of $11 million and $38 million, respectively, in the three and nine months ended October 3, 2026, and $2 million and $26 million, respectively, in the three and nine months ended September 27, 2025, related to the release of tax reserves at foreign subsidiaries, restructuring charges and various other items.

Previous wording

Our results for the three and six months ended July 4, 2026 and June 28, 2025, reflect the following items (in millions):

Current wording

Our results for the three and nine months ended October 3, 2026 and September 27, 2025, reflect the following items (in millions):

Previous wording

This Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations," includes forward-looking statements that are subject to risks and uncertainties. For further information regarding these and other factors that have had, or may have in the future, a significant impact on our business, financial condition or results of operations, see "—

Current wording

This Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations," includes forward-looking statements that are subject to risks and uncertainties. For further information regarding these and other factors that have had, or may have in the future, a significant impact on our business, financial condition or results of operations, see "— Forward-Looking Statements" below and Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, 2025.

Previous wording

Net sales in the second quarter of 2026 were $6.2 billion, as compared to $6.0 billion in the second quarter of 2025, an increase of $179 million or 3%. The impact of foreign exchange rate fluctuations and new business in Asia, Europe/Africa and South America increased net sales by $106 million and $94 million, respectively. These increases were partially offset by lower production volumes on Lear platforms in Asia and North America, which reduced net sales by $171 million. Commercial recoveries were partially offset by the impact of selling price reductions.

Current wording

Net sales in the third quarter of 2026 were $5.8 billion, as compared to $5.7 billion in the third quarter of 2025, an increase of $93 million or 2%. The impact of new business and higher production volumes on Lear platforms in Europe/Africa increased net sales by $141 million and $92 million, respectively. These increases were offset by lower production volumes on Lear platforms in Asia and North America, which reduced net sales by $249 million. The impact of commercial recoveries was partially offset by selling price reductions.

Previous wording

Cost of sales was $5.7 billion in the second quarter of 2026, as compared to $5.6 billion in the second quarter of 2025. The impact of foreign exchange rate fluctuations and new business increased costs of sales. These increases were partially offset by lower production volumes on Lear platforms, which reduced cost of sales.

Current wording

Cost of sales was $5.4 billion in the third quarter of 2026, as compared to $5.3 billion in the third quarter of 2025. The impact of new business increased costs of sales. This increase was partially offset by lower production volumes on Lear platforms, which reduced cost of sales.

Previous wording

Gross profit and gross margin were $470 million and 7.6% of net sales, respectively, in the second quarter of 2026, as compared to $439 million and 7.3% of net sales, respectively, in the second quarter of 2025. The impact of favorable operating performance, including the benefit of restructuring actions, net of selling price reductions, increased gross profit by $55 million. Gross profit also benefited from new business in Asia, Europe/Africa and South America and the impact of foreign exchange rate fluctuations by $10 million and $4 million, respectively. These increases were partially offset by lower production volumes on Lear platforms in Asia and North America, which reduced gross profit by $35 million. These factors had a corresponding impact on gross margin.

Current wording

Gross profit and gross margin were $382 million and 6.6% of net sales, respectively, in the third quarter of 2026, as compared to $364 million and 6.4% of net sales, respectively, in the third quarter of 2025. The impact of favorable operating performance, including the benefit of restructuring actions, net of selling price reductions, increased gross profit by $51 million. Gross profit also benefited from new business and higher production volumes on Lear platforms in Europe/Africa by $31 million. These increases were partially offset by lower production volumes on Lear platforms in Asia and North America, which reduced gross profit by $47 million. These factors had a corresponding impact on gross margin.

Previous wording

Selling, general and administrative expenses, including engineering and development expenses, were $198 million in the second quarter of 2026, as compared to $186 million in the second quarter of 2025. As a percentage of net sales, selling, general and administrative expenses were 3.2% in the second quarter of 2026 and 3.1% in the second quarter of 2025.

Current wording

Selling, general and administrative expenses, including engineering and development expenses, were $181 million in the third quarter of 2026, as compared to $166 million in the third quarter of 2025. As a percentage of net sales, selling, general and administrative expenses were 3.1% in the third quarter of 2026 and 2.9% in the third quarter of 2025.

Previous wording

Amortization of intangible assets was $5 million in the second quarters of 2026 and 2025.

Current wording

Amortization of intangible assets was $5 million in the third quarter of 2026 and 2025.

Previous wording

Interest expense, net was $24 million in the second quarter of 2026, as compared to $25 million in the second quarter of 2025.

Current wording

Interest expense, net was $21 million in the third quarter of 2026, as compared to $25 million in the third quarter of 2025.

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 $3 million in the second quarter of 2026, as compared to $5 million in the second quarter of 2025. In the second quarters of 2026 and 2025, we recognized foreign exchange losses of $9 million and $7 million, respectively, including losses of $1 million and $3 million, respectively, related to the hyper-inflationary environment 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 $3 million in the third quarter of 2026, as compared to $9 million in the third quarter of 2025. In the third quarter of 2026 and 2025, we recognized foreign exchange (gains) losses of ($3) million and $9 million, respectively, including losses of $1 million and $4 million, respectively, related to the hyper-inflationary environment in Argentina.

Previous wording

In the second quarter of 2026, the provision for income taxes was $49 million, representing an effective tax rate of 20.1% on pretax income before equity in net income of affiliates of $241 million. 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, 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 third quarter of 2026, the provision for income taxes was $42 million, representing an effective tax rate of 24.4% on pretax income before equity in net income of affiliates of $173 million. In the third quarter of 2025, the provision for income taxes was $45 million, representing an effective tax rate of 28.3% on pretax income before equity in net income of affiliates of $159 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 second quarters of 2026 and 2025, the provision for income taxes was primarily impacted by the level and mix of earnings among tax jurisdictions. In the second quarters of 2026 and 2025, we recognized net tax benefits of $10 million and $16 million, respectively, related to the release of tax reserves at foreign subsidiaries, restructuring charges and various other items. Excluding these items, the effective tax rate for the second quarters of 2026 and 2025 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

In the third quarter of 2026 and 2025, the provision for income taxes was primarily impacted by the level and mix of earnings among tax jurisdictions. In the third quarter of 2026 and 2025, we recognized net tax benefits of $11 million and $2 million, respectively, related to the release of tax reserves at foreign subsidiaries, restructuring charges and various other items. Excluding these items, the effective tax rate for the third quarter of 2026 and 2025 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

Equity in net income of affiliates was $19 million in the second quarter of 2026, as compared to $16 million in the second quarter of 2025.

Current wording

Equity in net income of affiliates was $19 million in the third quarter of 2026, as compared to $12 million in the third quarter of 2025.

Previous wording

Net income attributable to Lear was $193 million, or $3.79 per diluted share, in the second quarter of 2026, as compared to $165 million, or $3.06 per diluted share, in the second quarter of 2025. Net income and diluted net income per share increased for the reasons described above. Diluted net income per share also benefited from a reduction in shares outstanding between periods.

Current wording

Net income attributable to Lear was $137 million, or $2.74 per diluted share, in the third quarter of 2026, as compared to $108 million, or $2.02 per diluted share, in the third quarter of 2025. Net income and diluted net income per share increased for the reasons described above. Diluted net income per share also benefited from a reduction in shares outstanding between periods.

Previous wording

E-Systems net sales in the second quarter of both 2026 and 2025 were $1.6 billion, an increase of $29 million or 2%. The impact of foreign exchange rate fluctuations increased net sales by $29 million. This increase was offset by lower production volumes on Lear platforms and the winddown of certain businesses, which reduced net sales by $31 million and $25 million, respectively. Commercial recoveries were partially offset by the impact of selling price reductions.

Current wording

E-Systems net sales in the third quarter of 2026 and 2025 were $1.4 billion, an increase of $17 million or 1%. Higher production volumes on Lear platforms increased net sales by $45 million. This increase was partially offset by the winddown of certain businesses, which reduced net sales by $36 million. The impact of commercial recoveries was partially offset by selling price reductions.

Previous wording

Segment earnings related to our other category were ($103) million in the second quarter of 2026, as compared to ($92) million in the second quarter of 2025, primarily reflecting higher compensation-related costs.

Current wording

Segment earnings related to our other category were ($91) million in the third quarter of 2026, as compared to ($86) million in the third quarter of 2025.

Previous wording

Net sales for the six months ended July 4, 2026 were $12.0 billion, as compared to $11.6 billion for the six months ended June 28, 2025, an increase of $442 million or 4%. The impact of foreign exchange rate fluctuations, higher production volumes on Lear platforms in Europe/Africa and North America, and new business in Asia and South America increased net sales by $380 million, $263 million and $124 million, respectively. These increases were partially offset by the reversal of certain 2025 tariff recoveries, lower production volumes on Lear platforms in Asia and the impact of selling price reductions.

Current wording

Net sales for the nine months ended October 3, 2026 were $17.8 billion, as compared to $17.3 billion for the nine months ended September 27, 2025, an increase of $535 million or 3%. The impact of foreign exchange rate fluctuations, higher production volumes on Lear platforms in Europe/Africa and North America, and new business in Europe/Africa and Asia increased net sales by $378 million, $297 million and $253 million, respectively. These increases were partially offset by lower production volumes on Lear platforms in Asia, the reversal of certain 2025 tariff recoveries and lower 2026 tariff recoveries, which reduced net sales by $405 million, $175 million and $116 million, respectively. The impact of commercial recoveries was partially offset by selling price reductions.

Previous wording

Cost of sales was $11.1 billion in the first six months of 2026, as compared to $10.8 billion in the first six months of 2025. The impact of foreign exchange rate fluctuations, new business and higher production volumes on Lear platforms increased costs of sales. These increases were partially offset by the reversal of certain 2025 tariff costs, which reduced cost of sales.

Current wording

Cost of sales was $16.5 billion in the first nine months of 2026, as compared to $16.1 billion in the first nine months of 2025. The impact of foreign exchange rate fluctuations and new business increased costs of sales. These increases were partially offset by the reversal of certain 2025 tariff costs and lower 2026 tariff costs, which reduced cost of sales.

Previous wording

Gross profit and gross margin were $921 million and 7.7% of net sales, respectively, in the six months ended July 4, 2026, as compared to $798 million and 6.9% of net sales, respectively, in the six months ended June 28, 2025. The impact of favorable operating performance, including the benefit of restructuring actions, net of selling price reductions, increased gross profit by $58 million. Gross profit also benefited from higher production volumes on Lear platforms in Europe/Africa and North America and the impact of foreign exchange rate fluctuations by $39 million and $20 million, respectively. These increases were partially offset by lower production volumes on Lear platforms in Asia, which reduced gross profit by $44 million. These factors had a corresponding impact on gross margin.

Current wording

Gross profit and gross margin were $1.3 billion and 7.3% of net sales, respectively, in the nine months ended October 3, 2026, as compared to $1.2 billion and 6.7% of net sales, respectively, in the nine months ended September 27, 2025. The impact of favorable operating performance, including the benefit of restructuring actions and lower restructuring costs, net of selling price reductions, increased gross profit by $148 million. Gross profit also benefited from higher production volumes on Lear platforms in Europe/Africa and North America, the impact of new business in Europe/Africa and Asia, and foreign exchange rate fluctuations by $91 million. These increases were partially offset by lower production volumes on Lear platforms in Asia, which reduced gross profit by $78 million. These factors had a corresponding impact on gross margin.

Previous wording

Selling, general and administrative expenses, including engineering and development expenses, were $388 million in the first six months of 2026, as compared to $359 million in the first six months of 2025. As a percentage of net sales, selling, general and administrative expenses were 3.2% in the first six months of 2026, as compared to 3.1% in the first six months of 2025.

Current wording

Selling, general and administrative expenses, including engineering and development expenses, were $568 million in the first nine months of 2026, as compared to $525 million in the first nine months of 2025, driven by higher sales and higher compensation-related costs. As a percentage of net sales, selling, general and administrative expenses were 3.2% in the first nine months of 2026, as compared to 3.0% in the first nine months of 2025.

Previous wording

Amortization of intangible assets was $10 million in the first six months of 2026 and 2025.

Current wording

Amortization of intangible assets was $15 million in the first nine months of 2026 and 2025.

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 $16 million in the six months ended July 4, 2026, as compared to $26 million in the six months ended June 28, 2025. In the first six months of 2026 and 2025, we recognized foreign exchange losses of $14 million and $17 million, respectively, including losses of $1 million and $5 million, respectively, related to the hyper-inflationary environment in Argentina. In the first six months of 2025, we also recognized a loss of $3 million on the disposal of a non-core business.

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 $19 million in the nine months ended October 3, 2026, as compared to $34 million in the nine months ended September 27, 2025. In the first nine months of 2026 and 2025, we recognized foreign exchange losses of $10 million and $26 million, respectively, including losses of $1 million and $9 million, respectively, related to the hyper-inflationary environment in Argentina. In the first nine months of 2025, we also recognized a loss of $3 million on the disposal of a non-core business.

Previous wording

For the six months ended July 4, 2026, the provision for income taxes was $87 million, representing an effective tax rate of 19.0% on pretax income before equity in net income of affiliates of $458 million. For the six months ended June 28, 2025, the provision for income taxes was $87 million, representing an effective tax rate of 24.6% on pretax income before equity in net income of affiliates of $353 million, for reasons described below. For further information, see Note 12, "Income Taxes," to the condensed consolidated financial statements included in this Report.

Current wording

For the nine months ended October 3, 2026, the provision for income taxes was $129 million, representing an effective tax rate of 20.5% on pretax income before equity in net income of affiliates of $630 million. For the nine months ended September 27, 2025, the provision for income taxes was $132 million, representing an effective tax rate of 25.7% on pretax income before equity in net income of affiliates of $512 million, for 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 six months of 2026 and 2025, the provision for income taxes was primarily impacted by the level and mix of earnings among tax jurisdictions. In the first six months of 2026 and 2025, we recognized net tax benefits of $27 million and $24 million, respectively, related to the release of tax reserves at foreign subsidiaries, restructuring charges and various other items. Excluding these items, the effective tax rate for the first six months of 2026 and 2025 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

In the first nine months of 2026 and 2025, the provision for income taxes was primarily impacted by the level and mix of earnings among tax jurisdictions. In the first nine months of 2026 and 2025, we recognized net tax benefits of $38 million and $26 million, respectively, related to the release of tax reserves at foreign subsidiaries, restructuring charges and various other items. Excluding these items, the effective tax rate for the first nine months of 2026 and 2025 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

Net income attributable to Lear was $365 million, or $7.13 per diluted share, in the six months ended July 4, 2026, as compared to $246 million, or $4.54 per diluted share, in the six months ended June 28, 2025. Net income and diluted net income per share increased for the reasons described above. Diluted net income per share also benefited from a reduction in shares outstanding between periods.

Current wording

Net income attributable to Lear was $502 million, or $9.89 per diluted share, in the nine months ended October 3, 2026, as compared to $354 million, or $6.56 per diluted share, in the nine months ended September 27, 2025. Net income and diluted net income per share increased for the reasons described above. Diluted net income per share also benefited from a reduction in shares outstanding between periods.