LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

~~A summary of 2011 activity is shown below (in millions):~~

Accrual as of 2011 Utilization Accrual as of
January 1, 2011 Charges Cash Non-cash October 1, 2011
Employee termination benefits $ 38.4 $ 8.8 $ (19.9 ) $ — $ 27.3
Contract termination costs 3.7 1.9 — — 5.6
Asset impairments — 1.0 — (1.0 ) —
Other related costs — 1.6 (1.6 ) — —

Total $ 42.1 $ 13.3 $ (21.5 ) $ (1.0 ) $ 32.9

         Utilization
   Accrual as of
January 1, 2012    2012
Charges    Cash Non-cash    Accrual as of
March 31, 2012
Employee termination benefits
   $ 56.8       $ 4.7       $ (46.4 ) $ —         $ 15.1
Contract termination costs
   5.7       0.4       (0.4 ) —         5.7
Other related costs
   —         0.1       (0.1 ) —         —








Total
   $ 62.5       $ 5.2       $ (46.9 ) $ —         $ 20.8

(3) Inventories

Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method. Finished goods and work-in-process inventories include material, labor and manufacturing overhead costs. A summary of inventories is shown below (in millions):

October 1, December 31,
2011 2010
Raw materials $ 565.1 $ 448.6
Work-in-process 38.3 32.9
Finished goods 105.5 72.7

Inventories $ 708.9 $ 554.2

   March 31,
2012    December 31,
2011
Raw materials
   $ 580.4       $ 520.1
Work-in-process
   37.0       36.0
Finished goods
   98.1       81.7




Inventories
   $ 715.5       $ 637.8

(4) Pre-Production Costs Related to Long-Term Supply Agreements

The Company incurs pre-production engineering and development (“E&D”) and tooling costs related to the products produced for its customers under long-term supply agreements. The Company expenses all pre-production E&D costs for which reimbursement is not contractually guaranteed by the customer. In addition, the Company expenses all pre-production tooling costs related to customer-owned tools for which reimbursement is not contractually guaranteed by the customer or for which the Company does not have a non-cancelable right to use the tooling. During the first ~~nine months~~quarters of ~~2011~~2012 and ~~2010,~~2011, the Company capitalized ~~$135.4~~$59.7 million and ~~$99.0~~$43.0 million, respectively, of pre-production E&D costs for which reimbursement is contractually guaranteed by the customer. ~~In addition, during~~During the first ~~nine months~~quarters of ~~2011~~2012 and ~~2010,~~2011, the Company also capitalized ~~$118.8~~$41.8 million and ~~$102.3~~$38.7 million, respectively, of pre-production tooling costs related to customer-owned tools for which reimbursement is contractually guaranteed by the customer or for which the Company has a non-cancelable right to use the tooling. These amounts are included in other current and long-term assets in the accompanying condensed consolidated balance sheets. During the ~~nine months ended October 1,~~first quarters of 2012 and 2011, ~~and October 2, 2010,~~ the Company collected ~~$222.1~~$60.9 million and ~~$191.3~~$96.7 million, respectively, of cash related to E&D and tooling costs.

The classification of recoverable customer engineering, development and tooling costs related to long-term supply agreements is shown below (in millions):

October 1, December 31,
2011 2010
Current $ 122.3 $ 77.9
Long-term 64.3 75.3

Recoverable customer engineering, development and tooling $ 186.6 $ 153.2

   March 31,
2012    December 31,
2011
Current
   $ 131.6       $ 96.0
Long-term
   67.0       64.2




Recoverable customer engineering, development and tooling
   $ 198.6       $ 160.2

(5) Property, Plant and Equipment

Property, plant and equipment is stated at cost; however, as a result of the adoption of fresh-start accounting, property, plant and equipment was re-measured at estimated fair value as of November 7, 2009. For further information, see Note 3, “Fresh-Start Accounting,” to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2010.~~2011. Costs associated with the repair and maintenance of the Company’s property, plant and equipment are expensed as incurred. Costs associated with improvements which extend the life, increase the capacity or improve the efficiency or safety of the Company’s property, plant and equipment are capitalized and depreciated over the remaining useful life of the related asset. Depreciable property is depreciated over the estimated useful lives of the assets, using principally the straight-line method.

~~LEAR CORPORATION AND SUBSIDIARIES~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~(Continued)~~

A summary of property, plant and equipment is shown below (in millions):

October 1, December 31,
2011 2010
Land $ 107.8 $ 106.0
Buildings and improvements 399.8 360.6
Machinery and equipment 930.0 761.8
Construction in progress 15.8 5.7

Total property, plant and equipment 1,453.4 1,234.1
Less — accumulated depreciation (395.3 ) (239.4 )

Net property, plant and equipment $ 1,058.1 $ 994.7

LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)


	March 31, 2012			December 31, 2011
Land	$	107.8		$	106.1
Buildings and improvements		415.8			406.1
Machinery and equipment		1,052.7			988.6
Construction in progress		15.8			3.3

Total property, plant and equipment		1,592.1			1,504.1
Less – accumulated depreciation		(485.5	)		(432.1	)

Net property, plant and equipment	$	1,106.6		$	1,072.0

Depreciation expense was ~~$56.4~~$46.8 million and ~~$51.7~~$54.6 million infor the three months ended ~~October 1,~~March 31, 2012 and April 2, 2011, ~~and October 2, 2010, respectively, and $168.2 million and $154.0 million in the nine months ended October 1, 2011 and October 2, 2010,~~ respectively.

The Company monitors its long-lived assets for impairment indicators on an ongoing basis in accordance with GAAP. If impairment indicators exist, the Company performs the required impairment analysis by comparing the undiscounted cash flows expected to be generated byfrom the long-lived assets to the related net book values. If the net book value exceeds the undiscounted cash flows, an impairment loss is measured and recognized. The Company does not believe that there were any indicators that would have resulted in ~~additional~~ long-lived asset impairment charges as of ~~October 1, 2011.~~March 31, 2012. The Company will, however, continue to assess the impact of any significant industry events and long-term automotive production estimates on the realization of its long-lived assets.

(6) Goodwill

A summary of the changes in the carrying amount of goodwill, all of which relates to the seating segment, for the ~~nine~~three months ended ~~October 1, 2011,~~March 31, 2012, is shown below (in millions):

Balance as of January 1, 2011 $ 614.6
Acquisition 15.0
Foreign currency translation 2.4

Balance as of October 1, 2011 $ 632.0


Balance as of January 1, 2012	$	628.6
Foreign currency translation		6.3

Balance as of March 31, 2012	$	634.9

Goodwill is not amortized but is tested for impairment on at least an annual basis. Impairment testing is required more often than annually if an event or circumstance indicates that an impairment is more likely than not to have occurred. In conducting its impairment testing, the Company first performs a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount. If not, no further goodwill impairment testing is performed. If it is more likely than not that a reporting unit’s fair value is less than its carrying amount, the Company then compares the fair value of each of its reporting units to the related net book value. If the net book value of a reporting unit exceeds its fair value, an impairment loss is measured and recognized. The Company conducts its annual impairment testing as of the first day of its fourth quarter.

The Company does not believe that there were any indicators that would have resulted in goodwill impairment charges as of ~~October 1, 2011.~~March 31, 2012. The Company will, however, continue to assess the impact of any significant industry events and long-term automotive production estimates on its recorded goodwill.

(7) Long-Term Debt

A summary of long-term debt and the related weighted average interest rates is shown below (in millions):

October 1, 2011 December 31, 2010
Long-Term Weighted Average Long-Term Weighted Average
Debt Interest Rate Debt Interest Rate
7.875% Senior Notes due 2018 $ 347.8 8.00 % $ 347.7 8.00 %
8.125% Senior Notes due 2020 347.4 8.25 % 347.2 8.25 %

Long-term debt $ 695.2 $ 694.9

~~LEAR CORPORATION AND SUBSIDIARIES~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~(Continued)~~

Senior Notes

~~The~~

As of March 31, 2012, the Company’s long-term debt consists of $350 million in aggregate principal amount at maturity of senior unsecured notes due 2018 ~~with~~at a stated coupon rate of 7.875% (the “2018 Notes”) and $350 million in aggregate principal amount at maturity of senior unsecured notes due 2020 ~~with~~at a stated coupon rate of 8.125% (the “2020 Notes” and together with the 2018 Notes, the “Notes”). The 2018 Notes were priced at 99.276% of par, resulting in a yield to maturity of 8.00%, and the 2020 Notes were priced at 99.164% of par, resulting in a yield to maturity of 8.25%.

LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

The Notes were issued on March 26, 2010, and the net proceeds, together with existing cash on hand, were used to repay in full an aggregate amount of $925.0 million of term loans provided under the Company’s first and second lien credit agreements.

~~Interest is payable~~interest on the Notes is payable on March 15 and September 15 of each ~~year, beginning September 15, 2010.~~year. The 2018 Notes mature on March 15, 2018, and the 2020 Notes mature on March 15, 2020.

The Notes are senior unsecured obligations. ~~Obligations~~The Company’s obligations under the Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis, by certain ~~of Lear’s~~ domestic subsidiaries, which are directly or indirectly 100% owned by ~~Lear (see~~Lear. See Note ~~17,~~18, “Supplemental Guarantor Condensed Consolidating Financial ~~Statements”).~~

Statements.”

The indenture governing the Notes contains restrictive covenants that, among other things, limit the ability of the Company and its subsidiaries to: (i) incur additional debt, (ii) pay dividends and make other restricted payments, (iii) create or permit certain liens, (iv) issue or sell capital stock of the Company’s restricted subsidiaries, (v) use the proceeds from sales of assets and subsidiary stock, (vi) create or permit restrictions on the ability of the Company’s restricted subsidiaries to pay dividends or make other distributions to the Company, (vii) enter into transactions with affiliates, (viii) enter into sale and leaseback transactions and (ix) consolidate or merge or sell all or substantially all of the Company’s assets. The foregoing limitations are subject to exceptions as set forth in the Notes. In addition, if in the future the Notes have an investment grade credit rating from both Moody’s Investors Service and Standard & Poor’s Ratings Services and no default has occurred and is continuing, certain of these covenants will, thereafter, no longer apply to the Notes for so long as the Notes have an investment grade credit rating by both rating agencies. The indenture governing the Notes also contains customary events of default.

As of ~~October 1, 2011,~~March 31, 2012, the Company was in compliance with all covenants under the indenture governing the Notes.

As discussed above, in 2010, the Company used the net proceeds from the issuance of the Notes, together with existing cash on hand, to repay in full all amounts outstanding under the term loans provided under the Company’s first and second lien credit agreements. In connection with the issuance of the Notes, the repayment of the term loans and the related amendments to the first lien credit agreement, the Company recognized a loss on the extinguishment of debt of $11.8 million in the first quarter of 2010, resulting from the write-off of unamortized debt issuance costs, and paid debt issuance costs of $17.6 million in the first half of 2010. The debt issuance costs are being amortized over the life of the related debt. The loss on the extinguishment of debt is recorded in other expense, net. See Note 9, “Other Expense, Net.”

Revolving Credit Facility

~~On June 17, 2011, the Company entered into an amendment~~

The Company’s amended and ~~restatement of its~~restated senior secured credit agreement ~~(the “Amended and Restated Credit Agreement”) to, among other things, (i) extend the maturity of the Company’s existing~~provides for a $500 million revolving credit facility from March 18, 2013 to June 17, 2016, (ii) increase the amount available under its existing revolving credit facility from $110 million to $500 million, (iii) adjust the interest rates payable on outstanding borrowings, as described below, and (iv) modify the covenants under the existing credit agreement to provide the Company with significant flexibility with respect to certain actions. In connection with this amendment and restatement, the Company paid debt issuance costs of $4.8 million in the second quarter of 2011.facility. The revolving credit facility permits borrowings for general corporate and working capital purposes and the issuance of letters of credit. The commitments under the revolving credit facility expire on June 17, 2016. As of ~~October 1, 2011,~~March 31, 2012, there were no borrowings outstanding under the revolving credit facility.

Advances under the revolving credit facility generally bear interest at a variable rate per annum equal to (i) the Eurocurrency Rate (as ~~defined in the Amended and Restated Credit Agreement)~~defined) plus an adjustable margin of 1.375% to 3.0% based on the Company’s corporate rating (2.25% as of ~~October 1, 2011)~~March 31, 2012), payable on the last day of each applicable interest period but in no event less frequently than quarterly, or (ii) the Adjusted Base Rate (as ~~defined in the Amended and Restated Credit Agreement)~~defined) plus an adjustable margin of 0.375% to 2.0% based on the Company’s corporate rating (1.25% as of ~~October 1, 2011)~~March 31, 2012), payable quarterly. A facility fee is payable which ranges from 0.375% to 0.50% of the total amount committed under the revolving credit facility.

~~LEAR CORPORATION AND SUBSIDIARIES~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~(Continued)~~

~~Obligations~~The Company’s obligations under the ~~Amended~~amended and ~~Restated Credit Agreement~~restated senior secured credit agreement are secured on a first priority basis by a lien on substantially all of the U.S. assets of ~~Lear~~the Company and its domestic subsidiaries, as well as 100% of the stock of ~~Lear’s~~the Company’s domestic subsidiaries and 65% of the stock of certain of ~~Lear’s~~the Company’s foreign subsidiaries. In addition, obligations under the ~~Amended~~amended and ~~Restated Credit Agreement~~restated senior secured credit agreement are guaranteed, jointly and severally, on a first priority basis, by certain ~~of Lear’s~~ domestic subsidiaries, which are directly or indirectly 100% owned by ~~Lear (see~~Lear. See Note ~~17,~~18, “Supplemental Guarantor Condensed Consolidating Financial ~~Statements”).~~

Statements.”

The ~~Amended~~amended and ~~Restated Credit Agreement~~restated senior secured credit agreement contains various customary representations, warranties and covenants by the Company, including, without limitation, (i) covenants regarding maximum leverage and minimum interest coverage, (ii) limitations on fundamental changes involving the Company or its subsidiaries and (iii) limitations on indebtedness, liens, investments and restricted payments. As of ~~October 1, 2011,~~March 31, 2012, the Company was in compliance with all covenants under the agreement governing the ~~Amended~~amended and ~~Restated Credit Agreement.~~

restated senior secured credit agreement.

For further information on the Notes and the revolving credit facility, see Note 8, “Long-Term Debt,” to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2010.~~

2011.
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

(8) Pension and Other Postretirement Benefit Plans

Net Periodic Pension and Other Postretirement Benefit Cost

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

Three Months Ended Nine Months Ended
October 1, 2011 October 2, 2010 October 1, 2011 October 2, 2010
U.S. Foreign U.S. Foreign U.S. Foreign U.S. Foreign
Service cost $ 0.7 $ 1.7 $ 0.8 $ 1.2 $ 2.2 $ 5.0 $ 2.4 $ 3.5
Interest cost 5.8 6.4 5.8 5.9 17.5 19.1 17.4 17.7
Expected return on plan assets (6.5 ) (7.9 ) (5.9 ) (6.8 ) (19.7 ) (23.6 ) (17.6 ) (20.5 )
Amortization of actuarial loss — 0.1 — — — 0.2 — —
Curtailment loss — — — 3.5 — — — 3.5
Settlement gain — — — — (0.1 ) — (0.1 ) —

Net periodic benefit cost $ — $ 0.3 $ 0.7 $ 3.8 $ (0.1 ) $ 0.7 $ 2.1 $ 4.2


	Three Months Ended
	March 31, 2012						April 2, 2011
	U.S.			Foreign			U.S.			Foreign
Service cost	$	0.8		$	1.9		$	0.7		$	1.8
Interest cost		5.8			4.8			5.8			6.6
Expected return on plan assets		(6.6	)		(5.5	)		(6.6	)		(8.1	)
Amortization of actuarial loss		1.0			1.4			—			0.1
Settlement (gain) loss		0.6			—			(0.1	)		—

Net periodic benefit cost	$	1.6		$	2.6		$	(0.2	)	$	0.4

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

Three Months Ended Nine Months Ended
October 1, 2011 October 2, 2010 October 1, 2011 October 2, 2010
U.S. Foreign U.S. Foreign U.S. Foreign U.S. Foreign
Service cost $ 0.1 $ 0.4 $ 0.2 $ 0.2 $ 0.3 $ 0.8 $ 0.4 $ 0.6
Interest cost 1.4 0.8 1.3 0.9 4.1 2.8 4.0 2.7
Amortization of actuarial loss — 0.1 — — 0.2 0.1 — —
Special termination benefits — — — — — — — 0.1

Net periodic benefit cost $ 1.5 $ 1.3 $ 1.5 $ 1.1 $ 4.6 $ 3.7 $ 4.4 $ 3.4


	Three Months Ended
	March 31, 2012				April 2, 2011
	U.S.		Foreign		U.S.		Foreign
Service cost	$	0.1	$	0.2	$	0.1	$	0.3
Interest cost		1.1		0.8		1.3		1.0
Amortization of actuarial loss		0.1		0.1		0.1		—
Special termination benefits		—		0.1		—		—

Net periodic benefit cost	$	1.3	$	1.2	$	1.5	$	1.3

Contributions

Employer contributions to the Company’s domestic and foreign pension plans for the ~~nine~~three months ended ~~October 1, 2011,~~March 31, 2012, were ~~$16.3 million, in aggregate.~~$8.6 million. The Company expects ~~total~~ contributions ~~of approximately $30 to $35 million~~ to its domestic and foreign pension plans of $35 to $40 million in ~~aggregate, in 2011.~~2012. The Company may elect to make contributions in excess of minimum funding requirements in response to investment performance or changes in interest rates or when the Company believes that it is financially advantageous to do so and based on its other cash requirements.

Employer contributions to the Company’s defined contribution retirement program for its salaried employees, determined as a percentage of each covered employee’s eligible compensation, for the ~~nine~~three months ended ~~October 1, 2011,~~March 31, 2012, were ~~$9.8~~$3.0 million. The Company expects total contributions ~~of approximately $13 million~~ to this program of $14.5 million in ~~2011.~~

~~LEAR CORPORATION AND SUBSIDIARIES~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~(Continued)~~

~~Recent Legislation~~

In March 2010, the Patient Protection and Affordable Care Act and the Health Care Education and Affordability Reconciliation Act (the “Acts”) were signed into law. The Acts contain provisions that impact the Company’s accounting for retiree medical benefits. The impact of these provisions was not significant and was included in the determination of the Company’s other postretirement benefit plan obligation as of December 31, 2010. The Company will continue to assess the provisions of the Acts and may consider plan amendments to respond to the provisions of the Acts.

(9) Other (Income) Expense, Net

Other (income) expense, net includes ~~equity in net income of affiliates,~~ non-income related taxes, foreign exchange gains and losses, gains and losses related to certain derivative instruments and hedging activities, gains and losses on the sales of fixed assets and other miscellaneous income and expense. A summary of other (income) expense, net is shown below (in millions):

Three Months Ended Nine Months Ended
October 1, October 2, October 1, October 2,
2011 2010 2011 2010
Other expense $ 13.0 $ 12.8 $ 18.4 $ 32.9
Other income (4.5 ) (9.8 ) (12.7 ) (31.4 )

Other expense, net $ 8.5 $ 3.0 $ 5.7 $ 1.5


	March 31, 2012			April 2, 2011
Other expense	$	3.2		$	4.2
Other income		(2.9	)		(7.0	)

Other (income) expense, net	$	0.3		$	(2.8	)

For the three ~~and nine~~ months ended ~~October 1,~~March 31, 2012, other income includes a gain of $1.6 million resulting from insurance recoveries related to the destruction of property, plant and equipment. See Note 13, “Legal and Other Contingencies.”

For the three months ended April 2, 2011, other income includes ~~gains~~a gain of ~~$1.9~~$3.9 million ~~and $5.8 million, respectively,~~ related to ~~affiliate transactions. For~~a fair market value adjustment in conjunction with a transaction with an affiliate.

LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

(10) Income Taxes

The provision for income taxes was $39.3 million for the ~~three and nine months ended October 1, 2011, other~~first quarter of 2012, representing an effective tax rate of 22.6% on pretax income ~~includes~~before equity in net income of affiliates of ~~$1.7~~$174.0 million, ~~and $9.6 million, respectively.~~

For the nine months ended October 2, 2010, other expense includes a loss on the extinguishment of debt of $11.8 million, resulting from the write-off of unamortized debt issuance costs. For the three and nine months ended October 2, 2010, other income includes equity in net income of affiliates of $8.7 million and $26.5 million, respectively.

~~(10) Income Taxes~~

~~The provision for income taxes was $31.0~~as compared to $40.0 million for the ~~third~~first quarter of 2011, representing an effective tax rate of ~~22.3%~~20.1% on pretax income ~~of $139.1 million, as compared to $5.4 million for the third quarter of 2010, representing an effective tax rate of 5.2% on pretax~~before equity in net income of ~~$103.9~~affiliates of $198.6 million. The provision for income taxes was $90.7 million for the nine months ended October 1, 2011, representing an effective tax rate of 16.6% on pretax income of $547.2 million, as compared to $29.1 million for the nine months ended October 2, 2010, representing an effective tax rate of 7.9% on a pretax income of $366.7 million.

In the first ~~nine months~~quarters of 2012 and 2011, the provision for income taxes was primarily impacted by the level and mix of earnings among tax jurisdictions, tax benefits of $22.9 million related to the reversal of full valuation allowances on the deferred tax assets of two foreign subsidiaries and an increase in tax expense related to the phase out of preferential tax holiday rates in several Chinese subsidiaries. The provision was also impacted by a portion of the Company’s restructuring charges and other expenses, for which no tax benefit was provided as the charges were incurred in certain countries for which no tax benefit is likely to be realized due to a history of operating losses in those countries. In the first nine months of 2010, the provision for income taxes was impacted by the mix of earnings among tax jurisdictions, tax benefits of $32.8 million, including interest, related to reductions in recorded tax reserves and net tax benefits of $3.1 million related to restructuring, the reduction of a valuation allowance in a foreign subsidiary and various other items.jurisdictions. The provision was also impacted by a portion of the Company’s restructuring charges and other expenses, for which no tax benefit was provided as the charges were incurred in certain countries for which no tax benefit is likely to be realized due to a history of operating losses in those countries. Excluding these items, the effective tax rate in the first ~~nine months~~quarters of ~~2011~~2012 and ~~2010~~2011 approximated the U.S. federal statutory income tax rate of 35% adjusted for income taxes on foreign earnings, losses and remittances, foreign and U.S. valuation allowances, tax credits, income tax incentives and other permanent items.

~~Further, the~~

The Company’s current and future provision for income taxes is significantly impacted by the initial recognition of and changes in valuation allowances in certain countries, particularly the United States. The Company intends to maintain these allowances until it is more likely than not that the deferred tax assets will be realized. The Company’s future provision for income taxes will include no tax benefit with respect to losses incurred and no tax expense with respect to income generated in these countries until the respective valuation allowances are eliminated. Accordingly, income taxes are impacted by the U.S. and foreign valuation allowances and the mix of earnings among jurisdictions.

~~LEAR CORPORATION AND SUBSIDIARIES~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~(Continued)~~

The Company was profitable in the first nine months of 2011 and in 2010 in the United States and in certain international jurisdictions for which it has provided a full valuation allowance against its deferred tax assets. If the Company continues to experience sustained levels of profitability in the United States and these international jurisdictions, its assessment of the need for a full valuation allowance with respect to the deferred tax assets in those jurisdictions could change. Any reduction to a valuation allowance will reduce the Company’s tax expense in the period in which such reduction occurs.

In connection with the Company’s emergence from Chapter 11 bankruptcy proceedings, the Company increased its U.S. net operating loss carryforwards and retained its capital loss and tax credit carryforwards (collectively, the “Tax Attributes”). However, Internal Revenue Code (“IRC”) Sections 382 and 383 provide an annual limitation with respect to the ability of a corporation to utilize its Tax Attributes, as well as certain built-in-losses, against future U.S. taxable income in the event of a change in ownership. The Company’s emergence from Chapter 11 bankruptcy proceedings is considered a change in ownership for purposes of IRC Section 382. The limitation under the IRC is based on the value of the corporation as of the emergence date. As a result, the Company’s future U.S. taxable income may not be fully offset by the Tax Attributes if such income exceeds its annual limitation, and the Company may incur a tax liability with respect to such income. In addition, subsequent changes in ownership for purposes of the IRC could further limit the Company’s ability to use its Tax Attributes.

For further information, , see Note 9, “Income Taxes,” to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2010.~~

2011.

(11) Net Income Per Share Attributable to Lear

Basic net income per share attributable to Lear ~~was~~is computed ~~using the two-class method~~ by dividing net income attributable to Lear ~~after deducting undistributed earnings allocated to participating securities,~~ by the average number of common shares outstanding during the period. Common shares issuable upon the satisfaction of certain conditions pursuant to a contractual agreement, such as those common shares contemplated as part of the Company’s emergence from Chapter 11 bankruptcy proceedings, are considered common shares outstanding and are included in the computation of basic net income per share attributable to Lear. The Company’s preferred shares that were outstanding during a portion of 2010 were considered participating securities. There were no preferred shares outstanding during 2011 as all of the Company’s remaining preferred shares outstanding were converted into shares of common stock on November 10, 2010. For the three and nine months ended October 2, 2010, average participating securities outstanding were 2,367,115 and 4,480,401, respectively (such securities were convertible into 4,734,230 and 8,960,802 shares, respectively, of common stock after giving effect to the two-for-one stock split described in Note 12, “Comprehensive Income and Equity”).

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

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

Three Months Ended Nine Months Ended
October 1, October 2, October 1, October 2,
2011 2010 2011 2010
Net income attributable to Lear $ 100.7 $ 95.3 $ 434.2 $ 321.2
Less: Undistributed earnings allocated to participating securities — (4.3 ) — (28.5 )

Net income available to Lear common shareholders $ 100.7 $ 91.0 $ 434.2 $ 292.7

Average common shares outstanding⁽¹⁾
103,356,696 99,332,230 104,363,937 91,952,210

Basic net income per share attributable to Lear⁽¹⁾
$ 0.97 $ 0.92 $ 4.16 $ 3.18


⁽¹⁾		~~2010 share~~ and ~~per share data has been retroactively adjusted to reflect the two-for-one stock split described in Note 12, “Comprehensive Income and Equity.”~~

~~LEAR CORPORATION AND SUBSIDIARIES~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~(Continued)~~

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

Three Months Ended Nine Months Ended
October 1, October 2, October 1, October 2,
2011 2010 2011 2010
Net income attributable to Lear $ 100.7 $ 95.3 $ 434.2 $ 321.2

Average common shares outstanding⁽¹⁾
103,356,696 99,332,230 104,363,937 91,952,210
Dilutive effect of common stock equivalents⁽¹⁾
2,452,053 8,884,432 2,795,339 16,149,572

Average diluted shares outstanding⁽¹⁾
105,808,749 108,216,662 107,159,276 108,101,782

Diluted net income per share attributable to Lear⁽¹⁾
$ 0.95 $ 0.88 $ 4.05 $ 2.97


⁽¹⁾		~~2010 share and per share data has been retroactively adjusted to reflect the two-for-one stock split described in Note 12, “Comprehensive Income and Equity.”~~

The Company’s participating securities were convertible into common stock on a two-for-one basis, after giving effect to the two-for-one stock split described in Note 12, “Comprehensive Income and Equity,” and participated ratably with common stock on dividends. Accordingly, diluted net income per share attributable to Lear computed using the two-class method produced the same result.

LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
   Three Months Ended
   March 31,
2012    April 2,
2011
Net income attributable to Lear
   $ 134.1       $ 156.0




Average common shares outstanding
   100,315,771       105,060,428
Dilutive effect of common stock equivalents
   1,613,630       3,181,911




Average diluted shares outstanding
   101,929,401       108,242,339




Basic net income per share attributable to Lear
   $ 1.34       $ 1.48




Diluted net income per share attributable to Lear
   $ 1.32       $ 1.44

(12) Comprehensive Income and Equity

Comprehensive Income

Comprehensive income is defined as all changes in the Company’s net assets except changes resulting from transactions with stockholders. It differs from net income in that certain items recorded in equity are included in comprehensive income.

A summary of comprehensive income and reconciliations of equity, Lear Corporation stockholders’ equity and noncontrolling interests for the three ~~and nine~~ months ended ~~October 1,~~March 31, 2012 and April 2, 2011, isare shown below (in millions):

Three Months Ended October 1, 2011 Nine Months Ended October 1, 2011
Attributable Attributable
to Lear Corporation Non-controlling to Lear Corporation Non-controlling
Equity Stockholders Interests Equity Stockholders Interests
Beginning equity balance $ 2,901.9 $ 2,792.7 $ 109.2 $ 2,568.8 $ 2,460.2 $ 108.6
Stock-based compensation transactions and other 10.3 10.3 — 25.8 25.8 —
Repurchase of common stock (94.2 ) (94.2 ) — (194.2 ) (194.2 ) —
Dividends declared to Lear Corporation stockholders (13.2 ) (13.2 ) — (40.0 ) (40.0 ) —
Dividends paid to noncontrolling interests (0.3 ) — (0.3 ) (18.5 ) — (18.5 )
Addition to noncontrolling interests — — — 2.4 — 2.4
Comprehensive income:
Net income 108.1 100.7 7.4 456.5 434.2 22.3
Other comprehensive income (loss), net of tax:
Defined benefit plan adjustments 0.1 0.1 — 0.3 0.3 —
Derivative instruments and hedging activities (51.9 ) (51.9 ) — (45.0 ) (45.0 ) —
Foreign currency translation adjustments (117.6 ) (118.0 ) 0.4 (12.9 ) (14.8 ) 1.9

Other comprehensive income (loss) (169.4 ) (169.8 ) 0.4 (57.6 ) (59.5 ) 1.9

Comprehensive income (loss) (61.3 ) (69.1 ) 7.8 398.9 374.7 24.2

Ending equity balance $ 2,743.2 $ 2,626.5 $ 116.7 $ 2,743.2 $ 2,626.5 $ 116.7

~~In the three months ended October 1, 2011, foreign currency translation adjustments relate primarily to the Euro.~~

~~LEAR CORPORATION AND SUBSIDIARIES~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~(Continued)~~

A summary of comprehensive income and reconciliations of equity, Lear Corporation stockholders’ equity and noncontrolling interests for the three and nine months ended October 2, 2010, is shown below (in millions):

Three Months Ended October 2, 2010 Nine Months Ended October 2, 2010
Attributable Attributable
to Lear Corporation Non-controlling to Lear Corporation Non-controlling
Equity Stockholders Interests Equity Stockholders Interests
Beginning equity balance $ 2,322.5 $ 2,214.5 $ 108.0 $ 2,181.8 $ 2,089.1 $ 92.7
Stock-based compensation transactions and other 4.0 4.0 — 13.1 13.1 —
Dividends paid to noncontrolling interests (9.3 ) — (9.3 ) (13.9 ) — (13.9 )
Transaction with affiliates — — — 6.5 — 6.5
Comprehensive income:
Net income 98.5 95.3 3.2 337.6 321.2 16.4
Other comprehensive income (loss), net of tax:
Defined benefit plan adjustments (1.9 ) (1.9 ) — (2.1 ) (2.1 ) —
Derivative instruments and hedging activities 3.5 3.5 — 3.7 3.7 —
Foreign currency translation adjustments 120.7 119.0 1.7 11.3 9.4 1.9

Other comprehensive income 122.3 120.6 1.7 12.9 11.0 1.9

Comprehensive income 220.8 215.9 4.9 350.5 332.2 18.3

Ending equity balance $ 2,538.0 $ 2,434.4 $ 103.6 $ 2,538.0 $ 2,434.4 $ 103.6

~~In the three months ended October 2, 2010, foreign currency translation adjustments relate primarily to the Euro.~~

Lear Corporation Stockholders’ Equity

Common Stock Share Repurchase Program — On February 16, 2011, the Company’s Board of Directors authorized a three year, $400 million common stock share repurchase program. On January 11, 2012, the Company’s Board of Directors authorized a $300 million increase to the existing common stock share repurchase program, bringing the total value of shares of outstanding common stock that may be repurchased under the program to $700 million. Under this program, the Company ~~may~~will repurchase shares of ~~its outstanding~~ common stock from time to time in open market or privately negotiated transactions at prices, times and amounts to be determined by the Company. The common stock repurchase authorization expires on February 16, 2014. ~~In the first nine months of 2011, the~~

The Company repurchased ~~4,082,523~~1,151,913 shares of its outstanding common stock at an average purchase price of ~~$47.57~~$45.58 per share, excluding commissions, ~~(shares and price per share have been retroactively adjusted to reflect the two-for-one stock split discussed below)~~ for an aggregate purchase price of ~~$194.2~~$52.5 million in the first quarter of 2012 and repurchased 528,998 shares of its outstanding common stock at an average purchase price of $51.83 per share, excluding commissions, for an aggregate purchase

LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

price of $27.4 million in the first quarter of 2011. As of March 31, 2012, the Company may repurchase an additional ~~$205.8~~$368.4 million in shares of its outstanding common stock under this program. The extent to which the Company will repurchase its outstanding common stock and the timing of such repurchases will depend upon its financial condition, prevailing market conditions, alternative uses of capital and other factors. In addition, the Company’s amended and restated credit facility and ~~indentures~~the indenture governing the Notes place certain limitations on the repurchase of common shares.

In addition to shares repurchased under the Company’s common stock share repurchase program described above, the Company classified shares withheld from the settlement of the Company’s restricted stock unit awards to cover minimum tax withholding requirements as common stock held in treasury in the accompanying condensed consolidated balance sheets as of ~~October 1, 2011~~March 31, 2012 and December 31, ~~2010.~~

2011.

~~Stock Split~~Quarterly Dividend — ~~On February 16,~~In the first quarters of 2012 and 2011, the Company’s Board of Directors declared a two-for-one stock split of the Company’s common stock. On March 17, 2011, as a result of the stock split, stockholders of record as of the close of business on March 4, 2011, received one additional share of common stock for every one share of the common stock held by the stockholders of record. The Company recorded a transfer from additional paid-in-capital to common stock of $0.5 million, representing $0.01 par value of each share of common stock issued. In addition, as a result of the stock split, warrant holders are entitled to exercise each warrant for two shares of common stock at an exercise price of $0.005 per share of common stock. Except as otherwise expressly stated, all issued common stock shares and per share amounts presented in the accompanying condensed consolidated financial statements have been retroactively adjusted to reflect the stock split for all periods presented.

~~Quarterly Dividend~~ ~~— The Company’s Board of Directors declared quarterly~~ cash dividends of $0.14 and $0.125 per share of common stock, inrespectively. In the first ~~second and third quarters~~quarter of ~~2011. Declared~~2012, declared dividends totaled ~~$40.0~~$14.4 million, ~~in aggregate,~~and dividends paid totaled $13.8 million. In the first quarter of ~~which $38.3~~2011, declared dividends totaled $13.4 million, ~~was~~and dividends paid ~~in 2011.~~totaled $12.8 million. Dividends payable on common shares to be distributed under the Company’s stock-based compensation program and common

~~LEAR CORPORATION AND SUBSIDIARIES~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~(Continued)~~

shares contemplated as part of the Company’s emergence from Chapter 11 bankruptcy proceedings will be paid when such common shares are distributed.

Noncontrolling Interests

Transactions with affiliates in the ~~nine months ended October 1, 2011, addition to~~above table includes the acquisition of a noncontrolling ~~interests reflects~~interest in a consolidated subsidiary in the first quarter of 2012 and the acquisition of a controlling interest in an affiliate previously accounted for under the equity ~~method. In~~method in the ~~nine months ended October 2, 2010, transaction with affiliates reflects the sale~~first quarter of ~~noncontrolling interests in two previously wholly owned subsidiaries.~~

2011.

(13) Legal and Other Contingencies

As of ~~October 1, 2011~~March 31, 2012 and December 31, ~~2010,~~2011, the Company had recorded reserves for pending legal disputes, including commercial disputes and other matters, of ~~$17.2~~$14.7 million and ~~$23.4~~$17.0 million, respectively. Such reserves reflect amounts recognized in accordance with GAAP and typically exclude the cost of legal representation. Product liability and warranty reserves are recorded separately from legal reserves, as described below.

On October 5, 2011, a plaintiff filed a putative class action complaint in the United States ~~district court~~District Court for the Eastern District of Michigan against the Company and several other global suppliers of automotive wire harnesses alleging violations of federal and state antitrust and related laws. Since that time, ~~several~~a number of other plaintiffs have filed substantially similar class action complaints against the Company and these and other suppliers and individuals in a number of different federal district courts, and it is possible that additional similar lawsuits may be filed in the future. Plaintiffs ~~claim that they are~~purport to be direct and indirect purchasers of automotive wire harnesses supplied by the Company and/or the other defendants ~~in vehicles purchased or leased by~~during the ~~plaintiffs for personal use or for resale.~~relevant period. The complaints allege that the defendants conspired to fix prices at which automotive wire harnesses were sold and that this had an anticompetitive effect upon interstate commerce in the United States. The complaints further allege that defendants fraudulently concealed their alleged conspiracy. The plaintiffs in these proceedings seek injunctive relief and recovery of an unspecified amount of damages, as well as costs and expenses relating to the proceedings, including attorneys’ fees. ~~One plaintiff has filed a motion with~~On February 7, 2012, the Judicial Panel on Multidistrict Litigation ~~requesting that these separate~~entered an order transferring and coordinating the various civil ~~proceedings be consolidated~~actions, for pretrial purposes, into one proceeding ~~before~~in the ~~U.S.~~United States District Court for the Eastern District of Michigan. ~~Responses~~On February 17, 2012, a plaintiff filed a putative class action complaint in the Ontario (Canada) Superior Court of Justice against the Company and several other global suppliers of automotive wire harnesses alleging violations of Canadian laws related to competition. The allegations in this complaint are substantially similar to those complaints that have been filed in the United States. On November 17, 2011, the Company filed a motion with the United States Bankruptcy Court for the Southern District of New York seeking entry of an order enforcing the Company’s 2009 Plan of Reorganization and directing dismissal of the pending class action complaints. The bankruptcy court heard oral argument on the motion and, on February 10, 2012, ruled that claims against the Company alleging violation of antitrust law are ~~due in~~enjoined to the extent that they arose prior to the Company’s emergence from Chapter 11 bankruptcy proceedings on November ~~2011.~~9, 2009. The bankruptcy court further held that the District Court was the appropriate forum to address antitrust claims arising after the Company’s emergence from Chapter 11 bankruptcy proceedings. The Company is currently appealing the bankruptcy court’s decision. The ultimate outcome of this litigation, and consequently, an estimate of the possible loss, if any, related to this litigation, cannot reasonably be determined at this time. However, the Company believes the plaintiffs’ allegations against it are without merit and intends to vigorously defend itself in these proceedings.

LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

Commercial Disputes

The Company is involved from time to time in legal proceedings and claims, including, without limitation, commercial or contractual disputes with its customers, suppliers and competitors. These disputes vary in nature and are usually resolved by negotiations between the parties.

Product Liability and Warranty Matters

In the event that use of the Company’s products results in, or is alleged to result in, bodily injury and/or property damage or other losses, the Company may be subject to product liability lawsuits and other claims. Such lawsuits generally seek compensatory damages, punitive damages and attorney fees and costs. In addition, the Company is a party to warranty-sharing and other agreements with certain of its customers related to its products. These customers may pursue claims against the Company for contribution of all or a portion of the amounts sought in connection with product liability and warranty claims. The Company can provide no ~~assurance~~assurances that it will not experience material claims in the future or that it will not incur significant costs to defend such claims. In addition, if any of the Company’s products are, or are alleged to be, defective, the Company may be required or requested by its customers to participate in a recall or other corrective action involving such products. Certain of the Company’s customers have asserted claims against the Company for costs related to recalls or other corrective actions involving its products.

In certain instances, allegedly defective products may be supplied by tier 2 suppliers. The Company may seek recovery from its suppliers of materials or services included within the Company’s products that are associated with product liability and warranty claims. The Company carries insurance for certain legal matters, including product liability claims, but such coverage may be limited. The Company does not maintain insurance for product warranty or recall matters. Future dispositions with respect to the Company’s product liability claims that were subject to compromise under the Chapter 11 bankruptcy proceedings will be satisfied out of a common stock and warrant reserve established for that purpose.

The Company records product warranty reserves based on its individual customer agreements. Product warranty reserves are recorded for known warranty issues when liability for such issues is probable and related amounts are reasonably estimable.

~~LEAR CORPORATION AND SUBSIDIARIES~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~(Continued)~~

A summary of the changes in reserves for product liability and warranty claims for the ~~nine~~three months ended ~~October 1, 2011,~~March 31, 2012, is shown below (in millions):

Balance as of January 1, 2011 $ 43.6
Expense, net (including changes in estimates) 1.5
Settlements (5.8 )
Foreign currency translation and other 0.7

Balance as of October 1, 2011 $ 40.0


Balance as of January 1, 2012	$	23.4
Expense, net (including changes in estimates)		0.3
Settlements		(1.4	)
Foreign currency translation and other		0.4

Balance as of March 31, 2012	$	22.7

Environmental Matters

The Company is subject to local, state, federal and foreign laws, regulations and ordinances which govern activities or operations that may have adverse environmental effects and which impose liability for clean-up costs resulting from past spills, disposals or other releases of hazardous wastes and environmental compliance. The Company’s policy is to comply with all applicable environmental laws and to maintain an environmental management program based on ISO 14001 to ensure compliance with this standard. However, the Company currently is, has been and in the future may become the subject of formal or informal enforcement actions or procedures.

The Company has been named as a potentially responsible party at several third-party landfill sites and is engaged in the cleanup of hazardous waste at certain sites owned, leased or operated by the Company, including several properties acquired in its 1999 acquisition of UT Automotive, Inc. (“UT Automotive”). Certain present and former properties of UT Automotive are subject to environmental liabilities which may be significant. The Company obtained agreements and indemnities with respect to certain environmental liabilities from United Technologies Corporation (“UTC”) in connection with its acquisition of UT Automotive. UTC manages and directly funds these environmental liabilities pursuant to its agreements and indemnities with the Company.

As of ~~October 1, 2011~~March 31, 2012 and December 31, ~~2010,~~2011, the Company had recorded environmental reserves of ~~$2.9 million and $2.7 million, respectively. While the~~$2.8 million. The Company does not believe that the environmental liabilities associated with its current and former properties will have a material adverse impact on its business, financial condition, results of operations or cash ~~flows,~~flows; however, no ~~assurance~~assurances can be given in this regard.

LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

Other Matters

The Company is involved from time to time in various other legal proceedings and claims, including, without limitation, ~~commercial and contractual disputes,~~ intellectual property matters, ~~personal injury claims,~~ tax claims and employment matters. Although the outcome of any legal matter cannot be predicted with certainty, the Company does not believe that any of these other legal proceedings or claims in which the Company is currently involved, either individually or in the aggregate, will have a material adverse impact on its business, financial condition, results of operations or cash flows. However, no ~~assurance~~assurances can be given in this regard.

Although the Company records reserves for legal disputes, product liability and warranty claims and environmental and other matters in accordance with GAAP, the ultimate outcomes of these matters are inherently uncertain. Actual results may differ significantly from current estimates.
Insurance Recoveries
The Company has incurred losses and incremental costs related to the destruction of assets caused by a fire at one of its European production facilities in the third quarter of 2011 and is pursuing, and will continue to pursue, recovery of such costs under applicable insurance policies. Anticipated proceeds from insurance recoveries related to losses and incremental costs that have been incurred (“loss recoveries”) are recognized when receipt is probable. Anticipated proceeds from insurance recoveries in excess of the net book value of destroyed property, plant and equipment (“insurance gain contingencies”) are recognized when all contingencies related to the claim have been resolved. Loss recoveries related to the destruction of inventory and incremental costs are included in costs of sales, and loss recoveries and insurance gain contingencies related to the destruction of property, plant and equipment are included in other (income) expense, net. Cash proceeds related to the destruction of inventory and incremental costs are included in cash flows from operating activities, and cash proceeds related to the destruction of property, plant and equipment are included in cash flows from investing activities.
Through the first quarter of 2012, the Company incurred cumulative losses and incremental costs of $34.7 million ($10.7 million incurred in the first quarter of 2012). The Company also recognized in cost of sales cumulative loss recoveries of $20.1 million ($10.0 million recognized in the first quarter of 2012) and cumulative loss recoveries and insurance gain contingencies in other (income) expense of $5.0 million ($1.6 million recognized in the first quarter of 2012). In addition, the Company has received cumulative cash proceeds of $21.1 million ($8.5 million received in the first quarter of 2012), of which $16.6 million ($7.5 million in the first quarter of 2012) has been reflected in cash flows from operating activities and $4.5 million ($1.0 million in the first quarter of 2012) has been reflected in cash flows from investing activities.

(14) Segment Reporting

The Company has two reportable operating segments: seating, which includes seat systems and related components, such as seat frames, recliner mechanisms, seat tracks, seat trim covers, headrests and seat foam, and electrical power management systems (“EPMS”), which includes wiring, connectors, junction boxes and various other components of electrical distribution systems for traditional powertrain vehicles, as well as for hybrid and electric vehicles. The other category includes unallocated costs related to corporate headquarters, ~~geographic~~regional headquarters and the elimination of intercompany activities, none of which meets the requirements offor being classified as an operating segment.

The Company evaluates the performance of its operating segments based primarily on (i) revenues from external customers, (ii) pretax income before equity in net income of affiliates, interest expense and other (income) expense ~~net~~ (“segment earnings”) and (iii) cash flows, ~~being~~ defined as segment earnings less capital expenditures plus depreciation and amortization. A summary of revenues from external customers and other financial information by reportable operating segment is shown below (in millions):

LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

Three Months Ended October 1, 2011
Seating EPMS Other Consolidated
Revenues from external customers $ 2,687.8 $ 772.2 $ — $ 3,460.0
Segment earnings⁽¹⁾
169.9 40.6 (52.0 ) 158.5
Depreciation and amortization 36.6 25.0 1.9 63.5
Capital expenditures 56.1 33.7 1.7 91.5
Total assets 3,919.4 1,313.5 1,983.0 7,215.9

Three Months Ended October 2, 2010
Seating EPMS Other Consolidated
Revenues from external customers $ 2,208.7 $ 611.6 $ — $ 2,820.3
Segment earnings⁽¹⁾
139.8 24.3 (45.3 ) 118.8
Depreciation and amortization 36.2 20.9 1.6 58.7
Capital expenditures 24.1 13.4 1.4 38.9
Total assets 3,633.3 1,098.1 1,904.9 6,636.3

Nine Months Ended October 1, 2011
Seating EPMS Other Consolidated
Revenues from external customers $ 8,272.7 $ 2,375.3 $ — $ 10,648.0
Segment earnings⁽¹⁾
601.8 133.2 (157.2 ) 577.8
Depreciation and amortization 111.7 72.1 5.5 189.3
Capital expenditures 135.5 107.9 4.3 247.7
Total assets 3,919.4 1,313.5 1,983.0 7,215.9

Nine Months Ended October 2, 2010
Seating EPMS Other Consolidated
Revenues from external customers $ 6,929.7 $ 1,868.4 $ — $ 8,798.1
Segment earnings⁽¹⁾
496.7 73.4 (157.7 ) 412.4
Depreciation and amortization 107.6 62.1 4.6 174.3
Capital expenditures 71.1 40.0 4.2 115.3
Total assets 3,633.3 1,098.1 1,904.9 6,636.3


	Three Months Ended April 2, 2011
	Seating		EPMS		Other			Consolidated
Revenues from external customers	$	2,725.0	$	786.7	$	—		$	3,511.7
Segment earnings⁽¹⁾		208.5		44.1		(53.5	)		199.1
Depreciation and amortization		37.1		22.6		1.8			61.5
Capital expenditures		33.1		37.0		0.4			70.5
Total assets		4,023.4		1,246.4		2,093.2			7,363.0


⁽¹⁾		See definition ~~above.~~above

For the three months ended ~~October 1, 2011,~~March 31, 2012, segment earnings include restructuring charges ~~(credits)~~ of ~~$8.6~~$3.7 million, ~~$0.8~~$1.3 million and ~~($0.1)~~$0.2 million in the seating and EPMS segments and in the other category, respectively. For the ~~nine~~three months ended ~~October 1,~~April 2, 2011, segment earnings include restructuring charges of ~~$12.0~~$1.5 million and ~~$1.9~~$0.1 million in the seating and EPMS segments, respectively. ~~For~~There were no restructuring charges in the other category for the three months ended ~~October~~April 2, 2010, segment earnings include restructuring charges of $24.0 million, $1.0 million and $0.6 million in the seating and EPMS segments and in the other category, respectively. For the nine months ended October 2, 2010, segment earnings include restructuring charges of $32.9 million, $15.2 million and $1.8 million in the seating and EPMS segments and in the other category, respectively.2011. See Note 2, ~~“Restructuring Activities.~~“Restructuring.”

A reconciliation of consolidated segment earnings to consolidated income before provision for income taxes and equity in net income of affiliates is shown below (in millions):

~~LEAR CORPORATION AND SUBSIDIARIES~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~(Continued)~~

Three Months Ended Nine Months Ended
October 1, October 2, October 1, October 2,
2011 2010 2011 2010
Segment earnings $ 158.5 $ 118.8 $ 577.8 $ 412.4
Interest expense 10.9 11.9 24.9 44.2
Other expense, net 8.5 3.0 5.7 1.5

Consolidated income before provision for income taxes $ 139.1 $ 103.9 $ 547.2 $ 366.7

(15) Financial Instruments

The carrying values of the Company’s debt instruments vary from their fair values. The fair values were determined by reference to the quoted market prices of these ~~securities.~~securities (Level 1 of the fair value hierarchy). As of ~~October 1,~~March 31, 2012, the aggregate carrying value of the Company’s Notes was $695.5 million, as compared to an estimated aggregate fair value of $769.0 million. As of December 31, 2011, the aggregate carrying value of the Company’s Notes was ~~$695.2~~$695.4 million, as compared to an estimated aggregate fair value of ~~$742.0~~$764.6 million. ~~As of December 31, 2010, the aggregate carrying value of the Company’s Notes was $694.9 million, as compared to an estimated aggregate fair value of $755.6 million.~~

Derivative Instruments and Hedging Activities

The Company has used derivative financial instruments, including forwards, futures, options, swaps and other derivative contracts to reduce the effects of fluctuations in foreign exchange rates, interest rates and commodity prices and the resulting variability of the Company’s operating results. The Company is not a party to leveraged derivatives. On the date that a derivative contract is entered into, the Company designates the derivative as either (1) a hedge of a recognized asset or liability or of an unrecognized firm commitment (a fair value hedge), (2) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (a cash flow hedge) or (3) a hedge of a net investment in a foreign operation (a net investment hedge).

Foreign exchange — The Company uses ~~forward foreign exchange, futures~~forwards, swaps and ~~option~~other derivative contracts to reduce the ~~effect~~effects of fluctuations in foreign exchange rates on known foreign currency exposures. Gains and losses on the derivative instruments are intended to offset gains and losses on the hedged transaction in an effort to reduce ~~the earnings volatility resulting from~~exposure to fluctuations in foreign exchange rates. ~~Currently, the~~The principal currencies hedged by the Company include the Mexican peso, various European currencies, the Chinese renminbi and the ~~Chinese renminbi. Forward foreign exchange, futures~~Canadian dollar. Forwards, swaps and ~~option~~other derivative contracts are accounted for as cash flow hedges when the hedged item is a forecasted transaction or relates to the variability of cash flows to be received or paid. As of ~~October 1, 2011~~March 31, 2012 and December 31, ~~2010,~~2011, contracts designated as cash flow hedges with ~~$509.4~~$571.7 million and ~~$174.7~~$585.7 million, respectively, of notional amount were outstanding with maturities of less than ~~18 months and 12 months, respectively.~~17 months. As of ~~October 1, 2011~~March 31, 2012 and December 31, ~~2010,~~2011, the fair value of these contracts was approximately ~~($45.6)~~$1.3 million and

LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

($~~1.3)~~39.1) million, respectively. As of ~~October 1, 2011~~March 31, 2012 and December 31, ~~2010,~~2011, other foreign currency derivative contracts that did not qualify for hedge accounting with ~~$57.0~~$121.9 million and ~~$140.6~~$148.4 million, respectively, of notional amount were outstanding. These foreign currency derivative contracts consist principally of ~~hedges of~~ cash transactions of up to ~~three~~13 months, hedges of intercompany loans and hedges of certain other balance sheet exposures. As of ~~October 1, 2011~~March 31, 2012 and December 31, ~~2010,~~2011, the fair value of these contracts was ~~$0.7~~approximately ($3.4) million and ~~$0.4~~($5.4) million, respectively.

The fair value of outstanding foreign currency derivative contracts and the related classification in the accompanying condensed consolidated balance sheets as of ~~October 1, 2011~~March 31, 2012 and December 31, ~~2010,~~2011, are shown below (in millions):

October 1, December 31,
2011 2010
Contracts qualifying for hedge accounting:
Other current assets $ 0.6 $ 0.2
Other current liabilities (37.5 ) (1.5 )
Other long-term liabilities (8.7 ) —

(45.6 ) (1.3 )

Contracts not qualifying for hedge accounting:
Other current assets 1.0 0.7
Other current liabilities (0.3 ) (0.3 )

0.7 0.4

$ (44.9 ) $ (0.9 )

~~LEAR CORPORATION AND SUBSIDIARIES~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~(Continued)~~

Pretax amounts related to foreign currency derivative contracts that were recognized in and reclassified from accumulated other comprehensive loss are shown below (in millions):

Three Months Ended Nine Months Ended
October 1, October 2, October 1, October 2,
2011 2010 2011 2010
Contracts qualifying for hedge accounting:
Gains (losses) recognized in accumulated other comprehensive loss $ (55.2 ) $ 5.7 $ (45.8 ) $ 10.5
(Gains) losses reclassified from accumulated other comprehensive loss 3.9 (2.2 ) 1.6 (6.8 )

Comprehensive income (loss) $ (51.3 ) $ 3.5 $ (44.2 ) $ 3.7


	March 31, 2012		April 2, 2011
Contracts qualifying for hedge accounting:
Gains recognized in accumulated other comprehensive loss	$	40.1	$	5.3
(Gains) losses reclassified from accumulated other comprehensive loss		0.3		(0.4	)

Comprehensive income	$	40.4	$	4.9

For the three ~~and nine~~ months ended ~~October 1,~~March 31, 2012 and April 2, 2011, net sales includes ~~losses~~gains (losses) of ~~($0.8)~~$0.2 million and ($~~1.0)~~0.1) million, respectively, reclassified from accumulated other comprehensive loss related to foreign currency derivative contracts. For the three ~~and nine~~ months ended ~~October 1,~~March 31, 2012 and April 2, 2011, cost of sales includes ~~losses~~gains (losses) of ($~~3.1)~~0.5) million and ~~($0.6)~~$0.5 million, respectively, reclassified from accumulated other comprehensive loss related to foreign currency derivative contracts. For the three and nine months ended October 2, 2010, net sales includes losses of ($0.5) million and ($0.2) million, respectively, reclassified from accumulated other comprehensive loss related to foreign currency derivative contracts. For the three and nine months ended October 2, 2010, cost of sales includes gains of $2.7 million and $7.0 million, respectively, reclassified from accumulated other comprehensive loss related to foreign currency derivative contracts.

Interest rate — Historically, the Company used interest rate swap and other derivative contracts to manage its exposure to fluctuations in interest rates. Interest rate swap and other derivative contracts which fix the interest payments of certain variable rate debt instruments or fix the market rate component of anticipated fixed rate debt instruments ~~were~~are accounted for as cash flow hedges. Interest rate swap and other derivative contracts which hedge the change in fair value of certain fixed rate debt instruments ~~were~~are accounted for as fair value hedges. As of ~~October 1, 2011~~March 31, 2012 and December 31, ~~2010,~~2011, there were no interest rate contracts outstanding. The Company will continue to evaluate, and may use, derivative financial instruments, including forwards, futures, options, swaps and other derivative contracts to manage its exposures to fluctuations in interest rates in the future.

Commodity prices — The Company uses derivative instruments to reduce its exposure to fluctuations in ~~copper~~certain commodity prices. These derivative instruments are utilized to hedge forecasted inventory purchases and to the extent that they qualify and meet hedge accounting criteria, they are accounted for as cash flow hedges. Commodity swap contracts that are not designated as cash flow hedges are marked to market with changes in fair value recognized immediately in the condensed consolidated statements of comprehensive income. See Note 9, “Other (Income) Expense, Net.” As of ~~October 1,~~March 31, 2012 and December 31, 2011, commodity swap contracts with ~~$7.0~~$2.0 and $3.4 million, respectively, of notional amount were outstanding with maturities of ~~12 months.~~less than seven and twelve months, respectively. As of ~~October 1,~~March 31, 2012 and December 31, 2011, the fair market value of these contracts was approximately zero and ($~~0.8) million. As of December 31, 2010, there were no commodity swap contracts outstanding.~~

0.3) million, respectively.

LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

The fair value of outstanding commodity swap contracts and the related classification in the accompanying condensed consolidated balance ~~sheet~~sheets as of ~~October 1,~~March 31, 2012 and December 31, 2011, are shown below (in millions):

October 1,
2011
Contracts qualifying for hedge accounting:
Other current liabilities $ (0.8 )


	March 31, 2012		December 31, 2011
Contracts qualifying for hedge accounting:
Other current liabilities	$	—	$	(0.3	)

Pretax amounts related to commodity swap contracts that were recognized in and reclassified from accumulated other comprehensive loss are shown below (in millions):

For the three months ended March 31, 2012, cost of sales includes losses of $0.2 million reclassified from accumulated other comprehensive loss related to commodity price contracts.

~~LEAR CORPORATION AND SUBSIDIARIES~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~(Continued)~~

October 1, 2011
Three Months Nine Months
Ended Ended
Contracts qualifying for hedge accounting:
Losses recognized in accumulated other comprehensive loss $ (0.7 ) $ (0.9 )
Losses reclassified from accumulated other comprehensive loss 0.1 0.1

Comprehensive loss $ (0.6 ) $ (0.8 )

As of ~~October 1, 2011~~March 31, 2012 and December 31, ~~2010,~~2011, pretax net ~~losses~~gains (losses) of approximately ~~$46.4~~$1.3 million and ~~$1.3~~($39.4) million, respectively, related to the Company’s derivative instruments and hedging activities were recorded in accumulated other comprehensive loss. During the three months ended March 31, 2012 and April 2, 2011, the Company reclassified net gains (losses) of approximately ($0.5) million and $0.4 million, respectively, related to its hedging activities from accumulated other comprehensive loss into earnings. During the twelve month period ending ~~October 1, 2012,~~March 30, 2013, the Company expects to reclassify into earnings net ~~losses~~gains of approximately ~~$37.7~~$0.6 million recorded in accumulated other comprehensive loss as of ~~October 1, 2011.~~March 31, 2012. Such ~~losses~~gains will be reclassified at the time that the underlying hedged transactions are realized. ~~For~~During the three ~~and nine~~ months ended ~~October 1,~~March 31, 2012 and April 2, 2011, other expense, net includes gains (losses) of ($2.1) million and $5.0 million, respectively, related to changes in the fair value of foreign currency derivative contracts that did not qualify for hedge accounting. For the three and nine months ended October 1, 2011 and October 2, 2010, other gains and lossesamounts recognized ~~in other expense, net~~ in the accompanying condensed consolidated statements of comprehensive income related to changes in the fair value of cash flow and fair value hedges excluded from the Company’s effectiveness assessments and the ineffective portion of changes in the fair value of cash flow and fair value hedges were not material.

Fair Value Measurements

GAAP provides that fair value is an exit price, defined as a market-based measurement that represents the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value measurements are based on one or more of the following three valuation techniques:


		~~Market~~Market::		This approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

		~~Income~~Income::		This approach uses valuation techniques to convert future amounts to a single present value amount based on current market expectations.

		~~Cost~~Cost::		This approach is based on the amount that would be required to replace the service capacity of an asset (replacement cost).

Further, GAAP prioritizes the inputs and assumptions used in the valuation techniques described above into a three-tier fair value hierarchy as follows:


		Level 11::		Observable inputs, such as quoted market prices in active markets for identical assets or liabilities that are ~~accessible at the measurement date.~~

		Level 22::		Inputs, other than quoted market prices included in Level 1, that are observable either directly or indirectly for the asset or liability.

LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)


Level 33::		Unobservable inputs that reflect the entity’s own assumptions about the exit price of the asset or liability. Unobservable inputs may be used if there is little or no market data for the asset or liability at the measurement date.

The Company discloses fair value measurements and the related valuation techniques and fair value hierarchy level for its assets and liabilities that are measured or disclosed at fair value.

Items measured at fair value on a recurring basis —– Fair value measurements and the related valuation techniques and fair value hierarchy level for the Company’s assets and liabilities measured or disclosed at fair value on a recurring basis as of ~~October 1, 2011~~March 31, 2012 and December 31, ~~2010,~~2011, are shown below (in millions):

~~LEAR CORPORATION AND SUBSIDIARIES~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~(Continued)~~

October 1, 2011
Asset Valuation
Frequency (Liability) Technique Level 1 Level 2 Level 3
Foreign currency derivative contracts Recurring $ (44.9 ) Market/Income $ — $ (44.9 ) $ —
Commodity swap contracts Recurring $ (0.8 ) Market/Income $ — $ (0.8 ) $ —

December 31, 2010
Valuation
Frequency Liability Technique Level 1 Level 2 Level 3
Foreign currency derivative contracts Recurring $ (0.9 ) Market/Income $ — $ (0.9 ) $ —

The Company determines the fair value of its derivative contracts using quoted market prices to calculate the forward values and then discounts such forward values to the present value. The discount rates used are based on quoted bank deposit or swap interest rates. If a derivative contract is in a net liability position, these discount rates are adjusted by an estimate of the credit spread that would be applied by market participants purchasing these contracts from the Company’s counterparties. To estimate this credit spread, the Company uses significant assumptions and factors other than quoted market rates, which would result in the classification of its derivative liabilities within Level 3 of the fair value hierarchy, to the extent that such adjustment is necessary. As of ~~October 1, 2011~~March 31, 2012 and December 31, ~~2010,~~2011, there were no derivative contracts that were classified within Level 3 of the fair value hierarchy. In addition, there were no transfers in or out of Level 3 of the fair value hierarchy during the first ~~half~~quarter of ~~2011.~~

2012.

Items measured at fair value on a non-recurring basis —– The Company measures certain assets and liabilities at fair value on a non-recurring basis, which are not included in the table above. As these non-recurring fair value measurements are generally determined using unobservable inputs, these fair value measurements are classified within Level 3 of the fair value hierarchy. ~~In the first nine months~~As of March 31, 2012 and December 31, 2011, there were no significant ~~non-recurring~~assets or liabilities measured at fair value ~~adjustments.~~

on a non-recurring basis.

(16) Accounting Pronouncements

~~Goodwill Impairment~~Comprehensive Income

The Financial Accounting Standards Board (“FASB”) amended ASC 350, “Intangibles — Goodwill and Other,” with Accounting Standards Update (“ASU”) 2010-28, “When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts.” This update requires that step 2 of the goodwill impairment test (i.e., measurement and recognition of an impairment loss) be performed if a reporting unit has a carrying value equal to or less than zero and qualitative factors indicate that it is more likely than not that a goodwill impairment exists. The provisions of this update are effective for annual reporting periods beginning after December 15, 2010. The Company’s annual goodwill impairment test is conducted as of the first day of its fourth quarter. The Company does not expect the effects of adoption to be significant.

The FASB amended ASC 350, “Intangibles — Goodwill and Other,” with ASU 2011-08, “Testing Goodwill for Impairment.” This update provides entities with the option to perform a qualitative assessment of whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the two-step impairment test would be required. Otherwise, no further goodwill impairment testing would be required. The provisions of this update are effective for annual and interim testing periods beginning after December 15, 2011; however, early adoption is permitted. The Company expects to adopt the provisions of this ASU in connection with its 2011 annual goodwill impairment test, conducted as of the first day of its fourth quarter, and does not expect the effects of adoption to be significant.

~~Business Combinations~~

The FASB amended ASC 805, “Business Combinations,” with ASU 2010-29, “Disclosure of Supplementary Pro Forma Information for Business Combinations,” to, among other things, require pro forma revenue and earnings disclosures in comparative financial statements that reflect the results of operations of the acquired entity as though the business combination had occurred as of the beginning of the prior year. The provisions of this update are effective for annual reporting periods beginning after December 15, 2010. The Company will evaluate the impact of this update on material future business combinations.

~~LEAR CORPORATION AND SUBSIDIARIES~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~(Continued)~~

~~Fair Value Measurements~~

The FASB amended ASC 820, “Fair Value Measurements,” with ASU 2010-06, “Improving Disclosures about Fair Value Measurements,” to require additional disclosures related to activity within Level 3 of the fair value hierarchy. The provisions of this update are effective for reporting periods beginning after December 15, 2010. The effects of adoption were not significant. For further information, see Note 15, “Financial Instruments.”

The FASB amended ASC 820, “Fair Value Measurements,” with ASU 2011-04, “Fair Value Measurement (Topic 820) — Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” This update provides converged guidance on how to measure fair value, which is largely consistent with existing GAAP. This update also requires additional fair value measurement disclosures. The provisions of this update are effective as of January 1, 2012. The Company is currently evaluating the impact of this update on its financial statement disclosures.

~~Revenue Recognition~~

The FASB amended ASC 605, “Revenue Recognition,” with ASU 2009-13, “Revenue Recognition (Topic 605) — Multiple-Deliverable Revenue Arrangements.” If a revenue arrangement has multiple deliverables, this update requires the allocation of revenue to the separate deliverables based on relative selling prices. In addition, this update requires additional ongoing disclosures about an entity’s multiple-element revenue arrangements. The provisions of this update were effective as of January 1, 2011. The effects of adoption were not significant.

~~Comprehensive Income~~

~~The FASB amended ASC~~ 220, “Comprehensive Income,” with ASU ~~2001-05,~~2011-05, “Comprehensive Income (Topic 220) —– Presentation of Comprehensive Income,” which revises the manner in which comprehensive income is presented in an entity’s financial statements. This update requires the presentation of the components of comprehensive income in either a continuous statement of comprehensive income or in two separate but consecutive financial statements. The option to present comprehensive income onin the statement of stockholders’ equity has been eliminated. The provisions of this update ~~are~~were effective as of January 1, 2012, and the Company has included a condensed consolidated statement of comprehensive income as part of the condensed consolidated financial statements included in this Report.

Fair Value Measurements

The FASB amended ASC 820, “Fair Value Measurements,” with ASU 2011-04, “Fair Value Measurement (Topic 820) – Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” This update provides converged guidance on how to measure fair value, which is largely consistent with existing GAAP. This update also requires additional fair value measurement disclosures. The provisions of this update were effective as of January 1, 2012. The ~~implementation of this update will have no impact on the manner in which the Company accounts for comprehensive income.~~

~~Multiemployer Pension Plans~~

The FASB amended ASC 715-80, “Compensation — Retirement Benefits — Multiemployer Plans,” with ASU 2011-09, “Disclosures about an Employer’s Participation in a Multiemployer Plan.” This update requires additional qualitative and quantitative disclosures about an employer’s participation in significant multiemployer plans that offer pension or other postretirement benefits. The provisions of this update are effective for annual reporting periods ending after December 15, 2011, with early adoption permitted. The Company is currently evaluating the impact of this update on its annual financial statement disclosures and does not expect the effects of adoption ~~to be~~were not significant.

The Guilford acquisition will be accounted for as a purchase, and accordingly, the assets acquired, liabilities assumed and Guilford’s results of operations will be included in the Company’s condensed consolidated financial statements beginning on the transaction closing date.

LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

~~(17)~~

(18) Supplemental Guarantor Condensed Consolidating Financial Statements —– (continued)

For the Nine Months Ended October 1, 2011
Non-
Lear Guarantors guarantors Eliminations Consolidated
(Unaudited; in millions)
Net cash provided by operating activities $ 132.7 $ 115.6 $ 268.2 $ — $ 516.5
Cash Flows from Investing Activities:

Additions to property, plant and equipment (7.5 ) (48.5 ) (191.7 ) — (247.7 )
Other, net 23.6 2.2 (2.9 ) — 22.9

Net cash used in investing activities 16.1 (46.3 ) (194.6 ) — (224.8 )

Cash Flows from Financing Activities:

Other long-term debt repayments, net — — (1.1 ) — (1.1 )
Short-term debt repayments, net — — (4.2 ) — (4.2 )
Payment of debt issuance costs (4.8 ) — — — (4.8 )
Repurchase of common stock (194.2 ) — — — (194.2 )
Dividends paid to Lear Corporation stockholders (38.3 ) — — — (38.3 )
Dividends paid to noncontrolling interests — — (18.5 ) — (18.5 )
Other (3.5 ) — 0.1 — (3.4 )
Change in intercompany accounts 84.0 (69.5 ) (14.5 ) — —

Net cash used in financing activities (156.8 ) (69.5 ) (38.2 ) — (264.5 )

Effect of foreign currency translation — — (4.8 ) — (4.8 )

Net Change in Cash and Cash Equivalents
(8.0 ) (0.2 ) 30.6 — 22.4
Cash and Cash Equivalents as of Beginning of Period
808.8 0.4 844.9 — 1,654.1

Cash and Cash Equivalents as of End of Period
$ 800.8 $ 0.2 $ 875.5 $ — $ 1,676.5

For the Nine Months Ended October 2, 2010
Non-
Lear Guarantors guarantors Eliminations Consolidated
(Unaudited; in millions)
Net cash provided by operating activities $ (68.1 ) $ 266.6 $ 185.6 $ — $ 384.1
Cash Flows from Investing Activities:

Additions to property, plant and equipment (8.7 ) (30.1 ) (76.5 ) — (115.3 )
Other, net — 2.1 — — 2.1

Net cash used in investing activities (8.7 ) (28.0 ) (76.5 ) — (113.2 )

Cash Flows from Financing Activities:

Proceeds from the issuance of senior notes 694.5 — — — 694.5
First lien credit agreement repayments (375.0 ) — — �� — (375.0 )
Second lien credit agreement repayments (550.0 ) — — — (550.0 )
Other long-term debt repayments, net — — (9.2 ) — (9.2 )
Short-term debt repayments, net — — (33.8 ) — (33.8 )
Payment of debt issuance costs (17.6 ) — — — (17.6 )
Dividends paid to noncontrolling interests — — (13.9 ) — (13.9 )
Other (3.4 ) — — — (3.4 )
Change in intercompany accounts 544.1 (238.1 ) (306.0 ) — —

Net cash used in financing activities 292.6 (238.1 ) (362.9 ) — (308.4 )

Effect of foreign currency translation 2.2 (0.5 ) (4.7 ) — (3.0 )

Net Change in Cash and Cash Equivalents
218.0 — (258.5 ) — (40.5 )
Cash and Cash Equivalents as of Beginning of Period
584.9 0.1 969.0 — 1,554.0

Cash and Cash Equivalents as of End of Period
$ 802.9 $ 0.1 $ 710.5 $ — $ 1,513.5

LEAR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

~~(17)~~

(18) Supplemental Guarantor Condensed Consolidating Financial Statements —– (continued)

Basis of Presentation — Certain of Lear’s domestic 100% owned subsidiaries (the “Guarantors”) have jointly and severally unconditionally guaranteed, on a senior unsecured basis, the performance and the full and punctual payment when due, whether at stated maturity, by acceleration or otherwise, of the Company’s obligations under its revolving credit facility and the indenture governing the Notes, including the Company’s obligations to pay principal, premium, if any, and interest with respect to the Notes. The Notes consist of $350 million in aggregate principal amount at maturity of 7.875% senior unsecured notes due 2018 and $350 million in aggregate principal amount at maturity of 8.125% senior unsecured notes due 2020. The Guarantors include Lear ~~Automotive Dearborn, Inc., Lear~~ Corporation EEDS and Interiors, Lear European Operations Corporation, Lear Mexican ~~Holdings Corporation, Lear Mexican~~ Seating ~~Corporation, Lear Operations~~ Corporation and Lear Trim L.P. In connection with Company’s Amended and Restated Credit Agreement, Lear #50 Holdings, LLC, Lear Automotive Manufacturing, LLC, Lear Corporation Global Development, Inc., Lear Mexican Holdings, L.L.C. and Lear South American Holdings Corporation were released as guarantors.Operations Corporation. In lieu of providing separate financial statements for the Guarantors, the Company has included the supplemental guarantor condensed consolidating financial statements above. These financial statements reflect the Guarantors listed above for all periods presented. Management does not believe that separate financial statements of the Guarantors are material to investors. Therefore, separate financial statements and other disclosures concerning the Guarantors are not presented.

The ~~2010~~2011 supplemental guarantor condensed consolidating financial statements have been restated to reflect certain changes to the equity investments of the Guarantors.

Distributions — There are no significant restrictions on the ability of the Guarantors to make distributions to the Company.

Selling, General and Administrative Expenses — Corporate and division selling, general and administrative expenses are allocated to the operating subsidiaries based on various factors, which estimate usage of particular corporate and division functions, and in certain instances, other relevant factors, such as the revenues or the number of employees of the Company’s subsidiaries. During the three months ended ~~October 1,~~March 31, 2012 and April 2, 2011, ~~and October 2, 2010, $5.4~~$5.8 million and ~~$2.2~~$5.4 million, respectively, of selling, general and administrative expenses were allocated from Lear. ~~During the nine months ended October 1, 2011 and October 2, 2010, $15.6 million and $5.5 million, respectively, of selling, general and administrative expenses were allocated from Lear.~~

Long-Term Debt of Lear and the Guarantors — A summary of long-term debt of Lear and the Guarantors on a combined basis is shown below (in millions):

October 1, December 31,
2011 2010
Senior notes $ 695.2 $ 694.9

LEAR CORPORATION

ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

EXECUTIVE OVERVIEW

We were incorporated in Delaware in 1987 and are a leading tier 1 supplier to the global automotive industry. We supply our products to virtually every major automotive manufacturer in the world.

We supply automotive manufacturers with complete automotive seat systems and related components, as well as electrical distribution systems and related components. Our strategy is to focus on our core capabilities, selective vertical integration and investments in technology; leverage our global presence and expand our low-cost footprint; and enhance and diversify our strong customer relationships through our operational performance.

Industry Overview

Our sales are driven by the number of vehicles produced by the automotive manufacturers, which is ultimately dependent on consumer and fleet demand for automotive vehicles, and our level of content on specific vehicle platforms, as well as the portion of such content manufactured internally. Automotive sales and production can be affected by general economic or industry conditions, the age of the vehicle fleet and related scrappage rates, labor relations issues, fuel prices, regulatory requirements, government initiatives, trade agreements, the availability and cost of credit, the availability to our customers and suppliers of critical components needed to complete the production of vehicles and other factors. Our operating results are also significantly impacted by the overall commercial success of the vehicle platforms for which we supply particular products, as well as the profitability of the products that we supply for these platforms. In addition, it is possible that customers could elect to manufacture our products internally. 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 have a material adverse impact on 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.

Global industry production volumes have improved significantly in recent years from the ~~global automotive industry has undergone major restructuring and consolidation~~decline experienced in ~~response to overcapacity, narrow profit margins, excess debt and the necessary realignment of resources from mature markets to emerging markets. In~~ 2008 and ~~continuing into~~ 2009 as a result of the global economic ~~downturn and associated decline in automotive~~downturn. In the first three months of 2012, global vehicle production ~~(particularly in North America and Europe) represented a ‘turning point’ for the industry.~~

~~During this period, industry production in North America and Europe experienced the steepest peak-to-trough declines in history. In North America, industry production declined over 40% —~~increased by approximately 6% from a ~~peak of 15.0 million units in 2007~~year ago levels to ~~a trough of 8.6 million units in 2009. In Europe, industry production declined over 20% — from a peak of~~ 20.2 million ~~units in 2007 to a trough of 15.6 million units in 2009.~~

~~The year ended December 31, 2010, saw a significant improvement in industry production volumes globally. This trend continued in the first nine months of 2011.~~units. North American industry production increased by approximately ~~8% and~~16% from a year ago levels to 3.9 million units, while European industry production ~~increased~~decreased by approximately ~~5% as compared~~6% from a year ago levels to ~~the first nine months of 2010 to 9.6~~4.6 million ~~units and 13.7 million units, respectively.~~

units.

The majority of our sales continue to be derived from automotive manufacturers based in North America and Europe. Our financial results are impacted by changes in our customers’ market share. Our ability to reduce the risks inherent in certain concentrations of business, and thereby maintain our financial performance in the future, will depend, in part, on our ability to continue to diversify our sales on a customer, product, platform and geographic basis to reflect the market overall.

Our customers require us to reduce our prices over the life of a vehicle model and, at the same time, assume significant responsibility for the design, development and engineering of our products. Our financial performance is largely dependent on our ability to achieve product cost reductions through design enhancement and supply chain management, as well as manufacturing efficiencies and restructuring actions. We also seek to enhance our financial performance by investing in product development, design capabilities and new product initiatives that respond to the needs of our customers and consumers. We continually evaluate operational and strategic alternatives to align our business with the changing needs of our customers and improve our business structure ~~and lower our operating costs.~~

by investing in vertical integration opportunities.

Our material cost as a percentage of net sales was ~~68.6%~~68.3% in the first ~~nine~~three months of ~~2011,~~2012, as compared to ~~67.9%~~68.6% in ~~2010 and 69.0% in 2009.~~2011. Raw material, energy and commodity costs have been volatile over the past several years. Unfavorable industry conditions ~~over the last several~~in recent years have also ~~have~~ resulted in financial distress within our supply base and an increase in the risk of supply disruption. We have developed and implemented strategies to mitigate the impact of higher raw material, energy and commodity costs, such as the selective in-sourcing of components, the continued consolidation of our supply base, longer-term purchase

~~LEAR CORPORATION~~

commitments, financial hedges for certain commodities and the selective expansion of low-cost country sourcing and engineering, as well as value engineering and product benchmarking. However, these strategies, together with commercial negotiations with our customers and suppliers, typically offset only a portion of the adverse impact. These costs remain volatile and could have an adverse impact on our operating results in the foreseeable future.

We have assessed the impact on our business of the earthquake and tsunami in Japan that occurred in March 2011. We do not have any production facilities in Japan, and our sales in Japan have not been significant historically, with sales in Japan representing only 1.6% of total sales in 2010. The earthquake and tsunami, however, have adversely impacted portions of the automotive industry outside of Japan, leading to intermittent customer production downtime and continued shortages of certain electronic components. We do not anticipate a material impact on our results of operations for the full year from these events.

~~See “–~~

See“— Forward-Looking Statements” below and Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, ~~2010,~~2011, as supplemented and updated by Part II — Item 1A, “Risk Factors,” in ~~our Quarterly Report on Form 10-Q for the quarter ended April 2, 2011.~~

this Report.

LEAR CORPORATION

Financial Measures

In evaluating our financial condition and operating performance, we focus primarily on earnings, operating margins, cash flows and return on invested capital. In addition to maintaining and expanding our business with our existing customers in our more established markets, our expansion plans are focused primarily on emerging markets. Asia, in particular, continues to present significant growth opportunities, as major global automotive manufacturers implement production expansion plans and local automotive manufacturers aggressively expand their operations to meet demand in this region. We currently have 2019 joint ventures with operations in Asia, as well as an additional three joint ventures in North America and Europe dedicated to serving Asian automotive manufacturers. In addition, we have aggressively pursued this strategy by selectively increasing our vertical integration capabilities ~~and~~globally, as well as expanding our component manufacturing capacity in Mexico, Eastern Europe, Africa and Asia. Furthermore, we have expanded our low-cost engineering capabilities in China, India and the Philippines.

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 have generally been successful in aligning our vendor payment terms with our customer payment terms. However, our ability to continue to do so may be adversely impacted by the unfavorable financial results of our suppliers and adverse automotive industry conditions, as well as our financial results. 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 assets are deployed to increase our 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.

Acquisition

On April 11, 2012, we signed an agreement to acquire Guilford Mills, a privately-held portfolio company of Cerberus Capital Management, L.P. that manufactures fabrics for the automotive and specialty markets, for approximately $260 million. The closing of the transaction is expected to occur in the second quarter of 2012 and is subject to customary conditions, including regulatory approvals. Guilford Mills is based in Wilmington, North Carolina and has annual sales of approximately $400 million. In the first quarter of 2012, we incurred approximately $1 million of costs related to this transaction.

Operational Restructuring

In 2005, we initiated a multi-year operational restructuring strategy to (i) eliminate excess capacity and lower our operating costs, (ii) streamline our organizational structure and reposition our business for improved long-term profitability and (iii) better align our manufacturing ~~footprint~~capabilities with the changing needs of our customers. In light of industry conditions and customer announcements, we expanded this strategy. Through the end of ~~2010,~~2011, we incurred pretax restructuring costs of approximately ~~$736~~$804 million and related manufacturing inefficiency charges of ~~$73~~$76 million.

In the first ~~nine~~three months of ~~2011,~~2012, we incurred additional restructuring costs of approximately ~~$13 million and related manufacturing inefficiency charges of approximately $1~~$5 million as we ~~continue~~continued to restructure our global operations and aggressively reduce our costs. Cash expenditures related to our restructuring actions, which primarily consisted of employee termination benefit payments, totaled ~~$22~~$47 million in the first ~~nine~~three months of ~~2011.~~

~~Through 2010, our~~2012. We expect annual restructuring actions and related investments to moderate in the current year and thereafter. Our restructuring strategy has resulted in the closure of 4448 manufacturing and 11 administrative facilities and a current footprint with more than 80% of our component facilities and more than 90% of our related employment in 2021 low-cost countries. ~~We expect elevated restructuring actions and related investments to total approximately $100 million in 2011 and to moderate thereafter.~~

Restructuring costs include employee termination benefits, fixed asset impairment charges and contract termination costs, as well as other incremental costs resulting from the restructuring actions. These incremental costs principally include equipment and personnel relocation costs. Although each restructuring action is unique, based upon the nature of our operations, we expect that the allocation of future restructuring costs will be consistent with our historical experience. We also incur incremental manufacturing inefficiency costs at the operating locations impacted by the restructuring actions during the related restructuring implementation period. Restructuring costs are recognized in our consolidated financial statements in accordance with accounting principles generally accepted in the

~~LEAR CORPORATION~~

United States (“GAAP”). Generally, charges are recorded as restructuring actions are approved and/or implemented. Actual costs recorded in our consolidated financial statements may vary from current estimates.

For further information, see Note 2, “Restructuring, ~~Activities,~~” to the condensed consolidated financial statements included in this Report.

~~Revolving Credit Facility~~

In June 2011, we entered into an amended and restated credit agreement, which among other things, increased the amount available under our existing revolving credit facility to $500 million and extended its maturity to June 17, 2016. For further information, see “— Liquidity and Capital Resources — Capitalization,” and Note 7, “Long-Term Debt,” to the condensed consolidated financial statements included in this Report.

Share Repurchase Program ~~Stock Split~~andQuarterly Cash Dividend

In February 2011, our Board of Directors authorized a three year, $400 million common stock share repurchase program. In January 2012, our Board of Directors authorized an increase in the amount of the common stock share repurchase program ~~and declared a two-for-one stock split of our common stock.~~from $400 million to $700 million. In February ~~May and August 2011,~~2012, our Board of Directors declared a quarterly cash dividend of ~~$0.125~~$0.14 per share of common stock. For further information, see “— Liquidity and Capital ~~Resources — Capitalization,”~~Resources” below and Note 12, “Comprehensive Income and Equity,” to the condensed consolidated financial statements included in this Report.

LEAR CORPORATION

Other Matters

In the ~~three and nine months ended October 1,~~first quarter of 2011, we recognized ~~gains~~a gain of $2 million and $6 million, respectively, related to affiliate transactions. In the three and nine months ended October 1, 2011, we recognized tax benefits of $3 million and $23 million, respectively, primarily related to the reversal of full valuation allowances on the deferred tax assets of two foreign subsidiaries. In the three and nine months ended October 1, 2011, we recorded a loss, net of expected insurance recoveries, of approximately $1$4 million related to the destruction of assets caused by a fire at one of our European production facilities. In addition, we will incur incremental costs in the fourth quarter of 2011 due to the loss of this facility; however, we do not anticipate a material impact on our results of operations for the full year. Any insurance proceeds in excess of the book value of the destroyed assets will be recorded when all contingencies related to the insurance claim are resolved.

In the nine months ended October 2, 2010, we recognized a loss on the extinguishment of debt of approximately $12 million, resulting from the write-off of unamortized debt issuance costs in conjunction with the issuance of our senior unsecured notes. In the three months ended October 2, 2010, we recognized tax benefits of $2 million related to restructuring and the reduction of a valuation allowance in a foreign subsidiary. In the nine months ended October 2, 2010, we recognized tax benefits of $33 million related to reductions in recorded tax reserves, as well as net tax benefits of $3 million related to restructuring, the reduction of a valuation allowance in a foreign subsidiary and various other items.

an affiliate transaction.

As discussed above, our results for the ~~three~~first quarters of 2012 and ~~nine months ended October 1,~~ 2011 ~~and October 2, 2010,~~ reflect the following items (in millions):

Three months ended Nine months ended
October 1, October 2, October 1, October 2,
2011 2010 2011 2010
Costs related to restructuring actions, including manufacturing inefficiencies of $1 million in the nine months ended October 1, 2011, and $1 million and $3 million in the three and nine months ended October 2, 2010, respectively $ 9 $ 27 $ 14 $ 53
Loss on extinguishment of debt — — — 12
Gain related to affiliate transactions (2 ) — (6 ) —
Tax benefits, net (3 ) (2 ) (23 ) (36 )


	Three months ended
	March 31, 2012		April 2, 2011
Costs related to restructuring actions, including manufacturing inefficiencies of $1 million in 2011	$	5	$	2
Gain related to affiliate transaction		—		(4	)

For further information regarding these items, see Note 2, “Restructuring Activities,” ~~Note 7, “Long-Term Debt,”~~ and Note ~~10, “Income Taxes,~~9, “Other (Income) Expense, Net,” to the condensed consolidated financial statements included in this Report.

This section includes forward-looking statements that are subject to risks and uncertainties. For further information regarding 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, ~~2010,~~2011, as supplemented and updated by Part II — Item 1A, “Risk Factors,” in ~~our Quarterly Report on Form 10-Q for the quarter ended April 2, 2011.~~

~~LEAR CORPORATION~~

RESULTS OF OPERATIONS

A summary of our operating results in millions of dollars and as a percentage of net sales is shown below:

Three Months Ended Nine Months Ended
October 1, October 2, October 1, October 2,
2011 2010 2011 2010
Net sales
Seating systems $ 2,687.8 77.7 % $ 2,208.7 78.3 % $ 8,272.7 77.7 % $ 6,929.7 78.8 %
Electrical power management systems 772.2 22.3 611.6 21.7 2,375.3 22.3 1,868.4 21.2

Net sales 3,460.0 100.0 2,820.3 100.0 10,648.0 100.0 8,798.1 100.0
Cost of sales 3,179.5 91.9 2,584.5 91.6 9,697.5 91.1 8,014.7 91.1

Gross profit 280.5 8.1 235.8 8.4 950.5 8.9 783.4 8.9
Selling, general and administrative expenses 114.9 3.3 110.0 3.9 351.6 3.3 350.7 4.0
Amortization of intangible assets 7.1 0.2 7.0 0.3 21.1 0.2 20.3 0.2
Interest expense 10.9 0.3 11.9 0.4 24.9 0.2 44.2 0.5
Other expense, net 8.5 0.3 3.0 0.1 5.7 0.1 1.5 —
Provision for income taxes 31.0 0.9 5.4 0.2 90.7 0.8 29.1 0.3
Net income attributable to noncontrolling interests 7.4 0.2 3.2 0.1 22.3 0.2 16.4 0.2

Net income attributable to Lear $ 100.7 2.9 % $ 95.3 3.4 % $ 434.2 4.1 % $ 321.2 3.7 %

   Three months ended
   March 31, 2012 April 2, 2011
Net sales

Seating systems
   $ 2,813.8    77.2 % $ 2,725.0    77.6 %
Electrical power management systems
   830.2    22.8    786.7    22.4


Net sales
   3,644.0    100.0    3,511.7    100.0
Cost of sales
   3,334.2    91.5    3,188.3    90.8


Gross profit
   309.8    8.5    323.4    9.2
Selling, general and administrative expenses
   116.1    3.2    117.5    3.3
Amortization of intangible assets
   6.9    0.2    6.8    0.2
Interest expense
   12.5    0.3    3.3    0.1
Other (income) expense, net
   0.3    —      (2.8 ) (0.1 )
Provision for income taxes
   39.3    1.1    40.0    1.2
Equity in net income of affiliates
   (9.7 ) (0.3 ) (4.1 ) (0.1 )
Net income attributable to noncontrolling interests
   10.3    0.3    6.7    0.2


Net income attributable to Lear
   $ 134.1    3.7 % $ 156.0    4.4 %

Three Months Ended ~~October 1, 2011~~March 31, 2012 vs. Three Months Ended ~~October~~April 2, ~~2010~~

2011

Net sales in the ~~third~~first quarter of ~~2011~~2012 were ~~$3.5~~$3.6 billion, as compared to ~~$2.8~~$3.5 billion in the ~~third~~first quarter of ~~2010,~~2011, an increase of ~~$640~~$132 million or ~~22.7%~~3.8%. ~~The impact of new~~New business and improved production volumes on Lear platforms ~~and net foreign exchange rate fluctuations~~ positively impacted net sales by ~~$280 million, $167~~$153 million and ~~$153~~$27 million, respectively.

These increases were partially offset by net foreign exchange rate fluctuations.

Cost of sales in the ~~third~~first quarter of ~~2011~~2012 was ~~$3.2~~$3.3 billion, as compared to ~~$2.6~~$3.2 billion in the ~~third~~first quarter of ~~2010.~~2011. This increase is largely due to the impact of new business ~~net foreign exchange rate fluctuations~~ and improved production volumes on Lear platforms, partially offset by net foreign exchange rate fluctuations, and is consistent with the increase in net sales.

Gross profit and gross margin were ~~$281~~$310 million and ~~8.1%~~8.5% in the quarter ended ~~October 1, 2011,~~March 31, 2012, as compared to ~~$236~~$323 million and ~~8.4%~~9.2% in the quarter ended ~~October~~April 2, ~~2010. The impact of improved production volumes on Lear platforms and new business positively impacted gross profit by $60 million.~~2011. The impact of selling price reductions, as well as higher product and facility launch costs and ~~commodity~~program development costs, was partially offset by favorable operating performance and the benefit of operational restructuring ~~actions. In addition, gross profit includes operational restructuring costs of $10 million in the third quarter of 2011, as compared to $25 million in the third quarter of 2010.~~

actions and new business.

LEAR CORPORATION

Selling, general and administrative expenses, including engineering and development expenses, were ~~$115~~$116 million in the three months ended ~~October 1, 2011,~~March 31, 2012, as compared to ~~$110~~$118 million in the three months ended ~~October~~April 2, 2010. The increase in selling, general and administrative expenses was primarily due to higher compensation-related costs and net foreign exchange rate fluctuations, partially offset by a decrease in engineering and development expenses.2011. As a percentage of net sales, selling, general and administrative expenses declined to 3.2% in the first quarter of 2012, as compared to 3.3% in the ~~third~~first quarter of ~~2011, as compared to 3.9% in the third quarter of 2010, due to the increase in net sales.~~

2011.

Amortization of intangible assets was $7 million in the ~~third~~first quarters of ~~2011~~2012 and ~~2010.~~

2011.

Interest expense was ~~$11~~$13 million in the ~~third~~first quarter of ~~2011,~~2012, as compared to ~~$12~~$3 million in the ~~third~~first quarter of ~~2010.~~

2011. This increase was primarily due to the refund of interest in 2011 related to a favorable settlement of an indirect tax matter in a foreign jurisdiction.

Other (income) expense, net, which includes ~~equity in net income of affiliates,~~ non-income related taxes, foreign exchange gains and losses, gains and losses related to certain derivative instruments and hedging activities, gains and losses on the sales of fixed assets and other miscellaneous income and expense, was expense of $9less than $1 million in the ~~third~~first quarter of ~~2011,~~2012, as compared to income of $3 million in the ~~third~~first quarter of ~~2010. The increase~~2011, reflecting a gain of $4 million related to an affiliate transaction recognized in ~~other expense was primarily due to reduced net income from affiliates.~~

2011 and a decrease in foreign exchange gains in the current quarter.

The provision for income taxes was ~~$31~~$39 million for the ~~third~~first quarter of 2012, representing an effective tax rate of 22.6% on pretax income before equity in net income of affiliates of $174 million, as compared to $40 million for the first quarter of 2011, representing an effective tax rate of ~~22.3%~~20.1% on a pretax income ~~of $139 million, as compared to $5 million for the third quarter of 2010, representing an effective tax rate of 5.2% on a pretax~~

~~LEAR CORPORATION~~

before equity in net income of ~~$104~~affiliates of $199 million. In the ~~third quarter~~first quarters of 2012 and 2011, the provision for income taxes was primarily impacted by the level and mix of earnings among tax jurisdictions, a tax benefit of $3 million related to the reversal of a full valuation allowance on the deferred tax assets of a foreign subsidiary and an increase in tax expense related to the phase out of preferential tax holiday rates in several Chinese subsidiaries. The provision was also impacted by a portion of our restructuring charges and other expenses, for which no tax benefit was provided as the charges were incurred in certain countries for which no tax benefit is likely to be realized due to a history of operating losses in those countries. In the third quarter of 2010, the provision for income taxes was impacted by the mix of earnings among tax jurisdictions, as well as tax benefits of $2 million related to restructuring and the reduction of a valuation allowance in a foreign subsidiary.jurisdictions. The provision was also impacted by a portion of our restructuring charges and other expenses, for which no tax benefit was provided as the charges were incurred in certain countries for which no tax benefit is likely to be realized due to a history of operating losses in those countries. Excluding these items, the effective tax rate in the ~~third~~first quarters of ~~2011~~2012 and ~~2010~~2011 approximated the U.S. federal statutory income tax rate of 35% adjusted for income taxes on foreign earnings, losses and remittances, foreign and U.S. valuation allowances, tax credits, income tax incentives and other permanent items.

~~Further, our~~

Our current and future provision for income taxes is significantly impacted by the initial recognition of and changes in valuation allowances in certain countries, particularly the United States. We intend to maintain these allowances until it is more likely than not that the deferred tax assets will be realized. Our future provision for income taxes will include no tax benefit with respect to losses incurred and no tax expense with respect to income generated in these countries until the respective valuation allowances are eliminated. Accordingly, income taxes are impacted by the U.S. and foreign valuation allowances and the mix of earnings among jurisdictions.

~~We were profitable in the first nine months~~

As of December 31, 2011, we had a valuation allowance related to tax loss and ~~in 2010~~credit carryforwards and other deferred tax assets of $880 million in the United States and $517 million in ~~certain~~several international ~~jurisdictions for which we have provided a full valuation allowance against our deferred tax assets.~~jurisdictions. If we continue to generate pretax earnings in the United States in 2012 and our forecasted earnings thereafter remain favorable, we may reverse a significant portion of the U.S. valuation allowance in the second half of 2012. In addition, if we experience sustained levels of profitability in ~~the United States and these~~certain international jurisdictions in the future, our assessment of the need for a full valuation allowance with respect to the deferred tax assets in those jurisdictions could change. ~~Any~~A reduction ~~to a~~in our valuation allowance ~~will reduce our~~could have a significant impact on tax expense and net income in the period in which such reduction occurs.

Equity in net income of affiliates was $10 million in the quarter ended March 31, 2012, as compared to $4 million in the quarter ended April 2, 2011, reflecting the improved performance of our equity affiliates.

Net income attributable to Lear in the ~~third~~first quarter of ~~2011~~2012 was ~~$101~~$134 million, or ~~$0.95~~$1.32 per diluted share, as compared to ~~$95~~$156 million, or ~~$0.88~~$1.44 per diluted share, in the ~~third~~first quarter of ~~2010,~~2011, for the reasons described above. Net income per share data for 2010 has been retroactively adjusted to reflect the two-for-one stock split described in “— Liquidity and Capital Resources — Capitalization,” and Note 12, “Comprehensive Income and Equity,” to the condensed consolidated financial statements included in this Report.

Reportable Operating Segments

We have two reportable operating segments: seating, which includes seat systems and related components, such as seat frames, recliner mechanisms, seat tracks, seat trim covers, headrests and seat foam, and electrical power management systems (“EPMS”), which includes wiring, connectors, junction boxes and various other components of electrical distribution systems for traditional powertrain vehicles, as well as for hybrid and electric vehicles. The financial information presented below is for our two reportable operating segments and our other category for the periods presented. The other category includes unallocated costs related to corporate headquarters, ~~geographic~~regional headquarters and the elimination of intercompany activities, none of which meets the requirements offor being classified as an operating segment. Corporate and ~~geographic~~regional headquarters costs include various support functions, such as information technology, ~~purchasing,~~ corporate finance, legal, executive administration and human resources. Financial measures regarding each segment’s pretax income before equity in net income of affiliates, interest expense and other (income) expense ~~net and provision for income taxes~~ (“segment earnings”) and segment earnings divided by net sales (“margin”) are not measures of performance under GAAP. Segment earnings and the

LEAR CORPORATION

related margin are used by management to evaluate the performance of our reportable operating segments. Segment earnings should not be considered in isolation or as a substitute for net income attributable to Lear, net cash provided by operating activities or other statement of comprehensive income or cash flow statement data prepared in accordance with GAAP or as measures of profitability or liquidity. In addition, segment earnings, as we determine it, may not be comparable to related or similarly titled measures reported by other companies. For a reconciliation of consolidated segment earnings to consolidated income before provision for income taxes and equity in net income of affiliates, see Note 14, “Segment Reporting,” to the condensed consolidated financial statements included in this Report.

~~LEAR CORPORATION~~

Seating

A summary of financial measures for our seating segment is shown below (dollar amounts in millions):

Three months ended
October 1, October 2,
2011 2010
Net sales $ 2,687.8 $ 2,208.7
Segment earnings⁽¹⁾
169.9 139.8
Margin 6.3 % 6.3 %


		Three months ended
		March 31, 2012			April 2, 2011
Net sales	��	$	2,813.8		$	2,725.0
Segment earnings⁽¹⁾			185.8			208.5
Margin			6.6	%		7.7	%


⁽¹⁾		See definition above.

Seating ~~systems~~ net sales were $2.8 billion in the first quarter of 2012, as compared to $2.7 billion in the ~~third~~first quarter of 2011, ~~as compared to $2.2 billion in the third quarter of 2010,~~ an increase of ~~$479~~$89 million or ~~21.7%~~3.3%. ~~The impact of new~~New business ~~net foreign exchange rate fluctuations~~ and improved production volumes on Lear platforms positively impacted net sales by ~~$237 million, $113~~$94 million and ~~$110~~$13 million, respectively. These increases were partially offset by net foreign exchange rate fluctuations. Segment earnings, including restructuring costs, and the related margin on net sales were ~~$170~~$186 million and ~~6.3%~~6.6% in the ~~third quarter~~first three months of ~~2011,~~2012, as compared to ~~$140~~$209 million and ~~6.3%~~7.7% in the ~~third quarter~~first three months of ~~2010.~~2011. The benefit of new business, improved production volumes on Lear platforms and our restructuring and other operating performance actions positively impacted segment earnings by $72 million. These increases were largely offset by the impact of selling price reductions, as well as higher product and facility launch costs and program development costs, was partially offset by favorable operating performance and ~~commodity costs. In addition, in~~ the ~~third quarter~~benefit of ~~2011, we incurred costs of $9 million related to our~~operational restructuring actions ~~as compared to $25 million in the third quarter of 2010.~~

and new business.

EPMS

A summary of financial measures for our EPMS segment is shown below (dollar amounts in millions):

Three months ended
October 1, October 2,
2011 2010
Net sales $ 772.2 $ 611.6
Segment earnings⁽¹⁾
40.6 24.3
Margin 5.3 % 4.0 %


	Three months ended
	March 31, 2012			April 2, 2011
Net sales	$	830.2		$	786.7
Segment earnings⁽¹⁾		52.6			44.1
Margin		6.3	%		5.6	%


⁽¹⁾		See definition above.

EPMS net sales were ~~$772~~$830 million in the ~~third~~first quarter of 2012, as compared to $787 million in the first quarter of 2011, ~~as compared to $612 million in the third quarter of 2010,~~ an increase of ~~$161~~$44 million or ~~26.3%~~5.5%. ~~Improved production volumes on Lear platforms, the impact of new~~New business ~~and net foreign exchange rate fluctuations~~ positively impacted net sales by ~~$57 million, $43 million and $40 million, respectively.~~$59 million. Improved global vehicle production volumes were offset by net foreign exchange rate fluctuations. Segment earnings, including restructuring costs, and the related margin on net sales were ~~$41~~$53 million and ~~5.3%~~6.3% in the ~~third quarter~~first three months of ~~2011,~~2012, as compared to ~~$24~~$44 million and ~~4.0%~~5.6% in the ~~third quarter~~first three months of ~~2010. The~~2011. Favorable operating performance and the benefit of ~~our~~operational restructuring ~~and other operating performance~~ actions, ~~and improved production volumes on Lear platforms positively impacted segment earnings by $39 million. These increases~~as well as new business, were partially offset by the impact of selling price reductions ~~as well as~~and higher product and facility launch ~~and commodity~~ costs.

Other

A summary of financial measures for our other category, which is not an operating segment, is shown below (dollar amounts in millions):

Three months ended
October 1, October 2,
2011 2010
Net sales $ — $ —
Segment earnings⁽¹⁾
(52.0 ) (45.3 )
Margin N/A N/A


	Three months ended
	March 31, 2012			April 2, 2011
Net sales	$	—		$	—
Segment earnings⁽¹⁾		(51.6	)		(53.5	)
Margin		N/A			N/A


⁽¹⁾		See definition above.

LEAR CORPORATION

Our other category includes unallocated corporate and ~~geographic~~regional headquarters costs, as well as the elimination of intercompany activity. Corporate and ~~geographic~~regional headquarters costs include various support functions, such as information technology, ~~purchasing,~~ corporate finance, legal, executive administration and human resources. Segment earnings related to our other category were ($52) million in the ~~third quarter~~first three months of ~~2011,~~2012, as compared to ($~~45) million in the third quarter of 2010.~~

~~LEAR CORPORATION~~

~~Nine Months Ended October 1, 2011 vs. Nine Months Ended October 2, 2010~~

Net sales in the first nine months of 2011 were $10.6 billion, as compared to $8.8 billion in first nine months of 2010, an increase of $1.8 billion or 21.0%. The impact of new business, improved production volumes on Lear platforms and net foreign exchange rate fluctuations positively impacted net sales by $705 million, $564 million and $399 million, respectively.

Cost of sales in the first nine months of 2011 was $9.7 billion, as compared to $8.0 billion in the first nine months of 2010. This increase is largely due to the impact of new business, improved production volumes on Lear platforms and net foreign exchange rate fluctuations and is consistent with the increase in net sales.

Gross profit and gross margin were $951 million and 8.9% in the nine months ended October 1, 2011, as compared to $783 million and 8.9% in the nine months ended October 2, 2010. Favorable operating performance and the benefit of operational restructuring actions, as well as improved production volumes on Lear platforms, positively impacted gross profit by $293 million. The impact of selling price reductions, as well as higher commodity and launch costs, was partially offset by the impact of new business. In addition, gross profit includes operational restructuring costs of $1454) million in the first ~~nine~~three months of ~~2011, as compared to $47 million in the first nine months of 2010.~~

Selling, general and administrative expenses, including engineering and development expenses, were $352 million in the nine months ended October 2, 2011, as compared to $351 million in the nine months ended October 2, 2010. Increased engineering and development expenses and net foreign exchange rate fluctuations were largely offset by lower compensation-related costs. As a percentage of net sales, selling, general and administrative expenses declined to 3.3% in the first nine months of 2011, as compared to 4.0% in the first nine months of 2010, due to the increase in net sales.

~~Amortization of intangible assets was $21 million in the first nine months of 2011, as compared to $20 million in the first nine months of 2010.~~

Interest expense was $25 million in the first nine months of 2011, as compared to $44 million in the first nine months of 2010. This decrease was primarily due to the refund of interest related to a favorable settlement of an indirect tax matter in a foreign jurisdiction and lower overall debt levels.

Other expense, net, which includes equity in net income of affiliates, non-income related taxes, foreign exchange gains and losses, gains and losses related to certain derivative instruments and hedging activities, gains and losses on the sales of assets and other miscellaneous income and expense, was $6 million in the first nine months of 2011, as compared to $2 million in the first nine months of 2010. In the first nine months of 2011, we recognized gains of $6 million related to affiliate transactions. In the first nine months of 2010, we recognized a loss on the extinguishment of debt of $12 million related to the write-off of unamortized debt issuance costs. Other expense increased by $17 million between periods due to reduced net income from affiliates.

The provision for income taxes was $91 million for the first nine months of 2011, representing an effective tax rate of 16.6% on pretax income of $547 million, as compared to $29 million for the first nine months of 2010, representing an effective tax rate of 7.9% on pretax income of $367 million. In the first nine months of 2011, the provision for income taxes was impacted by the level and mix of earnings among tax jurisdictions, tax benefits of $23 million related to the reversal of full valuation allowances on the deferred tax assets of two foreign subsidiaries and an increase in tax expense related to the phase out of preferential tax holiday rates in several Chinese subsidiaries. The provision was also impacted by a portion of our restructuring charges and other expenses, for which no tax benefit was provided as the charges were incurred in certain countries for which no tax benefit is likely to be realized due to a history of operating losses in those countries. In the first nine months of 2010, the provision for income taxes was impacted by the mix of earnings among tax jurisdictions, tax benefits of $33 million, including interest, related to reductions in recorded tax reserves and net tax benefits of $3 million related to restructuring, the reduction of a valuation allowance in a foreign subsidiary and various other items. The provision was also impacted by a portion of our restructuring charges and other expenses, for which no tax benefit was provided as the charges were incurred in certain countries for which no tax benefit is likely to be realized due to a history of operating losses in those countries. Excluding these items, the effective tax rate in the first nine months of 2011 and 2010 approximated the U.S. federal statutory income tax rate of 35% adjusted for income taxes on foreign earnings, losses and remittances, foreign and U.S. valuation allowances, tax credits, income tax incentives and other permanent items.

~~For a description of our valuation allowances, see “Three Months Ended October 1, 2011 vs. Three Months Ended October 2, 2010,” above.~~

~~LEAR CORPORATION~~

Net income attributable to Lear in the first nine months of 2011 was $434 million, or $4.05 per diluted share, as compared to $321 million, or $2.97 per diluted share, in the first nine months of 2010, for the reasons described above. Net income per share data for 2010 has been retroactively adjusted to reflect the two-for-one stock split described in “— Liquidity and Capital Resources — Capitalization,” and Note 12, “Comprehensive Income and Equity,” to the condensed consolidated financial statements included in this Report.

~~Reportable Operating Segments~~

~~For a description of our reportable operating segments, see “Three Months Ended October 1, 2011 vs. Three Months Ended October 2, 2010 — Reportable Operating Segments,” above.~~

~~Seating~~

~~A summary of financial measures for our seating segment is shown below (dollar amounts in millions):~~

Nine months ended
October 1, October 2,
2011 2010
Net sales $ 8,272.7 $ 6,929.7
Segment earnings⁽¹⁾
601.8 496.7
Margin 7.3 % 7.2 %


⁽¹⁾		~~See definition above.~~

Seating systems net sales were $8.3 billion in the first nine months of 2011, as compared to $6.9 billion in the first nine months of 2010, an increase of $1.3 billion or 19.4%. The impact of new business, net foreign exchange rate fluctuations and improved production volumes on Lear platforms positively impacted net sales by $622 million, $303 million and $301 million, respectively. Segment earnings, including restructuring costs, and the related margin on net sales were $602 million and 7.3% in the first nine months of 2011, as compared to $497 million and 7.2% in the first nine months of 2010. The benefit of our restructuring and other operating performance actions, as well as the impact of new business and improved production volumes on Lear platforms, positively impacted segment earnings by $250 million. These increases were largely offset by the impact of selling price reductions, as well as higher program development and commodity costs. In addition, in the first nine months of 2011, we incurred costs of $13 million related to our restructuring actions, as compared to $35 million in 2010.

~~EPMS~~

~~A summary of financial measures for our EPMS segment is shown below (dollar amounts in millions):~~

Nine months ended
October 1, October 2,
2011 2010
Net sales $ 2,375.3 $ 1,868.4
Segment earnings⁽¹⁾
133.2 73.4
Margin 5.6 % 3.9 %


⁽¹⁾		~~See definition above.~~

EPMS net sales were $2.4 billion in the first nine months of 2011, as compared to $1.9 billion in the first nine months of 2010, an increase of $507 million or 27.1%. Improved production volumes on Lear platforms positively impacted net sales by $263 million. Net sales also benefited from the impact of new business and net foreign exchange rate fluctuations. Segment earnings, including restructuring costs, and the related margin on net sales were $133 million and 5.6% in the first nine months of 2011, as compared to $73 million and 3.9% in the first nine months of 2010. The benefit of our restructuring and other performance actions and improved production volumes on Lear platforms positively impacted segment earnings by $127 million. These increases were partially offset by the impact of higher launch and commodity costs, as well as selling price reductions. In addition, in the first nine months of 2011, we incurred costs of $2 million related to our restructuring actions, as compared to $17 million in 2010.

~~LEAR CORPORATION~~

~~Other~~

~~A summary of financial measures for our other category, which is not an operating segment, is shown below (dollar amounts in millions):~~

Nine months ended
October 1, October 2,
2011 2010
Net sales $ — $ —
Segment earnings⁽¹⁾
(157.2 ) (157.7 )
Margin N/A N/A


⁽¹⁾		~~See definition above.~~

Our other category includes unallocated corporate and geographic headquarters costs, as well as the elimination of intercompany activity. Corporate and geographic headquarters costs include various support functions, such as information technology, purchasing, corporate finance, legal, executive administration and human resources. Segment earnings related to our other category were ($157) million in the first nine months of 2011, as compared to ($158) million in the first nine months of 2010.

LIQUIDITY AND CAPITAL RESOURCES

Our primary liquidity needs are to fund general business requirements, including working capital requirements, capital expenditures, operational restructuring actions and debt service requirements. Our principal sources of liquidity are cash flows from operating activities, borrowings under available credit facilities and our existing cash balance. A substantial portion of our operating income is generated by our subsidiaries. As a result, we are dependent on the earnings and cash flows of and the combination of dividends, royalties, intercompany loan repayments and other distributions and advances from our subsidiaries to provide the funds necessary to meet our obligations. There are no significant restrictions on the ability of our subsidiaries to pay dividends or make other distributions to Lear. As of March 31, 2012 and December 31, 2011, we had $1.6 billion and $1.8 billion, respectively, of cash and cash equivalents on hand to support our liquidity needs, of which $823 million and $931 million, respectively, was held in foreign subsidiaries and can be repatriated primarily through the repayment of intercompany loans without creating additional income tax expense. For further information regarding potential dividends from our non-U.S. subsidiaries, see Note 9, “Income Taxes,” to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2010.~~

2011.

Cash Flows

Net cash provided by operating activities was ~~$517~~$4 million in the first ~~nine~~three months of ~~2011,~~2012, as compared to ~~$384~~$154 million in the first ~~nine~~three months of ~~2010.~~2011. The ~~increase primarily reflects higher earnings in the first nine months of 2011, largely offset by the~~ net change in working capital items ~~which~~resulted in an incremental decrease in operating cash flow of $70 million between periods, primarily due to cash payments related to previously accrued restructuring activities and the launch of several new facilities. The net change in recoverable customer engineering, development and tooling and lower earnings in the first quarter of 2012 also resulted in a decrease in operating cash flow ~~of $97 million~~ between periods. In the first ~~nine~~three months of ~~2011,~~2012, increases in accounts receivable and accounts payable resulted in a use of cash of ~~$343~~$457 million and a source of cash of ~~$372~~$310 million, respectively, primarily reflecting the impact of improved ~~production~~ volumes on Lear ~~platforms.~~

platforms in the first quarter of 2012, as compared to the fourth quarter of 2011. The impact of increases in inventories, other current assets and accrued liabilities were largely offsetting.

Net cash used in investing activities was ~~$225~~$64 million in the first ~~nine~~three months of ~~2011,~~2012, as compared to ~~$113~~$77 million in the first ~~nine~~three months of ~~2010,~~2011. The decrease between periods primarily ~~reflecting~~relates to a transaction with an ~~increase~~affiliate in ~~capital expenditures of $132 million between periods. Total capital~~2011. Capital spending in ~~2011~~2012 is estimated at approximately ~~$325 million.~~

$455 million, which includes approximately $30 million of replacement assets associated with a fire in 2011. We expect to receive recovery for the replacement assets through related insurance proceeds.

Net cash used in financing activities was ~~$265~~$73 million in the first ~~nine~~three months of ~~2011,~~2012, as compared to ~~$308~~$53 million in the first ~~nine~~three months of ~~2010. The decrease in financing cash outflow between periods primarily reflects the impact~~2011. In first three months of 2012, we repurchased $53 million of our ~~2010 financing transactions.~~common stock, as compared to repurchases of $27 million in the first three months of 2011. In 2010, we repaid $925 million of term loans under our first and second lien credit agreements, largely offset by net proceeds of $680 million related to the issuance of our senior unsecured notes. In 2011,addition, we paid ~~$38~~$3 million ~~in dividends to our stockholders, paid $19~~and $10 million in dividends to noncontrolling interests in the three months of 2012 and ~~repurchased $194 million of our common stock.~~2011, respectively. For further information regarding our 2010 financing transactions, see Note 8, “Long-Term Debt,” to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2010. For further information regarding our dividends and share repurchase program, see “— Capitalization,” below and Note 12, “Comprehensive Income and Equity,” to the condensed consolidated financial statements included in this Report.

Capitalization

~~In addition~~

From time to ~~cash provided by operating activities,~~time, we utilize uncommitted credit facilities to fund our capital expenditures and working capital requirements at certain of our foreign ~~subsidiaries. We utilize~~subsidiaries, as well as uncommitted lines of credit ~~as needed~~ for our short-term working capital ~~fluctuations. For the nine months ended October 1,~~fluctuations, in addition to cash provided by operating activities. As of March 31, 2012, there were no short-term debt balances outstanding. As of April 2, 2011, ~~and October 2, 2010,~~ our ~~average~~ outstanding short-term debt balance was ~~$2 million and $27 million, respectively. The~~$4 million. For the three months ended April 2, 2011, the weighted average ~~short-term~~ interest rate on our short-term debt balances was ~~6.5% and 2.4% for the respective periods.~~5.0%. The availability of uncommitted lines of credit may be affected by our financial performance, credit ratings and other factors.

~~LEAR CORPORATION~~

Senior Notes

As of ~~October 1, 2011,~~March 31, 2012, our long-term debt consists of $350 million in aggregate principal amount at maturity of senior unsecured ~~7.875% senior~~ notes due 2018 at a stated coupon rate of 7.875% (the “2018 Notes”) and $350 million in aggregate principal amount at maturity of senior unsecured ~~8.125% senior~~ notes due 2020 at a stated coupon rate of 8.125% (the “2020 Notes” and together with the 2018 Notes, the “Notes”).

~~There are no scheduled~~ As of March 31, 2012 and December 31, 2011, we had $696 million and $695 million, respectively, of Notes outstanding.

Scheduled cash interest payments on the Notes are approximately $28 million in the last ~~three~~nine months of ~~2011.~~2012. As of ~~October 1, 2011,~~March 31, 2012, we were in compliance with all covenants under the indenture governing the Notes.

LEAR CORPORATION

The Notes are senior unsecured obligations. ~~Obligations~~Our obligations under the Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis, by certain ~~of Lear’s~~ domestic subsidiaries, which are directly or indirectly 100% owned by Lear.

For further information related to the Notes, including information on early redemption, covenants and events of default, see Note 7, “Long-Term Debt,” to the condensed consolidated financial statements included in this Report and Note 8, “Long-Term Debt,” to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2010.~~

2011.

Revolving Credit Facility

~~On June 17, 2011, we entered into an amended and restated credit agreement, under which we~~

We have a $500 million revolving credit facility, ~~(the “Revolving Credit Facility”),~~ which permits borrowings for general corporate and working capital purposes and the issuance of letters of credit. The commitments under the ~~Revolving Credit Facility~~revolving credit facility expire on June 17, 2016. As of ~~October 1, 2011,~~March 31, 2012, there were no borrowings outstanding under the ~~Revolving Credit Facility,~~revolving credit facility, and we were in compliance with all covenants under the agreement governing the ~~Revolving Credit Facility.~~

revolving credit facility.

For further information related to the ~~Revolving Credit Facility,~~revolving credit facility, including information on pricing, covenants and events of default, see Note 7, “Long-Term Debt,” to the condensed consolidated financial statements included in this Report and Note 8, “Long-Term Debt,” to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2010.~~

2011.

Off-Balance Sheet Arrangements

Guarantees and Commitments

We guarantee 49% of certain of the debt of one of our unconsolidated affiliates, Tacle Seating USA, LLC. As of ~~October 1, 2011,~~March 31, 2012, the aggregate amount of debt guaranteed was approximately $2$1 million.

Common Stock Share Repurchase Program

On February 16, 2011, our Board of Directors authorized a three year, $400 million common stock share repurchase program, which permits the discretionary repurchase of our outstanding common stock through February 16, 2014. On January 11, 2012, our Board of Directors authorized an increase in the amount of the common stock repurchase program to $700 million. In the first ~~nine~~three months of ~~2011,~~2012, we repurchased ~~4,082,523~~1,151,913 shares of our outstanding common stock at an average purchase price of ~~$47.57~~$45.58 per share, excluding commissions, ~~(shares and price per share have been retroactively adjusted to reflect the two-for-one stock split discussed below)~~ for an aggregate purchase price of ~~$194 million and~~$53 million. We may repurchase an additional ~~$206~~$368 million in shares of our outstanding common stock under this program. The extent to which we will repurchase our outstanding common stock and the timing of such repurchases will depend upon our financial condition, prevailing market conditions, alternative uses of capital and other factors. In addition, our amended and restated credit facility and ~~indentures~~the indenture governing the Notes place certain limitations on the repurchase of common shares. See “—Forward-Looking Statements.”

~~Stock Split~~

During the first quarter of 2011, we completed a two-for-one stock split of our common stock. For further information, see Note 12, “Comprehensive Income and Equity,” to the condensed consolidated financial statements included in this Report.

Dividends

A summary of 2012 dividend declarations is shown below:


Dividend Amount	Declaration Date	Record Date	Payment Date
~~Dividend Amount~~	~~Declaration Date~~	~~Record Date~~	~~Payment Date~~
$~~0.125~~0.14	February ~~16, 2011~~9, 2012	March ~~4, 2011~~2, 2012	March ~~16, 2011~~
~~$0.125~~	~~May 12, 2011~~	~~June 3, 2011~~	~~June 22, 2011~~
~~$0.125~~	~~August 10, 2011~~	~~September 2, 2011~~	~~September~~ 21, ~~2011~~2012

~~LEAR CORPORATION~~

We currently expect to pay quarterly cash dividends in the future, although such ~~payment is~~payments are at the discretion of our Board of Directors and will depend upon our financial condition, results of operations, capital requirements, alternative uses of capital and other factors that our Board of Directors may consider at its discretion. In addition, our amended and restated credit facility and ~~indentures~~the indenture governing the Notes place certain limitations on the payment of cash dividends.

Adequacy of Liquidity Sources

As of ~~October 1, 2011,~~March 31, 2012, we had approximately ~~$1.7~~$1.6 billion of cash and cash equivalents on hand and $500 million in available borrowings under our Revolving Credit ~~Facility, which~~Facility. Together with cash provided by operating activities, we believe this will enable us to meet our liquidity needs to satisfy ordinary course business obligations. However, our future financial results and our ability to continue to meet such liquidity needs isare subject to, and will be affected by, cash flows from operations, including the impact of restructuring activities, automotive industry conditions, the financial condition of our customers and suppliers and other related ~~factors.~~factors outside of our control. Additionally, an economic downturn or reduction in production levels could negatively impact our financial condition. Furthermore, our future financial results will be affected by cash flows from operations, including the impact of restructuring activities, and will also be subject to certain factors outside of our control, including those described above. For further discussion of the risks and uncertainties affecting our cash flows from operations and overall liquidity, see “— Executive Overview” above, “— Forward-Looking Statements” below and Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, ~~2010,~~2011, as supplemented and updated by Part II — Item 1A, “Risk Factors,” in ~~our Quarterly Report on Form 10-Q for the quarter ended April 2, 2011.~~

this Report.
LEAR CORPORATION

Market ~~Rate~~Risk Sensitivity

In the normal course of business, we are exposed to market risks associated with fluctuations in foreign exchange rates, interest rates and commodity prices. We manage a portion of these risks through the use of derivative financial instruments in accordance with management’s guidelines. We enter into all hedging transactions for periods consistent with the underlying exposures. We do not enter into derivative instruments for trading purposes.

Foreign Exchange

Operating results may be impacted by our buying, selling and financing in currencies other than the functional currency of our operating companies (“transactional exposure”). We may mitigate a portion of this risk by entering into forward foreign exchange, futures and option contracts. The foreign exchange contracts are executed with banks that we believe are creditworthy. Gains and losses related to foreign exchange contracts are deferred where appropriate and included in the measurement of the foreign currency transaction subject to the hedge. Gains and losses incurred related to foreign exchange contracts are generally offset by the direct effects of currency movements on the underlying transactions.

Currently, our most significant foreign currency transactional exposures relate to the Mexican peso, various European currencies, the Chinese renminbi and the ~~Chinese renminbi.~~Canadian dollar. We have performed a quantitative analysis of our ~~net~~overall currency rate exposure as of ~~October 1, 2011~~March 31, 2012 and December 31, ~~2010.~~2011. As of ~~October 1, 2011,~~March 31, 2012, the potential adverse earnings ~~benefit~~impact related to net transactional exposures from a hypothetical 10% strengthening of the U.S. dollar relative to all other currencies to which it is exposed for a twelve-month period is approximately $2($19) million. In addition, the potential earnings benefit related to net transactional exposures from a similar strengthening of the Euro relative to all other currencies to which it is exposed for a twelve-month period is approximately $4$16 million. As of December 31, ~~2010,~~2011, the potential adverse earnings ~~benefit~~impact related to net transactional exposures from a hypothetical 10% strengthening of the U.S. dollar relative to all other currencies to which it is exposed for a twelve-month period ~~was~~is approximately ~~$22~~($21) million. In addition, the potential earnings benefit related to net transactional exposures from a similar strengthening of the Euro relative to all other currencies to which it is exposed for a twelve-month period ~~was~~is approximately ~~$15~~$3 million.

As of ~~October 1, 2011,~~March 31, 2012, foreign exchange contracts representing ~~$566~~$694 million of notional amount were outstanding with maturities of less than 1817 months. As of ~~October 1, 2011,~~March 31, 2012, the fair value of these contracts was approximately ($45) million. A 10% change in the value of the U.S. dollar relative to all other currencies to which it is exposed would result in a $35 million change in the aggregate fair value of these contracts. A 10% change in the value of the Euro relative to all other currencies to which it is exposed would result in a $9 million change in the aggregate fair value of these contracts. As of December 31, 2010, foreign exchange contracts representing $315 million of notional amount were outstanding with maturities of less than 12 months. As of December 31, 2010, the fair value of these contracts was approximately ($1)2) million. A 10% change in the value of the U.S. dollar relative to all other currencies to which it is exposed would have resulted in a $7$20 million change in the aggregate fair value of these contracts. A 10% change in the value of the Euro relative to all other currencies to which it is exposed would have resulted in a $4$6 million change in the aggregate fair value of these contracts.

As of December 31, 2011, foreign exchange contracts representing $734 million of notional amount were outstanding with maturities of less than 17 months. As of December 31, 2011, the fair value of these contracts was approximately ($45) million. A 10% change in the value of the U.S. dollar relative to all other currencies to which it is exposed would have resulted in a $30 million change in the aggregate fair value of these contracts. A 10% change in the value of the Euro relative to all other currencies to which it is exposed would result have resulted in a $14 million change in the aggregate fair value of these contracts.

There are certain shortcomings inherent in the sensitivity analysis presented. The analysis assumes that all currencies would uniformly strengthen or weaken relative to the U.S. dollar or Euro. In reality, some currencies may strengthen while others may weaken, causing the earnings impact to increase or decrease depending on the currency and the direction of the exchange rate movement.

~~LEAR CORPORATION~~

In addition to the transactional exposure described above, our operating results are impacted by the translation of our foreign operating income into U.S. dollars (“~~translation~~translational exposure”). In ~~2010,~~2011, net sales outside of the United States accounted for 82% of our consolidated net sales, although certain non-U.S. sales are U.S. dollar denominated. We do not enter into foreign exchange contracts to mitigate ~~this~~our translational exposure.

Interest Rates

Historically, we have used interest rate swap and other derivative contracts to manage our exposure to variable interest rates on outstanding variable rate debt instruments indexed to ~~United States~~U.S. or European Monetary Union short-term money market rates. As of ~~October 1, 2011~~March 31, 2012 and December 31, ~~2010,~~2011, there were no interest rate contracts outstanding. We will continue to evaluate, and may use, derivative financial instruments, including forwards, futures, options, swaps and other derivative contracts to manage our exposures to fluctuations in interest rates in the future.

LEAR CORPORATION

Commodity Prices

Raw material, energy and commodity costs have been volatile over the past several years. We have developed and implemented strategies to mitigate the impact of higher raw material, energy and commodity costs, such as the selective in-sourcing of components, the continued consolidation of our supply base, longer-term purchase commitments, financial hedges for certain commodities and the selective expansion of low-cost country sourcing and engineering, as well as value engineering and product benchmarking. However, these strategies, together with commercial negotiations with our customers and suppliers, typically offset only a portion of the adverse impact. These costs remain volatile and could have an adverse impact on our operating results in the foreseeable future. See “— Forward-Looking Statements” below and Item 1A, “Risk Factors — Increases in the costs and restrictions on the availability of raw materials, energy, commodities and product components could adversely affect our financial performance,” in our Annual Report on Form 10-K for the year ended December 31, ~~2010, as supplemented and updated by Part II — Item 1A, “Risk Factors,” in our Quarterly Report on Form 10-Q for the quarter ended April 2,~~ 2011.

We have commodity price risk with respect to purchases of certain raw materials, including steel, copper, diesel fuel, chemicals, resins and leather. Our main cost exposures relate to steel and copper. The majority of the steel used in our products is comprised of components that are integrated into a seat system, such as seat frames, recliner mechanisms, seat tracks and mechanical components. Therefore, our exposure to steel prices is primarily indirect, through these purchased components. Approximately 80% of our copper purchases are subject to price index agreements with our customers.

We use derivative instruments to reduce our exposure to fluctuations in copper prices. As of ~~October 1, 2011,~~March 31, 2012, commodity swap contracts representing $7$2 million of notional amount were outstanding with maturities of 12less than seven months. As of ~~October 1,~~March 31, 2012, the fair market value of these contracts was approximately zero. The potential adverse earnings impact from a 10% parallel decline in the copper curve for a twelve-month period is less than ($1) million. As of December 31, 2011, commodity swap contracts representing $3 million of notional amount were outstanding with maturities of less than twelve months. As of December 31, 2011, the fair market value of these contracts was less than ($1) million. The potential adverse earnings impact from a 10% parallel decline in the copper curve for a twelve-month period is less than ($1) million. ~~As of December 31, 2010, there were no commodity swap contracts outstanding.~~

OTHER MATTERS

Legal and Environmental Matters

We are involved from time to time in various legal proceedings and claims, including, without limitation, commercial and contractual disputes, product liability claims and environmental and other matters. As of ~~October 1, 2011,~~March 31, 2012, we had recorded reserves for pending legal disputes, including commercial disputes and other matters, of ~~$17~~$15 million. In addition, as of ~~October 1, 2011,~~March 31, 2012, we had recorded reserves for product liability claims and environmental matters of ~~$40~~$23 million and $3 million, respectively. Although these reserves were determined in accordance with GAAP, the ultimate outcomes of these matters are inherently uncertain, and actual results may differ significantly from current estimates. For a description of risks related to various legal proceedings and claims, see Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, ~~2010,~~2011, as supplemented and updated by Part II — Item 1A, “Risk Factors,” in ~~our Quarterly Report on Form 10-Q for the quarter ended April 2, 2011.~~this Report. For a more complete description of our outstanding material legal proceedings, see Note 13, “Legal and Other Contingencies,” to the condensed consolidated financial statements included in this Report.

Significant Accounting Policies and Critical Accounting Estimates

Certain of our accounting policies require management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions are based on our historical experience, the terms of existing contracts, our evaluation of trends in the industry, information provided by our customers and suppliers and information available from other outside sources, as appropriate. However, these estimates and assumptions are subject to an inherent degree of uncertainty. As a result, actual results in these areas may differ significantly from our estimates. For a discussion of our significant accounting policies and critical

~~LEAR CORPORATION~~

accounting estimates, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Significant Accounting Policies and Critical Accounting Estimates,” and Note 4, “Summary of Significant Accounting Policies,” to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2010.~~2011. There have been no significant changes in our significant accounting policies or critical accounting estimates during the first ~~nine~~three months of ~~2011.~~

2012.

Recently Issued Accounting Pronouncements

~~Goodwill Impairment~~

For more likely than not that a goodwill impairment exists. The provisions of this update are effective for annual reporting periods beginning after December 15, 2010. Our annual goodwill impairment test is conducted as of the first day of our fourth quarter. We do not expect the effects of adoption to be significant.

The FASB amended ASC 350, “Intangibles — Goodwill and Other,” with ASU 2011-08, “Testing Goodwill for Impairment.” This update provides entities with the option to perform a qualitative assessment of whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the two-step impairment test would be required. Otherwise, no further goodwill impairment testing would be required. The provisions of this update are effective for annual and interim testing periods beginning after December 15, 2011; however, early adoption is permitted. We expect to adopt the provisions of this ASU in connection with our 2011 goodwill impairment test, conducted as of the first day of our fourth quarter, and do not expect the effects of adoption to be significant.

~~Business Combinations~~

The FASB amended ASC 805, “Business Combinations,” with ASU 2010-29, “Disclosure of Supplementary Pro Forma Information for Business Combinations,” to, among other things, require pro forma revenue and earnings disclosures in comparative financial statements that reflect the results of operations of the acquired entity as though the business combination had occurred as of the beginning of the prior year. The provisions of this update are effective for annual reporting periods beginning after December 15, 2010. We will evaluateinformation on the impact of recently issued accounting pronouncements, see Note 16, “Accounting Pronouncements,” to the condensed consolidated financial statements included in this ~~update on material future business combinations.~~

~~Fair Value Measurements~~

The FASB amended ASC 820, “Fair Value Measurements,” with ASU 2011-04, “Fair Value Measurement (Topic 820) — Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” This update provides converged guidance on how to measure fair value, which is largely consistent with existing GAAP. This update also requires additional fair value measurement disclosures. The provisions of this update are effective as of January 1, 2012. We are currently evaluating the impact of this update on our financial statement disclosures.

~~Multiemployer Pension Plans~~

The FASB amended ASC 715-80, “Compensation — Retirement Benefits — Multiemployer Plans,” with ASU 2011-09, “Disclosures about an Employer’s Participation in a Multiemployer Plan.” This update requires additional qualitative and quantitative disclosures about an employer’s participation in significant multiemployer plans that offer pension or other postretirement benefits. The provisions of this update are effective for annual reporting periods ending after December 15, 2011, with early adoption permitted. We are currently evaluating the impact of this update on our annual financial statement disclosures and do not expect the effects of adoption to be significant.

Report.

Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by us or on our behalf. The words “will,” “may,” “designed to,” “outlook,” “believes,” “should,” “anticipates,” “plans,” “expects,” “intends,” “estimates,” “forecasts” and similar expressions identify certain of these forward-looking statements. We also may provide forward-looking statements in oral statements or other written materials released to the public. All such forward-looking statements contained or incorporated in this Report or in any other public statements which address operating performance, events or developments that we

expect or anticipate may occur in the future, including, without limitation, statements related to business opportunities, awarded sales contracts, sales backlog and ongoing commercial arrangements, or statements expressing views about future operating results, are forward-looking statements. Actual results may differ materially from any or all forward-looking statements made by us. Important factors, risks and uncertainties that may cause actual results to differ materially from anticipated results include, but are not limited to:

general economic conditions in the markets in which we operate, including changes in interest rates or currency exchange rates;

the financial condition and restructuring actions of our customers and suppliers;

changes in actual industry vehicle production levels from our current estimates;

fluctuations in the production of vehicles or the loss of business with respect to, or the lack of commercial success of, a vehicle model for which we are a significant supplier;

disruptions in the relationships with our suppliers;

~~LEAR CORPORATION~~

labor disputes involving us or our significant customers or suppliers or that otherwise affect us;

•		~~general economic conditions in the markets in which we operate, including changes in interest rates or currency exchange rates;~~

•		~~the financial condition and restructuring actions of our customers and suppliers;~~

•		~~changes in actual industry vehicle production levels from our current estimates;~~

•		~~fluctuations in the production of vehicles or the loss of business with respect to, or the lack of commercial success of, a vehicle model for which we are a significant supplier;~~

•		~~disruptions in the relationships with our suppliers;~~

•		~~labor disputes involving us or our significant customers or suppliers or that otherwise affect us;~~

•		~~the outcome of customer negotiations and the impact of customer-imposed price reductions;~~

•		~~the impact and timing of program launch costs and our management of new program launches;~~

•		~~the costs, timing and success of restructuring actions;~~

•		~~increases in our warranty, product liability or recall costs;~~

•		~~risks associated with conducting business in foreign countries;~~

•		~~competitive conditions impacting us and our key customers and suppliers;~~

•		~~the cost and availability of raw materials, energy, commodities and product components and our ability to mitigate such costs;~~

•		~~the outcome of legal or regulatory proceedings to which we are or may become a party;~~

•		~~the impact of pending legislation and regulations or changes in existing federal, state, local or foreign laws or regulations;~~

•		~~unanticipated changes in cash flow, including our ability to align our vendor payment terms with those of our customers;~~

•		~~limitations imposed by our existing indebtedness and our ability to access capital markets on commercially reasonable terms;~~

•		~~impairment charges initiated by adverse industry or market developments;~~

•		~~our ability to execute our strategic objectives;~~

•		~~changes in discount rates and the actual return on pension assets;~~

•		~~costs associated with compliance with environmental laws and regulations;~~

•		~~developments or assertions by or against us relating to intellectual property rights;~~

•		~~our ability to utilize our net operating loss, capital loss and tax credit carryforwards;~~

•		the impact of any failure by the United States or any other country to satisfy its obligations, a downgrade (or the prospect of a downgrade) of credit ratings assigned to any such obligations and other similar developments relating to the global credit markets and economic conditions;

•		~~the impact of pending and future governmental actions in the United States or any other country to address budget deficits through reductions in spending and/or revenue increases; and~~

•		other risks, described in Part I — Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2010, as supplemented and updated by Part II — Item 1A, “Risk Factors,” in our Quarterly Report on Form 10-Q for the quarter ended April 2, 2011, and from time to time in our other Securities and Exchange Commission filings.

the outcome of customer negotiations and the impact of customer-imposed price reductions;

the impact and timing of program launch costs and our management of new program launches;

the costs, timing and success of restructuring actions;

increases in our warranty, product liability or recall costs;

risks associated with conducting business in foreign countries;

the operational and financial success of our joint ventures;

competitive conditions impacting us and our key customers and suppliers;

disruptions to our information technology systems;

the cost and availability of raw materials, energy, commodities and product components and our ability to mitigate such costs;

the outcome of legal or regulatory proceedings to which we are or may become a party;

the impact of pending legislation and regulations or changes in existing federal, state, local or foreign laws or regulations;

unanticipated changes in cash flow, including our ability to align our vendor payment terms with those of our customers;

limitations imposed by our existing indebtedness and our ability to access capital markets on commercially reasonable terms;

impairment charges initiated by adverse industry or market developments;

our ability to execute our strategic objectives;

changes in discount rates and the actual return on pension assets;

costs associated with compliance with environmental laws and regulations;

developments or assertions by or against us relating to intellectual property rights;

our ability to utilize our net operating loss, capital loss and tax credit carryforwards;

global sovereign fiscal matters and creditworthiness, including potential defaults and the related impacts on economic activity, including the possible effects on credit markets, currency values, monetary unions, international treaties and fiscal policies; and

other risks, described in Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2011, as supplemented and updated by Part II — Item 1A, “Risk Factors,” in this Report, and from time to time in our other Securities and Exchange Commission filings.

The forward-looking statements in this Report are made as of the date hereof, and we do not assume any obligation to update, amend or clarify them to reflect events, new information or circumstances occurring after the date hereof.

~~LEAR CORPORATION~~

ITEM 4 — CONTROLS AND PROCEDURES

(a)		Disclosure Controls and Procedures

		The Company has evaluated, under the supervision and with the participation of the Company’s management, including the Company’s President and Chief Executive Officer along with the Company’s Interim Chief Financial Officer, the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Report. The Company’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Based on the evaluation described above, the Company’s President and Chief Executive Officer along with the Company’s Interim Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective to provide reasonable assurance that the desired control objectives were achieved as of the end of the period covered by this Report.

The Company has evaluated, under the supervision and with the participation of the Company’s management, including the Company’s President and Chief Executive Officer along with the Company’s Senior Vice President and Chief Financial Officer, the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Report. The Company’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and

LEAR CORPORATION

instances of fraud, if any, within the Company have been detected. Based on the evaluation described above, the Company’s President and Chief Executive Officer along with the Company’s Senior Vice President and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective to provide reasonable assurance that the desired control objectives were achieved as of the end of the period covered by this Report.

(b)		Changes in Internal Controls over Financial Reporting

		There was no change in the Company’s internal control over financial reporting that occurred during the fiscal quarter ended October 1, 2011, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

There was no change in the Company’s internal control over financial reporting that occurred during the fiscal quarter ended March 31, 2012, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1 — LEGAL PROCEEDINGS

We are involved from time to time in various legal proceedings and claims, including, without limitation, commercial and contractual disputes, product liability claims and environmental and other matters. For a description of risks related to various legal proceedings and claims, see Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, ~~2010,~~2011, as supplemented and updated by Part II — Item 1A, “Risk Factors,” in ~~our Quarterly Report on Form 10-Q for the quarter ended April 2, 2011.~~this Report. For a description of our outstanding material legal proceedings, see Note 13, “Legal and Other Contingencies,” to the condensed consolidated financial statements included in this Report.

ITEM 1A — RISK FACTORS

There have been no material changes from the risk factors as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2010,~~2011, except to supplement and update those risk factors as ~~supplemented~~follows:

•

A disruption in our information technology systems could adversely affect our financial performance.

We rely on the accuracy, capacity and ~~updated~~security of our information technology systems. Despite the security measures we have implemented, our systems could be breached or damaged by ~~Part II — Item 1A, “Risk Factors,”~~computer viruses or unauthorized physical or electronic access. Such a breach could result in business disruption, theft of our ~~Quarterly Report on Form 10-Q for~~intellectual property or trade secrets and unauthorized access to personnel information. To the ~~quarter ended April 2, 2011.~~

extent that our business is interrupted or data is lost, destroyed or inappropriately used or disclosed, such disruptions could adversely affect our competitive position, relationships with our customers, financial condition, operating results and cash flows.

ITEM 2 — UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

As discussed in Part I — Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Capitalization — Common Stock Share Repurchase Program,” on February 16, 2011, our Board of Directors authorized a three year, $400 million common stock share repurchase program. On January 11, 2012, our Board of Directors authorized an increase in the amount of the common stock repurchase program to $700 million. In the ~~third~~ quarter ~~of 2011,~~ended March 31, 2012, we repurchased ~~2,094,249~~1,151,913 shares of our outstanding common stock for an aggregate purchase price of $94.2 million, excluding commissions. In the first nine months of 2011, we repurchased 4,082,523 shares of our outstanding common stock (share amounts have been retroactively adjusted to reflect the two-for-one split of our common stock) for an aggregate purchase price of $194.2$52.5 million, excluding commissions. For further information, see Note 12, “Comprehensive Income and Equity,” to the condensed consolidated financial statements included in this Report. A summary of the shares of our common stock repurchased during the ~~fiscal~~ quarter ended ~~October 1, 2011,~~March 31, 2012, is shown below:


Delaware
~~Delaware~~		13-3386776
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

21557 Telegraph Road, Southfield, MI		48033
~~21557 Telegraph Road, Southfield, MI~~		~~48033~~
(Address of principal executive offices)		(Zip code)


Large accelerated filer	x	Accelerated filer	¨

~~Large accelerated~~Non-accelerated filerþ	~~Accelerated filer~~o¨	~~Non-accelerated filer~~o	~~Smaller reporting company~~o
		~~(Do~~ (Do not check if a smaller reporting company)	Smaller reporting company	¨


	Page No.
Part I —– Financial Information
Item 1 —– Condensed Consolidated Financial Statements
Introduction to the Condensed Consolidated Financial Statements		3
Condensed Consolidated Balance Sheets - ~~October 1, 2011~~March 31, 2012 (Unaudited) and December 31, ~~2010~~2011		4
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - Three ~~and Nine~~ Months Ended ~~October 1,~~March 31, 2012 and April 2, 2011 ~~and October 2, 2010~~		5
Condensed Consolidated Statements of Cash Flows (Unaudited) - ~~Nine~~Three Months Ended ~~October 1,~~March 31, 2012 and April 2, 2011 ~~and October 2, 2010~~		6
Notes to the Condensed Consolidated Financial Statements		7
Item 2 —– Management’s Discussion and Analysis of Financial Condition and Results of Operations		3027
Item 3 —– Quantitative and Qualitative Disclosures about Market Risk (included in Item 2)
Item 4 – Controls and Procedures		36
Part II – Other Information
Item ~~4 — Controls and Procedures~~1 – Legal Proceedings		4437
~~Part II — Other Information~~Item 1A – Risk Factors		37
~~Item 1 — Legal Proceedings~~		44
~~Item 1A — Risk Factors~~		44
Item 2 —– Unregistered Sales of Equity Securities and Use of Proceeds		4437
Item 6 —– Exhibits		4538
Signatures		4639
~~EX-10.1~~
~~EX-10.2~~
~~EX-31.1~~
~~EX-31.2~~
~~EX-32.1~~
~~EX-32.2~~
~~EX-101 INSTANCE DOCUMENT~~
~~EX-101 SCHEMA DOCUMENT~~
~~EX-101 CALCULATION LINKBASE DOCUMENT~~
~~EX-101 LABELS LINKBASE DOCUMENT~~
~~EX-101 PRESENTATION LINKBASE DOCUMENT~~
~~EX-101 DEFINITION LINKBASE DOCUMENT~~


	October 1,			December 31,
	2011⁽²⁾			2010
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,676.5		$	1,654.1
Accounts receivable		2,082.3			1,758.4
Inventories		708.9			554.2
Other		524.0			418.8

Total current assets		4,991.7			4,385.5

LONG-TERM ASSETS:
Property, plant and equipment, net		1,058.1			994.7
Goodwill		632.0			614.6
Other		534.1			626.3

Total long-term assets		2,224.2			2,235.6

Total assets	$	7,215.9		$	6,621.1


LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term borrowings	$	—		$	4.1
Accounts payable and drafts		2,199.8			1,838.4
Accrued liabilities		1,042.8			976.0

Total current liabilities		3,242.6			2,818.5

LONG-TERM LIABILITIES:
Long-term debt		695.2			694.9
Other		534.9			538.9

Total long-term liabilities		1,230.1			1,233.8

EQUITY:
Series A convertible preferred stock, 100,000,000 shares authorized; 10,896,250 shares issued as of October 1, 2011 and December 31, 2010; and no shares outstanding as of October 1, 2011 and December 31, 2010		—			—
Common stock, $0.01 par value, 300,000,000 shares authorized; 106,754,019 and 105,498,880 shares issued as of October 1, 2011 and December 31, 2010, respectively⁽¹⁾		1.1			1.1
Additional paid-in capital, including warrants to purchase common stock		2,145.0			2,116.0
Common stock held in treasury, 4,468,011 and 322,130 shares as of October 1, 2011 and December 31, 2010, respectively, at cost⁽¹⁾		(210.8	)		(13.4	)
Retained earnings		828.7			434.5
Accumulated other comprehensive loss		(137.5	)		(78.0	)

Lear Corporation stockholders’ equity		2,626.5			2,460.2
Noncontrolling interests		116.7			108.6

Equity		2,743.2			2,568.8

Total liabilities and equity	$	7,215.9		$	6,621.1


	March 31, 2012⁽¹⁾			December 31, 2011
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,630.9		$	1,754.3
Accounts receivable		2,366.3			1,880.1
Inventories		715.5			637.8
Other		532.3			489.3

Total current assets		5,245.0			4,761.5

LONG-TERM ASSETS:
Property, plant and equipment, net		1,106.6			1,072.0
Goodwill		634.9			628.6
Other		549.5			548.8

Total long-term assets		2,291.0			2,249.4

Total assets	$	7,536.0		$	7,010.9

LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable and drafts	$	2,355.2		$	2,014.3
Accrued liabilities		1,081.8			1,049.2

Total current liabilities		3,437.0			3,063.5

LONG-TERM LIABILITIES:
Long-term debt		695.5			695.4
Other		698.1			690.9

Total long-term liabilities		1,393.6			1,386.3

EQUITY:
Preferred stock, 100,000,000 shares authorized (including 10,896,250 Series A convertible preferred stock authorized); no shares outstanding		—			—
Common stock, $0.01 par value, 300,000,000 shares authorized; 107,607,452 and 107,486,539 shares issued as of March 31, 2012 and December 31, 2011, respectively		1.1			1.1
Additional paid-in capital, including warrants to purchase common stock		2,158.0			2,150.6
Common stock held in treasury, 7,970,442 and 6,799,597 shares as of March 31, 2012 and December 31, 2011, respectively, at cost		(359.0	)		(305.6	)
Retained earnings		1,042.1			922.3
Accumulated other comprehensive loss		(265.1	)		(332.0	)

Lear Corporation stockholders’ equity		2,577.1			2,436.4
Noncontrolling interests		128.3			124.7

Equity		2,705.4			2,561.1

Total liabilities and equity	$	7,536.0		$	7,010.9

x
þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

¨
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


⁽¹⁾		Share data as of December 31, 2010, has been retroactively adjusted to reflect the two-for-one stock split described in Note 12, “Comprehensive Income and Equity,” to these condensed consolidated financial statements.

⁽²⁾		Unaudited.


	Three Months Ended				Nine Months Ended
	October 1,		October 2,		October 1,		October 2,
	2011		2010		2011		2010
Net sales	$	3,460.0	$	2,820.3	$	10,648.0	$	8,798.1

Cost of sales		3,179.5		2,584.5		9,697.5		8,014.7
Selling, general and administrative expenses		114.9		110.0		351.6		350.7
Amortization of intangible assets		7.1		7.0		21.1		20.3
Interest expense		10.9		11.9		24.9		44.2
Other expense, net		8.5		3.0		5.7		1.5


Consolidated income before provision for income taxes		139.1		103.9		547.2		366.7
Provision for income taxes		31.0		5.4		90.7		29.1


Consolidated net income		108.1		98.5		456.5		337.6
Less: Net income attributable to noncontrolling interests		7.4		3.2		22.3		16.4


Net income attributable to Lear	$	100.7	$	95.3	$	434.2	$	321.2


Basic net income per share attributable to Lear⁽¹⁾	$	0.97	$	0.92	$	4.16	$	3.18


Diluted net income per share attributable to Lear⁽¹⁾	$	0.95	$	0.88	$	4.05	$	2.97


⁽¹⁾		2010 per share data has been retroactively adjusted to reflect the two-for-one stock split described in Note 12, “Comprehensive Income and Equity,” to these condensed consolidated financial statements.


	Accrual as of		2011		Utilization						Accrual as of
	January 1, 2011		Charges		Cash			Non-cash			October 1, 2011
Employee termination benefits	$	38.4	$	8.8	$	(19.9	)	$	—		$	27.3
Contract termination costs		3.7		1.9		—			—			5.6
Asset impairments		—		1.0		—			(1.0	)		—
Other related costs		—		1.6		(1.6	)		—			—

Total	$	42.1	$	13.3	$	(21.5	)	$	(1.0	)	$	32.9


					Utilization
	Accrual as of January 1, 2012		2012 Charges		Cash			Non-cash		Accrual as of March 31, 2012
Employee termination benefits	$	56.8	$	4.7	$	(46.4	)	$	—	$	15.1
Contract termination costs		5.7		0.4		(0.4	)		—		5.7
Other related costs		—		0.1		(0.1	)		—		—

Total	$	62.5	$	5.2	$	(46.9	)	$	—	$	20.8


	March 31, 2012		December 31, 2011
Raw materials	$	580.4	$	520.1
Work-in-process		37.0		36.0
Finished goods		98.1		81.7

Inventories	$	715.5	$	637.8


	March 31, 2012		December 31, 2011
Current	$	131.6	$	96.0
Long-term		67.0		64.2

Recoverable customer engineering, development and tooling	$	198.6	$	160.2


Balance as of January 1, 2011	$	614.6
Acquisition		15.0
Foreign currency translation		2.4

Balance as of October 1, 2011	$	632.0


	October 1, 2011					December 31, 2010
	Long-Term		Weighted Average			Long-Term		Weighted Average
	Debt		Interest Rate			Debt		Interest Rate
7.875% Senior Notes due 2018	$	347.8		8.00	%	$	347.7		8.00	%
8.125% Senior Notes due 2020		347.4		8.25	%		347.2		8.25	%

Long-term debt	$	695.2				$	694.9


	March 31, 2012					December 31, 2011
	Long-Term Debt		Weighted Average Interest Rate			Long-Term Debt		Weighted Average Interest Rate
7.875% Senior Notes due 2018	$	348.0		8.00	%	$	347.9		8.00	%
8.125% Senior Notes due 2020		347.5		8.25	%		347.5		8.25	%

Long-term debt	$	695.5				$	695.4


	Three Months Ended October 1, 2011									Nine Months Ended October 1, 2011
				Attributable									Attributable
				to Lear Corporation			Non-controlling						to Lear Corporation			Non-controlling
	Equity			Stockholders			Interests			Equity			Stockholders			Interests
Beginning equity balance	$	2,901.9		$	2,792.7		$	109.2		$	2,568.8		$	2,460.2		$	108.6
Stock-based compensation transactions and other		10.3			10.3			—			25.8			25.8			—
Repurchase of common stock		(94.2	)		(94.2	)		—			(194.2	)		(194.2	)		—
Dividends declared to Lear Corporation stockholders		(13.2	)		(13.2	)		—			(40.0	)		(40.0	)		—
Dividends paid to noncontrolling interests		(0.3	)		—			(0.3	)		(18.5	)		—			(18.5	)
Addition to noncontrolling interests		—			—			—			2.4			—			2.4
Comprehensive income:
Net income		108.1			100.7			7.4			456.5			434.2			22.3
Other comprehensive income (loss), net of tax:
Defined benefit plan adjustments		0.1			0.1			—			0.3			0.3			—
Derivative instruments and hedging activities		(51.9	)		(51.9	)		—			(45.0	)		(45.0	)		—
Foreign currency translation adjustments		(117.6	)		(118.0	)		0.4			(12.9	)		(14.8	)		1.9

Other comprehensive income (loss)		(169.4	)		(169.8	)		0.4			(57.6	)		(59.5	)		1.9

Comprehensive income (loss)		(61.3	)		(69.1	)		7.8			398.9			374.7			24.2

Ending equity balance	$	2,743.2		$	2,626.5		$	116.7		$	2,743.2		$	2,626.5		$	116.7


	Three Months Ended March 31, 2012									Three Months Ended April 2, 2011
	Equity			Attributable to Lear Corporation Stockholders			Non- controlling Interests			Equity			Attributable to Lear Corporation Stockholders			Non- controlling Interests
Beginning equity balance	$	2,561.1		$	2,436.4		$	124.7		$	2,568.8		$	2,460.2		$	108.6
Stock-based compensation transactions		8.8			8.8			—			8.1			8.1			—
Repurchase of common stock		(52.5	)		(52.5	)		—			(27.4	)		(27.4	)		—
Dividends declared to Lear Corporation stockholders		(14.4	)		(14.4	)		—			(13.4	)		(13.4	)		—
Dividends paid to noncontrolling interests		(3.2	)		—			(3.2	)		(10.0	)		—			(10.0	)
Transactions with affiliates		(6.2	)		(2.2	)		(4.0	)		2.4			—			2.4
Comprehensive income:
Net income		144.4			134.1			10.3			162.7			156.0			6.7
Other comprehensive income (loss), net of tax:
Defined benefit plan adjustments		(4.4	)		(4.4	)		—			0.1			0.1			—
Derivative instruments and hedging activities		40.7			40.7			—			4.7			4.7			—
Foreign currency translation adjustment		31.1			30.6			0.5			67.7			67.0			0.7

Other comprehensive income		67.4			66.9			0.5			72.5			71.8			0.7

Comprehensive income		211.8			201.0			10.8			235.2			227.8			7.4

Ending equity balance	$	2,705.4		$	2,577.1		$	128.3		$	2,763.7		$	2,655.3		$	108.4


	Three Months Ended October 2, 2010									Nine Months Ended October 2, 2010
				Attributable									Attributable
				to Lear Corporation			Non-controlling						to Lear Corporation			Non-controlling
	Equity			Stockholders			Interests			Equity			Stockholders			Interests
Beginning equity balance	$	2,322.5		$	2,214.5		$	108.0		$	2,181.8		$	2,089.1		$	92.7
Stock-based compensation transactions and other		4.0			4.0			—			13.1			13.1			—
Dividends paid to noncontrolling interests		(9.3	)		—			(9.3	)		(13.9	)		—			(13.9	)
Transaction with affiliates		—			—			—			6.5			—			6.5
Comprehensive income:
Net income		98.5			95.3			3.2			337.6			321.2			16.4
Other comprehensive income (loss), net of tax:
Defined benefit plan adjustments		(1.9	)		(1.9	)		—			(2.1	)		(2.1	)		—
Derivative instruments and hedging activities		3.5			3.5			—			3.7			3.7			—
Foreign currency translation adjustments		120.7			119.0			1.7			11.3			9.4			1.9

Other comprehensive income		122.3			120.6			1.7			12.9			11.0			1.9

Comprehensive income		220.8			215.9			4.9			350.5			332.2			18.3

Ending equity balance	$	2,538.0		$	2,434.4		$	103.6		$	2,538.0		$	2,434.4		$	103.6


Balance as of January 1, 2011	$	43.6
Expense, net (including changes in estimates)		1.5
Settlements		(5.8	)
Foreign currency translation and other		0.7

Balance as of October 1, 2011	$	40.0


	October 1, 2011
	Three Months			Nine Months
	Ended			Ended
Contracts qualifying for hedge accounting:
Losses recognized in accumulated other comprehensive loss	$	(0.7	)	$	(0.9	)
Losses reclassified from accumulated other comprehensive loss		0.1			0.1

Comprehensive loss	$	(0.6	)	$	(0.8	)


	March 31, 2012
	Frequency		Asset (Liability)			Valuation Technique		Level 1		Level 2			Level 3
Foreign currency derivative contracts		Recurring	$	(2.1	)		Market/Income	$	—	$	(2.1	)	$	—
Commodity swap contracts		Recurring	$	—			Market/Income	$	—	$	—		$	—


	October 1, 2011
		Asset			Valuation
	Frequency	(Liability)			Technique	Level 1		Level 2			Level 3
Foreign currency derivative contracts	Recurring	$	(44.9	)	Market/Income	$	—	$	(44.9	)	$	—
Commodity swap contracts	Recurring	$	(0.8	)	Market/Income	$	—	$	(0.8	)	$	—


	October 1, 2011
						Non-
	Lear			Guarantors		guarantors		Eliminations			Consolidated
				(Unaudited; in millions)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	800.8		$	0.2	$	875.5	$	—		$	1,676.5
Accounts receivable		35.5			369.1		1,677.7		—			2,082.3
Inventories		7.7			259.9		441.3		—			708.9
Other		105.9			34.5		383.6		—			524.0

Total current assets		949.9			663.7		3,378.1		—			4,991.7

LONG-TERM ASSETS:
Property, plant and equipment, net		90.9			166.1		801.1		—			1,058.1
Goodwill		23.5			303.9		304.6		—			632.0
Investments in subsidiaries		781.8			572.4		—		(1,354.2	)		—
Other		108.9			29.4		395.8		—			534.1

Total long-term assets		1,005.1			1,071.8		1,501.5		(1,354.2	)		2,224.2

	$	1,955.0		$	1,735.5	$	4,879.6	$	(1,354.2	)	$	7,215.9

LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable and drafts	$	96.9		$	556.9	$	1,546.0	$	—		$	2,199.8
Accrued liabilities		99.1			174.4		769.3		—			1,042.8

Total current liabilities		196.0			731.3		2,315.3		—			3,242.6

LONG-TERM LIABILITIES:
Long-term debt		695.2			—		—		—			695.2
Intercompany accounts, net		(1,710.9	)		624.3		1,086.6		—			—
Other		148.2			102.0		284.7		—			534.9

Total long-term liabilities		(867.5	)		726.3		1,371.3		—			1,230.1

EQUITY:
Lear Corporation stockholders’ equity		2,626.5			277.9		1,076.3		(1,354.2	)		2,626.5
Noncontrolling interests		—			—		116.7		—			116.7

Equity		2,626.5			277.9		1,193.0		(1,354.2	)		2,743.2

	$	1,955.0		$	1,735.5	$	4,879.6	$	(1,354.2	)	$	7,215.9


	For the Three Months Ended October 1, 2011
							Non-
	Lear			Guarantors			guarantors			Eliminations			Consolidated
				(Unaudited; in millions)
Net sales	$	93.1		$	1,340.2		$	3,058.9		$	(1,032.2	)	$	3,460.0

Cost of sales		112.1			1,227.9			2,871.7			(1,032.2	)		3,179.5
Selling, general and administrative expenses		36.7			12.5			65.7			—			114.9
Amortization of intangible assets		0.3			0.1			6.7			—			7.1
Intercompany charges		0.5			0.3			(0.8	)		—			—
Interest expense		0.5			6.4			4.0			—			10.9
Other intercompany (income) expense, net		(78.3	)		46.9			31.4			—			—
Other expense, net		10.8			11.6			(13.9	)		—			8.5


Consolidated income before provision for income taxes		10.5			34.5			94.1			—			139.1
Provision for income taxes		4.1			(0.2	)		27.1			—			31.0
Equity in net income of subsidiaries		(94.3	)		—			—			94.3			—

Consolidated net income		100.7			34.7			67.0			(94.3	)		108.1
Less: Net income attributable to noncontrolling interests		—			—			7.4			—			7.4


Net income attributable to Lear	$	100.7		$	34.7		$	59.6		$	(94.3	)	$	100.7


	For the Three Months Ended October 2, 2010
							Non-
	Lear			Guarantors			guarantors			Eliminations			Consolidated
				(Unaudited; in millions)
Net sales	$	89.5		$	1,077.4		$	2,470.3		$	(816.9	)	$	2,820.3

Cost of sales		107.9			956.7			2,336.8			(816.9	)		2,584.5
Selling, general and administrative expenses		34.3			10.4			65.3			—			110.0
Amortization of intangible assets		0.4			0.1			6.5			—			7.0
Intercompany charges		0.4			0.4			(0.8	)		—			—
Interest expense		(4.9	)		9.8			7.0			—			11.9
Other intercompany (income) expense, net		(12.5	)		10.8			1.7			—			—
Other expense, net		(0.3	)		(1.3	)		4.6			—			3.0


Consolidated income before provision for income taxes		(35.8	)		90.5			49.2			—			103.9
Provision for income taxes		(0.7	)		—			6.1			—			5.4
Equity in net income of subsidiaries		(130.4	)		(12.6	)		—			143.0			—

Consolidated net income		95.3			103.1			43.1			(143.0	)		98.5
Less: Net income attributable to noncontrolling interests		—			—			3.2			—			3.2


Net income attributable to Lear	$	95.3		$	103.1		$	39.9		$	(143.0	)	$	95.3


							Approximate Dollar
							value of share that
					Total Number of Shares		May Yet be
	Total Number of		Average		Purchased as Part of		Purchased Under
	Shares		Price Paid		Publicly Announced		the Program
Period	Purchased		per Share⁽¹⁾		Plans or Programs		(in millions)
July 3, 2011 through July 30, 2011		—		N/A		N/A	$	300.0
July 31, 2011 through August 27, 2011		796,706	$	43.62		796,706	$	265.2
August 28, 2011 through October 1, 2011		1,297,543	$	45.81		1,297,543	$	205.8


Total		2,094,249	$	44.98		2,094,249	$	205.8


Period	Total Number of Shares Purchased		Average Price Paid per Share ⁽¹⁾		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet be Purchased Under the Program (in millions)
January 1, 2012 through January 28, 2012		—		N/A		N/A	$	420.9
January 29, 2012 through February 25, 2012		471,430	$	45.40		471,530	$	399.5
February 26, 2012 through March 31, 2012		680,483	$	45.70		680,483	$	368.4

Total		1,151,913	$	45.58		1,151,913	$	368.4




Dated: ~~October 31, 2011~~May 3, 2012	By:	/s/ Matthew J. Simoncini

	Matthew J. Simoncini

	President and Chief Executive Officer





	By:	/s/ ~~Jason M. Cardew~~	Jeffrey H. Vanneste
~~Jason M. Cardew~~
~~Interim~~	Jeffrey H. Vanneste
		Senior Vice President and Chief Financial Officer


~~Exhibit~~
~~Number~~		~~Exhibit~~
* 10.1		~~Amended and Restated~~ Employment Agreement, dated ~~as of August 9, 2011,~~March 15, 2012, between the Company and ~~Matthew J. Simoncini.~~Jeffrey H. Vanneste.

*10.2		March 2012 Restricted Stock Unit Terms and Conditions for Jeffrey H. Vanneste (2-Year Vesting).

* ~~10.2~~10.3		~~Amended~~March 2012 Restricted Stock Unit Terms and ~~Restated Employment Agreement, dated as of August 9, 2011, between the Company and Robert E. Rossiter.~~Conditions for Jeffrey H. Vanneste (3-Year Vesting).

**31.1		Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer.

**31.2		Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer.

**32.1		Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

**32.2		Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

***101.INS		XBRL Instance ~~Document~~Document.

***101.SCH		XBRL Taxonomy Extension Schema ~~Document~~Document.

***101.CAL		XBRL Taxonomy Extension Calculation Linkbase ~~Document~~Document.

***101.LAB		XBRL Taxonomy Extension Label Linkbase ~~Document~~Document.

***101.PRE		XBRL Taxonomy Extension Presentation Linkbase ~~Document~~Document.

***101.DEF		XBRL Taxonomy Extension Definition Linkbase ~~Document~~Document.