Lear Corporation - Lear has proposed an amendment of its existing...

Lear Corporation - Recent Material Event

Item 7.01 Regulation FD Disclosure.

Lear has proposed an amendment of its existing senior credit facility to extend the revolving credit commitments thereunder from March 23, 2010 to January 31, 2012. The extension will be offered to each revolving lender. Any revolving lender which consents to the proposed amendment will be entitled to a reduction of such extending revolving lender’s commitment and an increase in the fees and interest rate applicable to its extended revolving commitment. Lenders under the revolving facility consenting to the proposed amendment will have their commitments reduced by at least 33.33%, which percentage reduction may be increased if the amount of extended commitments under the revolving facility, after giving effect to the reduction, would otherwise exceed $1.0 billion. The pricing applicable to the extended revolving commitments will be subject to an index-based grid with the current interest rate margins increasing by 100 basis points and the current facility fee increasing by 25 basis points.

The amendment further provides that extending revolving lenders will be paid a fee of 1.25% of their revised revolving commitments and that term lenders who consent at or prior to the time the amendment is approved by the majority lenders will be paid a fee of 1.00% of their outstanding term loans. The commitments of revolving lenders that do not participate in the extension will remain in place, and be available to Lear on the existing terms through the original maturity date of March 23, 2010. The tenor and pricing of the term loan facility are unaffected by the proposed amendment. The amendment requires the consent of lenders under Lear’s senior credit facility holding a majority of the $2.7 billion in outstanding revolving commitments and term loans. Commitments have been received from lenders under the revolving facility representing approximately 40% of the total revolving commitments and term loans outstanding under the senior credit facility, subject to the conditions set forth therein and the proposed amendment. However, no assurances can be given that the proposed amendment will be consummated on the terms contemplated or at all.

On July 2, 2008, Lear is making a presentation to the lenders under its senior credit facility regarding the proposed amendment. In the course of that presentation, Lear will reaffirm the revised financial outlook for 2008 that it initially provided on June 4, 2008. An excerpt from the presentation materials is attached hereto as Exhibit 99.1. Exhibit 99.1 is incorporated by reference herein.

The information contained in Item 7.01 of this Current Report on Form 8-K and Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Non-GAAP Financial Information

The excerpt from presentation materials attached hereto as Exhibit 99.1 contains certain non-GAAP financial measures.

In addition to the amounts reported in accordance with accounting principles generally accepted in the United States (“GAAP”) included throughout the presentation, the Company has provided information regarding “income before interest, other expense, income taxes, restructuring costs and other special items” (core operating earnings) and “free cash flow” (each, a non-GAAP financial measure). Other expense includes, among other things, non-income related taxes, foreign exchange gains and losses, discounts and expenses associated with the Company’s asset-backed securitization and factoring facilities, minority interests in consolidated subsidiaries, equity in net income of affiliates and gains and losses on the sale of assets. Free cash flow represents net cash provided by operating activities before the net change in sold accounts receivable, less capital expenditures. The Company believes it is appropriate to exclude the net change in sold accounts receivable in the calculation of free cash flow since the sale of receivables may be viewed as a substitute for borrowing activity.

Management believes the non-GAAP financial measures used in the presentation are useful to both management and investors in their analysis of the Company’s financial position and results of operations. In particular, management believes that core operating earnings is a useful measure in assessing the Company’s financial performance by excluding certain items (including those items that are included in other expense) that are not indicative of the Company’s core operating earnings or that may obscure trends useful in evaluating the Company’s continuing operating activities. Management also believes that this measure is useful to both management and investors in their analysis of the Company’s results of operations and provides improved comparability between fiscal periods. Management believes that free cash flow is useful to both management and investors in their analysis of the Company’s ability to service and repay its debt. Further, management uses these non-GAAP financial measures for planning and forecasting in future periods.

Core operating earnings and free cash flow should not be considered in isolation or as a substitute for pretax income, net income, cash provided by operating activities or other income statement or cash flow statement data prepared in accordance with GAAP or as measures of profitability or liquidity. In addition, the calculation of free cash flow does not reflect cash used to service debt and therefore, does not reflect funds available for investment or other discretionary uses. Also, these non-GAAP financial measures, as determined and presented by the Company, may not be comparable to related or similarly titled measures reported by other companies.

Given the inherent uncertainty regarding special items, other expense and the net change in sold accounts receivable in any future period, a reconciliation of forward-looking financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP is not feasible. The magnitude of these items, however, may be significant.

Section 9 — Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits

(d) Exhibits:


Exhibit Number		Exhibit Description
99.1		Excerpt from presentation materials, dated July 2, 2008, furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.