Lear Downplays SEC Inquiry

Lear Corp. CEO Robert Rossiter on Wednesday downplayed an informal investigation by the Securities and Exchange Commission into its employment of corporate officers' relatives and insider business transactions. The head of the Southfield, Mich.-based auto-interiors supplier also told analysts that the probe is strictly related to disclosure -- not whether there was financial misconduct. Management, he added, quickly corrected the disclosure omissions as soon as they were pointed out.

From Detroit Free Press

SOUTHFIELD, MI — Lear Corp. CEO Robert Rossiter on Wednesday downplayed an informal investigation by the Securities and Exchange Commission into its employment of corporate officers’ relatives and insider business transactions.

“I really don’t think there’s a whole lot to it,” Rossiter told attendees at the Morgan Stanley Global Automotive Conference in New York.

The head of the Southfield, Mich.-based auto-interiors supplier also told analysts that the probe is strictly related to disclosure — not whether there was financial misconduct. Management, he added, quickly corrected the disclosure omissions as soon as they were pointed out.

The SEC would neither confirm nor deny an investigation. But Lear disclosed the probe to investors in January, saying the commission might look at several years of filings that outline familial connections within the company, which include more than a dozen workers and upper-level executives.

For example, the company’s 2003 proxy statement reveals that Rossiter had at least seven relatives working for Lear or for a company associated with Lear in 2002.

Lear first revealed the working relationships and insider deals in a September 2002 amendment to a 2001 annual report to the SEC. The SEC requires that related-party transactions be reported each year.

In other business, Lear officials told analysts that the company has secured $4.4 billion in business through 2008 and is exploring ways in which it can expand in Asia and capitalize on lower-cost labor.

Lear provides seating systems, interior trim and electrical systems for automotive manufacturers. Company executives said that even though it may not be cost-effective for the company to build vehicle seats and ship them to Europe or North America, there are opportunities to build some seating parts, such as seat covers and wire harnesses, overseas to save money.

With annual sales of about $16 billion in 2003, Lear ranks seventh among the Free Press 50. The company has more than 110,000 employees and 289 facilities in 34 countries.

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