Lear must pay Seton $30 million over leather deal

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Friday, May 27, 2005



Lear must pay Seton $30 million over leather deal

Federal jury decides car-seat manufacturer failed to live up to contract with supplier.

Associated Press
SOUTHFIELD -- A federal court jury rendered a $30 million verdict against car-seat maker Lear Corp. for allegedly breaching a leather purchase agreement.

Lear said Thursday that the suit filed in 2002 by leather supplier Seton Co. alleged Lear had breached an agreement to buy leather from Seton for seats for the life of the General Motors GMT800 program, which includes the Chevy Silverado and GMC Sierra vehicles.

Lear may appeal the verdict.

"We strongly disagree with the jury's verdict and the damages award. We intend to challenge the verdict and, if necessary, seek an appeal," said Daniel A. Ninivaggi, Lear's general counsel.

Seton had sought up to $97 million in compensatory and exemplary damages.

As a result of the verdict in the U.S. District Court for the Eastern District of Michigan, Lear expects to record a net charge of about 25 cents a share to second-quarter net income.

The charge resulting from the verdict isn't reflected in Lear's prior financial guidance. In April, the auto-interiors maker said second-quarter earnings should be 20 cents to 40 cents a share. For the full year, Lear pegged earnings at $2.75 to $3.25 a share. Wall Street expects second-quarter earnings of 26 cents a share.

Lear plans to update financial guidance for the remainder of 2005 when it releases its second-quarter results on July 29.

The company's New York Stock Exchange-listed shares rose 60 cents, or 1.6 percent, to close Thursday at $38.52.
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