Lear

None of the warning signs we check for were found.

We look for five warning signs: doubt it can keep going, weak checks on its own accounts, a notice that its past accounts can't be relied on, a change of auditor, and one customer bringing in a big share of sales. We don't check lawsuits, investigations or debt yet.

We checked the auditor's report, internal controls, restatement notices, auditor changes and big customers in the 10-K filed 13 Feb 2026, plus the 10-Q filed 31 Jul 2026 and 4 later 8-Ks.

Cheap for a reason is the question the numbers cannot answer.

Whether the price already reflects the risks is what the deep dive is for.

• • Our increasing use of AI and other emerging technologies may expose us to operational, legal and regulatory risks that could adversely affect our business and reputation.

  Could happen

  Our use of AI and machine learning presents risks that could adversely affect our business, financial condition and results of operations. We currently incorporate AI-powered tools into certain internal business operations, such as in our production processes and in certain of our administrative functions. AI algorithms may be flawed, and datasets may be insufficient, inaccurate, biased or otherwise problematic. The rapid evolution and increased adoption of AI technologies may increase the risk of technical disruptions to our operations and the processes and functions for which the technology is deployed. The use of AI tools also raises risks related to privacy and inadvertent disclosure of sensitive information. AI systems may access, process or expose personal, confidential or proprietary data in ways that we do not intend or anticipate. Constraints in hardware (such as GPU availability), power capacity or other supply chain elements may further limit our ability to scale AI responsibly. We also face competitive risk if other companies develop or adopt AI capabilities more effectively, at lower cost or more rapidly than we do. Because our AI capabilities currently depend in part on third-party providers of models, cloud services and infrastructure, changes in their performance, pricing, licensing terms or availability could materially increase our costs. Collectively, these risks could adversely affect our financial condition, operating results, cash flows and reputation.

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• • Unanticipated changes in our effective tax rate, the adoption of new tax legislation or exposure to additional income tax liabilities could adversely affect our profitability.

  Could happen

  The Organization for Economic Cooperation and Development ("OECD") issued guidelines on the Global Anti-Base Erosion Model Rules, known as "Pillar Two," to implement a 15% global corporate minimum tax to address gaps in current tax laws and ensure that large multinational enterprises pay a minimum level of tax in the countries in which they operate. Countries may implement the OECD Pillar Two model rules as issued, in a modified form or not at all. A number of countries have passed legislation enacting certain parts of the OECD's Pillar Two framework effective in 2024. On January 5, 2026, the OECD released new guidelines introducing the side-by-side system as part of the Pillar Two Global Minimum Tax framework. This system is intended to coordinate the application of Pillar Two rules in jurisdictions that already operate minimum tax regimes. Under the OECD's guidelines, the United States is treated as a qualifying jurisdiction, allowing U.S.-parented multinational enterprises ("MNEs") to opt out of the global Pillar Two income inclusion rule and undertaxed profits rule beginning January 1, 2026. The adoption of the side-by-side system reduces uncertainty regarding the impact of the Pillar Two Global Minimum Tax on U.S.-parented MNEs. While many countries have not yet enacted Pillar Two legislation, it is not expected to have a material impact on the Company's consolidated financial statements.

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• • International trade policies, such as tariffs, sanctions, export controls and other trade restrictions, could adversely affect our financial performance.

  Could happen

  The policies relating to these tariffs continue to evolve, including with respect to the type of tariff or export control, the tariff rates, the countries, components and materials to which such tariffs apply, and the existence and applicability of any exemptions. The actual impacts of tariffs and other trade restrictions on our business, financial condition and results of operations continue to be subject to a number of factors that are not yet known or are subject to change, including the effect such tariffs and restrictions may have on consumer demand and global automotive production volumes, the duration of such tariffs and restrictions, future changes in the amounts and scope of tariffs, the potential withdrawal of such tariffs and restrictions in whole or in part, the scope and effective date of any exemptions to such tariffs or restrictions, any modification to existing exemptions to such tariffs or restrictions, countermeasures that target countries may take in response to such tariffs and restrictions, the impact such tariffs and restrictions may have on our customers and our supply chain, and whether and to what extent such tariffs are impacted by judicial review. We have entered into contractual agreements with our customers to recover substantially all tariff costs incurred to date and have implemented certain actions, and continue to consider others, to counter the potential impact of such tariffs on our business, financial condition and results of operations, including, without limitation, participating in efforts to inform the U.S. and certain foreign administrations and legislatures of the impact of current trade and tariff policies on the automotive industry and evaluating our production footprint and alternatives in our supply chain. To date, our mitigation efforts have been successful, but we cannot provide any assurance that future government actions will not adversely impact our customers' production or undermine our mitigation efforts, which could in turn adversely impact our business, financial condition and results of operations.

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• • We operate in a highly competitive industry and efforts by our competitors, as well as new entrants to the industry, to gain market share could adversely affect our financial performance.

  Already happened

  Over the past decade, the global transportation industry has increasingly focused on the development of electric and hybrid vehicles. As a result, we and our customers have made, and in some cases continue to make, significant investments in electric and hybrid vehicle programs and related infrastructure and technology. The adoption of such vehicles, particularly electric vehicles, has been slower than anticipated, particularly in the United States, as a result of, among other things, changes in government carbon emissions regulations and tax incentives, as well as prevailing consumer preferences. This has resulted in, among other things, various volume decreases related to, and cancellations of, vehicle programs for which we are a supplier, as well as general uncertainty about the overall rate of transition to electric and hybrid vehicles in certain regions. Our inability, or that of our customers, to respond to these evolving circumstances could adversely affect our financial condition, operating results and cash flows.

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