DETROIT -- Seating and electronics supplier Lear Corp. expects its auditors to question the suppliers ability to remain solvent through 2009 when Lear files its annual report with the U.S. Securities and Exchange Commission.
Lear said its annual financial report will contain a paragraph discussing the auditors explanation of companys ability to continue as a going concern, fueled by its default under its main line of credit and the impact of the depressed global auto industry.
The warning is the latest in a series of grim outlooks from automakers and parts suppliers reeling from tight credit conditions and the lowest U.S. auto sales in 27 years.
Lear has been hurt by steep production cuts by General Motors and Ford Motor Co., which account for more than 40 percent of its global revenue.
Auditor opinions about a companys going concern status mean the auditors have doubts about a companys ability to continue operating.
The disclosure came in an SEC filing saying that Lear wont be filing its annual financial report, its Form 10-k, on time.
The supplier has been in default under terms of its main line of credit since Dec. 31 and has been unable to renegotiate terms with its lenders to waive the default, a sign of still-tight credit markets and lenders aversion to extend loans to the unstable auto industry.
The company said it has been focused on winning an amendment to its lending terms to cure its credit default, and company disclosures in the 10-k could be significantly affected by any amendment to its main credit line.
Additional time is required to conclude discussions regarding the amendment and to reflect any such amendment in the Form 10-k, Lear said in todays filing.
Like nearly all publicly owned auto suppliers, Lear has posted large losses in recent months.
The suburban Detroit company posted a 2008 net loss of $689.9 million on revenue of $13.6 billion, compared with net income of $241.5 million on revenue of $16 billion in 2007.
Lear shares today closed at 60 cents, down 13 cents or 17.8 percent. In July 2007, Lear shareholders rejected a buyout offer from New York investor Carl Icahn that was valued at $37.25 a share -- or $2.9 billion.
Lear ranks No. 9 on the Automotive News list of the top 100 global suppliers with worldwide sales to automakers of $15.99 billion in 2007.
Reuters contributed to this report