Slide 1: NYSAA Conference, Dearborn, Michigan
NYSAA Conference Dearborn, Michigan a d v a n c e r e l e n t l e s s l y January 9, 2003 "fast forward"
Slide 2: Lear Total Interior Capabilities Opening Video
Lear Total Interior Capabilities Opening Video
Slide 3: Agenda
Agenda I. Strategic Overview Bob Rossiter, Chairman & CEO II. Customer Focus Jim Vandenberghe, Vice Chairman III. Shareholder Value Dave Wajsgras, SVP & CFO
Slide 4: Lear Profile and Strategic Overview
Lear Profile and Strategic Overview
Slide 5: Lear Profile
Lear Profile Founded in 1917; LBO in 1988; Public in 1994 17 Major Acquisitions Since 1994 Last Major Acquisition: UTA Automotive (5/99) Fortune 150 Company World's Leading Automotive Interior Supplier 120,000 Employees In 33 Countries 300+ Facilities Over 85 Years of Automotive History
Slide 6: We've Steadily Increased our Automotive Interior Capabilities
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 $ In Billions 3.1 4.7 6.2 7.3 9.1 12.4 14.1 13.6 Seating Overheads Door Panels Floor and Acoustics Instrument Panels Electronics We've Steadily Increased our Automotive Interior Capabilities Transformation from Seat Manufacturer to Integrator of Comp
Slide 7: Lear's Business Model
"To work relentlessly as a team to maximize shareholder value by consistently delivering the highest quality innovative products and services; to conduct our business with integrity; and to work in partnership with our customers to make them successful." Lear's Business Model Customer Focus Service
Slide 8: Global Business Strategy
Global Business Strategy North America - Leverage our leadership position in total interiors Europe - Improve our business structure and grow our market share Rest of World - Aggressively expand our presence with Asian OEMs Pursue Profitable Growth Worldwide
Slide 9: Customer Focus Driving Growth
Customer Focus Driving Growth
Slide 10: Lear Strategic Roadmap - Advance Relentlessly
Lear Strategic Roadmap - - Advance Relentlessly Revenue and Earnings Growth Seats Total Interior Capabilities Interior Integration Lear Operating Strengths Leading Global Market Position Diversified Customer Base Solid Reputation for Quality Outstanding Customer Relationships Premier Automotive Supp
Slide 11: Lear Has Complete Automotive Interior Capabilities
Global Positions In: Seat Systems #1 Floor & Acoustic #2 Door & Panels #2 Headliners #3 Electronics #3 Instrument Panels #6 Disciplined Focus on Integrated Automotive Interiors No Strategic "Hole" In Product Portfolio Unique, Value-Added Electrical And Electronics Capabilities Lear Has Complete Auto
Slide 12: Lear Has A Diversified Customer Base
Lear Has A Diversified Customer Base Lear Content on Over 300 Nameplates Worldwide
Slide 13: Continuous Quality Improvement
Continuous Quality Improvement 5% improvement in 2002 3rd consecutive year of improvement in TGW Highest quality seat manufacturer that supplies multiple OEMs Independent J.D. Power Survey Shows Continuous Improvement in Lear's TGW J.D. Power Seat Survey Lear's Results 1998 1999 2000 2001 2002 TGR 1
Slide 14: Recent Industry Awards Received by Lear
"Supplier of the Year" Three World Excellence Awards Interior Excellence Award, 5 Lear plants received Gold Awards "Supplier of the Year" Green Partner Award Quality, Cost, Value Awards Quality Master Awards News Articles: Newsweek Named Lear as a "Company of the Future" Auto Interiors Ranked the Fo
Slide 15: 2003 Lear Product Highlights
2003 Lear Product Highlights At North American International Auto Show General Motors Cadillac SRX Seats, trim, flooring, lift-gate Cadillac XLR Seats, electronics Chevrolet Malibu Electronics GMC Envoy XUV Door panels, mid-gate, console Chevrolet Corvette Seats Pontiac Grand Prix Seats, electronics
Slide 16: Backlog Improves to $4 Billion
Backlog Improves to $4 Billion Total interior program New business with Asian OEMs Growing electronics New IP and cockpit programs 1998 1999 2000 2002 Status 2003 Status TGR 12.4 11.8 10.5 3.6 4 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9 5-Year Sales Backlog Major Areas of Growth 2002 - 2006 S
Slide 17: Lear Progressing from Systems Integrator to Total Interior Integrator
Lear Progressing from Systems Integrator to Total Interior Integrator Total Interior Integrator Systems Integrator Design OEM Lead Supplier Lead Engineering Shared Supplier Lead Sourcing OEM Directed Supplier Directed Manufacturing Supplier Supplier Sub-Assembly Supplier Supplier Sequencing Supplier
Slide 18: Delivering Shareholder Value
Delivering Shareholder Value
Slide 19: Lear Strategic Roadmap - Advance Relentlessly
Lear Strategic Roadmap - - Advance Relentlessly Revenue and Earnings Growth Seats Total Interior Capabilities Interior Integration Lear Operating Strengths Leading Global Market Position Diversified Customer Base Solid Reputation for Quality Outstanding Customer Relationships Premier Automotive Supp
Slide 20: Financial Priorities
Financial Priorities We are keenly focused on: Growing our business profitably Improving our margins Generating cash Reducing debt Improving ROIC Transparency Meeting Our Commitments and Delivering Shareholder Value
Slide 21: Focused Strategy has Led to Profitable Growth for Lear
Focused Strategy has Led to Profitable Growth for Lear Net Sales Earnings 0.29 0.29 29% 28% 10 Years of Growth Net sales increased from $1 billion to $14 billion 17 major acquisitions during this period 60% acquisition growth 40% organic growth Lear now ranks 150 among the Fortune 500 Lear Ranks 10t
Slide 22: Sales Backlog
Sales Backlog Prior Backlog + New / Replacement Programs - Roll-off / Lost Programs -/+ Projected Pricing / Additional Content +/- Foreign Exchange = New Backlog How we Define it... Realistic Proxy for Forecasting our "Top Line" Growth
Slide 23: Sales Backlog - Macro Assumptions
Sales Backlog - Macro Assumptions North America - 16 million No Change Western Europe - 16 million No Change South America - 1.9 million No Change Asia Pacific - Program Specific No Change Currency - Euro / US Dollar Parity Stronger Euro Change from Prior Industry Production* * Assumes J.D. Power an
Slide 24: Sales Backlog Grows to $4.0 Billion
Sales Backlog Grows to $4.0 Billion 2002 - 2006 Backlog $ 3.6 Roll-off of 2002 ( 0.8 ) 2003 - 2006 0.6 Add-on 2007 0.5 Foreign Exchange 0.1 2003 - 2007 Backlog $ 4.0 Amount (Bils) Growing electronics New IP and cockpit programs Total interior program New business with Asian OEMs
Slide 25: Customer, Geographic and Product Diversification Improves
Present Backlog (millions) 2003 $ 900 2003 - 2005 $ 2,500 2003 - 2007 $ 4,000 Customer, Geographic and Product Diversification Improves Backlog By Customer Big 3 45 % European 30 % Asian 25 % Backlog By Region North America 40 % Europe 45 % Rest of World 15 % Backlog By Product Seats 35 % Electronic
Slide 26: Backlog Highlights
Backlog Highlights Customer diversification improves Asian OEMs and transplants now 25% IP's and cockpits now represent 25% Growth in higher margin segments, primarily electrical and electronics systems Includes first-ever Total Interior program Backlog now stands at the highest-ever absolute level
Slide 27: Lear Continues to Improve Margins & ROIC
Lear Continues to Improve Margins & ROIC Improving Operating Margins & ROIC Up from 2001 Up from 2002 Operating Margin 2001 2002 2003 0.035 0.04 0.045 ROIC
Slide 28: Lear has Generated Over $1 Billion in Free Cash Flow Since 1999
Lear has Generated Over $1 Billion in Free Cash Flow Since 1999 Cumulative Free Cash Flow Since 1999 Free Cash Flow* ($ Millions) * Operating cash flow less capital expenditures 1999 2000 2001 2002 East 179 600 900 1200 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9
Slide 29: Preliminary 2003 Outlook Vehicle Production Assumptions
2002 2003 16.5 15 2 North America (in millions) 2002 Forecast 2003 Outlook 16.0 16.4 Preliminary 2003 Outlook Vehicle Production Assumptions 2002 2003 15 15 2 2002 Forecast 2003 Outlook 16.0 16.0 Western Europe (in millions) 2003 Production Down in North America; Flat in Western Europe
Slide 30: Preliminary 2003 Outlook Net Sales and Earnings Growth
Preliminary 2003 Outlook Net Sales and Earnings Growth 2002 2003 6 12.5 2 4% - 6% Net Sales EPS 10% - 15% Operating Margins & ROIC to Improve Another Solid Year of Sales and Earnings Growth
Slide 31: Preliminary 2003 Outlook Capital Spending and Free Cash Flow
Capital Expenditures (in millions) 2002 2003 300 300 2 2002 2003 $300 $300 2002 2003 300 400 2 Free Cash Flow (in millions) 2002 2003 $400 $300 - $350 Interest Expense: ? $215 M $200 M $300 M $300 M Depreciation: Preliminary 2003 Outlook Capital Spending and Free Cash Flow 2003 Capital Spending Flat
Slide 32: Why Invest in Lear?
Why Invest in Lear? Lear is well positioned for growth with total interiors; backlog at highest level ever Operating margins improving Double-digit earnings per share growth Continuing strong free cash flow and debt reduction Solid and improving capital structure Operational excellence -- quality, c
Slide 33: Advance Relentlessly
ADVANCE RELENTLESSLY(tm) NYSE: LEA www.lear.com
Slide 34: Forward-looking statements
This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding anticipated financial results. Actual results may differ materially from anticipated results as a result of certain risks and uncertainties