Slide 1: Second-Quarter 2005 Financial Results and Updated 2005 Guidance
fast forward R Second-Quarter 2005 Financial Results and Updated 2005 Guidance July 29, 2005 Exhibit 99.2
Slide 2: Agenda
Agenda Strategic Direction Bob Rossiter, Chairman and CEO 2005 Business Conditions Jim Vandenberghe, Vice Chairman Second Quarter Financial Results and Updated 2005 Guidance Dave Wajsgras, SVP and CFO Lear Strategy and Restructuring Actions Doug DelGrosso, President and COO Closing Comments Bob Ross
Slide 3: Strategic Direction
Strategic Direction
Slide 4: Strategic Direction
Strategic Direction* Near-term Improve quality and ensure flawless launch execution Aggressively implement cost improvement initiatives Medium to long-term Continue to profitably grow and diversify our sales backlog Implement a global restructuring Improve or divest portions of under-performing inte
Slide 5: 2005 Business Conditions
2005 Business Conditions
Slide 6: 2005 Business Conditions
2005 Business Conditions Production declines for major customers on mature models Big 3 market share losses / inventory correction in North America Many of Lear's high content platforms disproportionately impacted Margins under pressure in the near-term Volatile production schedules / intermittent p
Slide 7: Total Interior Integration
Total Interior Integration GM has decided to increase its sourcing authority on future programs "Co-sourcing" reduces the effectiveness of integration opportunities Requires less up-front spending on tooling & engineering for Lear Lear Is Prepared To Serve Customers At Any Level Of Interior Integrat
Slide 8: Second Quarter Financial Results and Updated 2005 Guidance
Second Quarter Financial Results and Updated 2005 Guidance
Slide 9: Second Quarter Summary
Second Quarter Summary Volume and Mix North America - Industry production down 1% and Big Three down 6% as inventory correction continued. Key Lear platforms adversely impacted during the quarter. Europe - Industry production down 1%. Key Lear platforms adversely impacted during the quarter. Major L
Slide 10: Financial Highlights - Second Quarter 2005
Financial Highlights - Second Quarter 2005 * Income (loss) before income taxes for the second quarter 2005 and 2004 was ($50.4) and $158.9, respectively. Please see slides titled "Use of Non-GAAP Financial Information" at the end of this presentation for further information. ** Includes costs relate
Slide 11: Impact of Restructuring and Other Charges -- 2005
Impact of Restructuring and Other Charges -- 2005
Slide 12: Restructuring and Other Charges - Q2 2005
Restructuring and Other Charges - Q2 2005 Global Restructuring/Repositioning: $27M Pretax Actions at six facilities in addition to various administrative functions in the second quarter (55% North America / 45% Europe) Effectively completed by year-end Approximate payback 2 years Litigation Charges:
Slide 13: Second Quarter Sales Changes and Margin Impact Versus Prior Year
Second Quarter Sales Changes and Margin Impact Versus Prior Year
Slide 14: Continued Adverse Second Quarter Mix Impact from Declines in High-Content Platforms
Continued Adverse Second Quarter Mix Impact Driven by Declines in High-Content Platforms Lear's Key N.A. Platforms B/(W) 2Q 2004 Source: Ward's Automotive April Guidance Actual -0.03 -0.08 Big Three Car Big Three Truck N.A. Production Declines Concentrated In High-Content Platforms For Lear
Slide 15: Commodity Prices and Supply Base
Commodity Prices and Supply Base* Steel and resin prices were down in second quarter, but remain well above historical levels Commodity environment having significant unfavorable direct and indirect impact Price increases from suppliers Productivity negotiations with customers Material cost savings
Slide 16: Second Quarter Free Cash Flow
Second Quarter Free Cash Flow* * Cash from Operations represents net cash provided by operating activities ($407.6 and $526.1 for the three and six months ended 7/02/05, respectively) before net change in sold accounts receivable ($267.3 for the three and six months ended 7/02/05). Please see slides
Slide 17: 2005 Outlook Vehicle Production Assumptions
North America (in millions) 2005 Outlook Vehicle Production Assumptions* 2004 Actual 2005 Forecast 3rd Qtr 4th Qtr 8.3 8.1 3.6 3.6 East 3.8 3.8 90 20.4 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9 2004 Actual 2005 Forecast 3rd Qtr 4th Qtr 9.9 9.8 4.3 4.1 East 4.8 4.8 90 20.4 West 30.6 38.6 34.6
Slide 18: 2005 Outlook Full Year Production Environment
2005 Outlook Full Year Production Environment* Overall Industry Big Three Big Three Trucks Lear's Top 15Platforms -0.02 -0.06 -0.07 -0.08 North America Overall Industry Big Three Big Three Trucks Lear's Top 15 Platforms Overall Industry Lear's Top 10 Platforms -0.02 -0.02 Overall Industry Lear's Top
Slide 19: 2005 Outlook Net Sales
2005 Outlook Net Sales* Please see slide titled "Forward-Looking Statements" at the end of this presentation for further information. $17.0 $15.7 First Half Full Year Third Quarter ^ 2003 2004 2005 Guidance East 8 8.8 8.7 ddd 3.5 3.9 3.9 West 4.2 4.3 4.4 North (in billions) ^$17.0
Slide 20: 2005 Third Quarter and Full Year Net Income (Loss) Per Share Guidance
2005 Third Quarter and Full Year Net Income (Loss) Per Share Guidance* Please see slide titled "Forward-Looking Statements" at the end of this presentation for further information. ^ ^
Slide 21: Changes from Full-Year Prior Guidance
Changes from Full-Year Prior Guidance* Please see slide titled "Forward-Looking Statements" at the end of this presentation for further information.
Slide 22: 2005 Outlook Trend of Capital Expenditures
2005 Outlook Trend of Capital Expenditures* (in millions) 2003 2004 2005 2006 Directional 376 429 550 450 East West North 45.9 46.9 45 43.9 Memo: % of Sales 2.5% 3.2% Capital Spending Level Should Trend Lower On Ongoing Basis Please see slide titled "Forward-Looking Statements" at the end of this pr
Slide 23: 2005 Outlook Trend of Free Cash Flow
2002 2003 2004 2005 2006 Directional Net Sales 395 509 317 -250 200 -120 2005 Outlook Trend of Free Cash Flow* 2002 2003 2004 2005 (in millions) Please see slides titled "Use of Non-GAAP Financial Information" and "Forward-Looking Statements" at the end of this presentation for further information.
Slide 24: Revenue and Margin Outlook
Revenue and Margin Outlook* Global Footprint And Market Leadership / Expertise Allows Lear To Participate In All Platform Segments With All Global OEMs Revenue Lear platform mix improves Customer and geographic sales mix continues to diversify Margins Focus on higher value-added interior products Im
Slide 25: Lear Strategy and Restructuring Actions
Lear Strategy and Restructuring Actions
Slide 26: Strategic Focus
Strategic Focus Retain Core Values Re-Focus Our Plan Emphasis on Execution Quality first Continued customer service LBO mentality/lean and accountable Focus on seats and electrical / electronics Improve or divest non-competitive businesses Selective vertical integration in Tier 2 and Tier 3 (with pr
Slide 27: Strategic Outlook for Product Groups
Strategic Outlook for Product Groups* Please see slide titled "Forward-Looking Statements" at the end of this presentation for further information. Raw materials/distressed supply base impacting current results Global restructuring to address overcapacity/improve costs
Slide 28: Continued Growth and Diversification: Sales Backlog
2004 2005 2006 2007 2008 East 750 1550 1350 900 500 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9 $2.9 2004 2005 & 2006 3-Year Backlog 2008 East 750 2.9 3.8 500 West 30.6 38.6 31.6 North 45.9 46.9 43.9 Continued Growth and Diversification* $3.8 Unprecedented Two-Year Backlog Driving Intensive Nea
Slide 29: North America - Backlog
2005 2006 2007 Content Buick LaCrosse + Seats, Electronics Ford Five Hundred + Seats, OH Systems, F&A Ford Freestyle + Seats, OH Systems, F&A Buick Lucerne + + Total Interior Integrator Program, Electrical Distribution Cadillac DTS + + Total Interior Integrator Program, Electrical Distribution Dodge
Slide 30: International - Backlog
International - Backlog 2005 2006 2007 Content Ford Focus** + Electrical Distribution Peugeot 1007 + Seats, Electrical Distribution *Nissan Serena + Electrical Distribution Peugeot 407 + Seats, Electrical Distribution Peugeot 407 Coupe + + Seats *Audi A6 + + Seats PSA / Toyota Sub-B + + Seats BMW 3-
Slide 31: Emphasis on Growing Our Asian Sales
Emphasis on Growing Our Asian Sales** * Consolidated and unconsolidated sales. ** Please see slide titled "Forward-Looking Statements" at the end of this presentation for further information. Lear's Total Asian-Related Sales Are Growing At A Rapid Rate 2001 2002 2003 2004 2005 Forecast Future Cons 7
Slide 32: Low-Cost Manufacturing Capabilities and Engineering Centers
Low-Cost Manufacturing Capabilities and Engineering Centers Poland Hungary Czech Republic Turkey Slovakia Romania Philippines Africa Mexico Honduras China India Philippines India China Thailand Approximately 20% of sales manufactured in low-cost locations Move to low-cost countries accelerated throu
Slide 33: Restructuring Actions
Restructuring Actions Acceleration of move to low-cost country production Additional vertical integration -- Mexico and Eastern Europe (1) Electronics capability added in Asia Electrical distribution to Eastern Europe, Honduras and North Africa Streamlining of organization structure Align with custo
Slide 34: Comprehensive Repositioning Actions: $250M Total
Comprehensive Repositioning Actions: $250M total - global in nature Targeting 5% to 7% reduction in worldwide headcount Actions to date involve more than 20 manufacturing facilities Additional facilities may be impacted as actions are finalized Payback expected in 2-3 years Estimated Pre-Tax Restruc
Slide 35: Long-Term Outlook Remains Positive for Lear
Long-Term Outlook Remains Positive for Lear* * Please see slide titled "Forward-Looking Statements" at the end of this presentation for further information. Major high-volume program launches complete Margins reach full run rate efficiency on 2005-06 launches Supply base actions mitigate structurall
Slide 36: Advance Relentlessly
ADVANCE RELENTLESSLY(tm) www.lear.com LEA NYSE Listed R
Slide 37: Use of Non-GAAP Financial Information
In addition to the results reported in accordance with accounting principles generally accepted in the United States ("GAAP") included throughout this presentation, the Company has provided information regarding "income before interest, other expense and income taxes" (core operating earnings) and "
Slide 38: Core Operating Earnings
Q2 2005 Q2 2004 Income before interest, other expense and income taxes Income (loss) before income taxes $ ( 50.4 ) $ 158.9 Interest expense 48.2 39.2 Other expense, net 32.2 14.8 Income before interest, other expense and income taxes $ 30.0 $ 212.9 (core operating earnings) Three Months (in million
Slide 39: Use of Non-GAAP Financial Information: Free Cash Flow
Use of Non-GAAP Financial Information Free Cash Flow
Slide 40: 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