Slide 1: Agenda
Agenda Company Overview Bob Rossiter, Chairman and CEO Product-Line Strategies and Operating Priorities Doug DelGrosso, President and Chief Operating Officer Financial Update Jim Vandenberghe, Vice Chairman and Chief Financial Officer
Slide 2: Company Overview
Company Overview
Slide 3: Lear Overview
Lear Overview 2005 Net Sales: $17.1B 2005 Net Sales: $11.0B Seating Systems Manufacture, assemble and supply vehicle seating requirements Produce seat systems for automobiles and light trucks Fully assembled and ready for installation 2005 Net Sales: $3.1B Interior Products Manufacture, assemble and
Slide 4: Longer Term Strategy
Longer Term Strategy* Manage the business to improve product-line returns Strengthen leadership position in Seating Grow Electrical Distribution Systems and Electronic Products Finalize and execute Interior business strategy Improve global competitiveness Continuously improve quality and customer sa
Slide 5: Lear Value Proposition
Lear Value Proposition* Structural cost reductions to adjust business to changing environment Refocused resources on core businesses and operations Strong relationships with existing customers and changing pricing dynamic Developing relationships with Asian OEMs, globally Proactive, collaborative cu
Slide 6: Product-Line Strategies and Operating Priorities
Product-Line Strategies and Operating Priorities
Slide 7: Seating Systems Market Leadership
Seating Systems Market Leadership Lear JCI Magna Other Cockpits 0.42 0.41 0.08 0.09 0.65 Lear JCI Faurecia Other 0.27 0.29 0.21 0.21 Lear 27% Others 9% Lear 42% Magna 8% JCI 41% JCI 29% North America Market Europe Market Faurecia 23% Others 21% $15 billion $14 billion Total Global Seating Market Inc
Slide 8: Seating Leadership Strengths
Seating Leadership Strengths Customer / Platform Breadth ? Supply all major OEMs, globally ? Products across all vehicle segments ? "Best-in-class" expertise across platforms Customer Focused ? Industry leading benchmarking capabilities via Cost Technology Optimization ("CTO") ? Consumer benchmarkin
Slide 9: Seating Systems Outlook
Seating Systems Outlook* Lear intends to strengthen its leadership position in seating . . . Superior quality, leveraging common architecture strategy, selective vertical integration and new product innovation Global seating margin profile expected to return to historical levels by 2008 . . . Suppor
Slide 10: Electrical Distribution Market Overview
Electrical Distribution Market Overview Lear delphi Yazaki Other Cockpits 0.13 0.37 0.31 0.19 0.65 Lear Delphi Valeo Other 0.15 0.35 0.35 0.15 Lear 15% Others 19% Lear 13% Yazaki 31% Delphi 37% Delphi 35% North America Market Europe Market Valeo 15% Others 35% $7 billion $5 billion Total Global EDS
Slide 11: Electronic and Electrical Distribution Strengths
Electronic and Electrical Distribution Strengths* Continue to maintain low-cost footprint for wire harnesses Shifted operations to Eastern Europe, Honduras, Philippines and North Africa Offer full electrical distribution system through selective vertical integration of terminals and connectors Contr
Slide 12: Electronic and Electrical Distribution Outlook
Electronic and Electrical Distribution Outlook* Pursue profitable electrical and electronics growth globally . . . New programs with Asian OEMs, selective vertical integration and enhanced revenue with new products and technologies Maintain healthy electronic and electrical margin profile . . . Expa
Slide 13: Estimated Global Interior Products Market Overview
Estimated Global Interior Products Market Overview Door Panels Headliners Floor & Acoustic Instrument Panels Other Cockpits 0.24 0.07 0.19 0.24 0.26 0.65 Total Global Interior Products Market About $30 Billion Flooring & Acoustics 19% Instrument Panels 24% Other Trim 26% Overhead Systems 7% North Am
Slide 14: Interior Products Exploring Strategic Alternatives
Interior Products Exploring Strategic Alternatives* Business characteristics Industry over-capacity High raw material costs Insufficient pricing Near-term operational actions Restructuring actions to eliminate excess capacity Improve or resource low-return programs / components Marginal business not
Slide 15: Innovative Product Solutions: Core Dimensions Strategy
CORE DIMENSIONS STRATEGY ProTecTM PLuS Active Front Light System IntelliTireTM Car2UTM Two- Way Remote Keyless Entry Immobilizer Foam in Place Head Impact Countermeasure SAFETY COMFORT & CONVENIENCE COMMONIZATION ENVIRONMENTAL INFOTAINMENT CRAFTSMANSHIP FLEXIBILITY Lt. Weight Back panel Soy Foam Pol
Slide 16: Operating Priorities
Operating Priorities* Retain Core Values Quality First / Customer Satisfaction Customer / Regional Diversification Execute our Asian Strategy Operational Excellence Competitive Manufacturing Cost Structure Collaborative Cost Reduction Capability Maintaining Labor Competitiveness Flawless Launch Mana
Slide 17: Retain Core Values
Retain Core Values Internal Quality Measures Continuous improvement J.D. Power Seat Quality Survey 6% improvement in TGW over 2004 35% improvement since 1999 4 Best-in-Segment vehicles Full-size Car: Ford 500 Pickup: Chevrolet Avalanche Sport Utility: BMW X3 Van: Chevrolet Express Highest quality ma
Slide 18: Key to Sales Diversification Success
Key to Sales Diversification Success Customer Satisfaction Flawless Quality Increase Sales JD Power CTO Facilities Technology Quote Global Manufacturing Footprint Target Customers: Major Japanese, Korean And Chinese Automakers
Slide 19: Continue to Diversify Customer Base
Continue to Diversify Customer Base* Revenue in Asia and with Asian Manufacturers 2005 Performance Highlights Supported successful launch of Hyundai's first North American plant (seats, wiring, TPMS) Four recent program awards with Nissan (seats, wiring, carpets) Two new manufacturing facilities in
Slide 20: Operational Excellence: Competitive Manufacturing Cost Structure
Operational Excellence Competitive Manufacturing Cost Structure* Eliminate excess capacity Accelerate move to lower- cost sources Streamline organization and improve operational efficiency Restructuring Objectives 2005 2006+ 104 120 30 East West Pretax Restructuring Costs $103 (in millions) $120 - 1
Slide 21: Restructuring Actions - Update
Restructuring Actions - Update* 2005 Actions Initiated closure of 7 manufacturing facilities in US, Mexico and Europe to improve competitiveness 4 plants closed to eliminate excess / inefficient manufacturing capacity 3 plants closed with operations moving to low-cost countries, including Romania, T
Slide 22: Lear's Low-Cost Global Footprint
Lear's Low-Cost Global Footprint Manufacturing, Supply and Engineering Locations South America Brazil Argentina Honduras Europe Czech Republic Estonia Hungary Poland Romania Slovakia Turkey Asia Philippines China Korea Taiwan Thailand Approximately 25% of sales manufactured in low-cost locations Mov
Slide 23: Global Footprint - Selection Criteria
Global Footprint - Selection Criteria CRITERIA High Labor Content High Pack Density Available Raw Material No Patent Issues Minimal Investment Required Minimal Engineering Changes Quality LCC Supplier Available Connectors Key Fobs Grab Handles Cut and Sew Misc. Switches Equipment / Tooling / Racks S
Slide 24: Cost Technology Optimization (CTO) Centers
North America Dearborn, Michigan Southfield, Michigan Europe, EDS Valls, Spain Europe, Seating/Interior Products Munich, Germany Asia, Electrical Cebu, Philippines South America Sao Paulo, Brazil Cost Technology Optimization (CTO) Centers 6 Global CTO Centers Evaluate All Areas For Cost Reduction
Slide 25: Collaborative Cost Reduction Example: Utilize Lear Leather
Utilize Lear Leather Description of Opportunity Benefit(s) Expert in leather and product development Supplier to major OEM's Low logistical risk Diversified crust supply base Improved supply chain management Complete pipeline management Improved warranty costs Superior quality Action Required TEMA t
Slide 26: Operational Excellence: Maintaining Labor Competitiveness
Operational Excellence Maintaining Labor Competitiveness* Regular, open dialogue with all unions Candid assessment of business outlook Establish broad competitiveness framework No master contract; considerable plant flexibility Relatively young workforce; small percent of retirees No significant leg
Slide 27: Operational Excellence: 2006 Key Product Launches
Operational Excellence 2006 Key Product Launches Americas GMT900 SUVs/Pickups Seats, doors Hyundai Santa Fe Seats, TPMS Nissan Versa Overhead systems, trim Nissan Sentra Overhead systems, trim DCX Caliber/Compass/Patriot Overhead systems, trim, doors, flooring, IP International VW Cabrio Seats Peuge
Slide 28: Financial Update
Financial Update
Slide 29: Financial Update
Financial Update* Received underwritten bank commitments for $800 million in new secured term loans Reached agreement in principle to contribute European Interior business to Ross JV in return for a 34% stake in European venture Full year 2006 guidance being provided today First quarter earnings con
Slide 30: 2006 Guidance Key Assumptions
2006 Guidance Key Assumptions* Please see slide titled "Forward-Looking Statements" at the end of this presentation for further information.
Slide 31: 2006 Guidance Key Financial Projections
2006 Guidance Key Financial Projections* Please see slides titled "Use of Non-GAAP Financial Information" and "Forward-Looking Statements" at the end of this presentation for further information.
Slide 32: 2006 Guidance Trend of Capital Spending
2006 Guidance Trend of Capital Spending* (in millions) 2003 2004 2005 2006 Guidance HQ 45 43.9 Electrical / Electronics 377 274 Interior 568 400 Capital Spending Level Should Trend Lower On An Ongoing Basis Capital Spending Impacts: Record Launches Lear Flexible Seating Architecture (LFSA) Low-Cost
Slide 33: 2006 Guidance Free Cash Flow Forecast
2006 Guidance Free Cash Flow Forecast* (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. First Half 2006 Full Year 2006 Net Sales -419 75 2005 2006 Guidance ** Net cash provided by
Slide 34: Summary
Summary* New expected financing addresses 2007 maturities Increased product-line focus to improve financials Implementing global initiative to improve future competitiveness 2006 results expected to improve Longer-term outlook remains positive Please see slide titled "Forward-Looking Statements" at
Slide 35: Advance Relentlessly
ADVANCE RELENTLESSLY(tm) www.lear.com LEA NYSE Listed R
Slide 36: In addition to the results reported in accordance with accounting principles generally accepted in
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 certain non-GAAP financial measures. These measures include "income before interest, oth
Slide 37: Use of Non-GAAP Financial Information
Use of Non-GAAP Financial Information
Slide 38: Use of Non-GAAP Financial Information
Use of Non-GAAP Financial Information
Slide 39: Use of Non-GAAP Financial Information
Use of Non-GAAP Financial Information
Slide 40: Forward-Looking Statements
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 and liquidity. Actual results may differ materially from anticipated results as a