Slide 1: Fourth Quarter and Full Year 2003 Earnings Review and 2004 Guidance
Fourth Quarter and Full Year 2003 Earnings Review and 2004 Guidance January 26, 2004 fast forward advance relentlessly world's leading automotive interior supplier R Exhibit 99.2
Slide 2: Agenda
Agenda I. Company Overview Bob Rossiter, Chairman and CEO II. Operating Review Jim Vandenberghe, Vice Chairman III. Financial Review and 2004 Guidance Dave Wajsgras, SVP and CFO IV. Q & A
Slide 3: Company Overview
Company Overview
Slide 4: The Strategic Path We've Been Following
Company Overview The Strategic Path We've Been Following Mid - Late 1990s Transform Lear from a seating supplier to an industry-leading provider of complete automotive interior systems Recent Years Focus on improving operating fundamentals Profitably grow our business worldwide Generate strong cash
Slide 5: What We Have Accomplished
Company Overview What We Have Accomplished Today, we are the world's largest automotive interior supplier Operating fundamentals strongest ever Record sales and steadily improving financials Strong cash flow, reduced leverage and Investment Grade status from S&P and Fitch Record backlog supports con
Slide 6: Where We Are Heading
Continue to Pursue Profitable Growth Worldwide and Generate Strong Cash Flow North America Leverage our leadership position in total interiors Europe Improve our business structure and grow our market share Asia/Asian OEMs Aggressively expand our presence with Asian OEMs Outlook Quality continues to
Slide 7: How We Will Utilize Our Excess Cash
Invest internally in high return programs Pursue strategic acquisitions Maintain strong balance sheet What We Will Do. . . What We Will Evaluate. . . Company Overview How We Will Utilize Our Excess Cash Strong Cash Flow Gives Lear Value Creation Options Pre-funding pension Increasing the dividend Sh
Slide 8: Operating Review
Operating Review
Slide 9: Financial Highlights - Full Year 2003
Leveraging our Total Interior Capabilities to Deliver Value to our Customers and Shareholders Operating Review Financial Highlights - Full Year 2003 Record net sales of $15.75 billion, up 9% from 2002 Net income of $5.55 per share, up 19% from 2002* Return on invested capital** increased to 10.6% St
Slide 10: Record Backlog Supports Continued Growth and Diversification of Sales
New cockpit and interior programs Growth in seating systems with Korean automakers Electrical distribution and electronics systems, including TPMS Added content on replacement programs 1998 1999 2000 Three-Year Five-Year TGR 12.4 11.8 10.5 3 4.4 West 30.6 38.6 34.6 North 45.9 46.9 45 43.9 Sales Back
Slide 11: North America Lear Content On Top Selling Vehicles
North America Lear Content On Top Selling Vehicles Source: Based on available company and industry data. On 28 of 30 Top-Selling Vehicles in North America
Slide 12: 2004 Key Lear Product Launches - North America
Cadillac Seville Seats, electronics Chevrolet Cobalt Headliner, doors, remote keyless entry Dodge Dakota Seats, headliner, wire harness, electronics, instrument panel Jeep Grand Cherokee Wire harness, electronics Ford F-150 Cockpit Ford 500/Freestyle Seats, trim, electronics, overhead Ford Mustang S
Slide 13: Western Europe Lear Content On Top Selling Vehicles
Western Europe Lear Content On Top Selling Vehicles Source: Based on available company and industry data. On 23 of 30 Top-Selling Vehicles in Western Europe
Slide 14: 2004 Key Lear Product Launches - International
BMW 3-Series Seats, electronics Peugeot 107 & 407 Seats Mercedes SLK Seats Audi A6 Seats, headliner, electronics Porsche 911 Seats Hyundai Terracan Seats Product Lear Content International 2004 Key Lear Product Launches ^ $650 Million of International Backlog in 2004
Slide 15: Manufacturing Capacity/Efficiency Actions
Fourth Quarter 2003 (in millions) 3rd Qtr 4th Qtr East 26 37 90 20.4 West 34.6 31.6 North 45.9 46.9 45 43.9 3rd Qtr 4th Qtr East 24 41 90 20.4 West 34.6 31.6 North 45.9 46.9 45 43.9 $26 Estimated First Half 2004 (in millions) Costs for 3 Major Facilities* Total Facility- Related Costs Costs for 3 Ma
Slide 16: Production Environment - Fourth Quarter
Operating Review Production Environment - Fourth Quarter 2003 Industry Production in Major Markets Flat to Down; Euro Continues Strong North America Industry production about flat; Big Three down 4% Content per vehicle of $594, down 3% from a year ago Western Europe Industry production down 1%; Lear
Slide 17: Financial Review and 2004 Guidance
Financial Review and 2004 Guidance
Slide 18: Financial Highlights - Fourth Quarter 2003
Net Sales $ 4,255.3 $ 3,760.4 $ 494.9 Income before Interest, Other Expense & Income Taxes* $ 236.1 $ 246.8 $ ( 10.7 ) Margin 5.5 % 6.6 % ( 1.1 )pts Net Income $ 132.4 $ 118.0 $ 14.4 Net Income Per Share $ 1.90 $ 1.76 $ 0.14 SG&A % of Net Sales 3.4 % 3.4 % -- Interest Expense ** $ 42.5 $ 50.6 $ 8.1
Slide 19: 4Q03 vs 4Q02 - Change in Net Sales
Financial Review 4Q03 vs 4Q02 - Change in Net Sales Industry Vehicle Production North America 0% Western Europe (1)% Total Change Industry Production & Platform Mix Foreign Exchange Global New Business Net Performance (including facility consolidations) Net Sales 495 -94 318 268 0 Directional Impact
Slide 20: Fourth Quarter and Full Year Free Cash Flow
Net Income $ 132 $ 381 Depreciation 87 322 Working Capital / Other 115 182 Cash from Operations* $ 334 $ 885 Capital Expenditures ( 161 ) ( 376 ) Free Cash Flow $ 173 $ 509 4Q03 * Cash from Operations represents net cash provided by operating activities ($227 for fourth quarter 2003 and $586 for ful
Slide 21: Continuing to Reduce Our Net Debt
1999* 2000 2001** 2002** 2003 Net Debt 3.4 3 2.7 2.3 1.9 Debt/Cap 0.7 0.65 0.63 0.58 0.458 North 45.9 46.9 45 43.9 (in billions) Net Debt * UTA acquisition 5/99 ** Includes ABS debt of $261 million in 2001 and $189 million in 2002 (implemented in 2001). *** Free cash flow represents net cash provide
Slide 22: 2004 Vehicle Production Assumptions
North America (in millions) 2004 Production Stable in North America and Western Europe 2004 Guidance Vehicle Production Assumptions* 2003 Actual 2004 Guidance 3rd Qtr 4th Qtr East 4.1 4.2 90 20.4 West 11.8 11.8 34.6 31.6 North 45.9 46.9 45 43.9 2003 Actual 2004 Guidance 3rd Qtr 4th Qtr East 4.3 4.2
Slide 23: 2004 Guidance: Net Sales
2004 Guidance First Quarter and Full Year Net Sales* Record Net Sales in 2004 Anticipated 2002 2003 2004 Guidance East 3.5 3.9 4.2 West 10.9 11.4 11.7 North 45.9 46.9 45 (in billions) ^ $16.2 $15.7 $3.5 Please see slide titled "Forward-Looking Statements" at the end of this presentation for further
Slide 24: Capital Spending and Free Cash Flow
Capital Spending** (in millions) 2004 Guidance Capital Spending and Free Cash Flow 2003 Actual 2004 Guidance 3rd Qtr 4th Qtr East 376 300 90 20.4 West 34.6 31.6 North 45.9 46.9 45 43.9 2003 Actual 2004 Guidance 3rd Qtr 4th Qtr East 509 300 90 20.4 West 50 34.6 31.6 North 45.9 46.9 45 43.9 $376 $509
Slide 25: Corporate Tax Rate and Shares Outstanding
Current Trigger Price ^ $68.00 Trigger Price accretes over time Must exceed Trigger Price for 20 consecutive days on average before convertible Potential Accounting Impact of Convertible Debt 2002 2003 2004 Guidance 4th Qtr Tax Rate 0.335 0.288 0.28 20.4 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 4
Slide 26: 2004 Guidance: Net Income Per Share
2004 Guidance Net Income Per Share** Record Net Income Per Share Anticipated 2002 2003 2004 Guidance Net Sales 0.7 1.01 1.05 Increase in Net Sales 3.95 4.54 0.2 4.75 0.4 $0.70* $1.01 $1.10 $1.20 $4.65* $5.55 $5.85 $6.25 First Quarter Full Year * Represents income per share before cumulative effect o
Slide 27: Advance Relentlessly - www.lear.com
ADVANCE RELENTLESSLY(tm) www.lear.com LEA NYSE Listed R
Slide 28: Use Information: Non-GAAP financial measures
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 29: Use Information: Core Operating Earnings
Q4 2003 Q4 2002 Income before interest, other expense and income taxes Income before income taxes $ 182.8 $ 177.5 Interest expense* 42.5 50.6 Other expense, net 10.8 18.7 Income before interest, other expense and income taxes $ 236.1 $ 246.8 (core operating earnings) Three Months (in millions) Use o
Slide 30: Use Information: Free Cash Flow
Q4 2003 2003 2002 Free cash flow Net cash provided by operating activities $ 226.7 $ 586.3 $ 545.1 Net change in sold accounts receivable 107.2 298.1 122.2 Net cash provided by operating activities before net change in sold accounts receivable 333.9 884.4 667.3 Capital expenditures ( 161.4 ) ( 375.6
Slide 31: Use Information: Free Cash Flow Twelve Months
2001 2000 1999 Free cash flow Net cash provided by operating activities $ 829.8 $ 753.1 $ 560.3 Net change in sold accounts receivable ( 245.0 ) ( 21.2 ) 10.4 Net cash provided by operating activities before net change in sold accounts receivable 584.8 731.9 570.7 Capital expenditures ( 267.0 ) ( 32
Slide 32: Use Information: Return on Invested Capital
Use of Non-GAAP Financial Information Return on Invested Capital Earnings 2003 Income before interest, other expense and income taxes Income before income taxes $ 534.2 Interest expense* 189.2 Other expense, net 49.4 Income before interest, other expense and income taxes $ 772.8 (return on invested
Slide 33: Use Information: Net Debt
(in millions) Net debt Short-term borrowings $ 17.1 $ 37.3 $ 63.2 $ 72.4 $ 103.6 Current portion of long-term debt 4.0 3.9 129.5 155.6 63.6 Long-term debt 2,057.2 2,132.8 2,293.9 2,852.1 3,324.8 Total debt 2,078.3 2,174.0 2,486.6 3,080.1 3,492.0 Cash and cash equivalents ( 169.3 ) ( 91.7 ) ( 87.6 )
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