Slide 1: Third-Quarter 2005 Financial Review
fast forward R Third-Quarter 2005 Financial Review October 26, 2005 Exhibit 99.2
Slide 2: Agenda
Agenda Industry Perspective Jim Vandenberghe, Vice Chairman Operational Review Doug DelGrosso, President and COO Financial Results Dave Wajsgras, EVP and CFO Summary and Outlook Bob Rossiter, Chairman and CEO Q & A
Slide 3: Industry Conditions
Industry Conditions Vehicle production in N.A. relatively flat, with mix of Big Three pickups and SUVs down Industry overcapacity driving fierce pricing competition for market share Key commodity prices remain high Impact of recent Gulf Coast storms driving energy, resin and chemical prices higher A
Slide 4: Industry Events
Industry Events Collins & Aikman and Delphi's bankruptcies; financial stress at other major suppliers and automakers Visteon's return of troubled businesses to Ford GM and Ford's new purchasing initiatives Lear's partnership with WL Ross & Co. LLC GM's agreement with union on healthcare costs Indust
Slide 5: Industry Challenges
Industry Challenges Potential labor disputes/production interruption Supply disruptions Decline in Big Three SUV production Higher commodity prices Industry financial stress Significant Near-Term Risks Impacting Outlook
Slide 6: Lear's Action Plan to Mitigate Risks
Lear's Action Plan to Mitigate Risks Focus on Day-to-Day Execution Maintain high quality and ensure flawless launches Aggressively implement cost improvement initiatives Work in partnership to support customer requirements Implement Global Restructuring Plan Eliminate excess capacity Accelerate move
Slide 7: Strong Fundamentals Help Offset Risks
Strong Fundamentals Help Offset Risks A leader in quality and customer satisfaction Experienced management team High consumer demand for Seating, Electronic and Electrical products Manageable pension and postretirement liabilities Strong balance sheet, with sufficient liquidity Lear's Strengths Prov
Slide 8: Operational Review
Operational Review
Slide 9: Business Conditions
Business Conditions Launched 26 programs in 67 facilities worldwide in the third quarter, representing about $2 billion in annual sales N.A. platform mix still negative but improving, as six of our top fifteen platforms in the U.S. recently changed over Gulf Coast storms increasing costs for energy,
Slide 10: North American Production Environment
North American Production Environment Overall Industry Big Three Big Three Trucks Lear's Top 15Platforms -0.03 -0.01 -0.07 -0.08 First Half Overall Industry Lear's Top 15 Platforms 2005 compared with 2004 Overall Industry Big Three Big Three Trucks Lear's Top 5 Platforms 0.03 0.001 -0.07 -0.01 Overa
Slide 11: Commodity Price Update
Commodity Price Update Steel prices down in the third quarter, still well above historical levels Resin and chemical prices increased in the third quarter and remain well above historical levels; further increases due to Gulf Coast storms are expected Another quarter of high commodity prices has inc
Slide 12: Restructuring Implementation Status
Restructuring Implementation Status* Objectives Are To Eliminate Excess Capacity, Streamline Organizational Structure And Accelerate Manufacturing Footprint Actions Initiated closure of five manufacturing facilities Global organizational structure streamlined and multiple administrative offices rest
Slide 13: Global Component Manufacturing/Sourcing Footprint Actions
Global Component Manufacturing/ Sourcing Footprint Actions Value Add / Labor Content High Pack Density Raw Material Availability No Patent Issues Minimal Investment Minimal Engineering Changes Existing Technical Competency Seating Mechanisms Latches Lumbar support Power motors Leather trim sets Elec
Slide 14: Backlog Profitability
Backlog Profitability* 2005 is a transition year for Lear's platform mix; more than half of Lear's major North American platforms are turning over this year, representing approximately 40% of Lear's North American revenue Customer pricing negotiations underway to address raw material price increases
Slide 15: Growth Opportunities in Seating and Electronic and Electrical Products
Growth Opportunities in Seating and Electronic and Electrical Products* Capitalize on strong growth prospects in Asia and with Asian automakers globally Pursue global growth opportunities with new seating products that provide added safety features and flexible configurations Leverage reputation as
Slide 16: Financial Results
Financial Results
Slide 17: Third Quarter Summary
Third Quarter Summary* Third Quarter Production North American industry up 3%; platform mix unfavorable but improving European industry estimated down 4% Net sales of $4 billion, up slightly from a year ago Reported net loss of ($11.17) per share, including goodwill impairment charge of ($9.98) per
Slide 18: Third Quarter Sales Changes and Margin Impact Versus Prior Year
Third Quarter Sales Changes and Margin Impact Versus Prior Year
Slide 19: Financial Highlights - Third Quarter 2005
Financial Highlights - Third Quarter 2005 * Income (loss) before income taxes for the third quarter 2005 and 2004 was ($787.8) million and $105.8 million, respectively. Please see slides titled "Use of Non-GAAP Financial Information" at the end of this presentation for further information. ** Includ
Slide 20: Impact of 2005 Impairment and Restructuring Charges
Impact of 2005 Impairment and Restructuring Charges* * Please see slides titled "Use of Non-GAAP Financial Information" at the end of this presentation for further information.
Slide 21: Third Quarter Free Cash Flow
Third Quarter Free Cash Flow* * Cash from Operations represents net cash provided by (used in) operating activities (($297.3) and $131.9 for the three months ended 10/1/05 and 10/2/04, respectively) before net change in sold accounts receivable ($11.9 and zero for the three months ended 10/1/05 and
Slide 22: Lear's Debt Maturity Profile
Lear's Debt Maturity Profile 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 East 317 300 800 1700 400 West 400 North $317* $1,700 $400 $300 $800 $400 Public Bonds Convertible Bond Credit Facility Term Loan Target $1.0+ billion in excess liquidity Beyond seasonal working capital needs $2.1 billion
Slide 23: Debt Levels
Debt Levels * Please see slides titled "Use of Non-GAAP Financial Information" at the end of this presentation for further information.
Slide 24: Fourth Quarter Outlook
Fourth Quarter Outlook* A number of significant uncertainties are impacting the outlook for Lear's financial results for the fourth quarter: Instability in the raw material and commodity markets, particularly given the effects of the Gulf Coast storms Continuing distress throughout the supply chain,
Slide 25: Impact of Recent Gulf Coast Storms
Impact of Recent Gulf Coast Storms Over 645 of 819 manned platforms were evacuated during storms 210 (25.6%) platforms remain evacuated 35 platforms destroyed 32 severe damage / adrift Shut-in or off-line production as of Oct. 21: Oil 64.5% of daily production 11.6% of yearly production lost (8/26 -
Slide 26: Directional 2006 Outlook
Directional 2006 Outlook* Given the level of uncertainty, financial guidance for 2006 will not be provided at this time. Shown below is a directional assessment of our outlook for next year: Strong backlog supports sales growth in all segments Marked improvement in earnings Capital spending trends n
Slide 27: Interior Product Segment - Key Financials
Interior Product Segment- Key Financials Financial Returns Under Pressure * Includes $18 million for costs related to restructuring actions and $74 million for fixed asset impairment charges. ** Please see slides titled "Use of Non-GAAP Financial Information" at the end of this presentation for furt
Slide 28: Proposed Interior Product Segment Joint Venture with WL Ross
Proposed Interior Product Segment Joint Venture with WL Ross* Entered into a framework agreement providing for a joint venture with Wilbur Ross [WL Ross & Co. LLC] to explore acquisition and rationalization opportunities in the automotive interiors business sector . . . Develop better platform for I
Slide 29: Summary and Outlook
Qiear., Summary and Outlook
Slide 30: Summary
Summary* Proposed Joint Venture for Interior Product Segment Proposed JV provides a framework for re-positioning the Interior product segment, while allowing Lear to continue its focus on profitably growing the Seating, Electronic and Electrical segments Growth in Seating, Electronic and Electrical
Slide 31: Outlook for Business
Outlook for Business* 2005 - Transition Year Adverse platform mix Peak capital spending and product launches High raw material prices; distress in supplier base Change in customer payment terms Global restructuring plan Interior product segment partnership with WL Ross & Co. 2006 - Results Improve M
Slide 32: Q&A
Qtear., QRA
Slide 33: Advance Relentlessly - www.lear.com
ADVANCE RELENTLESSLY(tm) www.lear.com LEA NYSE Listed R
Slide 34: 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 certain non-GAAP financial measures. These measures include "income (loss) before intere
Slide 35: Use of Non-GAAP Financial Information: Income (Loss) Before Interest, Other Expense & Income Taxes
Use of Non-GAAP Financial Information Income (Loss) Before Interest, Other Expense & Income Taxes
Slide 36: Use of Non-GAAP Financial Information: Net Loss Excluding Impairment & Restructuring Charges
Use of Non-GAAP Financial Information Net Loss Excluding Impairment & Restructuring Charges
Slide 37: Use of Non-GAAP Financial Information: Cash from Operations and Free Cash Flow
Use of Non-GAAP Financial Information Cash from Operations and Free Cash Flow
Slide 38: 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