2. Agenda
“This is Lear” Video
Strategic Overview / Industry Trends
Bob Rossiter, Chairman & CEO
Our Approach to Creating Shareholder Value
Jim Vandenberghe, Vice Chairman
Q & A Session
2
3. Highlights of Today’s Presentation
Our customer-focused strategy is delivering
profitable growth
Industry trends for automotive interiors are positive
Business conditions, however, are very challenging
globally
Lear’s near-term results are being negatively
impacted, but our longer-term outlook remains
positive
We have a balanced approach to creating
shareholder value
3
5. The Lear Philosophy --
Put Our Customers First in Everything We Do
Stay focused on what we can control – quality,
customer service, cost and delivery
Operate leanly with an LBO mentality
Work together as a cohesive team
Continuously improve the fundamentals of our
business
Conduct our business with integrity and humility
Never quit until the customer is completely
satisfied
5
6. Strategic Evolution
Going Forward Profitably Grow the Business
Operational Excellence;
1999-2003
Reduce Debt
Seat Systems to
1994-1999
Total Interior Capability
Seat Components
1990-1994
to Seat Systems
6
7. Lear’s Strategy has Supported Rapid Growth
Net Sales
(in billions)
$17.0
$18.0
me
Inco
Net
$16.0
2%
GR 2
CA SALES
$14.0
CAGR
$12.0
18%
$10.0
$8.0
$6.0
$3.1
$4.0
$2.0
$0.0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Steadily increased net sales over the last ten years to $17 billion in 2004
Transformed from a seat assembly operation to one of the world’s largest
automotive interior systems suppliers
129 ranking and 23rd fastest growing company over the last ten years among the
Fortune 500
7
8. Industry Trends
Consumers demanding more interior features
Automakers focused on world-class interiors and
“Perceptual Quality”
Industry progressing toward total interior
integration
Automotive interiors are the fastest growing
segment of the auto industry
8
9. Business Conditions
Continued mixed economic signals
North American and European vehicle production
down in first quarter; flat for full year
Raw material prices negatively impacting earnings
Fierce global competition for market share
Significant Adverse Earnings Impact In First Quarter;
Improving Outlook For Balance Of 2005
9
10. Traits of a Model Supplier
Superior Superior
Superior
Organizational Competitive
Culture
Capability Advantage
“Can Do” Attitude Bring Best-in-Class Product Focus
Designs
Obsessed with Quality Performance
Continuous Breakthrough
Flawless Launches
Improvement Technology
and Program
Saying “No” the Speed - Go Fast Execution
Right Way
Global Presence Sustainable Cost
Strive for Stretch Advantage
Targets
Best-in-Class Value
Sustainable Contribution and Value
10
11. Critical Success Factors for Lear
Inspired team that works well together
Continuous improvement mindset
Working collaborately with customers and
suppliers
Relentless focus on quality and customer
service
Low-cost producer status in industry
Innovative products and services
11
13. We Have a Balanced, Long-Term
Approach to Creating Shareholder Value
Leverage our core capabilities as a leader in
automotive interiors to profitably grow our business:
– Deliver the highest quality and customer satisfaction
– Expand in Asia and grow with Asian manufacturers globally
– Leverage our scale, expertise and common architecture
– Grow our low-cost manufacturing and engineering capability
– Invest in new business development worldwide
Return cash to shareholders
Maintain a strong and flexible balance sheet
13
14. Highest Quality and Customer Satisfaction
Internal quality, as measured by defects per million,
improved over 50% last year, our 4th consecutive year of
improvement
Lear continues to rank as the highest quality seat
manufacturer serving multiple automakers in latest
J.D. Power survey
Lear has received awards for quality & service excellence
from all of our major customers worldwide
Lear is the most admired auto supplier in the Corporate
Reputation Survey by Fortune magazine, with the industry's
highest score for the quality of our products and services
14
15. We are Rapidly Growing Our Business
in Asia and with Asian Automakers Globally*
(in millions)
Presence in Asia
$1,800
China, India, Korea,
China, India, Korea,
Japan, Thailand and
Japan, Thailand and $1,250
Philippines
Philippines
$850
25 facilities
25 facilities
7 engineering centers
7 engineering centers
Serving more than 25
Serving more than 25
customers
customers
2002 2003 2004 Future
Lear’s Asian Sales More Than Doubled from 2002 to 2004;
Solid Growth Expected to Continue**
* Consolidated and unconsolidated sales.
** Please see slide titled “Forward-Looking Statements” at the end of this presentation for further information.
15
16. Leveraging Our Scale, Expertise and
Common Architecture Strategy
World’s leading automotive interior supplier,
with $17 billion in annual sales and 110,000
employees in 34 countries
Nearly 90 years of automotive history
9 Cost Technology Optimization (CTO) Centers
in 6 locations globally
Common Seat Architecture on more than a
dozen programs covering over 4 million vehicles
worldwide
16
17. Ongoing Manufacturing
Footprint and Efficiency Actions
Efficiency Actions
• Downsizing, closures and relocations impacted 15
facilities in 2004
Growth Opportunities
• New facilities opened to support business in China,
Korea, Czech Republic and Slovakia
Low-Cost Country
• Presently, Lear has low-cost operations in 13 countries
• Plans to expand operations in Mexico, Honduras,
Poland, Romania and Philippines
• Approximately 20% of sales manufactured in low-cost
locations
Investing In Footprint Actions Globally To Support Growth
Opportunities And Low-Cost Country Strategy
17
18. Record Sales Backlog Supports Continued Growth
Sales Backlog*
Major New Business
(in millions)
2005 backlog up $150 million
2005 backlog up $150 million
$3,800
from last year on a comparable
from last year on a comparable
basis
basis
Three-year backlog up $750
Three-year backlog up $750
million from last year on a
million from last year on a
comparable basis
comparable basis
Interior and electronics / /
$1,550 Interior and electronics
electrical represent 50% of the
electrical represent 50% of the
three-year backlog
three-year backlog
European and Asian customers
European and Asian customers
represent over half of the three-
represent over half of the three-
year backlog
year backlog
2005 2005 - 2007
Record Net New Business Supports Continued Growth
And Diversification Of Sales
18* Please see slide titled “Forward-Looking Statements” at the end of this presentation for further information.
19. Major New Model Changeovers
and Product Freshenings
2005 Calendar Year
• BMW 3-Series (MC)
• Hyundai Sonata (MC)
• Peugeot 407 Coupe (MC)
• Chevrolet Impala (MC)
• Chevrolet HHR (New)
• Dodge Ram (MF)
• Ford Explorer (MC)
• Mercury Mountaineer ( MC)
• Fiat Punto (MC)
• Ford Fusion (New)
* Total Interior Integration Program • Cadillac DTS (MC)
(New) = New Model
• Buick LeSabre
(MC) = Model Changeover
(MF) = Major Freshening
replacement* (MC)
2005 is a Transition Year For Lear; 2006 Mix Expected to Improve With Full
Year of Second Half of 2005 Programs and Launch of the GMT 900
19
20. Continuing to Strengthen Financial Position
65% *
63% Net Debt /Capital
58%
46%
42%
2000 2001* 2002* 2003 2004
* Net debt represents total debt plus utilization of our ABS facility, less cash and cash equivalents. Please see slides titled “Use of
Non-GAAP Financial Information” at the end of this presentation for further information.
20
21. Alternatives for Using Cash Flow. . .
Where We See Value Creation
Invest
Repurchase
internally
shares
in high return
programs
Pursue
strategic Dividends
acquisitions
. . . While Maintaining A Strong Balance Sheet
21
23. Use of Non-GAAP Financial Information
The Company has provided information regarding “net debt,” a non-GAAP financial measure. Net debt represents
total debt plus utilization under the Company’s ABS facility, less cash and cash equivalents. Management believes
that net debt provides useful information regarding the Company’s financial condition. Further, management uses net
debt for planning and forecasting in future periods.
Net debt should not be considered in isolation or as a substitute for total debt or other balance sheet data prepared in
accordance with GAAP. Also, this non-GAAP financial measure, as determined and presented by the Company, may
not be comparable to related or similarly titled measures reported by other companies.
Set forth on the following slide is a reconciliation of net debt to total debt.
23
24. Use of Non-GAAP Financial Information
Net Debt
(in millions) December 31,
Net debt 2003 2002 2001 2000
2004
Short-term borrowings $ 35.4 $ 17.1 $ 37.3 $ 63.2 $ 72.4
Current portion of long-term debt 632.8 4.0 3.9 129.5 155.6
Long-term debt 1,866.9 2,057.2 2,132.8 2,293.9 2,852.1
Total debt 2,535.1 2,078.3 2,174.0 2,486.6 3,080.1
Cash and cash equivalents ( 584.9 ) ( 169.3 ) ( 91.7 ) ( 87.6 ) ( 98.8 )
Asset backed securitization - - 189.0 260.7 -
Net debt 1,950.2 $ 1,909.0 $ 2,271.3 $ 2,659.7 $ 2,981.3
Note: Net Debt to Capital is defined as Net Debt divided by Net Debt plus Stockholders’ Equity.
24
25. 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, including but not limited to, general economic conditions in the markets in which
the Company operates, fluctuations in the production of vehicles for which the Company is a supplier, labor disputes involving
the Company or its significant customers or suppliers or that otherwise affect the Company, the Company’s ability to achieve
cost reductions that offset or exceed customer-mandated selling price reductions, the outcome of customer productivity
negotiations, the impact and timing of program launch costs, the costs and timing of facility closures or similar actions,
increases in the Company’s warranty or product liability costs, risks associated with conducting business in foreign countries,
competitive conditions impacting the Company’s key customers, raw material cost and availability, the Company’s ability to
mitigate the significant impact of recent increases in raw material prices, the outcome of legal or regulatory proceedings to
which the Company is or may become a party, unanticipated changes in free cash flow and other risks described from time to
time in the Company’s Securities and Exchange Commission filings.
This presentation also contains information on the Company’s sales backlog. The Company’s incremental sales backlog
reflects: anticipated net sales from awarded new programs, less phased-out and cancelled programs. The calculation of
backlog does not reflect customer price reductions on existing or newly-awarded programs. The backlog may be impacted by
various assumptions embedded in the calculation, including vehicle production levels on new and replacement programs,
foreign exchange rates and the timing of program launches.
The forward-looking statements in this presentation are made as of the date hereof, and the Company does not assume any
obligation to update them.
25
