UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 26, 2006
LEAR CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware (State or other jurisdiction of incorporation) |
1-11311 (Commission File Number) |
13-3386776 (IRS Employer Identification Number) |
| 21557
Telegraph Road, Southfield, MI (Address of principal executive offices) |
|
48034 (Zip Code) |
(248) 447-1500
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Lear Corporation (“Lear” or the “Company”) is filing this Form 8-K/A to (i) furnish information regarding Lear’s results of operations for the third quarter of 2006 and (ii) amend Lear’s Current Report on Form 8-K initially filed on June 27, 2005, as amended on August 30, 2005 and January 25, 2006, in order to update certain disclosures with respect to Lear’s restructuring strategy (the “Restructuring”).
FORWARD-LOOKING STATEMENTS
This Current Report on Form 8-K/A 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 result of certain risks and uncertainties, including but not limited to, general economic conditions in the markets in which the Company operates, including changes in interest rates or currency exchange rates, 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, business realignment 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 and suppliers, raw material costs and availability, the Company’s ability to mitigate the significant impact of increases in raw material, energy and commodity costs, the outcome of legal or regulatory proceedings to which the Company is or may become a party, unanticipated changes in cash flow, including the Company’s ability to align its vendor payment terms with those of its customers, the finalization of the Company’s restructuring strategy, the outcome of various strategic alternatives being evaluated with respect to its North American Interior business and other risks described from time to time in the Company’s Securities and Exchange Commission filings. In particular, the Company’s financial outlook for 2006 and 2007 is based on several factors, including the Company’s current vehicle production and raw material pricing assumptions. The Company’s actual financial results could differ materially as a result of significant changes in these factors. The Company’s previously announced private placement of common stock to affiliates of and funds managed by Carl C. Icahn is subject to certain conditions. No assurances can be given that the offering will be consummated on the terms contemplated or at all.
The forward-looking statements in this Report are made as of the date hereof, and the Company does not assume any obligation to update, amend or clarify them to reflect events, new information or circumstances occurring after the date hereof.
Section 2 – Financial Information
Item 2.02 Results of Operations and Financial Condition.
The following information is provided pursuant to Item 2.02 of Form 8-K, “Results of Operations and Financial Condition,” and Item 7.01 of Form 8-K, “Regulation FD Disclosure.”
On October 26, 2006, Lear Corporation issued a press release reporting its financial results for the third quarter of 2006, earnings guidance for the full year of 2006 and a preliminary outlook for 2007. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated by reference herein.
On October 26, 2006, Lear Corporation made available the presentation slides attached hereto as Exhibit 99.2 in a webcast of its third quarter 2006 earnings call. Exhibit 99.2 is incorporated by reference herein.
The information contained in Exhibits 99.1 and 99.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 2.05 Costs Associated with Exit or Disposal Activities.
As part of its previously announced Restructuring, Lear has continued its consolidation and census actions. In the third quarter of 2006, these actions resulted in charges of $17.4 million, consisting of employee termination costs of $12.1 million, fixed asset impairment charges of $2.4 million, contract termination costs of $1.5 million and other costs of $1.4 million (including $0.4 million of manufacturing inefficiency costs resulting from the Restructuring). The costs incurred in connection with the Restructuring generally represent cash charges, other than the fixed asset impairment charges which are non-cash.
The Company continues to expect to incur total pretax costs of approximately $250 million in connection with the Restructuring,
2
although all aspects of the restructuring actions have not been finalized. Approximately 90% of costs associated with the Restructuring are expected to result in cash expenditures. Total restructuring and related manufacturing inefficiency charges incurred through the third quarter of 2006 were $161.6 million. The Company expects to incur additional charges of $50 to $60 million in the fourth quarter of 2006. The remainder of the charges are expected to be incurred in 2007.
Section 7 – Regulation FD
Item 7.01 Regulation FD Disclosure.
See “Item 2.02 Results of Operations and Financial Condition” above.
Section 9 – Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
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(c) |
Exhibits |
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99.1 |
Press release issued October 26, 2006, furnished herewith. |
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99.2 |
Presentation slides from the Lear Corporation webcast of its third quarter 2006 earnings call held on October 26, 2006, furnished herewith. |
3
SIGNATURE
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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LEAR
CORPORATION, |
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By: |
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Name: |
James H. Vandenberghe |
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Title: |
Vice Chairman and Chief Financial Officer |
4
EXHIBIT INDEX
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Exhibit No. |
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Description |
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99.1 |
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Press release issued October 26, 2006, furnished herewith. |
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99.2 |
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Presentation slides from the Lear Corporation webcast of its third quarter 2006 earnings call held on October 26, 2006, furnished herewith. |
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5
Exhibit 99.1
FOR IMMEDIATE RELEASE
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Investor Relations: |
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Mel Stephens |
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(248) 447-1624 |
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Media: |
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Andrea Puchalsky |
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(248) 447-1651 |
Lear Reports Third-Quarter Financial Results
Southfield, Mich., October 26, 2006 — Lear Corporation [NYSE: LEA], one of the world’s largest automotive interior systems and components suppliers, today reported financial results for the third quarter of 2006, guidance for the full year of 2006 and a preliminary outlook for 2007.
Recent Highlights:
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Completed contribution of its European Interior business to joint venture |
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Continued to win new business in Asia and with Asian automakers globally |
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Agreement to issue $200 million of common stock |
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Introduced industry’s first solid-state Smart Junction Box technology |
For the third quarter of 2006, Lear posted net sales of $4.1 billion and a pretax loss of $65.9 million, including $46.1 million related to restructuring costs and a loss on the divestiture of the Company’s European Interior business. These results compare with year-earlier net sales of $4.0 billion and a pretax loss of $787.8 million, including $777.7 million related to impairments and restructuring costs. Net loss for the third quarter of 2006 was $74.0 million, or $1.10 per share. This compares with a net loss of $750.1 million, or $11.17 per share, for the third quarter of 2005.
“In response to very challenging industry conditions, we are continuing to aggressively implement cost reduction and restructuring actions to improve future profitability. Margins in our Seating business are showing solid improvement, and the actions we are taking to improve our manufacturing footprint will benefit our Electronic and Electrical margins in the future. We are also moving forward with our strategy to put in place a new, more sustainable business model for our Interior segment,” said Bob Rossiter, Lear Chairman and Chief Executive Officer.
Net sales were up from the prior year, primarily reflecting the addition of new business globally, offset in large part by lower production in North America and Europe. Operating performance was slightly below the year-earlier results, reflecting the adverse impact of lower production and higher raw material costs, largely offset by the benefit of new business and cost reductions in our core businesses.
(more)
2
Free cash flow was negative $48.2 million for the third quarter of 2006. (Net cash provided by operating activities was negative $8.1 million. A reconciliation of free cash flow to net cash provided by operating activities is provided in the attached supplemental data page.)
Lear continued to make progress on important strategic initiatives, including the completion of a transaction to contribute substantially all of its European Interior business to International Automotive Components Group, LLC (IAC) in return for a one-third equity interest. With respect to the Company’s North American Interior business, we are continuing to make progress toward a similar strategic solution with IAC. Lear is also aggressively expanding its business in Asia and with Asian automakers globally, and was awarded several new Asian programs during the third quarter. The Company’s recent agreement to issue $200 million of common stock provides additional operating and financial flexibility, allowing the Company to invest in and further strengthen its core businesses. Additionally, the Company continued to develop new products and technologies, including the industry’s first solid-state Smart Junction Box.
Full-Year 2006 Guidance
On October 16, 2006, the Company completed the contribution of substantially all of its European Interior business to International Automotive Components Group, LLC. Accordingly, Lear’s full-year financial results will reflect Lear’s minority interest in the joint venture on an equity basis for the fourth quarter.
For the full year of 2006, Lear expects worldwide net sales of about $17.7 billion, reflecting recently announced production cuts in North America and the divestiture of the Company’s European Interior business.
Lear anticipates full-year income before interest, other expense, income taxes, impairments, restructuring costs and other special items (core operating earnings) to be in the range of $345 to $375 million. Restructuring costs for the full year are estimated to be in the range of $105 to $115 million.
Full-year interest expense is estimated to be in the range of $210 to $215 million. Pretax income before impairments, restructuring costs and other special items is estimated to be in the range of $65 to $95 million. Income tax expense is estimated to be approximately $40 million in the fourth quarter, subject to the actual mix of financial results by country.
Full-year capital spending is estimated to be in the range of $380 to $390 million. Free cash flow for the full year is expected to be about breakeven.
Fourth quarter industry production assumptions underlying Lear’s financial outlook include 3.7 million units in North America, down 5% from a year ago, and 4.7 million units in Europe, down 1% from a year ago. Lear’s major platforms in North America are expected to be down significantly more than the industry average.
3
Preliminary 2007 Outlook
With respect to our core Seating, Electronic and Electrical businesses, we estimate that we will add new business of about $800 million. Seating margins are expected to continue to improve to the mid-5% level. In the Electronic and Electrical segment, we are continuing to implement aggressive restructuring actions, and we expect margins to improve during the course of the year to the 5.5% to 6% range. These margins assume an industry production environment roughly in line with 2006 and reflect underlying operating margins, excluding restructuring costs and other special items. Capital spending for 2007 in our core businesses is expected to be in the range of $250 to $280 million. Free cash flow is expected to return to a solid positive level.
Lear Corporation is one of the world’s largest suppliers of automotive interior systems and components. Lear provides complete seat systems, electronic products and electrical distribution systems and other interior products. With annual net sales of $17.1 billion in 2005, Lear ranks #127 among the Fortune 500. Lear’s world-class products are designed, engineered and manufactured by a diverse team of 115,000 employees at 282 locations in 34 countries. Lear’s headquarters are in Southfield, Michigan, and Lear is traded on the New York Stock Exchange under the symbol [LEA]. Further information about Lear is available on the internet at http://www.lear.com.
Lear will hold a conference call to review the Company’s third-quarter 2006 financial results and related matters on Thursday, October 26, 2006, at 9:00 a.m. EDT. To participate in the conference call, dial 1-800-789-4751 (domestic) or 1-706-679-3323 (international). You may also listen to the live audio webcast of the call, in listen-only mode, on the corporate website at www.lear.com. An audio replay will be available two hours following the call at 1-800-642-1687 (domestic) and 1-706-645-9291 (international). The audio replay will be available until November 9, 2006 (Conference I.D. 4340633).
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 press release, the Company has provided information regarding certain non-GAAP financial measures. These measures include “income before interest, other expense, income taxes, impairments, restructuring costs and other special items” (core operating earnings), “pretax income (loss) before impairments, restructuring costs and other special items” and “free cash flow.” Free cash flow represents net cash provided by operating activities before the net change in sold accounts receivable, less capital expenditures. The Company believes it is appropriate to exclude the net change in sold accounts receivable in the calculation of free cash flow since the sale of receivables may be viewed as a substitute for borrowing activity.
Management believes the non-GAAP financial measures used in this press release are useful to both management and investors in their analysis of the Company’s financial position and results of operations. In particular, management believes core
4
operating earnings and pretax income (loss) before impairments, restructuring costs and other special items are useful measures in assessing the Company’s financial performance by excluding certain items that are not indicative of the Company’s core operating earnings or that may obscure trends useful in evaluating the Company’s continuing operating activities. Management also believes these measures are useful to both management and investors in their analysis of the Company’s results of operations and provide improved comparability between fiscal periods. Management believes free cash flow is useful to both management and investors in their analysis of the Company’s ability to service and repay its debt. Further, management uses these non-GAAP financial measures for planning and forecasting in future periods.
Core operating earnings, pretax income (loss) before impairments, restructuring costs and other special items and free cash flow should not be considered in isolation or as substitutes for net income (loss), pretax income (loss), cash provided by operating activities or other income statement or cash flow statement data prepared in accordance with GAAP or as measures of profitability or liquidity. In addition, the calculation of free cash flow does not reflect cash used to service debt and therefore, does not reflect funds available for investment or other discretionary uses. Also, these non-GAAP financial measures, as determined and presented by the Company, may not be comparable to related or similarly titled measures reported by other companies.
For a reconciliation of third-quarter 2006 free cash flow to net cash provided by operating activities, see the supplemental data pages which, together with this press release, have been posted on the Company’s website through the Investor Relations link at http://www.lear.com. Given the inherent uncertainty regarding special items and the net change in sold accounts receivable in any future period, a reconciliation of forward-looking financial measures is not feasible. The magnitude of these items, however, may be significant.
Forward-Looking Statements
This press release 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 result of certain risks and uncertainties, including but not limited to, general economic conditions in the markets in which the Company operates, including changes in interest rates or currency exchange rates, 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, business realignment 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 and suppliers, raw material costs and availability, the Company’s ability to mitigate the significant impact of
5
increases in raw material, energy and commodity costs, the outcome of legal or regulatory proceedings to which the Company is or may become a party, unanticipated changes in cash flow, including the Company’s ability to align its vendor payment terms with those of its customers, the finalization of the Company’s restructuring strategy, the outcome of various strategic alternatives being evaluated with respect to its North American Interior business and other risks described from time to time in the Company’s Securities and Exchange Commission filings. In particular, the Company’s financial outlook for 2006 and 2007 is based on several factors, including the Company’s current vehicle production and raw material pricing assumptions. The Company’s actual financial results could differ materially as a result of significant changes in these factors. The Company’s previously announced private placement of common stock to affiliates of and funds managed by Carl C. Icahn is subject to certain conditions. No assurances can be given that the offering will be consummated on the terms contemplated or at all.
The forward-looking statements in this press release are made as of the date hereof, and the Company does not assume any obligation to update, amend or clarify them to reflect events, new information or circumstances occurring after the date hereof.
# # # # #
Lear Corporation and Subsidiaries
Consolidated Statements of Operations
(Unaudited; in millions, except per share amounts)
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Three Months Ended |
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September
30, |
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October 1, |
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Net sales |
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$ |
4,069.7 |
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$ |
3,986.6 |
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Cost of sales |
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3,882.9 |
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3,900.2 |
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Selling, general and administrative expenses |
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158.0 |
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142.7 |
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Goodwill impairment charge |
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— |
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670.0 |
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Interest expense |
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56.6 |
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45.1 |
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Other expense, net |
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38.1 |
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16.4 |
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Loss before income taxes |
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(65.9 |
) |
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(787.8 |
) |
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Income taxes |
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8.1 |
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(37.7 |
) |
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Net loss |
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$ |
(74.0 |
) |
$ |
(750.1 |
) |
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Basic net loss per share |
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$ |
(1.10 |
) |
$ |
(11.17 |
) |
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Diluted net loss per share |
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$ |
(1.10 |
) |
$ |
(11.17 |
) |
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Weighted average number of shares outstanding - basic |
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67.4 |
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67.1 |
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Weighted average number of shares outstanding - diluted |
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67.4 |
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67.1 |
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6
Lear Corporation and Subsidiaries
Consolidated Statements of Operations
(Unaudited; in millions, except per share amounts)
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Nine Months Ended |
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September
30, |
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October
1, |
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Net sales |
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$ |
13,558.4 |
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$ |
12,691.9 |
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Cost of sales |
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12,868.3 |
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12,184.8 |
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Selling, general and administrative expenses |
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493.9 |
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484.6 |
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Goodwill impairment charge |
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2.9 |
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670.0 |
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Interest expense |
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157.5 |
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138.1 |
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Other expense, net |
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55.4 |
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55.5 |
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Loss before income taxes and cumulative effect of a change in accounting principle |
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(19.6 |
) |
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(841.1 |
) |
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Income taxes |
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45.8 |
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(62.2 |
) |
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Loss before cumulative effect of a change in accounting principle |
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(65.4 |
) |
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(778.9 |
) |
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Cumulative effect of a change in accounting principle |
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2.9 |
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— |
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Net loss |
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$ |
(62.5 |
) |
$ |
(778.9 |
) |
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Basic
net loss per share |
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$ |
(0.97 |
) |
$ |
(11.60 |
) |
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Cumulative effect of a change in accounting principle |
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0.04 |
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— |
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Basic net loss per share |
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$ |
(0.93 |
) |
$ |
(11.60 |
) |
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Diluted
net loss per share |
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$ |
(0.97 |
) |
$ |
(11.60 |
) |
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Cumulative effect of a change in accounting principle |
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0.04 |
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— |
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Diluted net loss per share |
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$ |
(0.93 |
) |
$ |
(11.60 |
) |
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Weighted average number of shares outstanding - basic |
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67.3 |
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67.2 |
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Weighted average number of shares outstanding - diluted |
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|
67.3 |
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67.2 |
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7
Lear Corporation and Subsidiaries
Consolidated Balance Sheets
(In millions)
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September 30, |
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December 31, |
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(Unaudited) |
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(Audited) |
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ASSETS |
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Current: |
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Cash and cash equivalents |
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$ |
153.0 |
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$ |
207.6 |
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Accounts receivable |
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2,571.8 |
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2,337.6 |
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Inventories |
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748.4 |
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688.2 |
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Recoverable customer engineering and tooling |
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228.2 |
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317.7 |
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Other |
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310.7 |
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295.3 |
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4,012.1 |
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3,846.4 |
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Long-Term: |
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PP&E, net |
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1,982.0 |
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2,019.3 |
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Goodwill, net |
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1,984.7 |
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|
1,939.8 |
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Other |
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|
472.6 |
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|
482.9 |
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4,439.3 |
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|
4,442.0 |
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Total Assets |
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$ |
8,451.4 |
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$ |
8,288.4 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current: |
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Short-term borrowings |
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$ |
8.6 |
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$ |
23.4 |
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Accounts payable and drafts |
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|
2,888.9 |
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|
2,993.5 |
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Accrued liabilities |
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|
1,214.6 |
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|
1,080.4 |
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Current portion of long-term debt |
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|
27.5 |
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|
9.4 |
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|
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|
|
|
|
|
|
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4,139.6 |
|
|
4,106.7 |
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|
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|
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Long-Term: |
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|
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Long-term debt |
|
|
2,349.7 |
|
|
2,243.1 |
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Other |
|
|
838.9 |
|
|
827.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,188.6 |
|
|
3,070.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity |
|
|
1,123.2 |
|
|
1,111.0 |
|
|
|
|
|
|
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|
|
|
|
|
|
|
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Total Liabilities and Stockholders’ Equity |
|
$ |
8,451.4 |
|
$ |
8,288.4 |
|
|
|
|
|
|
|
|
|
|
8
Lear Corporation and Subsidiaries
Supplemental Data
(Unaudited; in millions, except content per vehicle and share data)
|
|
|
Three Months Ended |
|
||||
|
|
|
|
|
||||
|
|
|
September
30, |
|
October
1, |
|
||
|
|
|
|
|
|
|
||
|
Net Sales |
|
|
|
|
|
|
|
|
North America |
|
$ |
2,244.5 |
|
$ |
2,222.8 |
|
|
Europe |
|
|
1,444.1 |
|
|
1,405.7 |
|
|
Rest of World |
|
|
381.1 |
|
|
358.1 |
|
|
|
|
|
|||||
|
Total |
|
$ |
4,069.7 |
|
$ |
3,986.6 |
|
|
|
|
|
|
||||
|
Content Per Vehicle * |
|
|
|
|
|
|
|
|
North America |
|
$ |
660 |
|
$ |
606 |
|
|
Total Europe |
|
$ |
347 |
|
$ |
339 |
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow ** |
|
|
|
|
|
|
|
|
Net cash used in operating activities |
|
$ |
(8.1 |
) |
$ |
(297.3 |
) |
|
Net change in sold accounts receivable |
|
|
43.7 |
|
|
(11.9 |
) |
|
|
|
|
|
||||
|
Net cash provided by (used in) operating activities before net change in sold accounts receivable |
|
|
35.6 |
|
|
(309.2 |
) |
|
Capital expenditures |
|
|
(83.8 |
) |
|
(135.2 |
) |
|
|
|
|
|
||||
|
Free cash flow |
|
$ |
(48.2 |
) |
$ |
(444.4 |
) |
|
|
|
|
|
||||
|
Depreciation |
|
$ |
96.7 |
|
$ |
98.3 |
|
|
|
|
Nine Months Ended |
|
||||
|
|
|
|
|
||||
|
|
|
|
September
30, |
|
|
October
1, |
|
|
|
|
|
|
|
|
|
|
|
Net Sales |
|
|
|
|
|
|
|
|
North America |
|
$ |
7,600.8 |
|
$ |
6,757.4 |
|
|
Europe |
|
|
4,834.4 |
|
|
4,978.6 |
|
|
Rest of World |
|
|
1,123.2 |
|
|
955.9 |
|
|
|
|
|
|
||||
|
Total |
|
$ |
13,558.4 |
|
$ |
12,691.9 |
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
Content Per Vehicle * |
|
|
|
|
|
|
|
|
North America |
|
$ |
653 |
|
$ |
571 |
|
|
Total Europe |
|
$ |
338 |
|
$ |
351 |
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow ** |
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
$ |
106.1 |
|
$ |
228.8 |
|
|
Net change in sold accounts receivable |
|
|
23.7 |
|
|
(279.2 |
) |
|
|
|
|
|
||||
|
Net cash provided by (used in) operating activities before net change in sold accounts receivable |
|
|
129.8 |
|
|
(50.4 |
) |
|
Capital expenditures |
|
|
(268.5 |
) |
|
(414.3 |
) |
|
|
|
|
|
||||
|
Free cash flow |
|
$ |
(138.7 |
) |
$ |
(464.7 |
) |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
$ |
295.6 |
|
$ |
287.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Shares Outstanding at end of quarter |
|
|
67,373,554 |
|
|
67,168,087 |
|
|
|
|
|
|
|
|
|
|
|
Diluted Shares Outstanding at end of quarter *** |
|
|
67,373,554 |
|
|
67,168,087 |
|
|
* |
Content Per Vehicle for 2005 has been updated to reflect actual production levels. |
|
** |
See “Non-GAAP Financial Information” included in this news release. |
|
*** |
Calculated using stock price at end of quarter. Diluted shares outstanding exclude shares related to outstanding convertible debt, as well as options, restricted stock units, performance units and stock appreciation rights, all of which were antidilutive. |
9
fast forward
advance relentlessly
R
Third-Quarter 2006 Results,
Fourth-Quarter 2006 Guidance and
a Preliminary Outlook for 2007
October 26, 2006
Exhibit 99.2
1
Agenda
Recent Events
Bob Rossiter, Chairman and CEO
Financial Review
Jim Vandenberghe, Vice Chairman and CFO
Strategy Update and Key Operating Targets
Doug DelGrosso, President and COO
Summary and Outlook
Bob Rossiter, Chairman and CEO
Q and A Session
2
Recent Events*
Strategic Developments
Closed transaction whereby Lear contributed substantially all of
its European Interior business to joint venture in return for a one-
third equity stake
Continued to make progress on new strategy for North American
Interior business
Agreed to $200 million equity offering to increase flexibility
Operating Developments
Industry production environment in N.A. very challenging
Continued to win new business with Asian manufacturers
Introduced new products, including the industry’s first solid-state
Smart Junction Box technology
Please see slide titled “Forward-Looking Statements” at the end of this presentation for further information.
3
Financial Review
4
Contributed substantially all of Lear’s European Interior
business to International
Automotive Components Group,
LLC in return for a one-third equity stake:
Creates a large [20 manufacturing facilities in 9 countries,
with $1.2 billion in annual sales] and well capitalized
enterprise
Solid platform for improving ongoing operating efficiency
and financial performance
Continuing to work toward a new strategy for Lear’s North
American Interior business
Please see slide titled “Forward-Looking Statements” at the end of this presentation for further information.
Working Toward Definitive New Strategic Direction
For North American Interior Business By Year End
Recent Events
Update on Interior Business
5
Recent Events
Equity Offering*
Lear agreed to issue $200 million of common stock to
affiliates of Carl Icahn in a private placement
Proceeds to be used for strategic investments in the
Company’s core businesses and to increase financial and
operating flexibility
Lear looks forward to working with Icahn to increase value
for all Lear shareholders
Icahn representative will join Lear’s Board of Directors
when transaction closes (expected timing about 45 days)
Lear’s shares outstanding will increase by 8.7 million
Please see slide titled “Forward-Looking Statements” at the end of this presentation for further information.
6
Third Quarter 2006
Industry Environment
Third Quarter
Third Quarter
2006
2006 vs. 2005
North American Production
Industry
3.4 mil
Down 9%
Big Three
2.2 mil
Down 13%
Lear's Top 15 Platforms
1.1 mil
Down 14%
European Production
Industry
4.2 mil
Down 2%
Lear's Top 5 Customers
2.0 mil
Down 3%
Key Commodities (Quarterly Average)
vs. Prior Quarter
Steel (Hot Rolled)
Up 4%
Up 23%
Resins (Polypropylene)
Up 4%
Up 24%
Copper
Up 12%
Up 106%
Crude Oil
flat
Up 11%
7
Third Quarter 2006
Financial Summary**
(in millions, except net loss per share)
Third
Quarter 2006
Third
Quarter 2005
3Q '06
B/(W) 3Q '05
Net Sales
$4,069.7
$3,986.6
$83.1
Income (Loss) Before Interest, Other Expense
and Income Taxes*
$28.8
($726.3)
$755.1
Margin
0.7
%
NM
NM
Pretax Loss
($65.9)
($787.8)
$721.9
Net Loss*
($74.0)
($750.1)
$676.1
Net Loss Per Share
($1.10)
($11.17)
$10.07
SG&A % of Net Sales
3.9
%
3.6
%
(0.3)
pts.
Interest Expense
$56.6
$45.1
($11.5)
Depreciation / Amortization
$98.1
$99.6
$1.5
Other Expense, Net
$38.1
$16.4
($21.7)
8
* Third quarter 2006 tax provision was $8.1 million. This included a non-recurring tax benefit of $19.9 million related to
restructuring actions, the loss on the divestiture of
the European Interior business and a one-time tax benefit.
** Please see slides titled “Non-GAAP Financial Information” at the end of this presentation for further information.
Third Quarter 2006
Restructuring and Special Items*
(in millions)
Income Before
Interest, Other
Expense and
Income Taxes
Pretax Loss
COGS
SG&A
Other
Expense
2006 Reported Results
$ 28.8
$ (65.9)
Reported results include the following items:
Costs related to Global Restructuring Actions
$ 17.4
$ 17.4
16.1
$
1.3
$
-
Loss on Divestiture of
European Interior Business
-
28.7
-
-
$ 28.7
2006 Core Operating Results
46.2
$
$ (19.8)
2005 Core Operating Results
47.9
$
$ (10.1)
Third Quarter
Income Statement Category
Memo:
9
* Please see slides titled “Non-GAAP Financial Information” at the end of this presentation for further information
Third Quarter 2006
Net Sales Changes and Margin Impact Versus Prior Year
Net Sales
Margin
Performance Factor
Change
Impact
Comments
(in millions)
Industry Production /
$ (366)
Negative
Primarily lower industry production in
Platform Mix / Net Pricing /
Other
North America (down 9%) and
unfavorable platform mix (lower pickups
in N.A.)
Global New Business
362
Positive
GM large SUVs, Lucerne, Fusion / Milan
/ Zephyr, Santa Fe, Peugeot 207, Punto
F/X Translation
87
Neutral
Euro up 4%, Canadian dollar up 7%
Commodity / Raw Material
Negative
Unfavorable year over year increases--
hot rolled steel up 23%, polypropylene up
24%, copper up 106%
Performance
Positive
Favorable operating performance in core
businesses, including benefits from
restructuring actions
10
Third Quarter and Nine Months 2006
Business Segment Results***
2006
2005
2006
2005
Seating
Net Sales
2,633.0
$
2,564.3
$
8,721.6
$
8,192.9
$
Segment Earnings*
125.6
$
71.2
$
423.0
$
169.9
$
% of Sales
4.8
%
2.8
%
4.9
%
2.1
%
Adjusted
% of Sales**
5.1
%
3.0
%
5.2
%
2.7
%
Electronic and Electrical
Net Sales
682.6
$
690.9
$
2,257.6
$
2,237.8
$
Segment Earnings*
16.4
$
35.3
$
107.6
$
145.9
$
% of Sales
2.4
%
5.1
%
4.8
%
6.5
%
Adjusted
% of Sales**
3.4
%
6.5
%
5.7
%
7.4
%
Interior
Net Sales
754.1
$
731.4
$
2,579.2
$
2,261.2
$
Segment Earnings*
(55.8)
$
(112.6)
$
(149.6)
$
(138.8)
$
% of Sales
(7.4)
%
(15.4)
%
(5.8)
%
(6.1)
%
Adjusted
% of Sales**
(7.1)
%
(3.3)
%
(5.0)
%
(2.1)
%
Nine Months
Third Quarter
11
($ in millions)
* Segment earnings represent income (loss) before goodwill impairment charge, interest, other expense and income taxes. Income (loss) before goodwill impairment
charge,
interest, other expense and income taxes for the Company was $28.8 million and $(56.3) million for the three months ended 9/30/06 and 10/01/05,
respectively, and $196.2 million and $22.5 million for the nine months ended 9/30/06 and 10/01/05, respectively.
** Adjusted % of sales excludes impairments, restructuring costs and other special items of $16.8 million (Seating - $7.8, Electronic and Electrical - $7.1, Interior - $1.9)
and
$103.9 million (Seating - $5.5, Electronic and Electrical - $9.7, Interior - $88.7) for the three months ended 9/30/06 and 10/01/05, respectively, and $69.7 million
(Seating - $27.8, Electronic and Electrical - $22.0, Interior - $19.9) and $162.4
million (Seating - $50.6, Electronic and Electrical - $19.9, Interior - $91.9) for the nine
months ended 09/30/06 and 10/01/05, respectively.
*** Please see slides titled “Non-GAAP Financial Information” at the end of this presentation for further information.
Third Quarter and Nine Months 2006
Free Cash Flow*
(in millions)
* Free Cash Flow represents net cash provided by (used in) operating activities (($8.1) million
for the three months and $106.1
million for the nine months ended 9/30/06) before net change in sold accounts receivable ($43.7 million for the three months
and $23.7 million for the nine months ended 9/30/06), less capital expenditures. Please
see slides titled “Non-GAAP Financial
Information” at the end of this presentation for further information.
Third
Quarter
2006
Nine
Months
2006
Net Loss
$ (74.0)
$ (62.5)
Depreciation / Amortization
98.1
299.4
Working Capital / Other
11.5
(107.1)
Cash from Operations
$ 35.6
$ 129.8
Capital Expenditures
(83.8)
(268.5)
Free Cash Flow
$ (48.2)
$ (138.7)
12
Fourth Quarter 2006 Guidance
Key Assumptions*
Fourth Quarter
Change from
2006 Guidance
Prior Year
North American Production
Total Industry
3.7 mil
down 5%
Big Three
2.4 mil
down 12%
Lear's Top 15 Platforms
1.0 mil
down 24%
European Production
Total Industry
4.7 mil
down 1%
Lear's Top 5 Customers
2.4 mil
down 2%
Euro
$1.28 / Euro
up 7%
13
Please see slide titled “Forward-Looking Statements” at the end of this presentation for further information.
2006 Guidance
Key Financial Projections***
(Reflects Lear's investment in European
Fourth Quarter 2006
Full Year 2006
Interiors joint venture on an equity basis)
Net Sales
$ 4.1 billion
$ 17.7 billion
Core Operating Earnings
$80 to $110 million
$345 to 375 million
Income before interest, other expense,
income taxes, impairments, restructuring
costs and other special items
Interest Expense
$50 to $55 million
$210 to $215 million
Pretax Income
$15 to $45 million
$65 to $95 million
before impairments, restructuring costs
and other special items
Estimated Tax Expense*
$40 million
$90 million
Pretax Restructuring Costs
$50 to $60 million
$105 to $115 million
Capital Spending
$110 to $120 million
$380 to $390 million
Free Cash Flow**
$140 million positive
about breakeven
14
** Excludes potential payment of approximately $35 million related to settlement of prior litigation.
*** Please see slides titled “Non-GAAP Financial Information” and “Forward-Looking Statements” at the end of this presentation for further information.
* Subject to actual mix of financial results by country.
2007 Outlook
Preliminary Assessment of Key Financials*
Assuming an industry production environment that is roughly in line
with 2006. . . we see the following preliminary outlook for 2007:
Within our core Seating, Electronic and Electrical businesses:
Global new business of about $800 million,
Seating margins continue to improve to the mid-5% level,
excluding restructuring costs and other special items,
Electronic and Electrical margins improve during the course of the
year to the 5.5% to 6% range, also excluding restructuring costs
and other special items
Capital spending is expected to be in the range of $250 to $280
million, and
Free cash flow turns solidly positive.
Please see slide titled “Forward-Looking Statements” at the end of this presentation for further information.
15
Strategy Update and Key
Operating Targets
16
Where Lear Needs To Be . . .
And Our Strategy To Get There*
Strategic Direction
High-Performance
Company
Consistently Delivering
“Profitable Growth”
Market Leadership
Expand Market Boundaries
Maintain Efficient / Competitive Operations
* Please see slide titled “Forward-Looking Statements” at the end of this presentation for further information.
17
Achieve global sales growth (about 5%
annually) and
further diversify sales (target is to grow total Asian sales*
about 25% annually)
Continuous improvement in quality and customer satisfaction
Core Dimension Strategy – product focus; emphasis on technology
Put in place a new, sustainable business model for Interior business
Restore Seating margins to historical level (6.0% range)
Improve Electronic and Electrical margins (7.5% range)
Restore strong free cash flow levels, pay down debt and restore
investment grade credit status
Key Operating Targets**
* Total Asian sales target includes consolidated and non-consolidated sales.
** Please see slide titled “Forward-Looking Statements” at the end of this presentation for further information.
18
Global Strategy
For Sales Growth and Diversification*
North America
Fully participate in fast-growing Crossover segment
Expand emerging relationships with Hyundai, Nissan and Toyota
Grow content per vehicle with new products and technology:
Safety-Related – IntelliTireTM
, Pro-TecTM PLuS and Adaptive
Front Lighting
Electronics – RKE Technology, Premium Audio/Visual, Home
Automation
Participate in Hybrid growth with high-voltage Electrical Systems
Europe and Rest of World
Continue to invest and grow sales in China, India and Korea
Accelerate growth with Asian automakers and Volkswagen
Leverage existing relationships with Big Three and European
automakers to grow in emerging markets
Please see slide titled “Forward-Looking Statements” at the end of this presentation for further information.
19
Examples of Emerging Asian Relationships*
Customer
Product
Santa Fe -- Seating, IntelliTireTM
Supply 100% of North American seating
Provide value-add technologies (e.g., TPMS)
Provide wiring harnesses through JV with a Korean partner
Leverage Lear’s quality reputation and global footprint to
support Hyundai’s quality reputation
Rapid growth potential as a preferred global supplier
Lear Relationship
Nissan evolving its sourcing strategy to global suppliers
Lear’s relationship with Tachi-S now encompasses three
JVs:
North America (Mt. Juliet, TN)
Europe (Sunderland, U.K.)
Asia (Guangzhou, China)
Collectively, these operations will supply seven vehicle
lines for Nissan
Additional JV opportunities with Tachi-S being developed
Expanding relationship with headliners, NVH, plastics and
seating by establishing new facilities alongside Toyota in
North America and Europe
Continued success on seating JV in N.A. (Sienna) and
interior programs (e.g., Tundra) provides opportunity on
next new N.A. seat program
Tundra – Flooring & Acoustics,
Interior Trim
Qashqai -- Seating,
Electrical Distribution
* Please see slide titled “Forward-Looking Statements” at the end of this presentation for further information.
20
Lear China = 13 JV Plants (For 12 JVs)
+ 3 WOFE’s (Including Regional Headquarters)
Lear China
Business Profile*
Please see slide titled “Forward-Looking Statements” at the end of this presentation for further information.
21
Lear China’s Sales Are Projected
To Grow About 30% Annually
Lear China
Projected Sales Growth*
Please see slide titled “Forward-Looking Statements” at the end of this presentation for further information.
22
New Asian Business Awards
During Third Quarter 2006*
Automaker
Market
Lear Content
Vehicle Program
Nissan
Europe
Seating, Wire
Harnesses, Smart
Junction Box
Future Crossover
Chery
China
Seating
Transit Van
Changan
China
Seating, Door Trim
New MPV
Honda
North America
ProTec Plus
TM
Pilot
DFM
China
Wire Harnesses,
Smart Junction Box
Sedan Passenger Car
Toyota
North America
Interior Trim
Camry Crossover
GM
China
Carpet, Trunk Trim
Epsilon SWB
DCX
China
Carpet, Trunk Trim
300C
23
Please see slide titled “Forward-Looking Statements” at the end of this presentation for further information.
Continuing To Win New Business In Asia
And With Asian Manufacturers Globally
Targeting Total Asian Sales
Growth of About 25% Annually**
Revenue in Asia and with
Asian Manufacturers*
Rapid Growth In Asian Sales Led By Expanding
Relationships With Hyundai, Nissan And Toyota,
As Well As Growth In Emerging Markets Such As China
(in millions)
Consolidated
Non-consolidated
* Total Asian sales target includes consolidated and non-consolidated sales.
** Please see slide titled “Forward-Looking Statements” at the end of this presentation for further information.
$2,200
$1,800
$1,200
$2,500
$3,000
Lear’s Targeted
Asian Sales by Major Market
24
Nissan Altima
Seating, Headliner, Door Panels, Flooring &
Acoustics, Interior Trim
Nissan Armada / Titan
Overhead System, Console
Nissan Sentra
Overheads, Flooring
& Acoustics, Interior Trim
Saturn VUE
Seating
Toyota Tundra
Flooring & Acoustics, Interior Trim,
SonoTecTM Dash Insulator
North America
Major Second Half 2006 And 2007 Launches
Acura MDX
Wire Harnesses
BMW X5
Seating, Electronics
Chrysler Aspen
Seating, Wire Harnesses, Overhead System,
Flooring & Acoustics, Console, Electronics
Chrysler / Dodge Minivan
IP, Door Panels, Overhead System, Flooring
& Acoustics
Ford Edge / Lincoln MKX
Overhead System
Honda CR-V and Accord
Wire Harnesses
Chevrolet Silverado
Seating, Door Panels and
Car2UTM Home Automation System
Crossover Vehicle
Jeep Patriot
Instrument Panel, Overhead System,
Flooring & Acoustics, and Interior Trim
25
Europe and Rest of World
Major Second Half 2006 And 2007 Launches
Europe
Rest of World
BMW 3-Series Convertible
Seating, Electronics
Fiat Bravo
Seating
Ford Mondeo
Seating (First LFSA-common seat architecture
program in Europe)
Jaguar S-Type
Seating, Overhead System, Electronics
Land Rover Range Rover
Seating, Electronics
Nissan Qashqai
Seating, Electrical Distribution
Peugeot 207 Coupe
Seating
Volvo V70
Seating
Cadillac STS (China)
Seating, Door Panels, Flooring & Acoustics
Chang'an (China)
Seating
Dodge Caliber (Venezuela)
Seating, Door Panels
Ford Galaxy (China)
Seating
Ford Mondeo (China)
Seating, Door Panels, Overheads
Hyundai Santro Minicar (India)
Seating, IntelliTireTM
Nissan Geniss MPV and Sylphy Sedan (China)
Seating
Renault Logan (India)
Seating
Hyundai Veracruz
Seating and IntelliTireTM (Korea)
Mercedes C-Class
Seating
26
Summary
and Outlook
27
Summary and Outlook
Improving our Global Competitiveness*
Continuously improving quality and customer satisfaction
levels
Successfully implementing global restructuring initiatives
Increasing emphasis on new product technology and
innovation
Leveraging global scale, expertise and common
architecture strategy to deliver the best overall value
Strategically managing the business to improve individual
product-line returns
Please see slide titled “Forward-Looking Statements” at the end of this presentation for further information.
Comprehensive Initiatives Being Implemented
To Improve Future Competitiveness
28
Summary and Outlook
Making Progress on Strategic Priorities*
Global Seating margins improving
Aggressive restructuring actions to improve Electronic and
Electrical margins in future
Completed agreement to contribute European Interior business
to International Automotive Components Group, LLC
Priority focus on improving our North American Interior
business and putting in place a sustainable business model
Continuing to aggressively grow sales in Asia and with Asian
Automakers globally
Please see slide titled “Forward-Looking Statements” at the end of this presentation for further information.
Agreement To Issue $200 Million Of Common Stock
Provides Increased Flexibility, Allowing The Company
To Further Strengthen Our Core Businesses
29
ADVANCE RELENTLESSLY™
www.lear.com
LEA
NYSE
Listed
R
30
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 interest, other expense and income taxes,” “income before interest, other expense, income taxes,
impairments, restructuring costs and
other special items” (core operating earnings), “pretax income (loss) before impairments, restructuring
costs and other special items” and “free cash flow.” Free cash flow represents net cash provided by operating activities
before the net
change in sold accounts receivable, less capital expenditures. The Company believes it is appropriate to exclude the net change in sold
accounts receivable in the calculation of free cash flow since the sale of receivables may be viewed
as a substitute for borrowing activity.
Management believes that the non-GAAP financial measures used in this presentation are useful to both management and investors in their
analysis of the Company’s financial position and results of operations.
In particular, management believes that income (loss) before interest,
other expense and income taxes, core operating earnings and pretax income (loss) before impairments, restructuring costs and other
special items are useful measures in assessing
the Company’s financial performance by excluding certain items that are not indicative of the
Company’s core operating earnings or that may obscure trends useful in evaluating the Company’s
continuing operating activities.
Management also believes that these measures are useful to both management and investors in their analysis of the Company's results of
operations and provide improved comparability between fiscal periods. Management
believes that free cash flow is useful to both
management and investors in their analysis of the Company’s ability to service and repay its debt. Further, management uses these non-
GAAP financial measures for planning and forecasting
in future periods.
Income (loss) before interest, other expense and income taxes, core operating earnings, pretax income (loss) before impairments,
restructuring costs and other special items and free cash flow should not be
considered in isolation or as substitutes for net income (loss),
pretax income (loss), cash provided by operating activities or other income statement or cash flow statement data prepared in accordance
with GAAP or as measures of profitability or liquidity. In
addition, the calculation of free cash flow does not reflect cash used to service debt
and therefore, does not reflect funds available for investment or other discretionary uses. Also, these non-GAAP financial measures, 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 slides are reconciliations of these non-GAAP financial measures to the most directly comparable financial
measures calculated and presented in accordance with GAAP. Given
the inherent uncertainty regarding special items and the net change
in sold accounts receivable in any future period, a reconciliation of forward-looking financial measures is not feasible. The magnitude of
these items, however, may be significant.
Non-GAAP Financial Information
31
Non-GAAP Financial Information
(in millions)
Q3 2006
Q3 2005
Loss before income taxes
$ (65.9)
$ (787.8)
Interest expense
56.6
45.1
Other expense, net
38.1
16.4
Income (loss) before interest, other expense
and income taxes
$ 28.8
$ (726.3)
Goodwill and fixed asset impairment charges
-
743.8
Costs related to restructuring actions
17.4
32.1
Litigation charges
-
(1.7)
Income before interest, other expense, income taxes,
impairments, restructuring costs and
other special items
46.2
$
47.9
$
(core operating earnings)
32
Non-GAAP Financial Information
(in millions)
Q3 2006
Q3 2005
Loss before income taxes
$ (65.9)
$ (787.8)
Goodwill and fixed asset impairment charges
-
743.8
Costs related to restructuring actions
17.4
33.1
Litigation charges
-
0.8
Loss on divestiture
28.7
-
Pretax loss before impairments,
restructuring costs and other special items
$ (19.8)
$ (10.1)
33
Non-GAAP Financial Information
Three Months
Nine Months
(in millions)
Q3 2006
Q3 2006
Net cash provided by (used in) operating activities
$ (8.1)
$ 106.1
Net change in sold accounts receivable
43.7
23.7
Net cash provided by operating activities
before net change in sold accounts receivable
(cash from operations)
$ 35.6
$ 129.8
Capital expenditures
(83.8)
(268.5)
Free cash flow
$ (48.2)
$ (138.7)
34
Non-GAAP Financial Information
(in millions)
Q3 2006
Q3 2005
Q3 2006
Q3 2005
Seating
$ 125.6
$ 71.2
$ 423.0
$ 169.9
Electronic and Electrical
16.4
35.3
107.6
145.9
Interior
(55.8)
(112.6)
(149.6)
(138.8)
Segment earnings
$ 86.2
(6.1)
$
$ 381.0
177.0
$
Corporate and geographic headquarters and
elimination of intercompany activity
(57.4)
(50.2)
(184.8)
(154.5)
Income (loss) before goodwill impairment charge,
interest, other expense and income taxes
$ 28.8
$ (56.3)
$ 196.2
$ 22.5
Goodwill impairment charge
-
670.0
2.9
670.0
Interest expense
56.6
45.1
157.5
138.1
Other expense, net
38.1
16.4
55.4
55.5
Loss before income taxes and cumulative effect
of a change in accounting principle
$ (65.9)
$ (787.8)
$ (19.6)
$ (841.1)
Three Months
Nine Months
35
Non-GAAP Financial Information
Three Months Q3 2006
Three Months Q3 2005
Electronic and
Electronic and
(in millions)
Seating
Electrical
Interior
Seating
Electrical
Interior
Segment earnings
125.6
$
16.4
$
(55.8)
$
71.2
$
35.3
$
(112.6)
$
Fixed asset impairment charges
-
-
-
-
-
73.8
Costs related to restrucuting actions
7.8
7.1
1.9
7.2
9.7
14.9
Litigation charges
-
-
-
(1.7)
-
-
Adjusted segment earnings
133.4
$
23.5
$
(53.9)
$
76.7
$
45.0
$
(23.9)
$
Nine Months Q3 2006
Nine Months Q3 2005
Electronic and
Electronic and
(in millions)
Seating
Electrical
Interior
Seating
Electrical
Interior
Segment earnings
423.0
$
107.6
$
(149.6)
$
169.9
$
145.9
$
(138.8)
$
Fixed asset impairment charges
-
-
9.2
-
-
73.8
Costs related to restructuring actions
27.8
22.0
10.7
20.1
19.9
18.1
Litigation charges
-
-
-
30.5
-
-
Adjusted segment earnings
450.8
$
129.6
$
(129.7)
$
220.5
$
165.8
$
(46.9)
$
36
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 result of certain risks and uncertainties, including but not limited to, general economic conditions in
the markets
in which the Company operates, including changes in interest rates or currency exchange rates, 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, business realignment 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 and suppliers, raw material costs and availability, the
Company's ability to mitigate the significant impact of increases in raw material, energy and commodity costs, the
outcome of legal or regulatory proceedings to which the
Company is or may become a party, unanticipated changes in
cash flow, including the Company’s ability to align its vendor payment terms with those of its customers, the finalization of
the Company's restructuring strategy, the outcome of various
strategic alternatives being evaluated with respect to its
North American Interior business and other risks described from time to time in the Company's Securities and Exchange
Commission filings. In particular, the Company’s financial
outlook for 2006 and 2007 is based on several factors
including, the Company’s current vehicle production and raw material pricing assumptions. The Company’s actual
financial results could differ materially as a result of significant
changes in these factors. The Company's previously
announced private placement of common stock to affiliates of and funds managed by Carl C. Icahn is subject to certain
conditions. No assurances can be given that the offering will
be consummated on the terms contemplated or at all.
The forward-looking statements in this presentation are made as of the date hereof, and the Company does not assume
any obligation to update, amend or
clarify them to reflect events, new information or circumstances occurring after the
date hereof.
37