R R R.W. Baird 34th Annual Industrial Technology Conference Chicago, Illinois November 9, 2004 world’s leading automotive interior supplier fast forward advance relentlessly 1 1 R Agenda Industry Trends Strategic Evolution Financial Update Q & A 2 2 R Industry Trends 3 3 R Industry Trends Consumers demanding more interior features Automakers focusing on world-class interiors and “Perceptual Quality” Industry progressing toward total interior integration Automotive interiors are the fastest growing segment of the auto industry 4 4 R Top 10 Vehicle Features for Commuters 1. Comfortable seats 2. Automatic transmission 3. Good visibility 4. In-dash CD changer or satellite radio 5. Steering wheel-mounted stereo controls 6. Controlled noise, vibration and handling 7. Good fuel economy 8. Well-designed cup holders and ample storage 9. Two power points and a hands-free voice activated phone system 10. Reasonably compact external size Lear Offers All Desired Interior Solutions of Edmunds.com’s Top Ten Features for Commuters 5 Source: List issued in a press release from Edmunds.com on August 11, 2004. 5 R Priority Emphasis on the Interior “(In the) Interior is where you spend all of your time. It makes total sense to me to want to get it right.” J Mays, Ford “Interiors are an area of huge focus for General Motors.” Bob Lutz, GM “For us, the interior has always been a priority of design.” Helmut Panke, BMW 6 6 R New Emphasis on the Interior in Advertising Volvo XC90 VW Multivan Reconfigurable Seating 7 Nissan Quest 7 R Automotive Industry Moving to Integrated Systems Increasing Supplier Responsibility Dec., 2002 - - Integrated First Total Interior System Design & Development Integrator Program Awarded Co-located to Lear Design D EN TR Mfg. RY Feasibility ST DU Build to IN Print Increasing Systems Complexity Component Sub Sub System System Assembly System Integration 8 8 R Global Growth of Vehicle Sub-Elements 26% Average Annual Growth 2004 - 2009 9% 6% 5% Powertrain Electrical Chassis Interior Interiors are the Fastest Growing Segment 9 Source: 2004 CSM Worldwide, Study 9 R Estimated Size of Total Interior Market* (Global) Global Market (billions) $145 $25 $90 $30 $25 $30 Electrical Distribution $20 Interiors $30 $90 $90 $90 Seats $40 Current Global Add Add Add Cockpits Market Cockpits** Electronics and Electronics A Broader Focus on Cockpits and Electronics Significantly Expands Lear’s Potential Market*** * Based on internal Lear estimates. ** Excludes IP substrate and cockpit electronics, which are included in current global market. 10 *** Please see slide titled “Forward-Looking Statements” at the end of this presentation for further information. 10 R Strategic Evolution 11 11 R Strategic Evolution Going Forward Profitably Grow the Business 1999-2003 Operational Excellence; Reduce Debt Seat Systems to 1994-1999 Total Interior Capability 1990-1994 Seat Components to Seat Systems 12 12 R Lear’s Strategy has Supported Rapid Growth Net Sales (billions) $15.7 $16.0 me co $14.1 $14.4 t In $13.6 Ne 3% $14.0 R 2 $12.4 CAG SALES $12.0 CAGR $10.0 $9.1 20% $7.3 $8.0 $6.2 $6.0 $4.7 $4.0 $3.1 $2.0 $0.0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Net sales have steadily No strategic hole in Lear’s increased since IPO to about product line up $15.7 billion in 2003 Lear ranks 129 among the 18 major acquisitions over Fortune 500 and is the 23rd last decade fastest growing company in the 60% acquisition growth U.S. over the last ten years 40% organic growth 13 13 At the Same Time, R We have Diversified Our Product Mix… 1994 Present* Seats and Seating Components Seating Systems 100% 68% Interior Systems Electronics * Based on 2003 financials. 14 18% 14% 14 R Diversified Our Geographic Mix… 1994 Present* Europe Europe 17% 36% North America Rest of World North America 83% 5% 59% * Based on 2003 financials. 15 15 R And Diversified Our Customer Mix 1994 Present* Extended Ford & GM - Classic Ford & GM Opel, Saab, Volvo, 47% Jaguar and Land Rover Classic Ford & GM 12% 75% DaimlerChrysler BMW All Other Fiat VW All Other Asian PSA GP 25% Renault – Nissan * Based on 2003 financials. 16 16 Going Forward, We have a Focused R Strategy to Grow Our Business Worldwide* Aggressively expand our presence in Asia and with Improve our Asian OEMs business globally structure and grow our market Leverage our leadership share in Europe position in total interiors in North America Profitably Grow and Diversify Our Business Worldwide 17 * Please see slide titled “Forward-Looking Statements” at the end of this presentation for further information. 17 In Asia, R We are Rapidly Expanding Our Presence* China Korea •12 facilities • 2 facilities • 1 engineering center • 1 engineering center • 21 customers • 2 customers • Seats, interiors, electrical •Seats distribution, electronics, IP India Japan • 3 facilities • 3 engineering centers • 1 engineering center • 5 customers • 4 customers • Interior integration • Seats, interior integration Thailand Philippines • 2 facilities • 4 facilities • 5 customers • 1 engineering center • Seats, seat trim, • 7 customers door panels • Electrical distribution 18 * Includes facilities held through joint ventures. 18 We are Rapidly Growing Our Business R in Asia and with Asian Automakers Globally* (millions) ≈$1,700 $1,250 $850 2002 2003 2004 Future Asian Sales About Double from 2002 to 2004; Solid Growth Expected to Continue** * Consolidated and unconsolidated sales. 19 ** Please see slide titled “Forward-Looking Statements” at the end of this presentation for further information. 19 R Financial Update 20 20 R Profitable Global Growth Strategy Industry Focus Interiors are the fastest growing automotive segment Intense focus on improving interiors by all major automakers Lear Opportunity Deliver record sales backlog (supports ≈ 5% + annual growth) Awarded General Motors’ first total interior integrator program Accelerate new product innovations (e.g., IntelliTireTM) Pursue strategic acquisitions (e.g., Grote & Hartmann) Win new business in Asia and with Asian OEMs globally Lear is Well Positioned in the Fastest Growing Segment of the Automotive Industry 21 21 R Infrastructure Cost Reduction Actions Low cost country strategy Selective in-sourcing of value-add components Global Cost Technology Optimization initiatives Leverage Lear’s scale and commonization expertise “Lear Flexible Seat Architecture” 22 22 R Low Cost Manufacturing Capabilities and Engineering Centers Poland – 4 Hungary – 4 Czech Republic – 3 Turkey – 1 Mexico – 24 Slovakia – 1 Romania – 1 India – 1 L China – 2 L LL Thailand – 1 LL L L L L L L L L L Philippines – 4 Honduras – 3 China – 1 India – 1 Africa – 7 Korea – 1 Philippines – 1 23 23 R Electronics / Electrical Market Terminals & Connectors Acquisition Average Wire Harness Composition High quality producer with technical expertise Terminals 40% 60% & Connectors Wiring Improves overall / Assembly competitiveness in electronics / electrical market Provides avenue for growth and customer diversification Wire Harness Terminals & Terminals & Connectors are an Integral Connectors Part of a Wire Harness Assembly 24 24 R Cost Technology Optimization (CTO) Centers Munich, Germany Dearborn, MI Southfield, MI Barcelona, Spain Sao Paulo, Brazil Cebu, Philippines CTO Evaluates All Areas for Cost Reduction 25 25 R Lear Flexible Seat Architecture (LFSA) Modular system that can be packaged in several vehicle environments through the utilization of power and common components Currently on over a dozen programs, totaling nearly 4 million vehicles Benefits Faster implementation timing Reduced development costs and tooling / capital Enhanced comfort and safety features Increased quality and craftsmanship 26 26 R Continuing to Reduce Our Net Debt (billions) 70% $4.0 *** 65% Net Debt /Capital 63% $3.5 $3.4 58% $3.0 $3.0 $2.7 Net Debt Net $2.5 $2.3 46% $2.0 $1.9 $1.5 1999* 2000 2001** 2002** 2003 Lear’s Goal is to Maintain Investment Grade Status * UTA acquisition 5/99 ** Includes ABS debt of $261 million in 2001 and $189 million in 2002 (implemented in 2001). *** Net debt represents total debt plus utilization of our ABS facility, less cash and cash equivalents. Please see slides titled “Use of 27 Non-GAAP Financial Information” and “Forward-Looking Statements” at the end of this presentation for further information. 27 R Alternative Uses of Cash Flow. Where We See Value Creation Invest internally Repurchase in high return shares programs Pursue strategic Increase acquisitions the dividend . While Maintaining a Strong Balance Sheet 28 28 Focused Strategy will Allow Lear to Deliver R Value to its Customers and Shareholders Challenging Automotive Industry Dynamics Overcapacity Fierce competition Production outlook Lear Works in Partnership with Customers to Add Value Focus on quality, customer service, cost and delivery Invest opportunistically in value added growth vehicles Implement aggressive cost efficiency actions / flexible cost structure Maintain strong balance sheet with LBO mentality 29 29 R R ADVANCE RELENTLESSLY™ LEA Listed NYSE www.lear.com 30 30 R Use of 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 “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 is useful to both management and investors in their analysis of the Company’s financial condition. Further, management uses net debt for planning and forecasting in future periods. Net debt should be not considered in isolation or as a substitute for total debt or other balance sheet data prepared in accordance with GAAP or as a measure of profitability or liquidity. 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.