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Newsroom Lear Announces Global Restructuring Plan to Improve Long-Term Competitiveness


SOUTHFIELD, Mich., June 27 /PRNewswire-FirstCall/ -- Lear Corporation (NYSE: LEA) today announced plans to implement a global restructuring plan to address unfavorable automotive industry conditions and position Lear for improved long-term competitiveness and profitability.

The initial phase of restructuring activity will affect five facilities in North America and Europe, as well as certain administrative functions. These actions are the initial phase of a more comprehensive restructuring strategy intended to better align Lear's manufacturing capacity with the changing needs of its customers; eliminate excess capacity and lower operating costs; and streamline Lear's organizational structure. The restructuring will primarily consist of facility consolidations and closures, including the movement of certain manufacturing operations to lower-cost countries, and census reductions.

In connection with the restructuring, Lear expects to incur pre-tax costs of up to $250 million. Such costs will include asset impairment charges and employee severance, as well as other incremental costs resulting from the Company's restructuring activities. The severance and other costs generally represent cash charges, while the asset impairment charges are non-cash. Lear estimates that approximately 80% of the restructuring costs will result in future cash expenditures, although the overall restructuring plan has not been finalized.

Commenting on the restructuring, Bob Rossiter, chairman and chief executive officer of Lear stated, "We are implementing this restructuring plan to improve our overall competitive position in light of extremely challenging industry conditions. While the actions we are taking are difficult, these steps are consistent with our strategy to deliver superior long-term value to our customers and shareholders."

The Company estimates that pre-tax costs of approximately $30 million will be incurred in the second quarter of 2005 in connection with the restructuring, although the actual second quarter impact will depend on the timing of certain actions. The Company currently estimates that a substantial portion of the remaining costs will be incurred in the second half of 2005. In addition, the Company anticipates recording an additional non-cash charge of approximately $17 million in the second quarter of 2005 relating to the impairment of an equity investment in a non-core business that the Company has decided to divest.

Lear will provide revised financial guidance for the remainder of 2005 reflecting the restructuring, as well as other developments, including further customer production cuts affecting several of Lear's high-content platforms and the status of on-going commercial negotiations with several of its customers, when Lear releases its second quarter financial results on July 29, 2005. At that time, Lear will also discuss in more detail the restructuring.

Lear Corporation, a Fortune 500 Company headquartered in Southfield, Mich., USA, focuses on integrating complete automotive interiors, including seat systems, interior trim and electrical systems. With annual net sales of $17 billion in 2004, Lear is one of the world's largest automotive interior systems suppliers. The Company's world-class products are designed, engineered and manufactured by more than 110,000 employees in 34 countries. Further information about Lear and its products is available on the Internet at .

Forward-Looking Statements

This Press Release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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, 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, raw material cost and availability, the Company's ability to mitigate the significant impact of recent 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, the finalization of the restructuring plan referred to above and other risks described from time to time in the Company's Securities and Exchange Commission filings.

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 them.

SOURCE: Lear Corporation

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Posted on 6/27/2005

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