Lear Provides 2005 Financial Guidance, Increases Sales Backlog and Raises Quarterly Dividend
Southfield, Mich., January 13, 2005 – Lear Corporation [NYSE: LEA]
today provided 2005 financial guidance, announced an increase in its
three-year sales backlog to $3.8 billion and raised its quarterly
dividend by 25% to $0.25 per share.
For 2005, Lear's planning assumption for industry vehicle production
is a range of 15.7 to 16.0 million units in North America and a range of
18.3 to 18.6 million units in Europe, both roughly in line with 2004.
Lear expects record worldwide net sales in 2005 of $17.6 to $18.0
billion, reflecting primarily the addition of new business globally.
Lear anticipates 2005 net income to be in the range of $5.00 to $6.00
per share. Capital spending is forecasted in the range of $425 to $475
million, to support new sales growth. Free cash flow is expected to be
$250 million, which includes the negative impact of changes in customer
payment terms. Lear's effective tax rate is expected to be in the range
of 25% to 27%.
Lear's three-year sales backlog improved by $750 million to $3.8
billion, reflecting the addition of new business globally. The next
quarterly dividend of $0.25 per share is payable on March 14, 2005, to
shareholders of record at the close of business on February 25, 2005.
“Our 2005 outlook reflects another year of record sales, driven by
our commitment to improve product quality and customer satisfaction,
said Bob Rossiter, Lear Chairman and Chief Executive Officer. “We are
working hard to offset the adverse effects of rising raw material prices
and an uncertain production environment, and the increase in our
dividend reflects the company's confidence in the long-term outlook for
Lear's management will discuss the 2005 outlook and related financial
matters in further detail on Thursday, January 13, 2005, at 3:00 p.m.
EST as part of the Auto Analysts of New York 2005 Detroit Auto
Conference. Interested parties can access a live audio webcast of the
presentation at Lear's website at www.lear.com. A replay of the
presentation will be available immediately following the live
presentation and will be archived for one month.
Lear Corporation, a FORTUNE 500 company headquartered in Southfield,
Michigan, USA, focuses on integrating complete automotive interiors,
including seat systems, interior trim and electrical systems. Further
information about Lear and its products is available on the internet at
Use of Non-GAAP Financial Information
The Company has provided a forecast in this news release of “free
cash flow (a non-GAAP financial measure). 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 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 free cash flow for planning
and forecasting in future periods.
Free cash flow should not be considered in isolation or as a
substitute for net income, net cash provided by operating activities or
other cash flow statement data prepared in accordance with GAAP or as a
measure 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, free cash flow, 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 historical free cash flow to net cash
provided by operating activities, see the Auto Analysts of New York 2005
Detroit Auto Conference presentation which, together with this press
release, has been posted on the Company's website at www.lear.com.
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. 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 and fuel prices, 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, fluctuations in foreign exchange rates,
adverse changes in economic conditions or political instability in the
jurisdictions in which the Company operates, 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 Company's ability to
successfully integrate the recently acquired terminals and connectors
operations, 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 press release also contains information on the Company's sales
backlog. The Company's incremental three-year sales backlog reflects:
anticipated net sales from formally awarded new programs, less net sales
from phased-out and cancelled programs. The calculation of backlog
does not reflect customer price reductions on existing or newly-awarded
programs. The three-year 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
major program launches.
In addition, the 2005 per share earnings guidance is based on an
assumed 74 million shares outstanding, including approximately 4.8
million shares related to our outstanding contingent convertible debt.
The forward-looking statements in this press release are made as of
the date hereof, and the Company does not assume any obligation to
Posted on 1/13/2005