Lear Announces Aggressive Cost Reduction Actions Targeting $150 Million in Operating Improvements
SOUTHFIELD, Mich., Oct. 15, 2008: Lear Corporation , a leading global supplier of automotive seating systems, electrical distribution systems and electronics products, today announced aggressive cost reduction actions targeting an additional $150 million of improvement in operating performance over the next twelve months.
In light of current market conditions, the Company is implementing comprehensive actions to further reduce structural costs and improve operating results. Additional details of the $150 million operating improvement plan will be provided as part of the Company's third quarter earnings conference call on October 30th. Refer to "Forward-Looking Statements" for additional information.
Major new actions under the profit improvement plan include the following: Reducing program development costs, consistent with the significantly lower production outlook Acceleration of low-cost engineering and sourcing initiatives More targeted investments in growth initiatives, focused on high priority programs Further reductions in procurement, manufacturing, engineering and logistics costs to reflect present business conditions Further census reductions, temporary layoffs and additional thrifting of personnel-related costs Re-timing and selective reductions in restructuring spending Aggressive working capital management and capital spending efficiencies Supply base consolidation and other commercial actions
"We have been very aggressive in reducing our costs as industry production has declined, and we intend to remain well ahead of the curve," commented Bob Rossiter, Lear Chairman, Chief Executive Officer and President. "We have faced challenging conditions before, and each time we have emerged as an even stronger Company. I fully expect the Company to overcome the present challenges as an even more formidable competitor."
Rossiter continued, "Management's strategy is to take all actions necessary to withstand the current industry downturn, maintain our focus on strategic priorities and position the Company for success when industry conditions improve. Longer term, we see global growth in automotive demand, with mature markets expected to recover in 2010 and emerging markets continuing to expand. With our global capabilities, low-cost footprint, superior quality and leading technologies, we are well positioned for success in the future."
In addition, the Company announced that it has drawn $400 million under its revolving credit facility to protect against possible short-term disruptions in the credit markets.
"The profit improvement plan outlined in this release is designed to restore the Company to a level of profitability necessary to preserve our financial flexibility going forward," said Matt Simoncini, Lear Senior Vice President and Chief Financial Officer. "Given the recent volatility in the financial markets, we believe it is also prudent to temporarily increase our cash on hand by borrowing under our revolving credit facility."
At the end of the third quarter Lear had in excess of $500 million in cash. After this revolver borrowing, the Company will have more than $800 million in availability remaining under its revolving credit facility and continues to expect positive free cash flow for 2008.