Lear reports record third-quarter net sales of US$3.5 billion

Southfield, Michigan, October 17 -- Lear Corporation , the world's largest automotive interior systems supplier, today reported financial results for the third quarter of 2003.

    Third-Quarter Highlights Include: 
    *  Record net sales of US$3.5 billion, up 5% from a year ago 
    *  Net income per share of US$1.10, up 21% from a year ago 
    *  Investment grade credit rating achieved 
    *  Interior Excellence award from DaimlerChrysler

For the third quarter of 2003, Lear posted record net sales of US$3.5 billion and net income of US$76.1 million, or US$1.10 per share. These results compare to net sales of US$3.3 billion and net income of US$61.6 million, or US$0.91 per share, for the third quarter of 2002. Third-quarter net income per share was slightly above guidance, as implementation costs for some of the productivity and facility actions planned to commence in the third quarter will now begin in the fourth quarter.

"We continued our positive momentum by setting a third-quarter sales record, achieving investment grade credit ratings from Standard & Poor's and Fitch and earning an award of recognition from a top customer," said Bob Rossiter, Lear Chairman and Chief Executive Officer.

The 5% increase in net sales from the year-earlier third quarter reflects primarily the addition of new business globally. The favourable impact of a stronger Euro was largely offset by lower vehicle production in North America (down 5%) and in Western Europe (down 5%).

The 21% improvement in third-quarter net income per share compared to the year-earlier period reflects primarily the profit contribution from productivity initiatives, global new business, lower interest expense and a lower corporate tax rate, offset in part by weaker industry production.

For the quarter, free cash flow was US$77 million. (Net cash provided by operating activities was US$102 million; a reconciliation of free cash flow to net cash provided by operating activities is provided in the attached supplemental data page.)

The upgrade by Standard & Poor's Rating Services and the decision by Fitch Ratings to initiate coverage of Lear with an investment grade rating reflect Lear's reduced leverage and solid financial performance amid challenging industry conditions.

"Our focus on customer satisfaction and operational excellence is allowing us to grow our business, strengthen our financial position and deliver value to our shareholders," Rossiter added. "As we move forward, the Lear team will work relentlessly to further improve our quality and operating performance to meet the aggressive targets set by our customers."

Fourth-Quarter and Full-Year 2003 Outlook

For the fourth quarter of 2003, net sales are expected to be approximately US$4.0 billion. The increase from a year ago reflects the addition of new business globally and a stronger Euro, offset by lower vehicle production in Western Europe (down 7%). Net income is expected to be in the range of US$1.75 to US$1.85 per share. Fourth-quarter net income includes the impact of up-front implementation costs of ongoing facility actions which were previously planned to commence in the third quarter. Capital spending is expected to be approximately US$100 million, and free cash flow is forecasted to be about US$75 million. For the fourth quarter, the corporate tax rate is anticipated to be 28%.

For the full year, net sales are expected to be about US$15.5 billion, compared with US$14.4 billion in 2002. This increase reflects the addition of new business globally and a stronger Euro, offset in part by lower vehicle production in North America (down from 16.4 million units last year to approximately 15.9 million units this year) and in Western Europe (down from 16.4 million units to 15.9 million units). Net income is expected to be in the range of US$5.40 to US$5.50 per share. Full-year capital spending is projected to be approximately US$315 million, and free cash flow is anticipated to be slightly above US$400 million.

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 US$14.4 billion in 2002, Lear is the world's largest automotive interior systems supplier. The Company's world-class products are designed, engineered and manufactured by more than 115,000 employees at 280 facilities located in 33 countries.

Lear's news releases and other information, including certain financial and statistical information presented during its periodic earnings conference calls, are available on the Company's website at http://www.lear.com/ . Lear will webcast live its third-quarter earnings conference call through the Investor Relations link at http://www.lear.com/ at 9:00 a.m. (Eastern) on October 17, 2003. In addition, one may access the conference call by dialling +1-800-789-4751 (domestic) or +1-706-679-3323 (international) with the access code number of 1943875. The audio replay will be available two hours following the call at +1-800-642-1687 (domestic) or +1-706-645-9291 (international) with the access code number of 1943875 and will be available until October 24, 2003.

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 news release, the Company has provided information regarding "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 thus, 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 free cash flow to net cash provided by operating activities, see the attached supplemental data page which, together with this press release, has been posted on the Company's website through the Investor Relations link at http://www.lear.com/ .