Financial Review and Product Capabilities
Non-GAAP Information
In addition to the results reported in accordance with GAAP included throughout this presentation, the Company has provided information regarding "pretax income before equity
income, interest, other (income) expense, restructuring costs and other special items" (core operating earnings or adjusted earnings), "adjusted net income attributable to Lear"
(adjusted net income), adjusted diluted net income per share available to Lear common stockholders (adjusted earnings per share) and "free cash flow" (each, a non-GAAP financial
measure). Other (income) expense includes, among other things, non-income related taxes, foreign exchange gains and losses, gains and losses related to certain derivative
instruments and hedging activities, losses on the extinguishment of debt and gains and losses on the disposal of fixed assets. Adjusted net income represents net income attributable
to Lear adjusted for restructuring costs and other special items, including the tax effect thereon. Adjusted earnings per share represents diluted net income per share available to
Lear common stockholders adjusted for the redeemable noncontrolling interest adjustment, restructuring costs and other special items, including the tax effect thereon. Free cash
flow represents net cash provided by operating activities, excluding the settlement of accounts payable in conjunction with the acquisition of Eagle Ottawa, less adjusted capital
expenditures. Adjusted capital expenditures represent capital expenditures, net of related insurance proceeds.
Management believes the non-GAAP financial measures used in this presentation are useful to both management and investors in their analysis of the Company's financial position
and results of operations. In particular, management believes that core operating earnings, adjusted net income and adjusted earnings per share are useful measures in assessing
the Company's financial performance by excluding certain items that are not indicative of the Company's core operating performance or that may obscure trends useful in evaluating
the Company's continuing operating activities. Management also believes that these measures are useful to both management and investors in their analysis of the Company's
results of operations and provide improved comparability between fiscal periods. 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 these non-GAAP financial measures for planning and forecasting future periods.
Core operating earnings, adjusted net income, adjusted earnings per share and free cash flow should not be considered in isolation or as a substitute for net income attributable to
Lear, diluted net income per share available to Lear common stockholders, cash provided by operating activities or other income statement or 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, these non-GAAP financial measures, as determined and presented by the Company, may not be comparable
to related or similarly titled measures reported by other companies.
Set forth on the following slides are reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in
accordance with GAAP.
LEAR
CORPORATION
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