Good morning. My name is Keith, and I will be your conference operator today. At this time, I would like to welcome everyone to the Fourth Quarter and Full Year 2014 Earnings Conference Call. [Operator Instructions] Ed Lowenfeld, Vice President, Investor Relations, you may begin your conference.

Thanks Keith. Good morning, everyone and thank you for joining us for our fourth quarter 2014 earnings call. Our earnings press release was filed this morning with the Securities and Exchange Commission, and materials for our earnings call are posted on our website at lear.com through the investor relations link. Today's presenters are Matt Simoncini, President and CEO; and Jeff Vanneste, Chief Financial Officer. Also participating on the call are several other members of Lear's leadership team. Before we begin, I'd like to remind you that during the call, we will be making forward-looking statements that are subject to risks and uncertainties. Some of the factors that could impact our future results are described in the slide titled Investor Information at the beginning of the presentation materials and also in our SEC filings. In addition, we will be referring to certain non-GAAP financial measures. Additional information regarding these measures can be found in the slide labeled Non-GAAP Financial Information at the end of the presentation materials. Slide 3 shows the agenda for today's review. First, Jeff Vanneste will discuss our 2014 financial results and 2015 outlook, then Matt Simoncini will provide some closing comments. Following the formal presentation, we'll be pleased to take your questions. Now please turn to Slide 5, and I'll hand it over to Jeff.

Thanks, Eddie. Lear finished 2014 strong with another quarter of higher sales, core operating earnings and free cash flow. Sales in the fourth quarter were $4.5 billion, up 7% from a year ago, and core operating earnings increased 35% to $280 million. Margins were higher in both of our business segments. In November, Lear took advantage of favorable conditions in the debt market to increase liquidity and reduce our borrowing cost. We increased and extended the maturity of our revolving line of credit and issued debt to pre-fund the Eagle Ottawa acquisition and the anticipated March 2015 redemption of our remaining 8.125% senior notes due in 2020. For the full year sales of $17.7 billion and core operating earnings of $1.05 billion were up 9% and 25% respectively, both significantly in excess of the increase in global industry production of 3%. The significant increase in earnings per share reflects our strong operating performance. 2014 marked the fourth consecutive year of strong cash flow generation and significant return to shareholders. Slide 6 shows vehicle production in our key markets for the fourth quarter and for the full year. In the quarter, 21.8 million vehicles were produced globally, up 1% from 2013. Production increases in China and North America, offset by lower production in Japan, Brazil and Russia. For the full year global vehicle production was a record 85.6 million units, up 3% from 2013. Our major market showed increases with China, North America and Europe up 9%, 5% and 3% respectively. Slide 7 shows our reported financial results for the fourth quarter and full year of 2014. In the fourth quarter, pretax income before equity income, interest, and other expense was $257 million, up $88 million from a year ago. For the full year, pretax income before equity income, interest, and…

Great. Nice job, Jeff. Thank you. As you can tell from our recent financial performance, our balanced strategy is working. 2014 was our fifth consecutive year of higher sales and earnings and we are projecting our sixth year of improvement in 2015. We also continue to generate strong free cash flow. Over the last five years we have generated over $2 billion of free cash flow. In Seating, our sales and margins are growing. Eagle Ottawa provides customer and geographic diversity, improved profitability and a platform for additional sales growth. It will also enhance our ability to differentiate our seats by strengthening our industry-leading key design capabilities, while improving overall comfort and craftsmanship of the seat. In Electrical, we are uniquely positioned to take advantage of the transformation in this segment of the industry as increasing demand for features, fuel efficiencies and connectivity is driving more electrical content than ever before. The investments we made in this segment over the last several years have resulted in market share gains and improved profitability. Slide 18 puts our sales growth into perspective. Since 2010, Lear’s sales have grown in an annual rate of 10% per year, which is more than twice as fast as the global industry production. Both of our business segments are [outpacing] the industry growth rates reflecting the investments we made in the business and key industry trends. Slide 19 highlights some of the major trends that are impacting the auto industry. OEMs increasingly are utilizing global platforms and direct component sourcing. Lear is well positioned to benefit from these trends from our low-cost global footprint and full component capabilities in both product segments. In addition, vehicles are becoming more complex with added features as consumers are demanding additional content and connectivity. Furthermore, vehicles are safer than they have…

Your first question comes from the line of Itay Michaeli from Citi. Your line is open.

Great, thanks. Good morning everyone and congratulations.

Thank you.

So Matt, maybe I will just start off where you just ended up, it seems like revenue out performance has become something of a norm with Lear both in electrical and in seats, if I do my math correctly I think even on your 2015 revenue guidance, excluding the backlog you are looking to kind of outperform global production, so as you look at the business 3 to 5 years out how do you look at the sustainable revenue growth of the entire company either in absolute terms or relative to the industry?

I think we can continue to outpace the industry production in both product segments Itay because of the trends that we talked about, global platforms, direct component sourcing, the content growth in the electrical side. Our footprint allows us to participate in this and take shares. As car companies are looking to have standardized suppliers under global platforms, it is important that you can do the product the same way in every automotive producing region in the world. If you look at Lear in Seating we’re one of two independent seat providers that can do that with all the components. I mean in Electrical we are one of four. So I think it plays into our strength. I think that car companies want to know that a company is committed to being in the business when they are sourcing a program that might be 3 to 5 to 8 years from the time of award, and I think that plays to Lear’s strength as well. So I think this strength continues for the foreseeable future.

Great, and just on the electrical margins, I think now two consecutive quarters north of 13%, maybe you can update on kind of the moving pieces into 2015, what could cause you to be at the 12.5% area versus the 13% in your range, or maybe potentially even higher?

Probably the biggest thing, Itay is always the mix of the products that you’re on, each one has its kind of own financial footprint. It’s important to note in this business segment when we perform in excess of 6.5% to 7%, we have returns well in excess of our cost to capital. So, the business continues to perform well, if we get the right mix and are able to get the efficiencies that we’re driving for in our facilities you’ll see the higher end of the earnings margin range if the mix holds. If we get a little bit weaker in some of our key platforms and you’ll see a little bit south of the margin range, but overall we’re very happy with the progress that the team is making in its segment would expect the performance to continue and we think at a 12.5% to 13% range, we can continue to penetrate and gain some pretty good business.

Great. And just lastly quickly, any updates on commodity costs and how that might be impacting you in 2015, are you seeing any tailwinds there and maybe remind us of what the pass-through and lags might be and that’s all I have?

[Indiscernible] now are providing somewhat of an offset to what we’re seeing in the Euro and if they remain at this level both copper, steel and petroleum, petroleum base chemicals, I think that would provide a little bit of a tailwind and a benefit. Jeff can you take them through the actual kind of indexes.

Just to reiterate on copper, we buy about 150 million pounds, 160 million pounds of copper a year of which commercial agreements cover about 85% of that buy. So, our risk there is about 20 million pounds to 25 million pounds. And we typically buy forward on that risk and brought forward probably just slightly into the second quarter. So, we at tier point, we would anticipate seeing on a year-over-year basis some tailwind with respect to where they see those prices now. [Seals] are bigger buy for us, but our risk there is slightly lower in terms of pure dollars. Again, [Seal] maybe not so much as copper is down, but we should see a tailwind as it relates what [Seal’s] forecast to be right now, but not as significant maybe as maybe the copper.

That’s very helpful, thanks so much guys.

Welcome.

Your next question comes from the line John Murphy from Bank of America Merrill Lynch, your line is open.

Good morning, guys. Just maybe a quick follow up there, your guidance didn’t change much yet, you change your assumption on the euro exchange rate from a buck 20 to buck 15 or 120, 115, is that really just a function of [indiscernible] being an offset or is there something else that you’re able to offset that headwind with?

It was RAW John, it was also some modest changes in the production of certain key car lines as IHS updated their January numbers, we looked at the releases in the inventory levels. So, there was a few other things with the performance in the fourth quarter in certain cases we think is very sustainable heading into the year. So, we took it on the consideration and we’re comfortable, very comfortable with the guidance.

Okay. And Jeff, I mean, you guys have been very proactive and Matt as well on capital markets activities in front of transactions and maturities that would be advantageous to take out, just curious if there is anything else you see on the horizon in the near term or the long term that are going in the capital markets which might provide opportunity to really setup for the long term?

I think with respect to what we’ve done let’s say in the past couple of years in terms of enhancing liquidity, we’re at point right now where I think we’re comfortable with our current liquidity. We upped the revolver couple of months ago, we prefunded Eagle. We had secured some financing to take some bonds that for financing perspective made a lot of sense. There is no bonds in our current future that at least makes sense to take out given the length of time between then and now and because the rate structure on those current bond. So, I think we’re pretty well set absent some acquisitions and we’ve to take a look at those individually, but I think from a financing perspective we’re pretty set for a while.

Okay. And then, if we think about more region that you guys have been executing incredibly well across the business grades, some great upside surprises and a lot of that is Micro it’s not just a function of volumes, is there anything I’m thinking way down the line here, is there anything that you’re doing in your operations that will help you when we eventually see a downturn and I’m not trying to portend this happening in the next year or two that’s way down the line. But, just trying to understand about your flexibility of volumes, start turning in the other direction particularly in North America because that’s a big concern we hear from investors?

First of all, [indiscernible] starts with the footprint and making sure that your component capacity is in low cost and lower cost regions and components and that you’re making sure that you’re not adding excess capacity. If there is a pullback we’ll take advantage of consolidating into the lowest cost facilities. First and foremost it’s always there, secondly it’s to have a plan, a contingency plan and we always have that and we’re always looking at our cost structure, this cost structure, our variable cost structure, look for opportunities where and you bet, there was a pullback that we could move very quickly and I would tell you that it’s been a hallmark in a staple of Lear to perform extremely well in tough times and I would expect that to continue in the event we did see a market correction. As with our balance sheet and the flexibility that we have with the work that the team has done to increase our flexibility and our liquidity we could take advantage of a downturn to maybe consolidate some very good assets at a reasonable price.

Yes, it sounds like great stuff. And then just lastly, as you push more into electronics, I was just curious about the asset intensity there and if you get bigger and gain even more scale overtime will be asset intensity decline and will returns increase to levels it might higher than what you’re at right now or have been historically?

Well, I think obviously higher in terms of the asset intensity businesses are upfront and investment businesses demand higher returns. With our business we’ve a nice balance right now between electrical distribution which is a lower asset intensity and then maybe boxes or terminals connectors. So, I think we’re really happy with the margin profile if we had, if we expand it something that’s more capital intensive or engineering intensive would expect to get the increase of returns. Right now, we really don’t see anything at this point on that horizon, we think the mix will continue, we’re very comfortable playing in the electrical distribution and signal managing space. I think our software capabilities on the junction box plays extremely well to managing the signals. So, I don’t really see a dramatic change in the asset intensity John, but if it became more intense then we probably have to revise our margin profile higher.

Okay, great, thank you very much.

Your next question comes from the line of Patrick Archambault from Goldman Sachs, your line is open.

Oh yes, good morning thanks for taking my question. Really just two on seating, first is, I know this has been more, but with your other major global competitor still seeing a fairly cautious amount of content growth i.e., lack of content growth is there sort of pairing back the contracts they’re going after, how much is this an opportunity for you and is it something that you’re seeing in your backlog as tailwind both in terms of content profitability? And then, I guess, I’ll just ask the second question is just on how you see the landscape for seating between jet and sort of assembly business versus vertically integrated, how is the industry moving and what are the profit implications for you guys of that?

Okay. Starting with the competitive landscape with the uncertainty of the players in the space if you will, it provides an opportunity, it’s hard to quantify what it is still other bumps out there that are able to take on some of the programs, so it’s a very competitive space as you would expect. But when there is uncertainty as far as ownership and whose is going to have a company and the financial viability on programs that are sourced three years before start of production and run typically five to seven years after that it is the concern with the automakers to know who is going to be owning a company that's ultimately going to be doing the production and if all things are equal then it’s obviously a deciding factor. As far as the breakdown between and the evolution of the seating business, I would tell you that they are looking more and more at the business from a breakdown of assembly separately from the component sourcing to direct component sourcing and what it means is you really need to be the leader in each of the key components. You need to have the core competency in all the components because that ultimately helps to design the best seats in the world and it also allows you to provide a certain level of comfort and craftsmanship with the customers’ expat. The seat business unjust in time assembly itself is actually pretty asset like and the margin profiles are little bit lower because of that and it's still very good business even when it's in the low to mid single digit margins because of the returns that typically come through out of program. When you are cutting and selling a seat cover, it's fairly similar assets intensity, it is just in time assembly and that would require a lower margin. The flip side is the foam and the structures business and it would clatters in the tracks that they need – they demand a higher margin. For us, we take that all into consideration when we are cloning. We think the seat business is an outstanding business continuing to grow. Seats are getting more and more content to becoming smart if you will. People touch, feel the seat when they come in, it's a key decision maker or assistant decision making to buy a car and then in the end it's also a safety product as you strap to it. So, we like the segment, we like the seating, we like the components. We are going to continue to invest in it and I think we are going to continue to post really nice returns for our shareholders.

Okay. Thanks Matt. I appreciate the color.

Your next question comes from the line of Joseph Spak from RBC Capital Markets. Your line is open.

Thanks, good morning everyone. Jeff maybe just on FX, is there or would there be any transactional impact, I guess I’m specifically thinking in the electronics business maybe where some of that stuff is shipped a little bit more.

Yes, we operate in a number of different currency pairs in Euro and others and we have hedges in place that reflects the mitigation of a good portion of that risk, but there is always some transactional exposure that you will have. We do a pretty good job I think of trying to mitigate that with the various hedges we have.

Okay, great. And then, Matt I guess, I am just wondering if you could update us on some of the progress in South America where I think you showed some progress through the year. I want to get an update there especially concerning the environment down there?

Yes, it's a tough environment that's for sure, I mean, we have seen production decreases in the Brazilian market and the South American market overall. So, with the currency devaluation wage inflation of production increases, it's a really tough environment, not just for us but for our customers, which ultimately makes some of the commercial remedies that we see harder and harder to get. We expect 2015 to continue to lose money in South America and that's been taken into consideration in our guidance although we expect the losses to narrow. The good news for 2014 is while we continue to lose money in the fourth quarter, we are able to hold the losses tossed and even with a significantly lower sales base. So, we are taking appropriate actions to restructure our footprint. In the meanwhile some of our product and program portfolio is changing over and we think that will help with the profitability, but we don't expect it to be profitable in 2015 in our guidance, but we are making progress in what is a very, very challenging market.

Okay. Great, thanks for the color.

Our next question comes from the line of Daniel Galves from Crédit Suisse. Your line is open.

Good morning, thanks. On the cash return side, Q4 cash return annualized rate is higher than the free cash flow guidance for 2015 and it looks like you still have some excess liquidity above your targets. So is there – do you have any update on kind of how the cash return should trend in 2015 relative to free cash flow and are there any other opportunities maybe in the seating business whether regionally or component wise for inorganic growth?

Yes, let me work in reverse. We are pretty happy with the component capabilities that we have in seating. I don't really see anything out there that’s all that compelling or that is needed in any way. Of course, we are always looking for chances to invest in the business opportunities to invest in the business but we are pretty happy with our capabilities in seating both from the component standpoint and geographic footprint. On the logical side I think there is some things we can do, we are actively out there looking for the right strategic fit that can enhance our ability to move signals around the vehicles that maybe improve our ability to right software, help manage the quest of data that's going through the vehicle. And our priorities always to invest in the business first and take advantage of the market opportunities from cash return to shareholders I think we have flexibility to do both right now for modeling purposes and probably model a consistent type cash return I know that the board is constantly in every meeting discussing the pace the buyback, I think we have been an industry leader in returning cash to shareholders and balancing our capital structure. I don't think anybody real early and big and our return to cash to shareholders especially when we take into consideration the dividends. So, I’d expect it to be a topic for the upcoming board meeting and I expect the pace to be meaningful.

Okay, thanks that's helpful. And then on the bum product side, I appreciate the highlighting of the trends in electrical, are you seeing this type of growth in forward quoting activity and I think you mentioned kind of a 5% content growth number. How should we think about that, is that what a new product has versus the product that's replacing or this that kind of an annual growth in the overall electrical content globally?

Yes, kind of both. I mean, it's always easier to do with the new product design, again as a launch, typically a new design or refresh will have additional content which will drive it, but even in vehicles that are in the mist of production run, they’ll typically favor higher contented vehicles in order to keep up in the competitive landscape with their competitors products. So, you see kind of a content growth in that segment in both new products and existing products on the road and we would expect that trend to continue.

Are there any good examples of a particular product, you don't have to name it, but what type of electrical content growth it has when it does refresh?

Well, I mean, I will tell you what, I would like to answer this way if you will. If you can't think back to the ford focus when it originally started hitting the marketplace and the type of features and power or features that it had, if you look at the modern day focus between the connectivity, the driver interfaces on the infotainment system to the full power windows seats, it's just an incredible amount of content growth and we are seeing that level of content growth in pretty much all the platforms. In entry level A and B platform in emerging markets will eventually evolve into the type of content that consumers are demanding in their cars and we would expect that to continue.

Okay thanks. I appreciate it.

Your next question comes from the line of Colin Langan from UBS. Your line is open.

Great, thanks for taking my questions. You gave the backlog number its 75% seating so a bit more balance than it had been historically. Any color on how much is assembly type business versus component business because I believe some of your competitors are talking about shifting way from the assembly and does that mean some of that may roll on at a longer term lower margin going forward if it's more assembly focused?

We expect the backlog to come in around 10% incremental. It's about the average new business, 10% incremental margins from the variable standpoint. That's kind of been the history of it. The business is largely still I would two-thirds assembly for us. We think the margin profile I think the backlog will help us meet our margin profile for the business segment overall. It's been moving to the mid 60s type range of [indiscernible] so, I don't really see it changing our targets in that segment at all.

Okay. And so you said two-thirds, does that consist with your?

Roughly two-thirds. Yes it's consistent with what we have. I don't see a real change at all in the makeup of the business from assembly to component due to the backlog period.

Okay and then, you highlight directed sourcing as an opportunity, but is your share in components the same as your share of assembly because I thought that actually could be a risk if you are not as strong on the component side?

No, no I think it's about the same at this point, but I think the investments that we made in the seat cover business specifically with eagle Ottawa and Gilford and some of the footprint we put down in Northern Africa and Eastern Europe and Asia and the selling of the covers gives us the competitive advantage and continue to leverage that. That's the prime component example that I have where I think we can continue to penetrate. I think our structures business is outstanding tracks and recliners and seat frames and we have got a really nice footprint in Asia as well as Eastern Europe to do their business and we made massive investments in Mexico. So, I think we are in pretty good shape with our component business and I think it's a huge opportunity.

Okay and just one last question. Can you give any color on the benefit if we see a shift toward trucks given the lower gas prices obviously emerging on the seating said that that could be a pretty large opportunity?

Well, we like large vehicles and we like large vehicles they have three rows of seats and three rows of layered seats. From our standpoint we think it’s an opportunity, we believe those vehicles support a lifestyle that other vehicles can't quite frankly and typically if you look at three rows fully contented SUV, you’re in a range of content that could approach seat alone about $2,000 worth of content and when it's clear content that converts into nice -- that would be probably higher than 10%, probably goes to the 15%. So that could be a real opportunity for us.

And that $2,000 that would compare to what on like the compact car kind of like?

I think a better car might be a pickup truck. A pickup truck seating around 1000 to 1200 type average seating depending if it's a crew cab or just a regular one row seat. On a compact, I don't know maybe $500 on average AB platform something like that.

Okay. Alright thank you very much.

Your next question comes from the line of Ryan Brinkman from JP Morgan. Your line is open.

Hi, this is [Samik] here on behalf of Ryan. Thanks for taking the question. So, just firstly wanted to touch on seating. The year-on-year contribution margin when we look at this quarter was roughly 15% higher than what we have seen in few quarters now. So anything to give us a sense of what has changed there this quarter and is this like a more typical execution that we should expect in the coming quarters?

Well, we continue to drive efficiencies in our plants, digest some of the products portfolio changes that we have incurred over the last 18 months. We are seeing improvements in our business in Europe. We continue to restructure our business. We continue to work with our customers at certain commercial remedies and some of the programs that may not make sense for Lear to do. I think you take it all into consideration and we made a nice improvement in that segment and we would expect that improvement to continue into 2015.

And when you talk about the improvement going into 2015 as well, are there particular, can you give us more details on which particular regions will be driving that in 2015?

North America and Europe mainly, Asia has performed well and we expect it to continue to perform well. We will make improvements in South America, but will remain unprofitable in 2015, but we will get better as the year goes down and we see some product portfolio change over. So, there is literally thousands of inputs into that business segment as you would expect for business of that size and global reach. We have more initiatives and efficiencies and continuous improvement than you can count. I think just overall the business continues to run very well under what is an outstanding leadership team.

Great. And just on the free cash flow for the full year came in quite a bit better than what you are guiding to back at the North American auto show like roughly 503 million I believe versus 450, what you are guiding to. Were those driven by one off factor that will not repeat or is it fair to assume there is some upward pressure on your 2015 free cash flow guidance?

No, I think that generally there is few main items that allowed to come in higher CapEx, which our guidance on CapEx was 450, we came in at 425, so there was a timing mechanism of that. And also the improved earnings of the company, we came in a little bit higher than the midpoint of the guidance and combination of those two is really what led to the cash flow being roughly $50 million higher.

Okay that makes sense. And just lastly, touching on the backlog which you disclosed at the North American auto show as well, now I’m curious what the electrical mix there, did seem to come in a bit on the lower side that what most people would have expected. Just wondering if that’s more of a capital allocation strategy or it’s like available capacity for the next few years at your facilities or is this - and is there potential for that mix in electrical backlog to go up probably in the next few years?

Yes, there is potential for it to go up. It’s not a capital allocation strategy, it’s a business that we’re very high on and have been high on and we think has huge opportunity. It’s more just a function of timing of business sourcing if you will, if you look at what we’ve been able to do over the last four years, we had a component annual growth rate of 15%. So, really it’s more of just timing of program of word as opposed to capital allocation we would expect through the upcoming year to see that number continue to increase.

Great. Thanks for taking our question.

Your next question comes from the line of Brian Johnson from Barclays, your line is open.

Yes, good morning. I guess, two questions. Sort of what changed on the operating sides and to give the guidance and then second I wanted to talk strategically about the balance between JIT and components in the backlog and how Eagle Ottawa contributed maybe more component?

Yes. Really nothing has changed in the operations, I mean, we had a strong quarter of digesting the growth that we had in seating and launching the product to clean. So, I can’t point to one thing Brian, it just, overall of the business is running well, we had strong results in Europe as well as Asia and North American team did a nice job, I think we made some nice improvements in the structures of business in North America. So, it was just a, was a clean and strong worth quarter and we would expect that to continue. As far as the backlog, Eagle added about a $100 million to the backlog over the three year period, the split is as I mentioned on earlier questions about two-thirds assembly, a third component business which is fairly consistent with the business overall and would expect that to continue. I do think though that having the Eagle Ottawa, the Premier automotive leather manufacture in the world as part of the Lear family, we’re going long way to increase the platform for additional growth. I would expect that business segment to grow real quickly.

And there is a pretty big step up from 15 to 16 in the seating line, I mean, what broadly driving that and second is there going to be CapEx or expenses, we need to think about the launch that higher volume of business?

It’s really just timing of business awards, we’ve had a nice run of business wins, we’re continuing to penetrate the market, we’ve had a nice book of business with Audi, we’ve taken on Renegade in Asia, we’ve got proceeding program and a jeep in North America and these are business takeaways for us. As far as the CapEx, we’re pretty comfortable with the CapEx run rate as a percentage of sales, I don’t see a dramatic change at all in any way and the amount of CapEx required to sustain this backlog, Jeff had been running the 2.5%.

Yes, I think, we came in 14, obviously we’re talking on the timing of the CapEx about 24, I think our guidance next year is about 27 driven largely by the incorporation of Eagle which has a little bit of a higher percentage of CapEx to sales. So it will be in a 2.5% range in general.

And just final strategy, you talk a lot about a major competitor in the business, it appear to be taking for them, Toyota recently reorganized not clear if they’re more aggressively going beyond their core customer, are you seeing them buying for any of the seating business in the market that perhaps the other player is passing on or less aggressive on?

Yes, they’re in a marketplace, obviously their strategy is to expand their sales beyond Toyota and car companies after company groups and whether or not they want to source the competitor or not.

Okay, great.

Your next question comes from the line of Rod Lache from Deutsche Bank, your line is open.

Good morning, everybody. A couple, just housekeeping things. First of all, I was hoping you could just confirm the effect of currency on the electrical division year-over-year at the dollar 15 Euro, could it be something like $275 million or something like that?

I think what we’ve said Rod, in general for every penny change in the euro it has from an overall company perspective about $50 million impact of sales.

Alright, but just trying to fine tune the allocation of that between the two divisions?

I think, we have got about half of our sales in that segment are in Europe roughly half, in electrical sales are in Europe plant. So, the number as a percentage or as the ratio is more meaningful for electrical.

Yes, okay. And then, also wanted just to confirm the affect of copper on the margins for the pass through, if we are doing the number right, it would reduce your revenue by maybe $85 million to $90 million, but no impact on EBITD so that would be like 20 basis points accretive to margin, does that sound right to you?

Well, I think in general you are right in terms of the sales line, there is some delayed impact to that but the sales would go down to the extent that the selling price will go down because the cost is going down. So sales will go down. There will be some benefit on copper that's not related to the customer agreement for the piece that technically we are at risk for that that has a lower cost base. So, there should be some combination of sales down, overall cost down that provide some margin improvement.

I guess what I am asking is just using your exposures to 150 million pound to 160 million pound in your direct exposure of 20 million pounds to 25 million pounds it looks like the pass through mechanism kind of just mathematically adds maybe 20 basis points and then the direct exposure might add like 40 basis points to your electrical margin. So, it seems like it’s pretty accretive just mathematically, but you guys are guiding to flat margin. So just maybe what I might be missing from that?

It is accretive, a little bit heavy on the accretion side of it but it does benefit us. If it holds we would expect it continue to benefit us Rod, through the year. There is other things that’s going through and obviously it's not just copper, it's the mix of the program, the mix of wiring versus electronics and [indiscernible] engineering you need to do and the programs that you are winning, pricing environment with the customer efficiencies at the plants, things like that. So, we are comfortable at 12.5% to 13% margins. If we continue to perform it will be at the higher end of the range and if we get some headwinds we will be more towards the middle or lower end.

Okay and then just switching gears on the seating business, can you quantify what the rough tailwind would be from commodities on the year-over-year basis when you look at steel and resin things, just as they are kind of some high level thoughts on that?

Yes, I mean, the steel it's a little bit harder in seating just because it indirect nature of the component cost and steel is in the vast majority of our steel exposures who purchase component right but we are looking at 10 basis points at commodities when you take that into petroleum products and transportation cost into consideration, it's probably about a 10.

Okay does that affect your productivity number that you have to provide back to the OEMs. Obviously it's a pretty direct mechanism in the other division, but how does that affect that?

They want the commodities OEM first. Yes, I mean, it comes in the play. Obviously if your costs are going down on commodities they want to share their net benefit just like when the commodity cost go up, we ask them to sharing those costs. So it's part of the overall pricing discussion Rod.

Okay and my last one is just, how should we be thinking about the restructuring that you guys took in seating and electrical in '14 it was 92 million of restructuring and seating and electrical then you guys guided the restructuring for this year. So is that something that we should be thinking about in terms of mitigating price deflation or is that something that also we should be thinking as contributes some lift to margins into 2015?

It obviously provides a benefit. What we have been seeing is in the early days when we started restructuring we got payback typically at 2.5 years type payback, low hanging fruit has been trimmed if you will Rod. It is going to provide a benefit. We need to continue restructure the business and as far as the terms of restructuring maybe in the bottom of the eight or top of the nine as far as footprint actions there is a couple thorny ones that we need to take care of and I do think what you are seeing is in the growth rates that we have enjoyed in both businesses, yes, it obviously provides a benefit when we do it. We would expect another 24 months if you will of accelerated restructuring especially in light of some of the things we need to do to consolidate Eagle and a couple of facilities in Europe and North America and then we get back to more a normalized type $40 million, $50 million range.

Okay, thank you.

You are welcome.

Your next question comes from the line of Matthew Stover from SIG, your line is open.

Thank you very much for taking my question. Good quarter. Two questions, first one is on seating. The outlook for 50 basis increase in your guidance, but if I pencil my numbers right for Eagle Ottawa, you had accomplished most of that with the inclusion of Eagle Ottawa, so I guess, am I over estimating that impact and because I assume we should also envision margin improvement on the base business?

Yes, I think, Eagle Ottawa should add about two-tenths, 20 basis points to the margin profile Matt, and I think the base business is improving as well. So, we expect it to be slightly in the 6% margin profile this year.

Okay. And then, on the electrical side, that business has been stronger as you guys identified you have strong top line growth really nice margin reflecting that growth and leveraging, restructuring, but if I look at the backlog, and I think about the secular trends implying 5% content growth and if I look at just doing, there will be math in the backlog it kind of implies in 2.5% to 3% per annum growth for the business excluding industry volume, excluding pricing. So, how should we interpret what seems to be a slow in revenue growth and what for the first quarter and as long as I can remember you saw negative year-over-year comp in that business?

Yes. Quite the biggest problem, our headwind that we are facing in that segment is the exposure to the Euro with roughly after business in Europe and I think without that you would see sales growth. I also think it's a cadence issue where digesting the huge amount of growth that we had over the last four years on a component annual growth rate of 15% this business is little, in 2010 was barely $2 billion. So, we’ve more than doubled it in a full year period. I think it's really a cadence of program of words, I do expect it to get back into more normalized growth rates that will exceed the market production growth overall. So, to me we are happy where we’re at, I think the Euro is disguising some of the growth that is happening in that segment both from content and program penetration.

Just to follow on to that if we’re beaten right now in the balance of this year, my guess is you probably can't add to 17, the additions will be to 18 and beyond?

Yes, there might be a small amount in 17, its mainly going to benefit 18 and beyond. What we will see probably in the 17 timeframe is some of debt added content growth on existing platforms.

Okay, thanks guys.

You are welcome.

Your next question comes from the line of Richard Hilgert from Morningstar. Your line is open.

Thanks and I appreciate you taking my question. The prior question about revenue I kind of – it kind of feeds into my question and I think that this might help explain the revenue growth issue a little bit better, when you look at the 17.7 billion that you did in revenue this year, 700 million in new business backlog, a billion in revenue from Eagle Ottawa, you should be coming out at roughly 19.4 billion in annual revenue which would be quite a percentage bump up from last year but the guidance is 18.5 to 19 billion, so I am assuming that with the $0.01 change in the exchange rate to 50 million in revenue that's what bringing up the difference there, is that correct?

Well that’s a big part of it, I mean, roughly $1 billion of it and there is also in this business about 2%, 1.5% to 2% pricing that we work through every year with our customers I think those are the two drivers. There is obviously mixed issues as well that come in roughly, industry is much as the specific car lines but the big – you have the biggest drivers the effects that's disguising the growth if you will.

Okay, great. And then question on the electrical margin, 12.8% this year we saw quarterly run rate hitting over 13% in the last couple of quarters. Since you put the guidance at 12.5% to 13% range, kind of splitting the differences as to where we are at for the full year 2014, was the reason for going slightly below on the guidance to 2014 comparison also a currency issue or if you just kind of peaked out on what electrical margin can do?

No, it's not really a currency issue and that the currency is going to convert at the average price. There may be some modest impact just because of the mix in Europe we have performed fairly well. All in all it’s the mix of the programs within it in the portfolio. I also think if things stabilize and we are able to achieve some of the efficiency gains and monetize some of the commodity prices we’ll be higher in the range. But all in all this is great business at 12.5% to 13% and we think with that rate we can continue penetrate the industry, support our customers cost initiatives and grow the business and we are comfortable at this rate at this point.

Okay, great. Thanks again.

Welcome.

Your next question comes from the line of Ravi Shanker from Morgan Stanley, your line is open.

Thanks. Good morning everyone. Thanks for squeezing me in here. Just a couple of follow ups. Another way of looking at the EPMS business would be I know you guys have always been pretty focused on ROIC may be even over margins and just given these strength margins and EPMS and what the dot line has done in the last couple of quarters slowed down to the 1 to -1 range, is it time to maybe kind of get off some of that margin and try and go after volume growth again or how are you guys thinking about that?

Yes, it’s a good question. I don’t think it’s limiting our growth or demand for acceptable returns and returns in excess of our cost to capital, I don’t think that’s necessarily the baffle and the growth rates Ravi at this point, I think we are aggressive but disciplined in our approach to the market. I’m comfortable that the backlog when you deal with the new business it’s going to provide a type of returns that our shareholders would expect us to provide at this point it has not been a reason why we have not won a program.

But is that something you got us chose to do with something you can do, right?

No, I think one of the focus is of the organization overall is to make discipline investment decisions whether it’s restructuring capital or acquisitions or even new programs and we do keep an eye on return on investments that being said I don’t think that’s the reason why row is impacted because we demanded a fair return on our product investment. I don’t think that’s limiting it at this point, we are aggressive in the marketplace but very disciplined in our demand for acceptable returns.

Understood and just one follow up I apologize I missed this earlier but can you talk about the trajectory of seating margins through the year I mean this year you start in mid 5s and then you said you end up close to 6 and that’s exactly you did, how do we think about next year?

I think it will improve steadily through the year in otherwise seasonality first quarter and third quarter always is a pretty tough quarters, first quarter because it’s usually a lag before, the OEs really ramp up their production and also starts a new year of price downs with your customers before you have a chance necessarily to get the efficiency gain from the supply, supply chain reduction. So first quarter usually starts off a little bit tough, second quarter is usually pretty good quarter based on production, third quarter has the summer shutdown season especially in Europe so that’s all in for the quarter and we usually finish strong. From our standpoint overall we expect to make improvements in the first half and continue those improvements in the second half so steady progress. Not a whole lot different on how we handled 2014.

Very good, thank you.

Welcome.

There are no questions at this time I will turn the call back over to our presenters.

Well, great. Thank you at this point is probably the Lear team, I want to start by welcoming the Eagle Ottawa leadership team and the employees there to the Lear family and tell you all how very, very excited we are to have you as part of our family, the Lear family and for the Lear employees that are on the phone, thank you very much for your hard work and dedication as I said in my email earlier today, these results just don’t happen, they happen when we’re focused, when we make sound business decisions and we work very, very hard. So, on behalf of your senior leadership team, I want to thank each and every one of you, I want to give a special thanks to the finance organization for their work in preparation of year end in the call. So, thank you all, now let’s get back to work.