In the first quarter of 2005, light vehicle production in the Triad is expected to decrease by 2%. Currency effects are expected to add 3% to the Company’s revenues (provided that mid-January exchange rates prevail). There will also be three more reporting days in this year’s first quarter than in the first quarter 2004, which should boost sales by approximately 5%. Based on these assumptions and the general growth of the automotive safety market, sales could grow by approximately 12% in the first quarter compared to the same period 2004.
Provided that the effect of higher raw material prices does not exceed $25 million, net, operating margin could reach approximately 8%, i.e. roughly the same level as in the first quarter 2004.
The favorable impact in the first quarter from the change in the number of reporting days will be offset by a corresponding negative effect in the fourth quarter. This adjustment will therefore not have any impact on the full-year results.
During the full year 2005, light vehicle production in the Triad is expected to be flat. Currency effects are expected to add 4% to the Company’s revenues (provided that the mid-January exchange rates prevail). In addition, the Company expects to continue to improve its global market share and to outperform the overall occupant restraint market but not by as much as in the exceptional 2004.
The effective tax rate for 2005 is projected to be on a similar or marginally higher level in than 2004. The Company believes that the rate may be more volatile quarter by quarter than historically. In late 2004, the U.S. Extraterritorial Income (“ETI”) regime was repealed and replacement legislation was enacted. The new legislation is not expected to have a significant impact on the Company’s effective tax rate.
The new U.S. tax legislation also provides for a special one-time repatriation benefit. See Note 4 to the Consolidated Financial Statements included herein for the Company’s preliminary evaluation of the potential impact of this legislation.