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					ab                                                                                                       Global Equity Research

                                                                                                          Americas
 UBS Investment Research
                                                                                                          Automobile Manufacturers
 US Auto Supplier Survey Q1 2010
                                                                                                          Sector Comment



 Industry Leverage Significantly Improved
                                                                                                                                          19 April 2010
    Leverage significantly improved in 2009 downturn
                                                                                                                           www.ubs.com/investmentresearch
 The results of our Q110 Supplier Survey support our view that industry operating
 leverage has dramatically improved in the industry downturn. Suppliers reported
 breakeven N American production of 9.3m significantly above our 11.1m estimate
 and down 9% from 10.2m reported in Q109. Not surprisingly, 51% of supplier                                                       Colin Langan, CFA
 reported that the downturn addressed the excess capacity in their segment, and                                                                      Analyst
                                                                                                                                     colin.langan@ubs.com
 54% expect profit margin expansion over the next two years.
                                                                                                                                            +1-212-713 9949
    Ford most preferred automaker among suppliers                                                                                       Vera Veldkamp
 53% of suppliers describe their relationship with Ford as good. This was the                                                             Associate Analyst
 highest among automakers and was the first time Ford surpassed Toyota and                                                        vera.veldkamp@ubs.com
 Honda. Moreover, the most suppliers, 53%, reported that they would prefer to                                                             +1-212-713 8593
 grow their Ford business, likely reflecting positively on Ford’s growth outlook.

     Industry distress not over; consolidation still expected
 Despite the significant improvements in N American production, suppliers still
 reported liquidity issues. Suppliers still expect 9% of the industry to go out of
 business by the end of the year. Moreover, 43% of suppliers reported difficulty
 obtaining components from distressed sub-suppliers. Supplier failures present a
 share opportunity for well capitalized suppliers. That said, 43% of suppliers expect
 that most of the industry consolidation to be voluntary (vs. bankruptcy/liquidation).

    Maintain Buy ratings on F & LEA and Neutral ratings on JCI & BWA
 We believe well capitalized companies like LEA and JCI will likely benefit from
 remaining distressed suppliers.



 Table 1: Change in Supplier Outlook

                                          Q109         Q409          Q110        Y/Y Outlook     Q/Q Outlook

 North American Production                10.1          10.0          10.6

 Breakeven Production                     10.2          9.3           9.3                             -

 Industry Bankruptcy Outlook              20%           11%           9%

 Distressed Suppliers                     47%           53%           43%

 Profit Margin Outlook                    -2%           9%            6%

 Source: UBS Supplier Survey




 This report has been prepared by UBS Securities LLC
 ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 31.
 UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may
 have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making
 their investment decision.
US Auto Supplier Survey Q1 2010 19 April 2010


Contents                                                                                                            page         Colin Langan, CFA
                                                                                                                                                   Analyst
Investment Summary                                                                                                         3       colin.langan@ubs.com
                                                                                                                                          +1-212-713 9949
Results by Product Type                                                                                                    5
                                                                                                                                       Vera Veldkamp
Profile of Survey Participants                                                                                             7             Associate Analyst
   —    Questions 1 to 5: Supplier Profiles .......................................................................7             vera.veldkamp@ubs.com
Liquidity Risk                                                                                                             8             +1-212-713 8593

   —    Question 6A: Breakeven Point .............................................................................8
   —    Question 6B: Production Outlook .........................................................................9
   —    Question 7: Company Bankruptcy Risk ..............................................................10
   —    Question 8: Industry Bankruptcy Risk.................................................................11
   —    Question 9: Distressed Supplier Issues ..............................................................11
Industry Consolidation                                                                                                   13
   —    Question 10: Industry Consolidation Estimates ..................................................13
   —    Question 11: Industry Consolidation Factors ......................................................15
Supplier Performance                                                                                                     16
   —    Question 12: Performance Outlook ....................................................................16
OEM Relationship & Market Outlook                                                                                        18
   —    Question 13: Relationship With OEMs................................................................18
   —    Question 14: Best OEM to Grow Business With .................................................19
   —    Question 15: Industry Overcapacity....................................................................20
   —    Question 16: Effect of R&D Spending Reduction................................................21
   —    Question 17: Threats and Opportunities .............................................................22
   —    Question 18: US Tier 1 Suppliers .......................................................................23
Company Implications                                                                                                     24
   —    Lear (LEA) .........................................................................................................24
   —    Johnson Controls (JCI).......................................................................................24
   —    BorgWarner (BWA) ............................................................................................24
   —    Automakers........................................................................................................24
Appendix                                                                                                                 27




                                                                                                                                                   UBS 2
US Auto Supplier Survey Q1 2010 19 April 2010


Investment Summary
In March, we conducted a quarterly survey of auto suppliers to gain a better
understanding of the current operating environment and what suppliers expect in
the upcoming months. Our report is based on surveys submitted by 68 suppliers.
The primary takeaways from our Q110 survey are:

Leverage improved. The results of our Q110 Supplier Survey support our view
that industry operating leverage has dramatically improved in the downturn.
Suppliers reported breakeven N American production of 9.3m significantly
below our 11.1m estimate and down 9% from 10.2m reported in Q109. Not
surprisingly, 51% of supplier reported that the downturn addressed the excess
capacity in their segment, and 54% expect profit margin expansion over the next
two years. See Charts 1 and 2.

Chart 1:Supplier Breakeven vs. Production Outlook                                    Chart 2: Overcapacity Addressed?

   11.0                                                                               40%                              35%                34%
                                                                             10.6     35%
   10.5                                                                               30%
                 10.2
                                                 10.1                                 25%
   10.0                                                                                             16%
               10.1                                            10.0                   20%                                                                 15%
     9.5                        9.4                                                   15%
                                                 9.6
                                                                                      10%
     9.0                       9.1                              9.3           9.3      5%
                                                                                       0%
     8.5
                                                                                                    Yes,          Yes, somew hat     No, did not     No, little or no
     8.0                                                                                        significantly         reduced      reduce capacity   capacity w as
              Q1 '09          Q2 '09         Q3 '09          Q4 '09       Q1 '10                  reduced             capacity           enough        remov ed
                       Breakev en Point                      Production outlook                  capacity

Source: UBS Supplier Survey                                                          Source: UBS Supplier Survey

Ford most preferred. 53% of suppliers describe their relationship with Ford as
good. This was the highest among automakers and was the first time Ford
surpassed Toyota and Honda. Moreover, the most suppliers, 53%, reported that
they would prefer to grow their business with Ford. Honda was the second most
preferred with 37% wanting to grow their Honda business. See Charts 3 and 4.

Chart 3: Good OEM-Supplier Relationship by Customer                                  Chart 4: Most preferred OEM to Grow Business With

    60%       53%                                                                        60%      53%
                          49%
    50%                                46%             45%                               50%
                                                                42%
                                                                                                                37%
                                                                                         40%
    40%                                                                                                                  32%
                                                                           29%           30%                                       24%       23%
    30%                                                                                                                                               18%
                                                                                         20%
    20%
                                                                                         10%                                                                      5%
    10%
                                                                                          0%
     0%                                                                                           Ford      Honda      Toy ota Nissan Hy undai        GM        Chry sle
              Ford       Honda         Toy ota     Nissan        GM      Chry sler                                                                               r-Fiat

Source: UBS Supplier Survey                                                          Source: UBS Supplier Survey

Industry distress not over. Despite the significant improvements in N
American production, suppliers still reported liquidity issues. Suppliers still

                                                                                                                                                                    UBS 3
US Auto Supplier Survey Q1 2010 19 April 2010


expect 9% of the industry to go out of business by the end of the year. Moreover,
43% of suppliers reported difficulty obtaining components from distressed sub-
suppliers. Suppliers highlighted several challenges as part of the recovery
including rising commodity costs, challenges obtaining financing, and restarting
plants that were shut down in 2009. Supplier failures present a share opportunity
for well capitalized suppliers.

Consolidation still expected, but more voluntary. 43% of suppliers expect
that most of the industry consolidation to be voluntary rather than liquidation
(21%) or bankruptcy (36%). This is consistent with our view that industry
consolidation will increase as part of the recovery. See our October 16, 2009
report, Will Supplier Consolidation Accelerate? for more details.

R&D cuts hurt growth. 87% of suppliers indicated that reductions in R&D
spending that took place during the industry downturn will present a challenge
for future growth. Moreover, 15% consider it will be a ‘significant challenge’
and 42% consider it will be a ‘moderate challenge’.

Suppliers consider the shift toward global platforms an opportunity. 57% of
suppliers consider the shift towards global platforms as the biggest opportunity.
This is interesting, because while the suppliers named to a global platform may
bolster their sales and take advantage of economies of scale, some suppliers will
be left off of these platforms completely (and as a result of platform
consolidation, will not have as many platforms to seek a place on).

Conclusion: Our survey results indicate that suppliers’ sentiment continues to
improve. Though some distress remains, we believe that increasing production
and sales will drive the industry recovery in 2010. We continue to believe that
this is an opportunity for better capitalized suppliers like JCI and LEA. The
survey also points toward positive cultural changes with suppliers at Ford. We
maintain our Buy ratings on F and LEA and our Neutral ratings on JCI and
BWA.




                                                                                    UBS 4
US Auto Supplier Survey Q1 2010 19 April 2010


Results by Product Type
Below we summarize these results and highlight the relevant suppliers; however,
we note that the results of one supplier within a segment can vary significantly
from the segment as a whole. Table 10 in the appendix summarizes the key
results of the survey by product segment.
Liquidity

Best: Seating/interiors and engine/transmission suppliers scored highest on          Chart 5: Liquidity
liquidity metrics. None of the suppliers from these segments indicated a greater
                                                                                              Q309         Q409           Q110
than 50% probability of bankruptcy and only half of them reported problems
                                                                                                                          Seating,
with distressed sub-suppliers.                                                                             Electrical,
                                                                                              Seating,                    Interiors,
                                                                                     Best                  Electronics,
                                                                                              Interiors                   Engine,
                                                                                                           Safety
Companies: JCI, LEA, MGA, VSTN, BWA, FDML, WBC                                                                            Transmn

                                                                                                           Frames,        Frames,
Worst: Similar to our Q409 survey, the frames/structures/exteriors segment                    Engine,
                                                                                     Worst                 Structures,    Structures,
                                                                                              Transmn
scored lowest on liquidity metrics. 11% of suppliers operating in this segment                             Exteriors      Exteriors

reported a greater than 50% probability of bankruptcy and 44% of them reported       Source: UBS Supplier Survey
problems with distressed sub-suppliers.

Companies: MGA, ARM, DAN
Profitability

Best: As in our Q4 survey, the chassis/brakes/wheels segment suppliers ranked        Chart 6: Profitability
first in profitability. Suppliers from this segment indicated low breakeven points
                                                                                              Q309         Q409           Q110
and high expected profit margins. Moreover, a high percentage of them
                                                                                                           Seating,
indicated that the overcapacity issue had been resolved within the segment.                                Interiors;
Industry overcapacity tends to put more pressure on profit margins, thus                                   Engine,        Chassis,
                                                                                     Best     Other        Transmsn;      Brakes,
decreasing profitability.                                                                                  Chassis,       Wheels
                                                                                                           Brakes,
Companies: MGA, SUP, TRW, TEN, FDML, WBC                                                                   Wheels

                                                                                              Air, Fuel,   Air, Fuel,
Worst: Diversified suppliers performed worst on profitability metrics. They          Worst                                Other
                                                                                              Exhaust      Exhaust
reported the lowest expected increase in profit margins over the next two years.
                                                                                     Source: UBS Supplier Survey
Additionally, the majority of them indicated that the overcapacity issue has not
been resolved as a result of industry downturn.

Companies: JCI, MGA, FDML
Growth

Best: Air/fuel/exhaust component suppliers scored highest on growth metrics, a       Chart 7: Growth
significant improvement after ranking last in Q4 and Q3. This segment also
                                                                                              Q309         Q409           Q110
reported high expected capex and R&D spending over the next two years.
                                                                                              Frames,      Frames,
Suppliers of seating/interiors ranked second.                                                                             Air, Fuel,
                                                                                     Best     Strctrs,     Strctrs,
                                                                                                                          Exhaust
                                                                                              Exteriors    Exteriors
Companies: BWA, TEN, VSTN
                                                                                              Air, Fuel,   Air, Fuel,     Engine,
                                                                                     Worst
                                                                                              Exhaust      Exhaust        Transmn
Worst: Suppliers in the engine/transmission segment scored lowest on growth
metrics. They indicated the lowest increase in R&D spending and second lowest        Source: UBS Supplier Surveys
increase in capex, as well as the most serious negative impact of R&D
underinvestment on future growth. Without investments in capex and R&D,
long term growth and market share gains will be difficult to attain.

Companies: BWA, FDML

                                                                                                                                  UBS 5
US Auto Supplier Survey Q1 2010 19 April 2010


Table 6 illustrates which US suppliers compete in the product segments we
surveyed.

Table 2: Supplier Segment Mix

                                                                       Electrical/    Frames/      Engine/      Axle,                   Chassis
                                             Mkt Cap      Seating/     Electronics   Structures/   Trans-    Driveshaft,   Air/ Fuel/   Brakes/
          Company                   TK        ($m)        Interiors      / Safety     Exteriors    mission      4WD        Exhaust      Wheels    Other

BorgWarner                         BWA        4,547                                                 53%         11%          36%

Johnson Controls                    JCI       21,556        45%           18%                                                                     37%

Lear                               LEA        3,455         78%           22%

American Axle & Mfg                AXL         755                                                             100%

ArvinMeritor                       ARM        1,416                                     19%                     60%                      14%       7%

Gentex                            GNTX        2,983                       95%                                                                      5%

Magna                              MGA        7,089         17%           7%            19%         15%                                  20%      22%

Superior Industries                SUP         434                                                                                       100%

TRW Automotive                     TRW        3,724                       30%                        5%         7%                       58%

Tenneco                            TEN        1,474                                                                          70%         30%

Federal Mogul                     FDML        2,013                                                 38%                                  32%      30%

Dana Corp.                         DAN        1,839                                     12%                     71%                               17%

Visteon                           VSTN           3          26%           30%                                                28%                  16%

WABCO Holdings Inc.                WBC        2,059                                                 12%                      18%         59%      11%

Note: Market capitalization is based on April 13, 2010 closing price
Source: Company reports, UBS estimate




                                                                                                                                                     UBS 6
US Auto Supplier Survey Q1 2010 19 April 2010


Profile of Survey Participants
Questions 1 to 5: Supplier Profiles
In order to gain insight into how diverse the population of survey participants is,
                                                                                                                 Chart 8: Responses by Supplier Tier
we asked suppliers about their tier/size, product classification, key customers,
Detroit 3 mix, and North American sales mix.

Results: Responses diversified across industry
                                                                                                                                  Tier 3
Our results include responses from 68 US suppliers. 41% of respondents are                                                                          Tier 1
                                                                                                                                  21%
Tier 1 suppliers, while 38% are Tier 2, and 21% are Tier 3 (see Chart 8). These                                                                     41%
companies supply a diverse range of products (see Chart 9). Two thirds of
respondents (66%) indicated that a Detroit 3 automaker is their largest customer
                                                                                                                                      Tier 2
(see Chart 10). The suppliers are surprisingly diversified, as 70% indicated that
                                                                                                                                      38%
Detroit 3 sales are less than 50% of total sales (see Chart 11). The majority of
respondents are focused on North America. 68% of the suppliers indicated that
over half of sales were in North America (see Chart 12).
                                                                                                                 Source: UBS Supplier Survey


Chart 9: What product classification is best for your business?                   Chart 10: Which automaker is your largest customer?


              Seating/Interio rs        3%                                                                                Chry sler
                                                                                                   Ford                      9%       Toy ota
      Chassis/Brakes/Wheels             4%                                                          23%                                 7%
         Engine/Transmissio n             6%                                                                                                Honda
                                                                                                                                               4%
              A ir/Fuel/Exhaust                10%

 Frames/Structures/Exterio rs                    13%                                                                                            Nissan
  Electrical/Electro nics/Safety                            25%                                                                                  7%
                                                                                                   GM
                          Other                                    38%
                                                                                                  35%                                  Other
                                   0%     10%        20%    30%   40%     50%                                                           15%


Source: UBS Supplier Survey                                                       Source: UBS Supplier Survey

Chart 11: What percentage of business comes from Detroit 3?                       Chart 12: What percentage of your sales are within N America?



                                                                                                                         51% to 75%
           25% to 50%
                                                                                                                             21%
               33%                                                                                      25% to 50%
                               51% to 70%
                                                                      30%                                  22%
                                    18%
                                                                   More than
                                                                  50% Detroit 3
          < 25%                                                                                                                                     76% to 99%
                                                                                               < 25%
           37%                                                                                                   100%                                    40%
                                                                                                10%
                                               71% to 90%
                                                                                                                 7%
                                                  12%



Source: UBS Supplier Survey                                                       Source: UBS Supplier Survey




                                                                                                                                                               UBS 7
US Auto Supplier Survey Q1 2010 19 April 2010


Liquidity Risk
Question 6A: Breakeven Point
We asked survey participants what their current breakeven point was in terms of
North American light vehicle production units.

Result: Average breakeven point is 9.3m, unchanged q/q

The weighted average supplier breakeven point is 9.3m, unchanged q/q and
down 9.3% y/y. We believe that lower breakeven production reflects 2009
restructuring as well as the exit of weak suppliers view bankruptcy. Suppliers
operating in the engine/transmission segment have the highest breakeven point,
while chassis/brakes/wheels suppliers have the lowest (see Chart 16).

Chart 13: Breakeven Point                                                      Chart 14: Average Breakeven Point by Biggest Customer

      >15m               4%                                                          Nissan                                                                    11.8
    14-15m    0%                                                                       Ford                                                       9.6
    13-14m    0%
                                                                                   Chrysler                                                       9.6
    12-13m          2%
                                                                                    Industry                                                    9.3
    11-12m                       9%
                                                                                        GM                                                      9.1
    10-11m                                          18%
                                                                                     Honda                                                8.3
     9-10m                                        16% 8.6m '09 NA Production
      8-9m                                                          27%               Other                                               8.3

       <8m                                                       25%                Toyota                                          7.4

             0%           5%    10%         15%       20%     25%        30%                   0.0    2.0        4.0    6.0         8.0         10.0      12.0         14.0


Source: UBS Supplier Survey                                                    Source: UBS Supplier Survey

Chart 15: Average Breakeven Point by % of Sales to Detroit 3                   Chart 16: Average Breakeven Point by Product Type

                                                                  10.3                 Engine/Transmission                                                            12.0
    10.5
                                                                                Frames/Structures/Ex teriors                                              9.6
    10.0
                                  9.3               9.3                                              Industry                                            9.3
     9.5

                   8.7                                                           Electrical/Electronics/Safety                                           9.2
     9.0

     8.5                                                                                     Air/Fuel/Ex haust                                          9.0

     8.0                                                                                                Other                                           9.0

     7.5                                                                            Chassis/Brakes/Wheels                                               8.8
                  < 25%        25% to 50%     51% to 70%       71% to 90%
                                                                                                                 0.0   2.0    4.0     6.0        8.0 10.0 12.0 14.0


Source: UBS Supplier Survey                                                    Source: UBS Supplier Survey




                                                                                                                                                                         UBS 8
US Auto Supplier Survey Q1 2010 19 April 2010


Question 6B: Production Outlook
We asked survey participants for their outlook on North American light vehicle
production in 2010. Available responses included: less than 8m, 8m to 9m, 9m
to 10m, 10m to 11m, 11m to 12m, 12m to 13m, 13m to 14m, 14m to 15ms, and
more than 15m.

Result: Suppliers forecast 10.6m for 2010, 24% increase y/y

Suppliers on average expect North American light vehicle production to increase                                       Suppliers expect light vehicle
24% y/y to 10.6m in 2010. Nissan suppliers were the most optimistic, expecting                                        production of 10.6 in 2010
an average of 11.8m units, while Honda suppliers were the least optimistic,
expecting 9.3m for production. See Chart 18.

Chart 17: 2010 North American Light Vehicle Production                         Chart 18: 2010 North American Light Vehicle Production
Outlook                                                                        Outlook by Largest Customer

      >15m           4%                                                              Nissan                                                                   11.8
    14-15m     0%                                                                         Ford                                                         10.8
    13-14m     0%                                                                   Industry                                                          10.6
    12-13m                  10%                                                    Detroit 3                                                          10.6
    11-12m                              20%                                               GM                                                          10.6
    10-11m                                                        41%                Toyota                                                           10.5
     9-10m                        14%                                                 Other                                                           10.4
      8-9m           4%                       8.6m '09 NA Production                Chrysler                                                         10.1
       <8m                8%                                                         Honda                                                     9.3

             0%           10%       20%         30%         40%          50%                     0.0          2.0     4.0    6.0         8.0   10.0         12.0      14.0


Source: UBS Supplier Survey                                                    Source: UBS Supplier Survey


74% of suppliers forecasted production above their own breakeven points. This                                         74% of suppliers forecasted production
is the highest percentage since Q109. We believe low breakeven points and                                             above their own breakeven points. This
increasing production expectations are good indicators of a leaner industry in                                        is the highest percentage since Q109
recovery. See Chart 20.

Chart 19: Production Forecast vs. Breakeven Point                              Chart 20:Production Outlook And Breakeven Points

                                                 At breakev en                     11.0
                                                      14%                                                                                                             10.6
                                                                                   10.5
                                                                                                       10.2
                                                                   Abov e                                                          10.1
                                                                                   10.0
                                                                 breakev en                       10.1                                           10.0
                                                                   12%              9.5                               9.4
                                                                                                                                   9.6
                                                                                    9.0                              9.1                             9.3              9.3

                                                                                    8.5
             Below
          breakev en                                                                8.0

             74%                                                                                 Q1 '09             Q2 '09     Q3 '09          Q4 '09              Q1 '10
                                                                                                          Breakev en Point                     Production outlook

Source: UBS Supplier Survey                                                    Source: UBS Supplier Survey




                                                                                                                                                                       UBS 9
US Auto Supplier Survey Q1 2010 19 April 2010


Question 7: Company Bankruptcy Risk
We asked survey participants about the probability of their company going out
of business or declaring bankruptcy within the next year. Available responses
included: ‘less than 10%’, 10-25%, 26-50%, 51-75%, 76-90%, ‘more than
90%’, and ‘in bankruptcy/liquidation’.                                                                                           Chart 21: More Then 50% Probability Of
                                                                                                                                 Bankruptcy by Largest Customer
Result: Lowest bankruptcy risk since Q109

Just 6% of the respondents reported a greater than 50% probability of their                                                               GM                                      13%
company going bankrupt, a decrease from 7% in Q409, 10% in Q309, and 12%
in Q209. GM dependent suppliers reported the highest bankruptcy risk (see                                                                Ford                     7%
Chart 21) as well as suppliers operating in the frames/structures/exteriors
segments (see Chart 23). The highest decreases in bankruptcy risk were reported                                                       Industry                   6%
by frames/structures/exteriors (46% to 11%) as well as chassis/brakes/wheels
(36% to 0%) compared with Q109.                                                                                                                  0%         5%         10%        15%

                                                                                                                                 Source: UBS Supplier Survey


Chart 22: Probability of Going Out of Business or Declaring                                 Chart 23: More Than 50% Probability of Going Out of Business
Bankruptcy Within the Next Year                                                             or Declaring Bankruptcy by Product Type

 In Bankruptcy      0%
                                                                                             Frames/Structures/Ex teriors                                                             11%
         >90%       0%                                                                                                  Other                                          8%
                                          6%
        76-90%        1%                                                                                             Industry                                6%

        51-75%                                                                                Electrical/Electronics/Safety                                  6%
                         4%
                                                                                                             Seating/Interiors     0%
        26-50%           4%
                                                                                                     Engine/Transmission           0%
        10-25%           4%
                                                                                                 Chassis/Brakes/Wheels             0%
         <10%                                                             85%                             Air/Fuel/Ex haust        0%

                 0%           20%         40%           60%         80%         100%                                             0%      2%      4%         6%    8%        10%       12%

Source: UBS Supplier Survey                                                                 Source: UBS Supplier Survey



Chart 24: More Than 50% Probability of Going Out of Business or Declaring Bankruptcy by Product Type

 40%
                                                                                 33%                                                                                  33%
                Q2 '09        Q3 '09           Q4 '09         Q1 '10

 30%
                                23%

 20%
              14%                   14%                  14%                                   15%
                                                                              13%                                     12%                     12%     13%
                                                                                                                         10%                                                 11%11%
                                                                                                    9%                                                      8%
 10%                                                    6%                                                                  7% 6%                 7%
                                                               6%                                             6%

           0%      0% 0%               0% 0%                        0%     0%          0%                0%                                                                  0%
   0%
         Air, Fuel, Ex haust Seating, Interiors          Engine,          Chassis, Brakes,        Electrical,             Industry                  Other             Frames, Strctrs,
                                                        Transmsn              Wheels             Electronics,                                                            Ex teriors
                                                                                                    Safety

Source: UBS Supplier Survey


                                                                                                                                                                                   UBS 10
US Auto Supplier Survey Q1 2010 19 April 2010


Question 8: Industry Bankruptcy Risk
We asked survey participants what percentage of US suppliers they expect to
have declared or will declare bankruptcy by end-2001, and by end-2011.
Available responses included: 0-5%, 6-10%, 11-15%, 16-20%, 21-30%, and
more than 30%.

Result: 9% of suppliers expected to go bankrupt in 2010

The average percentage of companies expected to go bankrupt in 2010 is 9%,
down from 11% in Q409, and 16% in Q309. Decreasing bankruptcy
expectations signals increasing optimism among suppliers and supports an
industry recovery in 2010. Bankruptcy expectations for 2011 are similar to those
for 2010 at 9%.

Chart 25: Percentage of US Suppliers Likely to Declare                       Chart 26: Percentage of Suppliers Expected to Declare
Bankruptcy or Go Out of Business by the End of 2010 and 2011                 Bankruptcy or Go Out Of Business

 45%                 39%                                                         20%
                                                                                          18%
 40%          38%                                                                                      16%               16%
 35%                                                                             15%                                  14%
                           29%
 30%
          24%                                                                                                                            11%
 25%                             21%                                                                                                                    9%
                                                                                 10%                                               9%
 20%                                17%
 15%                                      12%
                                                10%
 10%                                                                              5%
                                                            5%
                                                       3%
   5%                                                                0% 2%
   0%                                                                             0%
           0-5%       6-10%      11-15%   16-20%       21-30%        >30%                  Q1 '09          Q2 '09      Q3 '09       Q4 '09         Q1 '10
                  By the end of 2010            By the end of 2011                            Bankruptcy Risk 2009               Bankruptcy Risk 2010

Source: UBS Supplier Survey                                                  Source: UBS Supplier Survey

Question 9: Distressed Supplier Issues
                                                                                                           Chart 27: Is your company finding it
We asked the survey participants if they find it difficult to get components from                          difficult to get components from
suppliers that are in bankruptcy. Available responses included: ‘Yes, it is a                              suppliers that are in bankruptcy?
significant issue’, ‘Yes, it is an issue’, ‘Yes, it is a minor issue,’ and ‘No’.
                                                                                                                                           B ig
Result: Still risk despite a production increase                                                                                          Issue
                                                                                                                No                          4%
                                                                                                                57%
The percentage of suppliers reporting difficulty obtaining components from
distressed sub-suppliers was 43% in Q110, down from 53% in Q409, and 49%                                                                          Yes
                                                                                                                                                  15%
in Q309. This decrease is in-line with our expectations that increasing
production will gradually decrease liquidity problems of sub-suppliers. Even as
production rises, there could be some residual fallout this year as some suppliers                                                             Small
are unable to finance their working capital needs. We continue to believe that                                                                 Issue
                                                                                                                                                24%
bankruptcies in the space may present a share opportunity for larger, better-
capitalized suppliers.
                                                                                                           Source: UBS Supplier Survey
For the third consecutive quarter, suppliers in the air/fuel/exhaust segment
reported the greatest problems with distressed sub-suppliers, with 86% of
respondents reporting issues (see Chart 28). Although Nissan suppliers have
reported significant problems with sub-suppliers (see Chart 29), we believe that
results were slightly distorted by the small representation of Nissan suppliers in



                                                                                                                                                        UBS 11
US Auto Supplier Survey Q1 2010 19 April 2010


our surveys. No Toyota suppliers reported significant problems, a sharp decline
from 71% in Q4 2009.

Chart 28: Problems With Distressed Suppliers by Product Type                 Chart 29: Problems With Distressed Suppliers by Largest
                                                                             Customer


               Air/Fuel/Ex haust                                     86%          Nissan                                              100%
        Chassis/Brakes/Wheels                                 67%                    Ford                               53%
                Seating/Interiors                      50%                       Chry sler                          50%
           Engine/Transmission                         50%                            GM                          43%
    Frames/Structures/Ex teriors                      44%                        Industry                         43%

                        Industry                     43%                           Honda                    33%

                           Other                36%                                 Other             20%
    Electrical/Electronics/Safety              29%                                Toy ota     0%

                                    0%   20%    40%     60%    80%    100%                   0%    20%      40%         60%   80%   100%     120%


Source: UBS Supplier Survey                                                  Source: UBS Supplier Survey




                                                                                                                                              UBS 12
US Auto Supplier Survey Q1 2010 19 April 2010


Industry Consolidation
Question 10: Industry Consolidation Estimates
We asked survey participants what percentage reduction in the US supply base
they expect to have occurred or will occur by end-2010 and end-2011 due to
industry consolidation. Available responses included: ‘more than 50%’, ’40-
49%’, ’30-39%’, ‘20-29%’, ’10-19%’, ‘5-9%,’ and ‘less than 5%’.

Result: Consolidation expectations continue to decrease

Industry consolidation expectations for 2010 also decreased compared with                      Chart 30: Consolidation Expectations
Q409. On average, suppliers expect 15% of the US supply base to consolidate                    in 2010
by the end of 2010, down from 17% in Q409, and 23% in Q309. These numbers
                                                                                                          23%
are slightly higher than bankruptcy expectations for the same periods. The                      25%
                                                                                                20%                   17%
decline likely reflects ongoing consolidation during this period. We maintain our                                              15%
view that companies with better liquidity and capex should be able to gain                      15%
market share from their distressed peers.                                                       10%
                                                                                                 5%
Chart 31: Consolidation in the US Supply Base                                                    0%
                                                                                                          Q3 '09      Q4 '09   Q1 '10
 40%                   35%                  34%
 35%                                  30%                                                      Source: UBS Supplier Surveys
 30%                          25%
 25%
 20%                                               17%               17%
                14%
 15%      11%
                                                         8%
 10%                                                            5%
  5%                                                                        2%         2% 2%
                                                                                 0%
  0%
             <5%        5% - 9%       10% - 19%    20% - 29%   30% - 39%   40% - 49%   >50%
                                    By the end of 2010            By the end of 2011

Source: UBS Supplier Survey

The diversified suppliers segment expects the greatest amount of consolidation
in 2010 (18%), which is consistent with that sector having the most pessimistic
outlook for the next two years (see Chart 37). Suppliers of the air/fuel/exhaust
segment expect the greatest amount of consolidation in 2011 (19%). See Chart
32.




                                                                                                                                     UBS 13
US Auto Supplier Survey Q1 2010 19 April 2010


Chart 32: Consolidation in the US Supply Base by Product

    24%                                                    2010          2011

              18% 18%                19%
    20%                        18%
                                                15%16%                                          16%
    16%                                                    14% 14%                                                                  14%
                                                                        13% 13%          13%
                                                                                                           11%                11%
    12%
                                                                                                                 9%
     8%

     4%

     0%
                 Other         Air, Fuel,       Av erage    Engine,   Chassis, Brakes,    Electrical,   Seating, Interiors Frames, Strctrs,
                                Ex haust                   Transmsn       Wheels         Electronics,                         Ex teriors
                                                                                           Safety

Source: UBS Supplier Survey




                                                                                                                                           UBS 14
US Auto Supplier Survey Q1 2010 19 April 2010


Question 11: Industry Consolidation Factors
We asked survey participants what will be the biggest factor in the expected
decrease of       the supply     base. Available responses         included:
‘Bankruptcy/liquidation of unprofitable suppliers’, ‘Voluntary industry
consolidation’, and ’Liquidation driven by OEM strategies to reduce their
supply base’.

Result: Voluntary consolidation the biggest factor

The most significant factor, as chosen by 43% of respondents, which will drive
the consolidation of the US supply base is ‘voluntary industry consolidation’.
Liquidation or bankruptcy, either driven by OEMs as a part of supply base
reduction or as a result of weak financial conditions, was indicated by 57% of
respondents. Voluntary consolidation is expected to play the most important role
in the engine/transmission segment (see Chart 33).

Chart 33: Biggest Factor in the Expected Decrease of the Supply Base



          Liquidatio n driven by
           OEM strategies to
                                                                         B ankruptcy /
           reduce their supply
                                                                         liquidatio n o f
                  base
                                                                          unpro fitable
                   21%
                                                                            suppliers
                                                                              36%




              Vo luntary industry
               co nso lidatio n
                     43%




Source: UBS Supplier Survey

Chart 34: Biggest Factors in the Expected Decrease of the Supply Base by Product

           Bankruptcy /liquidation of unprofitable suppliers       Liquidation driv en by OEM strategies to reduce their supply base     Voluntary industry consolidation
 90%
                                                                                      75%
 75%                           67%                                                           67%
                    57%
 60%                                                                                                                                   50%        50%
                                                               44%                                                                                                42%
                                                    38%                                                                   40%                            36%
 45%                                      33%                                                                           32%
               29%                                                         25%                                   28%
 30%                                                    19%                                            22%                                                   21%
           14%
                                                                                                   11%
 15%
                                     0%                                          0%                                                          0%
   0%
         Air, Fuel, Ex haust Chassis, Brakes,        Electrical,              Engine,       Frames, Strctrs,         Other         Seating, Interiors       Industry
                                    Wheels          Electronics,            Transmsn            Ex teriors
                                                       Safety


Source: UBS Supplier Survey




                                                                                                                                                                       UBS 15
US Auto Supplier Survey Q1 2010 19 April 2010


Supplier Performance
Question 12: Performance Outlook
We asked the survey participants how head count, capital spending, R&D
spending, and profit margins are expected to change in their company over the
next two years. Available responses included: significantly increase (>25%),
increase, same, decrease, and significantly decrease (>25%).

Result: Increasing optimism; best outlook since Q109                                                                The greatest changes are expected in
For the fourth consecutive quarter, suppliers’ outlook for the next two years has                                   headcount and capital spending
become more positive. Weighted average changes in headcount (+9%), capital
spending (+7%), and R&D spending (+7%) are the highest they have been since
Q109. The expected increase in profit margins (+6%) is second highest, after the
Q409 outlook of +9%. No respondents believed that there would be a significant
decrease in headcount over the next two years. We believe the increasing
optimism is a result of prior restructuring and a sign of industry recovery.

Chart 35: Likely Changes in Companies in the Next Two Years

    60%          53%
                                                                                                50%
                                          47%                     47%
    50%
                                               40%                   41%
    40%              35%                                                                            35%

    30%

    20%
              7%                        7%                                                                9%
    10%                    4%                                   6%            4%            4%
                                                   3% 3%                           1%                          1%
                                 0%
     0%
                   Head Count           Capital Spending          R&D Spending                  Profit Margins

     Significantly Increase (>25%)      Increase       Same     Decrease           Significantly Decrease (>25%)


Source: UBS Supplier Survey

Chart 36: Likely Changes in Companies in the Next Two Years


    10%                                                                        9%          9%
                                                                7% 6%                            7% 7%
     8%                                                                                                   6%
     6%                                 4%             4%
                                             3%                         3%
     4%
     2%                                           1%

     0%
    -2%                         -1%
                          -2%
    -4%       -2%
    -6%             -4%
                    Q2 '09                   Q3 '09                  Q4 '09                      Q1 '10

                           Head Count        Capital Spending     R&D Spending             Profit Margins

Note: Values are weighted averages based on the midpoint of response ranges.
Source: UBS Supplier Survey




                                                                                                                                                    UBS 16
US Auto Supplier Survey Q1 2010 19 April 2010


On average, suppliers from the seating/interiors segment expect the greatest
increases in capital expenditures (+13%) and profit margins (+13%).
Expectations in this segment improve significantly from Q109 when the
segment ranked second to last. Diversified suppliers, on average, ranked the
lowest among segments, although they were not the most pessimistic in any
category. The chassis/brakes/wheels segment fell to the fifth place from the top
spot in Q409, expecting no increase in capex (0%) and only a 4% increase in
headcount.

Chart 37: Likely Changes in Companies in the Next Two Years by Product Type

                                                             Headcount        CAPEX           R&D        Profit Margins
    16%                            14%
    14%      13%13%       13%                                                                                 13%
    12%                                11%10%            11%     11%            11%
                                                               9%             9%           9%                             9%
    10%                                                                                                           8%
                                                                       7%
     8%               6%
                                                5%                                                                                     6%    5%
                                                                                                    4%
     6%                                                                               4%                                                          4% 5% 4%
                                                                                                                               3% 3%
     4%
     2%
                                                                                                         0%
     0%
             Seating, Interiors   Air, Fuel, Ex haust       Electrical,       Frames, Strctrs,      Chassis, Brakes,      Engine, Transmsn        Other
                                                        Electronics, Safety      Ex teriors              Wheels

Source: UBS Supplier Survey
Note: Values are weighted averages based on the midpoint of response ranges




                                                                                                                                                          UBS 17
US Auto Supplier Survey Q1 2010 19 April 2010


OEM Relationship & Market
Outlook
Question 13: Relationship With OEMs
We asked the survey participants to evaluate their relationships with the major
auto manufacturers.

Result: Ford ranks first for the first time                                                       Chart 38: Current State of OEM-
                                                                                                  Supplier Relationship
For the first time since we began taking this survey in Q109, Ford was ranked
number one for having the best relationships with its suppliers. 53% of
                                                                                                          Good
respondents indicated they have a good relationship with Ford, better than the
                                                                                                           43%
49% for second-ranked Honda, and the 46% for Toyota. In past surveys, either
Toyota or Honda had the best relationships with their suppliers. For the fourth
                                                                                                                                         Fair
consecutive quarter, Chrysler has been ranked as having the worst relationships                                                          42%
with suppliers, not surprising given the company’s restructuring (see Chart 40).                                        Poor
                                                                                                                         15%



                                                                                                  Source: UBS Supplier Survey

Chart 39: Good OEM-Supplier Relationship by Customer                Chart 40: Bad OEM-Supplier Relationship by Customer

    60%                                                      53%        25%                                                              24%
                                                     49%
    50%                           45%       46%
                         42%                                            20%
                                                                                                                                15%
    40%                                                                                                           14%
              29%                                                       15%                            13%
                                                                                            12%
    30%                                                                          10%
                                                                        10%
    20%

    10%                                                                  5%

     0%                                                                  0%
           Chry sler     GM      Nissan    Toy ota   Honda   Ford               Toy ota      GM       Nissan      Ford         Honda   Chry sler


Source: UBS Supplier Survey                                         Source: UBS Supplier Survey




                                                                                                                                           UBS 18
US Auto Supplier Survey Q1 2010 19 April 2010


Question 14: Best OEM to Grow Business With
We asked the survey participants to rank their preference for growing their
business with the major OEMs on a scale of 1 (most preferred) to 7 (least
preferred).

Result: Suppliers would prefer to grow with Ford

Ford was chosen by 53% of suppliers (highest among OEMs) as the preferred
automaker to grow business with. Honda ranked second with 37% of
respondents, while Toyota ranked third with 32%. We believe that Ford’s
improved perception among suppliers is a combination of better coordination
with its suppliers and suppliers’ bullish outlook for Ford’s future growth.
Consistent with the results from question 13, suppliers least prefer to grow their
business with Chrysler and GM.

Chart 41: Most Preferred OEM for Growing Business With

    60%        53%

    50%
                              37%
    40%
                                        32%
    30%                                            24%       23%
                                                                        18%
    20%

    10%                                                                               5%

     0%
               Ford           Honda    Toy ota    Nissan    Hy undai   General     Chry sler-
                                                                       Motors         Fiat


Source: UBS Supplier Survey



Chart 42: Weighted Average Responses for Most Preferred OEM to Grow Business
With

    5.0                                                                               4.6
    4.5
    4.0
                                                                        3.3
    3.5                                                       3.1
                                                   2.8
    3.0                       2.6       2.6
    2.5
               1.9
    2.0
    1.5
    1.0
    0.5
    0.0
              Ford        Toy ota     Honda      Hy undai   Nissan      GM       Chry sler-Fiat


Source: UBS Supplier Survey




                                                                                                  UBS 19
US Auto Supplier Survey Q1 2010 19 April 2010


Question 15: Industry Overcapacity
We asked the survey participants if the industry downturn addressed
overcapacity in their segment. Available responses included: ‘Yes, significantly
reduced capacity’, ‘Yes, somewhat reduced capacity’, ‘No, did not reduce
capacity enough’, ‘No, little or no capacity was removed’.

Result: Diverging opinions on whether overcapacity was addressed

51% of respondents indicated that overcapacity was at least somewhat addressed                                           Chart 43:NA LV Production
by the industry downturn, while 49% reported that it did not reduce capacity
                                                                                                                            20
enough or at all. North American light vehicle production in 2009 was at least
25% lower than annual production in each of the past 25 years. On average,                                                  15
diversified suppliers, as well as suppliers operating in the seating/interiors and                                          10
electrical/electronics/safety segments, believe that there is still some
                                                                                                                            5
overcapacity, while 75% of suppliers of engine/transmission and 67% of
                                                                                                                            0
chassis/brakes/wheels indicated that overcapacity had been addressed in their
segment (see Chart 45).                                                                                                          1985               1995            2005

Chart 44: Did Industry Downturn Address Overcapacity in Your Segment?                                                    Source: Wards, UBS

 40%                                       35%
                                                                   34%
 35%
 30%
 25%
 20%               16%
                                                                                               15%
 15%
 10%
   5%
   0%
            Yes, significantly       Yes, somew hat         No, did not reduce       No, little or no capacity
            reduced capacity        reduced capacity         capacity enough              w as remov ed


Source: UBS Supplier Survey

Chart 45: Did Industry Downturn Address Overcapacity in Your Segment (by Segment)?

     Yes, significantly reduced capacity     Yes, somew hat reduced capacity           No, did not reduce capacity enough             No, little or no capacity w as remov ed
    80%
                                                                                                                                      67%
    70%
    60%                                                                                                    57%
                                      50%50%                                                                                                           50%
    50%
                                                              35%                 33%33%                                                 33%
    40%          32%32%                                    29%                                                   29%
                       24%                              24%                                                                                                25%25%
    30%                                                                        22%
    20%      12%                                                    12%                                            14%
                                                                                             11%
    10%                            0%            0%                                                   0%                         0%            0%                   0%
     0%
                   Other          Seating, Interiors       Electrical,         Frames, Strctrs,       Air, Fuel, Ex haust        Chassis, Brakes,     Engine, Transmsn
                                                       Electronics, Safety        Ex teriors                                          Wheels


Source: UBS Supplier Survey




                                                                                                                                                                       UBS 20
US Auto Supplier Survey Q1 2010 19 April 2010


Question 16: Effect of R&D Spending Reduction
We asked the survey participants if the cut in research and development
spending by many suppliers during the downturn would present a growth
challenge in their segment in the future. Available responses included: ‘No
impact’, ‘Small challenge’, ‘Moderate challenge’, ‘significant challenge’.

Result: R&D spending cut considered a challenge for future growth

The majority of the respondents (87%) believe that the reduction in R&D                                                 Only 13% of suppliers reported that
spending that occurred during the industry downturn will present a challenge for                                        2009 R&D spending cuts would have no
future growth. Moreover, 15% believe it will be a ‘significant challenge’ and                                           impact on future growth
42% think it will be a ‘moderate challenge’. Not surprising, given that higher
investment in R&D is generally positively correlated with higher future revenue,
especially in the technologically advanced industries. Considering that suppliers
expect R&D spending on average to increase 7% in the next two years (as
reported in question 12), we believe this will help the industry recovery.

Chart 46:Effect of R&D Spending Cuts on Future Growth

 45%                                                              42%
 40%
 35%
                                        30%
 30%
 25%
 20%
                                                                                             15%
                   13%
 15%
 10%
   5%
   0%
               No impact           Small challenge       Moderate challenge       Significant challenge


Source: UBS Supplier Survey

Chart 47: Effect of R&D Spending Cuts on Future Growth By Product

              No impact                         Small challenge                         Moderate challenge                                Significant challenge
    80%
                     67%
    70%
    60%                                  50%              50%50%
    50%                                                                                                      44%                 43%
                                                                                                                                                           40%
                 33%                                                               35%
    40%                                                                                                  33%
                                                                                29% 29%                                             29%
                                     25%    25%                                                                                                    24%24%
    30%
    20%                                                                                            11%                     14%          14%                       12%
                                                                             6%
    10%       0%            0%    0%                   0%          0%                                              0%
     0%
            Chassis, Brakes,     Engine, Transmsn     Seating, Interiors       Electrical,          Frames, Strctrs,       Air, Fuel, Ex haust          Other
                   Wheels                                                  Electronics, Safety           Ex teriors


Source: UBS Supplier Survey




                                                                                                                                                                    UBS 21
US Auto Supplier Survey Q1 2010 19 April 2010


Question 17: Threats and Opportunities
We asked the survey participants to rate ‘Shift toward global platforms’, ‘Rising
commodity costs,’ and ‘Low cost competition’ as either a threat or opportunity
on a scale of 1 to 9 with the lowest representing a threat and the highest
representing an opportunity.

Result: Shift to global platforms the biggest opportunity for suppliers

Overall, suppliers consider a shift to global platforms as the biggest opportunity                                                   Low cost competition and rising
and low cost competition and rising commodity costs the biggest threats. This is                                                     commodity costs are still considered
interesting, because while the suppliers that are named to a global platform may                                                     the biggest threats to suppliers
bolster their sales and take advantage of economies of scale, some suppliers will
be left off of these platforms completely (and as a result of platform
consolidation, will not have as many platforms to seek a place on). Rising
commodity costs as well as low cost competition were also ranked as the biggest
threats by respondents of our Q409 Supplier Survey. Rising commodity costs is
the biggest threat to frames/structures/exteriors suppliers while low cost
competition is the biggest threat to diversified suppliers (see Chart 49).

Chart 48:Threats and Opportunities

 30%                                 Avg 5.9                                               Avg 3.5                                                        Avg 3.5
                                                                                                                                                  25%
                                                                                                                                                               24%
 25%                                                                               22%
                                                                             19%                                                           19%
 20%                                 18%         18%                                                 18%
                                                            16%                          16%
                                           13%                                                                                       13%
 15%
                                                                                               10%
                          9%                                                                                                                             9%
 10%                7%
                                6%
                                                                                                           4% 4%                                                     4% 4%
   5%       3%                                                                                                       3% 3%
                                                                                                                                                                             0%
   0%
                     Shift tow ard global platforms                                      Rising commodity costs                                    Low cost competition

                                        1Threat          2              3          4           5 Neither         6         7         8        9 Opportunity


Source: UBS Supplier Survey

Chart 49: Threat and Opportunities by Product Type

    8.0
              6.8
                                                                  6.5
    7.0                                 6.0                                                                          5.5                    5.5                       5.6
    6.0                                                                                        5.0
                                                                                                           4.7
    5.0             4.0                                                                                                                                  4.0
                          3.6                  3.9 3.6
    4.0                                                                     3.3 3.5                  3.3                   3.6 3.3                                                3.5
                                                                                                                                                   2.5                      2.4
    3.0
    2.0
    1.0
    0.0
               Electrical,            Air, Fuel, Ex haust    Engine, Transmsn              Chassis, Brakes,                Other           Seating, Interiors        Frames, Strctrs,
           Electronics, Safety                                                                   Wheels                                                                 Ex teriors
                                       Shift tow ard global platforms                       Raising Comodity Costs                       Low cost competition


Source: UBS Supplier Survey




                                                                                                                                                                                        UBS 22
US Auto Supplier Survey Q1 2010 19 April 2010


Question 18: US Tier 1 Suppliers
We asked survey participants what, in their opinion, are the prospects of major
Tier 1 suppliers winning new business. Available responses included: ‘very
good’, ‘good’, ‘fair’, ‘poor’, ‘very poor,’ and ‘N/A’.

Result: Suppliers such as MGA, JCI and TRW

Our survey results indicate that Magna International (MGA), Autoliv (ALV),                                            Chart 50: Rankings for Winning New
Johnson Controls (JCI), and TRW Automotive (TRW) were ranked by                                                       Business
respondents as having the best prospects for winning new business among major                                                     Q1 '10   Q4'09     Q3'09   Q2 '09
Tier 1 suppliers (see Chart 51). This ranking supports our belief that bigger
                                                                                                                      MGA              1        3        2        2
companies with strong liquidity have a better chance of gaining market share in
                                                                                                                      ALV              2      N/A      N/A     N/A
a distressed environment.
                                                                                                                      JCI              3        1        1        1
Chart 51: Prospects of Winning New Business
                                                                                                                      TRW              4        6        3        3

                                                                                                                      AXL              5       14       12       15
                                                                                                    74%
 Magna International                          21%
                              5%                                                                                      Tenneco          6        9        6        7
                                                                                           64%
             Autoliv                                  27%                                                             Faurecia         7        4        5        5
                                   9%
                                                                                       60%                            BWA              8        2        4        4
   Johnson Controls                                          34%
                              6%                                                                                      LEA              9        7        8        9
                                                                                       59%
   TRW Automotiv e                                      31%                                                           FDML            10       10       11       10
                                   9%
                                                                                     57%                              GKN             11       12        9       12
      American Ax le                                  29%
                                        14%
                                                                                                                      IAC             12        5        7        8
                                                                                 53%
       Tenneco Inc.                                                        47%
                         0%                                                                                           ARM             13       13       10       13
                                                                               50%
           Faurecia                                                 42%                                               DPH             14       11       14        7
                               8%
                                                                           48%                                        DAN             15        8       13       11
    BorgWarner Inc.                                                     43%
                               9%
                                                                                                                      VSTN            16       15       15       14
                                                                           47%
          Lear Corp.                                        32%
                                              21%                                                                     Source: UBS Supplier Surveys
                                                                           47%
      Federal-Mogul                                          35%
                                          18%
                                                                         45%
      GKN Driv eline                                  27%
                                                      27%
                                                                        44%
                 IAC                                                           50%
                              6%
                                                                    41%
       Arv in Meritor                                        35%
                                                24%
                                                                  38%
              Delphi                                                           49%
                                        13%
                                                                  38%
         Dana Corp.                                                            50%
                                    13%
                                                22%
             Visteon                                   29%
                                                                               49%

                        0%    10%         20%       30%       40%         50%        60%      70%    80%        90%
                               Poor and Very Poor                       Fair               Very Good and Good


Source: UBS Supplier Survey




                                                                                                                                                             UBS 23
US Auto Supplier Survey Q1 2010 19 April 2010


Company Implications
Lear (LEA)
Lear is our favorite name in the supplier space given its strong liquidity, global     Lear is our favorite name in the supplier
diversity, and positive earnings outlook. We believe that Lear’s ability to win        space given its strong liquidity, global
new business has significantly improved having exited bankruptcy with a strong         diversity, and positive earnings outlook
balance sheet.

We maintain our Buy rating on LEA. Our $90 price target is based on 4.9x our
2010E EBITDA. Our 4.9x multiple is below the industry average of 6.9x. We do
not believe this discount is justified as Lear could eventually utilize its stronger
balance sheet to consolidate its business lines and Lear’s electrical distribution
business should benefit from higher vehicle content over.

Johnson Controls (JCI)
We believe that JCI is well positioned to benefit via share gains from distressed      We believe that JCI is well positioned to
competitors. Johnson Controls was ranked second in terms of its ability to gain        gain share from more distressed
market share. Interiors segment suppliers, on average, expect the highest              competitors
increases in capex and profit margins, and the second highest increase in
headcount. We believe that JCI has been investing in their business throughout
the downturn and will have an advantage over their competitors in their ability
to deliver superior technology relative to its peers.

We maintain our Neutral rating on JCI. Our $32 price target is based on 9.6x our
2010E EBITDA. Our 9.6x multiple reflects the value of JCI’s different divisions.
JCI’s premium multiple partially reflects its ability to benefit from industry.

BorgWarner (BWA)
BorgWarner’s largest competitors, such as Honeywell, are conglomerates with            Engine and transmission suppliers
sufficient liquidity. We therefore believe that BWA is not as well positioned to       ranked well on liquidity metrics, but
capitalize via share gains from current industry distress.                             worst on growth metrics

The survey raises concern about the stability of BWA’s suppliers. While
engine/transmission suppliers ranked well on liquidity metrics, the segment
ranked last on growth metrics.

We maintain our Neutral rating and a 12-month price target of $38. Our $38
price target is based on 8.0x 2010E EBITDA estimate. We are bullish on
BWA’s long-term growth opportunities; however, we believe the shares are
fairly valued.

Automakers
On average Honda ranked first, but Ford performed very well on some metrics.
In particular, 53% of suppliers report a good relationship with the OEM and
53% would consider Ford the best OEM to grow business with, the best rating
among automakers in both categories. Moreover, Ford dependent suppliers also
expect to implement the greatest increases in R&D spending (a position shared
with Honda), which will drive future growth. See Table 9.




                                                                                                                         UBS 24
US Auto Supplier Survey Q1 2010 19 April 2010


Table 3: Summary of Results by Automaker

                        Breakeven N    Percent with                  Average Profit     % Report      Best OEM to    Distressed    Overcapacity
                          America      Bankruptcy     Average R&D       Margin         Good OEM      grow business   suppliers        issue
Automaker                Production     Risk >50%       Change          Change        Relationship       with          issue        addressed

Chrysler                         9.6             0%          8.3%             8.3%             29%             5%           50%            67%

Ford                             9.6             7%          7.3%             7.3%             53%            53%           53%            67%

GM                               9.1            13%          6.5%             6.5%             42%            18%           43%            48%

Honda                            8.3             0%          8.3%             8.3%             49%            37%           33%            67%

Nissan                          11.8             0%          -5.0%           -5.0%             45%            24%          100%            80%

Toyota                           7.4             0%          7.5%             7.5%             46%            32%             0%           40%

Total                            9.3             6%          6.1%             6.1%             44%                          43%            52%

Source: UBS Supplier Survey




                                                                                                                                            UBS 25
US Auto Supplier Survey Q1 2010 19 April 2010


Notable Quotables
Obstacles on the road to recovery

   Rising commodity costs represent the greatest risk to recovery. With
   production ramping up, rising commodity costs, combined with an inability
   to recoup those costs at the OEM's, puts our company in jeopardy. (Tier 1,
   GM)

   Obtaining finance is still the largest issue that stops growth and taking new
   business opportunities. (Tier 1, GM)

   We see supply to be a problem as we and others are having problems gearing
   up plants that were shut in 2009. (Tier 3, GM)

   Supply from slow plant re-starts is a problem. (Tier 2, GM)

Other

   Tier 1 doesn’t consider new suppliers in the US, with world-class products
   and services. Old school mentality, especially in the buying ranks. No time,
   few people, not willing to investigate high value globally competitive local
   suppliers. 'No time'. (Tier 2, Chrysler)

   We are a secondary tooling company and supply tools to the automotive
   casting industry. We are seeing increased demand but no concession from
   the OEM's for deliveries. (Tier 3, GM)

   The industry is starting to pick up ever so slowly. It has been positive in
   forcing change to yield more aggressive improvements. (Tier 1, Other)

Acknowledgement: We would like to thank Michal Sobieraj for his
assistance in preparing this research report.




                                                                                   UBS 26
US Auto Supplier Survey Q1 2010 19 April 2010


Appendix
Table 4: Summary of Results by Supplier Product Type

                                                                 Chassis,   Electrical,               Frames,
                                          Score /   Air, Fuel,   Brakes,    Electronic    Engine,   Structures            Seating,
       Supplier Type          Question     Rank     Exhaust      Wheels      s, Safety    Transmn   , Exteriors   Other   Interiors   Average

Liquidity

Percent with Bankruptcy                    Score       0%          0%          6%           0%         11%         8%       0%          6%
                                 7
Risk >50%
                                           Rank         1           1           5            1          7           6        1

Percent with Distress                      Score      86%          67%         29%         50%         44%        36%       50%        43%
                                 9
Supplier Problems
                                           Rank         7           6           1            4          3           2        4

                                           Score       4.0         3.5         3.0          2.5         5.0        4.0       2.5
Relative Liquidity
                                           Rank         5           4           3            1          7           5        1

Profitability

Breakeven N America                        Score       9.0         8.8         9.2         12.0         9.6        9.0       8.5        9.3
                                 6
Production
                                           Rank         3           2           5            7          6           3        1

Average Change in Profit                   Score      5.4%        8.3%        7.2%         6.3%        9.4%       3.5%     12.5%       6.1%
                                 12
Margins
                                           Rank         6           3           4            5          2           7        1

Overcapacity issue                         Score      57%          67%         53%         75%         56%        44%       50%        52%
                                 15
addressed
                                           Rank         3           2           5            1          4           7        6

                                           Score       4.0         2.3         4.7          4.3         4.0        5.7       2.7
Relative Profitability
                                           Rank         3           1           6            5          3           7        2

Growth

                                           Score     10.4%        12.5%       10.7%        3.1%        4.2%       4.5%      6.3%       7.0%
Average Change in R&D            12
                                           Rank         3           1           2            7          6           5        4

                                           Score     10.7%        0.0%        9.3%         3.1%       10.8%       4.0%     12.5%       7.0%
Average Change in Capex          12
                                           Rank         3           7           4            6          2           5        1

Significant/Moderate                       Score      43%          67%         65%         75%         44%        52%       50%        57%
                                 16
negative impact of R&D cut
                                           Rank         1           6           5            7          2           4        3

                                           Score       2.3         4.7         3.7          6.7         3.3        4.7       2.7
Relative Growth Potential
                                           Rank         1           5           4            7          3           5        2

Source: UBS Supplier Survey




                                                                                                                                        UBS 27
US Auto Supplier Survey Q1 2010 19 April 2010


Figure 1: UBS Supplier Survey Page 1




Source: UBS




                                                UBS 28
US Auto Supplier Survey Q1 2010 19 April 2010


Figure 2: UBS Supplier Survey Page 2




Source: UBS




                                                UBS 29
US Auto Supplier Survey Q1 2010 19 April 2010


Figure 3: UBS Supplier Survey Page 3




Source: UBS




                                                UBS 30
US Auto Supplier Survey Q1 2010 19 April 2010




   Statement of Risk

The global auto industry is highly cyclical, vulnerable to sudden shifts in
consumer sentiment, employment, interest rates, and general economic activity.
Auto companies have high fixed costs, and therefore earnings and cash flows
can dramatically change with sudden shifts in vehicle demand. A significant and
sudden decline in demand would increase Ford’s bankruptcy risk as well as
increase the financial distress of its supply base. Ford also faces risks associated
with the impact of discount rates and asset values on legacy obligations. In
addition, the auto industry is highly competitive, and therefore Ford may face
pricing pressure from competitors looking to gain market share. GM in
particular has aggressive market share targets. Moreover, Ford’s North
American operations have historically been dependant on light truck sales, and
therefore the continued shifts toward cars will remain a headwind. Ford also has
said that it is planning on addressing it current balance sheet leverage which
raises the risk of shareholder dilution. Ford Credit’s long term funding plan
depends on Ford returning to investment grade which will likely take several
years. Parts suppliers are further exposed to customer pricing pressure, shifts in
OEM market share, volatile production schedules, and unforeseen changes in
technology. Through its building efficiency segment, JCI is also exposed to non-
residential and residential construction. The recent trends in non-residential
construction have been negative. If these trends continue, JCI may need to revise
its earnings downward. JCI is also exposed to lead, steel, resin, foam chemicals,
copper, and fuel costs. BWA is heavily dependant on the European market, and
in particular diesel engines. Diesel engine mix in Europe has been declining, and
continued mix deterioration will negatively impact BWA’s earnings outlook. In
addition, BWA’s drivetrain segment supplies transfer cases for SUVs in the US
market. Consequently, the continued shift toward cars from light trucks and
SUVs will negatively impact this segment. BWA also is exposed to steel and
nickel pricing. LEA is exposed to fluctuations in the price of steel,
polypropylene, and copper.



   Analyst Certification

Each research analyst primarily responsible for the content of this research
report, in whole or in part, certifies that with respect to each security or issuer
that the analyst covered in this report: (1) all of the views expressed accurately
reflect his or her personal views about those securities or issuers; and (2) no part
of his or her compensation was, is, or will be, directly or indirectly, related to
the specific recommendations or views expressed by that research analyst in the
research report.




                                                                                       UBS 31
US Auto Supplier Survey Q1 2010 19 April 2010


Required Disclosures

This report has been prepared by UBS Securities LLC, an affiliate of UBS AG. UBS AG, its subsidiaries, branches and
affiliates are referred to herein as UBS.

For information on the ways in which UBS manages conflicts and maintains independence of its research product;
historical performance information; and certain additional disclosures concerning UBS research recommendations,
please visit www.ubs.com/disclosures. The figures contained in performance charts refer to the past; past performance is
not a reliable indicator of future results. Additional information will be made available upon request.

UBS Investment Research: Global Equity Rating Allocations
                                                                                                     1                                2
 UBS 12-Month Rating                   Rating Category                                     Coverage                      IB Services
 Buy                                   Buy                                                       50%                             39%
 Neutral                               Hold/Neutral                                              40%                             33%
 Sell                                  Sell                                                      11%                             24%
                                                                                                     3                               4
 UBS Short-Term Rating                 Rating Category                                     Coverage                      IB Services
 Buy                                   Buy                                               less than 1%                            29%
 Sell                                  Sell                                              less than 1%                             0%
1:Percentage of companies under coverage globally within the 12-month rating category.
2:Percentage of companies within the 12-month rating category for which investment banking (IB) services were provided within
the past 12 months.
3:Percentage of companies under coverage globally within the Short-Term rating category.
4:Percentage of companies within the Short-Term rating category for which investment banking (IB) services were provided
within the past 12 months.

Source: UBS. Rating allocations are as of 31 March 2010.
UBS Investment Research: Global Equity Rating Definitions
 UBS 12-Month Rating                   Definition
 Buy                                   FSR is > 6% above the MRA.
 Neutral                               FSR is between -6% and 6% of the MRA.
 Sell                                  FSR is > 6% below the MRA.
 UBS Short-Term Rating                 Definition
                                       Buy: Stock price expected to rise within three months from the time the rating was assigned
 Buy
                                       because of a specific catalyst or event.
                                       Sell: Stock price expected to fall within three months from the time the rating was assigned
 Sell
                                       because of a specific catalyst or event.




                                                                                                                                UBS 32
US Auto Supplier Survey Q1 2010 19 April 2010


KEY DEFINITIONS
 Forecast Stock Return (FSR) is defined as expected percentage price appreciation plus gross dividend yield over the next 12
months.
 Market Return Assumption (MRA) is defined as the one-year local market interest rate plus 5% (a proxy for, and not a
forecast of, the equity risk premium).
 Under Review (UR) Stocks may be flagged as UR by the analyst, indicating that the stock's price target and/or rating are
subject to possible change in the near term, usually in response to an event that may affect the investment case or valuation.
 Short-Term Ratings reflect the expected near-term (up to three months) performance of the stock and do not reflect any
change in the fundamental view or investment case.
Equity Price Targets have an investment horizon of 12 months.

EXCEPTIONS AND SPECIAL CASES
UK and European Investment Fund ratings and definitions are: Buy: Positive on factors such as structure, management,
performance record, discount; Neutral: Neutral on factors such as structure, management, performance record, discount; Sell:
Negative on factors such as structure, management, performance record, discount.
Core Banding Exceptions (CBE): Exceptions to the standard +/-6% bands may be granted by the Investment Review
Committee (IRC). Factors considered by the IRC include the stock's volatility and the credit spread of the respective company's
debt. As a result, stocks deemed to be very high or low risk may be subject to higher or lower bands as they relate to the rating.
When such exceptions apply, they will be identified in the Company Disclosures table in the relevant research piece.



Research analysts contributing to this report who are employed by any non-US affiliate of UBS Securities LLC are not
registered/qualified as research analysts with the NASD and NYSE and therefore are not subject to the restrictions contained in
the NASD and NYSE rules on communications with a subject company, public appearances, and trading securities held by a
research analyst account. The name of each affiliate and analyst employed by that affiliate contributing to this report, if any,
follows.
UBS Securities LLC: Colin Langan, CFA; Vera Veldkamp.


Company Disclosures
 Company Name                                   Reuters    12-mo rating Short-term rating               Price         Price date
                  16
 BorgWarner Inc.                                 BWA.N          Neutral              N/A             US$38.35        16 Apr 2010
                2, 4, 6a, 6b, 6c, 7, 14, 16
 Ford Motor Co.                                      F.N           Buy               N/A             US$13.42        16 Apr 2010
                              16, 22
 Johnson Controls Inc.                             JCI.N        Neutral              N/A             US$32.69        16 Apr 2010
                    2, 4, 5, 6c, 16
 Lear Corporation                                 LEA.N            Buy                N/A            US$83.02        16 Apr 2010
Source: UBS. All prices as of local market close.
Ratings in this table are the most current published ratings prior to this report. They may be more recent than the stock pricing
date

2.      UBS AG, its affiliates or subsidiaries has acted as manager/co-manager in the underwriting or placement of securities of
        this company/entity or one of its affiliates within the past 12 months.
4.      Within the past 12 months, UBS AG, its affiliates or subsidiaries has received compensation for investment banking
        services from this company/entity.
5.      UBS AG, its affiliates or subsidiaries expect to receive or intend to seek compensation for investment banking services
        from this company/entity within the next three months.
6a.     This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and investment banking
        services are being, or have been, provided.
6b.     This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-investment
        banking securities-related services are being, or have been, provided.
6c.     This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-securities
        services are being, or have been, provided.
7.      Within the past 12 months, UBS Securities LLC has received compensation for products and services other than
        investment banking services from this company/entity.
14.     UBS Limited acts as broker to this company.
16.     UBS Securities LLC makes a market in the securities and/or ADRs of this company.



                                                                                                                             UBS 33
US Auto Supplier Survey Q1 2010 19 April 2010


22.    UBS AG, its affiliates or subsidiaries held other significant financial interests in this company/entity as of last month`s end
       (or the prior month`s end if this report is dated less than 10 working days after the most recent month`s end).


Unless otherwise indicated, please refer to the Valuation and Risk sections within the body of this report.

BorgWarner Inc. (US$)
                                                                                                         Price Target (US$)                            Stock Price (US$)
              60.0
              50.0
              40.0
              30.0
              20.0

              10.0
               0.0
                                                         01-Jan-06




                                                                                                           01-Jan-07




                                                                                                                                                            01-Jan-08




                                                                                                                                                                                                            01-Jan-09




                                                                                                                                                                                                                                                            01-Jan-10
                     01-Apr-05


                                 01-Jul-05

                                             01-Oct-05




                                                                     01-Apr-06


                                                                                 01-Jul-06


                                                                                             01-Oct-06




                                                                                                                       01-Apr-07

                                                                                                                                   01-Jul-07


                                                                                                                                               01-Oct-07




                                                                                                                                                                        01-Apr-08

                                                                                                                                                                                    01-Jul-08

                                                                                                                                                                                                01-Oct-08




                                                                                                                                                                                                                        01-Apr-09


                                                                                                                                                                                                                                    01-Jul-09


                                                                                                                                                                                                                                                01-Oct-09




                                                                                                                                                                                                                                                                        01-Apr-10
         Neutral 2
          Neutral
        No Rating


Source: UBS; as of 16 Apr 2010
Ford Motor Co. (US$)
                                                                                                         Price Target (US$)                            Stock Price (US$)

              20.0

              15.0

              10.0

               5.0

               0.0
                     01-Apr-05

                                 01-Jul-05

                                             01-Oct-05

                                                         01-Jan-06

                                                                     01-Apr-06

                                                                                 01-Jul-06

                                                                                             01-Oct-06

                                                                                                           01-Jan-07

                                                                                                                       01-Apr-07

                                                                                                                                   01-Jul-07

                                                                                                                                               01-Oct-07

                                                                                                                                                            01-Jan-08

                                                                                                                                                                        01-Apr-08

                                                                                                                                                                                    01-Jul-08

                                                                                                                                                                                                01-Oct-08

                                                                                                                                                                                                            01-Jan-09

                                                                                                                                                                                                                        01-Apr-09

                                                                                                                                                                                                                                    01-Jul-09

                                                                                                                                                                                                                                                01-Oct-09

                                                                                                                                                                                                                                                            01-Jan-10

                                                                                                                                                                                                                                                                        01-Apr-10
         Neutral 2
              Buy
          Neutral
        No Rating


Source: UBS; as of 16 Apr 2010




                                                                                                                                                                                                                                                                                    UBS 34
US Auto Supplier Survey Q1 2010 19 April 2010


Johnson Controls Inc. (US$)
                                                                                                         Price Target (US$)                            Stock Price (US$)

              50.0

              40.0

              30.0

              20.0

              10.0

               0.0
                     01-Apr-05

                                 01-Jul-05

                                             01-Oct-05

                                                         01-Jan-06

                                                                     01-Apr-06

                                                                                 01-Jul-06

                                                                                             01-Oct-06

                                                                                                           01-Jan-07

                                                                                                                       01-Apr-07

                                                                                                                                   01-Jul-07

                                                                                                                                               01-Oct-07

                                                                                                                                                            01-Jan-08

                                                                                                                                                                        01-Apr-08

                                                                                                                                                                                    01-Jul-08

                                                                                                                                                                                                01-Oct-08

                                                                                                                                                                                                            01-Jan-09

                                                                                                                                                                                                                        01-Apr-09

                                                                                                                                                                                                                                    01-Jul-09

                                                                                                                                                                                                                                                01-Oct-09

                                                                                                                                                                                                                                                            01-Jan-10

                                                                                                                                                                                                                                                                        01-Apr-10
         Neutral 1
              Buy
          Neutral
        No Rating


Source: UBS; as of 16 Apr 2010
Lear Corporation (US$)
                                                                                                         Price Target (US$)                            Stock Price (US$)
              100

               80

               60

               40

               20

                0
                                                         01-Jan-06




                                                                                                           01-Jan-07




                                                                                                                                                            01-Jan-08




                                                                                                                                                                                                            01-Jan-09




                                                                                                                                                                                                                                                            01-Jan-10
                     01-Apr-05


                                 01-Jul-05

                                             01-Oct-05




                                                                     01-Apr-06


                                                                                 01-Jul-06


                                                                                             01-Oct-06




                                                                                                                       01-Apr-07

                                                                                                                                   01-Jul-07


                                                                                                                                               01-Oct-07




                                                                                                                                                                        01-Apr-08

                                                                                                                                                                                    01-Jul-08

                                                                                                                                                                                                01-Oct-08




                                                                                                                                                                                                                        01-Apr-09


                                                                                                                                                                                                                                    01-Jul-09


                                                                                                                                                                                                                                                01-Oct-09




                                                                                                                                                                                                                                                                        01-Apr-10
            Buy 2
         Neutral 2
        Reduce 2
              Buy
          Neutral
        No Rating


Source: UBS; as of 16 Apr 2010


Note: On August 4, 2007 UBS revised its rating system. (See 'UBS Investment Research: Global Equity Rating Definitions' table
for details). From September 9, 2006 through August 3, 2007 the UBS ratings and their definitions were: Buy 1 = FSR is > 6%
above the MRA, higher degree of predictability; Buy 2 = FSR is > 6% above the MRA, lower degree of predictability; Neutral 1 =
FSR is between -6% and 6% of the MRA, higher degree of predictability; Neutral 2 = FSR is between -6% and 6% of the MRA,
lower degree of predictability; Reduce 1 = FSR is > 6% below the MRA, higher degree of predictability; Reduce 2 = FSR is > 6%
below the MRA, lower degree of predictability. The predictability level indicates an analyst's conviction in the FSR. A
predictability level of '1' means that the analyst's estimate of FSR is in the middle of a narrower, or smaller, range of possibilities.
A predictability level of '2' means that the analyst's estimate of FSR is in the middle of a broader, or larger, range of possibilities.
From October 13, 2003 through September 8, 2006 the percentage band criteria used in the rating system was 10%.




                                                                                                                                                                                                                                                                                    UBS 35
US Auto Supplier Survey Q1 2010 19 April 2010




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