Your SlideShare is downloading. ×
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
2006 Q3 TRW Auto Earnings Presentation
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

2006 Q3 TRW Auto Earnings Presentation

261

Published on

Published in: Economy & Finance
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
261
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
1
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Third Quarter 2006 Financial Results Conference Call Materials November 1, 2006 Materials Included Pages - Press Release 1-8 - Financial Summaries A1-A8 safety. - Presentation P1-P20 TRW Automotive Holdings Corp.
  • 2. News Release TRW Automotive 12001 Tech Center Drive Livonia, MI 48150 Investor Relations Contact: Patrick R. Stobb (734) 855-3140 Media Contact: Manley Ford (734) 855-2616 TRW Automotive Reports Third Quarter 2006 Financial Results; Revises 2006 Full Year Outlook LIVONIA, MICHIGAN, November 1, 2006 — TRW Automotive Holdings Corp. (NYSE: TRW), the global leader in active and passive safety systems, today reported third- quarter 2006 financial results with sales of $3.0 billion, an increase of about 3.4 percent compared to the same period a year ago. Net earnings for the 2006 quarter were $5 million or $0.05 per diluted share, which compares to $10 million or $0.10 per diluted share in the prior year quarter. Comparing the third quarter 2006 results to the previous year, a higher effective tax rate in the current year contributed significantly to the decrease in earnings. The 2006 quarterly tax rate, which is significantly higher than the full year expected rate, was negatively impacted primarily by the Company’s geographic earnings profile in the quarter. “Despite a precipitously more difficult second half operating environment, we are on pace to post profitable operating growth in 2006 as we continue to benefit from our industry leading sales diversification and the underlying strength of our safety product portfolio,” said John Plant, president and chief executive officer. “We’ve been successful at offsetting lower customer production in North America with higher product volumes in Europe, Asia and other parts of the world, which together represent 66% of our sales. However, the unprecedented level of recent production cuts by our major North American customers, along with other industry and operational pressures facing our business, have caused us to scale back our expected operating earnings growth for the year to more moderate levels.” 1
  • 3. Third Quarter 2006 The Company reported third-quarter 2006 sales of $3.0 billion, an increase of $98 million or 3.4 percent over the prior year period. The 2006 quarter benefited from the inclusion of sales from Dalphi Metal Espana, S.A. (“Dalphimetal”), which was acquired in October 2005. Excluding the incremental benefit from Dalphimetal, third-quarter 2006 sales were essentially flat compared to the previous year as the positive effect of foreign currency translation and growth from safety products were offset by lower customer vehicle production volumes in North America and price reductions provided to customers. Operating income for third-quarter 2006 was $82 million, which compares favorably to the prior year result of $73 million. In comparison to the prior year, the current quarter benefited from lower restructuring and asset impairment expenses, savings generated from cost improvement and efficiency programs, the inclusion of Dalphimetal and the favorable resolution of certain patent-related matters. These positive factors were partially offset by pricing provided to customers, the effect of lower North American industry production, commodity inflation and underperformance by the Company’s Automotive Components Segment related primarily to inefficient product launches, supplier issues, ongoing competitive pressures and other factors. Restructuring and asset impairment expenses in the 2006 period were $3 million, which compares to $35 million in 2005. Net interest and securitization expense for the third quarter of 2006 increased to $62 million when compared to the prior year total of $59 million. The year-to-year increase can be attributed to the impact of rising interest rates on the Company’s floating rate debt, which stands at approximately 63% of total debt outstanding, and incremental bank debt assumed at the time of the Dalphimetal acquisition. Together, these factors more than offset interest savings related to past debt reduction and capital structure improvement efforts. Third-quarter 2006 tax expense was $18 million resulting in an effective tax rate of 78 percent, which is above the expected annual rate as a result of the Company’s quarterly geographic earnings profile. The higher tax rate in the quarter contributed significantly to the decrease in net earnings when compared to the prior year results. 2
  • 4. Additionally, tax expense in the 2006 quarter included the positive effect of a reversal of prior tax reserves resulting from a tax interpretation issued by the German tax authorities clarifying the treatment of certain corporate interest deductions and the negative effect of establishing a valuation allowance for the net deferred tax asset of the Company’s Canadian operations. The net impact of these two items was immaterial. The Company reported third-quarter 2006 net earnings of $5 million, or $0.05 per diluted share, which compares to $10 million or $0.10 per diluted share in the 2005 period. Earnings before interest, securitization costs, loss on retirement of debt, taxes, depreciation and amortization (“EBITDA”) were $213 million in the third quarter, which compares to the prior year level of $200 million. Year-to-Date 2006 For the nine-month period ended September 29, 2006, the Company reported sales of $9.9 billion, an increase of $365 million or 3.8 percent compared to prior period sales of $9.5 billion. The current year benefited from the inclusion of sales resulting from the acquisition of Dalphimetal, continued growth from safety products and foreign currency translation, partially offset by lower North American customer vehicle production and price reductions provided to customers. Operating income for the 2006 year-to-date period was $510 million, which represents an increase of $90 million, or 21 percent, over the prior year result of $420 million. The current quarter benefited from a higher level of sales than the prior year, including a beneficial product mix that favored the Company’s Occupant Safety business in the first half of the year. Savings generated from cost improvement and efficiency programs, lower restructuring and asset impairment costs, and the non-recurrence of certain customer solvency and foreign currency related expenses also contributed. These items were partially offset by price reductions provided to customers, the net impact of commodity inflation, and the previously mentioned underperformance by the Automotive Components Segment in the third quarter. Restructuring and asset impairment expenses in the nine month year-to-date 2006 period were $22 million, which compares to $58 million in 2005. 3
  • 5. Net interest and securitization expense for the first nine months of 2006 totaled $184 million, which compares to $173 million in the prior year period. The year-to-year increase can be attributed to the impact of rising interest rates on the Company’s floating rate debt and incremental bank debt assumed at the time of the Dalphimetal acquisition that together more than offset interest savings related to past debt reduction and capital structure improvement efforts. During the year-to-date 2006 period, the Company incurred charges of $57 million related to the tender for the outstanding GBP 94.6 million 10-⅞% bonds of its Lucas Industries Limited subsidiary. Similarly, the Company incurred charges of $7 million in the prior year period for debt retirement expenses associated with the partial redemption of its 10-⅛% senior notes. Tax expense in the first nine months of 2006 was $134 million. The effective tax rate excluding expenses related to the Lucas bond transaction of $57 million (which carry zero tax benefit due to the Company’s tax loss position in the applicable jurisdiction) was 40 percent. The adjusted rate is below the expected annual rate as a result of the Company’s quarterly geographic earnings profile. Year-to-date 2006 net earnings were $143 million, or $1.38 per diluted share, which compares to $145 million or $1.42 per diluted share in the 2005 period. Net earnings in both periods were impacted by certain non-recurring items, which were expenses of $57 million in the 2006 period related to the Lucas bond tender transaction and net income of $10 million in the 2005 period related to the combined effect of a one-time tax benefit and the previously mentioned loss on retirement of debt. Net earnings excluding these items from both periods were $200 million or $1.93 per diluted share in 2006, which compares to $135 million or $1.32 per diluted share in 2005. EBITDA for the first nine months of 2006 was $899 million, which is an 11 percent increase compared to the prior year total of $807 million. The year-to-year increase can be attributed to the higher level of operating income in the 2006 period. 4
  • 6. Capital Structure/Liquidity/Transactions Net cash provided by operating activities during the third quarter and the first nine months of 2006 was $1 million and $252 million, respectively. In the comparable 2005 period, the Company’s cash flow from operating activities was a use of ($90) million in the third quarter and a source of $122 million in the first nine months. Third quarter capital expenditures were $132 million compared to $107 million in 2005. For the year- to-date period, capital expenditures were $334 million, which compares to $281 million in the prior year. As of September 29, 2006, the Company had $3,038 million of debt and $369 million of cash and marketable securities, resulting in net debt (defined as debt less cash and marketable securities) of $2,669 million, which represents an increase of $109 million compared to the year-end 2005 level. The change in net debt includes the $57 million premium associated with the Lucas bond tender transaction. On February 2, 2006, the Company’s wholly owned subsidiary, Lucas Industries Limited, completed the tender for its outstanding GBP 94.6 million 10-⅞% bonds. As a result of the transaction, the Company incurred a $57 million charge for loss on retirement, which reflects the difference between the tender amount and the book value of debt related to the bonds at the time of the transaction. On May 3, 2005, the Company completed the redemption of a portion of its Euro denominated 10-⅛% senior notes, which resulted in pre-tax expenses of $7 million for premiums and associated fees. 2006 Outlook The Company revised its full year guidance downward to account for expected lower customer vehicle production schedules and other factors in the fourth quarter. Accordingly, full year sales are now expected to be approximately $13.0 billion (including fourth quarter sales of approximately $3.1 billion). Net earnings per diluted share are expected to be in the range of $1.25 to $1.50, which includes the previously mentioned $57 million debt retirement expenses. Earnings per diluted share excluding this one-time item are expected to be in the range of $1.80 to $2.05. 5
  • 7. For the year, the Company continues to expect pre-tax restructuring expenses of approximately $50 million. The full year effective tax rate is estimated at approximately 46 percent, which excludes expenses related to the bond tender transaction. Mr. Plant commented, “In the midst of an extremely difficult operating environment, the Company has posted solid operating growth for the year-to-date period, which is a significant achievement for the organization. Additionally, we are making considerable investments to enhance our technology and our global presence in the marketplace, with the ultimate goal of growing the Company profitably and competitively over the long term.” “As we assess the health of the industry environment over the coming year, we anticipate further pressures from lower North American customer volumes, an adverse negative mix change favoring passenger cars over light trucks, and weaker commercial vehicle sales. Our ability to mitigate these challenges, together with rising commodity prices and a weakened supply base, will certainly test our resolve.” Third Quarter 2006 Conference Call The Company will host its third-quarter 2006 conference call at 9:00 a.m. (EST) today, Wednesday, November 1, to discuss financial results and other related matters. To access the conference call, U.S. locations should dial (877) 852-7898, and locations outside the U.S. should dial (706) 634-1095. A replay of the conference call will be available approximately two hours after the conclusion of the call and accessible for approximately one week. To access the replay, U.S. locations should dial (800) 642- 1687, and locations outside the U.S. should dial (706) 645-9291. The replay code is 8563513. A live audio web cast and subsequent replay of the conference call will also be available on the Company’s website at www.trwauto.com/results. Reconciliation to GAAP In addition to GAAP results included within this press release, the Company has provided certain information which is not calculated according to GAAP (“non-GAAP”). Management believes these non-GAAP measures are useful to evaluate operating performance and/or regularly used by security analysts, institutional investors and other interested parties in the evaluation of the Company. 6
  • 8. Non-GAAP measures are not purported to be a substitute for any GAAP measure and as calculated, may not be comparable to other similarly titled measures of other companies. For a reconciliation of non-GAAP measures to the closest GAAP measure and for share amounts used to derive earnings per share, please see the financial schedules that accompany this release. About TRW With 2005 sales of $12.6 billion, TRW Automotive ranks among the world's leading automotive suppliers. Headquartered in Livonia, Michigan, USA, the Company, through its subsidiaries, employs approximately 63,000 people in 26 countries. TRW Automotive products include integrated vehicle control and driver assist systems, braking systems, steering systems, suspension systems, occupant safety systems (seat belts and airbags), electronics, engine components, fastening systems and aftermarket replacement parts and services. All references to quot;TRW Automotivequot;, “TRW” or the quot;Companyquot; in this press release refer to TRW Automotive Holdings Corp. and its subsidiaries, unless otherwise indicated. TRW Automotive news is available on the internet at www.trwauto.com. Forward-Looking Statements This release contains statements that are not statements of historical fact, but instead are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve risks and uncertainties. Our actual results could differ materially from those contained in forward-looking statements made in this release. Such risks, uncertainties and other important factors which could cause our actual results to differ materially from those contained in our forward-looking statements are set forth in our Report on Form 10-K for the fiscal year ended December 31, 2005 (the “10-K”), and our Forms 10-Q for the quarters ended March 31 and June 30, 2006, and include: production cuts or restructuring by our major customers; work stoppages or other labor issues at the facilities of our customers or suppliers; non-performance by, or insolvency of, our suppliers and customers, which may be exacerbated by recent bankruptcies and other pressures within the automotive industry; the inability of our suppliers to deliver products at the scheduled rate and disruptions arising in connection therewith; interest rate risk arising from our variable 7
  • 9. rate indebtedness (which constitutes a majority of the company’s indebtedness), especially in view of the current climate of rising interest rates; loss of market share by domestic vehicle manufacturers; efforts by our customers to consolidate their supply base; severe inflationary pressures impacting the market for commodities; escalating pricing pressures from our customers; our dependence on our largest customers; fluctuations in foreign exchange rates; our substantial leverage; product liability and warranty and recall claims; limitations on flexibility in operating our business contained in our debt agreements; the possibility that our owners' interests will conflict with ours and other risks and uncertainties set forth under quot;Risk Factorsquot; in the 10-K and in our other SEC filings. We do not intend or assume any obligation to update any of these forward-looking statements. ### 8
  • 10. TRW Automotive Holdings Corp. Index of Condensed Consolidated Financial Information Page Consolidated Statements of Operations (unaudited) for the three months ended September 29, 2006 and September 30, 2005....................................A2 Consolidated Statements of Operations (unaudited) for the nine months ended September 29, 2006 and September 30, 2005 .....................................A3 Condensed Consolidated Balance Sheets as of September 29, 2006 (unaudited) and December 31, 2005..............................................................A4 Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 29, 2006 and September 30, 2005 .....................................A5 Reconciliation of GAAP Net Earnings to EBITDA (unaudited) for the three and nine month periods ended September 29, 2006 and September 30, 2005..........A6 Reconciliation of GAAP Net Earnings to Adjusted Earnings (unaudited) for the nine months ended September 29, 2006..............................................................................A7 Reconciliation of GAAP Net Earnings to Adjusted Earnings (unaudited) for the nine months ended September 30, 2005..............................................................................A8 The accompanying unaudited condensed consolidated financial information and reconciliation schedules should be read in conjunction with the TRW Automotive Holdings Corp. Form 10-K for the year ended December 31, 2005 and Forms 10-Q for the quarterly periods ended March 31, 2006 and June 30, 2006, as filed with the United States Securities and Exchange Commission on February 23, 2006, May 4, 2006, and August 2, 2006, respectively.
  • 11. TRW Automotive Holdings Corp. Consolidated Statements of Operations (Unaudited) Three Months Ended (In millions, except per share amounts) September 29, September 30, 2006 2005 Sales ........................................................................................... $ 3,015 $ 2,917 Cost of sales ............................................................................... 2,785 2,664 Gross profit............................................................................ 230 253 Administrative and selling expenses ........................................... 134 135 Amortization of intangible assets ................................................ 9 8 Restructuring charges and asset impairments ............................ 3 35 Other expense — net .................................................................. 2 2 Operating income .................................................................. 82 73 Interest expense — net ............................................................... 62 59 Equity in earnings of affiliates, net of tax..................................... (6) (2) Minority interest, net of tax .......................................................... 3 1 Earnings before income taxes ............................................. 23 15 Income tax expense .................................................................... 18 5 Net earnings ....................................................................... $ 5 $ 10 Basic earnings per share: Earnings per share.................................................................... $ 0.05 $ 0.10 Weighted average shares ......................................................... 100.8 99.1 Diluted earnings per share: Earnings per share.................................................................... $ 0.05 $ 0.10 Weighted average shares ......................................................... 104.0 103.1 A2
  • 12. TRW Automotive Holdings Corp. Consolidated Statements of Operations (Unaudited) Nine Months Ended (In millions, except per share amounts) September 29, September 30, 2006 2005 Sales ........................................................................................... $ 9,872 $ 9,507 Cost of sales................................................................................ 8,923 8,588 Gross profit ............................................................................ 949 919 Administrative and selling expenses ........................................... 403 397 Amortization of intangible assets................................................. 27 24 Restructuring charges and asset impairments ............................ 22 58 Other (income) expense — net ................................................... (13) 20 Operating income .................................................................. 510 420 Interest expense — net ............................................................... 182 171 Loss on retirement of debt........................................................... 57 7 Accounts receivable securitization costs..................................... 2 2 Equity in earnings of affiliates, net of tax..................................... (19) (12) Minority interest, net of tax .......................................................... 11 5 Earnings before income taxes ............................................. 277 247 Income tax expense .................................................................... 134 102 Net earnings........................................................................ $ 143 $ 145 Basic earnings per share: Earnings per share .................................................................... $ 1.43 $ 1.46 Weighted average shares ......................................................... 100.2 99.0 Diluted earnings per share: Earnings per share .................................................................... $ 1.38 $ 1.42 Weighted average shares ......................................................... 103.6 102.0 A3
  • 13. TRW Automotive Holdings Corp. Condensed Consolidated Balance Sheets As of (Dollars in millions) September 29, December 31, 2006 2005 (Unaudited) Assets Current assets: Cash and cash equivalents .................................................... $ 358 $ 659 Marketable securities ............................................................. 11 17 Accounts receivable — net .................................................... 2,143 1,948 Inventories.............................................................................. 780 702 Prepaid expenses and other current assets........................... 256 273 Total current assets .................................................................... 3,548 3,599 Property, plant and equipment — net ......................................... 2,607 2,538 Goodwill ...................................................................................... 2,317 2,293 Intangible assets — net .............................................................. 746 769 Prepaid pension cost .................................................................. 271 222 Other assets ............................................................................... 810 809 Total assets............................................................................. $ 10,299 $ 10,230 Liabilities, Minority Interests and Stockholders’ Equity Current liabilities: Short-term debt...................................................................... $ 81 $ 98 Current portion of long-term debt .......................................... 64 37 Trade accounts payable ........................................................ 1,847 1,865 Accrued compensation .......................................................... 273 280 Other current liabilities........................................................... 1,371 1,310 Total current liabilities ................................................................. 3,636 3,590 Long-term debt ........................................................................... 2,893 3,101 Post-retirement benefits other than pensions ............................. 879 917 Pension benefits ......................................................................... 771 795 Other long-term liabilities ............................................................ 541 513 Total liabilities ......................................................................... 8,720 8,916 Minority interests......................................................................... 107 106 Commitments and contingencies Stockholders’ equity: Capital stock .......................................................................... 1 1 Treasury stock ....................................................................... — — Paid-in-capital ........................................................................ 1,175 1,142 Retained earnings.................................................................. 275 132 Accumulated other comprehensive income (losses) ............. 21 (67) Total stockholders’ equity ........................................................... 1,472 1,208 Total liabilities, minority interests, and stockholders’ equity.... $ 10,299 $ 10,230 A4
  • 14. TRW Automotive Holdings Corp. Condensed Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended (Dollars in millions) September 29, September 30, 2006 2005 Operating Activities Net earnings ..................................................................................... $ 143 $ 145 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization ........................................................ 381 380 Other — net .................................................................................... (7) (84) Changes in assets and liabilities, net of effects of businesses acquired ......................................................................................... (265) (319) Net cash provided by operating activities ..................................... 252 122 Investing Activities Capital expenditures......................................................................... (334) (281) Net proceeds from acquisitions, asset sales and divestitures .......... 9 1 Investments in affiliates .................................................................... (1) (8) Net cash used in investing activities............................................. (326) (288) Financing Activities Change in short-term debt................................................................ (25) (1) Proceeds from issuance of long-term debt....................................... 28 1,313 Redemption of long-term debt .......................................................... (291) (1,601) Debt issue costs ............................................................................... — (4) Issuance of capital stock, net of fees................................................ — 143 Repurchase of capital stock ............................................................. — (143) Proceeds from exercise of stock options.......................................... 21 2 Net cash used in financing activities ............................................ (267) (291) Effect of exchange rate changes on cash ........................................ 40 (33) Decrease in cash and cash equivalents ........................................... (301) (490) Cash and cash equivalents at beginning of period........................... 659 790 Cash and cash equivalents at end of period .................................... $ 358 $ 300 A5
  • 15. TRW Automotive Holdings Corp. Reconciliation of GAAP Net Earnings to EBITDA (Unaudited) The reconciliation schedule below should be read in conjunction with the TRW Automotive Holdings Corp. Form 10-K for the year ended December 31, 2005 and Forms 10-Q for the quarterly periods ended March 31, 2006 and June 30, 2006, which contain summary historical data. The EBITDA measure calculated in the following schedule is a measure used by management to evaluate operating performance. Management believes that EBITDA is a useful measurement because it is frequently used by securities analysts, institutional investors and other interested parties in the evaluation of companies in our industry. EBITDA is not a recognized term under GAAP and does not purport to be an alternative to net earnings (losses) as an indicator of operating performance, or to cash flows from operating activities as a measure of liquidity. Additionally, EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Because not all companies use identical calculations, this presentation of EBITDA may not be comparable to other similarly titled measures of other companies. Three Months Ended (Dollars in millions) September 29, September 30, 2006 2005 GAAP net earnings........................................................ $ 5 $ 10 Income tax expense ................................................ 18 5 Interest expense — net ........................................... 62 59 Depreciation and amortization................................. 128 126 EBITDA ......................................................................... $ 213 $ 200 Nine Months Ended (Dollars in millions) September 29, September 30, 2006 2005 GAAP net earnings ....................................................... $ 143 $ 145 Income tax expense ................................................ 134 102 Interest expense — net ........................................... 182 171 Loss on retirement of debt ...................................... 57 7 Accounts receivable securitization costs................. 2 2 Depreciation and amortization ................................ 381 380 EBITDA ......................................................................... $ 899 $ 807 A6
  • 16. TRW Automotive Holdings Corp. Reconciliation of GAAP Net Earnings to Adjusted Earnings (Unaudited) In conjunction with the Company’s February 2, 2006 repurchase of its subsidiary Lucas Industries Limited’s £94.6 million 10⅞% bonds due 2020 for £137 million, or approximately $243 million, the Company recorded a loss on retirement of debt of £32 million, or approximately $57 million. Such loss on retirement of debt carries zero tax benefit due to the Company’s tax loss position in the respective jurisdiction. The following adjustment excludes the loss on retirement of debt to show the impact as if this transaction had not occurred. Nine Months Nine Months Ended Ended September 29, September 29, 2006 2006 Actual Adjustments Adjusted (In millions, except per share amounts) Sales............................................................. $ 9,872 $ — $ 9,872 Cost of sales ................................................. 8,923 — 8,923 Gross profit ............................................... 949 — 949 Administrative and selling expenses ............ 403 — 403 Amortization of intangible assets.................. 27 — 27 Restructuring charges and asset impairments ................................................. 22 — 22 Other income — net ..................................... (13) — (13) Operating income ..................................... 510 — 510 Interest expense, net .................................... 182 — 182 (a) Loss on retirement of debt............................ 57 (57) — Account receivable securitization costs........ 2 — 2 Equity in earnings of affiliates, net of tax...... (19) — (19) Minority interest, net of tax ........................... 11 — 11 Earnings before income taxes .................. 277 57 334 Income tax expense .................................... 134 — 134 Net earnings ............................................ $ 143 $ 57 $ 200 Effective tax rate ........................................... 48% 40% Basic earnings per share: Earnings per share ..................................... $ 1.43 $ 2.00 Weighted average shares........................... 100.2 100.2 Diluted earnings per share: Earnings per share ..................................... $ 1.38 $ 1.93 Weighted average shares........................... 103.6 103.6 (a) Reflects the elimination of the loss on retirement of debt. A7
  • 17. TRW Automotive Holdings Corp. Reconciliation of GAAP Net Earnings to Adjusted Earnings (Unaudited) In conjunction with the Company’s May 3, 2005 repurchase of approximately €48 million principal amount of its 10⅛% Senior Notes, the Company incurred $7 million of losses on retirement of debt consisting of $6 million of related redemption premium and $1 million for write-off of deferred debt issuance costs. Such debt retirement expenses were U.S.-based, and therefore carry zero tax benefit due to the Company’s tax loss position in this jurisdiction. Income tax expense for the nine months ended September 30, 2005 includes a one-time benefit of $17 million resulting from a tax law change in Poland related to investment tax credits for companies operating in certain special economic zones within the country. The investment tax credits replace the tax holiday that was previously in effect for the Company. The following adjustments exclude the loss on retirement of debt, as well as the one-time income tax benefit, to show the impact as if these transactions had not occurred. Nine Months Nine Months ended ended September 30, September 30, 2005 2005 Actual Adjustments Adjusted (In millions, except per share amounts) Sales .................................................................. $ 9,507 $ — $ 9,507 Cost of Sales ...................................................... 8,588 — 8,588 Gross profit ..................................................... 919 — 919 Administrative and selling expenses................... 397 — 397 Amortization of intangible assets ........................ 24 — 24 Restructuring charges and asset impairments.... 58 — 58 Other income — net ........................................... 20 — 20 Operating income ........................................... 420 — 420 Interest expense, net .......................................... 171 — 171 (a) Loss on retirement of debt .................................. 7 (7) — Account receivable securitization ....................... 2 — 2 Equity in earnings of affiliates, net of tax ............ (12) — (12) Minority interest, net of tax.................................. 5 — 5 Earnings before income taxes ........................ 247 7 254 (b) Income tax expense .......................................... 102 17 119 Net earnings ................................................... $ 145 $ (10) $ 135 Effective tax rate................................................. 41% 47% Basic earnings per share: Earnings per share ........................................... $ 1.46 $ 1.36 Weighted average shares................................. 99.0 99.0 Diluted earnings per share: Earnings per share ........................................... $ 1.42 $ 1.32 Weighted average shares................................. 102.0 102.0 (a) Reflects the elimination of the loss on retirement of debt incurred in conjunction with repurchase of a portion of the Company’s 10⅛% Senior Notes. (b) Reflects the elimination of one-time income tax benefit related to a tax law change in Poland. A8
  • 18. Third Quarter Financial Results Presentation November 1, 2006 TRW Automotive Holdings Corp. TRW Automotive Holdings Corp.
  • 19. Introduction Patrick Stobb Director, Investor Relations Business Summary John C. Plant President and Chief Executive Officer P2 © TRW Automotive Holdings Corp. 2006
  • 20. Safe Harbor Statement This material contains statements that are not statements of historical fact, but instead are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve risks and uncertainties. Our actual results could differ materially from those contained in forward-looking statements made in this presentation. Such risks, uncertainties and other important factors which could cause our actual results to differ materially from those contained in our forward-looking statements are set forth in our Report on Form 10-K for the fiscal year ended December 31, 2005 (the “10-K”), and our Forms 10-Q for the quarters ended March 31 and June 30, 2006, and include: production cuts or restructuring by our major customers; work stoppages or other labor issues at the facilities of our customers or suppliers; non- performance by, or insolvency of, our suppliers and customers, which may be exacerbated by recent bankruptcies and other pressures within the automotive industry; the ability of our suppliers to deliver products at the scheduled rate; interest rate risk arising from our variable rate indebtedness (which constitutes a majority of the company’s indebtedness), especially in view of the current climate of rising interest rates; loss of market share by domestic vehicle manufacturers; efforts by our customers to consolidate their supply base; severe inflationary pressures impacting the market for commodities; escalating pricing pressures from our customers; our dependence on our largest customers; fluctuations in foreign exchange rates; our substantial leverage; product liability and warranty and recall claims; limitations on flexibility in operating our business contained in our debt agreements; the possibility that our owners' interests will conflict with ours and other risks and uncertainties set forth under quot;Risk Factorsquot; in the 10-K and in our other SEC filings. We do not intend or assume any obligation to update any of these forward-looking statements. P3 © TRW Automotive Holdings Corp. 2006
  • 21. Summary Comments • Despite a precipitously more difficult operating environment, third quarter results were consistent with expectations • Second half operating environment presenting significant challenges: – Lower North American customer production volumes driven by Big 3 market share losses and accelerated mix shift away from light trucks and SUVs – Persistent commodity inflation pressures • TRW’s success can be attributed to…… – Leadership in safety 66% of 2006 sales outside – Industry leading diversification North America – Investment in technology – Cost improvement and efficiency efforts P4 © TRW Automotive Holdings Corp. 2006
  • 22. Financial Highlights Third Quarter • Sales of $3.0 billion, an increase of 3.4% over the prior year period: + Dalphimetal – + Foreign currency translation – + New product sales – - – North American industry production - – Customer pricing • Net earnings of $5 million or $0.05 per diluted share Year-to-Date • Sales of $9.9 billion, an increase of 3.8% over the prior year period • GAAP net earnings of $143 million or $1.38 per diluted share, which includes $57 million of debt retirement expenses • Net earnings excluding debt retirement expenses were $200 million or $1.93 per diluted share P5 © TRW Automotive Holdings Corp. 2006
  • 23. Quarterly Business Developments • Steady pace of new business wins in the quarter • NHTSA proposed rulemaking on Electric Stability Control (ESC) • Electric Steering business acquisition of electric motor supplier • Industry challenges becoming more difficult: – Lower Big 3 production reducing capacity utilization for many in the industry – Third consecutive year of Big 3 market share losses and commodity inflation taking a heavy toll on the supply base • Company active in countering industry pressures: – Plant restructuring (14 announced since the beginning of 2005) – Improving the competitiveness of existing plants – Diversification and safety content growth providing stability P6 © TRW Automotive Holdings Corp. 2006
  • 24. 2006 Operating Environment 2006 Production Assumptions(1) • Big 3 production expected to (units in millions) decline 15% in the fourth quarter compared to the previous year 15.9 ’03 North 15.8 ‘04 • Light trucks and SUVs more Am erica 15.8 ‘05 heavily impacted by Big 3 15.3 ‘06 production cuts 11.9 ’03 North • Experiencing high level of 11.4 ‘04 Am erica fourth quarter production cuts 10.9 ‘05 Big 3 in Europe, mainly with French 10.2 ‘06 customers 19.2 ’03 20.2 ‘04 • Persistent commodity inflation Europe 19.9 ‘05 continues to pressure bottom 20.0 ‘06 line profits ‘06 (1) Source: Primarily CSM Worldwide and internal company estimates. P7 © TRW Automotive Holdings Corp. 2006
  • 25. 2006 Full Year Outlook • Expect sales of approximately $13.0 billion • GAAP net earnings per diluted share of $1.25 to $1.50(1) – Includes $57 million for loss on retirement of debt related to Lucas bond tender transaction • Net earnings excluding loss on retirement of debt in the range of $1.80 to $2.05 per diluted share(1) • Restructuring expenses of approximately $50 million • Capital spending expected to run at approximately 4% of sales (1) Per share amounts based on weighted average diluted shares outstanding of approximately 103.8 million shares. P8 © TRW Automotive Holdings Corp. 2006
  • 26. Financial Overview Joseph S. Cantie Executive Vice President and Chief Financial Officer P9 © TRW Automotive Holdings Corp. 2006
  • 27. Third Quarter Results (dollars in millions, except where noted) Q3 2006 Q3 2005 $ 3,015 $ 2,917 Sales 82 73 Operating Income 62 59 Net Interest and Securitization (6) (2) Equity in Earnings of Affiliates 3 1 Minority Interest 18 5 Income Taxes Effective Tax Rate 78% 33% $ 5 $ 10 Net Earnings Share Count 104.0 103.1 $ 0.05 $ 0.10 Earnings Per Share Third Quarter 2006 Normalized Tax Expense (a) 0.07 Normalized Tax Expense Adjustment $ 0.12 Adjusted EPS Including Normalized Tax Expense (a) $0.07 per diluted share reflects adjustment to normalize the actual quarterly tax expense to the estimated full year effective tax rate of 46%. P10 © TRW Automotive Holdings Corp. 2006
  • 28. Third Quarter EBITDA (dollars in millions) Q3 2006 Q3 2005 Net Earnings $ 5 $ 10 Income Tax Expense 18 5 Net Interest and Securitization 62 59 Depreciation and Amortization 126 128 EBITDA(a) $ 213 $ 200 Memo: Restructuring & Asset Impairments Included Above $ 3 $ 35 (a) Please refer to slide P19 for management’s rationale for using this metric. P11 © TRW Automotive Holdings Corp. 2006
  • 29. Year-to-Date (YTD) 2006 Results (dollars in millions, except where noted) Nine Month YTD 2006 Nine Month YTD 2005 GAAP Adjusting Adjusted GAAP Adjusting Adjusted Results Item Results Results Items Results $ 9,872 $ - $ 9,872 $ 9,507 $ - $ 9,507 Sales 510 - 510 420 - 420 Operating Income 184 184 173 - 173 Net Interest and Securitization (a) (b) 57 (57) - 7 (7) - Loss on Retirement of Debt (19) - (19) (12) - (12) Equity in earnings of affiliates 11 - 11 5 - 5 Minority Interest (c) 134 102 17 119 134 - Income Taxes Effective Tax Rate 48% 40% 41% 47% $ 143 $ 57 $ 200 $ 145 $ (10) $ 135 Net Earnings (Losses) Share Count 103.6 103.6 102.0 102.0 Earnings Per Share $ 1.38 $ 1.93 $ 1.42 $ 1.32 (a) $57 million loss on retirement of debt related to Lucas bond tender transaction. (b) $7 million premiums and fees related to a bond redemption transaction. (c) $17 million one-time tax benefit for a tax law change in Poland. P12 © TRW Automotive Holdings Corp. 2006
  • 30. Year-to-Date (YTD) 2006 Normalized Tax (earnings per share data) Nine Month Nine Month (a) (a) YTD 2006 YTD 2005 $ 1.38 $ 1.42 GAAP Net Earnings (b) 0.55 - Lucas Bond Tender Transaction (d) - 0.07 Euro Note Bond Redemption (e) One-time Tax Benefit -- Poland - (0.17) $ 1.93 $ 1.32 Adjusted EPS Year-to-Date 2006 Normalized Tax Expense (c) (0.19) Normalized Tax Expense Adjustment $ 1.74 Adjusted EPS Including Normalized Tax Expense (a) Diluted share counts based on 103.6 million in 2006 and 102.0 million in 2005 (b) $57 million loss on retirement of debt related to Lucas bond tender transaction. (c) $0.19 per diluted share reflects adjustment to normalize the actual year-to-date tax expense to the estimated full year effective tax rate of 46%. (d) $7 million premiums and fees related to a bond redemption transaction. (e) $17 million one-time tax benefit for a tax law change in Poland. P13 © TRW Automotive Holdings Corp. 2006
  • 31. Year-to-Date (YTD) 2006 EBITDA (dollars in millions) Nine Month Nine Month YTD 2006 YTD 2005 $ 143 $ 145 Net Earnings Income Tax Expense 134 102 184 173 Net Interest and Securitization 57 7 Loss on Retirement of Debt 381 380 Depreciation and Amortization (a) EBITDA $ 899 $ 807 Memo: Restructuring & Asset Impairments Included Above $ 22 $ 58 (a) Please refer to slide P19 for management’s rationale for using this metric. P14 © TRW Automotive Holdings Corp. 2006
  • 32. Capital Structure Summary (dollars in millions) Net Debt Summary(a) Dalphimetal acquisition increased net debt by $244 million $2,560 $3,437 $2,964 $2,669 $2,514 $2,515 $2,372 $2,326 $2,316 Feb 28, 2003 Dec 31, 2003 Dec 31, 2004 July 1, 2005 Sep 30, 2005 Dec 31, 2005 June 30, 2006 Sep 29, 2006 • Third quarter net cash flow from operating activities was $1 million, which compares to a use of ($90) million in the prior year period • Capital expenditures totaled $132 million, which compares to $107 million in the prior year period • In excess of $1 billion in available liquidity at quarter end (a) Net debt is equal to total indebtedness (including receivables facility) minus cash, cash equivalents and marketable securities. For net debt reconciliation to closest GAAP equivalent, please refer to the reconciliation on slide P20 of this presentation. P15 © TRW Automotive Holdings Corp. 2006
  • 33. Closing Summary • Experiencing weak fourth quarter production, including an expected 15% year-to-year decline in Big 3 production • Expect fourth quarter sales of $3.1 billion based on industry production of 3.6 million units in North America and 5.0 million units in Europe • Company focused on progressing operational and financial objectives despite an extremely challenging industry environment P16 © TRW Automotive Holdings Corp. 2006
  • 34. TRW Automotive Holdings Corp. “Driving Automotive Safety”
  • 35. Financial Reconciliation Section P18 © TRW Automotive Holdings Corp. 2006
  • 36. EBITDA Measurement • The accompanying unaudited consolidated financial information and reconciliation of GAAP net earnings to earnings before interest, income tax, accounts receivable securitization cost, loss on retirement of debt, and depreciation and amortization (“EBITDA”) should be read in conjunction with the TRW Automotive Holdings Corp. Form 10-K for the year ended December 31, 2005, and Forms 10-Q for the quarters ended March 31 and June 30, 2006, as filed with the United States Securities and Exchange Commission. • The EBITDA measure calculated in this presentation is a measure used by management to evaluate operating performance. Management believes that EBITDA is a useful measurement because it is frequently used by securities analysts, institutional investors and other interested parties in the evaluation of companies in our industry. • EBITDA is not a recognized term under GAAP and does not purport to be an alternative to net earnings (losses) as an indicator of operating performance, or to cash flows from operating activities as a measure of liquidity. Additionally, EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Because not all companies use identical calculations, our presentation of EBITDA may not be comparable to other similarly titled measures of other companies. P19 © TRW Automotive Holdings Corp. 2006
  • 37. Net Debt Reconciliation (dollars in millions) Period-End Balances 3/1/03 12/31/03 12/31/04 4/1/05 7/1/05 9/30/05 12/31/05 3/31/06 6/30/06 9/29/06 Cash $ 449 $ 828 $ 790 $ 435 $ 506 $ 300 $ 659 $ 373 $ 503 $ 358 Marketable securities 26 16 19 16 13 17 17 17 17 11 Total 475 844 809 451 519 317 676 390 520 369 Short term debt 168 76 40 38 37 38 98 98 83 81 Long term debt: Term loan facilities 1,510 1,480 1,512 1,298 1,296 1,293 1,593 1,588 1,585 1,585 Senior notes 1,142 1,178 1,063 1,042 981 972 964 960 959 975 Senior subordinated notes 435 458 306 300 293 293 291 294 298 298 Lucas Varity senior notes 167 189 202 198 187 186 181 - - - 45 58 54 51 49 109 106 110 99 Other borrowings 142 Total Short & Long Term Debt 3,564 3,426 3,181 2,930 2,845 2,831 3,236 3,046 3,035 3,038 Net debt operating company $ 3,089 $ 2,582 $ 2,372 $ 2,479 $ 2,326 $ 2,514 $ 2,560 $ 2,656 $ 2,515 $ 2,669 Seller note 348 382 - - - - - - - - Net debt TRW Holdings $ 3,437 $ 2,964 $ 2,372 $ 2,479 $ 2,326 $ 2,514 $ 2,560 $ 2,656 $ 2,515 $ 2,669 P20 © TRW Automotive Holdings Corp. 2006

×