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2008 Q2 TRW Auto Earnings Presentation

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  • 1. Second Quarter 2008 Financial Results Presentation Materials Included Pages -Press Release 1-7 -Financial Summaries A1-A8 -Presentation P1-P24 July 31, 2008 © TRW Automotive Holdings Corp. 2008
  • 2. News Release TRW Automotive 12001 Tech Center Drive Livonia, MI 48150 Investor Relations Contact: Eric Birge (734) 855-3115 Media Contact: John Wilkerson (734) 855-3864 TRW Automotive Reports Second Quarter 2008 Financial Results; Provides Update on 2008 Outlook LIVONIA, MICHIGAN, July 31, 2008 — TRW Automotive Holdings Corp. (NYSE: TRW), the global leader in active and passive safety systems, today reported second- quarter 2008 financial results with sales of $4.4 billion, an increase of 18.4 percent compared to the same period a year ago. The Company reported second quarter net earnings of $127 million or $1.24 per diluted share, which compares to net earnings of $97 million or $0.94 per diluted share in the prior year period. During the second quarter of the previous year, the Company completed the final step of its 2007 debt recapitalization plan with the successful refinancing of its $2.5 billion credit facilities. The second quarter results of last year included $8 million of costs related to this refinancing. Excluding the refinancing costs in 2007, the Company earned $127 million or $1.24 per diluted share in the 2008 quarter compared to $105 million, or $1.02 per diluted share in the prior year. The current quarter benefited from a higher level of operating income, despite increased restructuring and asset impairment charges between the two periods, and also from a lower level of interest expense. “Our second quarter and first half results have demonstrated the strength of TRW’s safety product portfolio, leading customer and geographical diversification and the Company’s intense cost reduction efforts,” said John Plant, President and Chief Executive Officer. “These strengths have allowed TRW to mitigate the increasingly challenging industry conditions, primarily in North America, and provide the basis for the continued advancement of the Company’s strategic and operational objectives.” 1
  • 3. Mr. Plant added, “The transformation of TRW is not complete as we need to successfully react to the changing automotive landscape, while continuing to provide leading safety technologies, whose prospects we expect will be further enhanced by growth in emerging markets. We continue to explore strategies that will strengthen our competitiveness and help to achieve our goal of growing the Company profitably over the long term.” Second Quarter 2008 The Company reported second-quarter 2008 sales of $4.4 billion, an increase of $692 million or 18.4 percent over the prior year period. The 2008 quarter benefited from the positive effect of foreign currency translation, higher customer vehicle production in Europe and China and continued growth of safety products in all markets, including above-trend sales of lower margin modules. These positive factors were partially offset by lower vehicle production levels at our major customers in North America and price reductions provided to customers. Operating income for second-quarter 2008 was $224 million, which compares to $205 million in the prior year period. The year-to-year increase was driven by a number of factors, including savings generated from cost improvement and efficiency programs, including reductions in pension and other postretirement benefit related costs, higher product volumes, the net positive effect of an insurance recovery totaling $14 million received in the current quarter relating to a prior year business disruption at one of the Company’s manufacturing facilities, and the non-recurrence of certain one-off items that netted to an expense in the prior year. These positive factors were in part offset by price reductions provided to customers, higher commodity prices, a negative mix of products sold and a $13 million increase in restructuring and asset impairment expenses. Net interest and securitization expense for the second quarter of 2008 totaled $44 million, which compares to $57 million in the prior year. The year-to-year decline can be attributed to the benefits derived from the Company’s 2007 debt recapitalization and lower interest rates between the two periods. As mentioned previously, the 2007 quarter also included debt retirement costs of $8 million. 2
  • 4. Second-quarter 2008 tax expense was $56 million, resulting in an effective tax rate of 31 percent, which compares to $45 million or 30 percent in the prior year, excluding debt retirement expenses. The second-quarter 2008 tax rate is below the expected full year rate primarily due to the Company’s geographic earnings profile and other factors in the quarter. The Company reported second-quarter 2008 net earnings of $127 million, or $1.24 per diluted share, which compares to $97 million or $0.94 per diluted share in the 2007 period. Net earnings in the 2007 quarter excluding previously mentioned debt retirement costs of $8 million were $105 million or $1.02 per diluted share. Earnings before interest, securitization costs, loss on retirement of debt, taxes, depreciation and amortization (“EBITDA”) were $380 million in the second quarter, as compared to the prior year level of $344 million. First Half 2008 The Company reported first-half 2008 sales of $8.6 billion, an increase of $1.3 billion or 17.3 percent compared to prior year sales of $7.3 billion. The 2008 period benefited primarily from the positive effect of foreign currency translation, higher product volumes related to new product growth, including above-trend sales of lower margin modules, and robust industry sales in overseas markets. These positives were partially offset by the continued decline in North American customer vehicle production and price reductions provided to customers. Operating income for the first half of 2008 was $412 million, which is an 8.4 percent increase from the prior year result of $380 million. The year-to-year improvement was driven by a number of factors, including savings generated from cost improvement and efficiency programs, including reductions in pension and OPEB related costs, higher product volumes, the net positive effect of an insurance recovery received in 2008 relating to a prior year business disruption, and the non-recurrence of certain one-off items that netted to an expense in the prior year. These positives were partially offset by price reductions provided to customers, negative product mix, higher commodity prices and a higher level of restructuring and asset impairment expenses in 2008 compared to the prior year. 3
  • 5. Net interest and securitization expense in the first-half 2008 period was $93 million, which represents a significant improvement from the prior year result of $121 million. The decline in interest expense resulted primarily from the Company’s debt recapitalization completed in the first half of 2007 and lower interest rates between the two periods. The 2007 period also included debt retirement costs of $155 million related to the debt recapitalization. First-half 2008 tax expense was $103 million, resulting in an effective tax rate of 32 percent, which compares to $98 million or 37 percent excluding previously mentioned debt retirement expenses in the prior year. The Company reported first-half 2008 net earnings of $221 million, or $2.16 per diluted share, which compares to $11 million or $0.11 per diluted share in the 2007 period. The comparison of net earnings, excluding the previously mentioned debt retirement costs from the prior year, were $221 million, or $2.16 per diluted share in 2008 as compared to $166 million or $1.62 per diluted share in 2007. EBITDA was $717 million in the first half of 2008, which is a 9.8 percent increase from the prior year level of $653 million primarily due to the higher level of operating income in the current year. Cash Flow and Capital Structure Second quarter 2008 net cash provided by operations was $40 million, which compares to $290 million in the prior year. Cash flow in the 2007 period included proceeds of $127 million related to outstanding borrowings under the Company’s U.S. based Accounts Receivable Securitization Facility (“Receivable Facility”). Absent these proceeds, the Company’s cash flow from operations in the 2007 quarter was $163 million. Second quarter 2008 capital expenditures were $120 million compared to $109 million in 2007. For the six month period ended June 27, 2008, the Company had a net cash usage in operating activities of $75 million, which compares to net cash generated of $69 million in the prior year. Excluding proceeds related to outstanding borrowings under the Receivable Facility, cash flow from operations was a use of $58 million in the 2007 period. The year-to-year decline resulted primarily from higher working capital 4
  • 6. requirements, partly offset by higher operating income. First half capital expenditures were $217 million compared to $228 million in 2007. As mentioned previously, the Company refinanced substantially all of its debt in 2007. The Company incurred debt retirement charges of approximately $155 million during the 2007 year-to-date period related to these transactions. As of June 27, 2008, the Company had $3,122 million of debt and $453 million of cash and marketable securities, resulting in net debt (defined as debt less cash and marketable securities) of $2,669 million. Net debt is $324 million higher than the balance at the end of 2007. 2008 Outlook The Company increased its full year outlook to reflect the strong second quarter outcome, partially offset by a lower outlook for the second half of 2008. Sales are now expected to be in the range of $16.4 to $16.8 billion (including third quarter sales of approximately $3.9 billion). Full year net earnings per share are now expected to be in the range of $2.40 to $2.70. This guidance range reflects pre-tax restructuring and asset impairment charges of approximately $75 million (including approximately $25 million in the third quarter). The effective tax rate is expected to be in the range of approximately 38 to 42 percent. Lastly, the Company expects capital expenditures in 2008 to be approximately 3.5 percent of sales. “In recent months, the outlook for the North American automotive industry has further deteriorated with the decline in overall production of light vehicles, the shift of production away from light trucks to passenger cars and severe commodity inflation being the primary pressures in this market,” said Mr. Plant. “Our updated 2008 outlook provided today reflects the weaker outlook for the North American market as well as our expectations for a softening production environment in Europe.” Mr. Plant added, “The pressures we are seeing for the second half of 2008 will undoubtedly continue into 2009.” Second Quarter 2008 Conference Call The Company will host its second-quarter conference call at 8:30 a.m. (EDT) today, Thursday, July 31, to discuss financial results and other related matters. To access the 5
  • 7. 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 55410719. A live audio webcast and subsequent replay of the conference call will also be available on the Company’s website at www.trw.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. 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 2007 sales of $14.7 billion, TRW Automotive ranks among the world's leading automotive suppliers. Headquartered in Livonia, Michigan, USA, the Company, through its subsidiaries, operates in 27 countries and employs approximately 66,300 people worldwide. 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;, quot;TRWquot; 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.trw.com. 6
  • 8. 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. We caution readers not to place undue reliance on these statements, which speak only as of the date hereof. All forward-looking statements are subject to numerous assumptions, risks and uncertainties which can cause our actual results to differ materially from those suggested by the forward-looking statements, including those set forth in our Report on Form 10-K for the fiscal year ended December 31, 2007, such as: loss of market share, production cuts and capacity reductions by domestic North American vehicle manufacturers and resulting restructuring initiatives, including bankruptcy actions, of our suppliers and customers; escalating pricing pressures from our customers; commodity inflationary pressures adversely affecting our profitability and supply base, including any resulting inability of our suppliers to perform as we expect; our dependence on our largest customers; product liability, warranty and recall claims and efforts by customers to alter terms and conditions concerning warranty and recall participation; strengthening of the U.S. dollar and other foreign currency exchange rate fluctuations; work stoppages or other labor issues at our facilities or at the facilities of our customers or suppliers; our substantial debt and resulting vulnerability to an economic or industry downturn and to rising interest rates; cyclicality of automotive production and sales; any increase in the expense and funding requirements of our pension and other postretirement benefits; risks associated with non-U.S. operations, including foreign exchange risks and economic uncertainty in some regions; any impairment of our goodwill or other intangible assets; volatility in our annual effective tax rate resulting from a change in earnings mix or other factors; adverse effects of environmental and safety regulations; assertions by or against us relating to intellectual property rights; the possibility that our largest shareholder's interests will conflict with ours; and other risks and uncertainties set forth in our Report on Form 10-K and in our other filings with the Securities and Exchange Commission. We do not undertake any obligation to release publicly any revision to any of these forward-looking statements. ### 7
  • 9. TRW Automotive Holdings Corp. Index of Condensed Consolidated Financial Information Page Consolidated Statements of Earnings (unaudited) for the three months ended June 27, 2008 and June 29, 2007 .......................................................A2 Consolidated Statements of Earnings (unaudited) for the six months ended June 27, 2008 and June 29, 2007 ...........................................................A3 Condensed Consolidated Balance Sheets as of June 27, 2008 (unaudited) and December 31, 2007 .......................................................................A4 Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended June 27, 2008 and June 29, 2007 ...........................................................A5 Reconciliation of GAAP Net Earnings to EBITDA (unaudited) for the three and six months ended June 27, 2008 and June 29, 2007 ...........................................A6 Reconciliation of GAAP Net Earnings to Adjusted Earnings (unaudited) for the three months ended June 29, 2007 ......................................................................................A7 Reconciliation of GAAP Net Earnings to Adjusted Earnings (unaudited) for the six months ended June 29, 2007..........................................................................................A8 The accompanying unaudited condensed consolidated financial information and reconciliation schedules should be read in conjunction with the TRW Automotive Holdings Corp. Annual Report on Form 10-K for the year ended December 31, 2007 and Quarterly Report on Form 10-Q for the period ended March 28, 2008, as filed with the United States Securities and Exchange Commission on February 21, 2008 and April 30, 2008, respectively.
  • 10. TRW Automotive Holdings Corp. Consolidated Statements of Earnings (Unaudited) Three Months Ended (In millions, except per share amounts) June 27, 2008 June 29, 2007 Sales ........................................................................................... $ 4,446 $ 3,754 Cost of sales ............................................................................... 4,045 3,417 Gross profit............................................................................ 401 337 Administrative and selling expenses........................................... 136 140 Amortization of intangible assets ................................................ 9 9 Restructuring charges and asset impairments............................ 24 11 Other expense (income) — net................................................... 8 (28) Operating income.................................................................. 224 205 Interest expense — net............................................................... 43 56 Loss on retirement of debt .......................................................... — 8 Accounts receivable securitization costs .................................... 1 1 Equity in earnings of affiliates, net of tax .................................... (8) (9) Minority interest, net of tax.......................................................... 5 7 Earnings before income taxes ............................................. 183 142 Income tax expense.................................................................... 56 45 Net earnings ....................................................................... $ 127 $ 97 Basic earnings per share: Earnings per share.................................................................... $ 1.26 $ 0.97 Weighted average shares outstanding ..................................... 101.1 99.5 Diluted earnings per share: Earnings per share.................................................................... $ 1.24 $ 0.94 Weighted average shares outstanding ..................................... 102.6 103.4 A2
  • 11. TRW Automotive Holdings Corp. Consolidated Statements of Earnings (Unaudited) Six Months Ended (In millions, except per share amounts) June 27, 2008 June 29, 2007 Sales ........................................................................................... $ 8,590 $ 7,321 Cost of sales ............................................................................... 7,848 6,668 Gross profit............................................................................ 742 653 Administrative and selling expenses........................................... 268 268 Amortization of intangible assets ................................................ 18 18 Restructuring charges and asset impairments............................ 32 19 Other expense (income) — net................................................... 12 (32) Operating income.................................................................. 412 380 Interest expense — net............................................................... 91 119 Loss on retirement of debt .......................................................... — 155 Accounts receivable securitization costs .................................... 2 2 Equity in earnings of affiliates, net of tax .................................... (15) (15) Minority interest, net of tax.......................................................... 10 10 Earnings before income taxes ............................................. 324 109 Income tax expense.................................................................... 103 98 Net earnings ....................................................................... $ 221 $ 11 Basic earnings per share: Earnings per share.................................................................... $ 2.19 $ 0.11 Weighted average shares outstanding ..................................... 100.9 99.0 Diluted earnings per share: Earnings per share.................................................................... $ 2.16 $ 0.11 Weighted average shares outstanding ..................................... 102.3 102.5 A3
  • 12. TRW Automotive Holdings Corp. Condensed Consolidated Balance Sheets As of (Dollars in millions) June 27, December 31, 2008 2007 (Unaudited) Assets Current assets: Cash and cash equivalents .................................................... $ 453 $ 895 Marketable securities.............................................................. — 4 Accounts receivable — net..................................................... 3,165 2,313 Inventories .............................................................................. 944 822 Prepaid expenses and other current assets ........................... 419 292 Total current assets..................................................................... 4,981 4,326 Property, plant and equipment — net ......................................... 2,987 2,910 Goodwill ...................................................................................... 2,249 2,243 Intangible assets — net............................................................... 715 710 Pension asset.............................................................................. 1,500 1,461 Other assets................................................................................ 711 640 Total assets ............................................................................. $ 13,143 $ 12,290 Liabilities, Minority Interests and Stockholders’ Equity Current liabilities: Short-term debt ...................................................................... $ 90 $ 64 Current portion of long-term debt........................................... 16 30 Trade accounts payable......................................................... 2,710 2,406 Accrued compensation .......................................................... 329 298 Other current liabilities ........................................................... 1,133 917 Total current liabilities ................................................................. 4,278 3,715 Long-term debt............................................................................ 3,016 3,150 Postretirement benefits other than pensions............................... 580 591 Pension benefits.......................................................................... 493 497 Other long-term liabilities ............................................................ 1,055 1,011 Total liabilities.......................................................................... 9,422 8,964 Minority interests ......................................................................... 149 134 Commitments and contingencies Stockholders’ equity: Capital stock .......................................................................... 1 1 Treasury stock........................................................................ — — Paid-in-capital ........................................................................ 1,189 1,176 Retained earnings .................................................................. 622 398 Accumulated other comprehensive earnings ......................... 1,760 1,617 Total stockholders’ equity............................................................ 3,572 3,192 Total liabilities, minority interests, and stockholders’ equity .... $ 13,143 $ 12,290 A4
  • 13. TRW Automotive Holdings Corp. Condensed Consolidated Statements of Cash Flows (Unaudited) Six Months Ended (Dollars in millions) June 27, 2008 June 29, 2007 Operating Activities Net earnings ....................................................................................... $ 221 $ 11 Adjustments to reconcile net earnings to net cash (used in) provided by operating activities: Depreciation and amortization.......................................................... 300 268 Net pension and other postretirement benefits income and contributions ................................................................................... (105) (94) Net gains on sale of assets .............................................................. (3) (12) Loss on retirement of debt................................................................ — 155 Other — net ...................................................................................... 18 21 Changes in assets and liabilities, net of effects of businesses acquired: Accounts receivable — net............................................................. (710) (450) Inventories ...................................................................................... (59) (54) Trade accounts payable ................................................................. 176 201 Prepaid expense and other assets ................................................. (107) (38) Other liabilities ................................................................................ 194 61 Net cash (used in) provided by operating activities ........................ (75) 69 Investing Activities Capital expenditures, including other intangible assets ..................... (217) (228) Acquisitions of businesses, net of cash acquired............................... (40) (12) Termination of interest rate swaps ..................................................... — (12) Investment in affiliates........................................................................ (5) — Proceeds from sale/leaseback transactions....................................... 1 6 Net proceeds from asset sales........................................................... 3 17 Net cash used in investing activities............................................... (258) (229) Financing Activities Change in short-term debt.................................................................. 26 50 Net (repayments on) proceeds from revolving credit facility ............. (129) 200 Proceeds from issuance of long-term debt, net of fees ...................... 4 2,582 Redemption of long-term debt............................................................ (55) (2,993) Proceeds from exercise of stock options............................................ 4 28 Net cash used in financing activities .............................................. (150) (133) Effect of exchange rate changes on cash .......................................... 41 (10) Decrease in cash and cash equivalents............................................. (442) (303) Cash and cash equivalents at beginning of period............................. 895 578 Cash and cash equivalents at end of period ...................................... $ 453 $ 275 A5
  • 14. 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. Annual Report on Form 10-K for the year ended December 31, 2007 and Quarterly Report on Form 10-Q for the period ended March 28, 2008. The EBITDA measure calculated in the following schedules 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 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 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) June 27, 2008 June 29, 2007 GAAP net earnings ....................................................... $ 127 $ 97 Income tax expense ................................................ 56 45 Interest expense — net ........................................... 43 56 Loss on retirement of debt ...................................... — 8 Accounts receivable securitization costs................. 1 1 Depreciation and amortization ................................ 153 137 EBITDA ......................................................................... $ 380 $ 344 Six Months Ended (Dollars in millions) June 27, 2008 June 29, 2007 GAAP net earnings ....................................................... $ 221 $ 11 Income tax expense ................................................ 103 98 Interest expense — net ........................................... 91 119 Loss on retirement of debt ...................................... — 155 Accounts receivable securitization costs................. 2 2 Depreciation and amortization ................................ 300 268 EBITDA ......................................................................... $ 717 $ 653 A6
  • 15. TRW Automotive Holdings Corp. Reconciliation of GAAP Net Earnings to Adjusted Earnings (Unaudited) In conjunction with the Company’s tender offer and repurchases of its then outstanding 9⅜% Senior Notes and 10⅛% Senior Notes in original principal amounts of $925 million and €200 million, respectively, and 11% Senior Subordinated Notes and 11¾% Senior Subordinated Notes in original principal amounts of $300 million and €125 million, respectively (collectively, the “Old Notes”), the Company recorded a loss on retirement of debt of $1 million during the three months ended June 29, 2007 for additional redemption premiums paid. The Company entered into its Fifth Amended and Restated Credit Agreement dated as of May 9, 2007, which provides for $2.5 billion in senior secured credit facilities, consisting of (i) a 5-year $1.4 billion Revolving Credit Facility, (ii) a 6-year $600 million Term Loan A-1 Facility and (iii) a 6.75-year $500 million Term Loan B-1 Facility (collectively, the “Facilities”). Proceeds from the Facilities were used to refinance $2.5 billion of existing senior secured credit facilities and pay fees and expenses related to the refinancing. The Company recorded a loss on retirement of debt related to the transaction of $7 million during the second quarter of 2007. The following reconciliation excludes the impact of the loss on retirement of debt. Three Months Three Months Ended Ended June 29, 2007 June 29,2007 Actual Adjustments Adjusted (In millions, except per share amounts) Sales ..................................................................... $ 3,754 $ — $ 3,754 Cost of sales ......................................................... 3,417 — 3,417 Gross profit........................................................ 337 — 337 Administrative and selling expenses..................... 140 — 140 Amortization of intangible assets .......................... 9 — 9 Restructuring charges and asset impairments...... 11 — 11 Other income — net .............................................. (28) — (28) Operating income.............................................. 205 — 205 Interest expense, net............................................. 56 — 56 (a) Loss on retirement of debt .................................... 8 (8) — Accounts receivable securitization costs .............. 1 — 1 Equity in earnings of affiliates, net of tax .............. (9) — (9) Minority interest, net of tax .................................... 7 — 7 Earnings before income taxes .......................... 142 8 150 Income tax expense ............................................. 45 — 45 Net earnings ..................................................... $ 97 $ 8 $ 105 Effective tax rate ................................................... 32% 30% Basic earnings per share: Earnings per share.............................................. $ 0.97 $ 1.06 Weighted average shares outstanding ............... 99.5 99.5 Diluted earnings per share: Earnings per share.............................................. $ 0.94 $ 1.02 Weighted average shares outstanding ............... 103.4 103.4 (a) Reflects the elimination of the loss on retirement of debt. A7
  • 16. TRW Automotive Holdings Corp. Reconciliation of GAAP Net Earnings to Adjusted Earnings (Unaudited) In conjunction with the Company’s tender offer and repurchases of its then outstanding Old Notes, the Company recorded a loss on retirement of debt of $148 million during the six months ended June 29, 2007. This loss included $112 million for redemption premiums paid, $20 million for the write-off of deferred debt issuance costs, $11 million relating to the principal amount in excess of carrying value of the 9⅜% Senior Notes and $5 million of fees. The Company entered into its Fifth Amended and Restated Credit Agreement dated as of May 9, 2007, which provides for $2.5 billion in senior secured credit facilities, consisting of (i) a 5-year $1.4 billion Revolving Credit Facility, (ii) a 6-year $600 million Term Loan A-1 Facility and (iii) a 6.75-year $500 million Term Loan B-1 Facility (collectively, the “Facilities”). Proceeds from the Facilities were used to refinance $2.5 billion of existing senior secured credit facilities and pay fees and expenses related to the refinancing. The Company recorded a loss on retirement of debt related to the transaction of $7 million during the second quarter of 2007. The following reconciliation excludes the impact of the loss on retirement of debt. Six Months Six Months Ended Ended June 29, 2007 June 29, 2007 Actual Adjustments Adjusted (In millions, except per share amounts) Sales ..................................................................... $ 7,321 $ — $ 7,321 Cost of sales ......................................................... 6,668 — 6,668 Gross profit ....................................................... 653 — 653 Administrative and selling expenses..................... 268 — 268 Amortization of intangible assets .......................... 18 — 18 Restructuring charges and asset impairments ..... 19 — 19 Other income — net.............................................. (32) — (32) Operating income.............................................. 380 — 380 Interest expense, net ............................................ 119 — 119 (a) Loss on retirement of debt .................................... 155 (155) — Accounts receivable securitization costs .............. 2 — 2 Equity in earnings of affiliates, net of tax .............. (15) — (15) Minority interest, net of tax.................................... 10 — 10 Earnings before income taxes .......................... 109 155 264 Income tax expense ............................................. 98 — 98 Net earnings ..................................................... $ 11 $ 155 $ 166 Effective tax rate ................................................... 90% 37% Basic earnings per share: Earnings per share ............................................. $ 0.11 $ 1.68 Weighted average shares outstanding ............... 99.0 99.0 Diluted earnings per share: Earnings per share ............................................. $ 0.11 $ 1.62 Weighted average shares outstanding ............... 102.5 102.5 (a) Reflects the elimination of the loss on retirement of debt. A8
  • 17. Second Quarter 2008 Financial Results Presentation July 31, 2008 © TRW Automotive Holdings Corp. 2008
  • 18. Introduction Eric Birge Investor Relations Business Summary John C. Plant President and Chief Executive Officer
  • 19. Safe Harbor Statement This presentation 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. We caution readers not to place undue reliance on these statements, which speak only as of the date hereof. All forward-looking statements are subject to numerous assumptions, risks and uncertainties which can cause our actual results to differ materially from those suggested by the forward-looking statements, including those set forth in our Report on Form 10-K for the fiscal year ended December 31, 2007, and our Form 10-Q for the quarter ended March 28, 2008, such as: loss of market share, production cuts and capacity reductions by domestic North American vehicle manufacturers and resulting restructuring initiatives, including bankruptcy actions, of our suppliers and customers; escalating pricing pressures from our customers; commodity inflationary pressures adversely affecting our profitability and supply base, including any resulting inability of our suppliers to perform as we expect; our dependence on our largest customers; product liability, warranty and recall claims and efforts by customers to alter terms and conditions concerning warranty and recall participation; strengthening of the U.S. dollar and other foreign currency exchange rate fluctuations; work stoppages or other labor issues at our facilities or at the facilities of our customers or suppliers; our substantial debt and resulting vulnerability to an economic or industry downturn and to rising interest rates; cyclicality of automotive production and sales; any increase in the expense and funding requirements of our pension and other postretirement benefits; risks associated with non-U.S. operations, including foreign exchange risks and economic uncertainty in some regions; any impairment of our goodwill or other intangible assets; volatility in our annual effective tax rate resulting from a change in earnings mix or other factors; adverse effects of environmental and safety regulations; assertions by or against us relating to intellectual property rights; the possibility that our largest shareholder’s interests will conflict with ours; and other risks and uncertainties set forth in our Form 10-K and in other SEC filings. We do not undertake any obligation to release publicly any revision to any of these forward-looking statements. P3 © TRW Automotive Holdings Corp. 2008
  • 20. Summary Comments • TRW reports solid second quarter results: Strong Performance in – Healthy growth in sales, earnings and EBITDA the face of heightened – Industry pressures mitigated by geographic, customer challenges in the and product diversification and demand for increased Automotive Industry safety content – Continue to pursue business strategies that improve long-term competitiveness • Our vision of Cognitive Safety Systems: – Culmination of new and better technology that increasingly uses advanced electronics and proprietary algorithms to sense, analyze, anticipate and respond to ever-changing conditions – Examples of technology advancements: ►Haptic Lane Feedback System ►Advanced Head Protection System ►Automatic Emergency Braking System ►Low-Profile Knee Airbag Module P4 © TRW Automotive Holdings Corp. 2008
  • 21. Second Quarter Summary Q2 Vehicle Production(c) Financial Summary (% changes based on year-over-year comparisons) (US $ in millions, except where noted) Sales Summary North America $4,446 Detroit 3 -21.6% $3,754 EU OE 1.0% 18% Growth Asian OE -3.3% Total Region -14.5% Q2 2007 Q2 2008 Europe North America 7.8% West -1.7% Europe 20.5% East 19.3% ROW 36.3% Total Region 3.8% Net Earnings Summary ROW Q2 2007 Q2 2008 China 14.3% (a) GAAP GAAP India 16.6% Adjusted Korea -4.7% Net Earnings $ 97 $ 105 $ 127 Japan 4.5% (b) $ 0.94 $ 1.02 $ 1.24 Earnings Per Share South America 21.4% (a) Excludes $8 million of debt retirement charges. For adjusted results reconciliation to GAAP, please see slide P14. (b) Per share amounts based on diluted shares. (c) Production volumes based on CSM Worldwide data. P5 © TRW Automotive Holdings Corp. 2008
  • 22. First Half Sales Summary First Half Vehicle Production(c) Financial Summary (% changes based on year-over-year comparisons) (US $ in millions, except where noted) Sales Summary North America $8,590 Detroit 3 -17.6% $7,321 EU OE -0.7% 17% Growth Asian OE -2.0% Total Region -11.7% FH 2007 FH 2008 Europe North America 11.6% West -1.9% Europe 16.1% East 19.0% ROW 39.6% Total Region 3.4% Net Earnings Summary ROW FH 2007 FH 2008 China 13.9% (a) GAAP GAAP India 16.3% Adjusted Korea -0.9% Net Earnings $ 11 $ 166 $ 221 Japan 5.2% (b) $ 0.11 $ 1.62 $ 2.16 Earnings Per Share South America 19.2% (a) Excludes $155 million of debt retirement charges. For adjusted results reconciliation to GAAP, please see slide P16. (b) Per share amounts based on diluted shares. (c) Production volumes based on CSM Worldwide data. P6 © TRW Automotive Holdings Corp. 2008
  • 23. Quarterly Developments • Unprecedented time period for the Automotive Industry: – Extreme spikes in commodity inflation – Further reductions for second half vehicle production in North America – Shift in production away from light trucks to passenger cars in North America • Commodity Inflation has been a headwind since 2004 with a step increase in most areas over the last 3 months: – Steel and Iron Ore prices have increased dramatically since the beginning of the year – Full year impact of approximately $150 million anticipated – Working to mitigate through product changes, efficiency initiatives, supply chain management, and customer recoveries • European market showing signs of an economic slowdown. P7 © TRW Automotive Holdings Corp. 2008
  • 24. Quarterly Developments • Production estimates: ―Lowering North America production by 700 thousand to approximately 13.5 million units ―Detroit 3 production estimate lowered to 8.0 million units ―Lowering European production to 22.0 million units • Mix shift in North America has been dramatic: ―In last 3 months, Detroit 3 have announced plans to permanently shutter light truck capacity and delay production launches ―Effect partially mitigated by fact that only 22% of TRW’s 2007 global sales were to the Detroit 3 in North America ―Assessing our plans to see what changes will be needed to align our operations P8 © TRW Automotive Holdings Corp. 2008
  • 25. 2008 Operating Environment 2008 Industry Production Assumptions(1) (units in millions) • Forecast for North American North America Europe 22.0 15.8 21.7 22.3 production lowered to 15.3 15.1 20.4 19.9 14.2 13.5 6.7 5.8 6.6 approximately 13.5 million units – 4.9 4.1 5.0 5.2 5.6 5.6 lowest production level since 1992. 5.5 15.6 15.9 15.4 15.8 15.5 10.8 • European production lowered to 10.1 9.5 8.6 8.0 22.0 million units. Steady growth forecasted in the emerging 2005 2006 2007 2008E 2008E 2005 2006 2007 2008E 2008E OLD NEW OLD NEW markets of China, India and Brazil. We s t e rn E a s t e rn Detroit 3 Transplants South America Asia • Revised Euro rate assumptions upward, which is reflected in the increased full year sales guidance. 5 .5 5 .4 4 .6 4 .0 3 .9 4 .0 3 .9 4 .0 3 .8 3 .6 • Commodity inflation pressures to 7 .8 7 .8 6 .9 5 .7 4.1 4.1 4 .8 3.6 3.0 2.8 continue, with significant increases 11.0 10 .6 10 .8 10 .9 10 .0 expected in second half. 2005 2006 2007 2008E 2008E 2005 2006 2007 2008E 2008E OLD NEW OLD NEW Japan China Korea South Asia (1) Source: Light vehicle assumptions primarily CSM Worldwide and internal company estimates. P9 © TRW Automotive Holdings Corp. 2008
  • 26. 2008 Full Year Outlook Sales $16.4 - $16.8 billion Net Earnings per Diluted Share(a) $2.40 to $2.70 Restructuring Expenses (pre-tax) $75 million Capital Spending approx. 3.5% of sales Effective Tax Rate approx. 38% - 42% TRW is Well Positioned for the Future with Leading Customer and Geographic Diversification, Innovation and a Track Record of Steady Performance During Difficult Conditions. (a) Per share amounts based on assumed weighted average diluted shares outstanding of approximately 102.5 million shares. P10 © TRW Automotive Holdings Corp. 2008
  • 27. Financial Overview Joseph S. Cantie Executive Vice President and Chief Financial Officer
  • 28. Financial Summary • Strong second quarter performance: ―Sales of $4.4 billion, up 18% ―Earnings per share of $1.24 •Strong Q2 and First Half Performance • Second quarter completes an outstanding first half: •Significant “Headwinds” ―Record sales of $8.6 billion, up 17% over last year for the Second Half and into 2009 ―Record earnings per share of $2.16, up 33% over last year, excluding debt retirement charges in the prior year(a) ―EBITDA in excess of $700 million for the first time in any six-month period(b) • Raised full year guidance despite the challenges facing the industry and TRW. (a) For adjusted results comparison and reconciliation to GAAP, please see slide P16. (b) Please refer to slide P21 for management’s rationale for using this metric and slide P23 for a reconciliation to GAAP. P12 © TRW Automotive Holdings Corp. 2008
  • 29. Second Quarter Sales Summary Total Sales Segment Sales US $ in millions US $ in millions $2,556 $2,042 $4,446 $1,335 $3,754 $1,201 Chassis $555 $511 OSS Auto Comp +18% Q2 2007 Q2 2008 Q2 2007 Q2 2008 Geographic Sales Mix % of total sales Q2 YOY Sales Comparison North North America America Foreign Currency Europe Europe 28.4% 31.3% 56.8% 57.8% Product Volumes Modules New Products Rest of Rest of Vehicle Production World World Customer Pricing 11.9% 13.8% Q2 2007 Q2 2008 P13 © TRW Automotive Holdings Corp. 2008
  • 30. Second Quarter Results (US $ in millions, except where noted) Q2 2008 Q2 2007 GAAP GAAP Adjusting Adjusted Results Results Item Results Sales $ 4,446 $ 3,754 $ - $ 3,754 Operating Income 224 205 - 205 Net Interest and Securitization 44 57 - 57 (a) Loss on Retirement of Debt - 8 (8) - Equity in Earnings of Affiliates (8) (9) - (9) Minority Interest 5 7 - 7 56 45 - 45 Income Tax Expense Effective Tax Rate 31% 32% 30% Net Earnings $ 127 $ 97 $ 8 $ 105 Share Count 102.6 103.4 103.4 Earnings Per Share $ 1.24 $ 0.94 $ 1.02 EBITDA(b) $ 380 $ 344 (a) $8 million loss on retirement of debt related to the Company’s 2007 debt recapitalization. (b) Please refer to slide P21 for management’s rationale for using this metric and slide P22 for a reconciliation to GAAP. P14 © TRW Automotive Holdings Corp. 2008
  • 31. First Half Sales Summary Total Sales Segment Sales US $ in millions US $ in millions $4,898 $3,938 $2,609 $2,383 $8,590 $7,321 Chassis $1,083 $1,000 OSS Auto Comp 17% FH 2007 FH 2008 FH 2007 FH 2008 Geographic Sales Mix % of total sales FH YOY Sales Comparison North North America America Foreign Currency Europe Europe 29.3% 30.9% 57.4% 58.0% Product Volumes Modules New Products Rest of Vehicle Production Rest of World World Customer Pricing FH 2007 FH 2008 13.3% 11.1% P15 © TRW Automotive Holdings Corp. 2008
  • 32. First Half Results (US $ in millions, except where noted) First Half First Half 2007 2008 GAAP GAAP Adjusting Adjusted Results Results Item Results Sales $ 8,590 $ 7,321 $ - $ 7,321 Operating Income 412 380 - 380 Net Interest and Securitization 93 121 - 121 (a) Loss on Retirement of Debt - - 155 (155) Equity in Earnings of Affiliates (15) (15) - (15) Minority Interest 10 10 - 10 103 98 - 98 Income Tax Expense Effective Tax Rate 32% 90% 37% Net Earnings $ 221 $ 11 $ (155) $ 166 Share Count 102.3 102.5 102.5 Earnings Per Share $ 2.16 $ 0.11 $ 1.62 EBITDA(b) $ 717 $ 653 (a) $155 million loss on retirement of debt related to the Company’s 2007 debt recapitalization. (b) Please refer to slide P21 for management’s rationale for using this metric and slide P23 for a reconciliation to GAAP. P16 © TRW Automotive Holdings Corp. 2008
  • 33. Capital Structure Summary Operating Cash Flow Capital Expenditures US $ in millions US $ in millions $228 $217 2007 Operating Cash Flow: 2007 2008 2008 First Quarter $ (221) $ (115) Second Quarter 290 40 GAAP Operating Cash Flow $ 69 $ (75) $120 $119 A/R Securitization Proceeds (127) - $109 $97 Adjusted Operating Cash Flow $ (58) $ (75) Q1 Q2 First Half Capital Structure US $ in millions Period-End Balances Memo: Q2 Year End 2007 Q2 2008 2007 Cash $ 895 $ 453 $ 275 Marketable Securities 4 - 9 Total Cash & Marketable Securities $ 899 $ 453 $ 284 Total Debt 3,244 3,122 3,042 Total Equity 3,192 3,572 2,500 Total Capital $ 6,436 $ 6,694 $ 5,542 Total Debt / Capital Ratio 50% 47% 55% (a) Net Debt $ 2,345 $ 2,669 $ 2,758 (a) Total debt less total cash & marketable securities. For net debt reconciled to the closest GAAP equivalent, please refer to slide P24. P17 © TRW Automotive Holdings Corp. 2008
  • 34. Capital Structure Summary Net Debt (a) US $ in millions Debt transactions Debt transaction increased net debt by increased $127 million approximately $130 Dalphimetal acquisition net debt by $57 receivables million increased net debt million facility proceeds by $244 million (b) $2,885 $3,437 $2,964 $2,955 $2,758 $2,560 $2,669 $2,443 $2,599 $2,372 $2,345 Feb 28, Dec 31, Dec 31, Dec 31, Dec 31, Mar 30, Jun 29, Dec 31, Mar 28, Jun 27, 2003 2003 2004 2005 2006 2007 2007 2007 2008 2008 (a) Net debt is equal to total debt less cash and marketable securities. For net debt reconciled to the closest GAAP equivalent, please refer to slide P24. (b) Net debt adjusted to include receivables facility proceeds. P18 © TRW Automotive Holdings Corp. 2008
  • 35. Outlook Discussion Full Year • Raised full year sales guidance to $16.4 - $16.8 billion: – Decline in North American volume expected to be significant with the Detroit 3 producing nearly 1.5 million fewer vehicles compared to 2007 – Module sales expected to increase in 2008 by $800 to $900 million – Currency effect will provide measurable upside to sales – no material impact to income expected • Full year earnings of $2.40 to $2.70 per share. Third Quarter • Sales increase to approximately $3.9 billion due primarily to currency and modules. • Restructuring and asset impairment expenses of approximately $25 million. • Due to compressed production levels, restructuring, and higher effective tax rate, the level of net earnings will likely be break-even to very low. P19 © TRW Automotive Holdings Corp. 2008
  • 36. Financial Reconciliations
  • 37. 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, 2007, and Form 10-Q for the quarter ended March 28, 2008, 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. P21 © TRW Automotive Holdings Corp. 2008
  • 38. Second Quarter EBITDA (US $ in millions, except where noted) Q2 2008 Q2 2007 GAAP Net Earnings $ 127 $ 97 Income Tax Expense 56 45 Net Interest 43 56 Loss on Retirement of Debt - 8 Accounts Receivable Securitization Costs 1 1 Depreciation & Amortization 153 137 EBITDA $ 380 $ 344 Memo: Restructuring & Asset Impairments Included in EBITDA $ 24 $ 11 P22 © TRW Automotive Holdings Corp. 2008
  • 39. First Half 2008 EBITDA (US $ in millions, except where noted) First Half First Half 2008 2007 GAAP Net Earnings $ 221 $ 11 Income Tax Expense 103 98 Net Interest 91 119 Loss on Retirement of Debt - 155 Accounts Receivable Securitization Costs 2 2 Depreciation & Amortization 300 268 EBITDA $ 717 $ 653 Memo: Restructuring & Asset Impairments Included in EBITDA $ 32 $ 19 P23 © TRW Automotive Holdings Corp. 2008
  • 40. Net Debt Reconciliation (US $ in millions) Period-End Balances 2/28/03 12/31/03 12/31/04 12/31/05 12/31/06 3/30/07 6/29/07 12/31/07 03/28/08 6/27/08 Cash $ 449 $ 828 $ 790 $ 659 $ 578 $ 343 $ 275 $ 895 $ 562 $ 453 Marketable securities 26 16 19 17 11 11 9 4 3 - Total cash and marketable securities 475 844 809 676 589 354 284 899 565 453 Short term debt 168 76 40 98 69 125 140 64 80 90 Term loan facilities 1,510 1,480 1,512 1,593 1,582 1,579 1,100 1,098 1,098 1,096 Revolving credit facilities - - - - - - 200 429 339 300 Senior & senior subordinated notes due 2013 1,577 1,636 1,369 1,255 1,284 26 17 19 - - Senior notes due 2014 and 2017 - - - - - 1,467 1,469 1,505 1,522 1,521 Lucas Varity senior notes 167 189 202 181 - - - - - - Other borrowings 142 45 58 109 97 112 116 129 125 115 Northrop seller note 348 382 - - - - - - - - Total debt 3,912 3,808 3,181 3,236 3,032 3,309 3,042 3,244 3,164 3,122 Net debt $ 3,437 $ 2,964 $ 2,372 $ 2,560 $ 2,443 $ 2,955 $ 2,758 $ 2,345 $ 2,599 $ 2,669 Memo: Receivable facility proceeds(a) - - - - - - $ 127 - - - Net debt including receivables facility $ 3,437 $ 2,964 $ 2,372 $ 2,560 $ 2,443 $ 2,955 $ 2,885 $ 2,345 $ 2,599 $ 2,669 proceeds (a) Proceeds related to outstanding borrowings under the Company’s U.S. based Accounts Receivables Securitization Facility. P24 © TRW Automotive Holdings Corp. 2008