2008 Q3 TRW Auto Earnings Presentation

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  • 1. Third Quarter 2008 Financial Results Presentation WE PUT THE THINKING IN SAFETY SYSTEMS. Materials Included Pages -Press Release 1-7 -Financial Summaries A1-A7 -Presentation P1-P27 October 30, 2008 © TRW Automotive Holdings Corp. 2008 P1 © TRW Automotive Holdings Corp. 2008
  • 2. News Release TRW Automotive 12001 Tech Center Drive Livonia, MI 48150 Investor Relations Contact: Mark Oswald (734) 855-3140 Media Contact: John Wilkerson (734) 855-3864 TRW Automotive Reports Third Quarter 2008 Financial Results; Provides Update on 2008 Outlook LIVONIA, MICHIGAN, October 30, 2008 — TRW Automotive Holdings Corp. (NYSE: TRW), the global leader in active and passive safety systems, today reported third- quarter 2008 financial results with sales of $3.6 billion, an increase of 2.8 percent compared to the same period a year ago. The Company reported a third quarter net loss of $54 million or ($0.53) per diluted share, which compares to net earnings of $23 million or $0.22 per diluted share in the prior year period. Third quarter 2008 net cash flow from operating activities was $79 million, which exceeded the level generated in the prior year. Sales in the third quarter benefited from currency movements and increased sales of modules, which together did not provide a corresponding benefit to earnings. Excluding the benefits of currency and modules, core product sales were sharply lower, which was the primary reason for the decline in earnings between the two quarters. Other negative factors included a higher level of restructuring charges, commodity costs and tax expense despite a loss before income taxes. “TRW’s third quarter results reflect the unprecedented challenges facing the automotive industry and global economic markets in general,” said John C. Plant, President and Chief Executive Officer. “During this time of uncertainty, we are taking the actions necessary to align our organization with the changing industry conditions while continuing to remain focused on advancing our strategic priorities to ensure our long- term competitiveness.” 1
  • 3. Third Quarter 2008 The Company reported third-quarter 2008 sales of $3.6 billion, an increase of $97 million or 2.8 percent over the prior year period. The 2008 quarter benefited from the positive effect of foreign currency translation and the increase in sales of lower margin modules. These positive factors were substantially offset by lower sales of core products in both North America and Europe resulting from sharply reduced light vehicle production volumes. Price reductions provided to our customers were also a negative factor between the two quarters. Operating income for the third-quarter 2008 was $12 million, which compares to $95 million in the prior year period. The year-to-year decrease was driven by a number of factors, the most significant of which were the impact of lower sales, excluding currency, and the negative sales mix including a decline in higher margin core product sales replaced by lower margin module sales. Other negative factors included net currency losses and increased commodity costs. As a result of the negative industry conditions, the Company has increased its level of restructuring actions as it focuses on reducing its cost base, which also contributed to a lower level of operating profit between quarters. In the 2008 third quarter, restructuring charges and asset impairments totaled $32 million compared to $13 million in the prior year period. Net interest and securitization expense for the third quarter of 2008 totaled $43 million, which compares to $56 million in the prior year. The year-to-year decrease is due to lower interest rates between the periods. Tax expense for the third quarter of 2008 was $23 million, despite a loss before income taxes. The expense for the quarter is attributable to earnings in profitable tax jurisdictions while the Company has not recognized a tax benefit from losses in certain other jurisdictions. In the prior year quarter, tax expense was $18 million, resulting in an effective tax rate of 44 percent. The Company reported a third-quarter 2008 net loss of $54 million, or ($0.53) per diluted share, which compares to net earnings of $23 million or $0.22 per diluted share in the 2007 period. 2
  • 4. Earnings before interest, securitization costs, loss on retirement of debt, taxes, depreciation and amortization (“EBITDA”) were $157 million in the third quarter of 2008, as compared to the prior year level of $237 million. Year-to-Date 2008 For the nine-month period ended September 26, 2008, the Company reported sales of $12.2 billion, an increase of $1.4 billion or 12.6 percent compared to prior year sales. All of the increase in sales resulted from the positive effect of foreign currency translation and above trend sales of lower margin modules. Higher product volumes related to new product growth and robust industry sales in certain overseas markets during the first nine months of the year were fully offset by the continued decline in North American and Western European vehicle production and price reductions provided to customers. Operating income for the 2008 year-to-date period was $424 million, which is a decrease of $51 million or 10.7 percent compared to the prior year result of $475 million. The decline resulted from a number of factors including a $32 million increase in the level of restructuring and asset impairment expenses. Positive factors such as savings generated from cost improvement and efficiency programs, including reductions in pension and OPEB related costs, and the positive effect of net insurance proceeds received in 2008 relating to a prior year business disruption were more than offset by the profit impact resulting from a negative mix of products sold, higher commodity prices, price reductions provided to customers and foreign currency losses. Net interest and securitization expense in the first nine months of the 2008 period was $136 million, which represents a significant improvement from the prior year result of $177 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 periods. The debt recapitalization completed last year resulted in $155 million of costs in 2007. Tax expense in the first nine months of 2008 was $126 million, resulting in an effective tax rate of 43 percent, which compares to $116 million, or 38 percent excluding the debt retirement costs of $155 million, in the prior year. 3
  • 5. The Company reported year-to-date 2008 net earnings of $167 million, or $1.63 per diluted share, which compares to $34 million or $0.33 per diluted share in the 2007 period. The comparison of net earnings, excluding the previously mentioned debt retirement costs from the prior year, were $167 million or $1.63 per diluted share in 2008 as compared to $189 million or $1.84 per diluted share in 2007. EBITDA was $874 million in the first nine months of 2008, which is a 1.8 percent decrease from the prior year level of $890 million primarily due to the lower level of operating income in the current year. Cash Flow and Capital Structure Third quarter 2008 net cash flow from operating activities was $79 million, which compares to a use of $(158) million in the prior year. The prior year use of cash included the pay down of $127 million of outstanding borrowings under the Company’s U.S. based Accounts Receivable Securitization Facility (“Receivable Facility”). Excluding the pay down of the Receivable Facility, the comparison of net cash flow from operating activities was an inflow of $79 million in the current quarter compared to a use of $(31) million in the prior year. Third quarter 2008 capital expenditures were $121 million compared to $111 million in 2007. For the nine month period ended September 26, 2008, net cash flow from operating activities was $4 million, which compares to net cash use of $(89) million in the prior year. Year-to-date capital expenditures were $338 million in 2008 compared to $339 million in 2007. As of September 26, 2008, the Company had $3,243 million of debt and $511 million of cash and marketable securities, resulting in net debt (defined as debt less cash and marketable securities) of $2,732 million. This compares favorably to net debt of $3,029 million at the end of the prior year third quarter period ended September 28, 2007. At the end of the 2008 third quarter, committed liquidity facilities and cash on hand provided the Company with available liquidity of approximately $1.5 billion. 4
  • 6. 2008 Outlook The Company expects its full year sales to be approximately $15.3 billion (including fourth quarter sales of approximately $3.1 billion). Full year net earnings per share are expected to be in the range of $0.90 to $1.10, which includes pre-tax restructuring and asset impairment charges for known actions forecasted at approximately $95 million (including approximately $30 million in the fourth quarter). The Company continues to evaluate other actions that may be necessary in reaction to the current environment, which will most likely lead to additional restructuring charges and asset impairments that are not incorporated in the guidance provided above. The guidance range above reflects the continued reduction in vehicle production schedules in both Europe and North America, increased commodity costs and significantly higher restructuring expenses. The effective tax rate, which is highly dependent on the Company’s overall level of pre-tax earnings and the location of those earnings, is expected to exceed 50% for the full year. Lastly, the Company expects capital expenditures in 2008 to be approximately 3.5 percent of sales. “Our 2008 guidance provided today reflects the challenges facing the automotive industry and TRW, most notably the rapid decline and change in mix of vehicle production schedules of our customers,” said John C. Plant. “At this point, we are planning for a difficult 2009 year with vehicle sales below 2008 levels in both Europe and North America.” Third Quarter 2008 Conference Call The Company will host its third-quarter conference call at 8:00 a.m. (EDT) today, Thursday, October 30, to discuss financial results and other related matters. To participate in the conference call, please dial (877) 852-7898 for U.S. locations, or (706) 634-1095 for international locations. An audio replay of the conference call will be available approximately two hours after the conclusion of the call and will be accessible afterward 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 66236676. 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. 5
  • 7. 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 uses these non-GAAP measures to evaluate the operating performance of the Company and its business segments, including use in connection with forecasting future periods. Management believes that investors will likewise find these non-GAAP measures useful in evaluating such performance. Such measures are frequently used by security analysts, institutional investors and other interested parties in the evaluation of companies in our industry. 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 66,000 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. 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, 6
  • 8. including those set forth in our Report on Form 10-K for the fiscal year ended December 31, 2007 (our “Form 10-K”), and in our Reports on Form 10-Q for the quarters ended March 28 and June 27, 2008, such as: rapidly changing conditions in the automotive industry and disruptions in the financial markets make our sales and operating results difficult to forecast; loss of market share, production cuts and capacity reductions by domestic North American vehicle manufacturers and a market shift in vehicle mix in North America and resulting restructuring initiatives, including bankruptcy actions, of our suppliers and customers; sharply increasing commodity inflationary pressures adversely affecting our profitability and supply base, including any resulting inability of our suppliers to perform as we expect; escalating pricing pressures from our customers; our dependence on our largest customers; strengthening of the U.S. dollar and other foreign currency exchange rate fluctuations impacting our results; our substantial debt and resulting vulnerability to an economic or industry downturn and to rising interest rates; cyclicality of automotive production and sales; risks associated with non-U.S. operations, including economic uncertainty in some regions; contraction in consumer spending, a market shift in vehicle mix and production cuts in Europe; any impairment of our goodwill or other intangible assets; product liability, warranty and recall claims and efforts by customers to alter terms and conditions concerning warranty and recall participation; work stoppages or other labor issues at our facilities or at the facilities of our customers or suppliers; any increase in the expense and funding requirements of our pension and other postretirement benefits; 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 Operations (unaudited) for the three months ended September 26, 2008 and September 28, 2007....................................A2 Consolidated Statements of Operations (unaudited) for the nine months ended September 26, 2008 and September 28, 2007 .....................................A3 Condensed Consolidated Balance Sheets as of September 26, 2008 (unaudited) and December 31, 2007..............................................................A4 Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 26, 2008 and September 28, 2007 .....................................A5 Reconciliation of GAAP Net (Losses) Earnings to EBITDA (unaudited) for the three and nine months ended September 26, 2008 and September 28, 2007.....................A6 Reconciliation of GAAP Net Earnings to Adjusted Earnings (unaudited) for the nine months ended September 28, 2007..............................................................................A7 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 Reports on Form 10-Q for the periods ended March 28, 2008 and June 27, 2008 as filed with the United States Securities and Exchange Commission on February 21, 2008, April 30, 2008 and July 31, 2008, respectively.
  • 10. TRW Automotive Holdings Corp. Consolidated Statements of Operations (Unaudited) Three Months Ended (In millions, except per share amounts) September 26, September 28, 2007 2008 Sales ........................................................................................... $ 3,592 $ 3,495 Cost of sales ............................................................................... 3,411 3,263 Gross profit............................................................................ 181 232 Administrative and selling expenses........................................... 139 123 Amortization of intangible assets ................................................ 9 9 Restructuring charges and asset impairments............................ 32 13 Other income — net.................................................................... (11) (8) Operating income.................................................................. 12 95 Interest expense — net............................................................... 43 54 Accounts receivable securitization costs .................................... — 2 Equity in earnings of affiliates, net of tax .................................... (2) (5) Minority interest, net of tax.......................................................... 2 3 (Losses) earnings before income taxes............................... (31) 41 Income tax expense.................................................................... 23 18 Net (losses) earnings.......................................................... $ (54) $ 23 Basic (losses) earnings per share: (Losses) earnings per share ..................................................... $ (0.53) $ 0.23 Weighted average shares outstanding ..................................... 101.2 100.6 Diluted (losses) earnings per share: (Losses) earnings per share ..................................................... $ (0.53) $ 0.22 Weighted average shares outstanding ..................................... 101.2 103.3 A2
  • 11. TRW Automotive Holdings Corp. Consolidated Statements of Operations (Unaudited) Nine Months Ended (In millions, except per share amounts) September 26, September 28, 2007 2008 Sales ........................................................................................... $ 12,182 $ 10,816 Cost of sales ............................................................................... 11,259 9,931 Gross profit............................................................................ 923 885 Administrative and selling expenses........................................... 407 391 Amortization of intangible assets ................................................ 27 27 Restructuring charges and asset impairments............................ 64 32 Other expense (income) — net................................................... 1 (40) Operating income.................................................................. 424 475 Interest expense — net............................................................... 134 173 Loss on retirement of debt .......................................................... — 155 Accounts receivable securitization costs .................................... 2 4 Equity in earnings of affiliates, net of tax .................................... (17) (20) Minority interest, net of tax.......................................................... 12 13 Earnings before income taxes ............................................. 293 150 Income tax expense.................................................................... 126 116 Net earnings ....................................................................... $ 167 $ 34 Basic earnings per share: Earnings per share.................................................................... $ 1.65 $ 0.34 Weighted average shares outstanding ..................................... 101.0 99.5 Diluted earnings per share: Earnings per share.................................................................... $ 1.63 $ 0.33 Weighted average shares outstanding ..................................... 102.2 102.8 A3
  • 12. TRW Automotive Holdings Corp. Condensed Consolidated Balance Sheets As of (Dollars in millions) September 26, December 31, 2008 2007 (Unaudited) Assets Current assets: Cash and cash equivalents .................................................... $ 511 $ 895 Marketable securities.............................................................. — 4 Accounts receivable — net..................................................... 2,830 2,313 Inventories .............................................................................. 883 822 Prepaid expenses and other current assets ........................... 367 292 Total current assets..................................................................... 4,591 4,326 Property, plant and equipment — net ......................................... 2,809 2,910 Goodwill ...................................................................................... 2,242 2,243 Intangible assets — net............................................................... 706 710 Pension asset.............................................................................. 1,418 1,461 Other assets................................................................................ 621 640 Total assets ............................................................................. $ 12,387 $ 12,290 Liabilities, Minority Interests and Stockholders’ Equity Current liabilities: Short-term debt ...................................................................... $ 72 $ 64 Current portion of long-term debt........................................... 22 30 Trade accounts payable......................................................... 2,314 2,406 Accrued compensation .......................................................... 296 298 Other current liabilities ........................................................... 1,047 917 Total current liabilities ................................................................. 3,751 3,715 Long-term debt............................................................................ 3,149 3,150 Postretirement benefits other than pensions............................... 574 591 Pension benefits.......................................................................... 451 497 Other long-term liabilities ............................................................ 1,027 1,011 Total liabilities.......................................................................... 8,952 8,964 Minority interests ......................................................................... 144 134 Commitments and contingencies Stockholders’ equity: Capital stock .......................................................................... 1 1 Treasury stock........................................................................ — — Paid-in-capital ........................................................................ 1,194 1,176 Retained earnings .................................................................. 568 398 Accumulated other comprehensive earnings ......................... 1,528 1,617 Total stockholders’ equity............................................................ 3,291 3,192 Total liabilities, minority interests, and stockholders’ equity .... $ 12,387 $ 12,290 A4
  • 13. TRW Automotive Holdings Corp. Condensed Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended (Dollars in millions) September 26, September 28, 2008 2007 Operating Activities Net earnings ....................................................................................... $ 167 $ 34 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization.......................................................... 445 408 Net pension and other postretirement benefits income and contributions ................................................................................... (140) (147) Net gains on sale of assets .............................................................. (4) (19) Loss on retirement of debt................................................................ — 155 Other — net ...................................................................................... 23 27 Changes in assets and liabilities, net of effects of businesses acquired: Accounts receivable — net............................................................. (518) (424) Inventories ...................................................................................... (45) (86) Trade accounts payable ................................................................. (94) (10) Prepaid expense and other assets ................................................. (29) (9) Other liabilities ................................................................................ 199 (18) Net cash provided by (used in) operating activities ........................ 4 (89) Investing Activities Capital expenditures, including other intangible assets ..................... (338) (339) Acquisitions of businesses, net of cash acquired............................... (41) (12) Termination of interest rate swaps ..................................................... — (12) Investment in affiliates........................................................................ (5) — Purchase price adjustments ............................................................... — 3 Proceeds from sale/leaseback transactions....................................... 1 6 Net proceeds from asset sales........................................................... 6 35 Net cash used in investing activities............................................... (377) (319) Financing Activities Change in short-term debt.................................................................. 10 66 Net proceeds from revolving credit facility ......................................... 50 638 Proceeds from issuance of long-term debt, net of fees ...................... 4 2,584 Redemption of long-term debt............................................................ (61) (3,000) Proceeds from exercise of stock options............................................ 4 29 Net cash provided by financing activities ....................................... 7 317 Effect of exchange rate changes on cash .......................................... (18) (14) Decrease in cash and cash equivalents............................................. (384) (105) Cash and cash equivalents at beginning of period............................. 895 578 Cash and cash equivalents at end of period ...................................... $ 511 $ 473 A5
  • 14. TRW Automotive Holdings Corp. Reconciliation of GAAP Net (Losses) 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 Reports on Form 10- Q for the periods ended March 28, 2008 and June 27, 2008. The EBITDA measure calculated in the following schedules is a measure used by management to evaluate the operating performance of the Company and its business segments, including use in connection with forecasting future periods. Management believes that investors will likewise find EBITDA useful in evaluating such performance. EBITDA 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) September 26, September 28, 2008 2007 GAAP net (losses) earnings.......................................... $ (54) $ 23 Income tax expense ................................................ 23 18 Interest expense — net ........................................... 43 54 Accounts receivable securitization costs................. — 2 Depreciation and amortization ................................ 145 140 EBITDA ......................................................................... $ 157 $ 237 Nine Months Ended (Dollars in millions) September 26, September 28, 2008 2007 GAAP net earnings ....................................................... $ 167 $ 34 Income tax expense ................................................ 126 116 Interest expense — net ........................................... 134 173 Loss on retirement of debt ...................................... — 155 Accounts receivable securitization costs................. 2 4 Depreciation and amortization ................................ 445 408 EBITDA ......................................................................... $ 874 $ 890 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 old notes, the Company recorded a loss on retirement of debt of $148 million during the nine months ended September 28, 2007. This loss included $112 million for redemption premiums paid, $20 million for the write-off of deferred debt issue 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 nine months ended September 28, 2007. The following reconciliation excludes the impact of the loss on retirement of debt. Nine Months Nine Months Ended Ended September 28, September 28, 2007 2007 Actual Adjusted Adjustments (In millions, except per share amounts) Sales ..................................................................... $ 10,816 $ — $ 10,816 Cost of sales ......................................................... 9,931 — 9,931 Gross profit ....................................................... 885 — 885 Administrative and selling expenses..................... 391 — 391 Amortization of intangible assets .......................... 27 — 27 Restructuring charges and asset impairments ..... 32 — 32 Other income — net.............................................. (40) — (40) Operating income.............................................. 475 — 475 Interest expense, net ............................................ 173 — 173 (a) Loss on retirement of debt .................................... 155 (155) — Account receivable securitization costs................ 4 — 4 Equity in earnings of affiliates, net of tax .............. (20) — (20) Minority interest, net of tax.................................... 13 — 13 Earnings before income taxes .......................... 150 155 305 Income tax expense ............................................. 116 — 116 Net earnings ..................................................... $ 34 $ 155 $ 189 Effective tax rate ................................................... 77% 38% Basic earnings per share: Earnings per share ............................................. $ 0.34 $ 1.90 Weighted average shares................................... 99.5 99.5 Diluted earnings per share: Earnings per share ............................................. $ 0.33 $ 1.84 Weighted average shares................................... 102.8 102.8 (a) Reflects the elimination of the loss on retirement of debt. A7
  • 16. Third Quarter 2008 Financial Results Presentation WE PUT THE THINKING IN SAFETY SYSTEMS. October 30, 2008 © TRW Automotive Holdings Corp. 2008 P1 © TRW Automotive Holdings Corp. 2008
  • 17. Introduction Mark A. Oswald Director, Investor Relations Business Summary John C. Plant President and Chief Executive Officer
  • 18. 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 (our “Form 10-K”), and in our Reports on Form 10-Q for the quarters ended March 28 and June 27, 2008, such as: rapidly changing conditions in the automotive industry and disruptions in the financial markets make our sales and operating results difficult to forecast; loss of market share, production cuts and capacity reductions by domestic North American vehicle manufacturers and a market shift in vehicle mix in North America and resulting restructuring initiatives, including bankruptcy actions, of our suppliers and customers; sharply increasing commodity inflationary pressures adversely affecting our profitability and supply base, including any resulting inability of our suppliers to perform as we expect; escalating pricing pressures from our customers; our dependence on our largest customers; strengthening of the U.S. dollar and other foreign currency exchange rate fluctuations impacting our results; our substantial debt and resulting vulnerability to an economic or industry downturn and to rising interest rates; cyclicality of automotive production and sales; risks associated with non-U.S. operations, including economic uncertainty in some regions; contraction in consumer spending, a market shift in vehicle mix and production cuts in Europe; any impairment of our goodwill or other intangible assets; product liability, warranty and recall claims and efforts by customers to alter terms and conditions concerning warranty and recall participation; work stoppages or other labor issues at our facilities or at the facilities of our customers or suppliers; any increase in the expense and funding requirements of our pension and other postretirement benefits; 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. P3 © TRW Automotive Holdings Corp. 2008
  • 19. Summary Comments • Uncertainty in the global financial markets. – Consumers’ ability to purchase new cars is limited. • Unprecedented period for the automotive industry: – Significantly lower production in both North America and Western Europe. – Mix shift to more fuel efficient cars in North America and smaller cars in Europe. – Significantly higher restructuring expenses. – Increased commodity costs. • TRW remains focused on advancing our strategic priorities: – World class quality – Global reach – Innovative technologies – Lowest cost TRW’s third quarter results reflect the unprecedented challenges facing the industry and global economic markets in general. P4 © TRW Automotive Holdings Corp. 2008
  • 20. Third Quarter Summary Q3 Vehicle Production Financial Summary (% changes based on year-over-year comparisons and CSM data) (US $ in millions, except where noted) Sales Summary Forecast @ $3,592 $3,495 North America July 31st Actual Detroit 3 -18% -23% 2.8% Growth EU OE -7% -3% Asian OE -1% -8% Total Region -12% -16% Q3 2007 Q3 2008 Europe North America -4.2% West -4% -9% Europe 6.0% East 18% 18% ROW 5.5% Total Region 2% -1% ROW Net (Losses) Earnings Summary Slowing Growth China 14% 5% Q3 2008 Q3 2007 India 21% 10% GAAP GAAP Korea 10% -11% Net (Losses) Earnings $ (54) $ 23 Japan 7% 5% South America 15% 13% (a) $ (0.53) $ 0.22 (Losses) Earnings Per Share (a) Represents diluted (losses) earnings per share. P5 © TRW Automotive Holdings Corp. 2008
  • 21. Year-to-Date (9 months) Sales Summary Year-to-Date Vehicle Production Financial Summary (% changes based on year-over-year comparisons and CSM data) (US $ in millions, except where noted) Sales Summary North America Actual $12,182 $10,816 Detroit 3 -19% EU OE -1% 12.6% Growth Asian OE -5% Total Region -13% YTD 2007 YTD 2008 Europe West -4% North America 6.4% East 19% Europe 13.0% ROW 26.8% Total Region 3% ROW Net Earnings Summary China 11% Slowing Growth India 14% YTD 2007 YTD 2008 Korea -3% (a) GAAP GAAP Adjusted Japan 5% Net Earnings $ 167 $ 34 $ 189 South America 18% (b) $ 1.63 $ 0.33 $ 1.84 Earnings Per Share (a) Excludes $155 million of debt retirement charges. For adjusted results reconciliation to GAAP, please see slide P18. (b) Represents diluted earnings per share. P6 © TRW Automotive Holdings Corp. 2008
  • 22. Strategic Priorities – Global Reach Successfully launched 133 programs during Q3… • Renault Megane: Rear Brake Calipers, Electric Park Renault Brake, Electric Park Brake Switch, Electric Power Megane Steering Mechanical Gear, Lower Ball Joint, Actuation. • Opel Insignia: Front and Rear Brake Calipers, Electronic Stability Control, Inner Ball Joint, Outer Tie Opel Rod, Upper Ball Joint, Main Light Switch, Instrument Insignia Panel Switches, Electrical Sun Roof Switches, Multi- functional Controller, Window Lifter Function, and Mirror Adjuster. Ford • Ford Ka: Driver-Curtain-Side Airbags, Steering Wheel, Ka Actuation, Electric Power Steering Mechanical Gear. Participating in the shift to more fuel efficient cars with increased safety content. P7 © TRW Automotive Holdings Corp. 2008
  • 23. Strategic Priorities – Innovative Technologies • Electrically Powered Hydraulic Steering (EPHS): – System for light commercial vehicles highlighted at the IIA Truck Technical Showcase in Hanover, Germany. PIC – Recently launched on Citroen’s Berlingo and Peugeot’s Partner vans. – The steering system offers fuel savings and reduced CO2 emissions. • Slip Control Boost 2 Brake Technology: – The technology is ideal for regenerative and low vacuum powertrain PIC vehicles. – Replaces traditional boosters, master cylinders and vacuum pumps with a 25% smaller and lighter electro-hydraulic control unit. • Active Buckle Lifter: – The product is designed to make fastening seat belts easier. In PIC particular, the feature is intended to assist the elderly and people with mobility challenges. P8 © TRW Automotive Holdings Corp. 2008
  • 24. Strategic Priorities – Lowest Cost During 2008, we have continued to address Restructuring and Asset Impairment Charges and reduce our cost structure: US $ in millions Facility Closures $95 • Bergheim, Austria – Seat Belt plant $51 • St. Louis, Missouri – Module plant $32 $13 Personnel Actions – North America • Salary positions reduced by 18% or Q3 2007 Q3 2008 FY 2007 FY 2008 ≈ 1,200 heads. Estimate • Hourly labor positions reduced by ≈ 2,700 Cash Non Cash heads. In addition to direct restructuring actions, Six Sigma and Business Excellence programs ensure efficiencies are incorporated into our day-to-day operations. P9 © TRW Automotive Holdings Corp. 2008
  • 25. Commodity Inflation • During the third quarter, commodity inflation was $60 million higher compared with the same period last year. • Raising the 2008 full year impact to approximately $170 million. • TRW continues to aggressively act to mitigate the inflation: Estimated Commodity Inflation Impact for 2008 – Design, material and sourcing alternatives. US $ in millions – Work with suppliers and customers to share $170 cost (pricing). act on Greater Imp sults 2nd Half Re • The recent decline of certain quoted commodity spot rates and the strengthening dollar are providing some hope commodity prices will level off or decrease. • Time lag will exist with falling prices. Q1 08 Q2 08 Q3 08 Q4 08 FY 08 P10 © TRW Automotive Holdings Corp. 2008
  • 26. 2008 Operating Environment 2008 Industry Production Assumptions(1) (units in millions) • Forecast for North American North America Europe production lowered to 12.9 million 22.0 15.8 21.7 21.5 15.3 15.1 20.4 19.9 units – down 15% compared with last 13.5 5.8 6.6 12.9 6.7 4.9 4.1 5.0 year. 5.2 5.6 5.5 5.2 • Within the 12.9 million units, light truck 15.9 15.4 15.8 15.5 14.8 10.8 10.1 production is forecasted to be down 9.5 8.0 7.7 24% compared with last year. 2005 2006 2007 2008E 2008E 2005 2006 2007 2008E 2008E • European production lowered to 21.5 OLD NEW OLD NEW million units. Western Europe is We s t e rn E a s t e rn Detroit 3 Transplants forecasted to decline to 14.8 million South America Asia units, or 6%, compared with last year. 5 .4 5 .2 • Shift from large and mid-sized cars to 4 .6 4 .0 4 .0 3 .8 3 .9 4 .0 smaller cars in Europe is expected to 3 .8 3 .6 7 .8 7 .7 6 .9 5 .7 continue. 4.1 4.0 4 .8 3.6 3.0 2.8 11.0 11.0 10 .6 10 .8 10 .0 • Sales and production in the high growth regions of the world are 2005 2006 2007 2008E 2008E 2005 2006 2007 2008E 2008E OLD NEW OLD NEW starting to slow. Japan China Korea South Asia (1) Source: Light vehicle assumptions primarily CSM Worldwide and internal company estimates. P11 © TRW Automotive Holdings Corp. 2008
  • 27. 2008 Full Year Outlook Sales $15.3 billion Net Earnings per Diluted Share(a) $0.90 to $1.10 Restructuring Expenses (pre-tax) $95 million Capital Spending approx. 3.5% of sales Effective Tax Rate to exceed 50% TRW remains a strong global franchise that is well diversified with strong technology and leading market positions. (a) Per share amounts based on assumed weighted average diluted shares outstanding of approximately 101.8 million shares. P12 © TRW Automotive Holdings Corp. 2008
  • 28. Financial Overview Joseph S. Cantie Executive Vice President and Chief Financial Officer
  • 29. Financial Summary • Third quarter performance: Third Quarter Sales ― Sales of $3.6 billion, up 2.8% or $97 Variance to Prior Year million from last year. US $ in millions ― Excluding currency and the increase in module revenues, sales declined $164 8.6% or $299 million. ($299) $3,592 $232 ― Lost contribution margin on the $3,495 sales decline resulted in lower operating profit. ― Third quarter net loss of $54 million or diluted (losses) per share of Q3 2007 Sales Currency Module Sales Core Sales Q3 2008 Sales ($0.53). TRW’s third quarter results reflect significantly lower production and other factors. P14 © TRW Automotive Holdings Corp. 2008
  • 30. Third Quarter Sales Summary Total Sales Segment Sales US $ in millions US $ in millions (a) $2,136 $1,927 $3,592 $3,495 $1,100 $1,022 Chassis $468 $434 OSS Auto Comp 2.8% Q3 2007 Q3 2008 Q3 2007 Q3 2008 Geographic Sales Mix % of total sales Q3 YOY Sales Comparison North North Foreign Currency America America Europe Europe 28.7% Product Volumes 30.8% 55.2% 56.9% Modules New Products Vehicle Production Rest of Rest of Core Products World World Q3 2007 Q3 2008 14.0% 14.4% Customer Pricing (a) Includes $164 million of increased module sales P15 © TRW Automotive Holdings Corp. 2008
  • 31. Third Quarter Results (In millions, except where noted) Q3 2008 Q3 2007 EBITDA(a) GAAP GAAP US $ in millions Results Results $237 Sales $ 3,592 $ 3,495 Operating Income 12 95 Net Interest and Securitization $157 43 56 Equity in Earnings of Affiliates (2) (5) Minority Interest 2 3 23 18 Income Tax Expense Effective Tax Rate N/A 44% Net (Losses) Earnings $ (54) $ 23 Share Count 101.2 103.3 Q3 2008 Q3 2007 (b) $ (0.53) $ 0.22 (Losses) Earnings Per Share (a) Please refer to slide P24 for management’s rationale for using this metric and slide P25 for a reconciliation to GAAP. (b) Represents diluted (losses) earnings per share. P16 © TRW Automotive Holdings Corp. 2008
  • 32. Year-to-Date (9 months) Sales Summary Total Sales Segment Sales US $ in millions US $ in millions $7,034 $5,865 $12,182 $13,000 $3,631 $3,483 $12,000 $10,816 $11,000 Chassis $1,517 $1,468 $10,000 OSS 12.6% Auto Comp $9,000 $8,000 YTD 2007 YTD 2008 $7,000 YTD 2007 YTD 2008 Geographic Sales Mix % of total sales YTD YOY Sales Comparison North North America Foreign Currency America Europe Europe 29.1% 30.8% 57.3% 57.1% Product Volumes Modules New Products Rest of Rest of Vehicle Production World World Customer Pricing 12.1% YTD 2007 YTD 2008 13.6% P17 © TRW Automotive Holdings Corp. 2008
  • 33. Year-to-Date (9 months) Results (In millions, except where noted) Year-to- Year-to-Date 2007 Date 2008 EBITDA(c) GAAP GAAP Adjusting Adjusted US $ in millions Results Results Item Results $890 Sales $ 12,182 $ 10,816 $ - $ 10,816 $874 Operating Income 424 475 - 475 Net Interest and Securitization 136 177 - 177 (a) Loss on Retirement of Debt - 155 (155) - Equity in Earnings of Affiliates (17) (20) - (20) Minority Interest 12 13 - 13 126 116 - 116 Income Tax Expense Effective Tax Rate 43% 77% 38% Net Earnings $ 167 $ 34 $ (155) $ 189 Share Count 102.2 102.8 102.8 YTD 2008 YTD 2007 (b) $ 1.63 $ 0.33 $ 1.84 Earnings Per Share (a) $155 million loss on retirement of debt related to the Company’s 2007 debt recapitalization. (b) Represents diluted earnings per share. (c) Please refer to slide P24 for management’s rationale for using this metric and slide P26 for a reconciliation to GAAP. P18 © TRW Automotive Holdings Corp. 2008
  • 34. Capital Structure Summary Operating Cash Flow Capital Expenditures US $ in millions US $ in millions 2008 2007 $338 $339 First Half GAAP Operating Cash Flow $ (75) $ 69 2008 A/R Securitization Proceeds - (127) 2007 Adjusted Operating Cash Flow $ (75) $ (58) Third Quarter GAAP Operating Cash Flow $ 79 $ (158) A/R Securitization Repayment - 127 Adjusted Operating Cash Flow $ 79 $ (31) Year-to-Date $120 $119 $121 $111 $109 GAAP Operating Cash Flow $ 4 $ (89) $97 A/R Securitization (no balance) - - GAAP Operating Cash Flow $ 4 $ (89) Q1 Q2 Q3 Year-to-Date Capital Structure Period-End Balances US $ in millions Variance Memo: Increase/ First Half Year End Q3 2008 Q3 2007 (Decrease) 2008 2007 Total Cash & Marketable Securities $ 511 $ 486 $ 25 $ 453 $ 899 Total Debt 3,243 3,515 (272) 3,122 3,244 Total Equity 3,291 2,588 703 3,572 3,192 Total Capital $ 6,534 $ 6,103 $ 431 $ 6,694 $ 6,436 Total Debt / Capital Ratio 50% 58% (8 pts.) 47% 50% (a) Net Debt $ 2,732 $ 3,029 $ (297) $ 2,669 $ 2,345 (a) Total debt less total cash & marketable securities. For net debt reconciled to the closest GAAP equivalent, please refer to slide P27. P19 © TRW Automotive Holdings Corp. 2008
  • 35. Strong Liquidity Available Liquidity Committed Liquidity Facilities (as of September 26, 2008 -- US dollar equivalents in millions) • Credit Facilities Approx. $1,500 – $1.4 billion revolving credit facility through May 2012 $830 • Accounts Receivable Facilities $511 United States Facility $330 – $209 million facility through December 2009 Total Liquidity Revolver A/R Facilities Cash Capital Structure Other Facilities US $ in millions Key Credit Facility Financial Covenants – €155 million of facilities – renewable (as of September 26, 2008) annually – £25 million facility – renewable Required In compliance annually Maximum Leverage 4.00x Yes Minimum Interest Coverage 2.75x Yes P20 © TRW Automotive Holdings Corp. 2008
  • 36. Capital Structure Summary Net Debt (a) US $ in millions Debt transactions Net debt outstanding added $57 million in down $297 million 2006 and $145 million Dalphimetal acquisition compared to prior year in 2007 increased net debt third quarter by $244 million $(297) $3,029 $2,732 $2,560 $2,443 $2,345 Dec 31, 2005 Dec 31, 2006 Dec 31, 2007 Sep 28, 2007 Sep 26, 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 P27. P21 © TRW Automotive Holdings Corp. 2008
  • 37. Outlook Discussion Full Year 2008 • Full year sales of approximately $15.3 billion. – Fourth quarter sales of approximately $3.1 billion. – Lower production levels, increased restructuring costs and currency movement. • Earnings per share to be in the range of $0.90 to $1.10. • Pre-tax restructuring expenses raised to approximately $95 million. – Fourth quarter restructuring and asset impairment charges of approximately $30 million. – The Company is evaluating additional actions not included in the above guidance. • Capital spending will remain at approximately 3.5% of sales. • Effective tax rate for the full year is expected to exceed 50%. The challenges we faced over the past three months are expected to continue into the fourth quarter of 2008. P22 © TRW Automotive Holdings Corp. 2008
  • 38. Financial Reconciliations
  • 39. EBITDA Measurement The accompanying unaudited consolidated financial information and reconciliation of GAAP net earnings (losses) 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 each of the quarters ended March 28, and June 27, 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 the operating performance of the Company and its business segments. Management believes that investors will likewise find EBITDA useful in evaluating such performance. EBITDA 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. P24 © TRW Automotive Holdings Corp. 2008
  • 40. Third Quarter EBITDA (US $ in millions) Q3 2008 Q3 2007 GAAP Net (Losses) Earnings $ (54) $ 23 Income Tax Expense 23 18 Net Interest 43 54 Accounts Receivable Securitization Costs - 2 Depreciation & Amortization 145 140 EBITDA $ 157 $ 237 Memo: Restructuring & Asset Impairments Included in EBITDA $ 32 $ 13 P25 © TRW Automotive Holdings Corp. 2008
  • 41. Year-to-Date (9 months) 2008 EBITDA (US $ in millions) Year-to- Year-to- Date 2008 Date 2007 GAAP Net Earnings $ 167 $ 34 Income Tax Expense 126 116 Net Interest 134 173 Loss on Retirement of Debt - 155 Accounts Receivable Securitization Costs 2 4 Depreciation & Amortization 445 408 EBITDA $ 874 $ 890 Memo: Restructuring & Asset Impairments Included in EBITDA $ 64 $ 32 P26 © TRW Automotive Holdings Corp. 2008
  • 42. Net Debt Reconciliation (US $ in millions) Period-End Balances 12/31/05 12/31/06 12/31/07 9/28/07 9/26/08 Cash $ 659 $ 578 $ 895 $ 473 $ 511 Marketable securities 17 11 4 13 - Total cash and marketable securities 676 589 899 486 511 Short term debt 98 69 64 161 72 Term loan facilities 1,593 1,582 1,098 1,100 1,095 Revolving credit facilities - - 429 638 479 Senior & senior subordinated notes due 2013 1,255 1,284 19 18 - Senior notes due 2014 and 2017 - - 1,505 1,489 1,492 Lucas Varity senior notes 181 - - - - Other borrowings 109 97 129 109 105 Total debt 3,236 3,032 3,244 3,515 3,243 Net debt $ 2,560 $ 2,443 $ 2,345 $ 3,029 $ 2,732 P27 © TRW Automotive Holdings Corp. 2008