2008 Q4 TRW Auto Earnings Presentation

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2008 Q4 TRW Auto Earnings Presentation

  1. 1. Fourth Quarter and Full Year 2008 Financial Results Presentation WE PUT THE THINKING IN SAFETY SYSTEMS. Materials Included Pages -Press Release 1-7 -Financial Summaries A1-A10 -Presentation P1-P30 February 20, 2009 © TRW Automotive Holdings Corp. 2008 P1 © TRW Automotive Holdings Corp. 2008
  2. 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 Reports Fourth Quarter and Full Year 2008 Financial Results Fourth-quarter sales of $2.8 billion -- a decline of 28%; full-year sales of $15.0 • billion -- an increase of 2%. Fourth-quarter GAAP net loss of ($9.35) per share; full-year GAAP net loss of • ($7.71) per share. Excluding special items, fourth-quarter net loss of ($0.73) per share; full-year net • earnings of $1.50 per diluted share. Fourth-quarter free cash flow (cash flow from operating activities less capital • expenditures) of $625 million; 2008 free cash flow of $291 million. Year-end net debt of $2.2 billion -- a decline of $189 million since last year. • LIVONIA, MICHIGAN, February 20, 2009 — TRW Automotive Holdings Corp. (NYSE: TRW), the global leader in active and passive safety systems, today reported fourth- quarter 2008 financial results with sales of $2.8 billion, a decrease of 27.6 percent compared to the same period a year ago. The Company reported a GAAP fourth quarter net loss of $946 million or ($9.35) per diluted share, which compares to net earnings of $56 million or $0.55 per diluted share in the prior year period. The 2008 fourth quarter GAAP net loss includes goodwill and other intangible asset impairment charges of $787 million, restructuring and fixed asset impairment charges of $81 million and a one-off net tax expense of $4 million. Similarly, the prior year fourth quarter included $19 million of restructuring charges and asset impairments and a one- off tax benefit of $14 million. Excluding these special items, TRW’s 2008 fourth-quarter net loss was $74 million, or ($0.73) per diluted share, which compares to net earnings of $61 million or $0.59 per diluted share in the prior year period. 1
  3. 3. The Company’s full-year 2008 sales grew to a record $15.0 billion, an increase of 2.0 percent compared with the prior year. For the year, GAAP net losses were $779 million or ($7.71) per diluted share, which compares to 2007 earnings of $90 million or $0.88 per diluted share. Excluding special items, 2008 net earnings were $1.50 per diluted share, down from $2.68 per diluted share a year ago. “The automotive industry is in the midst of extraordinary challenges resulting from the sudden and steep decline in global automotive production and economic activity. TRW’s fourth quarter results reflect those challenges,” said John C. Plant, President and Chief Executive Officer. “We are confident the actions we have taken and will continue to take, to align our business with the current industry conditions, will allow us to prevail through these challenging times and prosper when the industry returns to a more stable environment.” Fourth Quarter 2008 The Company reported fourth-quarter 2008 sales of $2.8 billion, a decrease of $1.1 billion or 27.6 percent over the prior year period. The 2008 quarter was adversely impacted by lower sales in all geographic regions resulting from sharply reduced vehicle production volumes. Currency movements during the quarter also had a negative impact on sales compared to the same period a year ago. As a result of the negative economic and automotive industry conditions, demand for the Company’s products has declined substantially resulting in the impairment of certain of the Company’s long-lived assets including goodwill, customer relationships and fixed assets totaling $854 million. In addition, the Company has incurred restructuring charges relating primarily to employment separations totaling $14 million. Excluding asset impairments and restructuring charges from both periods, operating income for the fourth quarter of 2008 was a loss of $24 million, which compares to income of $168 million in the prior year period. The year-to-year decrease was driven primarily by the profit impact of lower sales and, to a lesser extent, net currency losses. Net interest and securitization expense for the fourth quarter of 2008 totaled $48 million, which compares to $56 million in the prior year. The year-to-year decrease is due to lower interest rates between the periods. 2
  4. 4. Tax expense for the fourth quarter of 2008 was nil, which compares to a $39 million expense in the prior year. The current year period included a net tax expense of $4 million relating to special items while the prior year period included a benefit of $14 million pertaining to a one-off tax matter. The Company reported a 2008 fourth-quarter GAAP net loss of $946 million, or ($9.35) per diluted share, which compares to GAAP net earnings of $56 million, or $0.55 per diluted share in the 2007 period. Excluding the special items referred to above, the Company reported a fourth-quarter 2008 net loss of $74 million, or ($0.73) per diluted share, which compares to net earnings of $61 million or $0.59 per diluted share in the 2007 period. Earnings before interest, securitization costs, taxes, depreciation and amortization and special items (“adjusted EBITDA”) were $101 million in the fourth quarter of 2008, as compared to the prior year level of $319 million. See page A6 for a description of the special items excluded in calculating adjusted EBITDA. Full Year 2008 The Company reported 2008 sales of $15.0 billion, an increase of $293 million or 2.0 percent compared to prior year sales. The increase in sales resulted primarily from the positive effect of foreign currency translation during the first nine months of the year and above trend sales of lower margin modules. For full-year 2008, the Company incurred goodwill, customer relationship and fixed asset impairments as well as restructuring charges totaling $932 million compared to restructuring charges and asset impairments of $51 million for 2007. Excluding these restructuring charges and asset impairments from both periods, operating income in 2008 was $464 million, which is a decrease of $211 million or 31 percent compared to the prior year result of $675 million. Positive factors such as savings generated from cost improvement and efficiency programs, including reductions in pension and OPEB related costs, were more than offset by the profit impact resulting from lower core sales, a negative mix of products sold, higher commodity prices, price reductions provided to customers and foreign currency losses. 3
  5. 5. Net interest and securitization expense for 2008 totaled $184 million, which represents a significant improvement from the prior year result of $233 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 2008 was $126 million compared to $155 million in the prior year. Excluding one-off tax items recorded in the prior year, tax expense was $126 million in 2008 compared to $175 million in 2007. The Company reported a 2008 full-year GAAP net loss of $779 million, or ($7.71) per diluted share, which compares to GAAP net earnings of $90 million, or $0.88 per diluted share in 2007. Excluding special items, the Company reported full-year 2008 net earnings of $153 million, or $1.50 per diluted share, which compares to $276 million or $2.68 per diluted share in 2007. Adjusted EBITDA totaled $1,039 million, compared to $1,241 million in the prior year. See page A6 for a description of the special items excluded in calculating adjusted EBITDA. Cash Flow and Capital Structure Fourth quarter 2008 net cash flow from operating activities was $769 million, which compares to $826 million in the prior year. Fourth quarter 2008 capital expenditures were $144 million compared to $174 million in 2007. Free cash flow (cash flow from operating activities less capital expenditures) was $625 million compared to $652 million in the prior year quarter. For full-year 2008, net cash flow from operating activities was $773 million, which compares to $737 million in the prior year. Capital expenditures were $482 million in 2008 compared to $513 million in 2007. Free cash flow (cash flow from operating activities less capital expenditures) was $291 million compared to $224 million in 2007. 4
  6. 6. As of December 31, 2008, the Company had $2,922 million of debt and $766 million of cash and marketable securities, resulting in net debt (defined as debt less cash and marketable securities) of $2,156 million. This compares favorably to net debt of $2,345 million at the end of 2007. At the end of 2008, committed liquidity facilities and cash on hand provided the Company with available liquidity in excess of $1.5 billion. On February 13, 2009, the Company drew down additional funds under its $1.4 billion revolving credit facility (bringing the total outstanding to $1.1 billion) in order to bolster its liquidity position due to concerns about ongoing disruptions in the financial markets and uncertainty in the automotive industry and global economy. 2009 Outlook TRW’s 2009 planning assumptions for industry production volumes are approximately 9.3 million in North America and 16.5 million for Europe, down 27% and 20%, respectively, compared to 2008 levels. Based on these production levels and the Company’s current expectations for foreign currency exchange rates, full-year sales are expected to range between $10.9 billion and $11.3 billion, with first-quarter sales expected to be approximately $2.4 billion. “We anticipate 2009 will be another challenging year for the automotive industry, especially in our major markets of North America and Europe where customer production volumes are anticipated to be down significantly,” said Mr. Plant. “TRW’s capital structure and strong liquidity, combined with management’s decisive actions to mitigate the effects of the downturn, will help TRW to remain a leading supplier to the world’s car manufacturers.” Fourth Quarter and Full Year 2008 Conference Call The Company will host its fourth-quarter conference call at 8:30 a.m. (EST) today, Friday, February 20th, 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 5
  7. 7. the U.S. should dial (706) 645-9291. The replay code is 80725154. A live audio webcast and replay of the conference call will also be available on the Company’s website at www.trw.com. 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”), such as net (loss) earnings, operating income and diluted earnings per share each excluding special items, adjusted EBITDA and free cash flow. 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 should not be considered in isolation or as a substitute for our reported results prepared in accordance with GAAP 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 financial measure and for share amounts used to derive earnings per share, please see the financial schedules that accompany this release. About TRW With 2008 sales of $15.0 billion, TRW Automotive ranks among the world's leading automotive suppliers. Headquartered in Livonia, Michigan, USA, the Company, through its subsidiaries, operates in 26 countries and employs approximately 65,000 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. 6
  8. 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 (our “Form 10-K”), and in our Reports on Form 10-Q for the quarters ended March 28, June 27, and September 26, 2008, such as: production cuts and capacity reductions by vehicle manufacturers and resulting restructuring initiatives, including bankruptcy actions, of our suppliers and customers; the financial condition of OEMs, particularly the Detroit Three, adversely affecting us and the viability of our supply base; disruptions in the financial markets adversely impacting the availability and cost of credit could negatively affect our business; our substantial debt and resulting vulnerability to an economic or industry downturn and to rising interest rates; escalating pricing pressures from our customers; commodity inflationary pressures adversely affecting our profitability and supply base; our dependence on our largest customers; 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; strengthening of the U.S. dollar and other foreign currency exchange rate fluctuations impacting our results; our pension and other postretirement benefits expense and funding requirements could materially increase; risks associated with non-U.S. operations, including economic uncertainty in some regions; work stoppages or other labor issues at our facilities or at the facilities of our customers or suppliers; volatility in our annual effective tax rate resulting from a change in earnings mix and 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. 9. TRW Automotive Holdings Corp. Index of Condensed Consolidated Financial Information Page Consolidated Statements of Operations (unaudited) for the three months ended December 31, 2008 and December 31, 2007................................A2 Consolidated Statements of Operations for the years ended December 31, 2008 (unaudited) and December 31, 2007.........................A3 Consolidated Balance Sheets as of December 31, 2008 (unaudited) and December 31, 2007 ............................................................................................................A4 Condensed Consolidated Statements of Cash Flows (unaudited) for the years ended December 31, 2008 and December 31, 2007............................................A5 Reconciliation of Non-GAAP Financial Measures (unaudited) for the three months and years ended December 31, 2008 and December 31, 2007 ...............A6 Reconciliation of GAAP Net (Losses) Earnings to Adjusted (Losses) Earnings (unaudited) for the three months ended December 31, 2008 ....................................................A7 Reconciliation of GAAP Net Earnings to Adjusted Earnings (unaudited) for the three months ended December 31, 2007 .......................................................................A8 Reconciliation of GAAP Net (Losses) Earnings to Adjusted Earnings (unaudited) for the year ended December 31, 2008 .....................................................................................A9 Reconciliation of GAAP Net Earnings to Adjusted Earnings (unaudited) for the year ended December 31, 2007 ....................................................................................A10 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, June 27, 2008, and September 26, 2008 as filed with the United States Securities and Exchange Commission on February 21, 2008, April 30, 2008, July 31, 2008 and October 30, 2008, respectively.
  10. 10. TRW Automotive Holdings Corp. Consolidated Statements of Operations (Unaudited) Three Months Ended December 31, (In millions, except per share amounts) 2008 2007 Sales............................................................................................ $ 2,813 $ 3,886 Cost of sales ................................................................................ 2,718 3,563 Gross profit ............................................................................ 95 323 Administrative and selling expenses............................................ 116 146 Amortization of intangible assets ................................................. 4 9 Restructuring charges and fixed asset impairments .................... 81 19 Goodwill impairments .................................................................. 458 — Intangible asset impairments ....................................................... 329 — Other income — net..................................................................... (1) — Operating (losses) income ..................................................... (892) 149 Interest expense — net................................................................ 48 55 Accounts receivable securitization costs ..................................... — 1 Equity in losses (earnings) of affiliates, net of tax........................ 3 (8) Minority interest, net of tax........................................................... 3 6 (Losses) earnings before income taxes................................ (946) 95 Income tax expense..................................................................... — 39 Net (losses) earnings........................................................... $ (946) $ 56 Basic (losses) earnings per share: (Losses) earnings per share ...................................................... $ (9.35) $ 0.56 Weighted average shares outstanding ...................................... 101.2 100.6 Diluted (losses) earnings per share: (Losses) earnings per share ...................................................... $ (9.35) $ 0.55 Weighted average shares outstanding ...................................... 101.2 102.7 A2
  11. 11. TRW Automotive Holdings Corp. Consolidated Statements of Operations Years Ended December 31, (In millions, except per share amounts) 2008 2007 (Unaudited) Sales ............................................................................................ $ 14,995 $ 14,702 Cost of sales ................................................................................ 13,977 13,494 Gross profit ............................................................................ 1,018 1,208 Administrative and selling expenses............................................ 523 537 Amortization of intangible assets ................................................. 31 36 Restructuring charges and fixed asset impairments .................... 145 51 Goodwill impairments................................................................... 458 — Intangible asset impairments ....................................................... 329 — Other income — net..................................................................... — (40) Operating (losses) income ..................................................... (468) 624 Interest expense — net................................................................ 182 228 Loss on retirement of debt ........................................................... — 155 Accounts receivable securitization costs ..................................... 2 5 Equity in earnings of affiliates, net of tax ..................................... (14) (28) Minority interest, net of tax........................................................... 15 19 (Losses) earnings before income taxes................................ (653) 245 Income tax expense..................................................................... 126 155 Net (losses) earnings........................................................... $ (779) $ 90 Basic (losses) earnings per share: (Losses) earnings per share ...................................................... $ (7.71) $ 0.90 Weighted average shares outstanding ...................................... 101.1 99.8 Diluted (losses) earnings per share: (Losses) earnings per share ...................................................... $ (7.71) $ 0.88 Weighted average shares outstanding ...................................... 101.1 102.8 A3
  12. 12. TRW Automotive Holdings Corp. Consolidated Balance Sheets As of December 31, (Dollars in millions) 2008 2007 (Unaudited) Assets Current assets: Cash and cash equivalents .................................................... $ 756 $ 895 Marketable securities ............................................................. 10 4 Accounts receivable — net..................................................... 1,570 2,313 Inventories.............................................................................. 694 822 Prepaid expenses and other current assets........................... 127 65 Deferred income taxes ........................................................... 82 227 Total current assets .................................................................... 3,239 4,326 Property, plant and equipment — net ......................................... 2,518 2,910 Goodwill ...................................................................................... 1,765 2,243 Intangible assets — net .............................................................. 373 710 Pension asset ............................................................................. 801 1,461 Deferred income taxes ................................................................ 93 88 Other assets................................................................................ 483 552 Total assets............................................................................. $ 9,272 $ 12,290 Liabilities, Minority Interests and Stockholders’ Equity Current liabilities: Short-term debt...................................................................... $ 66 $ 64 Current portion of long-term debt........................................... 53 30 Trade accounts payable ........................................................ 1,793 2,406 Accrued compensation .......................................................... 219 298 Income taxes ......................................................................... 23 63 Other current liabilities ........................................................... 1,010 854 Total current liabilities ................................................................. 3,164 3,715 Long-term debt............................................................................ 2,803 3,150 Postretirement benefits other than pensions .............................. 486 591 Pension benefits ......................................................................... 778 497 Deferred income taxes ................................................................ 232 552 Long-term liabilities ..................................................................... 541 459 Total liabilities ......................................................................... 8,004 8,964 Minority interests......................................................................... 137 134 Commitments and contingencies Stockholders’ equity: Capital stock .......................................................................... 1 1 Treasury stock ....................................................................... — — Paid-in-capital ........................................................................ 1,199 1,176 (Accumulated deficit)/retained earnings................................. (378) 398 Accumulated other comprehensive earnings......................... 309 1,617 Total stockholders’ equity ........................................................... 1,131 3,192 Total liabilities, minority interests and stockholders’ equity..... $ 9,272 $ 12,290 A4
  13. 13. TRW Automotive Holdings Corp. Condensed Consolidated Statements of Cash Flows (Unaudited) Years Ended December 31, (Dollars in millions) 2008 2007 Operating Activities Net (losses) earnings........................................................................ $ (779) $ 90 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization........................................................ 576 557 Net pension and other postretirement benefits income and contributions ................................................................................... (192) (184) Net gain on sale of assets .............................................................. (5) (20) Loss on retirement of debt .............................................................. — 155 Fixed asset impairment charges..................................................... 87 16 Goodwill and intangible asset impairment charges ........................ 787 — Other — net .................................................................................... 43 7 Changes in assets and liabilities, net of effects of businesses acquired: Accounts receivable, net ................................................................ 612 (66) Inventories ...................................................................................... 91 22 Trade accounts payable ................................................................. (460) 133 Prepaid expense and other assets ................................................. (67) 144 Other liabilities ................................................................................ 80 (117) Net cash provided by operating activities ..................................... 773 737 Investing Activities Capital expenditures, including other intangible assets.................... (482) (513) Acquisitions of businesses, net of cash acquired ............................. (40) (12) Termination of interest rate swaps ................................................... — (12) Investment in affiliates ...................................................................... (1) (1) Purchase price adjustments ............................................................. — 3 Proceeds from sale/leaseback transactions ..................................... 1 28 Net proceeds from asset sales ......................................................... 15 39 Net cash used in investing activities ............................................. (507) (468) Financing Activities Change in short-term debt................................................................ 6 (27) Net (repayments on) proceeds from revolving credit facility............. (229) 429 Proceeds from issuance of long-term debt, net of fees .................... 6 2,591 Redemption of long-term debt .......................................................... (68) (3,011) Proceeds from exercise of stock options .......................................... 4 29 Other — net ...................................................................................... (6) — Net cash (used in) provided by financing activities ...................... (287) 11 Effect of exchange rate changes on cash ........................................ (118) 37 Increase (decrease) in cash and cash equivalents .......................... (139) 317 Cash and cash equivalents at beginning of period........................... 895 578 Cash and cash equivalents at end of period .................................... $ 756 $ 895 A5
  14. 14. TRW Automotive Holdings Corp. Reconciliation of Non-GAAP Financial Measures (Unaudited) The reconciliation schedules 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, June 27, 2008, and September 26, 2008 which contain summary historical data. Since all companies do not use identical calculations, our definition and presentation of EBITDA, Adjusted EBITDA and free cash flow may not be comparable to similarly titled measures reported by other companies. EBITDA and Adjusted EBITDA The EBITDA measure calculated in the following schedule 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. Adjusted EBITDA is defined as EBITDA adjusted to exclude restructuring charges, asset impairments and other significant special items. Management believes that Adjusted EBITDA is useful to both management and investors because excluding these items is helpful in understanding the performance of on-going operations separate from items that may have a disproportionate impact on the Company's financial results in any particular period. EBITDA and Adjusted EBITDA are not recognized terms under GAAP and do not purport to be alternatives to net (losses) earnings as an indicator of operating performance, nor to cash flows from operating activities as a measure of liquidity. Additionally, EBITDA and Adjusted EBITDA are not intended to be measures of free cash flow for management’s discretionary use, as they do not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Three Months Ended Years Ended December 31, December 31, (Dollars in millions) 2008 2007 2008 2007 GAAP net (losses) earnings ....................................... $ (946) $ 56 $ (779) $ 90 Income tax expense ............................................ — 39 126 155 Interest expense — net ....................................... 48 55 182 228 Loss on retirement of debt................................... — — — 155 Accounts receivable securitization costs ............. — 1 2 5 Depreciation and amortization............................. 131 149 576 557 EBITDA ...................................................................... (767) 300 107 1,190 Restructuring charges and fixed asset impairments ....................................................... 81 19 145 51 Goodwill impairments ........................................ 458 — 458 — Intangible asset impairments ............................. 329 — 329 — Adjusted EBITDA ....................................................... $ 101 $ 319 $ 1,039 $ 1,241 Free Cash Flow Free cash flow represents net cash provided by operating activities less capital expenditures, and is used by management in its analysis of the Company’s ability to service and repay its debt and for forecasting future periods. However, this measure should not be used as a substitute for net cash provided by operating activities since it does not reflect cash used to service debt and, therefore, does not reflect funds available for investment or other discretionary uses. Three Months Ended Years Ended December 31, December 31, (Dollars in millions) 2008 2007 2008 2007 Cash flow provided by operating activities........................... $ 769 $ 826 $ 773 $ 737 Capital expenditures ........................................................... (144) (174) (482) (513) Free cash flow ..................................................................... $ 625 $ 652 $ 291 $ 224 A6
  15. 15. TRW Automotive Holdings Corp. Reconciliation of GAAP Net (Losses) Earnings to Adjusted Earnings (Unaudited) In accordance with SFAS 142 and SFAS 144, the Company recorded goodwill impairment charges of $458 million, intangible asset impairment charges of $329 million and fixed asset impairment charges of $67 million. Additionally, the Company recorded restructuring charges of $25 million related primarily to severance, retention and outplacement services, and net curtailment gains of $11 million. Three Months Three Months Ended Ended December 31, December 31, 2008 2008 Actual Adjusted Adjustments (In millions, except per share amounts) Sales.................................................................. $ 2,813 $ — $ 2,813 Cost of sales ...................................................... 2,718 — 2,718 Gross profit .................................................... 95 — 95 Administrative and selling expenses ................. 116 — 116 Amortization of intangible assets....................... 4 — 4 Restructuring charges and fixed asset (a) impairments ...................................................... 81 (81) — (b) Goodwill impairments ........................................ 458 (458) — (c) Intangible asset impairments............................. 329 (329) — Other income — net .......................................... (1) — (1) Operating (losses) income............................. (892) 868 (24) Interest expense, net ......................................... 48 — 48 Account receivable securitization costs............. — — — Equity in earnings of affiliates, net of tax........... 3 — 3 Minority interest, net of tax ................................ 3 — 3 (Losses) earnings before income taxes ........ (946) 868 (78) (d) Income tax expense ......................................... — (4) (4) Net (losses) earnings .................................... $ (946) $ 872 $ (74) Effective tax rate................................................ — — Basic (losses) earnings per share: (Losses) earnings per share............................ $ (9.35) $ (0.73) Weighted average shares outstanding............ 101.2 101.2 Diluted (losses) earnings per share: (Losses) earnings per share............................ $ (9.35) $ (0.73) Weighted average shares outstanding............ 101.2 101.2 (a) Represents the elimination of restructuring charges, fixed asset impairments and net curtailment gains. (b) Represents the elimination of goodwill impairments. (c) Represents the elimination of intangible asset impairments. (d) Represents the elimination of a tax benefit recorded through other comprehensive earnings of $2 million, the tax benefit related to restructuring charges and each of the impairments of $18 million, and the tax expense related to the one-time write off of certain tax assets of $24 million. A7
  16. 16. TRW Automotive Holdings Corp. Reconciliation of GAAP Net Earnings to Adjusted Earnings (Unaudited) The Company recorded restructuring charges and fixed asset impairments of $19 million, of which $10 million related primarily to severance, retention and outplacement services and $9 million related to fixed asset impairments. In accordance with SFAS 109, the Company recorded a non-cash tax benefit of $11 million related to pension and OPEB gains recorded through other comprehensive earnings. Three Months Three Months Ended Ended December 31, December 31, 2007 2007 Actual Adjustments Adjusted (In millions, except per share amounts) Sales.................................................................. $ 3,886 $ — $ 3,886 Cost of sales ...................................................... 3,563 — 3,563 Gross profit .................................................... 323 — 323 Administrative and selling expenses ................. 146 — 146 Amortization of intangible assets....................... 9 — 9 Restructuring charges and fixed asset (a) Impairments ...................................................... 19 (19) — Goodwill impairments ........................................ — — — Intangible asset impairments............................. — — — Other income — net .......................................... — — — Operating income .......................................... 149 19 168 Interest expense, net ......................................... 55 — 55 Account receivable securitization costs............. 1 — 1 Equity in earnings of affiliates, net of tax........... (8) — (8) Minority interest, net of tax ................................ 6 — 6 Earnings before income taxes....................... 95 19 114 (b) Income tax expense ......................................... 39 14 53 Net earnings ................................................. $ 56 $ 5 $ 61 Effective tax rate................................................ 41% 46% Basic earnings per share: Earnings per share .......................................... $ 0.56 $ 0.61 Weighted average shares outstanding............ 100.6 100.6 Diluted earnings per share: Earnings per share .......................................... $ 0.55 $ 0.59 Weighted average shares outstanding............ 102.7 102.7 (a) Represents the elimination of the restructuring charges and fixed asset impairments. (b) Represents the elimination of the tax benefit related to the SFAS 109 adjustment of $11 million and the elimination of the tax benefit related to restructuring charges and fixed asset impairments of $3 million. A8
  17. 17. TRW Automotive Holdings Corp. Reconciliation of GAAP Net (Losses) Earnings to Adjusted (Losses) Earnings (Unaudited) In accordance with SFAS 142 and SFAS 144, the Company recorded goodwill impairment charges of $458 million, intangible asset impairment charges of $329 million and fixed asset impairment charges of $87 million. Additionally, the Company recorded restructuring charges of $69 million related primarily to severance, retention and outplacement services, and net curtailment gains of $11 million. Year Ended Year Ended December 31, December 31, 2008 2008 Actual Adjustments Adjusted (In millions, except per share amounts) Sales ......................................................................... $ 14,995 $ — $ 14,995 Cost of sales ............................................................. 13,977 — 13,977 Gross profit............................................................ 1,018 — 1,018 Administrative and selling expenses......................... 523 — 523 Amortization of intangible assets .............................. 31 — 31 Restructuring charges and fixed asset (a) impairments............................................................. 145 (145) — (b) Goodwill impairments................................................ 458 (458) — (c) Intangible asset impairments .................................... 329 (329) — Other income — net.................................................. — — — Operating (losses) income .................................... (468) 932 464 Interest expense, net ................................................ 182 — 182 Loss on retirement of debt ........................................ — — — Account receivable securitization costs .................... 2 — 2 Equity in earnings of affiliates, net of tax .................. (14) — (14) Minority interest, net of tax........................................ 15 — 15 (Losses) earnings before income taxes................ (653) 932 279 (d) Income tax expense ................................................. 126 — 126 Net (losses) earnings ........................................... $ (779) $ 932 $ 153 Effective tax rate ....................................................... — 45% Basic (losses) earnings per share: (Losses) earnings per share ................................... $ (7.71) $ 1.51 Weighted average shares outstanding ................... 101.1 101.1 Diluted (losses) earnings per share: (Losses) earnings per share ................................... $ (7.71) $ 1.50 Weighted average shares outstanding ................... 101.1 102.0 (a) Represents the elimination of restructuring charges, fixed asset impairments and net curtailment gains. (b) Represents the elimination of goodwill impairments. (c) Represents the elimination of intangible asset impairments. (d) Represents the elimination of a tax benefit recorded through other comprehensive earnings of $2 million, the tax benefit related to restructuring charges and each of the impairments of $22 million, and the tax expense related to the one-time write off of certain tax assets of $24 million, which together net to zero. A9
  18. 18. 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 year ended December 31, 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. Such loss on retirement of debt carries zero tax benefit due to the Company’s tax loss position in the respective jurisdiction. 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 year ended December 31, 2007. Such loss on retirement of debt carries zero tax benefit due to the Company’s tax loss position in the respective jurisdiction. In addition, the Company recorded restructuring charges and fixed asset impairments of $51 million, of which $35 million related primarily to severance, retention and outplacement services and $16 million related to fixed asset impairments. In accordance with SFAS 109, the Company also recorded a non-cash tax benefit of $11 million related to pension and OPEB gains recorded through other comprehensive earnings. Year Ended Year Ended December 31, December 31, 2007 2007 Actual Adjustments Adjusted (In millions, except per share amounts) Sales ................................................................................. $ 14,702 $ — $ 14,702 Cost of sales ..................................................................... 13,494 — 13,494 Gross profit.................................................................... 1,208 — 1,208 Administrative and selling expenses ................................. 537 — 537 Amortization of intangible assets....................................... 36 — 36 (a) Restructuring charges and fixed asset impairments.......... 51 (51) — Goodwill impairments ........................................................ — — — Intangible asset impairments............................................. — — — Other income — net .......................................................... (40) — (40) Operating income .......................................................... 624 51 675 Interest expense, net......................................................... 228 — 228 (b) Loss on retirement of debt................................................. 155 (155) — Account receivable securitization costs............................. 5 — 5 Equity in earnings of affiliates, net of tax ........................... (28) — (28) Minority interest, net of tax ................................................ 19 — 19 Earnings before income taxes....................................... 245 206 451 (c) Income tax expense ......................................................... 155 20 175 Net earnings ................................................................. $ 90 $ 186 $ 276 Effective tax rate ............................................................... 63% 39% Basic earnings per share: Earnings per share .......................................................... $ 0.90 $ 2.77 Weighted average shares outstanding ............................ 99.8 99.8 Diluted earnings per share: Earnings per share .......................................................... $ 0.88 $ 2.68 Weighted average shares outstanding ............................ 102.8 102.8 (a) Reflects the elimination of restructuring charges and fixed asset impairments. (b) Reflects the elimination of the loss on retirement of debt. (c) Represents the elimination of the tax benefit related to the SFAS 109 adjustment of $11 million and the tax benefit related to restructuring charges and fixed asset impairments of $9 million. A10
  19. 19. Fourth Quarter and Full Year 2008 Financial Results Presentation WE PUT THE THINKING IN SAFETY SYSTEMS. February 20, 2009 © TRW Automotive Holdings Corp. 2009 P1 © TRW Automotive Holdings Corp. 2009
  20. 20. Introduction Mark A. Oswald Director, Investor Relations Business Summary John C. Plant President and Chief Executive Officer
  21. 21. 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, June 27, and September 26, 2008, such as: production cuts and capacity reductions by vehicle manufacturers and resulting restructuring initiatives, including bankruptcy actions, of our suppliers and customers; the financial condition of OEMs, particularly the Detroit Three, adversely affecting us and the viability of our supply base; disruptions in the financial markets adversely impacting the availability and cost of credit could negatively affect our business; our substantial debt and resulting vulnerability to an economic or industry downturn and to rising interest rates; escalating pricing pressures from our customers; commodity inflationary pressures adversely affecting our profitability and supply base; our dependence on our largest customers; 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; strengthening of the U.S. dollar and other foreign currency exchange rate fluctuations impacting our results; our pension and other postretirement benefits expense and funding requirements could materially increase; risks associated with non-U.S. operations, including economic uncertainty in some regions; work stoppages or other labor issues at our facilities or at the facilities of our customers or suppliers; volatility in our annual effective tax rate resulting from a change in earnings mix and 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. 2009
  22. 22. Summary Comments • The automotive industry continues to be in a highly fragile state: – The consumer confidence crisis and the lack of available credit is having a significant impact on the global vehicle markets. – Vehicle inventory levels remain high for both cars and trucks. – Significantly lower production in both North America and Western Europe. • TRW continues to take aggressive actions to mitigate these challenges: – Restructuring actions including facility closures and employee separations. – Strong focus on cutting costs, improving cash flow and strengthening liquidity. • Achievements made in 2008 despite the extraordinary environment: – Record sales of $15 billion. – Operating cash flow totaled $773 million or $291 million after capital expenditures. – Net debt reduced by $189 million to $2,156 million. – Available liquidity in excess of $1.5 billion at December 31, 2008. – Continued progress made on our four strategic priorities. TRW’s capital structure, adequate liquidity and continued focus on its strategic priorities will provide a solid foundation moving into 2009. P4 © TRW Automotive Holdings Corp. 2009
  23. 23. Fourth Quarter Summary Q4 Vehicle Production Financial Summary (% changes based on year-over-year comparisons and CSM data) (US $ in millions, except where noted) Sales Summary $3,886 $2,813 North America Actual Detroit 3 -28% EU OE -28% Asian OE -18% Total Region -26% Q4 2007 Q4 2008 Europe North America -12.5% West -29% Europe -34.7% East -25% ROW -29.3% Total Region -27% Net (Losses) Earnings Summary ROW Q4 2008 Q4 2007 China -13% India -11% (a) (a) GAAP GAAP Adjusted Adjusted Korea -11% Net (Losses) Earnings $ (946) $ (74) $ 56 $ 61 Japan -18% -27% South America (b) $ (9.35) $ (0.73) $ 0.55 $ 0.59 (Losses) Earnings Per Share (a) For adjusted results reconciliation to GAAP, see slide P16. (b) Represents diluted (losses) earnings per share. P5 © TRW Automotive Holdings Corp. 2009
  24. 24. Full Year Sales Summary Full Year Vehicle Production Financial Summary (% changes based on year-over-year comparisons and CSM data) (US $ in millions, except where noted) Sales Summary $14,995 $14,702 North America Actual Detroit 3 -21% EU OE -9% 2% Growth Asian OE -7% Total Region -16% FY 2007 FY 2008 Europe North America 1.7% West -9% Europe 0.4% East 6% ROW 10.2% Total Region -5% ROW Net (Losses) Earnings Summary China 5% FY 2008 FY 2007 India 8% (a) (a) GAAP GAAP Adjusted Adjusted Korea -5% Japan -1% Net (Losses) Earnings $ (779) $ 153 $ 90 $ 276 South America 5% (b) $ (7.71) $ 1.50 $ 0.88 $ 2.68 (Losses) Earnings Per Share (a) For adjusted results reconciliation to GAAP, see slide P20. (b) Represents diluted (losses) earnings per share. P6 © TRW Automotive Holdings Corp. 2009
  25. 25. Strategic Priorities – Quality • We have made significant improvements in our quality metrics over the past few years as we continue to raise the bar on quality. Quality is a Competitive and • TRW aggressively monitors compliance and adherence to established processes and best practices throughout its global organization. Strategic Advantage • Improved quality impacts bottom line with reduced warranty cost. Problems Per Million (PPM) Trend Non-Conforming Tickets (NCT) Trend (NCT per million parts produced) 52 0.880 Solid Solid Im prov Im 0.840 prov e men e men t t 24 0.659 0.650 17 16 0.627 11 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 P7 © TRW Automotive Holdings Corp. 2009
  26. 26. Strategic Priorities – Global Reach Successfully launched 102 programs during Q4… • Volvo XC60 (Europe): Driver Airbag Module, Steering Wheel, Electric Power Hydraulic Steering Volvo XC60 Power Pack, Electric Park Brake, Rear Seat Belts • Audi A4 (Asia Pacific): Driver Airbag Module and Steering Wheel, Actuation, Front Brake Caliper, Audi Electric Park Brake, Lower Ball Joint, Front Upper A4 Control Arm • Ford Fusion (North America): Belt Drive Electric Ford Fusion Power Steering, Knee Airbag Module (Hybrid only) Product launches during the fourth quarter and full year strengthened our leading customer and geographic diversification. P8 © TRW Automotive Holdings Corp. 2009
  27. 27. Strategic Priorities – Innovative Technologies Electrically Powered Steering (EPS) Technology offers fuel savings up to 3.5% compared with standard hydraulic powered steering as well as increased functionality when combined with advanced brake and driver assist systems. Ford Fusion Launched on the Ford Fusion in North America during Q4. Intelligent Safety Systems: Received Best Automotive Innovation Award for 2008 from Italy’s Automotive Technical Association for combining Lane Departure Warning, EPS and Electronic Stability Control. Lancia Delta Launched on the Lancia Delta in June 2008. Innovative technology is critical to our product leadership and long term growth. P9 © TRW Automotive Holdings Corp. 2009
  28. 28. Strategic Priorities – Lowest Cost We continue to address and reduce our cost structure: • Facility Closures – Consolidated or closed four facilities in 2008. – Additional closures planned for Q1 2009: Warrenton casting plant and Spain actuation engineering center. • Personnel Actions – Total employees reduced by about 10,000 during 2008. Do Mor wn – Aggressive use of short week working schemes, e Th 13% an Total Employees(a) primarily in Europe. (in thousands) – Eliminated merit increases for 2009. 80 2 73 – Suspended Company match on 401(k) plans. 70 65 • Continued Focus on Working the Basics 10 60 – Working capital. 50 – Discretionary spending. 40 12/31/2007 Acquisitions Reductions 12/31/2008 – Capital spending. during 2008 Separate from restructuring, Six Sigma and Business Excellence programs ensure efficiencies are incorporated into our day-to-day operations. (a) Includes contract employees, but excludes employees on approved forms of leave. P10 © TRW Automotive Holdings Corp. 2009
  29. 29. 2009 Operating Environment 2009 Industry Production Assumptions(1) (units in millions) • North American production North America Europe estimated at 9.3 million units – down 15.8 21.7 15.3 27% compared with 2008. 15.1 20.6 20.4 19.9 5.8 16.5 12.6 4.9 5.0 4.1 6.2 5.2 • Within the 9.3 million units, D3 5.6 5.1 9.3 production is forecasted to be down 5.1 31% compared with last year. 4.1 15.9 15.5 15.8 14.4 10.8 10.1 9.5 11.4 7.5 • European production forecasted at 5.2 16.5 million units. Western Europe 2005 2006 2007 2008 2009E 2005 2006 2007 2008 2009E is forecasted to decline to 11.4 Detroit 3 Transplants We s t e rn E a s t e rn million units, or 21%, compared with South America Asia last year. • Shift from large and mid-sized cars to smaller cars in Europe is expected 5.0 4.5 4.0 4.5 3.9 3.8 4.0 to continue. 3.8 3.3 3.6 7.3 3.7 6.9 3.6 3.6 5.7 4.8 7.6 3.0 2.8 • Sales and production in the high 10.8 10.7 growth regions of the world are also 10.6 10.0 7.8 expected to decline in 2009. 2005 2006 2007 2008 2009E 2005 2006 2007 2008 2009E Japan China Korea South Asia (1) Source: Light vehicle assumptions primarily CSM Worldwide and internal company estimates. P11 © TRW Automotive Holdings Corp. 2009
  30. 30. 2009 Outlook • Lower vehicle production forecasted in all regions of the world: – North America and Western Europe, TRW’s largest markets, are expected to be down 27% and 21%, respectively, for the full year. – First quarter production down about 50% in North America and 40% in Western Europe. • TRW’s forecasted sales reflect the lower production volumes and uncertainty in the global financial markets: – Full-year sales expected between $10.9 and $11.3 billion. – First quarter sales expected to be down about 41% to $2.4 billion. • No earnings guidance provided at this time -- providing an accurate and meaningful forecast is difficult in this environment. • Management team continues to focus on improving working capital, protecting cash flow and further reducing our cost base. • Additional restructuring actions under development. Improvements made to our cost structure will partially mitigate the difficult industry conditions that have continued in 2009. P12 © TRW Automotive Holdings Corp. 2009
  31. 31. Financial Overview Joseph S. Cantie Executive Vice President and Chief Financial Officer
  32. 32. Financial Summary • Fourth quarter sales variance: Fourth Quarter 2008 Sales Variance to Prior Year ― Sales of $2.8 billion, down 27.6% or $1.1 billion from last year. US $ in millions ― Currency reduced sales by $276 $3,886 million in the quarter. ― The $116 million increase in module $2,813 $116 sales was primarily in North $913 $276 America. ― Excluding currency and the increase in module revenues, sales declined 23% or $913 million. Q4 2007 Sales Core Sales Currency Module Sales Q4 2008 Sales TRW’s fourth quarter sales primarily reflect significantly lower global production. P14 © TRW Automotive Holdings Corp. 2009
  33. 33. Financial Summary • Fourth quarter earnings: ― Fourth quarter GAAP net loss of $946 Fourth Quarter 2008 million or diluted (losses) per share of GAAP to Adjusted EPS Walk ($9.35). ― Results include a number of special, non-cash expenses primarily related to $0.66 $0.14 $0.04 $3.25 ($0.73) intangible asset impairments and separately, restructuring charges. $4.53 ― Lost contribution margin on the sales decline resulted in lower operating profit. ($9.35) GAAP Goodwill Customer Fixed Asset Restructuring Net Tax Adjusted ― Excluding special items, fourth quarter EPS Impairment Relationship Impairment Expense EPS net loss of $0.73 per diluted share, compared to net earnings of $0.59 per diluted share in 2007. The capital structure and operations of the Company are not affected by the non- cash intangible asset impairments. Refer to slide P16 for share count and slide P28 for special items detail. P15 © TRW Automotive Holdings Corp. 2009

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