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TRW Automotive Reports First Quarter 2006 Financial Results; Provides Update on 2006 Outlook

PRNewswire-FirstCall
LIVONIA, Mich.
(NYSE:TRW)
May 3, 2006

LIVONIA, Mich., May 3 /PRNewswire-FirstCall/ -- TRW Automotive Holdings Corp. (NYSE: TRW), the global leader in active and passive safety systems, today reported first-quarter 2006 financial results with sales of $3.4 billion, an increase of 5.3 percent compared to the same period a year ago. Net earnings for the quarter were $47 million, or $0.46 per diluted share, which compares to net earnings of $50 million or $0.50 per diluted share in the prior year quarter.

(Logo: http://www.newscom.com/cgi-bin/prnh/20010824/TRWLOGO )

As previously announced, first-quarter 2006 earnings included expenses of $57 million for loss on retirement of debt associated with the tender for the outstanding GBP 94.6 million 10.875% bonds of the Company's Lucas Industries Limited subsidiary. First quarter net earnings excluding these expenses were $104 million, or $1.01 per diluted share, which were above previously provided guidance primarily due to a higher level of revenues, a more favorable operational performance and a lower level of tax expense than previously anticipated.

"We posted a strong start to the year, highlighted by solid first quarter financial results, steady progress on our operating initiatives and new business awards at a level that supports our future growth expectations," said John Plant, president and chief executive officer. "Although industry conditions remain challenging, we have been successful at growing the business and executing our strategic restructuring initiatives at an accelerated pace."

Mr. Plant added, "Looking to the remainder of the year, our ability to achieve our objectives will depend heavily on the execution of our operating strategies, particularly in the second half of the year, where we anticipate fundamentals will worsen due to heightened commodity inflation and softer industry production schedules."

First Quarter 2006

The Company reported first-quarter 2006 sales of $3.4 billion, an increase of $171 million or 5.3 percent compared to prior year sales of $3.2 billion. The increase resulted primarily from the inclusion of sales from the acquisition of Dalphi Metal Espana, S.A. ("Dalphimetal"), which was acquired in October 2005, together with sales growth from safety products and the net benefit of higher vehicle production, primarily in Europe. These positives were partially offset by the negative effect of foreign currency translation and price reductions provided to customers.

Operating income for first-quarter 2006 was $227 million, which represents an increase of $75 million over the prior year total of $152 million. The positive variance resulted primarily from the increased level of sales and from a beneficial product mix that favored the Company's Occupant Safety business. In addition, savings generated from cost reduction, productivity and restructuring programs and the non-recurrence of certain customer solvency and currency related expenses also contributed to the year-to-year increase in operating income. These items were in part offset by price reductions provided to customers and the negative net impact of commodity inflation. Restructuring expenses in both the first quarter of 2006 and 2005 were $8 million.

Net interest and securitization expense for first-quarter 2006 totaled $61 million. In comparison, the prior year totaled $59 million, which included expenses of $3 million related to a refinancing transaction. The year-to-year increase in expense can be attributed to the impact of rising interest rates on the Company's floating rate debt and incremental bank debt assumed at the time of the Dalphimetal acquisition that more than offset interest savings related to past debt reduction and capital structure improvement efforts and the non-recurrence of debt refinancing expenses. As mentioned previously, the Company incurred charges of $57 million related to the redemption of the 10.875% Lucas bonds during the 2006 quarter.

Tax expense in the 2006 quarter was $63 million, resulting in an effective tax rate of 57 percent. The effective tax rate excluding the previously mentioned $57 million loss on retirement of debt was 38 percent, which is below the expected annual rate as a result of the Company's quarterly geographical earnings profile.

Net earnings in the first quarter of 2006 were $47 million, or $0.46 per diluted share, which compares to $50 million or $0.50 per share in the 2005 period. Net earnings excluding the $57 million for loss on retirement of debt were $104 million or $1.01 per diluted share.

Earnings before interest, securitization costs, loss on retirement of debt, taxes, depreciation and amortization ("EBITDA") were $360 million in the first-quarter, which is a 27 percent increase compared to prior year EBITDA of $283 million. The year-to-year increase can be attributed to the higher level of operating income in the 2006 quarter.

Capital Structure/Liquidity

First-quarter 2006 net cash provided by operating activities was $18 million, which compares to cash used of $51 million in the prior year quarter. Capital expenditures for the quarter were $83 million, which is equal to the level reported in the 2005 period.

On February 2, 2006, the Company's wholly owned subsidiary, Lucas Industries Limited, completed the tender for its outstanding GBP 94.6 million 10.875% bonds. The transaction was funded with cash on hand. As mentioned previously, the Company incurred a $57 million charge for loss on retirement, which reflects the difference between the tender amount and the book value of debt related to the bonds at the time of the transaction.

As of March 31, 2006, the Company had $3,046 million of debt and $390 million of cash and marketable securities, resulting in net debt (defined as debt less cash and marketable securities) of $2,656 million. Net debt increased by $96 million compared to year-end 2005 primarily due to the $57 million premium associated with the bond tender transaction and the impact of net cash used in operating and investing activities, which historically is a net outflow in the first quarter due to seasonal factors.

2006 Outlook

For full-year 2006, the Company continues to expect revenue in the range of $12.8 to $13.2 billion. However, guidance related to net earnings has been revised upward from previous levels as a result of the strong first quarter results announced today. Accordingly, the Company now expects earnings per diluted share in the range of $1.30 to $1.60, which includes the $57 million charge related to the bond tender transaction. Earnings per diluted share excluding this charge are expected to be in the range of $1.85 to $2.15.

The Company expects pre-tax restructuring expenses of $50 million and an effective tax rate of approximately 45 percent, which excludes expenses related to the bond tender transaction. Lastly, the Company's estimate for capital expenditures remains at approximately 4 percent of sales for the year.

For the second quarter of 2006, the Company expects revenue of approximately $3.4 billion and operating income to be slightly below the level achieved in the comparable prior year period.

First Quarter 2006 Conference Call

The Company will host its first-quarter 2006 conference call at 9:00 a.m. (EDT) today, Wednesday, May 3rd, to discuss financial results and other related matters. To access the conference call, U.S. locations should dial (877) 852-7898, and locations outside the U.S. should dial (706) 634-1095.

A replay of the conference call will be available approximately two hours after the conclusion of the call and accessible for approximately one week. To access the replay, U.S. locations should dial (800) 642-1687, and locations outside the U.S. should dial (706) 645-9291. The replay code is 8234357. A live audio web cast and subsequent replay of the conference call will also be available on the Company's website at http://www.trwauto.com/results .

Reconciliation to GAAP

In addition to GAAP results included within this press release, the Company has provided certain information which is not calculated according to GAAP ("non-GAAP"). Management believes these non-GAAP measures are useful to evaluate operating performance and/or regularly used by security analysts, institutional investors and other interested parties in the evaluation of the Company.

Non-GAAP measures are not purported to be a substitute for any GAAP measure and as calculated, may not be comparable to other similarly titled measures of other companies. For a reconciliation of non-GAAP measures to the closest GAAP measure and for share amounts used to derive earnings per share, please see the financial schedules that accompany this release.

About TRW

With 2005 sales of $12.6 billion, TRW Automotive ranks among the world's leading automotive suppliers. Headquartered in Livonia, Michigan, USA, the Company, through its subsidiaries, employs approximately 63,000 people in 25 countries. TRW Automotive products include integrated vehicle control and driver assist systems, braking systems, steering systems, suspension systems, occupant safety systems (seat belts and airbags), electronics, engine components, fastening systems and aftermarket replacement parts and services. All references to "TRW Automotive," "TRW" or the "Company" 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 http://www.trwauto.com/ .

Forward-Looking Statements

This release contains statements that are not statements of historical fact, but instead are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve risks and uncertainties. Our actual results could differ materially from those contained in forward-looking statements made in this release. Such risks, uncertainties and other important factors which could cause our actual results to differ materially from those contained in our forward-looking statements are set forth in our Report on Form 10-K for the fiscal year ended December 31, 2005 (the "10-K"), and include: work stoppages or other labor issues at the facilities of our customers or suppliers; possible production cuts or restructuring by our customers; loss of market share by domestic vehicle manufacturers; efforts by our customers to consolidate their supply base; severe inflationary pressures impacting the market for commodities; non-performance by, or insolvency of, our suppliers and customers, which may be exacerbated by recent bankruptcies; escalating pricing pressures from our customers; our dependence on our largest customers; interest rate risk arising from our variable rate indebtedness; fluctuations in foreign exchange rates; our substantial leverage; product liability and warranty and recall claims; limitations on flexibility in operating our business contained in our debt agreements; the possibility that our owners' interests will conflict with ours and other risks and uncertainties set forth under "Risk Factors" in the 10-K and in our other SEC filings. We do not intend or assume any obligation to update any of these forward-looking statements.

                      TRW Automotive Holdings Corp.

          Index of Condensed Consolidated Financial Information

                                                                     Page

  Consolidated Statements of Operations (unaudited)
   for the three months ended March 31, 2006 and April 1, 2005        A2

  Condensed Consolidated Balance Sheets as of
   March 31, 2006 (unaudited) and December 31, 2005                   A3

  Condensed Consolidated Statements of Cash Flows (unaudited)
   for the three months ended March 31, 2006 and April 1, 2005        A4

  Reconciliation of GAAP Net Earnings to EBITDA (unaudited)
   for the three months ended March 31, 2006 and April 1, 2005        A5

  Reconciliation of GAAP Net Earnings to Adjusted Earnings
   (unaudited) for the three months ended March 31, 2006              A6

The accompanying unaudited condensed consolidated financial information and reconciliation schedules should be read in conjunction with the TRW Automotive Holdings Corp. Form 10-K for the year ended December 31, 2005, as filed with the United States Securities and Exchange Commission on February 23, 2006.

                                    A1



                      TRW Automotive Holdings Corp.

                  Consolidated Statements of Operations
                               (Unaudited)

  (In millions, except per share amounts)            Three Months Ended
                                             March 31, 2006    April 1, 2005

  Sales                                          $3,396           $3,225
  Cost of sales                                   3,039            2,915
      Gross profit                                  357              310
  Administrative and selling expenses               129              136
  Amortization of intangible assets                   9                8
  Restructuring charges and asset impairments         8                8
  Other (income) expense - net                      (16)               6
      Operating income                              227              152
  Interest expense - net                             60               58
  Loss on retirement of debt                         57                -
  Accounts receivable securitization costs            1                1
  Equity in earnings of affiliates, net of tax       (4)              (5)
  Minority interest, net of tax                       3                2
      Earnings before income taxes                  110               96
  Income tax expense                                 63               46
      Net earnings                                  $47              $50


  Basic earnings per share:
    Earnings per share                            $0.47            $0.51
    Weighted average shares                        99.5             99.0

  Diluted earnings per share:
    Earnings per share                            $0.46            $0.50
    Weighted average shares                       103.0            101.0


                                    A2



                      TRW Automotive Holdings Corp.

                  Condensed Consolidated Balance Sheets

  (Dollars in millions)                                   As of
                                                 March 31,     December 31,
                                                    2006           2005
                                                (Unaudited)
                                Assets
  Current assets:
      Cash and cash equivalents                     $373           $659
      Marketable securities                           17             17
      Accounts receivable - net                    2,203          1,948
      Inventories                                    709            702
      Prepaid expenses and other current assets      278            273
  Total current assets                             3,580          3,599

  Property, plant and equipment - net              2,532          2,538
  Goodwill                                         2,297          2,293
  Intangible assets - net                            761            769
  Prepaid pension cost                               235            222
  Other assets                                       834            809
    Total assets                                 $10,239        $10,230

      Liabilities, Minority Interests and Stockholders' Equity
  Current liabilities:
      Short-term debt                                $98            $98
      Current portion of long-term debt               49             37
      Trade accounts payable                       1,952          1,865
      Accrued compensation                           254            280
      Other current liabilities                    1,358          1,310
  Total current liabilities                        3,711          3,590

  Long-term debt                                   2,899          3,101
  Post-retirement benefits other than pensions       909            917
  Pension benefits                                   795            795
  Other long-term liabilities                        530            513
    Total liabilities                              8,844          8,916

  Minority interests                                 107            106

  Commitments and contingencies

  Stockholders' equity:
      Capital stock                                    1              1
      Treasury stock                                   -              -
      Paid-in-capital                              1,151          1,142
      Retained earnings                              179            132
      Accumulated other comprehensive losses         (43)           (67)
  Total stockholders' equity                       1,288          1,208
    Total liabilities, minority interests,
     and stockholders' equity                    $10,239        $10,230


                                      A3


                      TRW Automotive Holdings Corp.

             Condensed Consolidated Statements of Cash Flows
                               (Unaudited)

  (Dollars in millions)                            Three Months Ended
                                             March 31, 2006    April 1, 2005

  Operating Activities
  Net earnings                                      $47              $50
  Adjustments to reconcile net earnings to
   net cash provided by (used in)
   operating activities:
    Depreciation and amortization                   132              128
    Other - net                                      11              (20)
  Changes in assets and liabilities,
   net of effects of businesses acquired
   or divested                                     (172)            (209)
      Net cash provided by (used in)
       operating activities                          18              (51)

  Investing Activities
  Capital expenditures                              (83)             (83)
  Net proceeds from asset sales and divestitures      8                -
  Other - net                                        (1)               -
      Net cash used in investing activities         (76)             (83)

  Financing Activities
  Change in short-term debt                           (3)             (1)
  Proceeds from issuance of long-term debt             3            1,293
  Redemption of long-term debt                      (250)          (1,506)
  Debt issue costs                                     -               (4)
  Issuance of capital stock, net of fees               -              143
  Repurchase of capital stock                          -             (143)
  Proceeds from exercise of stock options              7                -
      Net cash used in financing activities         (243)            (218)
  Effect of exchange rate changes on cash             15               (3)
  Decrease in cash and cash equivalents             (286)            (355)
  Cash and cash equivalents at beginning of period   659              790
  Cash and cash equivalents at end of period        $373             $435


                                    A4


                      TRW Automotive Holdings Corp.

              Reconciliation of GAAP Net Earnings to EBITDA
                               (Unaudited)

The reconciliation schedule below should be read in conjunction with the TRW Automotive Holdings Corp. Form 10-K for the year ended December 31, 2005, which contains summary historical data.

The EBITDA measure calculated in the following schedule is a measure used by management to evaluate operating performance. Management believes that EBITDA is a useful measurement because it is frequently used by securities analysts, institutional investors and other interested parties in the evaluation of companies in our industry.

EBITDA is not a recognized term under GAAP and does not purport to be an alternative to net earnings (losses) as an indicator of operating performance, or to cash flows from operating activities as a measure of liquidity. Additionally, EBITDA is not intended to be a measure of free cash flow for management's discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Because not all companies use identical calculations, this presentation of EBITDA may not be comparable to other similarly titled measures of other companies.

  (Dollars in millions)                          Three Months Ended
                                         March 31, 2006        April 1, 2005
  GAAP net earnings                             $47                  $50
    Income tax expense                           63                   46
    Interest expense - net                       60                   58
    Loss on retirement of debt                   57                    -
    Accounts receivable securitization costs      1                    1
    Depreciation and amortization               132                  128

  EBITDA                                       $360                 $283


                                    A5


                      TRW Automotive Holdings Corp.

         Reconciliation of GAAP Net Earnings to Adjusted Earnings
                               (Unaudited)

In conjunction with the Company's February 2, 2006 repurchase of its subsidiary Lucas Industries Limited's GBP 94.6 million 10 7/8% bonds due 2020 for GBP 137 million, or approximately $243 million, the Company recorded a loss on retirement of debt of GBP 32 million, or approximately $57 million. Such loss on retirement of debt carries zero tax benefit due to the Company's tax loss position in the respective jurisdiction.

The following adjustment excludes the loss on retirement of debt to show the impact as if this transaction had not occurred.

  (In millions, except             Three Months                 Three Months
   per share amounts)                 Ended                        Ended
                                 March 31, 2006               March 31, 2006
                                      Actual     Adjustments      Adjusted

  Sales                               $3,396         $ -           $3,396
  Cost of sales                        3,039           -            3,039
      Gross profit                       357           -              357
  Administrative and selling
   expenses                              129           -              129
  Amortization of intangible assets        9           -                9
  Restructuring charges and
   asset impairments                       8           -                8
  Other income - net                     (16)          -              (16)
      Operating income                   227           -              227
  Interest expense, net                   60           -               60
  Loss on retirement of debt              57         (57) (a)           -
  Account receivable
   securitization costs                    1           -                1
  Equity in earnings of affiliates,
   net of tax                             (4)          -               (4)
  Minority interest, net of tax            3           -                3
      Earnings before income taxes       110          57              167
  Income tax expense                      63           -               63

      Net earnings                       $47         $57             $104

  Effective tax rate                      57%                          38%

  Basic earnings per share:
    Earnings per share                 $0.47                        $1.05
    Weighted average shares             99.5                         99.5

  Diluted earnings per share:
    Earnings per share                 $0.46                        $1.01
    Weighted average shares            103.0                        103.0


  (a) Reflects the elimination of the loss on retirement of debt.


                                    A6
Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20010824/TRWLOGO
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PRN Photo Desk photodesk@prnewswire.com

SOURCE: TRW Automotive Holdings Corp.

CONTACT: Investor Relations Contact: Patrick R. Stobb, +1-734-855-3140,
Media Contact: Manley Ford, +1-734-855-2616, both of TRW Automotive Holdings
Corp.

Web site: http://www.trwauto.com/
http://www.trwauto.com/results


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