News Releases

TRW Automotive Reports Second Quarter 2006 Financial Results; Provides Update on 2006 Full Year Outlook

PRNewswire-FirstCall
LIVONIA, Mich.
(NYSE:TRW)
Aug 2, 2006

LIVONIA, Mich., Aug. 2 /PRNewswire-FirstCall/ -- TRW Automotive Holdings Corp. (NYSE: TRW), the global leader in active and passive safety systems, today reported second-quarter 2006 financial results with sales of $3.5 billion, an increase of about 3 percent compared to the same period a year ago. Net earnings for the 2006 quarter were $91 million or $0.88 per diluted share, which compares to $85 million or $0.83 per diluted share in the prior year quarter.

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

The prior year second-quarter results included $10 million of net income relating to the combined effect of a one-time tax benefit and a loss on retirement of debt. Net earnings in the 2005 period excluding these items were $75 million or $0.73 per diluted share. The effective tax rate in the current quarter, which is lower than the expected full year 2006 rate due to the Company's quarterly geographic earnings profile, contributed significantly to the increase in earnings compared to the 2005 adjusted results.

"Our diversification and steady growth of safety products, together with a strong operating performance, were fundamental to our results in the quarter, marking a solid first half for the Company," said John Plant, president and chief executive officer. "Although we anticipate a healthy degree of our first half momentum to continue into the second half, which is reflected in our revised full year guidance, our projection for the remaining quarters is tempered by our expectation of weaker industry volumes, the impact of higher interest rates and a continued headwind from commodity inflation."

Mr. Plant added, "Our focus on safety and a highly diversified customer and geographic sales base, in combination with aggressive cost cutting, are helping us achieve our financial targets and providing the means for us to make significant investments in our product development efforts across the globe."

Second Quarter 2006

The Company reported second-quarter 2006 sales of $3.5 billion, an increase of $96 million or 2.9 percent over the prior year period. The current year benefited from the inclusion of sales from Dalphi Metal Espana, S.A. ("Dalphimetal"), which was acquired in October 2005, continued demand for safety products and the positive effect of foreign currency translation. These positive factors were partially offset by lower customer vehicle production in both North America and Europe, and price reductions provided to customers.

Operating income for second-quarter 2006 was $201 million, which represents an increase of $6 million over the prior year total of $195 million. The positive variance resulted primarily from the increased level of sales, savings generated from cost reduction, productivity and restructuring programs and the non-recurrence of foreign currency losses in the prior year. These items were in part offset by price reductions provided to customers and the negative net impact of commodity inflation. Restructuring and asset impairment expenses in the 2006 period were $11 million, which compares to $15 million in 2005.

Net interest and securitization expense for the second quarter of 2006 increased sharply to $61 million when compared to the prior year total of $55 million. The year-to-year increase can be attributed to the impact of rising interest rates on the Company's floating rate debt, which stands at approximately 63% of total debt outstanding, and incremental bank debt assumed at the time of the Dalphimetal acquisition, that together more than offset interest savings related to past debt reduction and capital structure improvement efforts. Also in the 2005 period, the Company incurred expenses of $7 million for loss on retirement of debt related to the partial redemption of its 10-1/8 senior notes.

Tax expense in the 2006 quarter was $53 million resulting in an effective tax rate of 37 percent, which is below the expected annual rate as a result of the Company's quarterly geographic earnings profile. The lower tax rate in the quarter contributed significantly to the increase in net earnings when compared to the prior year's adjusted results.

Net earnings in the second quarter of 2006 were $91 million, or $0.88 per diluted share, which compares to $85 million or $0.83 per diluted share in the 2005 period. As mentioned previously, the comparable 2005 period included the positive net impact of $10 million for non-recurring items related to a one- time tax benefit that was partially offset by debt retirement expenses. Prior year net earnings excluding the $10 million net benefit were $75 million or $0.73 per diluted share.

Earnings before interest, securitization costs, loss on retirement of debt, taxes, depreciation and amortization ("EBITDA") were $326 million in the second quarter, which is consistent with the prior year level of $324 million.

First Half 2006

The Company reported first-half 2006 sales of $6.9 billion, an increase of $267 million or 4.1 percent compared to prior year sales of $6.6 billion. The current year benefited from the inclusion of sales resulting from the acquisition of Dalphimetal, continued growth from safety products and the net benefit of higher vehicle production, offset partially by the negative effect of foreign currency translation and price reductions provided to customers.

Operating income for first-half 2006 was $428 million, which represents an increase of $81 million, or 23 percent, over the prior year total of $347 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, the year-to-year increase in operating income reflected savings generated from cost reduction, productivity and restructuring programs and the non-recurrence of certain customer solvency and foreign currency related expenses. These items were in part offset by price reductions provided to customers and the negative net impact of commodity inflation. Restructuring and asset impairment expenses in the first half of 2006 were $19 million, which compares to $23 million in the 2005 period.

Net interest and securitization expense for first-half 2006 totaled $122 million, which compares to $114 million in the prior year period, or $111 million after excluding $3 million of debt refinancing expenses. The year-to- year increase can be attributed to the impact of rising interest rates on the Company's floating rate debt and incremental bank debt assumed at the time of the Dalphimetal acquisition that together more than offset interest savings related to past debt reduction and capital structure improvement efforts.

In the first half of 2006, the Company incurred charges of $57 million related to the tender for the outstanding GBP 94.6 million 10-7/8% bonds of its Lucas Industries Limited subsidiary. Similarly, the Company incurred charges of $7 million in the prior year period for debt retirement expenses associated with the partial redemption of its 10-1/8% senior notes.

Tax expense in the first half of 2006 was $116 million, which resulted in an effective tax rate of 46 percent. The effective tax rate excluding expenses related to the Lucas bond transaction of $57 million (which carry zero tax benefit due to the Company's tax loss position in the applicable jurisdiction) was 37 percent. This rate is below the expected annual rate as a result of the Company's quarterly geographic earnings profile.

Net earnings in the first half of 2006 were $138 million, or $1.34 per diluted share, which compares to $135 million or $1.33 per diluted share in the 2005 period. As mentioned previously, net earnings in both periods were impacted by certain non-recurring items, including expenses of $57 million related to the Lucas bond tender transaction in 2006 and the previously discussed positive one-time net benefit of $10 million in 2005. Net earnings excluding these items from both periods were $195 million or $1.89 per diluted share in 2006, which compares to $125 million or $1.23 per diluted share in 2005.

EBITDA was $686 million in the first half of 2006, which is a 13 percent increase compared to the prior year total of $607 million. The year-to-year increase can be attributed to the higher level of operating income in the 2006 period.

Capital Structure/Liquidity/Transactions

Second quarter net cash provided by operating activities was $233 million, which compares to $263 million in the prior year. Capital expenditures for the quarter were $119 million, which compares to $91 million in the 2005 period. First half net cash provided by operating activities was $251 million, which compares to $212 million in the prior year. Capital expenditures in the first half of 2006 were $202 million, which compares to $174 million in the 2005 period.

As of June 30, 2006, the Company had $3,035 million of debt and $520 million of cash and marketable securities, resulting in net debt (defined as debt less cash and marketable securities) of $2,515 million, which represents a decrease of $45 million compared to the year-end 2005 level. The change in net debt includes the $57 million premium associated with the Lucas bond tender transaction.

On February 2, 2006, the Company's wholly owned subsidiary, Lucas Industries Limited, completed the tender for its outstanding GBP 94.6 million 10-7/8% bonds. As a result of the transaction, the Company incurred a $57 million charge for loss on retirement, which reflects the difference between the tender amount and the book value of debt related to the bonds at the time of the transaction.

On May 3, 2005, the Company completed the redemption of a portion of its Euro denominated 10-1/8% senior notes, which resulted in pre-tax expenses of $7 million for premiums and associated fees.

2006 Outlook

The Company revised its full year guidance upward as a result of the strong first half results announced today. Accordingly, full year sales are expected to be in the range of $13.0 to $13.3 billion (including third quarter sales of approximately $3.0 billion). Net earnings per diluted share are now expected to be in the range of $1.50 to $1.80, which includes the previously mentioned $57 million charge related to the bond tender transaction. Earnings per diluted share excluding this charge are expected to be in the range of $2.05 to $2.35.

For the year, the Company expects pre-tax restructuring expenses of $50 million (including approximately $7 million in the third quarter) and an effective tax rate of approximately 43 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.

Second Quarter 2006 Conference Call

The Company will host its second-quarter 2006 conference call at 9:00 a.m. (EDT) today, Wednesday, August 2, 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 2914927. 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 our Form 10-Q for the quarter ended March 31, 2006, and include: work stoppages or other labor issues at the facilities of our customers or suppliers; non-performance by, or insolvency of, our suppliers and customers, which may be exacerbated by recent bankruptcies and other pressures within the automotive industry; the inability of our suppliers to deliver products at the scheduled rate and disruptions arising in connection therewith; interest rate risk arising from our variable rate indebtedness (which constitutes a majority of the company's indebtedness), especially in view of the current climate of rising interest rates; 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; escalating pricing pressures from our customers; our dependence on our largest customers; fluctuations in foreign exchange rates; our substantial leverage; product liability and warranty and recall claims; limitations on flexibility in operating our business contained in our debt agreements; the possibility that our owners' interests will conflict with ours and other risks and uncertainties set forth under "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 June 30, 2006 and July 1, 2005        A2

  Consolidated Statements of Operations (unaudited)
  for the six months ended June 30, 2006 and July 1, 2005          A3

  Condensed Consolidated Balance Sheets as of
  June 30, 2006 (unaudited) and December 31, 2005                  A4

  Condensed Consolidated Statements of Cash Flows (unaudited)
  for the six months ended June 30, 2006 and July 1, 2005          A5

  Reconciliation of GAAP Net Earnings to EBITDA (unaudited)
  for the three and six month periods ended June 30, 2006
  and July 1, 2005                                                 A6

  Reconciliation of GAAP Net Earnings to Adjusted Earnings
  (unaudited) for the six months ended June 30, 2006               A7

  Reconciliation of GAAP Net Earnings to Adjusted Earnings
  (unaudited) for the three months ended July 1, 2005              A8

  Reconciliation of GAAP Net Earnings to Adjusted Earnings
  (unaudited) for the six months ended July 1, 2005                A9


  The accompanying unaudited condensed consolidated financial information
  and reconciliation schedules should be read in conjunction with the TRW
  Automotive Holdings Corp. Form 10-K for the year ended December 31, 2005
  and Form 10-Q for the quarterly period ended March 31, 2006, as filed with
  the United States Securities and Exchange Commission on February 23, 2006
  and May 4, 2006.


                      TRW Automotive Holdings Corp.

                  Consolidated Statements of Operations
                               (Unaudited)


  (In millions, except per share amounts)        Three Months Ended
                                           June 30, 2006    July 1, 2005

  Sales                                       $3,461          $3,365
  Cost of sales                                3,107           3,010
      Gross profit                               354             355
  Administrative and selling expenses            140             126
  Amortization of intangible assets                9               8
  Restructuring charges and asset impairments     11              15
  Other (income) expense - net                    (7)             11
      Operating income                           201             195
  Interest expense - net                          60              54
  Loss on retirement of debt                       -               7
  Accounts receivable securitization costs         1               1
  Equity in earnings of affiliates, net of tax    (9)             (5)
  Minority interest, net of tax                    5               2
      Earnings before income taxes               144             136
  Income tax expense                              53              51
      Net earnings                               $91             $85


  Basic earnings per share:
    Earnings per share                         $0.91           $0.86
    Weighted average shares                    100.3            99.0

  Diluted earnings per share:
    Earnings per share                         $0.88           $0.83
    Weighted average shares                    103.7           102.2

                                    A2



                      TRW Automotive Holdings Corp.

                  Consolidated Statements of Operations
                               (Unaudited)


  (In millions, except per share amounts)             Six Months Ended
                                               June 30, 2006    July 1, 2005

  Sales                                           $6,857           $6,590
  Cost of sales                                    6,146            5,925
      Gross profit                                   711              665
  Administrative and selling expenses                269              262
  Amortization of intangible assets                   18               16
  Restructuring charges and asset impairments         19               23
      Other (income) expense - net                   (23)              17
          Operating income                           428              347
  Interest expense - net                             120              112
  Loss on retirement of debt                          57                7
  Accounts receivable securitization costs             2                2
  Equity in earnings of affiliates, net of tax       (13)             (10)
  Minority interest, net of tax                        8                4
          Earnings before income taxes               254              232
  Income tax expense                                 116               97
          Net earnings                              $138             $135


  Basic earnings per share:
    Earnings per share                             $1.38            $1.36
    Weighted average shares                         99.9             99.0

  Diluted earnings per share:
    Earnings per share                             $1.34            $1.33
    Weighted average shares                        103.3            101.6

                                    A3



                      TRW Automotive Holdings Corp.

                  Condensed Consolidated Balance Sheets


  (Dollars in millions)                                    As of
                                                   June 30,    December 31,
                                                     2006            2005
                                                  (Unaudited)


                                  Assets
  Current assets:
    Cash and cash equivalents                         $503           $659
    Marketable securities                               17             17
    Accounts receivable - net                        2,329          1,948
    Inventories                                        729            702
    Prepaid expenses and other current assets          273            273
  Total current assets                               3,851          3,599

  Property, plant and equipment - net                2,579          2,538
  Goodwill                                           2,304          2,293
  Intangible assets - net                              753            769
  Prepaid pension cost                                 255            222
  Other assets                                         844            809
    Total assets                                   $10,586        $10,230

         Liabilities, Minority Interests and Stockholders' Equity
  Current liabilities:
    Short-term debt                                    $83            $98
    Current portion of long-term debt                   68             37
    Trade accounts payable                           2,026          1,865
    Accrued compensation                               283            280
    Other current liabilities                        1,449          1,310
  Total current liabilities                          3,909          3,590

  Long-term debt                                     2,884          3,101
  Post-retirement benefits other than pensions         903            917
  Pension benefits                                     794            795
  Other long-term liabilities                          553            513
    Total liabilities                                9,043          8,916

  Minority interests                                   114            106

  Commitments and contingencies

  Stockholders' equity:
    Capital stock                                        1              1
    Treasury stock                                       -              -
    Paid-in-capital                                  1,166          1,142
    Retained earnings                                  270            132
    Accumulated other comprehensive losses              (8)           (67)
  Total stockholders' equity                         1,429          1,208
    Total liabilities, minority interests,
     and stockholders' equity                      $10,586        $10,230

                                    A4



                      TRW Automotive Holdings Corp.

             Condensed Consolidated Statements of Cash Flows
                               (Unaudited)

  (Dollars in millions)                              Six Months Ended
                                              June 30, 2006    July 1, 2005


      Operating Activities
  Net earnings                                     $138            $135
  Adjustments to reconcile net earnings
   to net cash provided by (used in)
    operating activities:
   Depreciation and amortization                    253             254
   Other - net                                      (20)            (12)
  Changes in assets and liabilities, net of
   effects of businesses acquired                  (120)           (165)
    Net cash provided by operating activities       251             212

  Investing Activities
  Capital expenditures                             (202)           (174)
  Net proceeds from asset sales and divestitures     10               -
  Other - net                                        (1)              -
    Net cash used in investing activities          (193)           (174)

  Financing Activities
  Change in short-term debt                         (19)             (2)
  Proceeds from issuance of long-term debt           22           1,313
  Redemption of long-term debt                     (273)         (1,598)
  Debt issue costs                                    -              (4)
  Issuance of capital stock, net of fees              -             143
  Repurchase of capital stock                         -            (143)
  Proceeds from exercise of stock options            17               1
    Net cash used in financing activities          (253)           (290)
  Effect of exchange rate changes on cash            39             (32)
  Decrease in cash and cash equivalents            (156)           (284)
  Cash and cash equivalents at beginning of period  659             790
  Cash and cash equivalents at end of period       $503            $506

                                    A5



                      TRW Automotive Holdings Corp.

              Reconciliation of GAAP Net Earnings to EBITDA
                               (Unaudited)

The reconciliation schedule below should be read in conjunction with the TRW Automotive Holdings Corp. Form 10-K for the year ended December 31, 2005 and Form 10-Q for the quarterly period ended March 31, 2006, which contain summary historical data.

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

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

      (Dollars in millions)               Three Months Ended
                                  June 30, 2006         July 1, 2005
  GAAP net earnings                    $91                   $85
    Income tax expense                  53                    51
    Interest expense - net              60                    54
    Loss on retirement of debt           -                     7
    Accounts receivable
     securitization costs                1                     1
    Depreciation and amortization      121                   126

  EBITDA                              $326                  $324



      (Dollars in millions)                  Six Months Ended
                                   June 30, 2006        July 1, 2005
  GAAP net earnings                    $138                 $135
    Income tax expense                  116                   97
    Interest expense - net              120                  112
    Loss on retirement of debt           57                    7
    Accounts receivable
     securitization costs                 2                    2
    Depreciation and amortization       253                  254

  EBITDA                               $686                 $607

                                    A6



                      TRW Automotive Holdings Corp.

         Reconciliation of GAAP Net Earnings to Adjusted Earnings
                               (Unaudited)

In conjunction with the Company's February 2, 2006 repurchase of its subsidiary Lucas Industries Limited's 94.6 million pounds Sterling 10 7/8% bonds due 2020 for 137 million pounds Sterling, or approximately $243 million, the Company recorded a loss on retirement of debt of 32 million pounds Sterling, 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
    per share amounts)        Six Months                     Six Months
                                 Ended                          Ended
                            June 30, 2006                   June 30, 2006
                                Actual       Adjustments       Adjusted

  Sales                        $6,857            $-            $6,857
  Cost of sales                 6,146             -             6,146
    Gross profit                  711             -               711
  Administrative and selling
   expenses                       269             -               269
  Amortization of intangible
   assets                          18             -                18
  Restructuring charges and asset
   impairments                     19             -                19
  Other income - net              (23)            -               (23)
    Operating income              428             -               428
  Interest expense, net           120             -               120
  Loss on retirement of debt       57           (57) (a)            -
  Account receivable
   securitization costs             2             -                 2
  Equity in earnings of affiliates,
   net of tax                     (13)            -               (13)
  Minority interest, net of tax     8             -                 8
    Earnings before income taxes  254            57               311
  Income tax expense              116             -               116

    Net earnings                 $138           $57              $195

  Effective tax rate               46%                             37%

  Basic earnings per share:
    Earnings per share          $1.38                           $1.95
    Weighted average shares      99.9                            99.9

  Diluted earnings per share:
    Earnings per share          $1.34                           $1.89
    Weighted average shares     103.3                           103.3


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

                                    A7



                      TRW Automotive Holdings Corp.

         Reconciliation of GAAP Net Earnings to Adjusted Earnings
                               (Unaudited)

In conjunction with the Company's May 3, 2005 repurchase of approximately euro 48 million principal amount of its 10 1/8% Senior Notes, the Company incurred $7 million of losses on retirement of debt consisting of $6 million of related redemption premium and $1 million for write-off of deferred debt issuance costs. Such debt retirement expenses were U.S.-based, and therefore carry zero tax benefit due to the Company's tax loss position in this jurisdiction.

Income tax expense for the three months ended July 1, 2005 includes a one- time benefit of $17 million resulting from a tax law change in Poland related to investment tax credits for companies operating in certain special economic zones within the country. The investment tax credits replace the tax holiday that was previously in effect for the Company.

The following adjustments exclude the loss on retirement of debt, as well as the one-time income tax benefit, to show the impact as if these transactions had not occurred.

  (In millions, except
    per share amounts)        Three Months                  Three Months
                                 ended                         ended
                              July 1, 2005                  July 1, 2005
                                Actual        Adjustments     Adjusted

  Sales                         $3,365          $-             $3,365
  Cost of Sales                  3,010           -              3,010
    Gross profit                   355           -                355
  Administrative and selling
   expenses                        126           -                126
  Amortization of intangible
   assets                            8           -                  8
  Restructuring charges and
   asset impairments                15           -                 15
  Other income - net                11           -                 11
    Operating income               195           -                195
  Interest expense, net             54           -                 54
  Loss on retirement of debt         7          (7) (a)             -
  Account receivable securitization  1           -                  1
  Equity in earnings of affiliates,
   net of tax                       (5)          -                 (5)
  Minority interest, net of tax      2           -                  2
    Earnings before income taxes   136           7                143
  Income tax expense                51          17 (b)             68

      Net earnings                 $85        $(10)               $75

  Effective tax rate                38%                            48%

  Basic earnings per share:
    Earnings per share           $0.86                          $0.76

    Weighted average shares       99.0                           99.0

  Diluted earnings per share:
    Earnings per share           $0.83                          $0.73
    Weighted average shares      102.2                          102.2

  (a) Reflects the elimination of the loss on retirement of debt incurred in
      conjunction with repurchase of a portion of the Company's 101/8%
      Senior Notes.
  (a) Reflects the elimination of one-time income tax benefit related to a
     tax law change in Poland.

                                    A8



                      TRW Automotive Holdings Corp.

         Reconciliation of GAAP Net Earnings to Adjusted Earnings
                               (Unaudited)

In conjunction with the Company's May 3, 2005 repurchase of approximately euro 48 million principal amount of its 10 1/8% Senior Notes, the Company incurred $7 million of losses on retirement of debt consisting of $6 million of related redemption premium and $1 million for write-off of deferred debt issuance costs. Such debt retirement expenses were U.S.-based, and therefore carry zero tax benefit due to the Company's tax loss position in this jurisdiction.

Income tax expense for the six months ended July 1, 2005 includes a one- time benefit of $17 million resulting from a tax law change in Poland related to investment tax credits for companies operating in certain special economic zones within the country. The investment tax credits replace the tax holiday that was previously in effect for the Company.

The following adjustments exclude the loss on retirement of debt, as well as the one-time income tax benefit, to show the impact as if these transactions had not occurred.

  (In millions, except
   per share amounts)              Six Months                  Six Months
                                     ended                        ended
                                  July 1, 2005                 July 1, 2005
                                     Actual      Adjustments     Adjusted


  Sales                              $6,590         $-            $6,590
  Cost of Sales                       5,925          -             5,925
      Gross profit                      665          -               665
  Administrative and selling expenses   262          -               262
  Amortization of intangible assets      16          -                16
  Restructuring charges and asset
   impairments                           23          -                23
  Other income - net                     17          -                17
      Operating income                  347          -               347
  Interest expense, net                 112          -               112
  Loss on retirement of debt              7         (7) (a)            -
  Account receivable securitization       2          -                 2
  Equity in earnings of affiliates,
   net of tax                           (10)         -               (10)
  Minority interest, net of tax           4          -                 4
      Earnings before income taxes      232          7               239
  Income tax expense                     97         17 (b)           114

      Net earnings                     $135       $(10)             $125

  Effective tax rate                     42%                          48%

  Basic earnings per share:
    Earnings per share                $1.36                        $1.26
    Weighted average shares            99.0                         99.0

  Diluted earnings per share:
    Earnings per share                $1.33                        $1.23
    Weighted average shares           101.6                        101.6

  (a) Reflects the elimination of the loss on retirement of debt incurred in
      conjunction with repurchase of a portion of the Company's 101/8%
      Senior Notes.
  (b) Reflects the elimination of one-time income tax benefit related to a
      tax law change in Poland.

                                    A9
Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20010824/TRWLOGO
AP Archive: http://photoarchive.ap.org/
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/


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