News Releases

TRW Reports Third Quarter 2011 Financial Results

Nov 2, 2011

LIVONIA, Mich., Nov. 2, 2011 /PRNewswire/ -- TRW Automotive Holdings Corp. (NYSE: TRW), the global leader in active and passive safety systems, today reported third quarter 2011 financial results with sales of $3.9 billion, an increase of 14 percent compared to the prior year period.  The Company reported GAAP third quarter net earnings of $158 million or $1.22 per diluted share, which compares to net earnings of $199 million or $1.54 per diluted share in the prior year period.

The Company's current and prior year quarterly results both contain special items.  The current year quarter included debt retirement charges while the prior year period included debt retirement charges and favorable tax benefits.  Excluding these special items, the Company reported net earnings of $177 million, or $1.37 per diluted share in the third quarter of this year, which compares to net earnings of $189 million or $1.47 per diluted share in the prior year period.  

"TRW's solid third quarter results and business performance achieved through the first nine months of this year provide evidence of the Company's outstanding product and geographical positions," said John C. Plant, Chairman and Chief Executive Officer.  "We are confident in the future given the Company's strong market position and profitable growth initiatives that are positioning TRW for long-term success."

Third Quarter 2011

The Company reported third quarter 2011 sales of $3.9 billion, an increase of $489 million or 14 percent from the prior year period.  The increase in sales resulted from improved vehicle production volumes, increasing demand for TRW's broad array of active and passive safety products and the positive impact of currency movements between the two periods.  

The Company's third quarter 2011 operating income was $240 million, compared with operating income of $269 million in the 2010 period.  The year-to-year decline in profit was driven by the negative profit impact from higher raw material prices, higher legal fees and planned increases in costs to support future growth, partially offset by the improved profit from the higher level of sales between the two quarters.    

Net interest expense for the third quarter of 2011 totaled $26 million, which compares favorably to $39 million in the 2010 period as a result of lower debt levels.  In addition, both the 2011 and 2010 periods include net losses on retirement of debt totaling $19 million and $1 million, respectively.    

Tax expense for the third quarter of 2011 was $37 million, which compares to a tax expense of $28 million in the prior year period.  The 2010 period includes special tax benefits of $11 million.

The Company reported 2011 third quarter GAAP earnings of $158 million, or $1.22 per diluted share, which compares to GAAP net earnings of $199 million, or $1.54 per diluted share in the 2010 period.  

Excluding special items, the Company reported third quarter 2011 net earnings of $177 million, or $1.37 per diluted share, which compares to net earnings of $189 million or $1.47 per diluted share in the 2010 period.  

Earnings before interest, taxes, depreciation and amortization and special items ("adjusted EBITDA") were $354 million in the third quarter of 2011, compared to the prior year level of $385 million.  See page A6 for a description of the special items excluded in calculating adjusted EBITDA.    

Year-to-Date 2011

For the nine month period ended September 30, 2011, the Company reported sales of $12.3 billion, an increase of $1.6 billion or 15 percent compared to prior year sales.  The increase in sales resulted from the higher level of global vehicle production volumes, increasing demand for TRW's innovative technologies and the positive impact of currency movements between the two periods.        

For the 2011 year-to-date period, the Company reported operating income of $980 million which compares to $891 million of operating income in the prior year period.  The 2011 period included a gain related to a favorable resolution of a commercial matter totaling $19 million and a charge related to the termination of a service contract totaling $10 million.  Restructuring and fixed asset impairment charges totaling $10 million were recognized in the 2010 period.  Excluding these items from both periods, the Company reported operating income of $971 million in the 2011 period, which compares to $901 million in the prior year.  The year-to-year improvement in absolute profit was driven primarily by the positive profit impact of the higher level of sales between the two periods partially offset by inflationary pressures, including higher raw material prices and planned increases in costs to support future growth.          

Net interest expense for the first nine months of 2011 totaled $90 million, which compares to $125 million in the prior year period.  In addition, the current year-to-date period included a net loss on retirement of debt totaling $39 million compared with the first nine months of 2010, which recognized a net loss on retirement of debt totaling $2 million.        

The Company recognized a $9 million gain on an acquisition related to the purchase of a shock absorber manufacturing facility during the 2011 period.  The gain reflects the excess of fair value of the business in comparison to the purchase price.

Year-to-date tax expense was $127 million, which compares to $130 million in the prior year.  Excluding tax benefits related to special items in both periods, tax expense was $147 million and $153 million for the first nine months of 2011 and the first nine months of 2010, respectively.      

The Company reported year-to-date 2011 GAAP net earnings of $732 million, or $5.57 per diluted share, which compares to GAAP net earnings of $630 million, or $4.93 per diluted share in the prior year period.

Excluding special items, the Company reported 2011 year-to-date net earnings of $733 million, or $5.58 per diluted share, which compares to net earnings of $619 million or $4.84 per diluted share in the 2010 period.  

Adjusted EBITDA totaled $1,313 million for the first nine months of 2011, compared to $1,247 million in the prior year period.  See page A6 for a description of the special items excluded in calculating adjusted EBITDA.

Cash Flow and Capital Structure

Third quarter 2011 net cash flow provided by operating activities was $160 million, which compares to $267 million in the third quarter of 2010.  Capital expenditures were $137 million in the current quarter compared to $61 million last year.  Third quarter free cash flow (cash flow from operating activities less capital expenditures) was a positive $23 million, compared to $206 million in the prior year quarter.  The lower level of free cash flow compared with last year resulted from a planned increase in capital expenditures and higher working capital requirements.      

For the nine month period ended September 30, 2011, net cash flow provided by operating activities totaled $512 million, which compares to $690 million in the prior year period.  Year-to-date capital expenditures were $304 million compared to $168 million in 2010.  Free cash flow was a positive $208 million in the first nine months of 2011 compared to $522 million for the same period last year.  

During the third quarter of 2011, the Company used $213 million of cash to retire $162 million of face value debt, including $66 million of face value exchangeable notes.  As of September 30, 2011, the Company had $1,532 million of debt and $890 million of cash and cash equivalents, resulting in net debt (defined as debt less cash and cash equivalents) of $642 million.  This net debt outcome is $126 million lower than the balance at the end of 2010 and $388 million lower than the balance at the end of the prior year third quarter.  Committed liquidity facilities and cash on hand provided the Company with available liquidity in excess of $1.3 billion as of September 30, 2011.            

Divestiture Activity

During the most recent quarter the Company took action to divest certain of its non-safety related businesses in Asia and entered into an agreement to sell its cold forming business in Japan.  The planned divestitures, with annual sales of approximately $100 million, are expected to be finalized in the fourth quarter of 2011 and will enable the Company to concentrate its resources on the growing safety systems market in Asia.              

2011 Outlook

TRW expects full year production to total 12.9 million units in North America and 19.9 million units in Europe.  Based on these production levels and the Company's expectations for foreign currency exchange rates, full year 2011 sales are now expected to be approximately $16.2 billion (including fourth quarter sales of approximately $3.9 billion).                    

"Although vehicle production schedules have moderated slightly in the second half of 2011 compared to the first half of the year, increased demand for TRW's innovative products, continued growth in the developing markets of the world and the Company's business performance achieved through September will support a strong year for TRW," said Mr. Plant.  "We are committed to finishing a solid year while executing our profitable growth strategy to ensure TRW is well positioned for 2012 and beyond."      

Third Quarter 2011 Conference Call

The Company will host its third quarter conference call at 8:30 a.m. (Eastern time) today, Wednesday, November 2nd, to discuss financial results and other related matters.  To participate in the conference call, please dial (877) 852-7898 for U.S. locations, or (706) 634-1095 for international locations.  

An audio replay of the conference call will be available approximately two hours after the conclusion of the call and will be accessible afterward for approximately one week.  To access the replay, U.S. locations should dial (800) 642-1687, and locations outside the U.S. should dial (706) 645-9291. The replay code is 11694231.  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 earnings, operating income and diluted earnings per share each excluding special items; tax expense excluding certain tax benefits; adjusted EBITDA; and free cash flow.  Management uses these non-GAAP measures to evaluate the operating performance of the Company and its business segments and to forecast 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 2010 sales of $14.4 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 over 60,000 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 "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 www.trw.com.

Forward-Looking Statements

This release contains statements that are not statements of historical fact, but instead are forward-looking statements within the meaning of the U.S. 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 could 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, 2010 (our "Form 10-K"), and our Reports on Form 10-Q for the quarters ended April 1 and July 1, 2011, such as: any developments related to antitrust investigations adversely affecting our results, cash flows, financial condition or reputation; tighter financial markets adversely impacting the availability and cost of credit negatively affecting our business; a material contraction in automotive sales and production adversely affecting our results or the viability of our supply base; commodity inflationary pressures adversely affecting our profitability or supply base; strengthening of the U.S. dollar and other foreign currency exchange rate fluctuations impacting our results; pricing pressures from our customers adversely affecting our profitability; any shortage of supplies causing a production disruption; increasing costs negatively impacting our profitability; the loss of any of our largest customers materially adversely affecting us; costs of product liability, warranty and recall claims and efforts by customers to adversely alter contract terms and conditions concerning warranty and recall participation; costs or liabilities relating to environmental, health and safety regulations adversely affecting our results; risks associated with non-U.S. operations, including economic and political uncertainty in some regions, adversely affecting our business, results or financial condition; any inability to protect our intellectual property rights adversely affecting our business or our competitive position; any increase in the expense of our pension and other postretirement benefits or the funding requirements of our pension plans reducing our profitability; work stoppages or other labor issues at our facilities or at the facilities of our customers or suppliers adversely affecting our operations; volatility in our annual effective tax rate resulting from a change in our valuation allowances position or other factors; any impairment of a significant amount of our goodwill or other intangible assets; and other risks and uncertainties set forth in our Form 10-K and in our other filings with the U.S. Securities and Exchange Commission.  We do not undertake any obligation to release publicly any update or revision to any of the forward-looking statements.    

A1


TRW Automotive Holdings Corp.




Index of Condensed Consolidated Financial Information





Page



Consolidated Statements of Earnings (unaudited)


for the three months ended September 30, 2011 and October 1, 2010

A2



Consolidated Statements of Earnings (unaudited)


for the nine months ended September 30, 2011 and October 1, 2010

A3



Condensed Consolidated Balance Sheets as of September 30, 2011 (unaudited)


and December 31, 2010

A4



Condensed Consolidated Statements of Cash Flows (unaudited)


for the nine months ended September 30, 2011 and October 1, 2010

A5



Reconciliation of Non-GAAP Financial Measures (unaudited)


for the three and nine months ended September 30, 2011 and October 1, 2010

A6



Reconciliation of GAAP Net Earnings to Adjusted Earnings (unaudited):




  • For the three months ended September 30, 2011

A7

  • For the nine months ended September 30, 2011

A8

  • For the three months ended October 1, 2010

A9

  • For the nine months ended October 1, 2010

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, 2010 and Quarterly Reports on Form 10-Q for the periods ended April 1, 2011 and July 1, 2011, which were filed with the United States Securities and Exchange Commission.



A2

TRW Automotive Holdings Corp.












Consolidated Statements of Earnings

(Unaudited)












(In millions, except per share amounts)


Three Months Ended





September 30,

2011


October 1,

2010












Sales


$

3,915



$

3,426


Cost of sales



3,534




3,039




Gross profit



381




387


Administrative and selling expenses



151




120


Amortization of intangible assets



4




5


Other (income) expense — net



(14)




(7)




Operating income



240




269


Interest expense — net



26




39


Loss on retirement of debt — net



19




1


Equity in earnings of affiliates, net of tax



(9)




(7)




Earnings before income taxes



204




236


Income tax expense



37




28




Net earnings



167




208


Less: Net earnings attributable to noncontrolling interest, net of tax



9




9




Net earnings attributable to TRW


$

158



$

199














































Basic earnings per share:










Earnings per share


$

1.28



$

1.66



Weighted average shares outstanding



123.7




119.9













Diluted earnings per share:










Earnings per share


$

1.22



$

1.54



Weighted average shares outstanding



132.4




131.6





A3

TRW Automotive Holdings Corp.











Consolidated Statements of Earnings

(Unaudited)














Nine Months Ended

(In millions, except per share amounts)

September 30,

2011


October 1,

2010











Sales

$

12,258



$

10,670


Cost of sales


10,849




9,415




Gross profit


1,409




1,255


Administrative and selling expenses


454




375


Amortization of intangible assets


12




16


Restructuring charges and fixed asset impairments


-




10


Other (income) expense — net


(37)




(37)




Operating income


980




891


Interest expense — net


90




125


Loss on retirement of debt — net


39




2


Gain on business acquisition


(9)




-


Equity in earnings of affiliates, net of tax


(29)




(24)




Earnings before income taxes


889




788


Income tax expense


127




130




Net earnings


762




658


Less: Net earnings attributable to noncontrolling interest, net of tax


30




28




Net earnings attributable to TRW

$

732



$

630










































Basic earnings per share:









Earnings per share

$

5.93



$

5.29



Weighted average shares outstanding


123.4




119.2












Diluted earnings per share:









Earnings per share

$

5.57



$

4.93



Weighted average shares outstanding


133.7




130.5





A4

TRW Automotive Holdings Corp.











Condensed Consolidated Balance Sheets











(Dollars in millions)


As of




September 30,


December 31,




2011 


2010 














(Unaudited)





Assets

Current assets:










Cash and cash equivalents


$

890



$

1,078



Accounts receivable — net



2,581




2,087



Inventories



958




760



Prepaid expenses and other current assets



231




215


Total current assets



4,660




4,140












Property, plant and equipment — net



2,062




2,100


Goodwill



1,762




1,761


Intangible assets — net



301




304


Pension assets



533




454


Other assets



553




529



Total assets


$

9,871



$

9,288












Liabilities and Equity

Current liabilities:










Short-term debt


$

39



$

23



Current portion of long-term debt



28




20



Trade accounts payable



2,341




2,079



Accrued compensation



314




251



Other current liabilities



1,188




1,146


Total current liabilities



3,910




3,519


Long-term debt



1,465




1,803


Postretirement benefits other than pensions



438




453


Pension benefits



659




681


Other long-term liabilities



585




594



Total liabilities



7,057




7,050












Commitments and contingencies



















Stockholders' equity:










Capital stock



1




1



Treasury stock



-




-



Paid-in-capital



1,590




1,638



Retained earnings



1,243




511



Accumulated other comprehensive earnings (losses)



(215)




(87)


Total TRW stockholders' equity



2,619




2,063


Noncontrolling interest



195




175


Total equity



2,814




2,238


Total liabilities and equity


$

9,871



$

9,288





A5

TRW Automotive Holdings Corp.












Condensed Consolidated Statements of Cash Flows

(Unaudited)












(Dollars in millions)


Nine Months Ended





September 30,


October 1,





2011 


2010 












Operating Activities









Net earnings


$

762



$

658


Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:










Depreciation and amortization



343




350



Net pension and other postretirement benefits income and contributions



(132)




(148)



Loss on retirement of debt — net



39




2



Fixed asset impairment charges



-




(3)



Net gain on sales of assets and divestitures



(11)




(2)



Gain on business acquisition



(9)




-



Other — net



7




6


Changes in assets and liabilities, net of effects of businesses acquired:










Accounts receivable — net



(515)




(421)



Inventories



(191)




(133)



Trade accounts payable



246




191



Prepaid expense and other assets



(8)




(17)



Other liabilities



(19)




207




Net cash provided by (used in) operating activities



512




690













Investing Activities









Capital expenditures, including other intangible assets



(304)




(168)


Cash acquired in acquisition of business



15




-


Net proceeds from asset sales and divestitures



17




6




Net cash provided by (used in) investing activities  



(272)




(162)













Financing Activities









Change in short-term debt



15




6


Proceeds from issuance of long-term debt, net of fees



1




53


Redemption of long-term debt



(442)




(309)


Proceeds from exercise of stock options



19




34


Dividends paid to noncontrolling interest



(11)




(12)


Capital contribution from noncontrolling interest



-




4




Net cash provided by (used in) financing activities



(418)




(224)


Effect of exchange rate changes on cash



(10)




(3)


Increase (decrease) in cash and cash equivalents



(188)




301


Cash and cash equivalents at beginning of period



1,078




788


Cash and cash equivalents at end of period


$

890



$

1,089





A6

TRW Automotive Holdings Corp.


Reconciliation of Non-GAAP Financial Measures

(Unaudited)


EBITDA, Adjusted EBITDA and free cash flow are not recognized terms under GAAP and do not purport to be alternatives to the most comparable GAAP amounts.  Further, since all companies do not use identical calculations, our definition and presentation of these measures may not be comparable to similarly titled measures reported by other companies.


EBITDA and Adjusted EBITDA

EBITDA as calculated below is a measure used by management to evaluate the operating performance of the Company and its business segments and to forecast future periods.  Adjusted EBITDA is defined as EBITDA excluding restructuring charges, asset impairments and other significant special items.  Management uses Adjusted EBITDA to evaluate the performance of ongoing operations separate from items that may have a disproportionate impact in any particular period.  EBITDA and Adjusted EBITDA are frequently used by securities analysts, institutional investors and other interested parties in the evaluation of companies in our industry.


EBITDA and Adjusted EBITDA do not purport to be alternatives to net earnings as an indicator of operating performance, nor to cash flows from operating activities as a measure of liquidity.  Additionally, neither is intended to be a measure 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.




(Dollars in millions)


Three Months Ended


Nine Months Ended





September 30,


October 1,


September 30,


October 1,





2011 


2010 


2011 


2010 




















GAAP net earnings attributable to TRW


$

158



$

199



$

732



$

630



Income tax expense



37




28




127




130



Interest expense - net



26




39




90




125



Depreciation and amortization



114




118




343




350


EBITDA



335




384




1,292




1,235























Restructuring charges and fixed asset impairments


-




-




-




10




Termination of a service contract


-




-




10




-




Loss on retirement of debt - net


19




1




39




2




Favorable resolution of a commercial matter 


-




-




(19)




-




Gain on business acquisition



-




-




(9)




-


Adjusted EBITDA


$

354



$

385



$

1,313



$

1,247
























Free Cash Flow

Free cash flow represents net cash provided by (used in) operating activities less capital expenditures, and is used by management in analyzing the Company's ability to service and repay its debt and to forecast future periods.  However, this measure does not represent funds available for investment or other discretionary uses since it does not deduct cash used to service debt or for other non-discretionary expenditures.























(Dollars in millions)


Three Months Ended


Nine Months Ended





September 30,


October 1,


September 30,


October 1,





2011 


2010 


2011 


2010 




















Cash flow provided by (used in) operating activities


$

160



$

267



$

512



$

690


Capital expenditures                         



(137)




(61)




(304)




(168)


Free cash flow                             


$

23



$

206



$

208



$

522
























A7

TRW Automotive Holdings Corp.


















Reconciliation of GAAP Net Earnings to Adjusted Earnings

(Unaudited)

























































Three Months








Three Months





Ended








Ended





September 30, 2011








September 30, 2011

(In millions, except per share amounts)


Actual



Adjustments



Adjusted


















Sales


$

3,915




$

-




$

3,915


Cost of sales



3,534





-





3,534




Gross profit



381





-





381


Administrative and selling expenses



151





-





151


Amortization of intangible assets



4





-





4


Other (income) expense — net



(14)





-





(14)




Operating income



240





-





240


Interest expense — net



26





-





26


Loss on retirement of debt — net



19





(19)


(a)



-


Equity in earnings of affiliates, net of tax



(9)





-





(9)




Earnings before income taxes



204





19





223


Income tax expense



37





-





37




Net earnings



167





19





186


Less: Net earnings attributable to noncontrolling interest, net of tax



9





-





9




Net earnings attributable to TRW


$

158




$

19




$

177



















Basic earnings per share:
















Earnings per share


$

1.28









$

1.43



Weighted average shares outstanding



123.7










123.7



















Diluted earnings per share:
















Earnings per share


$

1.22









$

1.37



Weighted average shares outstanding



132.4










132.4


__________
































(a)

Represents the elimination of the loss on retirement of debt.



A8

TRW Automotive Holdings Corp.


















Reconciliation of GAAP Net Earnings to Adjusted Earnings

(Unaudited)

























































Nine Months








Nine Months





Ended








Ended





September 30,

2011








September 30,

2011

(In millions, except per share amounts)


Actual



Adjustments



Adjusted


















Sales


$

12,258




$

-




$

12,258


Cost of sales



10,849





19


(a)



10,868




Gross profit



1,409





(19)





1,390


Administrative and selling expenses



454





(10)


(b)



444


Amortization of intangible assets



12





-





12


Other (income) expense — net



(37)





-





(37)




Operating income



980





(9)





971


Interest expense — net



90





-





90


Loss on retirement of debt — net



39





(39)


(c)



-


Gain on business acquisition



(9)





9


(d)



-


Equity in earnings of affiliates, net of tax



(29)





-





(29)




Earnings before income taxes



889





21





910


Income tax expense



127





20


(e)



147




Net earnings



762





1





763


Less: Net earnings attributable to noncontrolling interest, net of tax



30





-





30




Net earnings attributable to TRW


$

732




$

1




$

733



















Basic earnings per share:
















Earnings per share


$

5.93









$

5.94



Weighted average shares outstanding



123.4










123.4



















Diluted earnings per share:
















Earnings per share


$

5.57









$

5.58



Weighted average shares outstanding



133.7










133.7


__________
































(a)

Represents the elimination of the gain related to the favorable resolution of a commercial matter.

(b)

Represents the elimination of the expense related to the termination of a service contract.

(c)

Represents the elimination of the loss on retirement of debt.

(d)

Represents the elimination of the gain on business acquisition.

(e)

Represents the elimination of a $20 million tax benefit related to the favorable resolution of various tax matters in foreign jurisdictions.




A9

TRW Automotive Holdings Corp.


















Reconciliation of GAAP Net Earnings to Adjusted Earnings

(Unaudited)

























































Three Months








Three Months





Ended








Ended





October 1, 2010








October 1, 2010

(In millions, except per share amounts)


Actual



Adjustments



Adjusted


















Sales


$

3,426




$

-




$

3,426


Cost of sales



3,039





-





3,039




Gross profit



387





-





387


Administrative and selling expenses



120





-





120


Amortization of intangible assets



5





-





5


Other (income) expense — net



(7)





-





(7)




Operating income



269





-





269


Interest expense — net



39





-





39


Loss on retirement of debt — net



1





(1)


(a)



-


Equity in earnings of affiliates, net of tax



(7)





-





(7)




Earnings before income taxes



236





1





237


Income tax expense



28





11


(b)



39




Net earnings



208





(10)





198


Less: Net earnings attributable to noncontrolling interest, net of tax



9





-





9




Net earnings attributable to TRW


$

199




$

(10)




$

189



















Basic earnings per share:
















Earnings per share


$

1.66









$

1.58



Weighted average shares outstanding



119.9










119.9



















Diluted earnings per share:
















Earnings per share


$

1.54









$

1.47



Weighted average shares outstanding



131.6










131.6


__________
































(a)

Represents the elimination of the loss on retirement of debt.

(b)

Represents the elimination of tax benefits of $11 million related to the favorable resolution of various tax matters in foreign jurisdictions.



A10

TRW Automotive Holdings Corp.


















Reconciliation of GAAP Net Earnings to Adjusted Earnings

(Unaudited)


















Among other adjustments, the Company recorded recorded restructuring charges of $13 million primarily related to severance, retention, and outplacement services at various production facilities and fixed asset impairment charges of $1 million.  This was offset by a gain on the sale of a property in the amount of $4 million related to a closed North American braking facility, which was impaired in 2008.







































Nine Months








Nine Months





Ended








Ended





October 1, 2010








October 1, 2010

(In millions, except per share amounts)


Actual



Adjustments



Adjusted


















Sales


$

10,670




$

-




$

10,670


Cost of sales



9,415





-





9,415




Gross profit



1,255





-





1,255


Administrative and selling expenses



375





-





375


Amortization of intangible assets



16





-





16


Restructuring charges and fixed asset impairments



10





(10)


(a)



-


Other (income) expense — net



(37)





-





(37)




Operating income



891





10





901


Interest expense — net



125





-





125


Loss on retirement of debt — net



2





(2)


(b)



-


Equity in earnings of affiliates, net of tax



(24)





-





(24)




Earnings before income taxes



788





12





800


Income tax expense



130





23


(c)



153




Net earnings



658





(11)





647


Less: Net earnings attributable to noncontrolling interest, net of tax



28





-





28




Net earnings attributable to TRW


$

630




$

(11)




$

619



















Basic earnings per share:
















Earnings per share


$

5.29









$

5.19



Weighted average shares outstanding



119.2










119.2



















Diluted earnings per share:
















Earnings per share


$

4.93









$

4.84



Weighted average shares outstanding



130.5










130.5


__________
































(a)

Represents the elimination of restructuring charges and fixed asset impairments.

(b)

Represents the elimination of the loss on retirement of debt.

(c)

Represents the elimination of (i) the income tax impact of the adjustments made to the restructuring charges and fixed asset impairments, by calculating the income tax impact of each of these items using the appropriate tax rate for the jurisdiction where the charges were incurred, and (ii) tax benefits related to the favorable resolution of various tax matters in foreign jurisdictions of $21 million recorded in the second and third quarters of 2010.




SOURCE TRW Automotive Holdings Corp.


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