TRW Automotive 12025 Tech Center Drive News Release Livonia, Mich. 48150 USA
Investor Relations Contact: Patrick R. Stobb (734) 853-6966 Media Contact:
Manley Ford (734) 266-2616
TRW Automotive Reports Fourth-Quarter and Full-Year 2003 Financial Results; Provides 2004 Guidance LIVONIA, MICHIGAN, February 17, 2004 — TRW Automotive Holdings Corp.
(NYSE: TRW) today reported financial results for the fourth quarter and full year
ended December 31, 2003. TRW Automotive Holdings Corp. (the “Company”), the
parent company of TRW Automotive Inc., completed its initial public offering (“IPO”)
of approximately 24.1 million shares of common stock on February 6, 2004.
Fourth-Quarter 2003 The Company reported fourth-quarter 2003 sales of nearly $3.0 billion, up $308
million or 11.5% compared to predecessor combined sales of nearly $2.7 billion in
fourth-quarter 2002. The Company also reported $139 million of operating income,
an increase of $36 million from the prior year quarter, and a consolidated net loss of
$1 million or 1 cent per share compared to a predecessor combined net loss of $33
million in the prior year quarter.
On February 28, 2003, affiliates of The Blackstone Group L.P. acquired the former
TRW Inc.’s automotive business from Northrop Grumman Corporation. As a result,
certain consolidated and combined financial information contained within this release
(labeled as pro forma) have been adjusted to illustrate the estimated pro forma
effects of such acquisition and a subsequent July 2003 debt refinancing, as if these
transactions had occurred on January 1, 2002.
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Sales for fourth-quarter 2003 totaled nearly $3.0 billion, up $371 million or 14%
compared to pro forma fourth-quarter 2002. Operating income for the quarter was
$139 million, an increase of $22 million from the prior year pro forma operating
income. This increase reflects a number of factors, including a $66 million decline in
net pension and OPEB income due primarily to the application of purchase
accounting, a $59 million reduction in restructuring and other unusual charges, and
$17 million of unrealized currency gains on debt instruments recognized in the fourth
quarter of 2003. Excluding these factors, operating income improved by $12 million.
The Company’s fourth-quarter 2003 consolidated net loss of $1 million or 1 cent per
share compares to a pro forma consolidated net loss of $7 million or 8 cents per
share in fourth-quarter 2002.
Earnings before interest, taxes, depreciation, amortization, unrealized currency gains
on debt instruments, and net pension and OPEB expense (EBITDAP) for fourth-
quarter 2003 totaled $276 million, an increase of $67 million compared to pro forma
fourth-quarter 2002. The Company incurred restructuring and other unusual charges
totaling $14 million and $73 million for 2003 and 2002, respectively. Exclusive of
these charges, fourth quarter EBITDAP was $290 million, an improvement of $8
million when compared to pro forma fourth-quarter 2002.
“Through its diversified customer base, the Company benefited from new business
growth and foreign exchange during 2003,” said John C. Plant, president and chief
executive officer. “The commitment by our employees to drive down costs and to
design and manufacture high-quality products were significant contributors to our
2003 financial performance and will continue to be essential to the Company’s future
success and overall competitiveness.”
Full-Year 2003 For the ten-month period from March 1, 2003 (post acquisition date), through
December 31, 2003, the Company reported sales of $9.4 billion, operating income of
$340 million, and net losses of $101 million or $1.16 per share. For the two months
ended February 28, 2003, the predecessor Company reported sales of $1.9 billion,
operating income of $97 million, and net earnings of $31 million.
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Pro forma sales for full-year 2003 totaled $11.3 billion, an increase of $924 million or
about 9% compared to full-year 2002 pro forma sales. Pro forma operating income
for the year was $579 million, a decline of $86 million from the prior year. This
decrease reflects a number of factors, including a $224 million decline in net pension
and OPEB income due primarily to the application of purchase accounting, a $49
million reduction in restructuring and other unusual charges, and $32 million of
unrealized currency gains on debt instruments recognized in 2003. Excluding these
factors, operating income improved by $57 million. On a pro forma basis, the
Company reported full-year 2003 net earnings of $93 million or $1.03 per share on a
fully diluted basis. In comparison, the Company reported pro forma consolidated net
earnings of $201 million or $2.32 per share in full-year 2002.
Pro forma EBITDAP for full-year 2003 totaled $1,094 million, an increase of $109
million compared to the prior year period pro forma. The Company incurred
restructuring and other unusual charges of $39 million and $88 million for 2003 and
2002, respectively. Excluding these charges, full year pro forma EBITDAP was
$1,133 million, an improvement of $60 million when compared to the prior year.
Capital/Liquidity As of December 31, 2003, the Company had $3,808 million of debt and $844 million
of cash and marketable securities. At year-end, net debt (defined as debt less cash
and marketable securities) totaled $2,964 million, a decrease of $473 million as
compared to the Blackstone acquisition date of February 28, 2003. Cash flow from
operations during the fourth quarter, which is generally the company’s highest cash
generating quarter, amounted to $549 million. Capital expenditures for fourth-quarter
and full-year 2003 totaled $197 million and $415 million, respectively.
2004 Outlook TRW expects full-year 2004 revenue in the range of $11.4 to $11.6 billion and
earnings per share in the range of $1.55 to $1.70, excluding charges for debt
repayment transactions in conjunction with the IPO and a January 2004 bank debt
refinancing. These charges, which at this time have not been finalized, are expected
to be significant and will be included in the Company’s first quarter results. This
range also reflects the impact of interest savings of the IPO as it occurred on
February 6, 2004 and assumes an effective tax rate of approximately 45% for 2004.
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Further, this guidance includes pre-tax expenses of approximately $33 million for
amortization of intangibles (principally customer relationships) and $30 million related
to restructuring. Excluding these two items, we expect earnings per share in the
range of $2.01 to $2.16.
The Company expects EBITDA in the range of $1,035 to $1,060 million, including
approximately $30 million of pre-tax restructuring charges. Excluding the
restructuring charges, EBITDA is expected to be in the range of $1,065 to $1,090
million. Additionally, the Company expects capital expenditures for the year to be at,
or slightly below, 4% of sales.
For first-quarter 2004, the Company expects revenue of approximately $2.9 billion
and earnings per share in the range of $0.40 to $0.48, excluding charges for debt
repayment transactions as described previously. Earnings per share, excluding
amortization of intangibles and restructuring charges, as discussed above, is
estimated to be in the range of $0.54 to $0.62. The Company also expects EBITDA
in the range of $260 to $270 million, including approximately $10 million of pre-tax
restructuring charges, or $270 to $280 million excluding these charges.
Reconciliation to GAAP For a reconciliation of the pro forma and non-GAAP historical numbers appearing in
this release to GAAP, please see the accompanying schedules or visit the investor
information section of our website at www.trwauto.com.
About TRW With 2003 pro forma sales of $11.3 billion, TRW Automotive ranks among the world's
top 10 automotive suppliers. Headquartered in Livonia, Michigan, USA, the
Company, through its subsidiaries, employs approximately 61,000 people in 22
countries. Its 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. TRW Automotive news is available on
the Internet at www.trwauto.com.
4
Forward-Looking Statements This release contains statements that are not statements of historical fact, but instead
are forward-looking statements. 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 the TRW Automotive
Holdings Corp. final prospectus dated as of February 2, 2004 (the "Prospectus") filed
with the Securities and Exchange Commission (the "SEC") pursuant to Rule
424(b)(4) and include: our substantial leverage; the highly competitive automotive
parts industry and its cyclicality; pricing pressures from our customers; product
liability and warranty and recall claims; our dependence on our largest customers;
limitations on flexibility in operating our business contained in our debt agreements;
increases in interest rates; fluctuations in foreign exchange rates; the possibility that
our owners' interests will conflict with ours; work stoppages or other labor issues and
other risks and uncertainties set forth under "Risk Factors" in the Prospectus and in
our other SEC filings. We do not intend or assume any obligation to update any of
these forward-looking statements.
# # #
5
TRW Automotive Holdings Corp.
Index Actual and Pro Forma Consolidated and Combined
Financial Information Page Periods Ended December 31, 2003, February 28, 2003, and December 31, 2002
Consolidated and Combined Statements of Operations (unaudited) for the three months ended December 31, 2003 and December 31, 2002 ....................................................................A2 Consolidated and Combined Statements of Operations for the ten months ended December 31, 2003 (unaudited), the two months ended February 28, 2003 and the year ended December 31, 2002 ................................................................................................................A3 Condensed Consolidated and Combined Balance Sheets – December 31, 2003 (unaudited) and December 31, 2002 ............................................................................................................................A4 Actual and Pro Forma Consolidated and Combined Statements of Operations (unaudited) for the three months and years ended December 31, 2003 and December 31, 2002 ...........................................A5 Reconciliation of GAAP Net Income to Actual and Pro Forma EBITDA and EBITDAP (unaudited) for the three months and years ended December 31, 2003 and December 31, 2002................................A7
The accompanying actual and pro forma consolidated and combined financial information and reconciliation of GAAP net income to actual and pro forma EBITDA and EBITDAP should be read in conjunction with the TRW Automotive Holdings Corp. Registration Statement on Form S-1 including the final prospectus dated February 2, 2004 and filed on February 3, 2004, which contains historical consolidated and combined financial statements and the accompanying notes to consolidated and combined financial statements and unaudited pro forma consolidated and combined financial information and accompanying notes to unaudited pro forma consolidated and combined financial information. The accompanying unaudited pro forma consolidated and combined financial information is intended to give effect to the February 28, 2003 acquisition of the former TRW Inc.’s automotive business by affiliates of The Blackstone Group L.P. from Northrop Grumman Corporation and the July 22, 2003 refinancing of a portion of debt entered into in connection with the acquisition, as if these transactions had occurred on January 1, 2002. The unaudited pro forma consolidated and combined financial information is based upon available information and certain assumptions we believe are reasonable. However, these statements are for informational purposes only and are not intended to represent or be indicative of the consolidated results of operations or financial position that would have been reported had the acquisition been completed as of January 1, 2002, and should not be taken as representative of future consolidated results of operations or financial position.
A2
TRW Automotive Holdings Corp.
Consolidated and Combined Statements of Operations (unaudited)
Three Months Ended December 31, Successor Predecessor (In millions, except per share amounts) 2003 2002 Sales......................................................................................................... $ 2,982 $ 2,674 Cost of sales ............................................................................................ 2,674 2,369 Gross profit .............................................................................................. 308 305 Administrative and selling expenses ....................................................... 144 155 Research and development expenses ...................................................... 45 43 Amortization of intangible assets ........................................................... 8 4 Other income – net .................................................................................. (28) - Operating income .................................................................................... 139 103 Interest expense ....................................................................................... 86 106 Interest income ........................................................................................ (3) (3)Losses on sales of receivables ................................................................ - 2 Earnings (losses) before income taxes .................................................... 56 (2)Income tax expense ................................................................................ 57 31 Net losses................................................................................................. $ (1) $ (33) Basic and diluted losses per share: Losses per share................................................................................... $ (0.01) N/A Weighted average shares ..................................................................... 86.8 N/A
A3
TRW Automotive Holdings Corp.
Consolidated and Combined Statements of Operations
Successor Predecessor
Ten Months Two Months Ended Ended Year Ended
December 31, February 28, December 31, (In millions, except per share amounts) 2003 2003 2002 (unaudited) Sales .................................................................................................. $ 9,435 $ 1,916 $ 10,630 Cost of sales ...................................................................................... 8,456 1,686 9,315 Gross profit ....................................................................................... 979 230 1,315 Administrative and selling expenses ................................................. 446 100 541 Research and development expenses ................................................ 137 27 151 Purchased in-process research and development .............................. 85 - - Amortization of intangible assets...................................................... 27 2 15
Other (income) expense – net ........................................................... (56) 4 (6) Operating income.............................................................................. 340 97 614 Interest expense................................................................................. 295 48 316 Interest income.................................................................................. (8) (1) (7)Loss (gain) on retirement of debt ...................................................... 31 - (4)Losses on sales of receivables .......................................................... 25 - 7 (Losses) earnings before income taxes.............................................. (3) 50 302 Income tax expense........................................................................... 98 19 138 Net (losses) earnings........................................................................ $ (101) $ 31 $ 164
Basic and diluted losses per share: Losses per share ............................................................................ $ (1.16) N/A N/A Weighted average shares............................................................... 86.8 N/A N/A
A4
TRW Automotive Holdings Corp.
Consolidated and Combined Balance Sheets
Year ended December 31, Successor Predecessor (Dollars in millions) 2003 2002 (unaudited) Assets Current assets:
Cash and cash equivalents ............................................................ $ 828 $ 188 Marketable securities..................................................................... 16 26 Accounts receivable ...................................................................... 1,643 1,348 Inventories..................................................................................... 635 608 Prepaid expenses ........................................................................... 73 49 Deferred income taxes................................................................... 120 144
Total current assets ............................................................................... 3,315 2,363 Property, plant and equipment – net ..................................................... 2,499 2,558 Goodwill and other intangible assets –net ............................................ 3,324 2,578 Prepaid pension cost ............................................................................. 120 3,048 Deferred income taxes .......................................................................... 129 - Other assets........................................................................................... 520 401 $ 9,907 $ 10,948
Liabilities, minority interests and stockholders' investment Current liabilities: Short-term debt ................................................................................... $ 76 $ 327 Current portion of long-term debt....................................................... 24 17 Trade accounts payable....................................................................... 1,626 1,407 Other current liabilities ....................................................................... 1,400 1,004 Total current liabilities.......................................................................... 3,126 2,755 Debt allocated from TRW .................................................................... - 3,279 Long-term debt ..................................................................................... 3,708 302 Post-retirement benefits other than pensions ........................................ 935 751 Pension benefits.................................................................................... 838 427 Deferred income taxes .......................................................................... 222 731 Other long-term liabilities .................................................................... 300 231 Total liabilities...................................................................................... 9,129 8,476 Minority interests.................................................................................. 50 81 Stockholders' investment:
Parent company investment........................................................... - 2,738 Capital stock (par value $0.01; 100 million shares authorized,
86.9 million issued and outstanding as of December 31, 2003.. 1 - Paid-in-capital ............................................................................... 868 - Accumulated deficit ...................................................................... (101) - Accumulated other comprehensive losses..................................... (40) (347)
Total stockholders' investment ............................................................ 728 2,391 $ 9,907 $ 10,948
A5
TRW Automotive Holdings Corp.
Actual and Pro Forma Consolidated and Combined Statements of Operations (unaudited)
Three Months Ended December 31,
(In millions, except per share amounts) Actual 2003
Pro forma 2002
Sales........................................................................................... $ 2,982 $ 2,611 Cost of sales............................................................................... 2,674 2,300 Gross profit ................................................................................ 308 311 Administrative and selling expenses.......................................... 144 144 Research and development expenses......................................... 45 43 Amortization of intangible assets .............................................. 8 9 Other income – net .................................................................... (28) (2) Operating income ...................................................................... 139 117 Interest expense ......................................................................... 86 78 Interest income .......................................................................... (3) (2) Losses on sales of receivables ................................................... - 2 Earnings before income taxes.................................................... 56 39 Income tax expense ................................................................... 57 46 Net losses................................................................................... $ (1) $ (7) Basic and diluted losses per share:
Losses per share..................................................................... $ (0.01) $ (0.08) Weighted average shares ....................................................... 86.8 86.8
A6
TRW Automotive Holdings Corp.
Pro Forma Consolidated and Combined Statements of Operations
Year ended December 31, (In millions, except per share amounts) 2003 2002 Sales........................................................................................... $ 11,308 $ 10,384 Cost of sales............................................................................... 10,042 9,048 Gross profit ................................................................................ 1,266 1,336 Administrative and selling expenses.......................................... 544 501 Research and development expenses......................................... 164 151 Amortization of intangible assets .............................................. 32 33 Other income – net .................................................................... (53) (14) Operating income ...................................................................... 579 665 Interest expense ......................................................................... 327 310 Interest income .......................................................................... (8) (6) Losses on sales of receivables ................................................... 8 5 Earnings before income taxes.................................................... 252 356 Income tax expense ................................................................... 159 155 Net earnings ............................................................................. $ 93 $ 201 Basic earnings per share: Earnings per share ................................................................. $ 1.07 $ 2.32 Weighted average shares ....................................................... 86.8 86.8 Diluted earnings per share: Earnings per share ................................................................ $ 1.03 $ 2.32 Weighted average shares ..................................................... 90.4 86.8
A7
TRW Automotive Holdings Corp.
Reconciliation to Actual and Pro Forma EBITDA and EBITDAP (unaudited)
• The reconciliation schedules that follow should be read in conjunction with the TRW
Automotive Holdings Corp. Registration Statement on Form S-1 including the final prospectus dated February 2, 2004 and filed as of February 3, 2004, which contains summary historical and pro forma financial data. The accompanying unaudited pro forma financial information is intended to give effect to the February 28, 2003 acquisition of the former TRW Inc.’s automotive business by affiliates of The Blackstone Group L.P. from Northrop Grumman Corporation and the July 22, 2003 refinancing of a portion of debt entered into in connection with the acquisition, as if these transactions had occurred on January 1, 2002.
• The EBITDA and EBITDAP measures calculated in the schedules are measures used by
management to evaluate operating performance. Management believes EBITDA and EBITDAP measures are useful to investors because they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. Management also believes that the inclusion of supplementary adjustments to EBITDA and EBITDAP are appropriate to provide additional information to investors about certain material cash items and other unusual items that we do not expect to continue at the same level in the future.
• EBITDA and EBITDAP are not recognized terms under GAAP and do not purport to be
alternatives to net earnings (losses) as indicators of operating performance or to cash flows from operating activities as a measure of liquidity. Because not all companies use identical calculations, these presentations of EBITDA and EBITDAP may not be comparable to other similarly titled measures of other companies. Additionally, EBITDA and EBITDAP are not intended to be measures of free cash flow for management’s discretionary use, as they do not consider certain cash requirements such as interest payments, tax payments and debt service requirements, and, in the case of EBITDAP, pensions and other post retirement benefits.
• The adjustments to EBITDA to arrive at EBITDAP may not be in accordance with current
Securities and Exchange Commission (“SEC”) practice or with regulations adopted by the SEC that apply to registration statements filed under the Securities Act of 1933 and periodic reports filed under the Securities Exchange Act of 1934. Accordingly, the SEC may require that EBITDAP be presented differently in filings made with the SEC than as presented on these schedules or not presented at all.
A8
TRW Automotive Holdings Corp.
Reconciliation to Actual and Pro Forma EBITDA and EBITDAP (unaudited)
Three Months Ended December 31,
(Dollars in millions) Actual
2003 Pro Forma
2002 GAAP net losses .......................................................................................... $ (1) $ (33) Income tax expense ................................................................................. 57 31 Interest expense, net of interest income .................................................. 83 103 Losses on sales of receivables ................................................................. - 2 GAAP operating income............................................................................. 139 103 Pro forma adjustments:
Stand alone costs .................................................................................... - 7 Depreciation and amortization ............................................................... - 5 Other....................................................................................................... - 2
Operating income........................................................................................ 139 117 Depreciation and amortization, net of pro forma adjustments ...................... 128 132 Unrealized foreign exchange gain................................................................. (17) - EBITDA ....................................................................................................... 250 249 Cash restructuring charges ............................................................................ 14 20 Acquisition-related expenses......................................................................... - 23 Other unusual items....................................................................................... - 30 EBITDA, excluding unusual items ............................................................ 264 322 EBITDA ....................................................................................................... $ 250 $ 249 Net Pension/OPEB expense (income), net of pro forma adjustments ........... 26 (40) EBITDAP..................................................................................................... 276 209
Cash restructuring charges ............................................................................ 14 20 Acquisition-related expenses......................................................................... - 23 Other unusual items....................................................................................... - 30 EBITDAP, excluding unusual items .......................................................... $ 290 $ 282
A9
TRW Automotive Holdings Corp.
Reconciliation to Pro Forma EBITDA and EBITDAP (unaudited)
Year Ended December 31, (Dollars in millions) 2003 2002 GAAP net (losses) earnings......................................................................... $ (70) $ 164 Income tax expense ................................................................................ 117 138 Interest expense, net of interest income.................................................. 334 309 Loss (gain) on retirement of debt............................................................ 31 (4) Losses on sales of receivables ................................................................ 25 7 GAAP operating income ............................................................................. 437 614 Pro forma adjustments:
Inventory fair market value adjustment ................................................. 43 - Purchased in-process research and development ................................... 85 - Stand alone costs.................................................................................... (1) 28 Depreciation and amortization............................................................... 4 20 Other ...................................................................................................... 11 3
Pro forma operating income ....................................................................... 579 665 Depreciation and amortization, net of pro forma adjustments....................... 486 483 Unrealized foreign exchange gain ................................................................. (32) - Pro forma EBITDA ..................................................................................... 1,033 1,148 Cash restructuring charges............................................................................. 33 27 Acquisition-related expenses ......................................................................... 6 23 Other unusual items ....................................................................................... - 38 Pro forma EBITDA, excluding unusual items .......................................... 1,072 1,236 Pro forma EBITDA ..................................................................................... $ 1,033 $ 1,148 Net Pension/OPEB expense (income), net of pro forma adjustments ........... 61 (163) Pro forma EBITDAP................................................................................... 1,094 985 Cash restructuring charges............................................................................. 33 27 Acquisition-related expenses ......................................................................... 6 23 Other unusual items ....................................................................................... - 38 Pro forma EBITDAP, excluding unusual items ........................................ $ 1,133 $ 1,073
TRW Automotive Holdings Corp.
2003 Fourth Quarter and Full YearFinancial Results Conference Call Presentation
February 17, 2004
© TRW Automotive Inc. 2004
P2
IntroductionPatrick StobbDirector, Investor Relations
2003 Year and Q4 HighlightsJohn C. PlantPresident and Chief Executive Officer
Financial OverviewJoseph S. CantieVice President and Chief Financial Officer
Introduction
• Final Prospectus
• Basis of financial statements
• Safe harbor statementThis material contains statements that are not statements of historical fact, but instead are forward-looking statements. 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 the TRW Automotive Holdings Corp. final prospectus dated as of February 2, 2004 (the "Prospectus") filed with the Securities and Exchange Commission (the "SEC") pursuant to Rule 424(b)(4) and include: our substantial leverage; the highly competitive automotive parts industry and its cyclicality; pricing pressures from our customers; product liability and warranty and recall claims; our dependence on our largest customers; limitations on flexibility in operating our business contained in our debt agreements; increases in interest rates; fluctuations in foreign exchange rates; the possibility that our owners' interests will conflict with ours; work stoppages or other labor issues and other risks and uncertainties set forth under "Risk Factors" in the Prospectus and in our other SEC filings. We do not intend or assume any obligation to update any of these forward-looking statements.
© TRW Automotive Inc. 2004
P3
IPO Overview
© TRW Automotive Inc. 2004
P4
• Completed IPO on February 6, 2003 – stock began trading under symbol TRW on NYSE
• Use of net proceeds from sale of 24.1 million shares– 50% to retire public debt– 50% to buy-back 12 million shares owned by Blackstone
• Post IPO ownership– Blackstone 57 %– Public 24– Northrop Grumman 17– Management 2
Total 100 %
Investment Highlights
Global leader in Active and Passive safety – leading market positions
High growth products – safety sells
Visible Growth – revenue growth in excess of industry vehicle production(1)
One of the most diversified major OEM suppliers
Consistent Cash Flow Generation & Earnings GrowthConsistent Cash Flow Generation & Earnings Growth
© TRW Automotive Inc. 2004
P5(1) Based on management assumptions regarding pricing, currency exchange rates, volume and timing of vehicle production, option
mix, and other factors not in the control of management.
2003 Highlights
• Sales of $11.3 billion, up 9% vs. 2002(1)
• Net Earnings of $93 million(1)
• EBITDA, before $39 million of restructuring and other unusual charges, totaled $1,072 million in 2003(2)
• EBITDAP of $1,133 million (pre-unusuals) vs. $1,073 million in 2002(2)
• Net debt $3.0 billion at year-end; a decline of $473 million from the acquisition date level of $3.4 billion(3)
© TRW Automotive Inc. 2004
P6(1) Pro forma for the acquisition and July 2003 debt refinancing. Please see page A3 of the press release for actual consolidated and combined financials.(2) For reconciliation of these non-GAAP measures to the comparable GAAP number, please refer to pages A7-A9 of the press release that accompanies this material.(3) Net Debt is total indebtedness (including receivable facility) less cash, cash equivalents and marketable securities. See page P19 for reconciliation to closest GAAP equivalent.
2003 Highlights
• Achieved targeted net new business wins to support future revenue growth
• Achieved cost reduction and productivity goals
• Restructuring activities resulted in fewer facilities and lower headcount
• Established several ventures in key areas
• Completed NOC (12/02) and Blackstone acquisitions, bond registration, two major bank refinancings and IPO
© TRW Automotive Inc. 2004
P7
Fourth Quarter 2003 Results
• Sales of $3.0 billion, up 14% vs. 2002(1)
• Net Loss of $1 million
• EBITDA, before $14 million of restructuring charges totaled $264 million(2)
• EBITDAP of $290 million (pre-unusuals) vs. $282 million in 2002(2)
• Reduction in net debt of $331 million(3)
© TRW Automotive Inc. 2004
P8(1) Pro forma for the acquisition and July 2003 debt refinancing. Please see page A2 of the press release for actual consolidated and combined financials.(2) For reconciliation of these non-GAAP measures to the comparable GAAP number, please refer to pages A7-A9 of the press release that accompanies this material.(3) Net Debt is total indebtedness (including receivable facility) less cash, cash equivalents and marketable securities. See page P19 for reconciliation to closest GAAP equivalent.
Looking Ahead - 2004
© TRW Automotive Inc. 2004
P9
15.9
11.9
16.2
11.7
5
10
15
20
2003 2004 2003 2004North America
18.8 19.2
10
15
20
2003 2004Europe
2004 Production Forecast(1)
(units in millions)
Total Big 3 • Industry fundamentals are moderately better
• Safety continues to be a focus – legislation and voluntary OE fitments add to revenues
• Pricing pressures remain difficult – continuous cost-down and productivity gains needed to mitigate this pressure
2004 Comments
(1) Source: Primarily CSM Worldwide and internal company estimates.
Looking Ahead – 2004 Expectations
© TRW Automotive Inc. 2004
P10
• Sales in 2004 of $11.4 to $11.6 billion
• Earnings per share of $1.55 to $1.70– Excludes first quarter charges relating to debt repayment
transactions – charges not finalized at this time– Assumes 45% effective tax rate
• Earnings per share of $2.01 to $2.16, excluding, – Amortization of intangibles of $33 million (principally customer
relationships)– Restructuring charges of $30 million
• EBITDA of $1,035 to $1,060 million; excluding restructuring charges $1,065 to $1,090 million
• Capital expenditures around 4% of sales
CEO Summary Comments
2003• TRW Automotive emerged as an independent
company
• Major strategic, operational and financial objectives achieved
• Capital structure transactions provide a solid basis and strong liquidity to support future growth
2004• Company positioned to generate consistent cash
flows and earnings growth
© TRW Automotive Inc. 2004
P11
Fourth Quarter 2003 Results(dollars in millions)
© TRW Automotive Inc. 2004
P12
2003 2002(1)
Sales $ 2,982 $ 2,611
Operating Income $ 139 $ 117Interest(2) (83) (78)Taxes (57) (46)Net Earnings(Loss) $ (1) $ (7)
Earnings(Loss) Per Share(3) $ (0.01) $ (0.08)
(1) Pro forma for the acquisition and July 2003 debt refinancing. Please see page A2 of the press release for actual consolidated and combined financials.(2) Includes loss on sale of receivables and interest income.(3) Based on shares outstanding of 86.8 million.
2003 2002(1)
Operating Income $ 139 $ 117Unrealized Exchange Gain (17) –Depreciation & Amortization 128 132EBITDA(2) 250 249 Restructuring & Other Unusuals 14 73EBITDA (pre-unusuals)(2) 264 322Net Pension & OPEB 26 (40)EBITDAP (pre-unusuals)(2) $ 290 $ 282
Fourth Quarter 2003 Results(dollars in millions)
© TRW Automotive Inc. 2004
P13(1) Pro forma for the acquisition and July 2003 debt refinancing. Please see page A2 of the press release for actual consolidated and combined financials.(2) For reconciliation of these non-GAAP measures to the comparable GAAP number, please refer to pages A7-A9 of the press release that accompanies this material.
Full Year 2003 Results(dollars in millions)
2003(1) 2002(1)
Sales $11,308 $10,384
Operating Income $ 579 $ 665Interest(2) (327) (309)Taxes (159) (155)Net Earnings(Loss) $ 93 $ 201
Earnings(Loss) Per Share(3) $ 1.03 $ 2.32
© TRW Automotive Inc. 2004
P14(1) Pro forma for the acquisition and July 2003 debt refinancing. Please see page A3 of the press release for actual consolidated and combined financials.(2) Includes loss on sale of receivables and interest income.(3) Based on fully diluted shares outstanding of 86.8 million for 2002 and 90.4 million for 2003.
2003(1) 2002(1)
Operating Income $ 579 $ 665Unrealized Exchange Gain (32) –Depreciation & Amortization 486 483EBITDA(2) 1,033 1,148 Restructuring & Other Unusuals 39 88EBITDA (pre-unusuals)(2) 1,072 1,236Net Pension & OPEB 61 (163)EBITDAP (pre-unusuals)(2) $1,133 $1,073
Full Year 2003 Results(dollars in millions)
© TRW Automotive Inc. 2004
P15(1) Pro forma for the acquisition and July 2003 debt refinancing. Please see page A3 of the press release for actual consolidated and combined financials.(2) For reconciliation of these non-GAAP measures to the comparable GAAP number, please refer to pages A7-A9 of the press release that accompanies this material.
Cash Flow Drives Deleveraging (dollars in millions)
2003 Net Debt2003 Net Debt(1)(1) CommentsComments
© TRW Automotive Inc. 2004
P16
$3,089 $2,923$2,581
$2,964$3,295
$3,437
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
'Feb 28 'Sep 26 'Dec 31
(1) Net debt is equal to total indebtedness (including receivables facility) minus cash, cash equivalents and marketable securities. For net debt reconciliation to closest GAAP equivalent, please refer to the reconciliation on page P19 of this presentation.
PIK Seller NoteOperating Co. Debt
$473 inNet Debt • Reduced net debt by $330 million
in Q4 of 2003
• As of 31-Dec-2003, the Company had over $1 billion of liquidity
– $500 million revolver
– $400 million A/R facility
– $844 million of cash on balance sheet
• Further deleveraging through use of IPO proceeds in Q1 2004
First Quarter 2004 – Expectations
• Sales of $2.9 billion
• Earnings per share of $0.40 to $0.48– Excludes first quarter charges relating to debt repayment
transactions – charges not finalized at this time
• Earnings per share of $0.54 to $.062 excluding, – Amortization of intangibles and restructuring charges
• EBITDA of $260 to $270 million; excluding $10 million restructuring charges $270 to $280 million
© TRW Automotive Inc. 2004
P17
© TRW Automotive Inc. 2004
P18
Automotive
Net Debt Reconciliation(dollars in millions)
3/1 9/26 12/31Cash $ 449 $ 399 $ 828Marketable Securities 26 16 16Subtotal $ 475 $ 415 $ 844
Short Term Debt $ 168 $ 54 $ 76 Long Term Debt 3,396 3,284 3,349Total Debt Operating Company 3,564 3,338 3,425Net Debt Operating Company $ 3,089 $ 2,923 $ 2,581
Seller Note $ 348 $ 372 $ 383Total Debt w/ Seller Note 3,912 3,710 3,808Net Debt TRW Holdings $ 3,437 $ 3,295 $ 2,964
2003 Period-End Balances
© TRW Automotive Inc. 2004
P19