TRW Reports First Quarter 2008 Financial Results; Revises Full Year Outlook

LIVONIA, Mich., April 30 -- TRW Automotive Holdings Corp. , the global leader in active and passive safety systems, today reported first-quarter 2008 financial results with sales of $4.1 billion, an increase of 16.2 percent compared to the same period a year ago. The Company reported first quarter net earnings of $94 million or $0.92 per diluted share, which compares to a net loss in the prior year of $(86) million or $(0.87) per share.

The prior year result included charges of $147 million related to the Company's debt recapitalization plan that was initiated in the prior year quarter. The plan was completed during the second quarter of 2007 and included the refinancing of substantially all of the Company's debt, which effectively lowered corporate borrowing costs, improved covenant flexibility and extended debt maturities. When comparing results between the two periods, excluding the impact of debt charges in 2007, the Company's 2008 first quarter net earnings of $0.92 per diluted share compare favorably to the prior year adjusted result of $0.60 per diluted share. In comparison, the first quarter of 2008 benefited primarily from lower expenses related to interest and taxes, together with higher product volumes and the non-recurrence of certain other expenses that impacted the 2007 period.

"We have consistently pursued business strategies that improve TRW's long-term competitiveness, which has helped the Company overcome difficult industry conditions and is reflected in our solid first quarter performance," said John Plant, president and chief executive officer.

"These strategies focus efforts on improving our global market position in safety, pioneering innovation throughout the organization and implementing our operating programs in a manner that optimizes both cost and quality."

Mr. Plant added, "With respect to innovation, TRW is raising the intelligence of safety. Earlier this year we introduced our vision of Cognitive Safety Systems, which embodies our goal of helping to keep drivers and passengers safer by making vehicles smarter. Cognitive Safety represents the culmination of new and better technology that increasingly uses advanced electronics and proprietary algorithms to sense, analyze and respond to ever-changing conditions. Cognitive Safety focuses attention on our advanced capabilities and underscores our role as an intellectual partner to our customers. In doing so, it also raises our confidence in our ability to provide sustainable long-term growth for the Company."

First Quarter 2008

The Company reported first-quarter 2008 sales of $4.1 billion, an increase of $577 million or 16.2 percent over the prior year period. Foreign currency translation benefited sales in the 2008 quarter by approximately $358 million. First quarter sales, excluding the impact of foreign currency translation, increased approximately $219 million or 6.1 percent over the prior year period. This increase can be attributed primarily to significantly higher module sales and industry growth in China and South America. These positive factors were partially offset by price reductions provided to customers and the continued decline in North American vehicle production, including the effects of a supplier-related strike that negatively impacted operations at one of our customers.

Operating income for first-quarter 2008 was $188 million, which compares favorably to $175 million in the prior year period. The year-to-year increase was driven by a number of positive factors, including savings generated from cost improvement and efficiency programs, higher product sales and the non-recurrence of a business disruption that negatively impacted the 2007 quarter. These factors were partially offset by price reductions provided to customers, higher commodity costs and the impact of operating inefficiencies stemming from historically low vehicle production in North America.

The net impact of foreign currency rate fluctuations did not have a material impact on operating income in the 2008 quarter. Restructuring and asset impairment expenses in both years were $8 million.

Net interest and securitization expense for the first quarter of 2008 totaled $49 million, which compares favorably to $64 million in the prior year. Lower borrowing costs in the 2008 quarter can be attributed to the benefits derived from the Company's previously mentioned debt recapitalization and the impact of declining interest rates between the two periods.

Tax expense in the 2008 quarter was $47 million, resulting in an effective tax rate of 33 percent, which compares to $53 million in the prior year period. The effective tax rate in the 2007 quarter excluding previously mentioned debt retirement charges was 46 percent. The Company expects its full year 2008 effective tax rate to be approximately 38 to 42 percent.

The Company reported first-quarter 2008 net earnings of $94 million or $0.92 per diluted share, which compares to a net loss of $(86) million or $(0.87) per share in 2007. The 2008 result represents an improvement of $33 million when compared to 2007 net earnings, excluding debt retirement charges, of $61 million or $0.60 per diluted share.

Earnings before interest, securitization costs, loss on retirement of debt (where applicable), taxes, depreciation and amortization, or EBITDA, were $337 million in the first quarter, which compares to the prior year level of $309 million.

Cash Flow and Capital Structure

Net cash from operating activities during the first quarter was a use of $115 million, which compares to a use of $221 million in the prior year period. First quarter capital expenditures were $97 million compared to $119 million in 2007.

As mentioned previously, the Company refinanced substantially all of its debt in 2007. In the first-quarter 2007, the Company completed its $1.5 billion Senior Note offering and repurchased substantially all of its then-outstanding Notes through a tender offer. The Company incurred debt retirement charges related to this transaction of approximately $147 million in the first quarter of 2007.

As of March 28, 2008, the Company had $3,164 million of debt and $565 million of cash and marketable securities, resulting in net debt (defined as debt less cash and marketable securities) of $2,599 million. This net debt outcome is $254 million higher than the balance at the end of 2007.

2008 Outlook

The Company increased its full year outlook and now expects sales to be in the range of $16.2 to $16.6 billion (including second quarter sales of approximately $4.5 billion). Full year net earnings per diluted share are now expected to be in the range of $2.30 to $2.60.

This guidance range reflects pre-tax restructuring expenses of approximately $55 million (including approximately $10 million in the second quarter) and an effective tax rate in the range of approximately 38 to 42 percent. Lastly, the Company expects capital expenditures in 2008 to be approximately 3.5 percent of sales.

First Quarter 2008 Conference Call

The Company will host its first quarter conference call at 8:30 a.m. (EDT) today, Wednesday, April 30, 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 42019964. A live audio webcast and subsequent replay of the conference call will also be available on the Company's website at www.trw.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 2007 sales of $14.7 billion, TRW Automotive ranks among the world's leading automotive suppliers. Headquartered in Livonia, Michigan, USA, the Company, through its subsidiaries, operates in 27 countries and employs more than 66,000 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 TRW.