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National Press Release
 | TRW Reports Fourth Quarter and Full Year 2008 Financial ResultsPublished 2009-02-20 07:00By TRW Automotive Holdings Corp. |
- Fourth-quarter sales of
- Fourth-quarter GAAP net loss of
- Excluding special items, fourth-quarter net loss of
- Fourth-quarter free cash flow (cash flow from operating activities less capital expenditures) of
- Year-end net debt of
The 2008 fourth quarter GAAP net loss includes goodwill and other intangible asset impairment charges of
The Company's full-year 2008 sales grew to a record
"The automotive industry is in the midst of extraordinary challenges resulting from the sudden and steep decline in global automotive production and economic activity. TRW's fourth quarter results reflect those challenges," said
Fourth Quarter 2008
The Company reported fourth-quarter 2008 sales of
As a result of the negative economic and automotive industry conditions, demand for the Company's products has declined substantially resulting in the impairment of certain of the Company's long-lived assets including goodwill, customer relationships and fixed assets totaling
Excluding asset impairments and restructuring charges from both periods, operating income for the fourth quarter of 2008 was a loss of
Net interest and securitization expense for the fourth quarter of 2008 totaled
Tax expense for the fourth quarter of 2008 was nil, which compares to a
The Company reported a 2008 fourth-quarter GAAP net loss of
Excluding the special items referred to above, the Company reported a fourth-quarter 2008 net loss of
Earnings before interest, securitization costs, taxes, depreciation and amortization and special items ("adjusted EBITDA") were
Full Year 2008
The Company reported 2008 sales of
For full-year 2008, the Company incurred goodwill, customer relationship and fixed asset impairments as well as restructuring charges totaling
Excluding these restructuring charges and asset impairments from both periods, operating income in 2008 was
Net interest and securitization expense for 2008 totaled
Tax expense in 2008 was
The Company reported a 2008 full-year GAAP net loss of
Excluding special items, the Company reported full-year 2008 net earnings of
Adjusted EBITDA totaled
Cash Flow and Capital Structure
Fourth quarter 2008 net cash flow from operating activities was
For full-year 2008, net cash flow from operating activities was
As of
At the end of 2008, committed liquidity facilities and cash on hand provided the Company with available liquidity in excess of
2009 Outlook
TRW's 2009 planning assumptions for industry production volumes are approximately 9.3 million in
"We anticipate 2009 will be another challenging year for the automotive industry, especially in our major markets of
Fourth Quarter and Full Year 2008 Conference Call
The Company will host its fourth-quarter conference call at
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 80725154. 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 (loss) earnings, operating income and diluted earnings per share each excluding special items, adjusted EBITDA and free cash flow. Management uses these non-GAAP measures to evaluate the operating performance of the Company and its business segments, including use in connection with forecasting 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 2008 sales of
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. 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 can 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
TRW Automotive Holdings Corp.
Index of Condensed Consolidated Financial Information
Page
Consolidated Statements of Operations (unaudited)
for the three months ended December 31, 2008 and December 31, 2007 A2
Consolidated Statements of Operations for the years ended
December 31, 2008 (unaudited) and December 31, 2007 A3
Consolidated Balance Sheets as of December 31, 2008 (unaudited)
and December 31, 2007 A4
Condensed Consolidated Statements of Cash Flows (unaudited)
for the years ended December 31, 2008 and December 31, 2007 A5
Reconciliation of Non-GAAP Financial Measures (unaudited)
for the three months and years ended December 31, 2008 and
December 31, 2007 A6
Reconciliation of GAAP Net (Losses) Earnings to Adjusted
(Losses) Earnings (unaudited) for the three months ended
December 31, 2008 A7
Reconciliation of GAAP Net Earnings to Adjusted Earnings (unaudited)
for the three months ended December 31, 2007 A8
Reconciliation of GAAP Net (Losses) Earnings to Adjusted Earnings
(unaudited) for the year ended December 31, 2008 A9
Reconciliation of GAAP Net Earnings to Adjusted Earnings
(unaudited) for the year ended December 31, 2007 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
A2
TRW Automotive Holdings Corp.
Consolidated Statements of Operations
(Unaudited)
(In millions, except per share amounts) Three Months Ended
December 31,
2008 2007
Sales $2,813 $3,886
Cost of sales 2,718 3,563
Gross profit 95 323
Administrative and selling expenses 116 146
Amortization of intangible assets 4 9
Restructuring charges and fixed asset impairments 81 19
Goodwill impairments 458 -
Intangible asset impairments 329 -
Other income - net (1) -
Operating (losses) income (892) 149
Interest expense - net 48 55
Accounts receivable securitization costs - 1
Equity in losses (earnings) of affiliates,
net of tax 3 (8)
Minority interest, net of tax 3 6
(Losses) earnings before income taxes (946) 95
Income tax expense - 39
Net (losses) earnings $(946) $56
Basic (losses) earnings per share:
(Losses) earnings per share $(9.35) $0.56
Weighted average shares outstanding 101.2 100.6
Diluted (losses) earnings per share:
(Losses) earnings per share $(9.35) $0.55
Weighted average shares outstanding 101.2 102.7
A3
TRW Automotive Holdings Corp.
Consolidated Statements of Operations
(In millions, except per share amounts) Years Ended
December 31,
2008 2007
(Unaudited)
Sales $14,995 $14,702
Cost of sales 13,977 13,494
Gross profit 1,018 1,208
Administrative and selling expenses 523 537
Amortization of intangible assets 31 36
Restructuring charges and fixed asset impairments 145 51
Goodwill impairments 458 -
Intangible asset impairments 329 -
Other income - net - (40)
Operating (losses) income (468) 624
Interest expense - net 182 228
Loss on retirement of debt - 155
Accounts receivable securitization costs 2 5
Equity in earnings of affiliates, net of tax (14) (28)
Minority interest, net of tax 15 19
(Losses) earnings before income taxes (653) 245
Income tax expense 126 155
Net (losses) earnings $(779) $90
Basic (losses) earnings per share:
(Losses) earnings per share $(7.71) $0.90
Weighted average shares outstanding 101.1 99.8
Diluted (losses) earnings per share:
(Losses) earnings per share $(7.71) $0.88
Weighted average shares outstanding 101.1 102.8
A4
TRW Automotive Holdings Corp.
Consolidated Balance Sheets
(Dollars in millions) As of
December 31,
2008 2007
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $756 $895
Marketable securities 10 4
Accounts receivable - net 1,570 2,313
Inventories 694 822
Prepaid expenses and other current assets 127 65
Deferred income taxes 82 227
Total current assets 3,239 4,326
Property, plant and equipment - net 2,518 2,910
Goodwill 1,765 2,243
Intangible assets - net 373 710
Pension asset 801 1,461
Deferred income taxes 93 88
Other assets 483 552
Total assets $9,272 $12,290
Liabilities, Minority Interests and Stockholders' Equity
Current liabilities:
Short-term debt $66 $64
Current portion of long-term debt 53 30
Trade accounts payable 1,793 2,406
Accrued compensation 219 298
Income taxes 23 63
Other current liabilities 1,010 854
Total current liabilities 3,164 3,715
Long-term debt 2,803 3,150
Postretirement benefits other than pensions 486 591
Pension benefits 778 497
Deferred income taxes 232 552
Long-term liabilities 541 459
Total liabilities 8,004 8,964
Minority interests 137 134
Commitments and contingencies
Stockholders' equity:
Capital stock 1 1
Treasury stock - -
Paid-in-capital 1,199 1,176
(Accumulated deficit)/retained earnings (378) 398
Accumulated other comprehensive earnings 309 1,617
Total stockholders' equity 1,131 3,192
Total liabilities, minority interests and
stockholders' equity $9,272 $12,290
A5
TRW Automotive Holdings Corp.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in millions) Years Ended
December 31,
2008 2007
Operating Activities
Net (losses) earnings $(779) $90
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 576 557
Net pension and other postretirement
benefits income and contributions (192) (184)
Net gain on sale of assets (5) (20)
Loss on retirement of debt - 155
Fixed asset impairment charges 87 16
Goodwill and intangible asset
impairment charges 787 -
Other - net 43 7
Changes in assets and liabilities,
net of effects of businesses acquired:
Accounts receivable, net 612 (66)
Inventories 91 22
Trade accounts payable (460) 133
Prepaid expense and other assets (67) 144
Other liabilities 80 (117)
Net cash provided by operating activities 773 737
Investing Activities
Capital expenditures, including other
intangible assets (482) (513)
Acquisitions of businesses,
net of cash acquired (40) (12)
Termination of interest rate swaps - (12)
Investment in affiliates (1) (1)
Purchase price adjustments - 3
Proceeds from sale/leaseback transactions 1 28
Net proceeds from asset sales 15 39
Net cash used in investing activities (507) (468)
Financing Activities
Change in short-term debt 6 (27)
Net (repayments on) proceeds from revolving
credit facility (229) 429
Proceeds from issuance of long-term debt,
net of fees 6 2,591
Redemption of long-term debt (68) (3,011)
Proceeds from exercise of stock options 4 29
Other - net (6) -
Net cash (used in) provided by financing
activities (287) 11
Effect of exchange rate changes on cash (118) 37
Increase (decrease) in cash and cash
equivalents (139) 317
Cash and cash equivalents at beginning of
period 895 578
Cash and cash equivalents at end of period $756 $895
A6
TRW Automotive Holdings Corp.
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
The reconciliation schedules below should be read in conjunction with the TRW Automotive Holdings Corp. Annual Report on Form 10-K for the year ended
EBITDA and Adjusted EBITDA
The EBITDA measure calculated in the following schedule is a measure used by management to evaluate the operating performance of the Company and its business segments, including use in connection with forecasting future periods. Management believes that investors will likewise find EBITDA useful in evaluating such performance. EBITDA is frequently used by securities analysts, institutional investors and other interested parties in the evaluation of companies in our industry.
Adjusted EBITDA is defined as EBITDA adjusted to exclude restructuring charges, asset impairments and other significant special items. Management believes that Adjusted EBITDA is useful to both management and investors because excluding these items is helpful in understanding the performance of on-going operations separate from items that may have a disproportionate impact on the Company's financial results in any particular period.
EBITDA and Adjusted EBITDA are not recognized terms under GAAP and do not purport to be alternatives to net (losses) earnings as an indicator of operating performance, nor to cash flows from operating activities as a measure of liquidity. Additionally, EBITDA and Adjusted EBITDA 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.
(Dollars in millions) Three Months Ended Years Ended
December 31, December 31,
2008 2007 2008 2007
GAAP net (losses) earnings $(946) $56 $(779) $90
Income tax expense - 39 126 155
Interest expense - net 48 55 182 228
Loss on retirement of debt - - - 155
Accounts receivable
securitization costs - 1 2 5
Depreciation and amortization 131 149 576 557
EBITDA (767) 300 107 1,190
Restructuring charges and
fixed asset impairments 81 19 145 51
Goodwill impairments 458 - 458 -
Intangible asset impairments 329 - 329 -
Adjusted EBITDA $101 $319 $1,039 $1,241
Free Cash Flow
Free cash flow represents net cash provided by operating activities less capital expenditures, and is used by management in its analysis of the Company's ability to service and repay its debt and for forecasting future periods. However, this measure should not be used as a substitute for net cash provided by operating activities since it does not reflect cash used to service debt and, therefore, does not reflect funds available for investment or other discretionary uses.
(Dollars in millions) Three Months Ended Years Ended
December 31, December 31,
2008 2007 2008 2007
Cash flow provided by operating
activities $769 $826 $773 $737
Capital expenditures (144) (174) (482) (513)
Free cash flow $625 $652 $291 $224
A7
TRW Automotive Holdings Corp.
Reconciliation of GAAP Net (Losses) Earnings to Adjusted Earnings
(Unaudited)
In accordance with SFAS 142 and SFAS 144, the Company recorded goodwill impairment charges of
(In millions, except per
share amounts) Three Months Three Months
Ended Ended
December 31, December 31,
2008 2008
Actual Adjustments Adjusted
Sales $2,813 $- $2,813
Cost of sales 2,718 - 2,718
Gross profit 95 - 95
Administrative and
selling expenses 116 - 116
Amortization of
intangible assets 4 - 4
Restructuring charges and
fixed asset impairments 81 (81)(a) -
Goodwill impairments 458 (458)(b) -
Intangible asset impairments 329 (329)(c) -
Other income - net (1) - (1)
Operating (losses) income (892) 868 (24)
Interest expense, net 48 - 48
Account receivable
securitization costs - - -
Equity in earnings of
affiliates, net of tax 3 - 3
Minority interest, net of tax 3 - 3
(Losses) earnings before
income taxes (946) 868 (78)
Income tax expense - (4)(d) (4)
Net (losses) earnings $(946) $872 $(74)
Effective tax rate - -
Basic (losses) earnings
per share:
(Losses) earnings
per share $(9.35) $(0.73)
Weighted average shares
outstanding 101.2 101.2
Diluted (losses)
earnings per share:
(Losses) earnings
per share $(9.35) $(0.73)
Weighted average shares
outstanding 101.2 101.2
(a) Represents the elimination of restructuring charges, fixed asset
impairments and net curtailment gains.
(b) Represents the elimination of goodwill impairments.
(c) Represents the elimination of intangible asset impairments.
(d) Represents the elimination of a tax benefit recorded through other
comprehensive earnings of $2 million, the tax benefit related to
restructuring charges and each of the impairments of $18 million,
and the tax expense related to the one-time write off of certain
tax assets of $24 million.
A8
TRW Automotive Holdings Corp.
Reconciliation of GAAP Net Earnings to Adjusted Earnings
(Unaudited)
The Company recorded restructuring charges and fixed asset impairments of
In accordance with SFAS 109, the Company recorded a non-cash tax benefit of
(In millions, except per
share amounts) Three Months Three Months
Ended Ended
December 31, December 31,
2007 2007
Actual Adjustments Adjusted
Sales $3,886 $- $3,886
Cost of sales 3,563 - 3,563
Gross profit 323 - 323
Administrative and selling
expenses 146 - 146
Amortization of intangible
assets 9 - 9
Restructuring charges and
fixed asset impairments 19 (19)(a) -
Goodwill impairments - - -
Intangible asset impairments - - -
Other income - net - - -
Operating income 149 19 168
Interest expense, net 55 - 55
Account receivable
securitization costs 1 - 1
Equity in earnings of
affiliates, net of tax (8) - (8)
Minority interest, net of tax 6 - 6
Earnings before income taxes 95 19 114
Income tax expense 39 14(b) 53
Net earnings $56 $5 $61
Effective tax rate 41% 46%
Basic earnings per share:
Earnings per share $0.56 $0.61
Weighted average shares
outstanding 100.6 100.6
Diluted earnings per share:
Earnings per share $0.55 $0.59
Weighted average shares
outstanding 102.7 102.7
(a) Represents the elimination of the restructuring charges and fixed
asset impairments.
(b) Represents the elimination of the tax benefit related to the SFAS
109 adjustment of $11 million and the elimination of the tax benefit
related to restructuring charges and fixed asset impairments of $3
million.
A9
TRW Automotive Holdings Corp.
Reconciliation of GAAP Net (Losses) Earnings to Adjusted (Losses) Earnings
(Unaudited)
In accordance with SFAS 142 and SFAS 144, the Company recorded goodwill impairment charges of
(In millions, except per
share amounts) Year Ended Year Ended
December 31, December 31,
2008 2008
Actual Adjustments Adjusted
Sales $14,995 $- $14,995
Cost of sales 13,977 - 13,977
Gross profit 1,018 - 1,018
Administrative and
selling expenses 523 - 523
Amortization of
intangible assets 31 - 31
Restructuring charges and
fixed asset impairments 145 (145)(a) -
Goodwill impairments 458 (458)(b) -
Intangible asset impairments 329 (329)(c) -
Other income - net - - -
Operating (losses) income (468) 932 464
Interest expense, net 182 - 182
Loss on retirement of debt - - -
Account receivable
securitization costs 2 - 2
Equity in earnings of
affiliates, net of tax (14) - (14)
Minority interest, net of tax 15 - 15
(Losses) earnings before
income taxes (653) 932 279
Income tax expense 126 - (d) 126
Net (losses) earnings $(779) $932 $153
Effective tax rate - 45%
Basic (losses) earnings
per share:
(Losses) earnings per share $(7.71) $1.51
Weighted average shares
outstanding 101.1 101.1
Diluted (losses) earnings
per share:
(Losses) earnings per share $(7.71) $1.50
Weighted average shares
outstanding 101.1 102.0
(a) Represents the elimination of restructuring charges, fixed asset
impairments and net curtailment gains.
(b) Represents the elimination of goodwill impairments.
(c) Represents the elimination of intangible asset impairments.
(d) Represents the elimination of a tax benefit recorded through other
comprehensive earnings of $2 million, the tax benefit related to
restructuring charges and each of the impairments of $22 million,
and the tax expense related to the one-time write off of certain
tax assets of $24 million, which together net to zero.
A10
TRW Automotive Holdings Corp.
Reconciliation of GAAP Net Earnings to Adjusted Earnings
(Unaudited)
In conjunction with the Company's tender offer and repurchases of its then outstanding old notes, the Company recorded a loss on retirement of debt of
The Company entered into its Fifth Amended and Restated Credit Agreement dated as of
In addition, the Company recorded restructuring charges and fixed asset impairments of
In accordance with SFAS 109, the Company also recorded a non-cash tax benefit of
(In millions, except per
share amounts) Year Ended Year Ended
December 31, December 31,
2007 2007
Actual Adjustments Adjusted
Sales $14,702 $- $14,702
Cost of sales 13,494 - 13,494
Gross profit 1,208 - 1,208
Administrative and selling
expenses 537 - 537
Amortization of intangible
assets 36 - 36
Restructuring charges and
fixed asset impairments 51 (51)(a) -
Goodwill impairments - - -
Intangible asset impairments - - -
Other income - net (40) - (40)
Operating income 624 51 675
Interest expense, net 228 - 228
Loss on retirement of debt 155 (155)(b) -
Account receivable
securitization costs 5 - 5
Equity in earnings of
affiliates, net of tax (28) - (28)
Minority interest, net of tax 19 - 19
Earnings before income taxes 245 206 451
Income tax expense 155 20(c) 175
Net earnings $90 $186 $276
Effective tax rate 63% 39%
Basic earnings per share:
Earnings per share $0.90 $2.77
Weighted average shares
outstanding 99.8 99.8
Diluted earnings per share:
Earnings per share $0.88 $2.68
Weighted average shares
outstanding 102.8 102.8
(a) Reflects the elimination of restructuring charges and fixed asset
impairments.
(b) Reflects the elimination of the loss on retirement of debt.
(c) Represents the elimination of the tax benefit related to the SFAS 109
adjustment of $11 million and the tax benefit related to restructuring
charges and fixed asset impairments of $9 million.
SOURCE TRW Automotive Holdings Corp.
