TRW Reports First Quarter 2009 Financial Results
The 2009 first quarter GAAP net loss includes restructuring and fixed asset impairment charges of
“The automotive industry continues to face extraordinary challenges resulting from the global economic crisis and significantly reduced automotive production levels, the effects of which are reflected in our first quarter results announced today,” said
First Quarter 2009
The Company reported first-quarter 2009 sales of
Included in the first quarter 2009 results were restructuring and fixed asset impairment charges totaling
Net interest and securitization expense for the first quarter of 2009 totaled
For the 2009 quarter, a tax benefit totaling
The Company reported a 2009 first-quarter GAAP net loss of
Excluding the special items referred to above, the Company reported a first-quarter 2009 net loss of
Earnings before interest, securitization costs, taxes, depreciation and amortization and special items (“adjusted EBITDA”) were
Cash Flow and Capital Structure
First quarter 2009 net cash flow from operating activities was a use of
As of
Committed liquidity facilities and cash on hand provided the Company with available liquidity in excess of
2009 Outlook
TRW currently expects full year production to total 8.2 million units in
“As expected, 2009 is shaping up to be another challenging year for the automotive industry. We remain on track with our restructuring plans and are cautiously optimistic that the stimulus and scrappage programs implemented around the world will lead to moderately higher vehicle production levels in the second half of the year,” said Mr. Plant. “Preserving our liquidity and taking swift, decisive actions to help mitigate the effects of the downturn remain our top priorities in 2009.”
First Quarter 2009 Conference Call
The Company will host its first-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 95189434. 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 (losses) 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 April 3, 2009 and March 28, 2008 A2
Condensed Consolidated Balance Sheets as of April 3, 2009 (unaudited)
and December 31, 2008 A3
Condensed Consolidated Statements of Cash Flows (unaudited)
for the three months ended April 3, 2009 and March 28, 2008 A4
Reconciliation of Non-GAAP Financial Measures (unaudited)
for the three months ended April 3, 2009 and March 28, 2008 A5
Reconciliation of GAAP Net Losses to Adjusted Net Losses
(unaudited) for the three months ended April 3, 2009 A6
Reconciliation of GAAP Net Earnings to Adjusted Net Earnings
(unaudited) for the three months ended March 28, 2008 A7
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, 2008 as filed with the United States Securities and Exchange Commission on February 20, 2009.
A2
TRW Automotive Holdings Corp.
Consolidated Statements of Operations
(Unaudited)
(In millions, except per share amounts) Three Months Ended
April 3, March 28,
2009 2008
Sales $2,390 $4,144
Cost of sales 2,360 3,803
Gross profit 30 341
Administrative and selling expenses 107 132
Amortization of intangible assets 5 9
Restructuring charges and fixed asset
impairments 24 8
Intangible asset impairments 30 -
Other (income) expense - net (11) 4
Operating (losses) income (125) 188
Interest expense - net 41 48
Gain on retirement of debt (34) -
Accounts receivable securitization costs 1 1
Equity in losses (earnings) of affiliates,
net of tax 1 (7)
(Losses) earnings before income taxes (134) 146
Income tax (benefit) expense (5) 47
Net (losses) earnings before
noncontrolling interest (129) 99
Net earnings attributable to
noncontrolling interest, net of tax 2 5
Net (losses) earnings $(131) $94
Basic (losses) earnings per share:
(Losses) earnings per share $(1.30) $0.93
Weighted average shares outstanding 101.1 100.8
Diluted (losses) earnings per share:
(Losses) earnings per share $(1.30) $0.92
Weighted average shares outstanding 101.1 102.2
A3
TRW Automotive Holdings Corp.
Condensed Consolidated Balance Sheets
(Dollars in millions) As of
April 3, December 31,
2009 2008
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $535 $756
Marketable securities - 10
Accounts receivable - net 1,620 1,570
Inventories 630 694
Prepaid expenses and other
current assets 219 209
Total current assets 3,004 3,239
Property, plant and
equipment - net 2,370 2,518
Goodwill 1,762 1,765
Intangible assets - net 339 373
Pension asset 824 801
Other assets 482 576
Total assets $8,781 $9,272
Liabilities and Equity
Current liabilities:
Short-term debt $61 $66
Current portion of long-term
debt 62 53
Trade accounts payable 1,590 1,793
Accrued compensation 226 219
Other current liabilities 931 1,033
Total current liabilities 2,870 3,164
Long-term debt 2,835 2,803
Postretirement benefits
other than pensions 479 486
Pension benefits 736 778
Other long-term liabilities 741 773
Total liabilities 7,661 8,004
Commitments and contingencies
Stockholders' equity:
Preferred stock - -
Capital stock 1 1
Treasury stock - -
Paid-in-capital 1,203 1,199
Accumulated deficit (509) (378)
Accumulated other
comprehensive income 295 309
Total stockholders' equity 990 1,131
Noncontrolling interest 130 137
Total equity 1,120 1,268
Total liabilities and equity $8,781 $9,272
A4
TRW Automotive Holdings Corp.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in millions) Three Months Ended
April 3, March 28,
2009 2008
Operating Activities
Net (losses) earnings before
noncontrolling interest $(129) $99
Adjustments to reconcile net (losses)
earnings to net cash used in operating
activities:
Depreciation and amortization 117 147
Net pension and other postretirement
benefits income and contributions (66) (54)
Gain on retirement of debt (34) -
Intangible asset impairment charges 30 -
Fixed asset impairment charges 4 -
Net (gains) losses on sales of assets (4) 1
Other - net 6 (29)
Changes in assets and liabilities, net
of effects of businesses acquired:
Accounts receivable - net (100) (420)
Inventories 45 (58)
Trade accounts payable (153) 150
Prepaid expense and other assets 57 (15)
Other liabilities (27) 64
Net cash used in operating activities (254) (115)
Investing Activities
Capital expenditures, including other
intangible assets (35) (97)
Acquisitions of businesses, net of cash
acquired - (40)
Proceeds from sale/leaseback
transactions - 1
Net proceeds from asset sales 4 -
Net cash used in investing activities (31) (136)
Financing Activities
Change in short-term debt (2) 14
Net proceeds from (repayments on)
revolving credit facility 110 (90)
Proceeds from issuance of long-term
debt, net of fees 4 4
Redemption of long-term debt (23) (43)
Proceeds from exercise of stock options - 2
Net cash provided by (used in) financing
activities 89 (113)
Effect of exchange rate changes on cash (25) 31
Decrease in cash and cash equivalents (221) (333)
Cash and cash equivalents at beginning
of period 756 895
Cash and cash equivalents at end of
period $535 $562
A5
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 December 31, 2008 which contain summary historical data. Since all companies do not use identical calculations, our definition and presentation of EBITDA, Adjusted EBITDA and free cash flow may not be comparable to similarly titled measures reported by other companies.
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
April 3, March 28,
2009 2008
GAAP net (losses) earnings $(131) $94
Income tax (benefit) expense (5) 47
Interest expense - net 41 48
Accounts receivable securitization costs 1 1
Depreciation and amortization 117 147
EBITDA 23 337
Restructuring charges and fixed asset
impairments 24 8
Intangible asset impairments 30 -
Gain on retirement of debt (34) -
Adjusted EBITDA $43 $345
Free Cash Flow
Free cash flow represents net cash (used in) 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
April 3, March 28,
2009 2008
Cash flow used in operating activities $(254) $(115)
Capital expenditures (35) (97)
Free cash flow $(289) $(212)
A6
TRW Automotive Holdings Corp.
Reconciliation of GAAP Net Losses to Adjusted Net Losses
(Unaudited)
In accordance with SFAS 142 and SFAS 144, the Company recorded intangible asset impairment charges of $30 million and fixed asset impairment charges of $4 million. Additionally, the Company recorded restructuring charges of $20 million related primarily to severance, retention and outplacement services. The Company recorded a gain on retirement of debt of $34 million on the repurchase of a portion of each of the three tranches of its outstanding Senior Notes.
Three Three
Months Months
(In millions, Ended Ended
except per April 3, April 3,
share 2009 2009
amounts) Actual Adjustments Adjusted
Sales $2,390 $- $2,390
Cost of sales 2,360 - 2,360
Gross profit 30 - 30
Administrative and
selling expenses 107 - 107
Amortization of
intangible assets 5 - 5
Restructuring charges
and fixed asset
impairments 24 (24) (a) -
Intangible asset
impairments 30 (30) (b) -
Other income - net (11) - (11)
Operating losses (125) 54 (71)
Interest Expense - net 41 - 41
Gain on retirement
of debt (34) 34 (c) -
Account receivable
securitization costs 1 - 1
Equity in losses
of affiliates,
net of tax 1 - 1
Losses before
income taxes (134) 20 (114)
Income tax benefit (5) 4 (d) (1)
Net losses before
noncontrolling
interest (129) 16 (113)
Net earnings
attributable to
noncontrolling
interest, net of
tax 2 - 2
Net losses $(131) $16 $(115)
Effective tax rate n.m. n.m.
Basic losses
per share:
Losses per share $(1.30) $(1.14)
Weighted average
shares
outstanding 101.1 101.1
Diluted losses
per share:
Losses per share $(1.30) $(1.14)
Weighted average
shares
outstanding 101.1 101.1
(a) Represents the elimination of restructuring charges and fixed asset impairments.
(b) Represents the elimination of intangible asset impairments.
(c) Represents the elimination of the gain on retirement of debt.
(d) Represents the elimination of the income tax impact of the above adjustments.
n.m. - not meaningful
A7
TRW Automotive Holdings Corp.
Reconciliation of GAAP Net Earnings to Adjusted Net Earnings
(Unaudited)
In accordance with SFAS 142 and SFAS 144, the Company recorded fixed asset impairment charges of $4 million. Additionally, the Company recorded restructuring charges of $4 million related primarily to severance, retention and outplacement services.
Three Three
Months Months
(In millions, Ended Ended
except per March 28, March 28,
share 2008 2008
amounts) Actual Adjustments Adjusted
Sales $4,144 $- $4,144
Cost of sales 3,803 - 3,803
Gross profit 341 - 341
Administrative
and selling
expenses 132 - 132
Amortization
of intangible
assets 9 - 9
Restructuring
charges and
fixed asset
impairments 8 (8) (a) -
Other expense- net 4 - 4
Operating income 188 8 196
Interest expense - net 48 - 48
Account receivable
securitization costs 1 - 1
Equity in earnings of
affiliates, net of tax (7) - (7)
Earnings before income
taxes 146 8 154
Income tax expense 47 - 47
Net earnings before
noncontrolling interest 99 8 107
Net earnings attributable
to noncontrolling interest,
net of tax 5 - 5
Net earnings $94 $8 $102
Effective tax rate 32.2% 30.5%
Basic earnings per share:
Earnings per share $0.93 $1.01
Weighted average
shares outstanding 100.8 100.8
Diluted earnings per share:
Earnings per share $0.92 $1.00
Weighted average shares
outstanding 102.2 102.2
(a) Represents the elimination of restructuring charges and fixed asset impairments.
SOURCE TRW Automotive Holdings Corp.