Attached files
file | filename |
---|---|
8-K - FORM 8-K - ZF TRW AUTOMOTIVE HOLDINGS CORP | k50631e8vk.htm |
TRW Automotive | ||||||||
12001 Tech Center Drive | ||||||||
Livonia, MI 48150 | ||||||||
News
Release
|
TRW |
|||||||
Investor Relations Contact: | ||||||||
Mark Oswald | ||||||||
(734) 855-3140 | ||||||||
Media Contact: | ||||||||
John Wilkerson | ||||||||
(734) 855-3864 |
TRW Reports Record Second Quarter and First Half 2011 Financial Results
LIVONIA, MICHIGAN, August 3, 2011 TRW Automotive Holdings Corp. (NYSE: TRW), the global leader
in active and passive safety systems, today reported second quarter 2011 financial results with
sales of $4.2 billion, an increase of 16 percent compared to the prior year period. The Company
reported GAAP second quarter net earnings of $293 million or $2.21 per diluted share, an increase
of 24 percent compared to net earnings of $227 million or $1.78 per diluted share in the prior
year period.
The Companys current and prior year quarterly results both contain special items. The current
year quarter included a gain associated with the resolution of a commercial matter, debt
retirement charges and favorable tax benefits while the prior year period included restructuring
charges, the impact of debt retirement and favorable tax benefits. Excluding these special
items, the Company reported net earnings of $264 million, or $1.99 per diluted share in the
second quarter of this year, which compares to net earnings of $221 million or $1.73 per diluted
share in the prior year period.
TRWs record results for the second quarter and first six months of 2011 have been driven by the
Companys strong market position and focus on profitably growing the business, said John C.
Plant, Chairman and Chief Executive Officer. The Companys outstanding business performance and
cash generation achieved in the first half of this year not only provides a solid foundation for
the remainder of this year, it also supports key growth initiatives that will further position
TRW for long-term success.
1
Second Quarter 2011
The Company reported second quarter 2011 sales of $4.2 billion, an increase of $573 million or 16
percent from the prior year period. The increase in sales resulted from improved vehicle
production volumes, primarily with domestic vehicle manufacturers in North America, increasing
demand for TRWs broad array of active and passive safety products and the positive impact of
currency movements between the two periods.
The Companys second quarter 2011 operating income was $368 million, compared with operating
income of $322 million in the 2010 period. The 2011 period includes a gain related to a
favorable resolution of a commercial matter totaling $19 million. Restructuring charges totaling
$3 million were recognized in the 2010 period. Excluding these items from both periods,
operating income for the second quarter was $349 million, which compares to $325 million in the
prior year period. The year-to-year improvement in absolute profit was driven by the positive
profit impact from the higher level of sales between the two quarters, largely offset by higher
raw material prices and planned increases in costs to support future growth.
Net interest expense for the second quarter of 2011 totaled $30 million, which compares favorably
to $41 million in the 2010 period as a result of lower debt levels. In addition, both the 2011
and 2010 periods recognized a net loss on retirement of debt totaling $10 million and $1 million,
respectively.
Tax expense for the second quarter of 2011 was $34 million, which compares to a tax expense of
$52 million in the prior year period. The 2011 period included a net tax benefit of $20 million
compared to the 2010 period which included a net tax benefit of $10 million, both of which
related to favorable resolutions of tax matters in foreign jurisdictions. Excluding these
benefits from both periods, tax expense was $54 million in the current quarter compared with $62
million last year.
The Company reported 2011 second quarter GAAP earnings of $293 million, or $2.21 per diluted
share, which compares to GAAP net earnings of $227 million, or $1.78 per diluted share in the
2010 period.
Excluding special items, the Company reported second quarter 2011 net earnings of $264 million,
or $1.99 per diluted share, which compares to net earnings of $221 million or $1.73 per diluted
share in the 2010 period.
2
Earnings before interest, taxes, depreciation and amortization and special items (adjusted
EBITDA) were $461 million in the second quarter of 2011, compared to the prior year level of
$437 million. See page A6 for a description of the special items excluded in calculating
adjusted EBITDA.
First Half 2011
The Company reported first half 2011 sales of $8.3 billion, an increase of $1.1 billion or 15
percent compared to prior year sales. The increase in sales resulted from the higher level of
global vehicle production volumes compared to first half 2010, increasing demand for TRWs
innovative technologies and the positive impact of currency movements between the two periods.
For the first half of 2011, the Company reported operating income of $740 million which compares
to $622 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 $731 million in the 2011
period, which compares to $632 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 half of 2011 totaled $64 million, which compares to $86
million in the prior year period. In addition, the current year-to-date period included a net
loss on retirement of debt totaling $20 million compared with
the first half 2010 period which
recognized a net loss on retirement of debt totaling $1 million.
The Company recognized a $9 million gain on an acquisition related to the purchase of a shock
absorber manufacturing facility during the first half of 2011. The gain reflects the excess of
fair value of the business in comparison to the purchase price.
First half 2011 tax expense was $90 million, which compares to $102 million in the prior year.
Excluding the tax benefits related to the special items previously noted in both
3
periods, tax expense was $110 million and $114 million in the first half of 2011 and the
first half of 2010, respectively.
The Company reported record first half 2011 GAAP net earnings of $574 million, or $4.34 per
diluted share, which compares to GAAP net earnings of $431 million, or $3.38 per diluted share in
the prior year period.
Excluding special items, the Company reported net earnings of $556 million in the first half of
2011, or $4.20 per diluted share, which compares to net earnings of $430 million or $3.38 per
diluted share in the first half of 2010.
Adjusted
EBITDA totaled $959 million in first half 2011, compared to $862 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
Second quarter 2011 net cash flow provided by operating activities was $271 million, which
compares to $402 million in the second quarter of 2010. Capital expenditures were $100 million
in the current quarter compared to $62 million last year. Second quarter free cash flow (cash
flow from operating activities less capital expenditures) was a positive $171 million, compared
to $340 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, increased working capital and an
increased level of cash payments primarily for taxes, restructuring and employee related
benefits.
For the six month period ended July 1, 2011, net cash flow provided by operating activities
totaled $352 million, which compares to $423 million in first half 2010. First half capital
expenditures were $167 million compared to $107 million in 2010. Free cash flow was a positive
$185 million in first half 2011 compared to $316 million for the same period last year.
During the first half of 2011, the Company repurchased approximately $175 million of face value
debt. As of July 1, 2011, the Company had $1,705 million of debt and $1,151 million of cash and
cash equivalents, resulting in net debt (defined as debt less cash and cash equivalents) of $554
million. This net debt outcome sets a new historic low for the Company, $214 million lower than
the balance at the end of 2010 and $723 million lower than the balance at the end of the prior year second quarter. Committed liquidity
facilities and cash on hand provided the Company with available liquidity in excess of $1.5
billion as of July 1, 2011.
4
2011 Outlook
TRW expects full year production to total 13.0 million units in North America and 20.0 million
units in Europe. Based on these production levels and the Companys expectations for foreign
currency exchange rates, full year 2011 sales are now expected to range between $16.2 billion and
$16.4 billion, with third quarter sales expected to be approximately $3.9 billion.
Vehicle production schedules remained robust during the first half of 2011 as the industry
worked hard to avoid and mitigate production disruptions due to supply chain shortages caused by
the March earthquake in Japan; however, normal seasonality will lead to a decline in production
levels, primarily in Europe, during the second half of the year compared to the first half, said
Mr. Plant. Building on the positive momentum established earlier this year while executing our
profitable growth strategy is a top priority as we look to finish the year in a strong manner and
position the Company for long-term success.
Second Quarter 2011 Conference Call
The Company will host its second quarter conference call at 8:30 a.m. (Eastern time) today,
Wednesday, August 3rd, 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 78541740. A live audio webcast and replay of the conference
call will also be available on the Companys website at www.trw.com.
5
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 worlds 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), our Report on Form 10-Q for the
fiscal quarter ended April 1, 2011 and our other filings with the U.S. Securities and Exchange
Commission (the SEC), such as: any developments related to antitrust investigations adversely
affecting our results, cash flows, financial condition or reputation; any shortage of supplies
causing a production disruption due to the events in Japan or otherwise; 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; 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
6
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 SEC. We do not undertake any obligation to release publicly any
update or revision to any of the forward-looking statements.
# # #
7
TRW Automotive Holdings Corp.
Index of Condensed Consolidated Financial Information
Consolidated Statements of Earnings (unaudited)
for the three months ended July 1, 2011 and July 2, 2010
|
A2 | |
Consolidated Statements of Earnings (unaudited)
for the six months ended July 1, 2011 and July 2, 2010
|
A3 | |
Condensed Consolidated Balance Sheets as of July 1, 2011 (unaudited)
and December 31, 2010
|
A4 | |
Condensed Consolidated Statements of Cash Flows (unaudited)
for the six months ended July 1, 2011 and July 2, 2010
|
A5 | |
Reconciliation of Non-GAAP Financial Measures (unaudited)
for the three and six months ended July 1, 2011 and July 2, 2010
|
A6 | |
Reconciliation of GAAP Net Earnings to Adjusted Earnings (unaudited): |
||
· For the three months ended July 1, 2011
|
A7 | |
· For the six months ended July 1, 2011
|
A8 | |
· For the three months ended July 2, 2010
|
A9 | |
· For the six months ended July 2, 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 Report on Form 10-Q for the period
ended April 1, 2011, which were filed with the United States Securities and Exchange Commission.
A1
TRW Automotive Holdings Corp.
Consolidated Statements of Earnings
(Unaudited)
Consolidated Statements of Earnings
(Unaudited)
(In millions, except per share amounts) | Three Months Ended | |||||||
July 1, 2011 | July 2, 2010 | |||||||
Sales |
$ | 4,234 | $ | 3,661 | ||||
Cost of sales |
3,717 | 3,222 | ||||||
Gross profit |
517 | 439 | ||||||
Administrative and selling expenses |
152 | 130 | ||||||
Amortization of intangible assets |
3 | 6 | ||||||
Restructuring charges and fixed asset impairments |
| 3 | ||||||
Other (income) expense net |
(6 | ) | (22 | ) | ||||
Operating income |
368 | 322 | ||||||
Interest expense net |
30 | 41 | ||||||
Loss on retirement of debt net |
10 | 1 | ||||||
Equity in earnings of affiliates, net of tax |
(10 | ) | (9 | ) | ||||
Earnings before income taxes |
338 | 289 | ||||||
Income tax expense |
34 | 52 | ||||||
Net earnings |
304 | 237 | ||||||
Less: Net earnings attributable to noncontrolling interest, net of tax |
11 | 10 | ||||||
Net earnings attributable to TRW |
$ | 293 | $ | 227 | ||||
Basic earnings per share: |
||||||||
Earnings per share |
$ | 2.37 | $ | 1.90 | ||||
Weighted average shares outstanding |
123.7 | 119.4 | ||||||
Diluted earnings per share: |
||||||||
Earnings per share |
$ | 2.21 | $ | 1.78 | ||||
Weighted average shares outstanding |
134.4 | 130.7 | ||||||
A2
TRW Automotive Holdings Corp.
Consolidated Statements of Earnings
(Unaudited)
Consolidated Statements of Earnings
(Unaudited)
Six Months Ended | ||||||||
(In millions, except per share amounts) | July 1, 2011 | July 2, 2010 | ||||||
Sales |
$ | 8,343 | $ | 7,244 | ||||
Cost of sales |
7,315 | 6,376 | ||||||
Gross profit |
1,028 | 868 | ||||||
Administrative and selling expenses |
303 | 255 | ||||||
Amortization of intangible assets |
8 | 11 | ||||||
Restructuring charges and fixed asset impairments |
| 10 | ||||||
Other (income) expense net |
(23 | ) | (30 | ) | ||||
Operating income |
740 | 622 | ||||||
Interest expense net |
64 | 86 | ||||||
Loss on retirement of debt net |
20 | 1 | ||||||
Gain on business acquisition |
(9 | ) | | |||||
Equity in earnings of affiliates, net of tax |
(20 | ) | (17 | ) | ||||
Earnings before income taxes |
685 | 552 | ||||||
Income tax expense |
90 | 102 | ||||||
Net earnings |
595 | 450 | ||||||
Less: Net earnings attributable to noncontrolling interest, net of tax |
21 | 19 | ||||||
Net earnings attributable to TRW |
$ | 574 | $ | 431 | ||||
Basic earnings per share: |
||||||||
Earnings per share |
$ | 4.66 | $ | 3.62 | ||||
Weighted average shares outstanding |
123.3 | 118.9 | ||||||
Diluted earnings per share: |
||||||||
Earnings per share |
$ | 4.34 | $ | 3.38 | ||||
Weighted average shares outstanding |
134.4 | 130.0 | ||||||
A3
TRW Automotive Holdings Corp.
Condensed Consolidated Balance Sheets
Condensed Consolidated Balance Sheets
(Dollars in millions) | As of | |||||||
July 1, | December 31, | |||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 1,151 | $ | 1,078 | ||||
Accounts receivable net |
2,697 | 2,087 | ||||||
Inventories |
948 | 760 | ||||||
Prepaid expenses and other current assets |
274 | 215 | ||||||
Total current assets |
5,070 | 4,140 | ||||||
Property, plant and equipment net |
2,156 | 2,100 | ||||||
Goodwill |
1,767 | 1,761 | ||||||
Intangible assets net |
297 | 304 | ||||||
Pension assets |
521 | 454 | ||||||
Other assets |
569 | 529 | ||||||
Total assets |
$ | 10,380 | $ | 9,288 | ||||
Liabilities and Equity | ||||||||
Current liabilities: |
||||||||
Short-term debt |
$ | 36 | $ | 23 | ||||
Current portion of long-term debt |
16 | 20 | ||||||
Trade accounts payable |
2,485 | 2,079 | ||||||
Accrued compensation |
304 | 251 | ||||||
Other current liabilities |
1,233 | 1,146 | ||||||
Total current liabilities |
4,074 | 3,519 | ||||||
Long-term debt |
1,653 | 1,803 | ||||||
Postretirement benefits other than pensions |
448 | 453 | ||||||
Pension benefits |
692 | 681 | ||||||
Other long-term liabilities |
596 | 594 | ||||||
Total liabilities |
7,463 | 7,050 | ||||||
Commitments and contingencies
Stockholders equity: |
||||||||
Capital stock |
1 | 1 | ||||||
Treasury stock |
| | ||||||
Paid-in-capital |
1,632 | 1,638 | ||||||
Retained earnings |
1,085 | 511 | ||||||
Accumulated other comprehensive earnings (losses) |
3 | (87 | ) | |||||
Total TRW stockholders equity |
2,721 | 2,063 | ||||||
Noncontrolling interest |
196 | 175 | ||||||
Total equity |
2,917 | 2,238 | ||||||
Total liabilities and equity |
$ | 10,380 | $ | 9,288 | ||||
A4
TRW Automotive Holdings Corp.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in millions) | Six Months Ended | |||||||
July 1, | July 2, | |||||||
2011 | 2010 | |||||||
Operating Activities |
||||||||
Net earnings |
$ | 595 | $ | 450 | ||||
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: |
||||||||
Depreciation and amortization |
229 | 232 | ||||||
Net pension and other postretirement benefits income and contributions |
(95 | ) | (95 | ) | ||||
Loss on retirement of debt net |
20 | 1 | ||||||
Fixed asset impairment charges |
| (3 | ) | |||||
Net gain on sales of assets and divestitures |
(8 | ) | (1 | ) | ||||
Gain on business acquisition |
(9 | ) | | |||||
Other net |
12 | 4 | ||||||
Changes in assets and liabilities, net of effects of businesses acquired: |
||||||||
Accounts receivable net |
(494 | ) | (519 | ) | ||||
Inventories |
(137 | ) | (88 | ) | ||||
Trade accounts payable |
283 | 270 | ||||||
Prepaid expense and other assets |
(17 | ) | (19 | ) | ||||
Other liabilities |
(27 | ) | 191 | |||||
Net cash provided by (used in) operating activities. |
352 | 423 | ||||||
Investing Activities |
||||||||
Capital expenditures, including other intangible assets |
(167 | ) | (107 | ) | ||||
Cash acquired in acquisition of business |
15 | | ||||||
Net proceeds from asset sales and divestitures |
13 | 6 | ||||||
Net cash provided by (used in) investing activities. |
(139 | ) | (101 | ) | ||||
Financing Activities |
||||||||
Change in short-term debt |
12 | 11 | ||||||
Proceeds from issuance of long-term debt, net of fees |
1 | 1 | ||||||
Redemption of long-term debt |
(226 | ) | (294 | ) | ||||
Proceeds from exercise of stock options |
19 | 17 | ||||||
Dividends paid to noncontrolling interest |
(5 | ) | (12 | ) | ||||
Net cash provided by (used in) financing activities. |
(199 | ) | (277 | ) | ||||
Effect of exchange rate changes on cash |
59 | (66 | ) | |||||
Increase (decrease) in cash and cash equivalents |
73 | (21 | ) | |||||
Cash and cash equivalents at beginning of period |
1,078 | 788 | ||||||
Cash and cash equivalents at end of period |
$ | 1,151 | $ | 767 | ||||
A5
TRW Automotive Holdings Corp.
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
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 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 managements 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 | Six Months Ended | ||||||||||||||
July 1, | July 2, | July 1, | July 2, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
GAAP net earnings attributable to TRW |
$ | 293 | $ | 227 | $ | 574 | $ | 431 | ||||||||
Income tax expense |
34 | 52 | 90 | 102 | ||||||||||||
Interest expense net |
30 | 41 | 64 | 86 | ||||||||||||
Depreciation and amortization |
113 | 113 | 229 | 232 | ||||||||||||
EBITDA |
470 | 433 | 957 | 851 | ||||||||||||
Restructuring charges and fixed asset
impairments |
| 3 | | 10 | ||||||||||||
Termination of a service contract |
| | 10 | | ||||||||||||
Loss on retirement of debt net |
10 | 1 | 20 | 1 | ||||||||||||
Favorable resolution of a commercial matter |
(19 | ) | | (19 | ) | | ||||||||||
Gain on business acquisition |
| | (9 | ) | | |||||||||||
Adjusted EBITDA |
$ | 461 | $ | 437 | $ | 959 | $ | 862 | ||||||||
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 Companys 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 | Six Months Ended | ||||||||||||||
July 1, | July 2, | July 1, | July 2, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Cash flow provided by (used in) operating activities |
$ | 271 | $ | 402 | $ | 352 | $ | 423 | ||||||||
Capital expenditures |
(100 | ) | (62 | ) | (167 | ) | (107 | ) | ||||||||
Free cash flow |
$ | 171 | $ | 340 | $ | 185 | $ | 316 | ||||||||
A6
TRW Automotive Holdings Corp.
Reconciliation of GAAP Net Earnings to Adjusted Earnings
(Unaudited)
Reconciliation of GAAP Net Earnings to Adjusted Earnings
(Unaudited)
Three Months | Three Months | |||||||||||||||
Ended | Ended | |||||||||||||||
July 1, 2011 | July 1, 2011 | |||||||||||||||
(In millions, except per share amounts) | Actual | Adjustments | Adjusted | |||||||||||||
Sales |
$ | 4,234 | $ | | $ | 4,234 | ||||||||||
Cost of sales |
3,717 | 19 | (a | ) | 3,736 | |||||||||||
Gross profit |
517 | (19 | ) | 498 | ||||||||||||
Administrative and selling expenses |
152 | | 152 | |||||||||||||
Amortization of intangible assets |
3 | | 3 | |||||||||||||
Other (income) expense net |
(6 | ) | | (6 | ) | |||||||||||
Operating income |
368 | (19 | ) | 349 | ||||||||||||
Interest expense net |
30 | | 30 | |||||||||||||
Loss on retirement of debt net |
10 | (10 | ) | (b | ) | | ||||||||||
Equity in earnings of affiliates, net of tax |
(10 | ) | | (10 | ) | |||||||||||
Earnings before income taxes |
338 | (9 | ) | 329 | ||||||||||||
Income tax expense |
34 | 20 | (c | ) | 54 | |||||||||||
Net earnings |
304 | (29 | ) | 275 | ||||||||||||
Less: Net earnings attributable to noncontrolling interest, net of tax |
11 | | 11 | |||||||||||||
Net earnings attributable to TRW |
$ | 293 | $ | (29 | ) | $ | 264 | |||||||||
Basic earnings per share: |
||||||||||||||||
Earnings per share |
$ | 2.37 | $ | 2.13 | ||||||||||||
Weighted average shares outstanding |
123.7 | 123.7 | ||||||||||||||
Diluted earnings per share: |
||||||||||||||||
Earnings per share |
$ | 2.21 | $ | 1.99 | ||||||||||||
Weighted average shares outstanding |
134.4 | 134.4 | ||||||||||||||
__________ |
(a)
|
Represents the elimination of the gain related to the favorable resolution of a commercial matter. | |
(b)
|
Represents the elimination of the loss on retirement of debt. | |
(c)
|
Represents the elimination of a $20 million tax benefit related to the favorable resolution of various tax matters in foreign jurisdictions. |
A7
TRW Automotive Holdings Corp.
Reconciliation of GAAP Net Earnings to Adjusted Earnings
(Unaudited)
Reconciliation of GAAP Net Earnings to Adjusted Earnings
(Unaudited)
Six Months | Six Months | |||||||||||||||
Ended | Ended | |||||||||||||||
July 1, 2011 | July 1, 2011 | |||||||||||||||
(In millions, except per share amounts) | Actual | Adjustments | Adjusted | |||||||||||||
Sales |
$ | 8,343 | $ | | $ | 8,343 | ||||||||||
Cost of sales |
7,315 | 19 | (a | ) | 7,334 | |||||||||||
Gross profit |
1,028 | (19 | ) | 1,009 | ||||||||||||
Administrative and selling expenses |
303 | (10 | ) | (b | ) | 293 | ||||||||||
Amortization of intangible assets |
8 | | 8 | |||||||||||||
Other (income) expense net |
(23 | ) | | (23 | ) | |||||||||||
Operating income |
740 | (9 | ) | 731 | ||||||||||||
Interest expense net |
64 | | 64 | |||||||||||||
Loss on retirement of debt net |
20 | (20 | ) | (c | ) | | ||||||||||
Gain on business acquisition |
(9 | ) | 9 | (d | ) | | ||||||||||
Equity in earnings of affiliates, net of tax |
(20 | ) | | (20 | ) | |||||||||||
Earnings before income taxes |
685 | 2 | 687 | |||||||||||||
Income tax expense |
90 | 20 | (e | ) | 110 | |||||||||||
Net earnings |
595 | (18 | ) | 577 | ||||||||||||
Less: Net earnings attributable to noncontrolling interest, net of tax |
21 | | 21 | |||||||||||||
Net earnings attributable to TRW |
$ | 574 | $ | (18 | ) | $ | 556 | |||||||||
Basic earnings per share: |
||||||||||||||||
Earnings per share |
$ | 4.66 | $ | 4.51 | ||||||||||||
Weighted average shares outstanding |
123.3 | 123.3 | ||||||||||||||
Diluted earnings per share: |
||||||||||||||||
Earnings per share |
$ | 4.34 | $ | 4.20 | ||||||||||||
Weighted average shares outstanding |
134.4 | 134.4 | ||||||||||||||
__________ |
(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. |
A8
TRW Automotive Holdings Corp.
Reconciliation of GAAP Net Earnings to Adjusted Earnings
(Unaudited)
Reconciliation of GAAP Net Earnings to Adjusted Earnings
(Unaudited)
Among other adjustments, the Company recorded restructuring charges of $7 million primarily related to severance, retention, and outplacement services at various production facilities. 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.
Three Months | Three Months | |||||||||||||||
Ended | Ended | |||||||||||||||
July 2, 2010 | July 2, 2010 | |||||||||||||||
(In millions, except per share amounts) | Actual | Adjustments | Adjusted | |||||||||||||
Sales |
$ | 3,661 | $ | | $ | 3,661 | ||||||||||
Cost of sales |
3,222 | | 3,222 | |||||||||||||
Gross profit |
439 | | 439 | |||||||||||||
Administrative and selling expenses |
130 | | 130 | |||||||||||||
Amortization of intangible assets |
6 | | 6 | |||||||||||||
Restructuring charges and fixed asset impairments |
3 | (3 | ) | (a | ) | | ||||||||||
Other (income) expense net |
(22 | ) | | (22 | ) | |||||||||||
Operating income |
322 | 3 | 325 | |||||||||||||
Interest expense net |
41 | | 41 | |||||||||||||
Loss on retirement of debt net |
1 | (1 | ) | (b | ) | | ||||||||||
Equity in earnings of affiliates, net of tax |
(9 | ) | | (9 | ) | |||||||||||
Earnings before income taxes |
289 | 4 | 293 | |||||||||||||
Income tax expense |
52 | 10 | (c | ) | 62 | |||||||||||
Net earnings |
237 | (6 | ) | 231 | ||||||||||||
Less: Net earnings attributable to noncontrolling interest, net of tax |
10 | | 10 | |||||||||||||
Net earnings attributable to TRW |
$ | 227 | $ | (6 | ) | $ | 221 | |||||||||
Basic earnings per share: |
||||||||||||||||
Earnings per share |
$ | 1.90 | $ | 1.85 | ||||||||||||
Weighted average shares outstanding |
119.4 | 119.4 | ||||||||||||||
Diluted earnings per share: |
||||||||||||||||
Earnings per share |
$ | 1.78 | $ | 1.73 | ||||||||||||
Weighted average shares outstanding |
130.7 | 130.7 | ||||||||||||||
__________ |
(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 a $10 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)
Reconciliation of GAAP Net Earnings to Adjusted Earnings
(Unaudited)
Among other adjustments, the Company 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.
Six Months | Six Months | |||||||||||||||
Ended | Ended | |||||||||||||||
July 2, 2010 | July 2, 2010 | |||||||||||||||
(In millions, except per share amounts) | Actual | Adjustments | Adjusted | |||||||||||||
Sales |
$ | 7,244 | $ | | $ | 7,244 | ||||||||||
Cost of sales |
6,376 | | 6,376 | |||||||||||||
Gross profit |
868 | | 868 | |||||||||||||
Administrative and selling expenses |
255 | | 255 | |||||||||||||
Amortization of intangible assets |
11 | | 11 | |||||||||||||
Restructuring charges and fixed asset impairments |
10 | (10 | ) | (a | ) | | ||||||||||
Other (income) expense net |
(30 | ) | | (30 | ) | |||||||||||
Operating income |
622 | 10 | 632 | |||||||||||||
Interest expense net |
86 | | 86 | |||||||||||||
Loss on retirement of debt net |
1 | (1 | ) | (b | ) | | ||||||||||
Equity in earnings of affiliates, net of tax |
(17 | ) | | (17 | ) | |||||||||||
Earnings before income taxes |
552 | 11 | 563 | |||||||||||||
Income tax expense |
102 | 12 | (c | ) | 114 | |||||||||||
Net earnings |
450 | (1 | ) | 449 | ||||||||||||
Less: Net earnings attributable to noncontrolling interest, net of tax |
19 | | 19 | |||||||||||||
Net earnings attributable to TRW |
$ | 431 | $ | (1 | ) | $ | 430 | |||||||||
Basic earnings per share: |
||||||||||||||||
Earnings per share |
$ | 3.62 | $ | 3.62 | ||||||||||||
Weighted average shares outstanding |
118.9 | 118.9 | ||||||||||||||
Diluted earnings per share: |
||||||||||||||||
Earnings per share |
$ | 3.38 | $ | 3.38 | ||||||||||||
Weighted average shares outstanding |
130.0 | 130.0 | ||||||||||||||
__________ |
(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) a $10 million tax benefit recorded in the second quarter of 2010 related to the favorable resolution of various tax matters in foreign jurisdictions. |
A10