TRW Automotive Business Report FY2006

Business Highlights

Financial overview
in million dollars FY2006 FY2005 Rate of change (%) Factors


Sales 13,144 12,643 3.9 The3.9% increase resulted primarily from a higher level of sales from new product areas and higher volumes on certain platforms, the consolidation of Dalphi Metal Espana, S.A., which was acquired in October 2005, into its operations for a full year, and foreign currency translation, partially offset by pricing provided to customers and lower industry production volumes.
Net earnings 176 204 (13.8) Net earnings in 2006 periods were impacted by certain non-recurring items, including expenses of $57 million, related to the Lucas bond tender transaction.

Sales by segment

Chassis Systems 7,096 7,206 (1.5)

The decrease was driven primarily by lower North American customer vehicle production and price reductions provided to customers of $216 million, partially offset by the favorable effect of currency exchange of $106 million.

Occupant Safety Systems 4,326 3,745 15.5 The increase was driven primarily by the consolidation of Dalphimetal acquired in October 2005, which contributed incremental sales of $336 million, favorable volume (net of price reductions provided to customers) of $216 million, and the favorable effect of currency exchange of $29 million.
Automotive Components 1,722 1,692 1.8 The increase was driven primarily by the favorable effect of currency exchange of $36 million, offset by price reductions provided to customers, net of higher volume, of $6 million.

New contracts in 2006
-In Mar. 2006, the Company started production of components of passenger safety and steering systems for Ford Focus of Changan Ford at its two plants in China. Shanghai TRW Automotive Safety Systems Co., Ltd.) (STASS), a joint venture with Shanghai Automotive Co., Ltd. supplies airbags and seat belts, and its wholly owned subsidiary, TACS supplies steering system parts using electric hydraulic steering system technology.

-In Mar 2006, the Company announced that the Company's Asia-Pacific and select North American subsidiaries have jointly developed anti-lock braking systems (ABS) for Chery Automobile Company's new A520 vehicles.

-In April 2006, the Company announced the production launch of active and passive safety systems and components from its China operations for the new Audi A4 built at First Automotive Works (FAW) in Changchun, China. TRW FAWER Automobile Safety Systems Co., Ltd. (TFASS), the Company's Changchun joint venture with the FAW Group, supplies steering wheels, driver-side airbag modules and side-impact airbag modules. Active safety components for this model such as rear brake calipers and brake boosters are supplied from TRW Lucas Varity Langzhong Brake Co., Ltd. (LVLB) in Langfang, China.

-In November 2006, the Company announced that it s supplying an innovative steering angle sensor technology from its Kelsey-Hayes Company subsidiary to Chrysler Group for several 2007 model year vehicles.


-In Aug. 2006, A subsidiary of the Company announced the acquisition of a Slovakian electric motor production business, Dana Emerson Actuator Systems (DEAS), from Dana Corporation.

The Company has initiated high level of restructuring in response to challenging industry conditions ( 16 plant closures announced since beginning of 2005: Aylesbury, Brighton, Burgos, Ceernay, Cookeville, Frankley, Holford, Itzehoe, Jackson, Kani, Kingsway, Malaysia, Rushford, Sterling Heights, Tarbes and Wednesbury)

-In Mar. 2006, Kelsey-Hayes Company, a subsidiary of TRW, announced the decision to close its Rushford, Minn. Facility. This decision is based on the steadily increasing cost pressures in the controls marketplace and the need to remain competitive to secure new business growth. The Rushford plant has approximately 175 employees involved in the assembly of Heating Ventilation Air Conditioning (HVAC) controls and switches. It is anticipated that employees will not be impacted until the first quarter of 2007 with a final closure date targeted by the end of the third quarter in 2007.


-The Company operates a global network of technical centers worldwide where the Company employs approximately 5,000 engineers, researchers, designers, technicians and their supporting functions.
-The Company funded research, development and engineering costs totaled $825 million, $780 million, and $714 million for the years ended December 31, 2006, 2005, and 2004 respectively. Total research, development and engineering costs as a percentage of sales were 6.3%, 6.2% and 5.9% for the years ended December 31, 2006, 2005, and 2004, respectfully.

Product Development

-In Jan. 2006, The Company unveiled a suite of technologies designed for hybrid electric vehicles. The products and systems range from simple lighter weight components to advanced braking technologies such as the Slip Control Boost, as well as electrically powered hydraulic steering systems.

-In June 2006, the Company unveiled an advanced pre-crash system combining its latest generation Adaptive Cruise Control (ACC) and Active Control Retractor (ACR) seatbelt technologies to help prepare occupants before a crash occurs.

-In Dec. 2006, TRW Automotive Safety Systems GmbH, a subsidiary of TRW Automotive Holdings Corp. unveiled its advanced asymmetrical airbag technology, incorporating a non-rotating driver airbag module with an airbag cushion specifically designed to fit the shape of individual vehicle interiors.

Investment Activities

in million $ Dec. 2006 Dec. 2005 Dec. 2004
Chassis Systems 273 275 286
Occupant Safety Systems 167 146 132
Automotive Components 76 79 73
Corporate 13 3 2
Total 529 503 493

Overseas Investment

-In Mar. 2006, the Company announced that the Company's commercial steering business has opened a new manufacturing facility in Changchun, China. The new site is the new home to TRW FAWER Commercial Vehicle Steering Systems (Changchun) Co., Ltd., a joint venture between TRW Automotive J.V. LLC and FAWER Automotive Parts Co., Ltd. The plant supplies more than 20 types of steering products to domestic and overseas commercial vehicle markets, with primary customers being the middle- sized truck and heavy truck manufacturers. The plant also exports machined components to the US and Mexico. The new facility accommodates 14 production lines with an annual capacity of 250,000 units.
-In April 2006, the Company announced the expansion of its Chinese joint venture, LucasVarity Langzhong Braking Company Limited (LVLB), in preparation to launch the Company's Electronic Park Brake (EPB) system in China. LVLB plans to start production of EPB systems in 2007.

-In Nov. 2006,TRW Automotive's Engineered Fasteners & Components business officially opened a new plant in Langfang, China. TRW Automotive Components (Langfang) Co. Ltd., a subsidiary of TRW Automotive Holdings Corp. will manufacture interior components such as air registers and center bezels.

-TRW FAWER Automobile Safety Systems (Changchun) Co., Ltd. (TFASS), a subsidiary of TRW Automotive Holdings Corp. has established a manufacturing plant in Beijing, China to produce chassis modules for Beijing Benz-DaimlerChrysler Automotive Co., Ltd. (BBDC). The 4,500-square meter facility plans to employ up to 100 local workers in the next five years to fulfill its annual capacity of module units at full production. Initially, the plant is committed to supplying rear axles, brake assemblies, front struts and knuckle assemblies to the luxury-car flagship Chrysler 300C and another upcoming sedan platform -- both newly localized in China.


-TRW Automotive Services Malaysia has officially opened as TRW's global information systems (IS) service center in Cyberjaya, Malaysia, representing an investment of more than US $2.4 million. The new entity, a subsidiary of TRW Automotive Holdings Corp.will provide IS support for TRW's global operations. By the end of this year, TRW plans to have employed 100 IS professionals in the 27,000-square-foot facility and intends to recruit a further 100 people by the end of 2007.