Financial Overview

(in million dollars)

	FY2008	FY2007	Rate of change (%)	Factors
Sales	14,995	14,702	2.0	-The increase in sales was driven by favorable foreign currency exchange and a higher level of lower margin module sales -Significantly offset by lower production volumes, primarily in North America and Europe, and price reductions provided to customers.
Net earnings	(779)	90	-	-This decrease was primarily the result of the significant decrease in operating results of $1,092 million
Sales by Segment
Chassis Systems	8,736	7,997	9.2	-The increase was driven primarily by the favorable impact of foreign currency exchange of $443 million and increased volume (including net favorable price recoveries from customers) of $296 million. -The higher volume is attributed primarily to increased module sales in North America and Asia.
Occupant Safety Systems	4,422	4,714	(6.2)	-The decrease was driven primarily by unfavorable volume and price reductions provided to customers of $494 million, -Partially offset by the favorable impact of foreign currency exchange of $202 million. -The decrease in volume is attributed to lower sales in both North America and Europe resulting from reduced light vehicle production volumes.
Automotive Components	1,837	1,991	(7.7)	-The decrease was driven primarily by unfavorable volume and price reductions provided to customers of $238 million, -Partially offset by the favorable impact of foreign currency exchange of $84 million. -The decrease in volume is attributed to lower sales of core products in both North America and Europe resulting from reduced light vehicle production volumes.

NOTE: In the Company's annual report on FY2008, the public accounting firm cited conditions that raise substantial doubt about the Company's ability to continue as a going concern.


Acquisitions
-In Jan. 2008, the Company announced that its subsidiary, TRW Integrated Chassis Systems LLC, completed the purchase of a portion of Delphi Corporation's North American brake component machining and module assembly assets (Saginaw, Michigan), including production inventory, for approximately $40 million.In conjunction with the asset purchase, the Company is supplying General Motors with a portion of the business, predominantly braking modules, formerly supplied by Delphi at the Saginaw facility. (From a press release on Jan. 2, 2008)

-In Jun. 2008, the Company announced that its subsidiary, TRW Airbag Systems GmbH, has closed an agreement with Davey Bickford SNC, France, to acquire initiator machining and intellectual property assets. This acquisition is part of the Company's occupant safety business strategy to vertically integrate its inflator business and corresponds with its future approach of ""make and buy."" Previously, Davey Bickford was a strategic supplier of igniters to the Company. (From a press release on Jun 11, 2008)


Contracts
-The Company supplies Lancia with Electronic Stability Control (ESC), video based lane departure warning and Electrically Powered Steering (EPS) systems with steering torque control functionality. (From a press release on June 5, 2008) 

-In Aug. 2008, the Company announced that it is supplying a full range of occupant safety products to the new Roewe 550, China SAIC Motor's mid-size sedan. the Company equips Roewe 550 with a complete occupant safety system (OSS) including driver, passenger and rear seat belts, driver and passenger airbags, side-impact curtain airbags, airbag electronic control units, and side-impact and rollover sensors. Roewe 550 features the RP2, the Company's second-generation rack-and-pinion seatbelt retractor. Additionally, the Company uses a load limiter in the Roewe 550 seat belt system to help better manage the occupant energy in a crash. (From a press release on Aug 7, 2008)


Product Launched during FY2008
Dodge Journey:
Front Brake Calipers, Side Airbags, Seat Belt Retractors, Chassis Modules (Rear Brake Calipers and Steering Gear), Steering Column Control Module and Angle Sensor, HVAC Controller and Actuators

Volkswagen Jetta(China):
Driver Airbag and Inflator, Brake Rotors, Rear Brake Calipers, Steering Wheel, Chassis Modules

Citroﾃｫn Berlingo, BerlingoVan, Peugeot Partner, and Partner Van:
Side-Driver-Passenger-Curtain Airbags, Steering Wheels, Rear Brake Calipers, Electrically Powered Hydraulic Steering Power Pack, Actuation

Renault Megane:
Rear Brake Calipers, Electric Park Brake, Electric Park Brake Switch, Electric Power Steering Mechanical Gear, Lower Ball Joint, Actuation

Opel Insignia:
Front and Rear Brake Calipers, Electronic Stability Control, Inner Ball Joint, Outer Tie Rod, Upper Ball Joint, Main Light Switch, Instrument Panel Switches, Electrical Sun Roof Switches, Multi- functional Controller, Window Lifter Function, and Mirror Adjuster

Ford Ka:
Driver-Curtain-Side Airbags, Steering Wheel, Actuation, Electric Power Steering Mechanical Gear

Volvo XC60 (Europe):
Driver Airbag Module, Steering Wheel, Electric Power Hydraulic Steering Power Rack, Electric Park Brake, Rear Seat Belts

Audi A4 (Asia Pacific):
Driver Airbag Module and Steering Wheel, Actuation, Front Brake Caliper, Electric Park Brake, Lower Ball Joint, Front Upper Control Arm

Ford Fusion (North America):
Belt Drive Electric Power Steering, Knee Airbag Module (Hybrid only)


Restructuring
Facility Closures
-Consolidated or closed four facilities in FY2008.

-Additional closures planned for Q1 FY2009: Warrenton casting plant in Georgia, USA and Spain actuation engineering center.

Personnel Actions
-Total employees reduced by about 10,000 during FY2008.


Outlook for FY2009
The Company expects the following figures in FY2009;
-Sales: between 10.9 billion and 11.3 billion USD
-Restructuring Actions: approx. 50 million USD
-Capital Spending: approx. 350 million USD

R&D Expenditure

(in million dollars)

	FY2008	FY2007	FY2006
Amount	N.A	893	825

-Total research, development and engineering costs as a percentage of sales were 6% in FY2008.


Product Development
Integrated Electronic Control Panel (IECP)
-Integrated Electronic Control Panel (IECP) combines major interior controls, advanced vehicle network architectures, and telematics. The Company has been awarded business for its next-generation IECP for two European vehicle platforms. (From a press release on June 4, 2008)

Automatic Emergency Braking (AEB)
-This system can potentially mitigate the severity of accidents and therefore help reduce the dangers to drivers and passengers. AEB combines environmental sensing and brake systems to slow a vehicle and potentially lessen the severity of an impact when a collision is unavoidable. (From a press release on June 5, 2008) 

New Knee Airbag Module
-The new knee airbag module combines airbag performance with reduced weight and dimensions. As an integral part of a frontal restraint system, the compact knee module helps protect occupants in the event of a crash, as it covers the potential impact area of the lower part of the instrument panel. The main benefits of active knee protection are improved restraint of the occupants'' femur and pelvis, while helping to better balance chest and lower limb loads. (From a press release on Jun 12, 2008) 

New Head Protection System for Convertible Vehicles
-It is the first system located in the seat mount rather than the door trim - designed to offer head protection for the unique characteristics of convertibles. It is due to be launched with a major European vehicle manufacturer during the first half of 2008. (From a press release on Jun 17, 2008) 

Modular Multi-piston Pump Electronic Stability Control (ESC) System
-Kelsey-Hayes Company, a subsidiary of the Company, has developed this system with enhanced performance to rapidly build brake pressure independent of vacuum boost from the engine. (From a press release on Jun 24, 2008) 

Active Buckle Lifter (ABL)
-The Company has developed the Active Buckle Lifter (ABL) to make fastening seat belts easier. The feature is particularly intended to assist the elderly and people with mobility challenges, and also can help reduce belt slack and keep the occupant in a better and more controlled seating position in dynamic driving situations such as cornering or braking. When the vehicle door is opened, the ABL raises the buckle approximately 100mm, putting the buckle within easier reach of occupants. And the ABL can retract the buckle in dynamic driving situations by a maximum of 60mm.(From a press release on Sep 4, 2008) 

Slip Control Boost 2 (SCB 2) Brake Technology
-In Oct. 2008, Kelsey-Hayes Company, a subsidiary of the Company, announced that it is developing its second-generation Slip Control Boost 2 (SCB 2) brake technology ideal for hybrid and direct-injection engine vehicles. SCB 2 replaces traditional boosters, master cylinders and vacuum pumps with a 25% smaller and lighter electro-hydraulic control unit (EHCU). The Company's original SCB is already on GM's Chevrolet Tahoe and GMC Yukon hybrids and works with the two-mode regenerative system. (From a press release on Oct 16, 2008)

Electrically Powered Steering (EPS) Rack Drive system
-The Company announced the launch of its Electrically Powered Steering (EPS) Rack Drive system with Ford for the 2010 Ford Fusion and Mercury Milan. Rack Drive steering technology brings the fuel efficiency and carbon dioxide reduction benefits of an electric steering system to higher rack load vehicles as compared to the Company's current Column Drive EPS system. (From a press release on Nov 19, 2008)

Capital Investment

(in million dollars)

	FY2008	FY2007	FY2006
Chassis Systems	239	279	273
Occupant Safety Systems	174	170	167
Automotive Components	54	51	76
Corporate	15	13	13
Total	482	513	529

-The Compnay expects to spend approximately 350 million USD, or approximately 3% of sales during 2009.