TRW Automotive Holdings Corp. (TRW) filed Quarterly Report for the period ended 2009-10-02.
TRW Automotive is an automotive supplier. Its 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. Trw Automotive Holdings Corp. has a market cap of $1.96 billion; its shares were traded at around $16.98 with and P/S ratio of 0.1.
Highlight of Business Operations:
In August 2009, we issued 16.1 million shares of common stock resulting in net cash proceeds of approximately $269 million. Of this amount, approximately $87 million was used to permanently prepay borrowings under our 6-year $600 million Term Loan A-1 Facility (the “Term Loan A-1”) and our 6.75-year $500 million Term Loan B-1 Facility (the “Term Loan B-1”). The remaining proceeds were used to reduce borrowings under our $1.4 billion Revolving Credit Facility (the “Revolving Credit Facility”).
During the first nine months of 2009, the Company entered into transactions to repurchase $38 million in principal amount of the 71/4% Senior Notes, €10 million in principal amount of the 63/8% Senior Notes and $6 million in principal amount of the 7% Senior Notes, totaling $57 million in principal amount. As a result of these transactions, the Company recorded a gain on retirement of debt of $41 million, including the write-off of a portion of deferred financing fees and premiums. The repurchased notes were retired upon settlement.
Gross profit increased by $120 million for the three months ended October 2, 2009 as compared to the three months ended September 26, 2008. The increase in gross profit was driven primarily by cost reductions (partially offset by inflation and price reductions provided to customers) of $199 million which includes the benefit of recently enacted restructuring actions. We also experienced lower pension and postretirement benefit expense and a favorable non-recurring customer settlement in the current period, which totaled $28 million. These favorable items were partially offset by lower volume and adverse mix, together which totaled $83 million, the net unfavorable impact of foreign currency exchange of $20 million and increased warranty expense of $5 million. Gross profit as a percentage of sales for the three months ended October 2, 2009 was 9.7% compared to 5.0% for the three months ended September 26, 2008.
Administrative and selling expenses decreased by $8 million for the three months ended October 2, 2009 as compared to the three months ended September 26, 2008. The decrease was driven primarily by cost reductions in excess of inflation which in total net to $9 million and the favorable impact of foreign currency exchange of $4 million. These items were partially offset by the negative impact of an increase in environmental reserves of $5 million. Administrative and selling expenses as a percentage of sales were 4.2% for the three months ended October 2, 2009, as compared to 3.9% for the three months ended September 26, 2008.
Other income — net decreased by $11 million for the three months ended October 2, 2009 as compared to the three months ended September 26, 2008. This was primarily due to a decrease in miscellaneous other income of $4 million, an unfavorable change in net provision for bad debts of $2 million, an unfavorable change in foreign currency exchange losses of $3 million, a decrease in net gain on sales of assets of $1 million, and a decrease in royalty and grant income of $1 million.
Income tax expense for the three months ended October 2, 2009 was $28 million on pre-tax earnings of $90 million as compared to income tax expense of $23 million on pre-tax losses of $29 million for the three months ended September 26, 2008. The income tax rate varies from the United States statutory income tax rate due primarily to results in the United States and certain foreign jurisdictions that are currently in a valuation allowance position for which a corresponding income tax expense or benefit is not recognized, partially offset by favorable foreign tax rates, holidays, and credits.
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