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TRW Automotive Holdings Corp. Reports Operating Results (10-Q)

October 30, 2012 | About:
10qk

10qk

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TRW Automotive Holdings Corp. (TRW) filed Quarterly Report for the period ended 2012-09-28.

Trw Automotive Holdings Corp has a market cap of $5.42 billion; its shares were traded at around $44.37 with a P/E ratio of 6.8 and P/S ratio of 0.3. Trw Automotive Holdings Corp had an annual average earning growth of 18.4% over the past 5 years.

Highlight of Business Operations:

Gross profit decreased by $45 million for the nine months ended September 28, 2012 as compared to the nine months ended September 30, 2011. This decrease was primarily driven by increased commodity inflation, engineering, and other costs (net of cost reductions) of $64 million, the unfavorable impact of foreign currency exchange of $59 million, the non-recurrence of a prior year favorable resolution of a commercial matter of $19 million and increased warranty expense of $8 million. Partially offsetting these unfavorable items was the favorable impact of higher volume (net of the proportion of lower margin business) of $89 million and a variance of $16 million resulting from a favorable change in actuarially established recall loss projections due to improved historical claims data.

Administrative and selling expenses, as a percentage of sales, were 3.5% for the nine months ended September 28, 2012 as compared to 3.7% for the nine months ended September 30, 2011. The decrease of $17 million was primarily driven by the favorable impact of foreign currency exchange of $21 million, the non-recurrence of a prior year $10 million expense related to the termination of the transaction and monitoring agreement with an affiliate of The Blackstone Group L.P., and lower legal fees related to antitrust matters of $8 million. Partially offsetting these favorable items were increased wages and benefits of $15 million (largely to support future growth), as well as non-commodity inflation and other costs of $7 million.

Income tax expense for the nine months ended September 28, 2012 was $253 million on pre-tax earnings of $871 million as compared to an income tax expense of $127 million on pre-tax earnings of $889 million for the nine months ended September 30, 2011. Income tax expense for the nine months ended September 28, 2012 includes a tax benefit of $9 million relating to the enactment of tax legislation and reduction in corporate income tax rates in the United Kingdom. Income tax expense for the nine months ended September 30, 2011 is net of tax benefits of $20 million relating to favorable resolutions of various tax matters in foreign jurisdictions and tax benefits of $9 million resulting from the reversal of valuation allowances on net deferred tax assets of certain foreign subsidiaries. For the period ended September 28, 2012, the income tax rate varies from the United States statutory income tax rate primarily due to favorable foreign tax rates, holidays, and credits. The income tax rate for the period ended September 30, 2011 varies from the United States statutory income tax rate primarily due to earnings in the United States that did not result in the recognition of a corresponding income tax expense as a result of our valuation allowance position, as well as favorable foreign tax rates, holidays, and credits.

Cost of sales increased by $63 million, or 3%, for the three months ended September 28, 2012 as compared to the three months ended September 30, 2011, primarily consisting of higher material costs of $84 million, partially offset by lower labor and other costs of $14 million and lower depreciation expense of $7 million. These increases were primarily driven by additional costs associated with higher volume, commodity inflation and other costs, together which totaled $212 million, partially offset by the favorable impact of foreign currency exchange of $149 million.

Earnings before taxes decreased by $104 million for the nine months ended September 28, 2012, compared to the nine months ended September 30, 2011. This decrease was driven primarily by increased commodity inflation, engineering, and other costs (net of cost reductions) of $71 million, the impact of a higher proportion of lower margin business of $55 million, the unfavorable impact of foreign currency exchange of $36 million, the non-recurrence of a prior year favorable resolution of a commercial matter of $19 million, higher warranty expense of $12 million and the non-recurrence of the favorable impact of a gain on business acquisition of $9 million. Partially offsetting these unfavorable items was the favorable profit impact of higher sales of $98 million.

Read the The complete Report

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