e10vk

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o No þ

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act.) Yes o No þ

As of June 27, 2003, the last day of the Registrant’s most recently completed second fiscal quarter, the Registrant’s common equity was not publicly traded. As of March 8, 2004, the aggregate market value of the registrant’s Common Stock, $0.01 par value per share, held by non-affiliates of the registrant was approximately $636,384,923.10. As of March 8, 2004, the number of shares outstanding of the registrant’s Common Stock was 98,914,266 shares.

TRW Automotive Holdings Corp. Internet website address is www.trwauto.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the Exchange Act and our Audit Committee Charter are available free of charge through our website as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission.

The Company. TRW Automotive Holdings Corp. is among the world’s largest and most diversified suppliers of automotive systems, modules and components to global vehicle manufacturers, or VMs, and related aftermarkets. We conduct substantially all of our operations through our subsidiaries. We believe we have leading market positions (which we consider to be a number 1, 2 or 3 position) in our primary business lines which encompass the design, manufacture and sale of active and passive safety related products. Active safety related products principally refer to vehicle dynamic controls (primarily braking and steering), and passive safety related products principally refer to occupant restraints (primarily air bags and seat belts) and crash sensors. We are primarily a “Tier-1” supplier, with over 85% of our sales in 2003 made directly to VMs and approximately 7% sold in the worldwide aftermarket for VM service and replacement parts and the balance sold primarily to other parts suppliers for use in their systems. Our products are primarily used in the manufacture of light vehicles, consisting of passenger cars and light trucks (which includes vans and sport-utility vehicles (SUVs)). Our history in the automotive supply business dates back to the early 1900s when our predecessor companies began manufacturing valves, wheels, and electrical components and selling them to the burgeoning automobile industry.

History and Ownership. On November 18, 2002, an entity controlled by affiliates of The Blackstone Group L.P. (“Blackstone”), entered into an agreement pursuant to which it agreed to cause our indirect wholly-owned subsidiary, TRW Automotive Acquisition Corp., to purchase the shares of the subsidiaries of TRW Inc. engaged in the automotive business from Northrop Grumman Corporation (“Northrop Grumman”). This acquisition, which we refer to as the “Acquisition” in this Annual Report on Form 10-K (this “report”), was consummated on February 28, 2003. Northrop Grumman acquired TRW Inc.’s automotive business in its December 11, 2002 acquisition of TRW Inc. (now known as Northrop Grumman Space & Mission Systems Corp.) (“TRW”), which we refer to as the “Merger” in this report. On March 25, 2003, TRW Automotive Acquisition Corp. was renamed TRW Automotive Inc.

All references in this report to “TRW Automotive,” the “Company,” “we,” “our” and “us” mean, unless the context indicates otherwise, (1) our predecessor, which is the former TRW Automotive Inc. (which we did not acquire and was renamed Richmond TAI Corp.) and its subsidiaries and the other subsidiaries, divisions and affiliates of TRW that together constituted the automotive business of TRW, for the periods prior to February 28, 2003, the date the Acquisition was consummated and (2) the successor and registrant, TRW Automotive Holdings Corp. and its subsidiaries, that own and operate the automotive business of TRW as a result of the Acquisition. In addition, when the context so requires, we use the term “Predecessor” to refer to the historical operations of our predecessor prior to the Acquisition and “Successor” to refer to our historical operations following the Acquisition and we use the terms “we,” “our” and “us” to refer to the Predecessor and the Successor collectively. The historical financial statements for the periods prior to the Acquisition and summaries thereof appearing in this report are those of our predecessor and represent the combined financial statements of TRW’s automotive business. Prior to the Acquisition, our predecessor operated as a segment of TRW, which was acquired by Northrop Grumman on December 11, 2002. Our predecessor’s 51% interest in the joint venture, TRW Koyo Steering Systems Company (“TKS”), was not transferred to us as part of the Acquisition.

All references in this report to “pro forma” results of operations and other financial data mean pro forma for the Transactions which means, collectively, the Acquisition and the related financings described elsewhere in this report, including the subsequent refinancing of the senior secured credit facilities on July 22, 2003, without giving effect to the application of $46 million of cash that was used to permanently retire debt in conjunction with that refinancing.

As a result of the Acquisition, Automotive Investors L.L.C., or AIL, an affiliate of Blackstone, held approximately 78.4%, an affiliate of Northrop Grumman held approximately 19.6% and our management group held approximately 2.0% of our common stock. On February 6, 2004, we completed an initial public

offering of 24,137,931 shares (or 24.4%) of our common stock. After our initial public offering, including the use of a portion of the net proceeds from our initial public offering to repurchase a portion of the shares held by AIL, AIL holds approximately 56.7%, an affiliate of Northrop Grumman holds approximately 17.2% and our management group holds approximately 1.7% of our common stock. In connection with our initial public offering, we effected a 100 for 1 stock split of our outstanding shares of common stock on January 27, 2004.

Overview. We have become a leader in the global automotive parts industry by capitalizing on the strength of our products, technological capabilities and systems integration skills. Over the last decade, we have experienced sales growth in many of our product lines due to an increasing focus by both governments and consumers on safety and fuel efficiency. We believe that this trend is continuing as evidenced by ongoing regulatory activities, and will enable us to experience growth in the most recent generation of advanced safety and fuel efficient products, such as vehicle stability control systems (“VSC”), curtain air bags, occupant sensing systems, electrically assisted power steering systems and tire pressure monitoring systems. Throughout our long history as a leading supplier to major VMs, we have focused on products where we have a technological advantage. We have extensive technical experience in a broad range of product lines and strong systems integration skills, which enable us to provide comprehensive, systems-based solutions for our VM customers.

We have a broad and established global presence, with a workforce of approximately 60,800 employees and a network of manufacturing facilities, technical centers, sales offices and joint ventures located in every major vehicle-producing region of the world. We have 136 wholly owned manufacturing facilities and 21 joint-venture facilities in 22 countries. We sell to all the major VMs across the world’s major vehicle producing regions. Among our largest customers are Ford Motor Company, DaimlerChrysler AG, Volkswagen AG, General Motors Corporation and Renault-Nissan BV. Our geographic breakdown of sales is among the most diverse in the industry, with approximately 50% of our pro forma sales for 2003 derived from Europe, 41% from North America and 9% from the rest of the world. No single customer accounted for more than 19% of such sales, which, we believe, is among the lowest customer concentration levels of major global Tier-1 suppliers. In addition, our four largest customers together accounted for approximately 63% of such sales for the same period. We believe our diversified business limits our exposure to the risks of any one geographic economy, product line or major customer.

We conduct substantially all of our operations through our subsidiaries and along three operating segments (Chassis Systems, Occupant Safety Systems and Automotive Components). The following table summarizes our three operating segments and their principal product lines and their pro forma sales and segment profit before taxes for the years ended December 31, 2003 and 2002 and their actual sales and segment profit before taxes for the ten months ended December 31, 2003, the two months ended February 28, 2003, and the year ended December 31, 2002. The table also provides a reconciliation of segment profit before taxes to earnings (losses) before income taxes.


(1)	Pro forma amounts reflect the elimination of sales and profit before taxes of TKS, which was not transferred to us as part of the Acquisition, the elimination of the amortization of unrecognized pension and OPEB losses, pro forma interest expense based on our new capital structure, elimination of purchased in-process research and development expense, adjustments to depreciation and amortization to reflect fair value of fixed assets and certain intangibles, restatement of administrative and selling expenses on a stand alone basis and the elimination of the effects of an inventory write-up recorded as a result of the Acquisition. The inventory was sold during the seven months ended September 26, 2003. See “ITEM 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of pro forma adjustments.

(2)	See “ITEM 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 14 to the consolidated and combined financial statements for a discussion of segment profit before taxes.


(1)	Our pro forma sales exclude sales of our predecessor company’s joint venture, TKS, which was not transferred to us as part of the Acquisition but include the sales of our former Canadian joint venture, Quality Safety Systems (“QSS”), through June 27, 2003 at which point it was sold.

See Note 14 to our consolidated and combined financial statements included elsewhere in this report for additional product sector and geographical information.

The automotive parts industry provides components, systems, subsystems and modules to VMs for the manufacture of new vehicles, as well as to the aftermarket for use as replacement parts. Historically, major vehicle manufacturers operated internal divisions to provide a wide range of component parts for their vehicles. More recently, vehicle manufacturers have moved towards a competitive sourcing process for automotive parts, including increased purchases from independent suppliers, as they seek lower-priced and/or higher-technology products. Demand for aftermarket products tends to increase when vehicle owners retain their vehicles longer, as these vehicles generally have a greater need for repair.

The statements regarding industry outlook, trends, the future development of certain automotive systems and other non-historical statements contained in this section are forward-looking statements.

Industry Trends. The following key trends have been affecting the automotive parts industry over the past several years:


	•	Consumer and Regulatory Focus on Safety. Consumers, and therefore VMs, are increasingly focused on, and governments are increasingly requiring, improved safety in vehicles. For example, on October 29, 2003, Honda announced that substantially all Honda and Acura vehicles will be equipped with side air bags, side curtain air bags and ABS as standard equipment before the end of 2006. Honda also announced that all Honda and Acura SUVs and minivans would be equipped with vehicle stability control systems and rollover sensors for side curtain air bags before the end of 2006. Advances in technology by us and others have led to a number of innovations in our product portfolio, which will allow us to benefit from this trend. Such innovations include electronic vehicle stability control systems, tire pressure monitoring systems, occupant sensing systems, rollover sensing and curtain air bag systems.

A further example of this is the December 4, 2003 announcement by the Alliance of Automobile Manufacturers and the Insurance Institute for Highway Safety of a new voluntary industry safety commitment to meet new performance criteria designed to enhance occupant protection in front- and side-impact crashes. The announcement indicated that the new performance criteria would encompass a wide range of occupant protection technologies and designs, including enhanced matching of vehicle front structural components and enhanced side-impact protection through the use of features such as side air bags, air bag curtains and revised side-impact structures. By September 1, 2007, at least 50% of all vehicles offered in the United States by participating manufacturers are expected to meet the front-to-side performance criteria, and by September 2009, 100% of the vehicles of participating manufacturers are expected to meet the criteria.


	•	Globalization of Suppliers. To serve multiple markets more cost effectively, many VMs are manufacturing global vehicle platforms, which typically are designed in one location but are produced and sold in many different geographic markets around the world. Having operations in the geographic markets in which VMs produce global platforms enables suppliers to meet VMs’ needs more economically and efficiently. Few suppliers have this global coverage, and it is a source of significant competitive advantage for those suppliers that do.

	•	Shift of Engineering to Suppliers. Increasingly, VMs are focusing their efforts on consumer brand development and overall vehicle design, as opposed to the design of individual vehicle systems. In order to simplify the vehicle design and assembly processes and reduce their costs, VMs increasingly look to their suppliers to provide fully engineered, combinations of components in systems and modules rather than individual components. Systems and modules increase the importance of Tier-1 suppliers because they generally increase the Tier-1 suppliers’ percentage of vehicle content.

	•	Increased Electronic Content and Electronics Integration. The electronic content of vehicles has been increasing and, we believe, will continue to increase in the future. The increase in electronic content is largely driven by consumer and regulatory requirements in Europe and the United States for improved automotive safety and environmental performance, as well as consumer demand for increased vehicle performance and functionality at lower cost. Electronics integration, which generally refers to replacing mechanical with electronic components and integration of mechanical and electrical functions within the vehicle, allows VMs to achieve a reduction in the weight of vehicles and the number of mechanical parts, resulting in easier assembly, enhanced fuel economy, improved emissions control, increased safety and better vehicle performance. As consumers seek more competitively-priced ride and handling performance, safety, security and convenience options in vehicles, such as electronic stability control, active cruise control, air bags, keyless entry and tire pressure monitoring, we believe that electronic content per vehicle will continue to increase.

	•	Increased Emphasis on Speed-to-Market. As VMs are under increasing pressure to adjust to changing consumer preferences and to incorporate technological advances, they are shortening product development times. Shorter product development times also generally reduce product development costs. We believe suppliers that are able to deliver new products to VMs in a timely fashion to accommodate the VMs’ needs will be well positioned to succeed in this evolving marketplace.

	•	Ongoing Automotive Supplier Consolidation. The worldwide automotive parts industry is consolidating as suppliers seek to achieve operating synergies through business combinations, shift production to locations with more flexible work rules and practices, acquire complementary technologies, build stronger customer relationships and follow their customers as they expand globally. The need for suppliers to provide VMs with single-point sourcing of integrated systems and modules on a global basis has helped drive industry consolidation. Furthermore, the cost focus of most major VMs has forced suppliers to reduce costs and improve productivity on an ongoing basis, including achieving economies of scale and consolidation.

The automotive parts industry is extremely competitive. VMs rigorously evaluate us and other suppliers based on many criteria such as quality, price/cost competitiveness, system and product performance, reliability and timeliness of delivery, new product and technology development capability, excellence and flexibility in operations, degree of global and local presence, effectiveness of customer service and overall management capability. We believe we compete effectively with leading automotive suppliers on all of these criteria. For example, we generally follow manufacturing practices designed to improve efficiency, including but not limited to, one-piece-flow machining and assembly, and level and just-in-time scheduling of our manufacturing plants, all of which enable us to manage inventory so that we can deliver components and systems to our customers in the quantities and at the times ordered. Our resulting delivery performance, as measured by our customers, generally meets or exceeds our customers’ expectations. Within each of our product segments, we face significant competition. Our principal competitors include Delphi, Bosch, Conti-Teves, Visteon, Koyo Seiko, ZF, and Advics in the Chassis Systems segment; Autoliv, Delphi, Key Safety, Takata, and Bosch in the Occupant Safety Systems segment; and ITW, Raymond, Nifco, Textron, Kostal, Delphi, Valeo, Tokai Riki and Eaton in the Automotive Components segment.

The following discussion describes each of our operating segments, as well as the major product groups within each segment.

Chassis Systems. Our Chassis Systems segment focuses on the design, manufacture and sale of product lines relating to steering, foundation brakes, brake control, modules and suspension. Chassis Systems accounted for approximately $6.5 billion, or 57.4% of our total pro forma sales and $265 million, or 38.6%, of our pro forma segment profit before taxes for the year ended December 31, 2003 and approximately $5.8 billion, or 56.2%, of our total pro forma sales and $283 million, or 45.3% of our pro forma segment profit before taxes for the year ended December 31, 2002.

We believe our Chassis Systems segment is well positioned to capitalize on growth trends toward increasing active safety systems, particularly in the areas of electric steering, electronic vehicle stability control and other advanced braking systems and integrated vehicle control systems.

The following table describes the principal product lines in order of 2003 sales in our Chassis Systems segment:

We sell our Chassis Systems products primarily to VMs and other Tier-1 suppliers. We also sell these products to VM service organizations and in the independent aftermarket, through a licensee in North America, and in the rest of the world, to independent distributors.

Occupant Safety Systems. Our Occupant Safety Systems segment focuses on the design, manufacture and sale of air bags, seat belts, safety electronics, steering wheels and security electronic systems. Occupant Safety Systems accounted for approximately $3.3 billion, or 29.2%, of our total pro forma sales and $301 million, or 43.9%, of our pro forma segment profit before taxes for year ended December 31, 2003 and approximately $3.1 billion, or 30.3% of our total pro forma sales and $212 million, or 33.9%, of our pro forma segment profit before taxes for year ended December 31, 2002.

We believe our Occupant Safety Systems segment is well positioned to capitalize on growth trends toward increasing passive safety systems, particularly in the areas of side and curtain air bag systems, occupant sensing systems, active seat belt pretensioning and retractor systems, and tire pressure monitoring systems.

The following table describes the principal product lines in order of 2003 sales in our Occupant Safety Systems segment:

We sell our Occupant Safety Systems products primarily to VMs and also to other Tier-1 suppliers. We also sell these products to VM service organizations for service parts.

Automotive Components. Our Automotive Components segment focuses on the design, manufacture and sale of body controls, engine valves and engineered fasteners and components. Automotive Components segment accounted for approximately $1.5 billion, or 13.4%, of our total pro forma sales and $120 million, or 17.5%, of our pro forma segment profit before taxes for the year ended December 31, 2003 and approximately $1.4 billion, or 13.6% of our total pro forma sales and approximately $130 million, or 20.8%, of our pro forma segment profit before taxes for the year ended December 31, 2002.

We believe our Automotive Components segment is well positioned to capitalize on growth trends toward multi-valve engines and increasing electronic content per vehicle. The following table describes in order of 2003 sales our principal product lines in our Automotive Components segment:

We sell our Automotive Components products primarily to VMs and also to other Tier-1 suppliers. We also sell these products to VM service organizations. In addition, we sell some engine valve and body control products to independent distributors for the automotive aftermarket.

Joint ventures represent an important part of our business, both operationally and strategically. We have often used joint ventures to enter into new geographic markets such as China, Korea and India, or to acquire new customers or to develop new technologies such as electro-hydraulic steering pumps and radar sensors.

In the case of entering new geographic markets, where we have not previously established substantial local experience and infrastructure, teaming with a local partner can reduce capital investment by leveraging pre-existing infrastructure. In addition, local partners in these markets can provide knowledge and insight into local customs and practices and access to local suppliers of raw materials and components. All of these advantages can reduce the risk, and thereby enhance the prospects for the success, of an entry into a new geographic market.

Joint ventures can also be an effective means to acquire new customers. Joint venture arrangements can allow partners access to technology they would otherwise have to develop independently, thereby reducing the time and cost of development. More importantly, they can provide the opportunity to create synergies and applications of the technology that would not otherwise be possible.

The following table shows our joint ventures in which we have a 49% or greater interest:


(1)	These entities are not consolidated in our financial statements.

(2)	On June 27, 2003, we sold our 60% partnership interest in QSS, a Canadian joint venture, to Tokai Rika Canada Limited, an affiliate of Tokai Rika Co., Ltd. of Japan, our former partner in QSS. QSS had sales of approximately $61 million during our period of ownership in 2003 and manufactured seat belt systems.

Our partnership interest in TKS, in which we had a 51% interest, was not transferred to us as part of the Acquisition. TKS had sales of $43 million for the two months ended February 28, 2003 and produced steering gears. Therefore, while our predecessor company’s historical financial statements include the results of TKS, our pro forma financial data reflects the elimination of the results of TKS.


(3)	Formerly named FAW Kelsey-Hayes Automobile Chassis Systems, Co., Ltd.

(4)	We formed this joint venture in February, 2004.


(5)	In September 2003, we formed EnTire Solutions, LLC with Group Michelin in order to develop, promote, market, sell and provide field support for direct tire pressure monitoring systems.

We sell to all the major VM customers across the world’s entire major vehicle producing regions. Among our largest customers are Ford Motor Company, DaimlerChrysler AG, Volkswagen AG, General Motors Corporation and Renault-Nissan BV. We believe that, among major automotive parts suppliers, the breadth of our customer mix is among the industry leaders. Our long-standing relationships with our customers have enabled us to understand global customer needs and business opportunities. We believe that we will continue to be able to compete effectively for our customers’ business because of the high quality of our products, our ongoing cost reduction efforts, our strong global presence and our product and technology innovations. The chart below indicates our ten largest customers by VM group, the VMs within each group and the percentage of our pro forma sales for the year ended December 31, 2003, represented by each of these VM groups.


(1)	Our pro forma sales for the year ended December 31, 2003 exclude sales of TKS but include sales of QSS through June 27, 2003 at which time it was sold. Both TKS and QSS sales were primarily to Toyota.

We also sell products to the global aftermarket as replacement parts for current production and older vehicles. For the year ended December 31, 2003, our pro forma sales to the aftermarket represented approximately 7% of our total sales. We sell these products through both VM service organizations and independent distribution networks.

We have a sales and marketing organization of dedicated customer teams that provide a consistent interface with our key customers. These teams are located in all major vehicle producing regions to best represent their respective customers’ interests within our organization, to promote customer programs and to coordinate global customer strategies with the goal of enhancing overall customer service and satisfaction. Our ability to support our customers globally is further enhanced by our broad global presence in terms of sales offices, manufacturing facilities, engineering/technical centers and joint ventures.

Our sales and marketing organization and activities are designed to create overall awareness and consideration of, and to increase purchases of, our systems, modules and components. To further this objective, we participate in international trade shows in Paris, Frankfurt and Detroit. We also provide on-site technology demonstrations at our major VM customers on a regular basis.

Our engineering, sales and production facilities are located in 22 countries. With approximately 500 dedicated sales/customer development employees, we provide effective customer solutions, products and service in any region in which these facilities operate or manufacture.

We own significant intellectual property, including a large number of patents, trademarks, copyrights and trade secrets, and are involved in numerous licensing arrangements. Although our intellectual property plays an important role in maintaining our competitive position in a number of the markets that we serve, no single patent, copyright, trade secret or license, or group of related patents, copyrights, trade secrets or licenses, is, in our opinion, of such value to us that our business would be materially affected by the expiration or termination thereof. However, we view the name TRW Automotive and primary mark “TRW” (which has been transferred to us as part of the Acquisition) as material to our business as a whole. Our general policy is to apply for patents on an ongoing basis in the United States, Germany and appropriate other countries to protect our patentable developments.

Our patent portfolio of nearly 10,000 patents and pending patent applications reflects our commitment to invest in technology and covers many aspects of our products and the processes for making those products. In addition, we have developed a substantial body of manufacturing know-how that we believe provides a significant competitive advantage in the marketplace.

We have entered into several hundred technology license agreements that either strategically exploit our intellectual property rights or provide a conduit for us into third party intellectual property rights useful in our businesses. In many of these agreements, we license technology to our suppliers, joint venture companies and other local manufacturers in support of product production for us and our customers. In other agreements, we license the technology to other companies to obtain royalty income.

We own a number of secondary trade names and marks applicable to certain of our businesses and products that we view as important to such businesses and products as well.

As part of the Acquisition, we have entered into intellectual property license agreements with TRW. These agreements are described under “Certain relationships and related transactions.”

Our business is moderately seasonal because our largest North American customers typically halt operations for approximately two weeks in July and one week in December. Additionally, customers in Europe historically shut down vehicle production during a portion of August and one week in December. In addition, third quarter automotive production traditionally is lower as new models enter production. Accordingly, our third and fourth quarter results may reflect these trends.

We operate a global network of technical centers worldwide where we employ approximately 4,200 engineers, researchers, designers, technicians and their supporting functions. This global network allows us to develop automotive active and passive technologies while improving existing products and systems. We utilize sophisticated testing and computer simulation equipment, including computer-aided engineering, noise-vibration-harshness, crash sled, math modeling and vehicle simulations. We have advanced engineering and research and development programs for next-generation components and systems in our chassis, occupant safety and automotive component product areas. We are disciplined in our approach to research and development, employing various tools to improve efficiency and reduce cost, such as Six Sigma, “follow-the-sun,” a 24-hour a day engineering program that utilizes our global network, and other e-Engineering programs, and outsourcing non-core activities.


	•	$137 million for the ten months ended December 31, 2003;

	•	$27 million for the two months ended February 28, 2003;

	•	$151 million for the year ended December 31, 2002; and

	•	$131 million for the year ended December 31, 2001.

We believe that continued research and development activities are critical to maintaining our leadership position in the industry and will provide us with a competitive advantage as we seek additional business with new and existing customers.

We purchase various manufactured components and raw materials for use in our manufacturing processes. The principal components and raw materials we purchase include castings, electronic parts, molded plastic parts, finished subcomponents, fabricated metal, aluminum, steel, resins, leather and wood. All of these components and raw materials are available from numerous sources. We have recently seen significant inflationary pressures in the ferrous metals markets. At this time, we are working with our suppliers and customers to attempt to mitigate the impact that this inflation may have on our financial results, but there can be no assurance that this will not have a material adverse effect. We have not, in recent years, experienced any significant shortages of manufactured components or raw materials and normally do not carry inventories of these items in excess of those reasonably required to meet our production and shipping schedule.

As of December 31, 2003, we had approximately 60,800 employees (including employees of our majority owned joint ventures but excluding temporary employees and employees who are on approved forms of leave), of whom approximately 22,300 were employed in North America, approximately 32,000 were employed in Europe, approximately 3,900 were employed in South America and approximately 2,600 were employed in Asia. Approximately 16,000 of our employees are salaried and approximately 44,800 are hourly. As of December 31, 2003, approximately 21% of our United States workforce and approximately 72% of our hourly workforce outside of the United States were represented by 39 unions. We consider relations with our employees to be good.

Governmental requirements relating to the discharge of materials into the environment, or otherwise relating to the protection of the environment, have had, and will continue to have, an effect on us and our operations. We have made and continue to make expenditures for projects relating to the environment, including pollution control devices for new and existing facilities. We are conducting a number of environmental investigations and remedial actions at current and former locations to comply with applicable requirements and, along with other companies, have been named a potentially responsible party for certain waste management sites. Each of these matters is subject to various uncertainties, and some of these matters may be resolved unfavorably to us.

We do not believe that compliance with environmental protection laws and regulations will have a material effect upon our capital expenditures, results of operations or competitive position. Our capital expenditures for environmental control facilities during 2004 and 2005 are not expected to be material to us.

We believe that any liability that may result from the resolution of environmental matters for which sufficient information is available to support cost estimates will not have a material adverse effect on our financial position or results of operations. However, we cannot predict the effect on our financial position of expenditures for aspects of certain matters for which there is insufficient information. In addition, we cannot predict the effect of compliance with environmental laws and regulations with respect to unknown environmental matters on our financial position or results of operations or the possible effect of compliance with environmental requirements imposed in the future. Under the master purchase agreement, Northrop Grumman will indemnify us for 50% of any environmental liabilities associated with the operation or ownership of TRW’s automotive business on or prior to the Acquisition (subject to certain exceptions), regardless of whether the liabilities arise before or after the Acquisition. See “ITEM 13 — Certain Relationships and Related Transactions — The Master Purchase Agreement.”

Our principal executive offices are located in Livonia, Michigan. Our operations include numerous manufacturing, research and development and warehousing facilities and offices. We own or lease principal facilities located in 18 states in the United States and in 21 other countries as follows: Austria, Brazil, Canada, China, the Czech Republic, France, Germany, Italy, Japan, Malaysia, Mexico, Poland, Portugal, Singapore, South Africa, South Korea, Spain, Sweden, Thailand, Turkey, and the United Kingdom. Approximately 57% of our principal facilities are used by the Chassis Systems segment, 18% by the Occupant Safety Systems segment and 25% by the Automotive Components segment. Our corporate headquarters are contained within the Chassis Systems numbers below.

Of the total number of principal facilities operated by us, approximately 58% of such facilities are owned, 37% are leased, and 5% are held by joint ventures in which we have a majority interest.

A summary of our principal facilities, by segment, type of facility and geographic region, as of March 8, 2004 is set forth in the following tables. Additionally, where more than one segment utilizes a single facility, that facility is categorized by the purposes for which it is primarily used.

Various claims, lawsuits and administrative proceedings are pending or threatened against us or our subsidiaries, covering a wide range of matters that arise in the ordinary course of our business activities with respect to commercial, product liability and environmental matters.

In October 2000, Kelsey-Hayes Company (formerly known as Fruehauf Corporation) was served with a grand jury subpoena relating to a criminal investigation being conducted by the U.S. Attorney for the Southern District of Illinois. The U.S. Attorney has informed us that the investigation relates to possible wrongdoing by Kelsey-Hayes Company and others involving certain loans made by Kelsey-Hayes Company’s then-parent corporation to Fruehauf Trailer Corporation, the handling of the trailing liabilities of Fruehauf Corporation and actions in connection with the 1996 bankruptcy of Fruehauf Trailer Corporation. Kelsey-Hayes Company became a wholly owned subsidiary of TRW upon TRW’s acquisition of Lucas Varity in 1999 and became our wholly owned subsidiary in connection with the Acquisition. We have cooperated with the investigation and are unable to predict the outcome of the investigation at this time.

On May 6, 2002, ArvinMeritor Inc. filed suit against TRW in the United States District Court for the Eastern District of Michigan, claiming breach of contract and breach of warranty in connection with certain tie rod ends that TRW supplied to ArvinMeritor and the voluntary recall of some of these tie rod ends. ArvinMeritor subsequently recalled all of the tie rod ends, and claims that it is entitled to reimbursement from TRW for the costs associated with both the products recalled by TRW and those recalled by ArvinMeritor on its own. ArvinMeritor is seeking $18.3 million in damages plus legal fees, administrative expenses and interest. We believe that we have meritorious defenses and intend to defend vigorously the claims asserted against us, but cannot predict the outcome of this lawsuit.

While certain of our subsidiaries have been subject in recent years to asbestos-related claims, we believe that such claims will not have a material adverse effect on our financial condition or results of operations. In general, these claims seek damages for illnesses alleged to have resulted from exposure to asbestos used in certain components sold by our subsidiaries. We believe that the majority of the claimants were assembly workers at the major U.S. automobile manufacturers. The vast majority of these claims name as defendants numerous manufacturers and suppliers of a wide variety of products allegedly containing asbestos. We believe that, to the extent any of the products sold by our subsidiaries and at issue in these cases contained asbestos, the asbestos was encapsulated. Based upon several years of experience with such claims, we believe that only a small proportion of the claimants has or will ever develop any asbestos-related impairment.

Neither our settlement costs in connection with asbestos claims nor our average annual legal fees to defend these claims have been material in the past. These claims are strongly disputed by us and it has been our policy to defend against them aggressively. We have been successful in obtaining the dismissal of many cases without any payment whatsoever. Moreover, there is significant insurance coverage with solvent carriers with respect to these claims. However, while our costs to defend and settle these claims in the past have not been material, we cannot assure you that this will remain so in the future.

We believe that the ultimate resolution of the foregoing matters will not have a material effect on our financial condition or results of operations.

During the fourth quarter of the year covered by this report, no matters were submitted to a vote of security holders.

The sale of 24,137,931 shares of common stock sold in our initial public offering was registered pursuant to our Registration Statement on Form S-1, as amended, registration statement number 333-110513, which became effective on February 2, 2004. On February 2, 2004, the Company priced these shares of common stock at $28.00 per share. As of February 3, 2004, the common stock began trading on the New York Stock Exchange under the symbol “TRW”. The sale of the shares closed on February 6, 2004. The aggregate offering price of the shares of common stock registered and sold was $675,862,068. We paid an aggregate of approximately $37,172,413.74 in underwriting discounts and commissions, resulting in proceeds to us of $638,689,654.26. In addition, we incurred an estimated $3 million in expenses. Goldman Sachs & Co., Credit Suisse First Boston LLC and JPMorgan Securities Inc. were the managing underwriters for our initial public offering. On March 8, 2004, there were 253 holders of record of our common stock. The Transfer Agent and Registrar for our Common Stock is National City Bank.

We used approximately $319 million of the net proceeds to repurchase 12,068,965 shares of our common stock held by AIL, an affiliate of Blackstone, at a price per share equal to the proceeds per share less the underwriting discounts of $26.46 we received from the offering. See “ITEM 13. Certain Relationships and Related Transactions — Share Repurchase Agreement” for a description of this transaction. We also used approximately $317 million to repay a portion of our senior subordinated notes and senior notes as follows, in each case, including the payment of a related redemption premium thereon:


	•	approximately $117 million of such proceeds to repay 35% of our $300,000,000 aggregate principal amount of 11% Senior Subordinated Notes due 2013;

	•	approximately $61 million to repay 35% of our €125,000,000 aggregate principal amount of 11 3/4% Senior Subordinated Notes due 2013;

	•	approximately $109 million to repay approximately 11% of our $925,000,000 aggregate principal amount of 9 3/8% Senior Notes due 2013; and

	•	approximately $30 million to repay approximately 11% of our €200,000,000 aggregate principal amount of 10 1/8% Senior Notes due 2013.

The proceeds received by our subsidiary, TRW Automotive Inc., from the offering of senior notes and senior subordinated notes, were used, together with other related financings described elsewhere in this report, to finance the Acquisition and to pay related transaction fees and expenses incurred in connection with the Acquisition and the related financings.

During our last fiscal year, we issued securities in transactions, which were exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), as transactions by an issuer not involving any public offering thereunder. All of the securities so issued are deemed restricted securities for the purposes of the Securities Act. No underwriters were involved in any of the sales of securities.

In connection with the Acquisition, on February 28, 2003, we issued 675,412 shares of common stock to AIL, in which Blackstone has a controlling equity interest, and 170,000 shares of common stock to an affiliate of Northrop Grumman, for an aggregate consideration of $675 million and $170 million, respectively, and at a

price per share of $1,000. On February 28, 2003, JPMorgan Chase Bank (the “escrow agent”), acting for the benefit of employees of certain of our subsidiaries, subscribed for and purchased 12,000 shares of our common stock at a price per share of $1,000 for an aggregate consideration of $12.0 million, with the proceeds of a promissory note issued to TRW Automotive Inc. On March 25, 2003, we repurchased 6,119.5 of such shares from the escrow agent at a price per share of $1,000 (and affiliates of Blackstone repurchased the remainder of such shares) and the note was paid.

On February 28, 2003, we also issued an aggregate of 10,588 shares of common stock to 37 of our officers and employees of certain of our subsidiaries for an aggregate consideration of $10.588 million in cash and at a price per share of $1,000. Subsequently, we issued to employees of certain of our subsidiaries the following: on March 25, 2003, an aggregate of 6,119.5 shares of common stock to 189 employees for an aggregate consideration of $6.1195 million; and on December 12, 2003 an aggregate of 1,048 shares of common stock to 32 employees for an aggregate consideration of $1.3624 million and at a price per share of $1,300. We also issued an aggregate of 9,981,900 (as adjusted to reflect the 100 for 1 stock split effected on January 27, 2004) options to purchase shares of our common stock to the members of management and employees of our subsidiaries who purchased shares in these offerings. These options generally vest in 20% equal annual increments over a five-year period from the date of grant.

In connection with the Acquisition, on February 28, 2003, TRW Automotive Inc. sold $925 million principal amount of 9 3/8% Senior Notes due 2013 and $300 million principal amount of 11% Senior Subordinated Notes due 2013 to J.P. Morgan Securities Inc., Credit Suisse First Boston LLC, Lehman Brothers Inc., Deutsche Bank Securities Inc., Banc of America Securities LLC, Scotia Capital (USA) Inc., TD Securities (USA) Inc. and SunTrust Capital Markets, Inc. and €200 million principal amount of 10 1/8% Senior Notes due 2013 and €125 million principal amount of 11 3/4% Senior Subordinated Notes due 2013 (collectively, the “notes”) to J.P. Morgan Securities Ltd., Credit Suisse First Boston Europe Ltd., Lehman Brothers International (Europe), Deutsche Bank AG London, Banc of America Securities Limited, Scotia Capital Inc., TD Securities (USA) Inc. and SunTrust Capital Markets, Inc. for an aggregate net proceeds of $1,577 million (based on the exchange rate on the date of Acquisition). On July 1, 2003, TRW Automotive Inc. filed with the Securities and Exchange Commission a registration statement on Form S-4 relating to (i) the registration of the notes and (ii) TRW Automotive Inc.’s offers to exchange the registered notes for the privately placed notes. Neither we nor TRW Automotive Inc. received any proceeds from the exchange offers. Such registration statement became effective on November 5, 2003 and the exchange was completed in December 2003.

The sales of the above securities were exempt from the registration requirements of the Securities Act, in reliance on Section 4(2) of the Securities Act, Regulation S, Regulation D or Rule 701 promulgated thereunder, as transactions by an issuer not involving a public offering or to qualified institutional buyers or transactions pursuant to compensatory benefit plans and contracts relating to compensation as provided under Rule 701. There were no underwriters involved in connection with the sale of the above securities.

We do not currently pay any cash dividends on our common stock, and instead intend to retain any earnings for debt repayment, future operations and expansion. The amounts available to us to pay cash dividends are restricted by our debt agreements. Under TRW Automotive Inc.’s senior credit facilities, we have a limited ability to pay dividends on our common stock pursuant to a formula based on our consolidated net income after January 1, 2004 and our leverage ratio as specified in the amended and restated credit agreement. The indentures governing the notes also limit our ability to pay dividends, except that payment of dividends up to 6.0% per annum of the net proceeds received by TRW Automotive Inc. from any public offering of common stock or contributed to TRW Automotive Inc. by us or TRW Automotive Intermediate Holdings from any public offering of common stock is allowed. Any decision to declare and pay dividends in the future will be made at the discretion of our board of directors and will depend on, among other things, our results of operations, cash requirements, financial condition, contractual restrictions and other factors that our board of directors may deem relevant.


(1)	Such shares of common stock were repurchased prior to the initial public offering of our shares from former employees following their termination of employment.

The selected historical combined financial data of the Predecessor as of December 31, 2002, 2001 and 2000 and for each of the four years in the period ended December 31, 2002 and the two months ended February 28, 2003 have been derived from the audited combined financial statements of our predecessor company. The selected historical combined financial data of the Predecessor as of December 31, 1999 has been derived from the unaudited combined financial statements of our predecessor company and have been prepared on a basis consistent with the Predecessor’s audited annual combined financial statements. The selected historical consolidated financial data of the Successor as of December 31, 2003 and for the ten months ended December 31, 2003 have been derived from our audited consolidated financial statements and have been prepared on a different basis from the Predecessor’s annual combined financial statements under the purchase method of accounting as a result of the consummation of the Acquisition on February 28, 2003.

Comparisons of certain items below are affected by the acquisition of Lucas Varity in March 1999 and divestitures during the three year period ended December 31, 2001. The table should be read in conjunction with “ITEM 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the combined financial statements of our predecessor company and our consolidated financial statements included elsewhere in this report. The following financial information for the periods prior to the Acquisition may not reflect what our results of operations, financial position and cash flows would have been had we operated as a separate, stand-alone entity during the periods presented, or what our results of operations, financial position and cash flows will be in the future.


(1)	Represents the fair value of the purchased in-process research and development associated with the acquisition of Lucas Varity in March 1999 and the Acquisition in February 2003. Under GAAP, the purchase price allocation includes the fair value of purchased in-process research and development, which is immediately expensed to the extent it has not reached technological feasibility or has no future alternative use.

(2)	Includes miscellaneous income and expense items from operations. See Note 13 to the consolidated and combined financial statements for further detail.

(3)	Earnings per share are calculated by dividing net earnings (losses) by the weighted average shares outstanding. Earnings per share are not applicable for the historical Predecessor periods as there were no shares outstanding during those periods.

Basic and diluted earnings per share for the ten months ended December 31, 2003 have been calculated based on the weighted average shares outstanding for the period adjusted to give effect to the 100 for 1 stock split effected on January 27, 2004. Shares issuable pursuant to outstanding common stock options under our 2003 Stock Incentive Plan have been excluded from the computation of diluted earnings per share because their effect is antidilutive.

(4)

EBITDA is defined as earnings (losses) from continuing operations before interest, losses on sales of receivables, gain (loss) on retirement of debt, income taxes, depreciation and amortization. EBITDA, a measure used by management to measure performance, is reconciled to net earnings (losses) in the following table. Our management believes EBITDA is useful to the investors because it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. EBITDA is not a recognized term under GAAP and does not purport to be an alternative to net earnings (losses) as an indicator of operating performance or to cash flows from operating activities as a measure of liquidity. Because not all companies use identical calculations, this presentation of EBITDA may not be comparable to other similarly titled measures of other companies. Additionally, EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. The amounts shown for EBITDA as presented herein differ from the amounts calculated under the definition of EBITDA used in our debt instruments. The definition of EBITDA used in our debt instruments is further adjusted for certain cash and non-cash charges and is used to determine compliance with financial covenants and our ability to engage in certain activities such as incurring additional debt and making certain payments.


(5)	Our earnings (losses) from continuing operations (pre-tax) were negatively impacted by the effects of unusual items as presented in the following table:


	(a)	Significant restructuring actions were taken over the last several years as described more fully in the “ITEM 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.” While we continuously evaluate whether additional restructuring opportunities exist to increase our operating efficiencies, we do not have any current plans that would result in additional restructuring charges of the magnitude that the Predecessor incurred in 2002, 2001 and 2000.


(6)	See “ITEM 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Pensions and Other Post-Retirement Benefits” for a further discussion of net pension and OPEB (income) expense.

(7)	Total debt excludes any off-balance sheet borrowings under receivables facilities. As of December 31, 2003, we had no advances outstanding under our receivables facility.

(8)	The Predecessor’s receivables facility was an off-balance sheet arrangement. Our receivables facility can be treated as a general financing agreement or as an off-balance sheet arrangement depending on the level


	of loans to the borrower as further described in “ITEM 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Off-balance Sheet Arrangements.”

The following discussion and analysis of our financial condition and results of operations covers periods prior and subsequent to the Acquisition. Accordingly, the discussion and analysis of historical operations of the Predecessor during the periods prior to the consummation of the Acquisition do not reflect the significant impact that the Acquisition has had and will have on us. In addition, the statements in the discussion and analysis regarding industry outlook, our expectations regarding the performance of our business and other non-historical statements in the discussion and analysis are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in the “Forward-Looking Statements” section. Our actual results may differ materially from those contained in or implied by any forward-looking statements. You should read the following discussion together with the sections entitled “Forward-Looking Statements,” “Risk Factors,” “Selected Historical Combined and Consolidated Financial Data” and the historical combined financial statements of our predecessor and our consolidated financial statements included elsewhere in this report.

The Predecessor did not historically operate as a stand-alone business, but as part of TRW, which became a subsidiary of Northrop Grumman on December 11, 2002. TRW Automotive Inc. acquired the shares of the subsidiaries of TRW engaged in the automotive business upon consummation of the Acquisition.

Due to a change in ownership, and the resultant application of purchase accounting, the historical financial statements of the Predecessor and the Successor included in this report have been prepared on different bases for the periods presented and are not comparable.

The following provides a description of the basis of presentation during all periods presented:


	Successor — Represents our consolidated financial position as of December 31, 2003 and our consolidated results of operations and cash flows for the ten month period ended December 31, 2003 following the Acquisition. The financial position as of December 31, 2003 and results of operations and cash flows for the ten month period ended December 31, 2003 reflect the application of purchase accounting, described below, relating to the Acquisition.

	Predecessor — Represents the combined financial position of the automotive business of TRW for all periods prior to the Acquisition on February 28, 2003. This presentation is on the historical basis of accounting without the application of purchase accounting related to the Merger in any period presented, due to the temporary nature of Northrop Grumman’s ownership of TRW’s automotive business. Prior to the Merger on December 11, 2002, Northrop Grumman entered into the master purchase agreement on November 18, 2002 with affiliates of Blackstone to sell TRW’s automotive business. See “ITEM 13 — Certain Relationships and Related Transactions.” The extensive representations, warranties and covenants contained in the master purchase agreement restricting Northrop Grumman’s conduct prior to the closing of the Acquisition severely limited any actions that could have been taken by Northrop Grumman during its brief and temporary ownership of TRW’s automotive business.

The combined financial statements of the Predecessor for each of the two years in the period ended December 31, 2002 and the unaudited pro forma information included in the results of operations for the year ended December 31, 2002 are based on the historical assets, liabilities, sales and expenses of the Predecessor for the periods prior to the Acquisition, including the allocation of a portion of TRW’s general and administrative corporate expenses, debt, interest expense and income taxes for periods prior to March 1, 2003 . The unaudited pro forma information for the year ended December 31, 2003 is based on the historical assets, liabilities, sales and expenses of the Predecessor for the two month period ended February 28, 2003 and of the Successor for the ten month period ended December 31, 2003. The pro forma adjustments reflect the effect of the Transactions as if they had occurred on January 1, 2002.

The financial position, results of operations and cash flows of the Successor exclude, while those of the Predecessor include, for all periods presented, the assets, liabilities, results of operations and cash flows of the joint venture, TKS, which was not transferred to us as part of the Acquisition.

As a result, the historical and other financial information of the Predecessor included in this report may not reflect what our results of operations, financial position and cash flows would have been had we operated as a separate, stand-alone company for the periods presented.

We are among the world’s largest and most diversified suppliers of automotive systems, modules and components to global VMs and related aftermarkets. We operate our business along three operating segments: Chassis Systems, Occupant Safety Systems and Automotive Components. Our cost of sales consists of variable and fixed components. Our variable and fixed costs approximate 80% and 20% of cost of sales, respectively. Variable costs are proportional to volume and mix and consist principally of materials and labor to manufacture our products. Our fixed costs are not significantly influenced by production volume, in the short term, and consist principally of administrative salaries, benefits and depreciation and other facility-related costs.

Our business is moderately seasonal because our largest North American customers typically halt operations for approximately two weeks in July and one week in December. Additionally, customers in Europe historically shut down vehicle production during a portion of August and one week in December. Third quarter automotive production traditionally is also lower as new models enter production. Accordingly, our third and fourth quarter sales tend to be lower than our first and second quarter sales.

Contract durations for automotive parts generally range from one year to the entire life of the vehicle model, generally three to seven years for cars and four to ten years for light trucks. Tier-l suppliers generally compete for new VM business at the beginning of the development of new vehicle models and upon the redesign of existing vehicle models. New vehicle model development generally begins at least two to five years before the marketing of such models to consumers. As a result, a significant portion of a supplier’s annual sales are generated pursuant to arrangements begun about two to five years before the revenues related to the arrangements begin to be realized. The Tier-l sourcing process for vehicle programs, which varies according to VM, is typically initiated when a VM seeks requests for quotations from several suppliers at least three to six years before anticipated vehicle production. Based on these quotations, VMs, in many cases, then select and work with a supplier on specific component design and development projects related to the new vehicle program. At varying points during this process, VMs may issue “nomination letters,” letters of intent or other representations to the supplier that, based on the supplier’s quotation and subject to a number of conditions established by the VM, the VM intends to award specific business relating to the vehicle program to the supplier. By the time the design and development of the vehicle program is nearly complete, the VM will typically have evaluated the supplier’s performance to date and its ability to meet the VM’s specific production and service requirements. The VM will then develop a proposed production timetable, including current vehicle volume and option mix estimates based on its own assumptions, and then source business with the supplier pursuant to written contracts, purchase orders or other firm commitments, provided that the supplier can meet the VM’s designated conditions and remain competitive in terms of price, quality, technology and delivery. In general, these contracts, purchase orders and commitments provide that the VM can terminate for convenience, and in some cases, they provide that the price will decrease over the proposed production timetable. Awarded business generally covers the supply of all or a portion of a VM’s production and service requirements of a particular product program rather than the supply of a specific quantity of products. Accordingly, in estimating awarded business over the life of a contract or other commitment, a supplier must make various assumptions as to the estimated number of vehicles expected to be produced, the timing of that production, the mix of options on the vehicles produced and pricing of the products being supplied. The realization of sales based on awarded business is subject in all cases to a number of important risks and uncertainties. In addition, the actual production volumes and option mix of vehicles produced by VMs depend on a number of factors that are beyond a supplier’s control.

Our business is greatly affected by the automotive build rates in North America and Europe. The automobile industry is characterized by short-term volatility, but long-term growth of, light vehicle sales and production. New vehicle demand is driven by macro-economic and other factors such as interest rates, manufacturer and dealer sales incentives, fuel prices, consumer confidence and employment and income growth trends. These factors ultimately determine longer-term vehicle production and sales rates.

One of the current trends in the automotive industry is for VMs to shift research and development, design and testing responsibility to suppliers. VMs have also been reducing the number of their suppliers, preferring strong relationships with fewer suppliers. We operate in a difficult pricing environment and our goal is to mitigate the pricing pressure imposed by VMs by continuing cost reduction efforts and restructuring our business. We also have recently seen significant inflationary pressures in the ferrous metals markets. We are fully engaged in supply chain management and utilizing Six Sigma as a leading quality improvement program throughout our operations and functions.

In 2001, the Predecessor disposed of five non-core businesses, one of which was accounted for as discontinued operations and four of which were not accounted for as discontinued operations. The business included in discontinued operations was Lucas Varity’s diesel business. Proceeds from the sale of the discontinued operations was $29 million and there was a $10 million gain on the sale, which is included in the net results of discontinued operations. The most significant of the four businesses divested that were not accounted for as discontinued operations were Lucas Varity India’s electrical businesses, and certain sensor and related components businesses. The revenues of these businesses were included in sales of the combined statements of operations and were $69 million for the year ended December 31, 2001. Proceeds from the sales of these divested businesses were $17 million and the gain on the sales of these businesses was $18 million.

On April 8, 2003, we sold our 21.8% equity interest in Toyoda TRW Automotive, Inc. (“Toyoda”) to our joint venture partner, Toyoda Machine Works, Ltd. We had previously accounted for our interest in Toyoda under the equity method, and classified this investment in “Other assets” (long-term) in our combined and consolidated balance sheets.

On June 27, 2003, we sold our 60% partnership interest in Quality Safety Systems Company (“QSS”), a Canadian seatbelt joint venture, to a subsidiary of our partner, Tokai Rika Co., Ltd. Through the sale date, QSS’s financial position results of operations and cash flows were included in our consolidated and combined financial statements.

On December 29, 2003, we completed the disposal of a European forge parts facility (“Linn”), which provided components internally to other portions of our businesses. Through the sale date, Linn’s financial position results of operations and cash flows were included in our consolidated and combined financial statements.

Proceeds from the Toyoda, QSS and Linn divestitures were approximately $57 million, net of cash retained in the QSS business.

On June 26, 2003, we acquired sole ownership of the immediate parent of Autocruise, S.A. (“Autocruise”) by acquiring for nominal consideration the equity interest held by our former joint venture partner, Thales Group. Autocruise, operating a custom-built facility in Brest, France, designs and manufactures radar-based sensors for adaptive cruise control systems, principally sold in certain European markets.

On September 22, 2003, we acquired a 50% equity interest in EnTire Solutions, LLC, a new joint venture we entered into with Group Michelin. This joint venture will focus on the development, marketing, manufacture and sale of advanced direct tire pressure monitoring systems for passenger cars and light trucks.

In 2001, the Predecessor recorded charges of $213 million related to the closing of two facilities and various headcount reduction activities including the integration of the former Chassis, Occupant Safety Systems and Automotive Electronics segments under one management team. The combination of these activities in 2001 resulted in a reduction of approximately 6,000 employees. In 2002, the Predecessor recorded charges of $59 million for actions that resulted in the closing of three plants and employee reductions of approximately 950. During the two months ended February 28, 2003, the Predecessor recorded charges of $3 million for severance and costs related to the consolidation of certain facilities. The charges described above include both cash and non-cash items. For the periods ended December 31, 2001 and 2002, the cash charges were $189 million and $27 million, respectively, and the non-cash charges were $24 million and $32 million, respectively. For the two months ended February 28, 2003, only cash charges were recorded totaling $3 million.

In connection with the Acquisition, we assumed liabilities (subject to certain exceptions) totaling approximately $51 million for various restructuring activities, primarily related to involuntary severance obligations and costs to exit certain activities. For the ten months ended December 31, 2003, we recorded cash charges of $29 million for severance and costs related to the consolidation of certain facilities. Additionally, we recorded a $37 million reserve through purchase accounting primarily for severance related to strategic restructurings, plant closings and involuntary employee termination arrangements outside of the United States to be paid over the next several years in accordance with local laws.

While we continuously evaluate whether additional restructuring opportunities exist to increase our operating efficiencies, we do not have any current plans that would result in additional restructuring charges of the magnitude that the Predecessor incurred in 2001 and 2002.

The following table sets forth a summary of the activity in the balance sheet accounts related to the restructuring reserves:

Of the $79 million restructuring reserve accrued at December 31, 2003, approximately $46 million is expected to be paid through 2004, and approximately $20 million relates to involuntary employee termination arrangements outside the United States to be paid over the next several years in accordance with local law.

In 2001, Chassis Systems, Occupant Safety Systems and Automotive Components segments recorded asset impairment charges of $28 million, $10 million and $12 million, respectively. These charges, related primarily to the write-down of property, plant and equipment, were recorded as $38 million in cost of sales, $11 million in other (income) expense-net and $1 million in goodwill amortization. Of these charges, $49 million was a result of the reduction of volume, consolidation of production and outsourcing at certain facilities. In 2002, Occupant Safety Systems and Automotive Components segments recorded asset impairment charges of $11 million and $6 million, respectively. Of these charges, $10 million related to the write-down of the investment in two affiliates to fair market value. The remaining $7 million related primarily to the

During the periods presented, substantially all our employees participated in defined benefit pension plans or retirement/termination indemnity plans. Net pension income included in earnings from continuing operations of the Predecessor for the years ended December 31, 2001 and 2002 and the two months ended February 28, 2003 was $209 million, $222 million and $23 million, respectively. Generally, pension income is required to be retained by the applicable pension plan and is not available for general corporate use. The net pension income during these periods is principally due to the overfunded status of the U.K. defined benefit plan. The fair value of plan assets in excess of the projected benefit obligation for the U.K. plan was $1.8 billion, $1.2 billion, $155 million, $55 million and $280 million at January 1, 2001, 2002, 2003, March 1, 2003 and October 31, 2003, respectively. The projected benefit obligations in excess of the fair value of plan assets for the U.S. and other plans was $174 million, $327 million, $563 million, $801 million and $826 million on January 1, 2001, 2002, 2003, March 1, 2003, and October 31, 2003, respectively. For the ten months ended December 31, 2003, net pension expense of the Successor was $24 million. The pension expense reflects the application of purchase accounting related to the Acquisition, including the recognition of all unamortized gains and losses in the opening balance sheet, valuing of the assets at fair value as of March 1, 2003 and changes in actuarial assumptions at March 1, 2003. See “— Critical Accounting Estimates — Employee Benefit Plans” and Note 18 to the financial statements.

The critical accounting estimates that affect our financial statements and that use judgments and assumptions are listed below. In addition, the likelihood that materially different amounts could be reported under varied conditions and assumptions is noted.

Product Recalls. We are at risk for product recall costs. Recall costs are costs incurred when the customer or we decide to recall a product through a formal campaign, soliciting the return of specific products due to a known or suspected safety concern. In addition, the National Highway Traffic Safety Administration has the authority, under certain circumstances, to require recalls to remedy safety concerns. Product recall costs typically include the cost of the product being replaced, customer cost of the recall and labor to remove and replace the defective part.

During the Predecessor periods when a decision to recall a product had been made for which we bore some responsibility, we recorded the estimated cost to us of the recall as a charge to net earnings in that period, in accordance with Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 5, “Accounting for Contingencies” (“SFAS 5”). In making estimates relating to product recalls, judgment was required as to the number of units to be returned, the total cost of the recall campaign, the ultimate negotiated sharing of the cost between us and the customer and, in some cases, the extent to which our supplier would share in the recall cost. As a result, our actual recall costs could be significantly different from our estimated costs.

Effective as of the Acquisition date, we implemented a new methodology for actuarially estimating our recall obligations that differs from that of our predecessor. We engaged independent third-party actuaries to run loss histories for the purpose of establishing loss projections and completed the valuation work in the fourth quarter of 2003. Under the actuarial estimation methodology, we accrue for recalls when revenues are recognized upon the shipment of product. The adoption of this estimation methodology does not have a material effect on the reported results of operations or cash flows for the ten month period ended December 31, 2003 or any individual quarter within such period. In the future, using an actuarial based estimation will have the effect of better matching revenues and expenses as relative to the methodology employed by our predecessor, we will record higher expenses in a period of minor or no recalls and lower expenses in a period of a significant recall since the obligation will have already been accrued as the revenue was recognized.

Impairment of Long-Lived Assets and Intangibles. We evaluate long-lived assets and intangibles subject to amortization for impairment when events and circumstances indicate that the assets may be impaired and the undiscounted cash flows to be generated by those assets are less than their carrying value. If the undiscounted cash flows are less than the carrying value of the assets, the assets are written down to their fair value.

The determination of undiscounted cash flows is based on the businesses’ strategic plans and long-range planning forecasts. The revenue growth rates included in the plans are based on industry specific data. We use external vehicle build assumptions published by widely used external sources and market share data by customer based on known and targeted awards over a five-year period. The projected profit margin assumptions included in the plans are based on the current cost structure and anticipated cost reductions. If different assumptions were used in these plans, the related undiscounted cash flows used in measuring impairment could be different and additional impairment of assets might be required to be recorded.

We test intangible assets not subject to amortization, other than goodwill, for impairment on an annual basis by comparing the estimated fair values to the carrying values. If the carrying value exceeds the estimated fair value, the asset is written down to its estimated fair value. Estimated fair value is based on cash flows, discussed above, discounted at a risk-adjusted rate of return.

Goodwill. Effective January 1, 2002, we adopted SFAS No. 142, “Goodwill and Other Intangible Assets.” See “Recent Accounting Pronouncements.” In connection with the Acquisition, we have applied the provisions of SFAS No. 141, “Business Combinations” (“SFAS 141”) and, after the application of purchase accounting, we have recorded approximately $2.5 billion in goodwill.

In accordance with SFAS 142, we no longer amortize goodwill but perform annual impairment testing at a reporting unit level. Our reporting units are our three reportable operating segments. To test goodwill for impairment, we estimate the fair value of each reporting unit and compare the estimated fair value to the carrying value. If the carrying value exceeds the estimated fair value, then a possible impairment of goodwill exists and requires further evaluation. Estimated fair values are based on the cash flows projected in the reporting units’ strategic plans and long-range planning forecasts (see “Impairment of Long-Lived Assets and Intangibles”), discounted at a risk-adjusted rate of return.

As the estimated fair values of our reporting units exceeded their carrying values at each testing date since adoption, we have recorded no goodwill impairment. While we believe our estimates of fair value are reasonable based upon current information and assumptions about future results, changes in our businesses, the markets for our products, the economic environment and numerous other factors could significantly alter our fair value estimates and result in future impairment of recorded goodwill.

Employee Benefit Plans. Assumptions used in determining projected benefit obligations and the fair value of plan assets for our pension plans and other post-retirement benefits are evaluated periodically by management in consultation with outside actuaries and outside investment advisors. Changes in assumptions are based on relevant company data, such as the rate of increases in compensation levels and the long-term rate of return on plan assets. Critical assumptions such as the expected long-term rate of return on plan assets, the discount rate used to measure our benefit obligations and health care cost projections are evaluated and updated annually. Based on our assumptions as of October 31, 2003, as discussed below, a one fourth percentage point change in these assumptions, holding all other assumptions constant, would have the following effect on our U.S. pension costs and obligations on an annual basis:

Pensions. We account for our defined benefit pension plans in accordance with SFAS No. 87, “Employers’ Accounting for Pensions” (“SFAS 87”), which requires that amounts recognized in financial statements be determined on an actuarial basis. This determination involves the selection of an expected rate of return on plan assets and a discount rate. SFAS 87 and the policies we have used, notably the use of a calculated value of plan assets for pensions (which is further described below), generally reduced the volatility of pension income and expense that would have otherwise resulted from changes in the value of the pension plan assets and pension liability discount rates. A substantial portion of our pension benefits relate to our plans in the United States and the United Kingdom. As discussed in “— Pension plans”, the Predecessor’s results of operations for the periods presented through February 28, 2003 reflect net pension income due to the over-funded status of our U.K. plan, net of pension expense for our U.S. and other plans. For the ten months ended December 31, 2003, our net pension expense reflects a combination of a decreased long-term rate of return assumption on the assets, decreased discount rate and use of fair value of plan assets as of March 1, 2003 in our purchase accounting, as opposed to the five-year market related value used historically.

One key assumption in determining our net pension (income) expense in accordance with SFAS 87 is the expected long-term rate of return on plan assets. The expected long-term annual rate of return on pension assets for 2001, 2002, and 2003 through February 28 were assumed by the Predecessor to be 9.5%, 9.5%, and 9.0%, respectively, in the United States and 8.75% in the United Kingdom. Effective March 1, 2003, we are assuming long-term annual rates of return on pension assets of 8.5% in the U.S. and 7.75% in the U.K. The actual returns on pension assets were a negative 4.3% in 2001, a negative 2.5% in 2002 and a positive 25.9% in 2003 for the U.S. plans and a negative 8.6% in 2001 and a negative 14.4% in 2002 and a positive 17% in 2003 for the U.K. plan. Over the last twelve years through December 31, 2003, our U.S. and U.K. plans have averaged returns of 8.4% and 8.2%, respectively. We review our long-term rate of return assumptions annually through comparison of our historical actual rates of return with our expectations, consultation with our actuaries regarding the assumptions used by other large companies and consultation with our investment managers regarding their expectations for future returns. While we believe our assumptions of future returns are reasonable and appropriate, significant differences in our actual experience or significant changes in our assumptions may materially affect our pension obligations and our future pension (income) expense. The expected long-term rate of return on assets is applied to a calculated market-related value of plan assets, which recognizes changes in the fair value of plan assets in a systematic manner over five years. This produces the expected return on plan assets that is included in pension (income) expense. In computing the expected return on plan assets that was included in the pension expense of the Successor for the ten month period ended December 31, 2003, the market-related value of assets was set equal to the fair value of assets; and, in future years, assets gains and losses will be amortized over five years in determining the market-related value of

Another key assumption in determining our net pension (income) expense is the determination of the discount rate to be used to discount plan liabilities. The discount rate reflects the current rate at which the pension liabilities could be effectively settled at the end of the year. In estimating this rate, we look to rates of return on high quality, fixed-income investments that receive one of the two highest ratings given by a recognized ratings agency, and we review the assumption with our actuaries. As of December 31, 2001, the Predecessor determined its pension discount rates to be 7.25% for the U.S. plans and 5.75% for the U.K. plan. As of December 31, 2002, the Predecessor assumed discount rates of 6.5% and 5.5% for the U.S. plans and the U.K. plan, respectively. These rates were used for the two-month period ended February 28, 2003. Beginning March 1, 2003, we are using discount rates of 6.25% and 5.5% for the U.S. plans and the U.K. plan respectively. Changes in discount rates over the past three years have not materially affected pension income (expense), and the net effect of changes in the discount rate, as well as the net effect of other changes in actuarial assumptions and experience, have been deferred historically as allowed by SFAS 87. As a result of the Acquisition and the application of purchase accounting, all unamortized historical changes were immediately recognized in the opening balance sheet.

We expect to contribute approximately $60 to $70 million to our U.S. pension plans (subject to possible legislative changes) and approximately $26 million to our non-U.S. pension plans in 2004.

Other Post-Retirement Benefits. We account for our Other Post-Retirement Benefits (“OPEB”) in accordance with SFAS No. 106, “Employers’ Accounting for Post-Retirement Benefits Other Than Pensions”, which requires that amounts recognized in financial statements be determined on an actuarial basis. This determination requires the selection of a discount rate and health care cost trend rates used to value benefit obligations. The discount rate reflects the current rate at which the OPEB liabilities could be effectively settled at the end of the year. In estimating this rate, we look to rates of return on high quality, fixed-income investments that receive one of the two highest ratings given by a recognized ratings agency and we review the assumption with our actuaries. As of December 31, 2002, the Predecessor determined its discount rate for OPEB to be 6.5%. The Predecessor used a discount rate for OPEB of 6.5% for the two-month period ended February 28, 2003, based on information available as of December 31, 2002. Beginning March 1, 2003, we are using a discount rate for OPEB of 6.25%. We develop our estimate of the health care cost trend rates used to value benefit obligations through review of our recent health care cost trend experience and through discussions with our actuary regarding the experience of similar companies. At December 31, 2001, the Predecessor assumed a 6.4% annual rate of increase in the per capita cost of covered health care benefits for the U.S. plan (representing substantially all of the OPEB benefits), which was assumed to gradually decrease to 5.1% in the year 2009 and remain at that level thereafter. At December 31, 2002, the Predecessor assumed a 10.0% annual rate of increase in the per capita cost of covered health care benefits for the U.S. plan, which was assumed to decrease gradually to 5.0% over eight years and remain at that level thereafter. This assumption was maintained after the Acquisition. We fund our OPEB obligation on a pay-as-you-go basis and have no plan assets. We expect to contribute approximately $75 million on a pay-as-you-go basis to our plans in 2004. Changes in the assumed discount rate or health care cost trend rate can have a significant impact on our actuarially determined liability and related OPEB expense.

On December 8, 2003, President Bush signed into law the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “MPD Act”). The MPD Act expanded Medicare to include, for the first time, coverage for prescription drugs. We sponsor retiree welfare programs and expect that this legislation will eventually reduce our costs for some of these programs. At this point, our investigation into a response to the legislation is preliminary, as we await guidance from various governmental and regulatory agencies concerning the requirements that must be met to obtain these cost reductions as well as the manner in which such savings should be measured.

Because of the various uncertainties related to our response to this legislation and the appropriate accounting methodology for this event, we have elected to defer financial recognition of this legislation until the Financial Accounting Standards Board issues final accounting guidance. As such, measures of the

accumulated post-retirement benefits obligation and net periodic post-retirement benefits cost included in these financial statements do not reflect the effects of the MPD Act. This deferral election is permitted under FASB Staff Position FAS 106-1, “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003”.

Income Taxes and Tax Valuation Allowances. We record the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts reported in our balance sheets, as well as operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply for taxable income in the years in which those temporary differences are expected to be recovered or settled. We follow specific guidelines in each tax jurisdiction regarding the recoverability of any tax assets recorded on the balance sheet and provide necessary valuation allowances as required. We review our deferred tax assets for recoverability based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. If we continue to operate at a loss in certain jurisdictions or are unable to generate sufficient future taxable income, or if there is a material change in the actual effective tax rates or time period within which the underlying temporary differences become taxable or deductible, we could be required to increase the valuation allowances against all or a significant portion of our deferred tax assets resulting in an increase in our effective tax rate and an adverse impact on our reported results. On February 28, 2003, the Acquisition required the Company to record certain purchase accounting adjustments, which accordingly required the Company to record certain deferred taxes. As of December 31, 2003, our gross deferred tax assets were approximately $1,216 million and our gross deferred tax liabilities were approximately $952 million. These amounts were reduced by a valuation allowance of $237 million for a net deferred tax asset of $27 million.

Environmental. Governmental regulations relating to the discharge of materials into the environment, or otherwise relating to the protection of the environment, have had, and will continue to have, an effect on our operations. We have made and continue to make expenditures for projects relating to the environment, including pollution control devices for new and existing facilities. We are conducting a number of environmental investigations and remedial actions at current and former locations to comply with applicable requirements and along with other companies, have been named a potentially responsible party for certain waste management sites.

A reserve estimate for each matter is established using standard engineering cost estimating techniques on an undiscounted basis. In the determination of such costs, consideration is given to the professional judgment of our environmental engineers, in consultation with outside environmental specialists, when necessary. At multi-party sites, the reserve estimate also reflects the expected allocation of total project costs among the various potentially responsible parties. Each of the environmental matters is subject to various uncertainties, and some of these matters may be resolved unfavorably to us. We believe that any liability, in excess of amounts accrued in our consolidated and combined financial statements, that may result from the resolution of these matters for which sufficient information is available to support cost estimates, will not have a material adverse affect on our financial position, results of operations or cash flows. However, we cannot predict the effect on our financial position, results of operations or cash flows for aspects of certain matters for which there is insufficient information. In addition, we cannot predict the effect of compliance with environmental laws and regulations with respect to unknown environmental matters.

The following unaudited pro forma consolidated and combined statements of operations for years ended December 31, 2003 and 2002 include adjustments to reflect the effect of the Transactions as if they have occurred on January 1, 2002. These unaudited pro forma consolidated and combined statements of operations and related notes are provided for informational purposes only and do not purport to be indicative of the results which would have actually been attained had the Transactions occurred on January 1, 2002 or that may be attained in the future.

The historical and pro forma results of operations of the Predecessor and the Successor reflect the impact of various unusual items during the periods discussed. Earnings (losses) from continuing operations (pretax) for the pro forma years ended December 31, 2003 and 2002 and the historical years ended


þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the year ended December 31, 2003

or

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the transition period from to .


Delaware		81-0597059
(State or other jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)


			Page

PART I
Item 1.	Business			1
	The Company			1
	History and Ownership			1
	Overview			2
	Industry			4
	Products and Competition			6
	Joint Ventures			8
	Customers			10
	Sales and Marketing			10
	Customer Support			11
	Intellectual Property			11
	Seasonality			11
	Research and Development			11
	Manufactured Components and Raw Materials			12
	Employees			12
	Environmental Matters			12
Item 2.	Properties			13
Item 3.	Legal Proceedings			14
Item 4.	Submission of Matters to a Vote of Security Holders			15
PART II
Item 5.	Market for Registrant’s Common Equity and Related Stockholder Matters			15
Item 6.	Selected Historical Consolidated and Combined Financial Data			17
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			22
	Basis of Presentation			22
	Executive Overview			23
	Automotive Environment			24
	Acquisitions and Divestitures			24
	Restructuring			25
	Asset Impairments Other Than Restructuring			25
	Pension Plans			26
	Critical Accounting Estimates			26
	Results of Operations on a Pro Forma Basis			30
		Total Company Results of Operations		31
		Short Period Discussions on a Historical Basis		35
		Segment Results of Operations		38
	Liquidity and Capital Resources			42
	Contractual Obligations and Commitments			46
	Off-Balance Sheet Arrangements			46
	Environmental Matters			48
	Contingencies			48


			Page

	Recent Accounting Pronouncements			49
	Outlook			52
	Forward-Looking Statements			52
	Risk Factors			53
Item 7A.	Quantitative and Qualitative Disclosures About Market Risks			56
Item 8.	Financial Statements and Supplementary Data			58
	Independent Auditor’s Report			58
	Consolidated and Combined Statements of Operations			60
	Consolidated and Combined Balance Sheets			61
	Consolidated and Combined Statements of Cash Flows			62
	Consolidated and Combined Statements of Changes in Stockholders’ Investment			63
	Notes to Consolidated and Combined Financial Statements			64
		Note 1. Description of Business and Change in Ownership		64
		Note 2. Basis of Presentation		66
		Note 3. Subsequent Events		70
		Note 4. Summary of Significant Accounting Policies		71
		Note 5. Supplemental Cash Flow Information		78
		Note 6. Acquisitions and Divestitures		78
		Note 7. Discontinued Operations		79
		Note 8. Restructuring		79
		Note 9. Asset Impairments		80
		Note 10. Inventories		80
		Note 11. Property, Plant and Equipment		81
		Note 12. Goodwill and Other Intangible Assets		81
		Note 13. Other (Income) Expense — Net		82
		Note 14. Operating Segments		83
		Note 15. Accounts Receivable Securitization		86
		Note 16. Financial Instruments		87
		Note 17. Income Taxes		89
		Note 18. Pension Plans		91
		Note 19. Post-Retirement Benefits Other Than Pensions		95
		Note 20. Debt and Credit Agreements		98
		Note 21. Lease Commitments		101
		Note 22. Capital Stock		101
		Note 23. Stock Options		101
		Note 24. Accumulated Other Comprehensive Earnings (Losses)		103
		Note 25. Related Party Transactions		103
		Note 26. Contingencies		104
		Note 27. Quarterly Financial Information (Unaudited)		106
Item 9.	Changes in and Disagreements With Accountants On Accounting and Financial Disclosure			108
Item 9A.	Controls and Procedures			108


			Page

PART III
Item 10.	Directors and Executive Officers of the Registrant			108
Item 11.	Executive Compensation			110
Item 12.	Security Ownership of Certain Beneficial Owners and Management			120
Item 13.	Certain Relationships and Related Transactions			121
Item 14.	Principal Accounting Fees and Services			126
PART IV
Item 15.	Exhibits, Financial Statement Schedules, and Reports On Form 8-K			127
		Exhibit-3.1 Amended and Restated Certificate of Incorporation of TRW Automotive Holdings Corp.
		Exhibit-21.1 List of Subsidiaries
		Exhibit-31 (a) Certification Pursuant to Section 302
		Exhibit-31 (b) Certification Pursuant to Section 302
		Exhibit-32 (a) Certification Pursuant to Section 906
		Exhibit-32 (b) Certification Pursuant to Section 906
Certificate of Incorporation
List of Subsidiaries
Certification
Certification
Certification
Certification

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents


Title of Each Class		Name of Each Exchange on Which Registered

Common Stock, $0.01 par value per share		New York Stock Exchange



		Pro Forma(1)										Actual


												Successor					Predecessor

		Years Ended December 31,
												Ten Months					Two Months
												Ended					Ended					Year ended
		2003					2002					December 31, 2003					February 28, 2003					December 31, 2002

				Segment					Segment					Segment					Segment					Segment
				Profit					Profit					Profit					Profit					Profit
				Before					Before					Before					Before					Before
Operating Segment	Principal Product	Sales		Taxes(2)			Sales		Taxes(2)			Sales		Taxes(2)			Sales		Taxes(2)			Sales		Taxes(2)


		(Unaudited)

		(Dollars in millions)
Chassis Systems	Foundation brakes; actuation brakes; ABS and other brake control (including electronic vehicle stability control); linkage and suspension systems and components; and steering gears and systems	$	6,491	$	265		$	5,832	$	283		$	5,424	$	129		$	1,110	$	46		$	6,078	$	256
Occupant Safety Systems	Air bags; seat belts; crash sensors; and other safety and security electronics		3,306		301			3,143		212			2,751		216			555		53			3,143		224
Automotive Components	Engine valves; engineered fasteners; plastic components; and body controls		1,511		120			1,409		130			1,260		90			251		26			1,409		148

Total segment		$	11,308		686		$	10,384		625		$	9,435		435		$	1,916		125		$	10,630		628

Corporate expense and other					(115	)				(147	)				(75	)				(44	)				(186	)
Financing cost					(333	)				(311	)				(349	)				(47	)				(319	)
Net employee benefits income (expense)					14					189					(14	)				16					179

Earnings (losses) before income taxes				$	252				$	356				$	(3	)			$	50				$	302


	Percentage
Product Line	of Sales

Steering gears & systems		16.0	%
Airbags		13.8	%
Foundation brakes		13.1	%
Seat belts		9.6	%
ABS & other brake control		9.1	%
Aftermarket		6.8	%
Chassis modules		5.8	%
Linkage & suspension		5.5	%
Body controls		5.0	%
Engine valves		4.6	%
Crash sensors & other safety & security electronics		3.9	%
Engineered fasteners & plastic components		3.1	%
Steering wheels		2.7	%
Other		1.0	%


Product Line		Description

Steering		Electrically assisted power steering systems (column-drive, pinion-drive, rack-drive type), electrically powered hydraulic steering systems, hydraulic power and manual rack and pinion steering gears, hydraulic steering pumps and hoses, fully integral commercial steering systems, commercial steering columns and pumps

Foundation brakes		Front and rear disc brake calipers, drum brake and drum-in-hat parking brake assemblies, rotors, drums

Brake control		Two-wheel and four-wheel ABS, electronic vehicle stability control systems, electro-hydraulic braking systems, active cruise control systems, actuation boosters and master cylinders, electronically controlled actuation

Modules		Brake modules, corner modules, pedal box modules, strut modules, front cross-member modules, rear axle modules

Suspension		Forged steel and aluminum control arms, suspension ball joints, rack and pinion linkage assemblies, conventional linkages, commercial steering linkages and suspension ball joints, active roll control systems


Product Line		Description

Air bags		Driver air bag modules, passenger air bag modules, side air bag modules, curtain air bag modules, single-and dual-stage air bag inflators

Seat belts		Retractor and buckle assemblies, pretensioning systems, height adjusters, active control retractor systems

Safety electronics		Front and side crash sensors, vehicle rollover sensors, air bag diagnostic modules, weight sensing and vision systems for occupant detection

Steering wheels		Full range of steering wheels from base designs to leather, wood, heated designs, including multifunctional switches and integral air bag modules

Security electronics		Remote keyless entry systems, advanced theft deterrent systems, direct tire pressure monitoring systems


		Percentage of
VM Group	VMs	sales(1)

Ford	Ford, Land Rover, Jaguar, Aston-Martin, Volvo, Mazda		18.4	%
DaimlerChrysler	Chrysler, Mercedes, Smart, Mitsubishi		16.3	%
Volkswagen	Volkswagen, Audi, Seat, Skoda, Bentley		15.0	%
General Motors	General Motors, Opel, Saab, Isuzu, Subaru		13.2	%
Renault-Nissan	Renault, Nissan		8.1	%
Fiat	Fiat, Lancia, Alfa-Romeo, Ducato		4.5	%
PSA	Peugeot, Citroen		3.5	%
Toyota	Toyota, NUMMI, Daihatsu		3.0	%
B M W	B M W		1.9	%
Hyundai	Hyundai, KIA		1.5	%
Honda	Honda		1.4	%


Principal Use of Facility	North America		Europe		Asia Pacific		Other		Total

Research and Development		4		4		0		1		9
Manufacturing		24		33		11		6		74
Warehouse		1		6		2		1		10
Office		3		8		9		0		20

Total		32		51		22		8		113


Item 4.	*Submission of Matters to a Vote of Security Holders*


Item 5.	*Market for Registrant’s Common Equity and Related Stockholder Matters*


									Maximum Number
									(Or Approximate
							Total Number		Dollar Value)
							of Shares		of Shares That
		Total Number			Average		Purchased as Part		May Yet be
		of Shares			Price Paid		of Publicly Announced		Purchased Under the
Period		Purchased			Per Share		Plans or Programs		Plans or Programs

Month #1 — September 27, 2003 to October 26, 2003			—		$	—		—		—
Month #2 — October 27, 2003 to November 26, 2003			—			—		—		—
Month #3 — November 27, 2003 to December 31, 2003			525	(1)		1,300		—		—

	Total		525		$	682,500		—		—


Item 1.	*Business*


Item 2.	*Properties*


Item 3.	*Legal Proceedings*



					Predecessor
		Successor
					Two
		Ten Months			Months
		Ended			Ended			Years Ended December 31,
		December 31,			February 28,
		2003			2003			2002			2001			2000			1999


		(In millions, except per share amounts)
Earnings (Losses) Per Share(3):
Basic and diluted losses per share:
	Losses per share	$	(1.16	)
	Weighted average shares		86.8
Statements of Cash Flows Data:
Net cash provided by (used in) operating activities		$	845		$	(73	)	$	526		$	828		$	751		$	964
Net cash (used in) provided by investing activities			(3,696	)		(68	)		(414	)		(409	)		641			(5,089	)
Net cash provided by (used in) financing activities			3,653			242			5			(464	)		(1,452	)		4,296
Capital expenditures			350			66			427			475			501			665
Other Financial Data (Unaudited):
EBITDA(4)		$	747		$	181		$	1,123		$	846		$	1,147		$	1,213
Depreciation and amortization			407			84			509			548			577			630
Unusual items (included in EBITDA)(5)			30			9			88			280			222			240
Net pension and OPEB (income) expense (included in EBITDA)(6)			82			(10	)		(153	)		(143	)		(146	)		(103	)


Item 6.	*Selected Historical Consolidated and Combined Financial Data*



	Successor		Predecessor


	At December 31,

	2003		2002		2001		2000		1999

									(Unaudited)
	(Dollars in millions)
Balance sheet data:
Cash and cash equivalents	$	828	$	188	$	118	$	151	$	223
Marketable securities		16		26		32		43		66

		844		214		150		194		289

Total assets	$	9,907	$	10,948	$	10,287	$	11,293	$	12,638
Total liabilities		9,129		8,476		8,712		9,457		10,732
Total debt (including current portion of long-term debt)(7)		3,808		3,925		4,597		5,053		6,521
Off-balance sheet borrowings under receivables facility(8)		—		—		327		—		—
Total stockholders’ investment		728		2,391		1,504		1,716		1,795


Item 7.	*Management’s Discussion and Analysis of Financial Condition and Results of Operations*



			Provision
							Purchase		Used for
	Beginning		Administrative		Cost of		Price		Purposes			Ending
	Balance		and Selling		Sales		Allocation		Intended			Balance


	(Dollars in millions)
Ten months ended December 31, 2003	$	51	$	13	$	16	$	37	$	(38	)	$	79
Two months ended February 28, 2003	$	61	$	1	$	2	$	—	$	(13	)	$	51
Year ended December 31, 2002	$	145	$	17	$	42	$	—	$	(143	)	$	61
Year ended December 31, 2001	$	63	$	87	$	126	$	—	$	(131	)	$	145



	Costs

	Increase			Decrease


	(Dollars in millions)
Discount rate	$	(1	)	$	1
Expected long-term rate of return	$	(2	)	$	2



	Obligations

	Increase			Decrease


	(Dollars in millions)
Discount rate	$	(33	)	$	34



	Impact on
	U.S. Retiree
	Healthcare Costs of
	a One-Fourth
	Percentage Change
	in Discount Rate

	Increase			Decrease


	(Dollars in millions)
U.S. retiree welfare expense	$	—		$	—
U.S. retiree welfare obligations	$	(23	)	$	25



	Percentage Change on
	U.S. Retiree Healthcare if
	Healthcare Trend Rates

	Decrease by 1%			Increase by 1%

U.S. retiree welfare expense		9.1	%		11.0	%
U.S. retiree welfare obligations		8.5	%		10.1	%



	Historical

	Successor			Predecessor

	Ten Months			Two Months
	Ended			Ended
	December 31,			February 28,			Pro Forma
	2003			2003			Adjustments			Pro Forma


	(Dollars in millions)
Sales	$	9,435		$	1,916		$	(43	)(a)	$	11,308
Cost of sales		8,456			1,686			(100	)(b)		10,042

Gross profit		979			230			57			1,266
Administrative and selling expenses		446			100			(2	)(c)		544
Research and development expenses		137			27			—			164
Purchased in-process research and development		85			—			(85	)(d)		—
Amortization of intangible assets		27			2			3	(e)		32
Other (income) expense — net		(56	)		4			(1	)(f)		(53	)

Operating income		340			97			142			579
Interest expense		295			48			(16	)(g)		327
Interest income		(8	)		(1	)		1	(g)		(8	)
Losses on sales of receivables		25			—			(17	)(g)		8
Loss on retirement of debt		31			—			(31	)(h)		—

(Losses) earnings before income taxes		(3	)		50			205			252
Income tax expense		98			19			42	(i)		159

Net (losses) earnings	$	(101	)	$	31		$	163		$	93


(a)		Reflects the elimination of the sales of TKS, which was not transferred to us as part of the Acquisition. See Note 1 of the Notes to Combined and Consolidated Financial Statements.

(b)		Reflects the elimination of $40 million of cost of sales of TKS, $12 million in pension and OPEB adjustments as a result of purchase accounting, the elimination of the effects of a $43 million inventory write-up recorded as a result of the Acquisition and $5 million net decrease in depreciation and amortization expense resulting from fair value adjustments to fixed assets and certain intangibles.

(c)		Reflects the elimination of $1 million administrative and selling expense of TKS, the addition of $1 million in the annual monitoring fee payable to an affiliate of Blackstone and $2 million decrease in depreciation and amortization expense resulting from fair value adjustments to fixed assets and capitalized software.

(d)		Reflects the elimination of the fair value of purchased in-process research and development expensed as a result of purchase accounting.

(e)		Reflects the incremental increase in amortization resulting from assignment of fair value to certain intangibles.

(f)		Reflects elimination of $1 million other expense related to TKS.

(g)		Reflects adjustments to present pro forma net financing costs based upon our new capital structure and the initiation of our receivables facility.

(h)		Reflects the elimination of the loss on retirement of debt in connection with the July 2003 refinancing of certain portions of senior credit facilities.

(i)		Reflects the tax effect of the above adjustments at the applicable tax rates.


(a)		Reflects the elimination of sales of TKS, which was not transferred to us as part of the Acquisition. See Note 1 of the Notes to Consolidated and Combined Financial Statements.

(b)		Reflects the elimination of $228 million of cost of sales of TKS, $10 million in pension adjustments as a result of purchase accounting and $29 million net decrease in depreciation and amortization expense resulting from fair value adjustments in fixed assets and certain intangibles.

(c)		Reflects the elimination of $3 million in administrative and selling expenses for TKS, $28 million net reduction in historical corporate allocations compared to estimated stand-alone costs including the annual monitoring fee and a $9 million net decrease in depreciation and amortization expense resulting primarily from fair value adjustments to fixed assets and certain intangibles.

(d)		Reflects the incremental increase in amortization expense resulting from fair value adjustments to certain intangibles.

(e)		Reflects the elimination of $8 million of other expense related to TKS.

(f)		Reflects adjustments to show pro forma net financing costs based upon our new capital structure and the initiation of our receivables facility.

(g)		Reflects the elimination of $1 million interest income related to TKS.

(h)		Reflects the elimination of the gain on the repurchase of £5.4 million Lucas Varity senior notes in the first quarter of 2002. Gain was reclassified from “extraordinary items” to “earnings before income taxes” under SFAS 145, as of January 1, 2003.

(i)		Reflects the tax effect of the above adjustments at applicable tax rates.