##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, DC
    20549-1004
      FORM 10-Q
  þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    June 30, 2006ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          
    to          .   Commission File No. 001-31970
  
 TRW Automotive Holdings Corp.
 (Exact name of registrant as
    specified in its charter)
  Delaware

81-0597059(State or other jurisdiction
    of
    Incorporation or Organization)

(I.R.S. Employer
    Identification Number)   12001 Tech Center Drive
 Livonia, Michigan 48150
 (734) 855-2600
 (Address, Including Zip Code,
    and Telephone Number, Including Area Code, of
 Registrants Principal
    Executive Offices)
   þ o
  Rule 12b-2
 þ o o
  Rule 12b-2 o þ




---



##### 



TRW
    AUTOMOTIVE HOLDINGS CORP.
  INDEX
  
  PagePART I 
    FINANCIAL INFORMATIONItem 1.

CONDENSED
    CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


2Item 2.

MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS


22Item 3.

QUANTITATIVE AND
    QUALITATIVE DISCLOSURES ABOUT MARKET RISK


39Item 4.

CONTROLS AND
    PROCEDURES


40PART II 
    OTHER INFORMATIONItem 1.

LEGAL
    PROCEEDINGS


41Item 1A.

RISK
    FACTORS


41Item 2.

UNREGISTERED SALES
    OF EQUITY SECURITIES AND USE OF PROCEEDS


41Item 4.

SUBMISSION OF
    MATTERS TO A VOTE OF SECURITY HOLDERS


41Item 5.

OTHER
    INFORMATION


42Item 6.

EXHIBITS


42SIGNATURES


43Third Amendment dated July 28, 2006 to Employment AgreementFirst Amendment dated July 28, 2006 to Executive Supplemental Retirement PlanFirst Amendment dated November 18, 2004 to TRW Automotive Benefit Equalization PlanFirst Amendment dated November 18, 2004 to TRW Automotive Deferred CompensationSecond Amendment dated July 31, 2006 to TRW Automotive Benefit Equalization PlanSecond Amendment dated July 31, 2006 to TRW Automotive Deferred Compensation PlanSection 302 Certification of Chief Executive OfficerSection 302 Certification of Chief Financial OfficerSection 906 Certification of Chief Executive OfficerSection 906 Certification of Chief Financial Officer   i




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##### Table of Contents



PART I 
    FINANCIAL INFORMATION  Item 1.
    Condensed
    Consolidated Financial Statements  TRW
    AUTOMOTIVE HOLDINGS CORP.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Three Months EndedJune 30,


July 1,2006


2005(Unaudited)(In millions, except per share amounts)Sales

$
3,461


$
3,365Cost of sales


3,107



3,010Gross profit


354



355Administrative and selling expenses


140



126Amortization of intangible assets


9



8Restructuring charges and asset
    impairments


11



15Other (income) expense 
    net


(7
)


11Operating income


201



195Interest expense  net


60



54Loss on retirement of debt






7Accounts receivable securitization
    costs


1



1Equity in earnings of affiliates,
    net of tax


(9
)


(5
)Minority interest, net of tax


5



2Earnings before income taxes


144



136Income tax expense


53



51Net earnings

$
91


$
85Basic earnings per share:Earnings per share

$
0.91


$
0.86Weighted average shares


100.3



99.0Diluted earnings per share:Earnings per share

$
0.88


$
0.83Weighted average shares


103.7



102.2    2




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##### Table of Contents



TRW
    AUTOMOTIVE HOLDINGS CORP.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Six Months EndedJune 30,


July 1,2006


2005(Unaudited)(In millions, except per share amounts)Sales

$
6,857


$
6,590Cost of sales


6,146



5,925Gross profit


711



665Administrative and selling expenses


269



262Amortization of intangible assets


18



16Restructuring charges and asset
    impairments


19



23Other (income) expense 
    net


(23
)


17Operating income


428



347Interest expense  net


120



112Loss on retirement of debt


57



7Accounts receivable securitization
    costs


2



2Equity in earnings of affiliates,
    net of tax


(13
)


(10
)Minority interest, net of tax


8



4Earnings before income taxes


254



232Income tax expense


116



97Net earnings

$
138


$
135Basic earnings per share:Earnings per share

$
1.38


$
1.36Weighted average shares


99.9



99.0Diluted earnings per share:Earnings per share

$
1.34


$
1.33Weighted average shares


103.3



101.6    3




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##### Table of Contents



TRW
    AUTOMOTIVE HOLDINGS CORP.
  CONDENSED
    CONSOLIDATED BALANCE SHEETS
  As ofJune 30,


December 31,2006


2005(Unaudited)(Dollars in millions)AssetsCurrent assets:Cash and cash equivalents

$
503


$
659Marketable securities


17



17Accounts receivable  net


2,329



1,948Inventories


729



702Prepaid expenses and other current
    assets


273



273Total current assets


3,851



3,599Property, plant and
    equipment  net of accumulated depreciation of
    $1,472 million and $1,147 million, respectively


2,579



2,538Goodwill


2,304



2,293Intangible assets  net


753



769Prepaid pension cost


255



222Other assets


844



809Total assets

$
10,586


$
10,230Liabilities, Minority Interests
    and Stockholders EquityCurrent liabilities:Short-term debt

$
83


$
98Current portion of long-term debt


68



37Trade accounts payable


2,026



1,865Accrued compensation


283



280Other current liabilities


1,449



1,310Total current liabilities


3,909



3,590Long-term debt


2,884



3,101Post-retirement benefits other
    than pensions


903



917Pension benefits


794



795Other long-term liabilities


553



513Total liabilities


9,043



8,916Minority interests


114



106Commitments and contingenciesStockholders equity:Capital stock


1



1Treasury stock






Paid-in-capital


1,166



1,142Retained earnings


270



132Accumulated other comprehensive
    losses


(8
)


(67
)Total stockholders equity


1,429



1,208Total liabilities, minority
    interests, and stockholders equity

$
10,586


$
10,230    4




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##### Table of Contents



TRW
    AUTOMOTIVE HOLDINGS CORP.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Six Months EndedJune 30,


July 1,2006


2005(Unaudited)(Dollars in millions)Operating
    ActivitiesNet earnings

$
138


$
135Adjustments to reconcile net
    earnings to net cash provided by operating activities:Depreciation and amortization


253



254Pension and other post-retirement
    benefits, net of contributions


(77
)


(66
)Net gain on sale of assets


(2
)


2Amortization of deferred financing
    fees


4



7Loss on retirement of debt


57



7Asset impairment charges


5



5Other  net


(7
)


33Changes in assets and liabilities,
    net of effects of businesses acquired:Accounts receivable, net


(288
)


(282
)Inventories


3



18Trade accounts payable


74



(2
)Prepaid expense and other assets


3



(30
)Other liabilities


88



131Net cash provided by operating
    activities


251



212Investing
    ActivitiesCapital expenditures


(202
)


(174
)Net proceeds from asset sales and
    divestitures


10



Other  net


(1
)


Net cash used in investing
    activities


(193
)


(174
)Financing
    ActivitiesChange in short-term debt


(19
)


(2
)Proceeds from issuance of
    long-term debt


22



1,313Redemption of long-term debt


(273
)


(1,598
)Debt issue costs






(4
)Issuance of capital stock, net of
    fees






143Repurchase of capital stock






(143
)Proceeds from exercise of stock
    options


17



1Net cash used in financing
    activities


(253
)


(290
)Effect of exchange rate changes on
    cash


39



(32
)Decrease in cash and cash
    equivalents


(156
)


(284
)Cash and cash equivalents at
    beginning of period


659



790Cash and cash equivalents at end
    of period

$
503


$
506    5




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##### Table of Contents



TRW
    AUTOMOTIVE HOLDINGS CORP.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  1.
    Description
    of Business    2.
    Basis of
    Presentation  Form 10-K
        Earnings per Share.
  Three Months Ended


Six Months EndedJune 30,


July 1,


June 30,


July 1,2006


2005


2006


2005(In millions)Weighted average shares outstanding


100.3



99.0



99.9



99.0Effect of dilutive securities


3.4



3.2



3.4



2.6Diluted shares outstanding


103.7



102.2



103.3



101.6   Warranties.
 6




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##### Table of Contents



TRW
    AUTOMOTIVE HOLDINGS CORP.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     CurrentPeriodAccruals,





Effects ofNet of


Used for


ForeignBeginning


Changes in


Purposes


Currency


EndingBalance


Estimates


Intended


Translation


Balance(Dollars in millions)Three months ended June 30,
    2006

$
111


$
21


$
(9
)

$
3


$
126Six months ended June 30, 2006


101



34



(15
)


6



126Three months ended July 1,
    2005


111



13



(8
)


(6
)


110Six months ended July 1, 2005


110



27



(17
)


(10
)


110   Share-based Compensation.
      Three Months Ended


Six Months EndedJune 30,


July 1,


June 30,


July 1,2006


2005


2006


2005(In millions, except per share amounts)Net earnings, as reported

$
91


$
85


$
138


$
135Deduct: Stock-based compensation
    under SFAS No. 123 fair value method, net of related
    tax effects of $0






(2
)






(4
)Adjusted net earnings, fair value
    method

$
91


$
83


$
138


$
131Basic earnings per share:As reported

$
0.91


$
0.86


$
1.38


$
1.36Pro forma

$
0.91


$
0.84


$
1.38


$
1.32Diluted earnings per share:As reported

$
0.88


$
0.83


$
1.34


$
1.33Pro forma

$
0.88


$
0.81


$
1.34


$
1.29    7




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##### Table of Contents





TRW
    AUTOMOTIVE HOLDINGS CORP.




NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)






Comprehensive Earnings.




|                                                        |  |                       |     |  |                  |   |     |          |  |   |         |   |  |   |     |  
|------------------------------------------------------- |  | --------------------- | --- |  | ---------------- | - | --- | -------- |  | - | ------- | - |  | - | --- | -
|                                                        |  | Three Months Ended    |     |  | Six Months Ended |  
|                                                        |  | June 30,              |     |  | July 1,          |   |     | June 30, |  |   | July 1, |  
|                                                        |  | 2006                  |     |  | 2005             |   |     | 2006     |  |   | 2005    |  
|                                                        |  | (Dollars in millions) |    
|                                                       
|Net earnings                                            |  | $                     | 91  |  |                  | $ | 85  |          |  | $ | 138     |   |  | $ | 135 |  
|Foreign currency translation
    earnings (losses), net |  |                       | 34  |  |                  |   | (35 | )        |  |   | 67      |   |  |   | (66 | )
|Realized net gains (losses) on
    cash flow hedges     |  |                       | 1   |  |                  |   | 17  |          |  |   | (8      | ) |  |   | 30  |  
|                                                        |  |                       |     |  |                  |   |     |          |  |   |         |   |  |   |     |  
|Comprehensive earnings                                  |  | $                     | 126 |  |                  | $ | 67  |          |  | $ | 197     |   |  | $ | 99  |  
|                                                        |  |                       |     |  |                  |   |     |          |  |   |         |   |  |   |     |  





Recent Accounting Pronouncements.












05-5, (EITF 05-5). EITF 05-5 EITF 05-5






8



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##### Table of Contents





TRW
    AUTOMOTIVE HOLDINGS CORP.




NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)






|   |                                                
|-- | -----------------------------------------------
|3. | Restructuring
    Charges and Asset Impairments







|                                                          |  |                       |    |  |                  |   |    |          |  |   |         |  |  |   |    |  
|--------------------------------------------------------- |  | --------------------- | -- |  | ---------------- | - | -- | -------- |  | - | ------- |  |  | - | -- | -
|                                                          |  | Three Months Ended    |    |  | Six Months Ended |  
|                                                          |  | June 30,              |    |  | July 1,          |   |    | June 30, |  |   | July 1, | 
|                                                          |  | 2006                  |    |  | 2005             |   |    | 2006     |  |   | 2005    | 
|                                                          |  | (Dollars in millions) |   
|                                                         
|Severance and other charges                               |  | $                     | 7  |  |                  | $ | 12 |          |  | $ | 14      |  |  | $ | 20 |  
|Asset impairments related to
    restructuring activities |  |                       |   |  |                  |   | 3  |          |  |   | 1       |  |  |   | 3  |  
|Curtailment gain                                          |  |                       |   |  |                  |   | (2 | )        |  |   |        |  |  |   | (2 | )
|                                                          |  |                       |    |  |                  |   |    |          |  |   |         |  |  |   |    |  
|Total restructuring charges                               |  |                       | 7  |  |                  |   | 13 |          |  |   | 15      |  |  |   | 21 |  
|Other asset impairments                                   |  |                       | 4  |  |                  |   | 2  |          |  |   | 4       |  |  |   | 2  |  
|                                                          |  |                       |    |  |                  |   |    |          |  |   |         |  |  |   |    |  
|Total restructuring charges and
    asset impairments     |  | $                     | 11 |  |                  | $ | 15 |          |  | $ | 19      |  |  | $ | 23 |  
|                                                          |  |                       |    |  |                  |   |    |          |  |   |         |  |  |   |    |  





Restructuring
    Charges








|                            |  |                       |   |  |                  |   |    |          |  |   |         |  |  |   |    | 
|--------------------------- |  | --------------------- | - |  | ---------------- | - | -- | -------- |  | - | ------- |  |  | - | -- | 
|                            |  | Three Months Ended    |   |  | Six Months Ended |  
|                            |  | June 30,              |   |  | July 1,          |   |    | June 30, |  |   | July 1, | 
|                            |  | 2006                  |   |  | 2005             |   |    | 2006     |  |   | 2005    | 
|                            |  | (Dollars in millions) |  
|                           
|Chassis Systems             |  | $                     | 4 |  |                  | $ | 5  |          |  | $ | 10      |  |  | $ | 9  | 
|Occupant Safety Systems     |  |                       | 2 |  |                  |   | 3  |          |  |   | 4       |  |  |   | 5  | 
|Automotive Components       |  |                       | 1 |  |                  |   | 5  |          |  |   | 1       |  |  |   | 7  | 
|                            |  |                       |   |  |                  |   |    |          |  |   |         |  |  |   |    | 
|Total restructuring charges |  | $                     | 7 |  |                  | $ | 13 |          |  | $ | 15      |  |  | $ | 21 | 
|                            |  |                       |   |  |                  |   |    |          |  |   |         |  |  |   |    | 





Severance
    and Other Charges








|                                  |  |                       |   |  |                  |   |    |          |  |   |         |  |  |   |    | 
|--------------------------------- |  | --------------------- | - |  | ---------------- | - | -- | -------- |  | - | ------- |  |  | - | -- | 
|                                  |  | Three Months Ended    |   |  | Six Months Ended |  
|                                  |  | June 30,              |   |  | July 1,          |   |    | June 30, |  |   | July 1, | 
|                                  |  | 2006                  |   |  | 2005             |   |    | 2006     |  |   | 2005    | 
|                                  |  | (Dollars in millions) |  
|                                 
|Chassis Systems                   |  | $                     | 4 |  |                  | $ | 7  |          |  | $ | 10      |  |  | $ | 11 | 
|Occupant Safety Systems           |  |                       | 2 |  |                  |   |   |          |  |   | 3       |  |  |   | 2  | 
|Automotive Components             |  |                       | 1 |  |                  |   | 5  |          |  |   | 1       |  |  |   | 7  | 
|                                  |  |                       |   |  |                  |   |    |          |  |   |         |  |  |   |    | 
|Total severance and other charges |  | $                     | 7 |  |                  | $ | 12 |          |  | $ | 14      |  |  | $ | 20 | 
|                                  |  |                       |   |  |                  |   |    |          |  |   |         |  |  |   |    | 





Chassis Systems.




Occupant Safety Systems.




Automotive Components.


9



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##### Table of Contents



TRW
    AUTOMOTIVE HOLDINGS CORP.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Restructuring
    Reserves
    Effects ofForeignCurrent


Purchase


Used for


CurrencyBeginning


Period


Price


Purposes


Translation


EndingBalance


Accruals


Allocation


Intended


and Transfers


Balance(Dollars in millions)Three months ended June 30,
    2006

$
60


$
7


$



$
(9
)

$
2


$
60Six months ended June 30, 2006


69



14



(5
)


(21
)


3



60Three months ended July 1,
    2005


41



13







(16
)


(2
)


36Six months ended July 1, 2005


49



21







(28
)


(6
)


36   No. 95-3,
    Asset
    Impairments Related to Restructuring Activities
  Occupant Safety Systems.
    Curtailment
    Gain
  Chassis Systems.
  Other
    Asset Impairments
     10




---



##### Table of Contents



TRW
    AUTOMOTIVE HOLDINGS CORP.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   4.
    Inventories    As ofJune 30,


December 31,2006


2005(Dollars in millions)Finished products and work in
    process

$
388


$
374Raw materials and supplies


341



328Total inventories

$
729


$
702   5.
    Goodwill
    and Intangible Assets  Goodwill
    OccupantChassis


Safety


AutomotiveSystems


Systems


ComponentsSegment


Segment


Segment


Total(Dollars in millions)Balance as of December 31,
    2005

$
892


$
928


$
473


$
2,293Acquisitions and purchase price
    adjustments


1



6







7Effects of foreign currency
    translation






4







4Balance as of June 30,
    2006

$
893


$
938


$
473


$
2,304     Intangible
    assets
    As of June 30, 2006


As of December 31, 2005Gross





Net


Gross





NetCarrying


Accumulated


Carrying


Carrying


Accumulated


CarryingAmount


Amortization


Amount


Amount


Amortization


Amount(Dollars in millions)Definite-lived intangible
    assets:Customer relationships

$
489


$
(77
)

$
412


$
488


$
(64
)

$
424Developed technology


81



(33
)


48



80



(28
)


52Non-compete agreements


1







1



1







1Total


571


$
(110
)


461



569


$
(92
)


477Indefinite-lived intangible
    assets:Trademarks


292







292



292







292Total

$
863






$
753


$
861






$
769  11




---



##### Table of Contents



TRW
    AUTOMOTIVE HOLDINGS CORP.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       Weighted AverageAmortizationPeriodCustomer relationships


20 yearsDeveloped technology


8 yearsNon-compete agreements


5 years     AmortizationYears Ended December 31,

Expense(Dollars in millions)2006

$
362007


352008


342009


342010


34   6.
    Other
    (Income) Expense  Net    Three Months Ended


Six Months EndedJune 30,


July 1,


June 30,


July 1,2006


2005


2006


2005(Dollars in millions)Provision for bad debts

$



$
2


$
3


$
15Net losses (gains) on sales of
    assets






1



(2
)


1Foreign currency exchange (gains)
    losses


1



14



(2
)


19Royalty and grant income


(6
)


(6
)


(12
)


(11
)Miscellaneous other income


(2
)






(10
)


(7
)Other (income) expense 
    net

$
(7
)

$
11


$
(23
)

$
17     7.
    Accounts
    Receivable Securitization   12




---



##### Table of Contents



TRW
    AUTOMOTIVE HOLDINGS CORP.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            13




---



##### Table of Contents



TRW
    AUTOMOTIVE HOLDINGS CORP.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     8.
    Income
    Taxes        9.
    Pension
    Plans and Post-Retirement Benefits Other Than Pensions  Pensions
    Plans
    Three Months EndedJune 30, 2006


July 1, 2005Rest of








Rest ofU.S.


U.K.


World


U.S.


U.K.


World(Dollars in millions)Service cost

$
6


$
10


$
6


$
7


$
9


$
5Interest cost on projected benefit
    obligations


16



63



10



17



64



8Expected return on plan assets


(16
)


(82
)


(4
)


(14
)


(87
)


(3
)Net pension cost (income)

$
6


$
(9
)

$
12


$
10


$
(14
)

$
10   14




---



##### Table of Contents



TRW
    AUTOMOTIVE HOLDINGS CORP.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Six Months EndedJune 30, 2006


July 1, 2005Rest of








Rest ofU.S.


U.K.


World


U.S.


U.K.


World(Dollars in millions)Service cost

$
12


$
20


$
12


$
14


$
18


$
10Interest cost on projected benefit
    obligations


32



123



19



34



130



16Expected return on plan assets


(32
)


(161
)


(7
)


(28
)


(176
)


(6
)Net pension cost (income)

$
12


$
(18
)

$
24


$
20


$
(28
)

$
20   Post-Retirement
    Benefits Other Than Pensions (OPEB)
    Three Months Ended


Six Months EndedJune 30,


July 1,


June 30,


July 1,2006


2005


2006


2005(Dollars in millions)Service cost

$
1


$
2


$
3


$
4Interest cost on projected benefit
    obligations


11



12



22



24Settlements


(3
)


(3
)


(4
)


(3
)Amortization


(4
)


(2
)


(8
)


(4
)Net post-retirement benefit cost

$
5


$
9


$
13


$
21      15




---



##### Table of Contents



TRW
    AUTOMOTIVE HOLDINGS CORP.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   10.
    Debt    As ofJune 30,


December 31,2006


2005(Dollars in millions)Short-term debt

$
83


$
98Long-term debt:Senior Notes

$
959


$
964Senior Subordinated Notes


298



291Term Loan facilities


1,585



1,593Revolving credit facility






Lucas Industries Limited
    debentures due 2020






181Capitalized leases


46



47Other borrowings


64



62Total long-term debt


2,952



3,138Less current portion


68



37Long-term debt, net of current
    portion

$
2,884


$
3,101   Senior
    Notes and Senior Subordinated Notes
  3 8 1 8 3 4
  1 8 1 8
  Credit
    Facilities
  Senior Secured Credit Facilities. 5-year 5-year 7.5-year
 16




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##### Table of Contents



TRW
    AUTOMOTIVE HOLDINGS CORP.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Debt
    Covenants
    Other
    Borrowings
  7 8
       17




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##### Table of Contents



TRW
    AUTOMOTIVE HOLDINGS CORP.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   11.
    Capital
    Stock  Capital Stock Issuances.
  Repurchase of Northrop Shares.
  Issuance and Registration of
    Shares.
    and/or 1 8
  Form S-3
  12.
    Share-Based
    Compensation    8-year
  8-year
 18




---



##### Table of Contents



TRW
    AUTOMOTIVE HOLDINGS CORP.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   10-year
    13.
    Related
    Party Transactions     19




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##### Table of Contents



TRW
    AUTOMOTIVE HOLDINGS CORP.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   14.
    Operating
    Segments    Three Months Ended


Six Months EndedJune 30,


July 1,


June 30,


July 1,2006


2005


2006


2005(Dollars in millions)Sales to external customers:Chassis Systems

$
1,888


$
1,956


$
3,703


$
3,803Occupant Safety Systems


1,123



955



2,267



1,893Automotive Components


450



454



887



894Total sales

$
3,461


$
3,365


$
6,857


$
6,590Earnings before taxes:Chassis Systems

$
85


$
114


$
179


$
173Occupant Safety Systems


113



89



246



185Automotive Components


35



31



70



64Segment earnings before taxes


233



234



495



422Corporate expense and other


(28
)


(36
)


(62
)


(69
)Finance costs


(61
)


(55
)


(122
)


(114
)Loss on retirement of debt






(7
)


(57
)


(7
)Earnings before income taxes

$
144


$
136


$
254


$
232Intersegment sales:Chassis Systems

$
7


$
1


$
14


$
4Occupant Safety Systems


27



24



54



38Automotive Components


10



10



22



22$
44


$
35


$
90


$
64   15.
    Contingencies     20




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##### Table of Contents



TRW
    AUTOMOTIVE HOLDINGS CORP.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    and/or
  2002-2006
       21




---



##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Form 10-K
  EXECUTIVE
    OVERVIEW
  Our Business.
  1 8
  The Unfavorable Automotive Climate.
  
    a decline in market share for vehicle sales among some of our
    largest customers, including Ford Motor Company, General Motors
    Corporation and, to a lesser extent, the Chrysler unit of
    DaimlerChrysler AG ( the Big Three);
    the deteriorating financial condition of certain of our
    customers and the resulting uncertainty as they undergo (or
    contemplate undergoing) restructuring initiatives, including in
    certain cases, significant capacity reductions
    and/or
    reorganization under bankruptcy laws;
    the continued rise in inflationary pressures impacting certain
    commodities such as base metals, aluminum, resins, chemicals,
    yarns and ferrous metals;
    the rise in fuel prices, which has led to a consumer shift in
    the North American market away from sport utility vehicles and
    light trucks to more fuel efficient passenger cars;
    the growing concerns over the economic viability of our
    Tier 2 and Tier 3 supply base as they face
    inflationary pressures and financial instability in certain of
    their customers;
    continuing pricing pressure from OEMs;
    reduced customer funding of engineering, research and
    development projects; and
    volatility of the U.S. dollar against other currencies,
    mainly the Euro. 22




---



##### Table of Contents



23




---



##### Table of Contents



Our Debt and Capital Structure. 7 8
     24




---



##### Table of Contents



RESULTS
    OF OPERATIONS
    Total
    Company Results of Operations
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
    For the Three Months Ended June 30, 2006 and July 1,
    2005
    (Unaudited)
  Three Months Ended


VarianceJune 30,


July 1,


Increase2006


2005


(Decrease)(Dollars in millions)Sales

$
3,461


$
3,365


$
96Cost of sales


3,107



3,010



97Gross profit


354



355



(1
)Administrative and selling expenses


140



126



14Amortization of intangible assets


9



8



1Restructuring charges and asset
    impairments


11



15



(4
)Other (income) expense 
    net


(7
)


11



(18
)Operating income


201



195



6Interest expense  net


60



54



6Loss on retirement of debt






7



(7
)Accounts receivable securitization
    costs


1



1



Equity in earnings of affiliates,
    net of tax


(9
)


(5
)


(4
)Minority interest, net of tax


5



2



3Earnings before income taxes


144



136



8Income tax expense


53



51



2Net earnings

$
91


$
85


$
6   Three
    Months Ended June 30, 2006 Compared to Three Months Ended
    July 1, 2005
  Sales
  Gross profit
  Administrative and selling expenses
 25




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##### Table of Contents



Amortization of intangible assets
  Restructuring charges and asset impairments
  Other (income) expense  net
  Interest expense  net
  Loss on retirement of debt 1 8 1 8
  Accounts receivable securitization costs
  Equity in earnings of affiliates
  Minority interest
  Income tax expense
 26




---



##### Table of Contents



CONSOLIDATED
    STATEMENTS OF OPERATIONS
    For the Six Months Ended June 30, 2006 and July 1,
    2005
    (Unaudited)
  Six Months Ended


VarianceJune 30,


July 1,


Increase2006


2005


(Decrease)(Dollars in millions)Sales

$
6,857


$
6,590


$
267Cost of sales


6,146



5,925



221Gross profit


711



665



46Administrative and selling expenses


269



262



7Amortization of intangible assets


18



16



2Restructuring charges and asset
    impairments


19



23



(4
)Other (income) expense 
    net


(23
)


17



(40
)Operating income


428



347



81Interest expense  net


120



112



8Loss on retirement of debt


57



7



50Accounts receivable securitization
    costs


2



2



Equity in earnings of affiliates,
    net of tax


(13
)


(10
)


(3
)Minority interest, net of tax


8



4



4Earnings before income taxes


254



232



22Income tax expense


116



97



19Net earnings

$
138


$
135


$
3   Six
    Months Ended June 30, 2006 Compared to Six Months Ended
    July 1, 2005
  Sales
  Gross profit
  Administrative and selling expenses
  Amortization of intangible assets
  Restructuring charges and asset impairments
 27




---



##### Table of Contents



Other (income) expense  net
  Interest expense  net
  Loss on retirement of debt 7 8 1 8 1 8
  Accounts receivable securitization costs
  Equity in earnings of affiliates
  Minority interest
  Income tax expense
 28




---



##### Table of Contents



SEGMENT
    RESULTS OF OPERATIONS
    Three Months Ended


Six Months EndedJune 30,


July 1,


June 30,


July 1,2006


2005


2006


2005(Dollars in millions)Sales to external customers:Chassis Systems

$
1,888


$
1,956


$
3,703


$
3,803Occupant Safety Systems


1,123



955



2,267



1,893Automotive Components


450



454



887



894Total sales

$
3,461


$
3,365


$
6,857


$
6,590Earnings before taxesChassis Systems

$
85


$
114


$
179


$
173Occupant Safety Systems


113



89



246



185Automotive Components


35



31



70



64Segment earnings before taxes


233



234



495



422Corporate expense and other


(28
)


(36
)


(62
)


(69
)Financing costs


(61
)


(55
)


(122
)


(114
)Loss on retirement of debt






(7
)


(57
)


(7
)Earnings before taxes

$
144


$
136


$
254


$
232   Chassis
    Systems
  Three
    Months Ended June 30, 2006 Compared to Three Months Ended
    July 1, 2005
  Three Months Ended


VarianceJune 30,


July 1,


Increase2006


2005


(Decrease)(Dollars in millions)Sales

$
1,888


$
1,956


$
(68
)Earnings before taxes


85



114



(29
)Restructuring charges and asset
    impairments included in earnings before taxes


(7
)


(5
)


2   Sales
  Earnings before taxes
 29




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##### Table of Contents







Six
    Months Ended June 30, 2006 Compared to Six Months Ended
    July 1, 2005




|                                                                                  |  |                       |       |   |          |   |       |            |  |   |      |  
|--------------------------------------------------------------------------------- |  | --------------------- | ----- | - | -------- | - | ----- | ---------- |  | - | ---- | -
|                                                                                  |  | Six Months Ended      |       |   | Variance |  
|                                                                                  |  | June 30,              |       |   | July 1,  |   |       | Increase   | 
|                                                                                  |  | 2006                  |       |   | 2005     |   |       | (Decrease) | 
|                                                                                  |  | (Dollars in millions) |      
|                                                                                 
|Sales                                                                             |  | $                     | 3,703 |   |          | $ | 3,803 |            |  | $ | (100 | )
|Earnings before taxes                                                             |  |                       | 179   |   |          |   | 173   |            |  |   | 6    |  
|Restructuring charges and asset
    impairments included in earnings before taxes |  |                       | (13   | ) |          |   | (9    | )          |  |   | 4    |  





Sales




Earnings before taxes




Occupant
    Safety Systems




Three
    Months Ended June 30, 2006 Compared to Three Months Ended
    July 1, 2005




|                                                                                  |  |                       |       |   |          |   |     |            |  |   |     |  
|--------------------------------------------------------------------------------- |  | --------------------- | ----- | - | -------- | - | --- | ---------- |  | - | --- | -
|                                                                                  |  | Three Months Ended    |       |   | Variance |  
|                                                                                  |  | June 30,              |       |   | July 1,  |   |     | Increase   | 
|                                                                                  |  | 2006                  |       |   | 2005     |   |     | (Decrease) | 
|                                                                                  |  | (Dollars in millions) |      
|                                                                                 
|Sales                                                                             |  | $                     | 1,123 |   |          | $ | 955 |            |  | $ | 168 |  
|Earnings before taxes                                                             |  |                       | 113   |   |          |   | 89  |            |  |   | 24  |  
|Restructuring charges and asset
    impairments included in earnings before taxes |  |                       | (3    | ) |          |   | (5  | )          |  |   | (2  | )





Sales




Earnings before taxes


30



---



##### Table of Contents







Six
    Months Ended June 30, 2006 Compared to Six Months Ended
    July 1, 2005




|                                                                                  |  |                       |       |   |          |   |       |            |  |   |     |  
|--------------------------------------------------------------------------------- |  | --------------------- | ----- | - | -------- | - | ----- | ---------- |  | - | --- | -
|                                                                                  |  | Six Months Ended      |       |   | Variance |  
|                                                                                  |  | June 30,              |       |   | July 1,  |   |       | Increase   | 
|                                                                                  |  | 2006                  |       |   | 2005     |   |       | (Decrease) | 
|                                                                                  |  | (Dollars in millions) |      
|                                                                                 
|Sales                                                                             |  | $                     | 2,267 |   |          | $ | 1,893 |            |  | $ | 374 |  
|Earnings before taxes                                                             |  |                       | 246   |   |          |   | 185   |            |  |   | 61  |  
|Restructuring charges and asset
    impairments included in earnings before taxes |  |                       | (5    | ) |          |   | (7    | )          |  |   | (2  | )





Sales




Earnings before taxes




Automotive
    Components




Three
    Months Ended June 30, 2006 Compared to Three Months Ended
    July 1, 2005




|                                                            |  |                       |     |   |          |   |     |            |  |   |    |  
|----------------------------------------------------------- |  | --------------------- | --- | - | -------- | - | --- | ---------- |  | - | -- | -
|                                                            |  | Three Months Ended    |     |   | Variance |  
|                                                            |  | June 30,              |     |   | July 1,  |   |     | Increase   | 
|                                                            |  | 2006                  |     |   | 2005     |   |     | (Decrease) | 
|                                                            |  | (Dollars in millions) |    
|                                                           
|Sales                                                       |  | $                     | 450 |   |          | $ | 454 |            |  | $ | (4 | )
|Earnings before taxes                                       |  |                       | 35  |   |          |   | 31  |            |  |   | 4  |  
|Restructuring charges included in
    earnings before taxes |  |                       | (1  | ) |          |   | (5  | )          |  |   | (4 | )





Sales




Earnings before taxes


31



---



##### Table of Contents



Six
    Months Ended June 30, 2006 Compared to Six Months Ended
    July 1, 2005
  Six Months Ended


VarianceJune 30,


July 1,


Increase2006


2005


(Decrease)(Dollars in millions)Sales

$
887


$
894


$
(7
)Earnings before taxes


70



64



6Restructuring charges included in
    earnings before taxes


(1
)


(7
)


(6
)   Sales
  Earnings before taxes
  LIQUIDITY
    AND CAPITAL RESOURCES
  Cash
    Flows
  Operating Activities.
  Investing Activities.
    Financing Activities. 7 8
    Debt and
    Commitments
  Sources of Liquidity.
 32




---



##### Table of Contents



Debt Repurchases. 7 8
    Funding Our Requirements.
  Credit Ratings.
  S & P

Moodys

FitchCorporate & Bank Debt
    Rating

BB+

Ba2

BB+Senior Note Rating

BB−

Ba3

BB−Senior Subordinated
    Note Rating

BB−

B1

B+  33




---



##### Table of Contents



Senior Secured Credit Facilities.
    Guarantees and Security of Term
    Loan Facilities.
  Interest Payments. 1 2
  3 8 3 4
  Debt Restrictions.
 34




---



##### Table of Contents



Interest Rate Swap Agreements.
    Contractual
    Obligations and Commitments
  7 8 Form 10-K
    Other Commitments.
    Off-Balance
    Sheet Arrangements
     35




---



##### Table of Contents



Other
    Receivables Facilities
   36




---



##### Table of Contents



ENVIRONMENTAL
    MATTERS
        CONTINGENCIES
  and/or
  2002-2006
   37




---



##### Table of Contents



RECENT
    ACCOUNTING PRONOUNCEMENTS
    OUTLOOK
         38




---



##### Table of Contents



FORWARD-LOOKING
    STATEMENTS
    Form 10-K Form 10-Q Form 10-K
    Item 3.
    Quantitative
    and Qualitative Disclosures about Market Risks   39




---



##### Table of Contents



Foreign Currency Exchange Rate Risk.
  Interest Rate Risk.
  Sensitivity Analysis.
  Assuming a 10%


Assuming a 10%


FavorableIncrease in


Decrease in


(Unfavorable)Market Risk

Rates


Rates


Change in(Dollars in millions)Foreign Currency Rate
    Sensitivity:Forwards* Long US$

$
(65
)

$
72



Fair value Short US$

$
20


$
(19
)


Fair valueDebt Foreign currency denominated

$
(45
)

$
45



Fair valueInterest Rate
    Sensitivity:Debt Fixed rate

$
15


$
(15
)


Fair value Variable rate

$
(11
)

$
11



Cash flowSwaps Pay variable/receive fixed

$
(14
)

$
11



Fair value Pay fixed/receive variable

$
2


$
(2
)


Fair value     *
    
    Includes only the risk related to the derivative instruments
    that serve as hedges and does not include the related underlying
    hedged item or any other operating transactions. The analyses
    also do not factor in a potential change in the level of
    variable rate borrowings or derivative instruments outstanding
    that could take place if these hypothetical conditions prevailed.  Item 4.
    Controls
    and Procedures  Evaluation of Disclosure Controls and
    Procedures. rule 13a-15(e)
 40




---



##### Table of Contents



Form 10-K
  Changes in Internal Control Over Financial
    Reporting.
 PART II 
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings  Form 10-K Form 10-Q
  Item 1A.
    Risk
    Factors  Form 10-K Form 10-Q
  Item 2.
    Unregistered
    Sales of Equity Securities and Use of Proceeds  (c)
    Issuer
    repurchases  Form 10-Q.
  Item 4.
    Submission
    of Matters to a Vote of Security Holders        For


WithholdRobert L. Friedman


69,141,861



15,187,559J. Michael Losh


81,136,045



3,193,375  41




---



##### Table of Contents



For


Against


Abstain82,652,806



1,512,504



164,111
   Item 5.
    Other
    Information        Item 6.
    Exhibits  ExhibitNumber

Exhibit Name10.1

Third Amendment dated as of
    July 28, 2006 to Employment Agreement of John C. Plant10.2

First Amendment dated as of
    July 28, 2006 to Executive Supplemental Retirement Plan of
    TRW Automotive Inc.10.3

First Amendment dated as of
    November 18, 2004 to TRW Automotive Benefit Equalization
    Plan10.4

First Amendment dated as of
    November 18, 2004 to TRW Automotive Deferred Compensation
    Plan10.5

Second Amendment dated as of
    July 31, 2006 to TRW Automotive Benefit Equalization Plan10.6

Second Amendment dated as of
    July 31, 2006 to TRW Automotive Deferred Compensation Plan31(a)

Certification Pursuant to
    Rule 13a-14(a)
    under the Securities Exchange Act of 1934, as adopted pursuant
    to §302 of the Sarbanes-Oxley Act of 200231(b)

Certification Pursuant to
    Rule 13a-14(a)
    under the Securities Exchange Act of 1934, as adopted pursuant
    to §302 of the Sarbanes-Oxley Act of 200232(a)

Certification Pursuant to
    18 U.S.C. §1350, As Adopted Pursuant to §906 of
    the Sarbanes-Oxley Act of 200232(b)

Certification Pursuant to
    18 U.S.C. §1350, As Adopted Pursuant to §906 of
    the Sarbanes-Oxley Act of 2002  42




---



##### Table of Contents



SIGNATURES       By:
    /s/  JOSEPH S. CANTIE         43




---



##### Table of Contents



EXHIBIT
    INDEX
  ExhibitNumber

Exhibit Name10.1

Third Amendment dated as of
    July 28, 2006 to Employment Agreement of John C. Plant10.2

First Amendment dated as of
    July 28, 2006 to Executive Supplemental Retirement Plan of
    TRW Automotive Inc.10.3

First Amendment dated as of
    November 18, 2004 to TRW Automotive Benefit Equalization
    Plan10.4

First Amendment dated as of
    November 18, 2004 to TRW Automotive Deferred Compensation
    Plan10.5

Second Amendment dated as of
    July 31, 2006 to TRW Automotive Benefit Equalization Plan10.6

Second Amendment dated as of
    July 31, 2006 to TRW Automotive Deferred Compensation Plan31(a)

Certification Pursuant to
    Rule 13a-14(a)
    under the Securities Exchange Act of 1934, as adopted pursuant
    to §302 of the Sarbanes-Oxley Act of 200231(b)

Certification Pursuant to
    Rule 13a-14(a)
    under the Securities Exchange Act of 1934, as adopted pursuant
    to §302 of the Sarbanes-Oxley Act of 200232(a)

Certification Pursuant to
    18 U.S.C. §1350, As Adopted Pursuant to §906 of
    the Sarbanes-Oxley Act of 200232(b)

Certification Pursuant to
    18 U.S.C. §1350, As Adopted Pursuant to §906 of
    the Sarbanes-Oxley Act of 2002