Other 15.7%

DaimlerChrysler 14.4%

Ford 16.1%

Volkswagen 14.3%

Honda 2.6%Hyundai 2.1%

Toyota 3.1%

BMW 3.5%

PSA 4.1%

Fiat 4.3%

Renault/Nissan 8.5%

General Motors 11.3%

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Other 1.2%

Steering Gears & Systems 16.3%

Foundation Brakes 14.1%

ABS & Other Brake Control 9.3%

Aftermarket 7.2%

Fasteners & Components 3.4%Body Controls 4.4%

Steering Wheels 3.2%

Engine Valves 4.9%

Crash Sensors & Other Electronics 5.8%

Seat Belts 7.4%

Airbags 14.2%

Link & Suspension 4.7%Chassis Modules 3.9%

Active Passive Auto Components

Customer Mix Geographic Mix

Europe 55%

Rest of World 9%

North America 36%

Financial Highlights(in $ millions, except where noted) Years Ended December 31Select Income Statement Items: 2005 12004

Sales 12,643 12,011Operating income 553 a 580 a

Operating income as a % of sales 4.4 % 4.8 %Net interest and securitization expense 231 252Debt retirement expenses 7 b 173 b

Net earnings 204 29Net earnings excluding debt retirement expenses and one-time benefits 176 b,c 173 b

Common Stock Per Share Data:Weighted average diluted shares 102.3 100.5Net earnings per diluted share 1.99 0.29Net earnings excluding debt retirement expenses and one-time benefits per diluted share 1.72 b,c 1.72 b

Capital Structure /Cash Flow:Cash and marketable securities 676 809Gross debt 3,236 3,181Net debt (gross debt less cash and marketable securities) 2,560 2,372Net debt impact from Dalphimetal acquisition 244 d —Net debt excluding impact of Dalphimetal acquisition 2,316 2,372Capital expenditures 503 493Net cash provided by operating activities 502 787a Operating income includes restructuring and asset impairment expenses of $107 million in 2005 and $38 million in 2004.b See the Reconciliation Section after the Report on Form 10-K herein for detail of the components included in debt retirement expenses and a reconciliation to the closest GAAP measurement.c 2005 one-time benefits include $18 million for adjustment to reserves for litigation and $17 million for a tax law change in Poland.d Reflects Dalphimetal transaction cost of $140.5 million plus year-end debt of $110.9 million less year-end cash of $7.1 million.

Product Mix

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Dear Shareholders

I’m pleased to say that 2005 was a year of solid achievementand significant progress for TRW. The Company performed well in an extremely challenging industry environment, and for the second consecutive year as a publicly traded company,we exceeded our financial and operational targets.

We also made significant progress across all of our StrategicPriorities (Best Quality, Lowest Cost, Global Reach andInnovative Technology). These Priorities, which are essential to the Company’s long-term competitiveness, have becomeingrained in our daily business activities and are used to guide our allocation of resources to support research anddevelopment, manufacturing investments and growthinitiatives.

During the course of the year, we experienced a number of profit pressures, including customer demands for pricereductions, erosion of market share of our largest NorthAmerican customers, rising interest rates, customer andsupplier solvency issues and significantly higher costs forcommodities such as steel, resins, energy and more recentlyaluminum.

Despite these challenges, TRW achieved a healthy financialperformance in 2005, growing sales by more than 5 percentand posting solid profits. Operating profits before restructuring-related expenses increased by approximately 7 percentcompared to 2004. Our performance can be attributed to thesuccess of our safety product positioning in the marketplace,together with our industry-leading diversification and thebenefits derived from well-executed productivity improvementsand cost reduction programs, including Six Sigma, ValueEngineering and Operational Excellence.

Our leading diversification improved in 2005. For the year, we generated64 percent of our sales outside of NorthAmerica, our largest customer stood at16 percent of sales and the largestvehicle program represented just3 percent of our sales. Further, ourdiversification strengthened as a resultof last year’s acquisition of a majoritystake in Dalphi Metal Espana, S.A.(“Dalphimetal”), which manufacturesairbags and steering wheels. Theintegration of Dalphimetal providesincreased business with leadingEuropean manufacturers and betterpositions us to meet the growingdemand for passive safety products.

There is a tremendous sense of urgency at TRW to enhance our statusas a leading supplier and to improve our competitiveness in this unrelentingindustry environment. We acceleratedour cost reduction plans in 2005,announcing ten plant closures andraising our restructuring-relatedexpenses above $100 million. Theincremental investment in restructuring

will provide a more competitive footprint by improving capacityutilization and lowering manufacturing costs.

Our focus on safety innovation has never been sharper. For the third consecutive year, we increased our investment in research, development and engineering, spendingapproximately $780 million or 6.2 percent of sales in 2005.Most of the additional investment was in technical expertise,raising our engineering population worldwide to approximately5,000 employees. We are investing capital to grow ourcapabilities in all regions, including the acquisition ofDalphimetal and significant investments in Asia, where we now have 30 facilities, 3,600 employees and 14 joint ventures as well as wholly owned TRW facilities. In 2005, we opened technical centers in China and Poland, and another one is planned for Japan.

We believe TRW’s level of safety offerings has no equal in themarketplace. As a leader in integrated safety systems, we havethe unique ability to assist our customers in taking automotivesafety to the next level. This is one reason why vehiclemanufacturers regularly seek our expertise to help themdevelop advanced safety solutions.

In the final evaluation, our customers judge whether we aremeeting or exceeding their expectations. It is always the nextcontract that provides the best indicator, which was the case in2005, when we had another outstanding year for new business wins. The sales awards we received in 2005 were in line with our objectives and at a level that supports our futuregrowth expectations and enhances the diversity and mix of our customer portfolio.

2005 Financial HighlightsWe reported 2005 sales of $12.6 billion, which represents anincrease of 5.3 percent compared to the prior year period.Growth in 2005 was strong, fueled by the success of our safetyproducts and the strength of a number of customer platforms,particularly in Europe, together with benefits derived fromcurrency translation and incremental sales resulting from ouracquisition of Dalphimetal in the fourth quarter of last year.Sales were negatively impacted by annual price reductionsprovided to customers and continued domestic market sharelosses by some of our major North American customers.

Operating income for the 2005 year was $553 million or 4.4 percent of sales, which compares to $580 million or 4.8 percent in 2004. TRW significantly increased its restructuringactivities in 2005, resulting in increased expenses that wereapproximately $70 million more than in the prior year.Operating income was also impacted by the negative industryfactors discussed previously.

In 2005, the Company reduced interest and securitizationexpense by $21 million to $231 million for the year. The year-to-year reduction resulted from the benefits derived from pastdeleveraging efforts partially offset by the impact of risinginterest rates associated with the Company’s floating rate debt.

Full-year 2005 net earnings were $204 million or $1.99 perdiluted share, which compares to net earnings of $29 millionor $0.29 per diluted share in the prior year. Net earnings after adjusting for one-time items in both periods, net of theassumed tax impacts, were $176 million or $1.72 per dilutedshare in 2005, which compares to $173 million or $1.72 perdiluted share in the prior year.a

Solid profitability led to a year of good cash flow generation,with net cash provided by operations of $502 million, whichcompares to $787 million in 2004. The year-to-year decline of$285 million resulted primarily from an increase in workingcapital at year-end and a higher level of pension funding in2005. Capital expenditures, which support our new businessgrowth, totaled $503 million in 2005, which compares to$493 million in the prior year.

Business OutlookLooking toward the longer term, we will maintain our focus on vehicle safety, continue to diversify the customer andgeographic spread of the business and continue to leverage ourhighly skilled workforce to grow the business profitably. Webelieve our business model offers us resiliency and strength intoday’s environment and increasingly the ability to be flexiblewhen adversity and uncertainty yield market opportunities.

The global automotive industry is changing at a rapid pace.Competition for market share among vehicle manufacturers inthe major vehicle producing regions continues to intensify andis reshaping the vehicle and component industry.

Many of the challenges we faced last year will again be centerstage in 2006. We expect significant profit pressures relatingto customer demands for price reductions, higher commoditycosts, customer and supplier solvency issues and rising interest rates.

The demand for safety products is critical to sustaining our growth, as we expect minimal vehicle volume increases in Europe and North America over the foreseeable future. The sales generated from safety products along with thebenefits derived from our cost reduction programs and pastrestructuring actions are expected to help mitigate many of the negative industry pressures that we are experiencing.

With that backdrop, the level of uncertainty surrounding the2006 environment is daunting, as severe economic straincontinues to take its toll on the automotive industry. For the2006 year, we have committed to a plan that will test ourhighly disciplined operational programs and will require goodexecution to achieve. We are ready to meet those tests and I look forward to reporting our progress to you during 2006.

Sincerely,

John C. PlantPresident and Chief Executive OfficerTRW Automotive

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This letter contains forward-looking statements, which involve risks and uncertainties. Such risk and uncertainties, which could cause our actual results to differmaterially from those contained in the forward-looking statements made in this letter, are set forth in “Risk Factors” and “Management’s Discussion and Analysis ofFinancial Condition and Results of Operations” under “Forward Looking Statements” in the accompanying Annual Report on Form 10-K. We do not intend or assumeany obligation to update any of these forward-looking statements.

a Please see the Reconciliation Section after the Report on Form 10-K herein for a reconciliation to the closest GAAP equivalent.

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By integrating “active” safety systems, which are those that help avoid accidents, and “passive” safety systems, which help mitigate the effects of an accident, not only are new and enhanced levels of automotive safety possible, they are being achieved today.

Combining TRW’s unique position in both active and passive safety with its market leadership in sensors and sophisticated electronics has placed the company in anideal position to bring these safety advancements to the market.

TRW is focusing its integrated safety efforts on technology combinations that offer the greatest potential to enhance the safety of drivers and passengers. Over the next few pages, we demonstrate just how far vehicle safety has comeand how much the state of the art is accelerating. A number of productsshown are in vehicles today; all can be production-ready in this decade.

Adaptive Cruise Control – Adaptive cruise controlis a key enabling technology for integratingactive and passive safety. The illustrations (aboveright and below left) show a center-mountedlong-range radar and two outboard located short-range radars working together to monitor what’shappening in front of the vehicle from the totalwidth of the front bumper to vehicles moving150 or more meters ahead. Working incombination with a vehicle’s braking and enginemanagement systems, these sensors can help manage a vehicle’s speed and interval from the leading car at highway speeds as well as in stop-and-go traffic, without the driver ever having to touch the pedals.

Collision Warning and Preparation – With short- and long-rangeradar systems on board, the adaptive cruise control

system evolves from a convenience system to a true safety system, capable of detecting

objects in close proximity and warningthe driver (above center) by

producing an audible warning or a haptic one, such as a

programmed vibration of thesteering wheel or seatcushion. In addition towarning the driver to take action, the brake system can be pre-armedto provide maximum brake boost once the driver does engage thebrakes, resulting in reduced stopping distances (left). In addition,the reversible electric motor in TRW’s active control retractor seatbelts (above right) can be signaled to remove the seat belt slack andbetter position the vehicle’s occupants for a potential crash.

Safety sets TRW apart.Integrated safety makes us unique.

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HapticWarning

AcousticWarning

HapticWarning

AcousticWarning

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Lane Departure Warning – TRW’s forward-facing videocamera mounted behind the rear view mirror (right)can detect the lane markings on a highway andalongside many types of roadways. If a driver does notintentionally indicate a lane change through the use ofthe turn signal, an audible or haptic warning alerts thedriver that the vehicle has drifted from the lane. Thiscan be particularly valuable in helping preventunintended road departures. By adding short-rangesensors at the sides of the vehicle, a similar warningcan be given during a lane-change maneuver shouldthere be a vehicle in the driver’s blind spot (belowcenter).

Lane Guidance – This technologyintegrates a TRW electricsteering system with the video system. As with lanedeparture warning, the videosystem detects if the vehiclebegins to drift from the centerof its lane or the edge of theroadway, and the electricsteering provides a torque thathelps the driver guide thevehicle back to the center of the lane (far right).

Rollover Prevention and Mitigation – TRW’s active dynamic controlsuspension systems (below) help counteract vehicle body roll withoutsacrificing ride quality. When integrated with electronic stabilitycontrol, the two systems work together not only to help prevent bodyroll, but also to help manage skids.

TRW helps to keep you on the road.

Without ADC With ADCWithout ADC With ADC

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Adaptive Restraints – One of the prime examples ofactive and passive safety integration already availableon vehicles is TRW’s active control retractor seat beltsystem. This system uses signals from active safetysystems such as electronic stability control or brakeassist to sense a possible loss of lateral vehicle controlor an emergency stop situation. Once a potentiallydangerous situation is sensed, the active controlretractor seat belt rapidly removes slack to help betterposition the occupant for a possible accident. If the accident is avoided, the system will release afterfive seconds and return to normal seat belt mode.

Pre-Crash / Automatic Emergency Braking – Thecombination of forward-looking radar and videosystems (adaptive cruise control and lane departurewarning) provides an enhanced picture of the roadahead. When integrated with electronic stabilitycontrol, these systems can enable automaticemergency braking to help mitigate the effects of impact. In addition to applying full brake pressure, the active control retractor seat belt can also be engaged priorto the actual impact, thus improving themargin of safety for the occupants.

Side Impact Integration – TRW active safety technologies such as electronic stability control or active dynamic control help drivers to avoid or mitigate the impact of vehicle accidents. Should an accident occur, passive safety systems will work in concert with active safety systems to better position occupants. In the event of a side impact collision,TRW’s curtain or side and thorax airbags inflate to offer a greater measure of protection.

When the accident is unavoidable,TRW is there to help protect you.

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Overview TRW Automotive ranks among the world’s largest and mostdiversified suppliers of automotive systems, modules andcomponents to global vehicle manufacturers and relatedaftermarkets.• $12.6 billion annual sales in 2005• Strategically focused product portfolio with more than 80%

of sales derived from safety-related products• Industry-leading sales diversification, with the largest

geographic sales region amounting to 55% of sales, largestcustomer concentration amounting to 16% of sales andlargest product group amounting to 16% of sales

• Customers include all major vehicle manufacturers acrossthe primary automotive producing regions

• Market leadership positions in most primary product lines

Operating SegmentsThe Company conducts all of its operations through itssubsidiaries and along three operating segments.

Chassis Systems• 2005 sales of $7.2 billion or 57% of total sales• Primary products include steering gears and systems,

foundation brakes, brake control (ABS, electronic stabilitycontrol and traction control systems) and suspension systems

Occupant Safety Systems• 2005 sales of $3.8 billion or 30% of sales• Primary products include airbags, seat belts, safety

electronics and steering wheels

Automotive Components• 2005 sales of $1.7 billion or 13% of sales• Primary products include body controls, engine valves and

engineered fasteners

EmployeesOur people are our true competitive advantage. As ofDecember 31, 2005, the Company had approximately63,100 employees, of which 27% are considered salariedworkers with the remaining 73% hourly workers.

Europe 33,800North America 21,300South America 4,400Asia Pacific 3,600

Locations TRW has 209 facilities in 25 countries with principalexecutive offices located in Livonia, Michigan.

Austria Malaysia SwedenBrazil Mexico SwitzerlandCanada Poland ThailandChina Portugal TunisiaCzech Republic Romania TurkeyFrance Singapore United KingdomGermany South Africa United StatesItaly South KoreaJapan Spain

Research, Development and EngineeringWe operate a global network of technical centers worldwide,which allows us to develop automotive active and passivetechnologies while improving existing products and systems. • At present, we employ approximately 5,000 engineers,

researchers, designers, technicians and support personnel• In 2005, we invested approximately 6.2% of sales to

support our global efforts• The Company utilizes sophisticated testing and computer

simulation equipment, including computer-aidedengineering, noise-vibration-harshness rigs, crash sled andmath modeling

• We believe that continued research, development andengineering activities are critical to maintaining ourleadership position in the industry and will provide us with acompetitive advantage as we seek additional business withnew and existing customers

TRW At a Glance