-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LkueaxnnXETnVNOlP+5xWrjIt4+VRymGYs0H3Xut8OPAusTvB7HUZIIomKIsZRPb QkneVvtorVT1xNfKxK4h1g== 0000950152-98-003894.txt : 19980504 0000950152-98-003894.hdr.sgml : 19980504 ACCESSION NUMBER: 0000950152-98-003894 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980501 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRW INC CENTRAL INDEX KEY: 0000100030 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 340575430 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-02384 FILM NUMBER: 98607977 BUSINESS ADDRESS: STREET 1: 1900 RICHMOND RD CITY: CLEVELAND STATE: OH ZIP: 44124 BUSINESS PHONE: 2162917000 MAIL ADDRESS: STREET 1: 1900 RICHMOND ROAD CITY: CLEVELAND STATE: OH ZIP: 44124 10-Q 1 TRW INC. 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to______________ Commission file number 1-2384 ----------------------------------------- TRW Inc. ----------------------------------------------------- (Exact name of registrant as specified in its charter) Ohio 34-0575430 ------------------------------- ------------------ (State or other jurisdiction of (I.R.S.Employer incorporation or organization) Identification No.) 1900 Richmond Road, Cleveland, Ohio 44124 ----------------------------------------- (Address of principal executive offices) (Zip Code) (216) 291-7000 -------------------------------------------------- (Registrant's telephone number, including area code) 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 X No ------ ------ As of April 3, 1998, there were 122,650,314 shares of TRW Common Stock, $0.625 par value, outstanding. 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements --------------------
Statements of Earnings (unaudited) TRW Inc. and subsidiaries - ---------------------------------------------------------------------------------------------------------------------- Quarter ended March 31 In millions except per share data 1998 1997 - --------------------------------------------------------------------------------------------------------------------- Sales $ 3,095 $ 2,660 Cost of sales 2,575 2,178 - ------------------------------------------------------------------------------------------------------------------- Gross profit 520 482 Administrative and selling expenses 199 159 Research and development expenses 121 106 Interest expense 38 20 Other (income) expense-net (42) 2 - ------------------------------------------------------------------------------------------------------------------- Earnings before income taxes 204 195 Income taxes 75 76 - ------------------------------------------------------------------------------------------------------------------- Net earnings $ 129 $ 119 - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- PER SHARE OF COMMON STOCK Diluted earnings per share $ 1.03 $ .92 Basic earnings per share $ 1.05 $ .95 Dividends declared $ .00 $ .00 - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- Shares used in computing per share amounts Diluted 126.2 129.4 Basic 122.6 125.2 - -------------------------------------------------------------------------------------------------------------------
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Balance Sheets (unaudited) TRW Inc. and subsidiaries - ------------------------------------------------------------------------------------------------------------------- March 31 December 31 In millions 1998 1997 - ------------------------------------------------------------------------------------------------------------------- Assets Current assets Cash and cash equivalents $ 92 $ 70 Accounts receivable 1,772 1,617 Inventories 589 573 Prepaid expenses 91 79 Deferred income taxes 158 96 - ------------------------------------------------------------------------------------------------------------- Total current assets 2,702 2,435 Property, plant and equipment-on the basis of cost 6,223 6,074 Less accumulated depreciation and amortization 3,617 3,453 - ------------------------------------------------------------------------------------------------------------- Total property, plant and equipment-net 2,606 2,621 Intangible assets Intangibles arising from acquisitions 750 673 Other 308 232 - ------------------------------------------------------------------------------------------------------------- 1,058 905 Less accumulated amortization 104 94 - ------------------------------------------------------------------------------------------------------------- Total intangible assets-net 954 811 Investments in affiliated companies 197 139 Other assets 440 404 - ------------------------------------------------------------------------------------------------------------- $ 6,899 $ 6,410 - ------------------------------------------------------------------------------------------------------------- Liabilities and shareholders' investment Current liabilities Short-term debt $ 694 $ 411 Accounts payable 840 859 Current portion of long-term debt 25 128 Other current liabilities 1,225 1,321 - ------------------------------------------------------------------------------------------------------------- Total current liabilities 2,784 2,719 Long-term liabilities 826 788 Long-term debt 1,423 1,117 Deferred income taxes 52 57 Minority interests in subsidiaries 87 105 Capital stock 77 79 Other capital 454 450 Retained earnings 1,844 1,778 Accumulated other comprehensive income (141) (120) Treasury shares-cost in excess of par value (507) (563) - ------------------------------------------------------------------------------------------------------------- Total shareholders' investment 1,727 1,624 - ------------------------------------------------------------------------------------------------------------- $ 6,899 $ 6,410 - -------------------------------------------------------------------------------------------------------------
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Statements of Cash Flows (unaudited) TRW Inc. and subsidiaries - ------------------------------------------------------------------------------------------------------------------- Quarter ended March 31 In millions 1998 1997 - ---------------------------------------------------------------------------------------------------------------- Operating activities Net earnings $ 129 $ 119 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 135 127 Deferred income taxes (68) 5 Other-net 5 10 Changes in assets and liabilities, net of effects of businesses acquired: Accounts receivable (162) (156) Inventories and prepaid expenses (23) 7 Accounts payable and other accruals (29) (43) Other-net (33) (13) - ---------------------------------------------------------------------------------------------------------------- Net cash provided(used in) by operating activities (46) 56 - ---------------------------------------------------------------------------------------------------------------- Investing activities Capital expenditures (119) (99) Acquisitions, net of cash acquired (228) (415) Other-net (8) 16 - ---------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (355) (498) - ---------------------------------------------------------------------------------------------------------------- Financing activities Increase(decrease) in short-term debt (40) 223 Proceeds from debt in excess of 90 days 620 10 Principal payments on debt in excess of 90 days (110) (11) Reacquisition of common stock (24) (77) Dividends paid (38) (39) Other-net 14 13 - ---------------------------------------------------------------------------------------------------------------- Net cash provided by financing activities 422 119 - ---------------------------------------------------------------------------------------------------------------- Effect of exchange rate changes on cash 1 (4) - ---------------------------------------------------------------------------------------------------------------- Increase(decrease) in cash and cash equivalents 22 (327) Cash and cash equivalents at beginning of quarter 70 386 - ---------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of quarter $ 92 $ 59 - ----------------------------------------------------------------------------------------------------------------
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Results by Business Segments (unaudited) TRW Inc. and subsidiaries - ---------------------------------------------------------------------------------------------------------------------- Quarter ended March 31 In millions 1998 1997 - ---------------------------------------------------------------------------------------------------------------------- Sales Automotive $ 1,886 $ 1,793 Space, Defense & Information Systems 1,209 867 - ---------------------------------------------------------------------------------------------------------------------- Sales $ 3,095 $ 2,660 - ---------------------------------------------------------------------------------------------------------------------- Operating profit Automotive $ 147 $ 167 Space, Defense & Information Systems 115 77 - ---------------------------------------------------------------------------------------------------------------------- Operating profit 262 244 Company Staff and other (16) (24) Minority interest in earnings of consolidated subsidiaries (5) (6) Interest expense (38) (20) Earnings from affiliates 1 1 - ---------------------------------------------------------------------------------------------------------------------- Earnings before income taxes $ 204 $ 195 - ----------------------------------------------------------------------------------------------------------------------
6 NOTES TO FINANCIAL STATEMENTS (unaudited) Principles of Consolidation - --------------------------- The financial statements include the accounts of the Company and its subsidiaries except for two insurance subsidiaries. The wholly owned insurance subsidiaries and the majority of investments in affiliated companies, which are not significant individually, are accounted for by the equity method. Comprehensive Income - -------------------- Effective January 1, 1998 the Company adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income." Statement 130 establishes new rules for the reporting and display of comprehensive income and its components. The adoption of this Statement requires unrealized gains or losses on the Company's available-for-sale securities, foreign currency translation and minimum pension liability adjustments be included in other comprehensive income, which prior to adoption were reported separately in shareholders' equity. Prior year financial statements have been reclassified to conform to the requirements of Statement 130. The components of comprehensive income, net of related tax, for the first quarter of 1998 and 1997 are as follows:
Quarter ended (In millions) March 31 ----------------------------------- 1998 1997 ---- ---- Net earnings $ 129 $ 119 Unrealized gains on securities 2 - Foreign currency translation adjustments (23) (63) ---- ---- Comprehensive income $ 108 $ 56 ---- ----
The components of accumulated other comprehensive income, net of related tax, at March 31, 1998 and December 31, 1997 are as follows:
March 31 December 31 (In millions) 1998 1997 -------------------- --------------------- Unrealized gains on securities $ 14 $ 12 Foreign currency translation adjustments (153) (130) Minimum pension liability adjustments (2) (2) ---- ---- Accumulated other comprehensive income $(141) $(120) ---- ----
7 Inventories - ----------- Inventories consist of the following:
(In millions) March 31 December 31 1998 1997 ---------------------------------------- Finished products and work in process $326 $292 Raw materials and supplies 263 281 --- --- $589 $573 --- ---
Long-Term Liabilities - --------------------- Long-term liabilities at March 31, 1998, and December 31, 1997, include $660 million and $653 million, respectively, relating to postretirement benefits other than pensions. Other (Income)Expense-Net - ------------------------- Other (income)expense-net included the following:
(In millions) Quarter ended March 31 ------------------------------------------ 1998 1997 ---- ---- Other income $(66) $(16) Other expense 22 16 Foreign currency translation 2 2 --- --- $(42) $ 2 ---- ---
First quarter 1998 other income included a $48.5 million benefit from the settlement of certain patent litigation. Supplemental Cash Flow Information - ----------------------------------
Quarter ended (In millions) March 31 --------------------------------------- 1998 1997 ---- ---- Interest paid (net of amount capitalized) $ 30 $ 20 Income taxes paid (net of refunds) $ 41 $ (37)
For purposes of the statements of cash flows, the Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. 8 Earnings Per Share - ------------------ In the fourth quarter of 1997, the Company adopted Statement of Financial Accounting Standards No. 128, "Earnings per Share." Statement 128 replaced the calculation of primary and fully diluted earnings per share with basic and diluted earnings per share. All earnings per share amounts for all periods presented have been restated to conform to Statement 128 requirements.
In millions except per share data Quarter ended March 31 ---------------------------------------- 1998 1997 ---- ---- NUMERATOR Net earnings $129.4 $119.2 Preferred stock dividends .2 .1 ----- ----- Numerator for basic earnings per share--earnings available to common shareholders 129.2 119.1 Effect of dilutive securities Preferred stock dividends .2 .1 ----- ----- Numerator for diluted earnings per share-- earnings available to common shareholders after assumed conversions $129.4 $119.2 ----- ----- DENOMINATOR Denominator for basic earnings per share--weighted-average common shares 122.6 125.2 Effect of dilutive securities Convertible preferred stock .9 1.0 Employee stock options 2.7 3.2 ----- ----- Dilutive potential common shares 3.6 4.2 Denominator for diluted earnings per share--adjusted weighted-average shares and assumed conversions 126.2 129.4 ----- ----- Basic earnings per share $ 1.05 $ .95 ----- ----- Diluted earnings per share $ 1.03 $ .92 ----- -----
Contingencies - ------------- During 1997, TRW Vehicle Safety Systems Inc., a wholly owned subsidiary of the Company, reported to the Arizona Department of Environmental Quality ("ADEQ") potential violations of the Arizona hazardous waste law at its Queen Creek, Arizona facility for the possible failure to properly label and dispose of wastewater that might be classified as hazardous waste. ADEQ is conducting an investigation into these potential violations and the Company is cooperating with the investigation. If ADEQ initiates proceedings against the Company with respect to such matters, the Company could be liable for penalties and fines and other relief. The Company has been apprised by state and federal officials that there are ongoing civil and criminal investigations with 9 respect to these potential violations. Management is currently evaluating this matter and is unable to make a meaningful estimate of the amount or range of possible liability, if any, at this time, although management believes that the Company would have meritorious defenses. During 1996, the Company was advised by the Department of Justice ("DOJ") that it had been named as a defendant in two lawsuits brought by a former employee of the Company's former Space & Technology Group and originally filed under seal in 1994 and 1995, respectively, in the United States District Court for the Central District of California under the QUI TAM provisions of the civil False Claims Act. The Act permits an individual to bring suit in the name of the United States and share in any recovery. The allegations in the lawsuits relate to the classification of costs incurred by the Company that were charged to certain of its federal contracts. Under the law, the government must investigate the allegations and determine whether it wishes to intervene and take responsibility for the lawsuits. On February 13, 1998, the DOJ intervened in the litigation. On February 19, 1998 and March 4, 1998, the former employee filed amended complaints in the Central District of California that realleged certain of the claims included in the 1994 and 1995 lawsuits and omitted the remainder. The amended complaints allege that the United States has incurred substantial damages and that the Company should be ordered to cease and desist from violations of the civil False Claims Act and is liable for treble damages, penalties, costs, including attorneys' fees, and such other relief as deemed proper by the court. On March 17, 1998, the DOJ filed its complaint against the Company upon intervention in the 1994 lawsuit, which set forth a limited number of the allegations in the 1994 lawsuit and other allegations not in the 1994 lawsuit. The DOJ elected not to pursue the other claims in the 1994 lawsuit or the claims in the 1995 lawsuit. The DOJ's complaint alleges that the Company is liable for treble damages, penalties, interest, costs and "other proper relief." On March 18, 1998, the former employee withdrew the first amended complaint in the 1994 lawsuit at the request of the DOJ. The Company expects to file responses to the former employee's first amended complaint in the 1995 lawsuit and the DOJ's complaint during the second quarter of 1998 and intends to defend itself vigorously. The Company cannot presently predict the outcome of these lawsuits, although management believes that their ultimate resolution will not have a material effect on the Company's financial condition or results of operations. Interim Statements - ------------------ The financial statements are based in part on approximations and are subject to adjustments that may develop, such as unsettled contract and renegotiation matters and matters that arise in connection with the annual audit of the financial statements; however, in the opinion of management, all adjustments (which consist of normal recurring accruals) necessary for a fair presentation of the results of operations for the periods presented have been included. Results of operations for any interim period are not necessarily indicative of the results to be expected for the full year. 10 Item 2. Management's Discussion and Analysis of Financial Condition and --------------------------------------------------------------- Results of Operations --------------------- RESULTS OF OPERATIONS (In millions except per share data)
First Quarter ------------------------------------------------------- Percent 1998 1997 Inc(Dec) --------------- ---------------- ---------------- Sales $3,095 $2,660 16% Operating Profit 262 244 7% Net Earnings 129 119 8% Diluted Earnings Per Share 1.03 .92 12% Effective Tax Rate 36.50% 38.75%
The increase in sales resulted primarily from the acquisition of BDM and from higher volume in the Automotive and Space, Defense & Information Systems segments partially offset by a strong U.S. dollar and unfavorable pricing in the Automotive segment. The higher operating profit was due to the higher sales and continued cost-reduction efforts partially offset by higher research and development expenditures, start-up costs and lower pricing in the Automotive segment. First quarter 1998 earnings included a $31.5 million benefit from the settlement of certain patent litigation, offset in part by $21.8 million in charges for litigation and contract reserves and severance costs relating to the combination of the Company's systems integration business with BDM. Interest expense was $38 million for the first quarter of 1998, compared to $20 million for the first quarter of 1997, primarily due to financing the acquisition of BDM. Automotive (In millions)
First Quarter ------------------------------------------------------- Percent 1998 1997 Inc(Dec) --------------- ---------------- ---------------- Sales $1,886 $1,793 5 % Operating Profit $ 147 $ 167 (12)%
The increase in sales resulted primarily from higher volume in most product lines, particularly steering systems, seat belts and electronics, partially offset by the effect of a strong U.S. dollar and lower pricing. The decline in operating profit resulted in part from higher research and development and costs associated with new product introductions and start-up facilities. The decline in operating profit was also affected by the continuation of severe pricing pressures. The Company is taking appropriate action with its customers to mitigate the pressure on price as well as accelerate additional cost reduction initiatives. 11 Space, Defense & Information Systems (In millions)
First Quarter ------------------------------------------------------- Percent 1998 1997 Inc(Dec) --------------- ---------------- ---------------- Sales $1,209 $867 39% Operating Profit $ 115 $ 77 49%
Sales increased due to the effect of the acquisition of BDM, which contributed $232 million, new contract awards and higher volume in continuing programs. The higher operating profit was due to the acquisition of BDM, continued success in commercial gallium arsenide (GaAs) technology programs, and the benefit from the settlement of certain patent litigation, which was offset in part by charges for litigation and contract reserves and severance costs relating to the combination of the Company's systems integration business with BDM. LIQUIDITY AND FINANCIAL POSITION In the first quarter of 1998, a net increase in debt of $470 million and a net increase of $7 million in other items, were used to fund business acquisitions of $228 million, capital expenditures of $119 million, reacquisition of common stock of $24 million of which $5 million was for the settlement of shares repurchased in 1997, dividend payments of $38 million and operating activities of $46 million. As a result, cash and cash equivalents increased by $22 million. Net debt (short-term debt, the current portion of long-term debt and long-term debt less cash and cash equivalents) was $2,050 million at March 31, 1998, compared to $1,586 million at December 31, 1997. The ratio of net debt to total capital (net debt, minority interests and shareholders' investment) was 53.0 percent at March 31, 1998, compared to 47.8 percent at December 31, 1997. During January 1998, the Company refinanced short-term debt by issuing $500 million of notes and debentures which mature at various dates through 2028. During the first quarter 1998, the Company established a $1 billion Universal Shelf Registration Statement. Securities that may be issued under this shelf registration statement include: debt securities, common stock, warrants to purchase debt securities and warrants to purchase common stock. No securities were issued under this shelf registration statement during the first quarter. As of the end of the first quarter 1998, $300 million of short-term debt was reclassified to long-term debt as the Company intends to refinance the borrowings on a long-term basis and has the ability to do so under its U.S. revolving credit agreements. During the first quarter of 1998, 350,810 shares of TRW common stock were repurchased for approximately $19 million. 12 Management believes that funds generated from operations and existing borrowing capacity are adequate to fund the current share repurchase program and finance planned growth, capital expenditures, working capital requirements including tax requirements, company-sponsored research and development programs and dividend payments to shareholders. OTHER MATTERS During 1997, TRW Vehicle Safety Systems Inc., a wholly owned subsidiary of the Company, reported to ADEQ potential violations of the Arizona hazardous waste law at its Queen Creek, Arizona facility for the possible failure to properly label and dispose of wastewater that might be classified as hazardous waste. If ADEQ initiates proceedings against the Company with respect to such matters, the Company could be liable for penalties and fines and other relief. Management is currently evaluating this matter and is unable to make a meaningful estimate of the amount or range of possible liability, if any, at this time, although management believes that the Company would have meritorious defenses. During 1996, the Company was advised by the DOJ that it had been named as a defendant in two lawsuits brought by a former employee and filed under seal in 1994 and 1995, respectively, in the United States District Court for the Central District of California under the QUI TAM provisions of the civil False Claims Act. The Company cannot presently predict the outcome of these lawsuits, although management believes that their ultimate resolution will not have a material effect on the Company's financial condition or results of operations. Refer to the "Contingencies" footnote in the Notes to Financial Statements for further discussion of these matters. 13 FORWARD-LOOKING STATEMENTS Statements in this filing that are not historical facts are forward-looking statements, which involve risks and uncertainties that could affect the Company's actual results. Information regarding the important factors that could cause the Company's actual results to differ materially from the forward-looking statements contained in this filing can be found in the Company's reports filed with the Securities and Exchange Commission. Item 3. Quantitative and Qualitative Disclosures about Market Risk ---------------------------------------------------------- There have been no material changes in market risk exposures during the first quarter of 1998 that affect the disclosures presented in the Company's Annual Report to Shareholders for the year ended December 31, 1997. 14 PART II. OTHER INFORMATION Item 1. Legal Proceedings. ------------------ During 1996, the Company was advised by the DOJ that it had been named as a defendant in two lawsuits brought by Richard D. Bagley, a former employee of the Company's former Space & Technology Group, and originally filed under seal in 1994 and 1995, respectively, in the United States District Court for the Central District of California under the QUI TAM provisions of the civil False Claims Act. The Act permits an individual to bring suit in the name of the United States and share in any recovery. The allegations in the lawsuits relate to the classification of costs incurred by the Company that were charged to certain of its federal contracts. Under the law, the government must investigate the allegations and determine whether it wishes to intervene and take responsibility for the lawsuits. On February 13, 1998, the DOJ intervened in the litigation. On February 19, 1998 and March 4, 1998, Bagley filed amended complaints in the Central District of California that realleged certain of the claims included in the 1994 and 1995 lawsuits and omitted the remainder. The amended complaints allege that the United States has incurred substantial damages and that the Company should be ordered to cease and desist from violations of the civil False Claims Act and is liable for treble damages, penalties, costs, including attorneys' fees, and such other relief as deemed proper by the court. On March 17, 1998, the DOJ filed its complaint against the Company upon intervention in the 1994 lawsuit, which set forth a limited number of the allegations in the 1994 lawsuit and other allegations not in the 1994 lawsuit. The DOJ elected not to pursue the other claims in the 1994 lawsuit or the claims in the 1995 lawsuit. The DOJ's complaint alleges that the Company is liable for treble damages, penalties, interest, costs and "other proper relief." On March 18, 1998, Bagley withdrew the first amended complaint in the 1994 lawsuit at the request of the DOJ. The Company expects to file responses to Bagley's first amended complaint in the 1995 lawsuit and the DOJ's complaint during the second quarter of 1998 and intends to defend itself vigorously. The Company cannot presently predict the outcome of these lawsuits, although management believes that their ultimate resolution will not have a material effect on the Company's financial condition or results of operations. In 1992, Vinnell Mining & Minerals Corporation ("VMMC") and Atlas Corporation ("Atlas"), an unrelated third party, entered into a Consent Decree with the United States Environmental Protection Agency ("EPA") with respect to an operable unit of the Atlas Asbestos Mine Superfund site in Fresno County, California. VMMC is a wholly owned indirect subsidiary of BDM International, Inc. that was acquired by the Company in December 1997. The Consent Decree provides, among other things, for the remediation of the site and reimbursement of oversight costs upon submission of appropriate documentation to VMMC and Atlas. On March 31, 1998, VMMC and Atlas filed a Motion to Enforce the Consent Decree in the U.S. District Court for the Eastern District of California to obtain judicial review of the oversight cost documentation requirements. On April 6, 1998, the EPA issued a Statement of Decision stating that VMMC and Atlas must pay the contested oversight costs, plus interest. The EPA has also taken the position that VMMC and Atlas are subject to stipulated daily penalties under the Consent Decree as of March 20, 1998. The Consent Decree provides for maximum daily penalties of up to $6,250. Management believes that the ultimate resolution of this matter will not have a material effect on the Company's financial condition or results of operations. 15 Item 6. Exhibits and Reports on Form 8-K. --------------------------------- (a) Exhibits: 4.1 Indenture between TRW Inc. and The Chase Manhattan Bank (National Association), as successor Trustee, dated as of May 1, 1986 (Exhibit 2 to TRW Form 8-A Registration Statement dated July 3, 1986 is incorporated herein by reference). 4.2 First Supplemental Indenture between TRW Inc. and The Chase Manhattan Bank (National Association), as successor Trustee, dated as of July 26, 1989 (Exhibit 4(b) to TRW Form S-3 Registration Statement, File No. 33-30350, is incorporated herein by reference). 27 Financial Data Schedule. 99 Computation of Ratio of Earnings to Fixed Charges -- Unaudited (Supplement to Exhibit 12 of the following Form S-3 Registration Statements of the Company: No. 333-48443, filed March 23, 1998). Certain instruments with respect to long-term debt have not been filed as exhibits as the total amount of securities authorized under any one of such instruments does not exceed 10% of the total assets of the registrant and its subsidiaries on a consolidated basis. The registrant agrees to furnish to the Commission a copy of each such instrument upon request. (b) Reports on Form 8-K: Current Report on Form 8-K dated April 13, 1998 as to Medium-Term Notes. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TRW Inc. Date: May 1, 1998 By: /s/ William B. Lawrence ----------------------- William B. Lawrence Executive Vice President and Secretary Date: May 1, 1998 By: /s/ Carl G. Miller ------------------ Carl G. Miller Executive Vice President and Chief Financial Officer 16 FORM 10-Q Quarterly Report for Quarter Ended March 31, 1998 EXHIBIT INDEX ------------- EXHIBIT NO. DESCRIPTION 4.1 Indenture between TRW Inc. and The Chase Manhattan Bank (National Association), as successor Trustee, dated as of May 1, 1986 (Exhibit 2 to TRW Form 8-A Registration Statement dated July 3, 1986 is incorporated herein by reference). 4.2 First Supplemental Indenture between TRW Inc. and The Chase Manhattan Bank (National Association), as successor Trustee, dated as of July 26, 1989 (Exhibit 4(b) to TRW Form S-3 Registration Statement, File No. 33-30350, is incorporated herein by reference). 27 Financial Data Schedule. 99 Computation of Ratio of Earnings to Fixed Charges -- Unaudited (Supplement to Exhibit 12 of the following Form S-3 Registration Statements of the Company: No. 333-48443, filed March 23, 1998). EX-27 2 EXHIBIT 27
5 1,000,000,000 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 92 0 1,772 0 589 2,702 6,223 3,617 6,899 2,784 1,423 0 0 77 1,650 6,899 3,095 3,095 2,575 2,575 0 0 38 204 75 129 0 0 0 129 1.05 1.03
EX-99 3 EXHIBIT 99 1 Exhibit 99 TRW INC. AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES - UNAUDITED (In Millions Except Ratio Data)
Years Ended December 31 Three Months ended ------------------------------------------------------------------------- March 31, 1998 1997 1996 1995 1994 1993 ------------------ ----------- ------------ ------------ ------------ ------------ Earnings from continuing operations before income taxes $203.8 $239.7(A) $302.2(B) $625.5 $435.5 $289.2 Unconsolidated affiliates (2.5) (8.0) 1.4 1.3 (0.6) 0.7 Minority earnings 4.6 20.2 11.5 10.8 7.7 1.4 Fixed charges excluding capitalized interest 51.8 123.9 129.0 137.2 145.3 177.5 ------ ------ ------ ------ ------ ------ Earnings $257.7 $375.8 $444.1 $774.8 $587.9 $468.8 ------ ------ ------ ------ ------ ------ Fixed Charges: Interest expense $ 38.5 $ 75.4 $ 84.2 $ 94.7 $104.7 $137.4 Capitalized interest 1.2 4.5 3.5 5.1 6.6 7.9 Portion of rents representative of interest factor 13.3 48.5 43.2 41.4 39.2 37.9 Interest expense of unconsolidated affiliates 0.0 0.0 1.6 1.1 1.4 2.2 ------ ------ ------ ------ ------ ------ Total fixed charges $ 53.0 $128.4 $132.5 $142.3 $151.9 $185.4 ------ ------ ------ ------ ------ ------ Ratio of earnings to fixed charges 4.9x 2.9x 3.4x 5.4x 3.9x 2.5x ------ ------ ------ ------ ------ ------ (A) The 1997 earnings from continuing operations before income taxes of $239.7 million includes a $548 million earnings charge for purchased in-process research and development. See "Acquisitions" footnote in the Notes to Financial Statements of the Company's 1997 Annual Report to Shareholders. (B) The 1996 earnings from continuing operations before income taxes of $302.2 million includes a charge of $384.8 Million as a result of actions taken in the automotive and space and defense businesses. See "Divestiture and special charges" footnote in the Notes to Financial Statements of the Company's 1996 Annual Report to Shareholders.
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