0000950152-95-001691.txt : 19950810 0000950152-95-001691.hdr.sgml : 19950810 ACCESSION NUMBER: 0000950152-95-001691 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950809 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: 1934 Act SEC FILE NUMBER: 001-02384 FILM NUMBER: 95560150 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 10-Q 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 June 30, 1995 ------------- 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 incorporation (I.R.S. Employer 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 August 4, 1995, there were 66,070,037 shares of TRW Common Stock, $0.625 par value, outstanding. This is page one of a total of 51 pages. The Exhibit Index is on page 15 of this filing. 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements -------------------- Statements of Earnings (unaudited) TRW Inc. and subsidiaries ------------------------------------------------------------------------------------------------------------
Second quarter ended Six months ended June 30 June 30 In millions except per share data 1995 1994 1995 1994 --------------------------------------------------------------------------- ----------------------------- Sales $2,712 $2,317 $5,308 $4,476 Cost of sales 2,184 1,846 4,257 3,566 --------------------------------------------------------------------------- ----------------------------- Gross profit 528 471 1,051 910 Administrative and selling expenses 184 176 385 352 Research and development expenses 123 112 226 218 Interest expense 24 27 48 56 Other (income)expense-net - 17 5 38 --------------------------------------------------------------------------- ----------------------------- Earnings before income taxes 197 139 387 246 Income taxes 74 52 149 95 --------------------------------------------------------------------------- ----------------------------- Net earnings $ 123 $ 87 $ 238 $ 151 --------------------------------------------------------------------------- ----------------------------- --------------------------------------------------------------------------- ----------------------------- PER SHARE OF COMMON STOCK Fully diluted $ 1.81 $ 1.31 $ 3.53 $ 2.28 Primary 1.84 1.33 3.58 2.30 Dividends declared .50 .47 .50 .47 --------------------------------------------------------------------------- ----------------------------- Shares used in computing per share amounts Fully diluted 68.0 65.6 67.4 66.0 Primary 66.7 65.0 66.3 65.4 --------------------------------------------------------------------------- -----------------------------
3 Statements of Cash Flows (unaudited) TRW Inc. and subsidiaries ------------------------------------------------------------------------------------------------------------
Six months ended June 30 In millions 1995 1994 ------------------------------------------------------------------------------------------------------------ Operating activities Net earnings $ 238 $ 151 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 260 240 Restructuring - (13) Deferred income taxes 11 27 Other-net 7 33 Changes in assets and liabilities, net of effects of businesses acquired or sold: Accounts receivable (162) (260) Inventories and prepaid expenses (28) (19) Accounts payable and other accruals (4) 59 Other-net (12) 34 ------------------------------------------------------------------------------------------------------------ Net cash provided by operating activities 310 252 ------------------------------------------------------------------------------------------------------------ Investing activities Capital expenditures (197) (187) Proceeds from divestitures 10 10 Investments in other assets (28) (31) Other-net - (19) ------------------------------------------------------------------------------------------------------------ Net cash used in investing activities (215) (227) ------------------------------------------------------------------------------------------------------------ Financing activities Increase (decrease) in short-term debt (24) (54) Proceeds from debt in excess of 90 days 15 158 Principal payments on debt in excess of 90 days (65) (49) Dividends paid (65) (61) Other-net 8 9 ------------------------------------------------------------------------------------------------------------ Net cash provided by (used in) financing activities (131) 3 ------------------------------------------------------------------------------------------------------------ Effect of exchange rate changes on cash (13) (33) ------------------------------------------------------------------------------------------------------------ Decrease in cash and cash equivalents (49) (5) Cash and cash equivalents at beginning of period 109 79 ------------------------------------------------------------------------------------------------------------ Cash and cash equivalents at end of period $ 60 $ 74 ------------------------------------------------------------------------------------------------------------
4 Balance Sheets (unaudited) TRW Inc. and subsidiaries
----------------------------------------------------------------------------------------------------------------------------- June 30 December 31 In millions 1995 1994 ----------------------------------------------------------------------------------------------------------------------------- Assets Current assets Cash and cash equivalents $ 60 $ 109 Accounts receivable 1,524 1,338 Inventories 511 470 Prepaid expenses 65 59 Deferred income taxes 239 239 ----------------------------------------------------------------------------------------------------------------------------- Total current assets 2,399 2,215 Property, plant and equipment-on the basis of cost 5,791 5,556 Less accumulated depreciation and amortization 3,263 3,067 ----------------------------------------------------------------------------------------------------------------------------- Total property, plant and equipment-net 2,528 2,489 Intangible assets Intangibles arising from acquisitions 479 477 Capitalized data files 463 441 Other 74 69 ----------------------------------------------------------------------------------------------------------------------------- 1,016 987 Less accumulated amortization 370 331 ----------------------------------------------------------------------------------------------------------------------------- Total intangible assets-net 646 656 Other assets 289 276 ----------------------------------------------------------------------------------------------------------------------------- $ 5,862 $ 5,636 ----------------------------------------------------------------------------------------------------------------------------- Liabilities and shareholders' investment Current liabilities Short-term debt $ 125 $ 122 Accounts payable 725 737 Current portion of long-term debt 165 157 Other current liabilities 1,002 970 ----------------------------------------------------------------------------------------------------------------------------- Total current liabilities 2,017 1,986 Long-term liabilities 793 796 Long-term debt 612 694 Deferred income taxes 281 269 Minority interests in subsidiaries 67 69 Capital stock 41 41 Other capital 391 354 Retained earnings 1,588 1,383 Cumulative translation adjustments 105 66 Treasury shares-cost in excess of par value (33) (22) ----------------------------------------------------------------------------------------------------------------------------- Total shareholders' investment 2,092 1,822 ----------------------------------------------------------------------------------------------------------------------------- $ 5,862 $ 5,636 -----------------------------------------------------------------------------------------------------------------------------
5 Results by Business Segments (unaudited) TRW Inc. and subsidiaries --------------------------------------------------------------------------------------------------------------------
Second quarter ended Six months ended June 30 June 30 In millions 1995 1994 1995 1994 --------------------------------------------------------------------------------- -------------------------------- Sales Automotive $ 1,719 $ 1,452 $ 3,460 $ 2,783 Space & Defense 842 709 1,548 1,389 Information Systems & Services 151 156 300 304 --------------------------------------------------------------------------------- -------------------------------- Sales $ 2,712 $ 2,317 $ 5,308 $ 4,476 --------------------------------------------------------------------------------- -------------------------------- Operating profit Automotive $ 172 $ 119 $ 345 $ 214 Space & Defense 54 45 99 91 Information Systems & Services 22 28 43 48 --------------------------------------------------------------------------------- -------------------------------- Operating profit 248 192 487 353 Company Staff and other (27) (27) (52) (53) Interest expense (24) (27) (48) (56) Earnings from affiliates -- 1 -- 2 --------------------------------------------------------------------------------- -------------------------------- Earnings before income taxes $ 197 $ 139 $ 387 $ 246 --------------------------------------------------------------------------------- --------------------------------
6 NOTES TO FINANCIAL STATEMENTS (unaudited) PRINCIPLES OF CONSOLIDATION --------------------------- The financial statements include the accounts of the Company and its subsidiaries except for an insurance subsidiary. The wholly-owned insurance subsidiary and the majority of investments in affiliated companies, which are not significant individually or in the aggregate, are accounted for by the equity method. INVENTORIES ----------- Inventories consist of the following: (In millions)
June 30 December 31 1995 1994 ---- ---- Finished products and work in process $278 $246 Raw materials and supplies 233 224 --- --- $511 $470 === ===
LONG-TERM LIABILITIES --------------------- For balance sheet purposes, long-term liabilities at June 30, 1995, and December 31, 1994, include $683 million and $682 million, respectively, relating to postretirement benefits other than pensions. OTHER (INCOME) EXPENSE-NET -------------------------- Other (income) expense included the following: (In millions)
Second quarter ended Six months ended June 30 June 30 1995 1994 1995 1994 --------------------- --------------------- Other income $(13) $(20) $(28) $(30) Other expense 10 18 25 32 Foreign currency translation 3 19 8 36 --- --- --- --- $ - $ 17 $ 5 $ 38 === === === ===
7 EARNINGS PER SHARE ------------------ Fully diluted earnings per share have been computed based on the weighted average number of shares of Common Stock outstanding during each period, including common stock equivalents and assuming the conversion of the Serial Preference Stock II--Series 1 and 3. Primary earnings per share have been computed based on the weighted average number of shares of Common Stock outstanding during each period including common stock equivalents. SUPPLEMENTAL CASH FLOW INFORMATION ---------------------------------- (In millions)
Six months ended June 30 ------------------------- 1995 1994 ---- ---- Interest paid (net of amount capitalized) $ 44 $57 Income taxes paid (net of refunds) $136 $10
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. 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. 8 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS (In millions except per share data)
Six Months Ended Second Quarter June 30 --------------------------------- -------------------------------- Percent Percent 1995 1994 Inc (Dec) 1995 1994 Inc (Dec) ---- ---- --------- ---- ---- --------- Sales $2,712 $2,317 17% $5,308 $4,476 19% Operating Profit $ 248 $ 192 30% $ 487 $ 353 38% Net Earnings $ 123 $ 87 42% $ 238 $ 151 58% Fully Diluted Earnings Per Share $ 1.81 $ 1.31 38% $ 3.53 $ 2.28 55% Effective Tax Rate 37.5% 37.5% 38.5% 38.7%
The increase in sales for the second quarter and first six months of 1995 resulted from higher volume in the Automotive segment, primarily in the North American airbag business and all European businesses, as well as increased volume in the Space & Defense segment. Operating profit for the second quarter and first six months of 1995 increased primarily from the increased sales noted above. The increase in net earnings for the second quarter and first six months of 1995 resulted from the higher operating profit noted above. Net earnings for the first six months of 1995 also benefited from lower interest expense. Interest expense was $48 million for the first six months of 1995 compared to $56 million for the first half of 1994. The decrease in interest expense was due primarily to lower average debt levels. 9 AUTOMOTIVE (In millions)
Six Months Ended Second Quarter June 30 ----------------------------------- ---------------------------------------- Percent Percent 1995 1994 Inc (Dec) 1995 1994 Inc (Dec) ---- ---- --------- ---- ---- --------- Sales $1,719 $1,452 18% $3,460 $2,783 24% Operating Profit $ 172 $ 119 44% $ 345 $ 214 61%
The increase in sales for the second quarter and first six months of 1995 resulted from higher volume in the North American airbag business and increased volume in all European businesses. Favorable exchange rates also contributed to the sales increase. Operating profit increased for the second quarter and first six months of 1995 as a result of the increase in sales from the North American airbag business as well as the increased volume in all European businesses. SPACE & DEFENSE (In millions)
Six Months Ended Second Quarter June 30 ----------------------------------- --------------------------------------- Percent Percent 1995 1994 Inc (Dec) 1995 1994 Inc (Dec) ---- ---- --------- ---- ---- --------- Sales $842 $709 19% $1,548 $1,389 11% Operating Profit $ 54 $ 45 20% $ 99 $ 91 9%
Sales for the second quarter and first six months of 1995 increased due to new business volume and improvements in ongoing program performance, partially offset by the effect of contracts nearing completion. The increase in operating profit for the second quarter and first six months of 1995 resulted from the increased sales volume and the absence of investments related to diversification into commercial markets, partially offset by program profit adjustments. INFORMATION SYSTEMS & SERVICES (In millions)
Six Months Ended Second Quarter June 30 ----------------------------------- --------------------------------------- Percent Percent 1995 1994 Inc (Dec) 1995 1994 Inc (Dec) ---- ---- --------- ---- ---- --------- Sales $151 $156 ( 4)% $300 $304 (1)% Operating Profit $ 22 $ 28 (19)% $ 43 $ 48 (9)%
The decrease in sales and operating profit for the second quarter and first six months of 1995 was primarily due to lower volume in the Information Systems and Real Estate Information Services businesses, partially offset by higher revenue in the Information Services business. 10 LIQUIDITY AND FINANCIAL POSITION In the first six months of 1995, cash flow provided by operating activities of $310 million was used primarily for capital expenditures of $197 million, dividend payments of $65 million, a net decrease in debt of $74 million and $23 million in other items. As a result, cash and cash equivalents decreased by $49 million. Total debt (short-term debt, the current portion of long-term debt and long-term debt) was $902 million at June 30, 1995, compared to $973 million at December 31, 1994. The ratio of total debt to total capital (total debt, total deferred income taxes, minority interests and shareholders' investment) at June 30, 1995 was 29 percent compared to 34 percent at December 31, 1994. During the first six months of 1995, the Company's committed U.S. 364-day revolving credit agreement, which allowed the Company to borrow up to $150 million, expired. Also during the first six months, the Company renegotiated the terms of its multi-year U.S. revolving credit agreement. The credit agreement, which previously allowed the Company to borrow up to $400 million, has been revised to allow the Company to borrow up to $550 million. The revised agreement now extends through February 2000 and contains lower commitment fees and borrowing rates. Also during the first six months of 1995, the Company renegotiated the terms of its committed multi-currency revolving credit agreement. The agreement, which previously consisted of two tranches with 13 banks and allowed the Company to borrow up to $200 million, now consists of one tranche and allows the Company to borrow up to $200 million. The revised agreement now extends through February 2000 and contains lower commitment fees and borrowing rates. The Company is subject to inherent risks attributed to operating in a global economy. It is the Company's policy to utilize derivative financial instruments to manage its interest rate and foreign currency exchange risks. The effect of these derivative transactions on the Company's net earnings is not material. Management believes that funds generated from operations and existing borrowing capacity will be adequate to support and finance planned growth, capital expenditures, company-sponsored research and development programs and dividend payments to shareholders. 11 PART II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS. On February 15, 1994, TRW filed suit in the United States District Court for the District of Arizona against Talley Industries, Inc. and certain Talley subsidiary companies. The suit relates to TRW's 1989 purchase of Talley's air bag business. In the complaint, TRW claimed that, among other violations of TRW's rights, Talley breached the non-compete provision contained in the purchase agreement by providing products and services to competitors of TRW. As a result of the breach, TRW exercised its rights under the agreement and the license from Talley to TRW to make a one-time payment of $26.5 million to Talley for a paid-up royalty-free license to use Talley's air bag patents and technology. On March 1, 1994, Talley filed an answer and counterclaims against TRW alleging that TRW had acted improperly in making the $26.5 million payment and requesting that TRW be ordered to pay immediately to Talley the value of all anticipated royalties, claimed by Talley to be not less than $250 million. On May 19, 1994, the court granted Talley's motion for an injunction requiring TRW to continue to make quarterly royalty payments pursuant to the 1989 asset purchase agreement and ancillary agreements pending trial of TRW's claims. On April 5, 1995, trial began before a jury on TRW's claims and Talley's counterclaims. On May 30, 1995, at the close of all the evidence, the trial judge directed a verdict against TRW on TRW's claims against Talley, ruling that there was not sufficient evidence to send TRW's claims to the jury. However, the judge allowed Talley's counterclaims to go to the jury. On June 6, 1995, the jury entered its verdict that Talley was entitled to the present value of the future royalty stream in the sum of $138 million on the contract claim, but that TRW had not acted in bad faith and that the technology on which royalties were due was limited to that in existence when TRW purchased Talley's air bag business. Judgment was entered against TRW on June 27, 1995 and TRW timely filed a notice of appeal on July 12, 1995. On July 26, 1995, the trial judge entered an order requiring that TRW continue to pay quarterly royalty payments to Talley as they become due, notwithstanding the fact it filed an appropriate bond in connection with its notice of appeal. TRW will immediately appeal the judge's decision requiring continued royalty payments and will also appeal the judge's decision directing a verdict against TRW on its claims against Talley. The judgment against TRW is not expected to have a material financial effect on the Company. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. (a) The Company held its 1995 Annual Meeting of Shareholders on April 26, 1995. (b) Proxies for the Annual Meeting of Shareholders were solicited pursuant to Regulation 14 under the Act; there was no solicitation in opposition to 11 12 management's nominees as listed in the proxy statement; and all of such nominees were elected. (c) Michael H. Armacost was elected a Director of the Company with 56,257,390 votes for election, 369,679 votes withheld from voting and 8,354,791 shares not voted, including broker non-votes. Carl H. Hahn was elected a Director of the Company with 56,254,033 votes for election, 373,036 votes withheld from voting and 8,354,791 shares not voted, including broker non-votes. George H. Heilmeier was elected a Director of the Company with 56,274,950 votes for election, 352,119 votes withheld from voting and 8,354,791 shares not voted, including broker non-votes. Richard W. Pogue was elected a Director of the Company with 55,854,456 votes for election, 772,613 votes withheld from voting and 8,354,791 shares not voted, including broker non- votes. The shareholders ratified the appointment of Ernst & Young as the Company's independent auditors for the 1995 fiscal year with 56,287,105 votes for, 158,605 votes against, 181,359 votes abstaining and 8,354,791 shares not voted, including broker non-votes. A shareholder proposal concerning a report to shareholders on research and development of space weapons was defeated, with 5,445,138 votes for, 46,082,129 votes against, 2,153,861 votes abstaining and 11,300,732 shares not voted, including broker non-votes. (d) None. 12 13 Item 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits: 10.1 TRW Inc. Stock Plan for Non-Employee Directors (as Amended and Restated, effective August 1, 1995) 10.2 TRW Inc. Deferred Compensation Plan (as Amended and Restated, effective August 1, 1995) 10.3 TRW Benefits Equalization Plan (as Amended and Restated, effective August 1, 1995) 10.4 TRW Supplementary Retirement Income Plan (as Amended and Restated, effective August 1, 1995) 11 Computation of Earnings Per Share -- Unaudited. 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. 33-30350, filed August 4, 1989, and No. 33-42870 filed September 20, 1991). (b) Reports on Form 8-K: No report on Form 8-K was filed during the quarter for which this report is filed. 13 14 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: August 9, 1995 By: /s/ Martin A. Coyle ------------------- Martin A. Coyle Executive Vice President and Secretary Date: August 9, 1995 By: /s/ Carl G. Miller ------------------ Carl G. Miller Vice President and Corporate Controller 14 15 FORM 10-Q Quarterly Report for Quarter Ended June 30, 1995 EXHIBIT INDEX -------------
Exhibit No. Description Page No. ----------- ----------- -------- 10.1 TRW Inc. Stock Plan for Non-Employee Directors (as Amended and Restated, effective August 1, 1995) 16 10.2 TRW Inc. Deferred Compensation Plan (as Amended and Restated, effective August 1, 1995) 19 10.3 TRW Benefits Equalization Plan (as Amended and Restated, effective August 1, 1995) 35 10.4 TRW Supplementary Retirement Income Plan (as Amended and Restated, effective August 1, 1995) 42 11 Computation of Earnings Per Share -- Unaudited. 46 27 Financial Data Schedule. 47 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. 33-30350, filed August 4, 1989, and No. 33-42870 filed September 20, 1991). 51
15 EX-10.1 2 TRW 10- Q EXHIBIT 10.1 1 EXHIBIT 10.1 AMENDED AND RESTATED EFFECTIVE AUGUST 1, 1995 TRW INC. STOCK PLAN FOR NON-EMPLOYEE DIRECTORS 1. PURPOSE ------- The purposes of this Stock Plan for Non-Employee Directors (the "Plan") of TRW Inc. (the "Company") are to increase the ownership interest in the Company of non-employee Directors whose services are considered essential to the Company's continued growth and progress and to provide a further incentive to serve as a Director of the Company. 2. ADMINISTRATION -------------- The Plan shall be administered by a Committee consisting of all Directors who are concurrently employees of the Company. Subject to the provisions of the Plan, the Committee shall have authority to adopt rules and regulations for carrying out the Plan and to interpret, construe and administer its provisions. The decisions of the Committee shall be final and binding upon all parties. The Committee may consist of as few as one person, and a quorum of the Committee shall be one. 3. ELIGIBILITY ----------- Directors of the Company who are not employees of the Company or any subsidiary or affiliate of the Company shall be eligible to participate in the Plan. Any Director who is a director or chairman of the board of directors of a subsidiary or affiliate of the Company shall not, solely by virture thereof, be deemed to be an employee of the Company or such subsidiary or affiliate for purposes of such eligibility. 2 4. GRANTS ------ Each eligible Director shall be granted 250 shares of TRW Common Stock ("TRW Common"), par value $0.625 per share, on August 1, 1995. Thereafter, on August 1 of each year, each eligible Director then serving shall be granted 250 shares of TRW Common. Only shares of TRW Common which previously have been issued and reacquired by the Company shall be utilized for grants under this Plan. Certificates for shares granted shall be issued as of the date of grant. Shares granted hereunder shall constitute compensation for services as a Director and shall supplement cash retainer fees. The value of shares of TRW Common granted hereunder shall be deemed to be the mean of the high and the low sales prices of TRW Common (1) as reported on the composite tape (or other appropriate reporting vehicle as determined by the Committee) for the date of grant or, if no such report shall be available for such date, as reported for the New York Stock Exchange for such date, or (2) if such day is not a trading day, as so reported for the next preceding trading day. 5. REGULATORY LIMITATIONS ---------------------- No share of TRW Common granted to a Director under this Plan may be sold for at least six months after the date of grant, except in the case of death or disability of such Director. The Company reserves the right to legend the share certificates, to retain custody of certificates for an appropriate period of time and to take other actions designed to assure compliance with applicable securities laws and stock exchange rules. 6. ADJUSTMENT UPON CHANGES IN TRW COMMON ------------------------------------- In the event there shall be any change in TRW Common through merger, consolidation, reorganization, recapitalization, stock dividend, stock split, exchange of stock or other change in the corporate structure -2- 3 or shares of the Company, appropriate adjustments shall be made in the number and kind of shares or other securities or property subject to subsequent grants hereunder to reflect such changes. 7. AMENDMENT AND TERMINATION PLAN ------------------------------ The Directors may from time to time amend, modify, suspend or terminate this Plan; provided, however, that the provisions of this Plan regarding eligibility, timing of grants and the number of shares included in any grant may not be amended or revised more than once every six months other than to conform to changes in the Internal Revenue Code of 1986, as amended, or the rules and regulations thereunder. 8. MISCELLANEOUS ------------- This Plan shall not be construed as conferring any rights upon any Director to continue as a Director for any period of time, or at any particular rate of compensation. The Company shall have the right to require, prior to the delivery of any share certificate, payment of any taxes required by law to be withheld with respect to the grant. - 3 - EX-10.2 3 TRW 10-Q EX-10.2 1 EXHIBIT 10.2 AMENDED AND RESTATED AUGUST 1, 1995 TRW INC. DEFERRED COMPENSATION PLAN THIS AMENDED AND RESTATED PLAN is established by TRW Inc. ("TRW") effective July 28, 1993, and as amended effective August 1, 1994 and August 1, 1995, for the benefit of certain employees of the Corporation in executive, managerial or professional capacities so as to enhance the Corporation's ability to attract and retain outstanding employees who are expected to contribute to its success. It shall remain in effect, as it may be amended from time to time, until termination as provided in Article VII of the Plan. ARTICLE I DEFINITIONS For the purposes of the Plan, the following words and phrases shall mean: 1.1 ACCOUNT. The bookkeeping or accounting records maintained (having and requiring no segregation or holding of any assets) by TRW pursuant to Article IV with respect to and resulting from a Participant's Deferral Election. 1.2 AFFILIATE. (a) Any corporation incorporated under the laws of one of the United States of America of which TRW owns, directly or indirectly, in excess of fifty percent (50%) of the combined voting power of all classes of stock or in excess of fifty percent (50%) of the total value of the shares of all classes of stock (all within the meaning of Section 1563 of the Code); (b) any partnership or other business entity organized under such laws, in which TRW owns, directly or indirectly, (i) in excess of fifty percent (50%) of the total capital or profits interest of such partnership, or (ii) in excess of fifty percent (50%) or more of the total value of such other business entity (all within the meaning of Section 414(c) of the Code); and (c) any other company designated as an Affiliate by the Committee. 1.3 BENEFICIARY. The person, persons or entity entitled under Article VI to receive any Plan Benefits payable after a Participant's death. -1- 2 1.4 CODE. The Internal Revenue Code of 1986, as amended. References in the Plan to Sections of the Code are to such Sections as in effect on the Effective Date. 1.5 COMMITTEE. The Compensation and Stock Option Committee of the Directors. 1.6 CORPORATION. TRW or an Affiliate of TRW. 1.7 DATE OF DEPOSIT. The Determination Date immediately preceding the date that, but for the Deferral Election, the Incentive Compensation would be paid. 1.8 DEFERRAL ELECTION. An election pursuant to Article III by an Eligible Employee to defer receipt of all or part of his Incentive Compensation. 1.9 DEFERRED COMPENSATION. The portion of Incentive Compensation which an Eligible Employee elects to defer pursuant to a Participation Agreement. 1.10 DETERMINATION DATE. The last day of each calendar quarter; that is March 31, June 30, September 30 and December 31. 1.11 DIRECTORS. The Directors of TRW. 1.12 EFFECTIVE DATE. July 28, 1993, the effective date of the establishment of the Plan. 1.13 ELIGIBLE EMPLOYEE. A person (who must be a U.S. citizen or a U.S. resident alien) in the full time active salary employ of the Corporation who is employed at Operational Incentive Plan Level III or above at the end of the year for which a Deferral Election applies. 1.14 EXECUTIVE OFFICER. Any Eligible Employee who is an "executive officer" of TRW for the purposes of Rule 3b-7 under the Securities Exchange Act of 1934. 1.15 FINANCIAL HARDSHIP. A severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or of a dependent (as defined in Section 152(a) of the Code) of the Participant, loss of the Participant's property due to casualty, or other similar extraordinary and unforeseeable circumstance arising as a result of events beyond the control of the Participant. In case of the Participant's death, the word "Beneficiary or other person or entity entitled to receive a Plan Benefit" shall be substituted for the word "Participant" wherever the latter appears in this Section 1.15. 1.16 HIGHLY PAID EMPLOYEE. A person in the full time active salary employ of the Corporation who (i) will earn, in salary and in bonus (assuming full year employment and no deferral of compensation), at least $150,000 (or such - 2 - 3 greater sum if the qualified benefit plan limitation is increased by the Internal Revenue Service) in the year of the Deferral Election or (ii) is already a participant in TRW's supplemental nonqualified benefit plans or (iii) is a U.S. citizen or U.S. resident alien who is Operational Incentive Plan Level III or above and is employed by either TRW Overseas Inc. or TRW Systems Overseas Inc. 1.17 INCENTIVE BONUS. A cash award payable to an Eligible Employee under TRW's Operational Incentive Plan (or similar compensation program that replaces the Operational Incentive Plan). 1.18 INCENTIVE COMPENSATION. Any cash award payable to an Eligible Employee as an Incentive Bonus or, if applicable, a Strategic Grant that, but for a Deferral Election under the Plan, would be paid to the Eligible Employee and considered to be "wages" for purposes of United States federal income tax withholding (or other appropriate jurisdiction). 1.19 INTEREST RATE. One-quarter of the annual interest rate, equal to 110% of the applicable long-term federal rate as published by the Internal Revenue Service pursuant to Code Section 1274(d) and in effect on the first business day of each calendar quarter. 1.20 PARTICIPANT. An Eligible Employee who has elected to participate in the Plan and has executed and filed with TRW a Participation Agreement as provided in Article III; provided, however, that such term shall include a person who no longer has an effective Deferral Election so long as he retains, under the Plan, an interest in an Account under the Plan. 1.21 PARTICIPANT AGREEMENT. An agreement between TRW and a Participant setting forth the Participant's Deferral Election. 1.22 PLAN. This Deferred Compensation Plan, as it may be amended from time to time. 1.23 PLAN BENEFIT. The benefit payable to a Participant in accordance with Article V hereof. 1.24 PLAN YEAR. Each of the twelve (12) month periods ending December 31 and occurring while the Plan remains in effect. The term "Plan Year" shall also include the period beginning on the Effective Date and ending December 31, 1993, and any period of less than twelve (12) months beginning January 1 and ending on the date the Plan is terminated. 1.25 PRE-RETIREMENT PAYMENT SUB-ACCOUNT. A Sub-Account of a Participant's Account, established pursuant to Section 4.3, to which there shall be credited Deferred Compensation under a single Deferral Election, and all interest accrued thereon, as to which the Participant has elected payment of his Plan Benefit in either five years or ten years from the Date of Deposit. - 3 - 4 1.26 RETIREMENT PAYMENT SUB-ACCOUNT. A Sub-Account of a Participant's Account, established pursuant to Section 4.3, to which there shall be credited Deferred Compensation under all Deferral Elections, and all interest accrued thereon, as to which the Plan Benefit is intended to be payable following retirement of the Participant from the Corporation. 1.27 SPECIAL COMMITTEE. The committee composed of the head of Human Resources, the General Counsel and the Chief Financial Officer of TRW, which committee reviews and acts upon the requests of Participants (other than Participants who are Executive Officers, whose requests are acted upon by the Committee) to receive early payout as a result of a Financial Hardship or to change payout upon retirement. 1.28 STRATEGIC GRANT. A cash award payable to an Eligible Employee pursuant to TRW's Strategic Incentive Program (or similar long-term compensation plan that replaces the Strategic Incentive Program). 1.29 SUB-ACCOUNT. A Pre-Retirement Payment Sub-Account or a Retirement Payment Sub-Account. 1.30 TERMINATION OF EMPLOYMENT. Any severance of a Participant from full-time active salaried employment by the Corporation for any reason (other than a transfer of employment from TRW to an Affiliate, from an Affiliate to another Affiliate or from an Affiliate to TRW). 1.31 TRW. TRW Inc., an Ohio corporation. ARTICLE II ADMINISTRATION 2.1 ADMINISTRATORS. The Plan shall be administered by the Committee, the Special Committee and the head of Human Resources, and certain decisions concerning Financial Hardship and change in payment upon retirement may be made by the Special Committee. Except as otherwise provided herein, decisions of the Committee, the head of Human Resources or the Special Committee shall be final and binding on all parties. 2.2 COMMITTEE. The Committee shall have the authority (a) to make, amend, interpret and enforce all rules and regulations for the administration of the Plan and (b) to decide all questions, including interpretation of the Plan as may arise in connection with the Plan insofar as it is applicable to Participants (i) who are Executive Officers or (ii) with respect to whom questions are referred to the Committee by the head of Human Resources. A majority of the members of the Committee shall constitute a quorum. The Committee may act by a vote of a majority of a quorum at a meeting or by a writing signed by a majority of the members of the Committee. - 4 - 5 2.3 HUMAN RESOURCES. The head of Human Resources shall administer the Plan in accordance with the terms of the Plan and the rules and regulations of the Plan as established by the Committee. Consistent with the authorized precedents and the rules and regulations authorized by the Committee, the head of Human Resources shall have the authority to decide all questions, including interpretations of the Plan, as may arise in connection with the Plan insofar as it is applicable to Participants other than Executive Officers. 2.4 SPECIAL COMMITTEE. With regard to all Participants, other than Participants who are Executive Officers, the Special Committee shall act upon (i) written requests of Participants concerning early payout of some or all of the Participant's Account balances as a result of Financial Hardship and (ii) written requests of Participants to change the payout of a Participant's Retirement Payment Sub-Account as provided by Section 5.1(b). The Special Committee may act by a vote of the majority at a meeting or by a writing signed by a majority of the members of the Special Committee. 2.5 FINANCIAL HARDSHIP AND RETIREMENT PAYOUT CHANGE REQUESTS. In order for a request to be considered by the Special Committee (or, in the case of a request as set forth in clauses (i) or (ii) of Section 2.4 by an Executive Officer, the Committee), the requests must (i) be in writing and delivered to the head of Human Resources, (ii) set forth whether the Participant is requesting an early payout because of a Financial Hardship or a change of payout upon retirement, (iii) set forth the reasons for such request, including in detail the Financial Hardship or the circumstances that necessitate the change of payout upon retirement, (iv) in the case of a request as a result of a Financial Hardship set forth the amount of such Participant's Account that the Participant wishes to be paid and the Sub-Accounts from which such early payout shall be made and (v) in the case of a change of payout at retirement set forth the manner in which the Participant wishes to receive payout (e.g., single sum or in five annual installments). Compliance with the petition procedures set forth in this Section 2.5 does not insure that the request will be granted by the Special Committee (or the Committee). ARTICLE III PARTICIPATION 3.1 PARTICIPATION. (a) Subject to the limitations set forth in this Article III, any person who is an Eligible Employee in the year for which the Incentive Compensation deferred under a Deferral Elections under this Section 3.1 is payable may participate in the Plan by executing and filing with the head of Human Resources a Participation Agreement; provided, however, the election to defer Incentive Bonus will not be effective unless the Eligible Employee is also a Highly Paid Employee. The head of Human Resources shall determine, in his sole discretion, which Eligible Employees are likely to be Highly Paid Employees during the year in - 5 - 6 which the Deferral Election is made. The head of Human Resources shall then notify Eligible Employees whether their elections to defer Incentive Bonuses are effective. (b) In each Participation Agreement, the Eligible Employee shall specify the percentage or dollar amount of Incentive Bonus and the percentage or the dollar amount of Strategic Grant in respect of a specified TRW fiscal year to be deferred and the Eligible Employee shall specify, subject to the limitations of Section 5.1, the form of Plan Benefit (i.e., whether such benefits are intended to be paid following retirement or five or ten years from the Date of Deposit). If the Eligible Employee chooses to defer a dollar amount of the Incentive Bonus or the Strategic Grant and to the extent that dollar amount specified exceeds the eligible amount of the Incentive Bonus or the Strategic Grant, as applicable, the amount actually deferred shall be eligible amount of the Incentive Bonus or the Strategic Grant, as applicable. If the Eligible Employee has chosen to have Deferred Compensation paid five or ten years from the Date of Deposit, such payments shall be made as provided in Section 5.1(d) below. (c) Before September 30, 1993 with respect to 1993, and September 30 of each subsequent Plan Year with respect to each Plan Year thereafter, each Eligible Employee who elects to become a Participant shall file with the head of Human Resources a Participation Agreement specifying his Deferral Election for any Incentive Compensation payable in respect of that Plan Year and whether such Deferred Compensation is intended to be payable the year following retirement or five or ten years from the Date of Deposit. 3.2 DEFERRAL ELECTIONS. Subject to the restrictions concerning deferral of Incentive Bonus set forth in Section 3.1(a), any Eligible Employee may elect to defer any percentage or dollar amount (but not both a percentage and dollar amount, but an Eligible Employee can defer a specified dollar amount of one of his Incentive Bonus and Strategic Grant and a percentage of the other) of each of his Strategic Grant and his Incentive Bonus; provided, however, that, to the extent that the Eligible Employee chooses to defer a percentage of his Incentive Bonus and/or Strategic Bonus, each Deferral Election, to be effective, must result in deferral of a minimum of 10% of the Eligible Employee's Incentive Bonus and/or Strategic Grant (provided that an Eligible Employee may elect to defer a portion of his Incentive Bonus and none of his Strategic Grant and vice versa) and the Deferral Elections must be in increments of 5% for each of the Strategic Grant and Incentive Bonus, which election percentages do not need to be identical; further, provided, however, that, to the extent that the Eligible Employee chooses to defer a specified amount of his Incentive Bonus and/or Strategic Bonus, each Deferral Election, to be effective, must result in deferral of a minimum of $10,000 of the Eligible Employee's Incentive Bonus and/or Strategic Grant (provided that an Eligible Employee may elect to defer a portion of his Incentive Bonus and none of his Strategic Grant and vice versa) and the Deferral - 6 - 7 Elections must be in increments of $1,000 for each of the Strategic Grant and Incentive Bonus, which election amounts do not need to be identical. 3.3 MODIFICATION OF DEFERRAL ELECTION. By written notice to TRW, a Deferral Election filed in any Plan Year may be modified or revoked at any time prior to October 1 of such Plan Year. Thereafter, a Deferral Election specified in a Participation Agreement shall be irrevocable, except that the Committee or the Special Committee, as appropriate under Article II, may permit a Participant at any time prior to the actual deferral of the Incentive Compensation to reduce the designated percentage to be deferred upon a finding, based upon uniform standards established by the Committee, that the Participant has suffered a Financial Hardship. ARTICLE IV DEFERRED COMPENSATION 4.1 DEFERRED COMPENSATION. The amount of Incentive Compensation deferred pursuant to a Deferral Election shall be withheld in a single sum at the time such Incentive Compensation, but for a Deferral Election, would be paid. 4.2 WITHHOLDING OF TAXES AND SSP/BEP CONTRIBUTIONS. Any withholding of taxes or other amounts which is required by any federal, state, or local law shall be withheld from the Participant's remaining undeferred Incentive Compensation, if any. If necessary in order to comply with any federal, state or local law, the amount of Incentive Compensation deferred may be reduced by an amount equal to any required withholding. Otherwise, such withholding may be made from any of the Participant's other compensation payable by the Corporation, or, at the election of the head of Human Resources, a Participant may be permitted to pay to the Corporation the amount of any such required withholding at or prior to the time such withholding would otherwise be required to be made. In addition, the amount of Incentive Compensation deferred shall be reduced by the amount of TRW Stock Savings Plan and Benefits Equalization Plan contributions to be made by the Eligible Employee on account of such Incentive Compensation. 4.3 ACCOUNTS. For recordkeeping purposes only, a separate Account shall be established and maintained by TRW for each Participant to which his Deferred Compensation and interest accrued thereon pursuant to Section 4.4 shall be credited. Each such Account shall be divided into the following Sub-Accounts for purposes of Section 5.1: (i) a Retirement Payment Sub-Account to which there shall be credited all Incentive Compensation deferred (and all interest thereon) pursuant to all Deferral Elections under which a Plan Benefit is payable the year following retirement; and (ii) a separate Pre-Retirement Payment Sub-Account for each Deferral Election under which the Participant has elected that his Plan Benefit be payable five or ten years from the Date of Deposit, to which the Incentive Compensation deferred (and all interest thereon) pursuant to such Deferral Election shall be credited. - 7 - 8 4.4 DETERMINATION OF ACCOUNT. The value of each Participant's Account as of each Determination Date shall be the total of the Participant's Retirement Payment and Pre-Retirement Payment Sub-Accounts. The value of each such Sub-Account shall consist of (i) the balance of such Sub-Account as of the last preceding Determination Date plus (ii) any Deferred Compensation credited to such Sub-Account since the last preceding Determination Date, plus (iii) interest in the amount determined by multiplying the average daily balance of such Sub-Account during the three calendar months since the last preceding Determination Date by the Interest Rate applicable to such three-month period, less (iv) the amount of all Plan Benefits, if any, paid during the period since the last preceding Determination Date. Interest, determined as provided in (iii) above, shall be credited to each such Sub-Account as of the Determination Date as of which such Sub-Account is valued. 4.5 STATEMENT OF ACCOUNTS. TRW shall submit to each Participant, within one hundred twenty (120) days after the close of each Plan Year and at such other times as determined by the Committee, a statement setting forth the total balance of the Participant's Account, and the balance of each Sub-Account thereof, as of the last day of such Plan Year and as of the last day of the immediately preceding Plan Year, the Deferred Compensation and interest credited to each Sub-Account during the Plan Year and the payments of the Plan Benefits from each Sub- Account during the Plan Year. ARTICLE V PLAN BENEFITS 5.1 PLAN BENEFITS PAYABLE ON TERMINATION OF EMPLOYMENT, FIVE YEARS FROM DATE OF DEPOSIT OR TEN YEARS FROM DATE OF DEPOSIT. (a) Subject to the provisions of Section 5.1(b) and except as otherwise provided below, upon Termination of Employment a Participant shall receive a Plan Benefit equal to the balance of his Account as of the Determination Date immediately preceding such Termination of Employment, plus the amount of any Deferred Compensation credited his Account after such Determination Date. Such Plan Benefit shall be payable as a single sum within a reasonable time following such Termination of Employment. In addition, the Participant shall receive interest on the balance of his Account for the period from such Determination Date to the date of payment at a daily simple interest rate equivalent to the Interest Rate then in effect. However, in the event that the Termination of Employment is the result of a divestiture of the unit or operations of the Corporation where the Participant worked prior to Termination of Employment and the Participant obtains employment with the entity that acquired such unit or operations, then the balance of such Participant's Retirement Payment Sub-Account shall not be payable until such Participant commences receiving retirement benefits from the - 8 - 9 Corporation and the balance of such Participant's Pre-Retirement Payment Sub-Account shall not be payable until such time as the Participant would have received payment in accordance with the original Deferral Election had the Participant's employment with the Corporation not been terminated. At such time, the amounts in such Participant's Account shall be paid as set forth in Sections 5.1(b) and 5.1(e). Interest shall continue to be earned on such Participant's Account following such Participant's Termination of Employment through payment in full of his or her Account. (b) In the event that a Participant's Termination of Employment occurs as a result of his retirement, the Participant shall receive the Plan Benefit payable in respect of his Retirement Payment Sub-Accounts in ten annual installments commencing in the year following the year that Termination of Employment occurred; provided, however, that the Participant can petition the Special Committee (or the Committee in the case of an Executive Officer) at any time at least six months prior to retirement to change such payment into five annual installments or a single sum; further provided, that any such payment change approved by the Special Committee (or the Committee) shall not be effective until the calendar year following the date of the payment change. In the event that payment shall be made in a single sum, such payment shall be in accordance with the procedures set forth in Section 5.1(a) above, but in no event in the same calendar year as the year of any requested change and no earlier than January 1 of the calendar year following the year that Termination of Employment occurred. In the event that the payment shall be made in installments, such payments shall be made in accordance with Section 5.1(e) below. If, at the time of retirement, the Participant has a credit in a Pre-Retirement Payment Sub-Account, such Sub-Account balances shall be paid in a single sum following retirement in accordance with the procedures set forth in Section 5.1(a) above. (c) In the event that a Participant's Termination of Employment occurs because of his death, his Beneficiary or, if no designated Beneficiary shall survive him, his estate shall receive the Plan Benefit in the manner provided in Section 5.1(a); provided, however, that if the Participant's Beneficiary designation shall result in all or any part of his Plan Benefit passing to his surviving spouse or to an entity for the benefit of his surviving spouse in such a way as to qualify for the marital deduction under Section 2056 of the Code, and at the time of his death the Participant was eligible to retire and had elected to receive his Plan Benefits in his Retirement Payment Sub-Account in installments pursuant to Section 5.1(b), payments from his Retirement Payment Sub-Account shall be made to such surviving spouse or to such entity for the benefit of such surviving spouse, as the case may be, in the manner provided in Section 5.1(b). Notwithstanding the foregoing, if such surviving spouse shall die prior to complete distribution of all Plan Benefits, the balance then remaining in such Retirement Payment Sub-Account shall be paid to - 9 - 10 the estate of such surviving spouse or to such entity for the benefit of such surviving spouse, as the case may be, in a single sum within a reasonable time following such spouse's death. (d) If the Participant has chosen in his Deferral Election to receive payouts either five or ten years from the Date of Deposit (as opposed to upon retirement from the Corporation), payments shall be made in a single sum form from each Pre-Retirement Payment Sub-Account of the Participant on or before February 15 of the year either five or ten years (depending upon the applicable Deferral Election) following the applicable Date of Deposit; provided, however, that if Termination of Employment has occurred prior to payment, payment of the Participant's Plan Benefits shall be made as provided in Section 5.1(a). (e) If the payments from the Participant's Retirement Payment Sub-Account are to be paid in installment form, such installments shall be paid in either five or ten annual installments between February 1 and February 15 of each year in which an installment is to be made; provided, however, that the initial installment payment will be made a reasonable time following Termination of Employment (but no earlier than February 1 of the calendar year following the year that Termination of Employment occurred). Installment payments will commence in the year following the Participant's Termination of Employment. The five year installment payments shall be made as follows: in the first year in which a payment is to be made, an amount equal to one-fifth of the balance of the Sub-Account on December 31 immediately preceding the first payment shall be paid; in the second year in which a payment is to be made, an amount equal to one-fourth of the balance of the Sub-Account on December 31 immediately preceding the second payment shall be paid; in the third year in which a payment is to be made, an amount equal to one-third of the balance of the Sub-Account on December 31 immediately preceding the third payment shall be paid; in the fourth year in which a payment is to be made, an amount equal to one-half of the balance of the Sub-Account on December 31 immediately preceding the fourth payment shall be paid; and in the fifth year in which a payment is to be made, an amount equal to the remaining balance of the Sub-Account on December 31 immediately preceding the fifth payment shall be paid. The ten installment payments shall be made as follows: in the first year in which a payment is to be made, an amount equal to one-tenth of the balance of the Sub-Account on the December 31 immediately preceding the first payment shall be paid; in the second year in which a payment is to be made, an amount equal to one-ninth of the balance of the Sub-Account on the December 31 immediately preceding the second payment shall be paid; in the third year in which a payment is to be made, an amount equal to one-eighth of the balance of the Sub-Account on the December 31 immediately preceding the third payment shall be paid; in the fourth year in which a payment is to be made, an amount equal to one-seventh of the balance of the Sub-Account on the December 31 immediately preceding the fourth payment shall be paid; in the fifth year in which a payment is to be made, an - 10 - 11 amount equal to one-sixth of the balance of the Sub-Account on the December 31 immediately preceding the fifth payment shall be paid; in the sixth year in which a payment is to be made, an amount equal to one-fifth of the balance of the Sub-Account on the December 31 immediately preceding the sixth payment shall be paid; in the seventh year in which a payment is to be made, an amount equal to one-fourth of the balance of the Sub-Account on the December 31 immediately preceding the seventh payment shall be paid; in the eighth year in which a payment is to be made, an amount equal to one-third of the balance of the Sub-Account on the December 31 immediately preceding the eighth payment shall be paid; in the ninth year in which a payment is to be made, an amount equal to one-half of the balance of the Sub-Account on the December 31 immediately preceding the ninth payment shall be paid; and in the tenth year in which a payment is to be made, the balance of the Sub-Account remaining on the December 31 immediately preceding the tenth payment shall be paid. Interest on Retirement Payment Sub-Account from which installment payments are made shall accrue until the December 31 immediately preceding the payment of the tenth installment. 5.2 WITHDRAWAL OF PLAN BENEFIT. No Plan Benefit shall be payable prior to the Participant's Termination of Employment other than in the form determined pursuant to Section 5.1(d), except that the Committee or the Special Committee, as appropriate under Article II, may permit a Participant or, after a Participant's death, a Participant's Beneficiary or other person or entity entitled to receive such Plan Benefit, to withdraw from the Participant's Account an amount necessary to meet a Financial Hardship. 5.3 WITHHOLDING; PAYROLL TAXES. TRW shall withhold from Plan Benefits payable under the Plan any taxes required to be withheld from an employee's wages for the federal or any state or local governments. 5.4 FULL PAYMENT OF BENEFITS. Notwithstanding any other provision of the Plan, all Plan Benefits shall be paid to the Participant no later than the January 5 next preceding the Participant's eightieth (80th) birthday. ARTICLE VI BENEFICIARY DESIGNATION 6.1 BENEFICIARY DESIGNATION. Each Participant shall have the right, at any time, to designate any person or persons as his Beneficiary (both principal as well as contingent) to whom payment under the Plan shall be made in the event of his death prior to complete distribution of all Plan Benefits due him under the Plan. Any Beneficiary designation shall be made in writing on a form prescribed by the Committee and shall become effective only when filed with the head of Human Resources. 6.2 AMENDMENTS. Subject to the limitations of Section 6.1 of the Plan, any Beneficiary designation may be changed by a Participant only by written - 11 - 12 notice of such change to the head of Human Resources on a form prescribed by the Committee. The filing of a new Beneficiary designation form will cancel all prior Beneficiary designations. 6.3 ABSENCE OF EFFECTIVE BENEFICIARY DESIGNATION. If a Participant fails to designate a Beneficiary as provided above or if all designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant's Plan Benefit, the Participant's remaining Plan Benefit shall be paid to his estate. 6.4 EFFECT OF PAYMENT. Payment to the Beneficiary designated pursuant to Sections 6.1 and 6.2 or to the Participant's estate pursuant to Section 6.3 shall completely discharge TRW's obligations under the Plan. ARTICLE VII AMENDMENT AND TERMINATION OF PLAN 7.1 TERMINATION. The Committee shall have the power in its sole discretion to suspend or terminate the Plan at any time, except that no such action shall adversely affect rights with respect to any Account without the consent of the person affected. 7.2 AMENDMENT. The Committee can amend any part of this Plan (including, without limitation, changing the interest rate to be paid to current and future Participants or changing who can become Participants) in its sole discretion without notice to Participants. ARTICLE VIII MISCELLANEOUS 8.1 UNFUNDED PLAN. The Plan is an unfunded plan maintained by TRW primarily to provide Deferred Compensation benefits for a select group of executive, managerial or professional employees of the Corporation. 8.2 UNSECURED GENERAL CREDITOR. Participants and their Beneficiaries, estates, heirs, successors and assigns shall have no legal or equitable rights, interest or claims in any property or assets of TRW. Such assets of TRW shall not be held under any trust or in any other way as collateral security for the fulfillment of the obligations of TRW under the Plan. Any and all of TRW's assets shall be, and remain, the general, unpledged, unrestricted assets of TRW. TRW's sole obligation under the Plan shall be merely that of an unfunded and unsecured promise of TRW to pay money in the future. 8.3 NONASSIGNABILITY. Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey, in advance of actual receipt, any Plan Benefit. Plan Benefits and all rights to Plan Benefits are and - 12 - 13 shall be nonassignable and nontransferable prior to actual payment as provided by the Plan. Any such attempted assignment or transfer shall be ineffective; TRW's sole obligation shall be to pay Plan Benefits to the Participant, his Beneficiary or his estate as appropriate. No part of any Plan Benefit shall, prior to actual payment as provided by the Plan, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person; nor shall any Plan Benefit be transferable by operation of law in the event of a Participant's or any other person's bankruptcy or insolvency, except as required by law. 8.4 NOT A CONTRACT OF EMPLOYMENT. Neither the terms and conditions of the Plan nor those of any Participation Agreement shall be deemed to constitute a contract of employment between the Corporation and the Participant, and neither the Participant, his Beneficiary nor his estate shall have any rights against TRW under the Plan except as may otherwise be specifically provided in the Plan. Moreover, nothing in the Plan shall be deemed to give a Participant the right to be retained in the service of the Corporation or to interfere with the right of the Corporation to discipline, discharge or change the status of a Participant at any time. Further, nothing in the Plan shall be deemed to give a Participant a right to receive any Incentive Compensation. 8.5 PROTECTIVE PROVISIONS. A Participant will cooperate with TRW by furnishing any and all information requested by TRW in order to facilitate the payment of Plan Benefits under the Plan, and by taking such other action as may be reasonably requested by TRW. 8.6 TERMS. Whenever any words are used in the Plan in the masculine, they shall be construed as though they were used in the feminine in all cases where they would so apply; and wherever any words are used in the Plan in the singular or in the plural, they shall be construed as though they were used in the plural or singular, as the case may be, in all cases where they would so apply. 8.7 CAPTIONS. The captions of the articles and sections of the Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions. 8.8. GOVERNING LAW. The provisions of the Plan shall be construed and interpreted according to the laws of the State of Ohio. 8.9 VALIDITY. In case any provision of the Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining provisions of the Plan, and the Plan shall be construed and enforced as if such illegal or invalid provision were not included in the Plan. 8.10 NOTICE OR FILING. Any notice or filing required or permitted to be given to TRW or a Participant under the Plan shall be sufficient if in writing and hand delivered, or sent by regular mail or by registered or certified mail, to the principal office of TRW or to the last known address of the Participant, as the - 13 - 14 case may be. Such notice or filing shall be deemed given or made (i) when hand delivered to the residence or offices of the recipient, (ii) as of five (5) days after the date of mailing if delivery is made by regular mail, or, (iii) as of five (5) days after the date shown on the postmark on the receipt for registration or certification provided to the sender at the time of mailing, if by registered or certified mail. 8.11 SUCCESSORS. The provisions of the Plan shall bind and obligate TRW and any successors. The term "successors" as used in this Section 8.11 shall include any corporate or other business entity which shall, whether by merger, consolidation, purchase or otherwise acquire all or substantially all of the business and assets of TRW and successors of any such corporation or other business entity. 8.12 EXPENSES AND COSTS. TRW shall bear all expenses and costs in connection with the operation of the Plan. 8.13 RELIANCE ON CERTIFIED PUBLIC ACCOUNTANTS. TRW, the Directors, the Committee, the Special Committee, the head of Human Resources and any employee of TRW or the Corporation shall be fully protected for actions taken in good faith based on the computations and reports made pursuant to or in connection with the Plan by the independent certified public accountants who audit TRW's accounts. 8.14 PRONOUN REFERENCES. References to "he," "his" or "him" in the Plan are used in the generic sense and shall apply to all Participants without reference to the gender of the Participant. ARTICLE IV CLAIMS PROCEDURE 9.1 CLAIM. Any person claiming a Plan Benefit, requesting an interpretation or ruling under the Plan (other than a ruling under Section 2.5 above or the determination as to whether an Eligible Employee is a Highly Paid Employee), or requesting information under the Plan shall present the request in writing to the head of Human Resources who (a) shall respond in writing within ninety (90) days following his receipt of the request or (b) in the case of a claimant who is an Executive Officer, shall refer the claim with his recommended response to the Committee, which shall respond in writing within one hundred twenty (120) days following the receipt of the request by the head of Human Resources. 9.2 DENIAL OF CLAIM. If the claim or request is denied, the written notice of denial shall state (i) the reasons for denial; (ii) a description of any additional material or information required and an explanation of why it is necessary; and (iii) an explanation of the Plan's claim review procedure. - 14 - 15 9.3 REVIEW OF CLAIM. Any person whose claim or request is denied may make a second request for review by notice given in writing to the head of Human Resources. The claim or request shall be reviewed further by the head of Human Resources or the Committee, as appropriate, and he or it may, but shall not be required to, grant the claimant a hearing. 9.4 FINAL DECISION. A decision on such second request shall normally be made within sixty (60) days after the date of the second request. If an extension of time is required for a hearing or other special circumstances, the claimant shall be notified and the time limit shall be one hundred twenty (120) days from the date of the second request. The decision shall be in writing and, whether made by the head of Human Resources or the Committee, shall be final and bind all parties concerned. - 15 - 16 PARTICIPATION AGREEMENT The undersigned hereby agrees to participate in the TRW Inc. Deferred Compensation Plan (the "Plan") for the following Incentive Compensation received by the undersigned on account of the year 19__. The undersigned acknowledges that if in accordance with the Plan the undersigned is not a Highly Paid Employee under the Plan, the undersigned's election to defer the Incentive Compensation will become invalid. The undersigned agrees that he/she has read the Plan and agrees that the following elections are governed by the Plan. Deferral Percentages or Amounts (Percentage elections must be in increments of 5%, with a 10% minimum election, and dollar elections must be in increments of $1,000, with a $10,000 minimum election; elections for OIP bonus and strategic incentive grant need not be the same; you cannot elect both a perecentage and a dollar amount for the same payment source): OIP Bonus ______% or $_______ Strategic Incentive Grant (to extent applicable) ______% or $_______ Election Options (Choose only one): ___ Paid in lump sum five years from the Date of Deposit ___ Paid in lump sum ten years from the Date of Deposit ___ Paid following retirement in ten annual installments unless a change has been approved in accordance with Section 2.5 of the Plan In order for the above elections to be effective, this form must be fully completed and returned to the head of Human Resources no later than September 30, 19__. Unless the undersigned has a Beneficiary Designation Form on file for this Plan with Human Resources, this Participation Agreement must be accompanied by an executed Beneficiary Designation Form. ___________________________ ________________________________ Signature of Participant Participant's Full Name ___________________________ ________________________________ Date Participant's Social Security # - 16 - EX-10.3 4 TRW 10-Q EX-10.3 1 EXHIBIT 10.3 TRW BENEFITS EQUALIZATION PLAN Amended and Restated Effective August 1, 1995 1. PURPOSE. This plan, the TRW Benefits Equalization Plan ("Plan"), combines the provisions of the TRW Inc. Supplemental Executive Retirement Plan and the TRW Inc. Nonqualified Benefits Equalization Plan as modified and restated herein. The Plan is unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act ("ERISA") and is maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees, including officers, of TRW Inc. and its domestic subsidiaries (the "Company"). Its purposes are to provide supplemental benefits to those: a. whose benefits under the TRW Salaried Pension Plan (the "Salaried Plan"), any other defined benefit pension plan for which TRW Inc. or a domestic subsidiary is a sponsor ("d.b. plan") or The TRW Employee Stock Ownership and Stock Savings Plan (the "Stock Savings Plan") are limited by section 401(a)(17) of the Internal Revenue Code of 1986 ("Code"); b. whose benefits otherwise payable under the Stock Savings Plan are limited by section 402(g)(1) of the Code; c. whose benefits under the Stock Savings Plan have been limited to the extent that the Company cannot contribute to the Stock Savings Plan the full amount of TRW Matching Contributions as defined therein without exceeding the amount provided by Code section 415(c)(1)(A); d. whose (i) compensation otherwise included as "Earnings" under the Salaried Plan or other d.b. plan or as "Compensation" under the Stock Savings Plan and (ii) service otherwise included as Benefit Service under the Salaried Plan or other d.b. plan would not be so included because of a determination by the Company that such inclusion could violate the regulations under Code section 401(a)(4); and e. whose compensation otherwise included as "Earnings" under the Salaried Plan or other d.b. plan or as "Compensation" under the Stock Savings Plan would not be included because such compensation was deferred under the provisions of the TRW Inc. Deferred Compensation Plan rather than received. 2. ELIGIBILITY. a. Employees (i) whose base pay and bonus paid in 1994 exceeded $150,000 and (ii) whose base pay and bonus paid in any subsequent year exceed the Code section 401(a)(17) compensation limit for such year will be eligible to participate in the portion of the Plan attributable to benefits otherwise payable under the Stock Savings Plan, provided they are otherwise eligible to participate in the Stock Savings Plan and have timely elected to participate in the 2 Plan. An account ("Account") shall be established in the name of each such eligible employee; amounts shall be credited to such Account in accordance with the provisions of Section 4. Once such employees have met the eligibility requirements under this paragraph a., they will continue to be eligible to participate in subsequent years even if their base pay and bonus paid fall below the compensation limit of Code section 401(a)(17). b. Any employee whose benefits under the Salaried Plan or other d.b. plan are limited due to any reason identified in Section 1 a., d. or e. above, is eligible to participate in the Plan; his interest will be referred to herein as the Defined Benefit Portion. 3. DIRECTORS/COMMITTEE. For purposes of the Plan, the term "Directors" shall mean the Compensation and Stock Option Committee of the Directors of TRW Inc. ("Company") with respect to the approval of benefits of any participant who is, or ever was, either a Director of the Company, a member of the Chief Executive Office, or a member of the Management Committee. With respect to the approval of benefits of other participants, the term "Committee" shall refer to an Administrative Committee consisting of those three employees of the Company who occupy the most senior positions in the Company Staff Finance, Human Resources, and Law Departments. The Committee or its delegate shall interpret the provisions of the Plan, determine the rights and status of participants and beneficiaries hereunder, and handle the general administration of the Plan. Such interpretations and determinations shall be final and conclusive as to all interested persons. 4. ACCOUNTS. a. An Account shall be established for each employee identified in Section 2 a. above into which shall be credited monthly the following amounts: i. that percentage of the participant's current compensation which the participant elected to contribute to the Stock Savings Plan as "Before-Tax Contributions" and that percentage of the participant's current compensation which the Company would have contributed to the Stock Savings Plan as "TRW Matching Contributions" (both terms as defined under the Stock Savings Plan) to the extent that such amounts cannot be contributed to the Stock Savings Plan due to any of the reasons identified in Section 1; provided, however, that the percentage of the participant's compensation credited to the Account, when combined with the percentage elected under the Stock Savings Plan, may not at any time be greater than that amount of "Before-Tax Contributions" which the participant would be permitted to contribute, as a highly-compensated participant, to the Stock Savings Plan without regard to the above-referenced limitations; and further provided, that the TRW Matching Contributions credited to the Account shall be reduced by any amounts actually contributed for the participant by the Company to the Stock Savings Plan as TRW Matching Contributions; plus -2- 3 ii. earnings on the amounts credited under subparagraph i. above in accordance with the participant's election as provided in Section 5 below, as if such amounts had been invested on a monthly basis in the Equity Fund and/or Insured Return Fund (also sometimes referred to as the Stable Value Fund) of the Stock Savings Plan. b. The participant's annual election to participate by having his Account credited as provided in paragraph a. shall be filed with the Committee in a form prescribed by it and shall be filed at such time as the Committee may specify, but in all cases prior to the time such compensation is to be earned by the participant. No changes in the percentage of compensation credited to the Account shall be made during the calendar year following the election, unless the participant elects 0%. c. Participants shall have, at all times, a nonforfeitable interest in the amounts credited to their Account, subject to the provisions of Section 10a. d. Participants shall receive an annual statement of their Account established under the Plan within a reasonable period after the end of each calendar year. 5. EARNINGS. a. Each participant shall be able to elect whether the monies credited to his or her Account will be credited with investment earnings based upon the performance of the Equity Fund or the Insured Return Fund (also sometimes referred to as the Stable Value Fund) of the Stock Savings Plan. Such election may be made by allocating the entire Account to one of the earnings options or by allocating the Account between the options in 25 percent multiples. Each participant may change his or her election at the middle or end of any month by contacting the Committee or its delegee. b. All TRW Matching Contributions allocated to a participant's Account will be credited in the same manner as the participant's election under Section 4a. 6. TRW SUPPLEMENTARY RETIREMENT INCOME PLAN BENEFITS. To the extent that the participant is restricted from accruing full benefits under the Salaried Plan or other d.b. plan, the Plan shall provide the annual pension benefits which would be payable from the Salaried Plan or other d.b. plan but for the limits in Section 1, less the sum of the annual pension benefits payable from the TRW Supplementary Retirement Income Plan (SRIP) and the Salaried Plan or other d.b. plan. - 3 - 4 7. TIME OF PAYMENT. DEFINED BENEFIT PORTION. a. No benefit is payable from the Defined Benefit Portion of the Plan, even if the Participant has terminated his/her employment, unless a Participant has five years of vesting service as defined under the Salaried Plan or other d.b. plan and has attained age fifty-five. b. If a Participant who has five or more years of vesting service dies before his/her benefit commencement date under the Salaried Plan or other d.b. plan, the Participant's Defined Benefit Portion benefit and the SRIP, if any, shall be paid in the same form and shall commence at the same time as a pre-retirement survivor benefit under the Salaried Plan or other d.b. plan. c. Any participant in the Salaried Plan or other d.b. plan and the Defined Benefit Portion of this Plan who is entitled to a vested or deferred vested pension under such qualified plan shall have his Defined Benefit Portion benefit and SRIP benefit, if any, commence at the same time as his benefit commencement date under the Salaried Plan or other d.b. plan. d. Except as provided above or in Section 9, payment of benefits under the Defined Benefit Portion and SRIP, if any, shall be made commencing with the January following the date the participant becomes eligible, having terminated his employment with the Company, for benefits under the qualified defined benefit plan. ACCOUNT. a. Except as provided in Section 9, payment of the Account to the participant (or, in the event of his death, to his beneficiary as designated in writing to the Committee) shall be made as of the January following the following events: i. the participant's becoming disabled as defined by the terms and conditions of the Stock Savings Plan; ii. the death of the participant; or iii. the termination of the participant's employment with the Company through retirement or otherwise. b. Notwithstanding the above, the Directors/Committee, upon determining that the participant has suffered an emergency event beyond his control which would impose an immediate and heavy financial hardship if the payment of his benefits were not made, may pay to the participant that part of his Account which is needed to satisfy such hardship. 8. FORM OF PAYMENT. Upon approval by the Directors/Committee, any election of a form of payment other than the automatic form of payment provided in this Section 8 shall be irrevocable. - 4 - 5 DEFINED BENEFIT PORTION. a. Except as provided in paragraph b. and Section 9, the automatic form of payment under the Defined Benefit Portion shall be, for an unmarried participant, a single life annuity, and, for a married participant, a 50% joint and survivor annuity with the participant's eligible spouse the survivor annuitant. Notwithstanding the above, the participant may petition the Directors/Committee at any time at least two months prior to termination of employment to change such form of payment into a single sum or annual installments from two to ten years, or any other payment form approved by the Directors/Committee in their or its discretion. If annual installment payments are elected, interest, if any, on such installments shall be determined by the Actuary, subject to approval by the Company. b. Except as provided in Section 9, any participant in the Salaried Plan or other d.b. plan and the Defined Benefit Portion of this Plan who is entitled to a vested or deferred vested pension under such qualified plan shall have his vested or deferred vested benefit paid from the Defined Benefit Portion in the same form and with the same designated joint annuitant, if any, as his form of payment under the Salaried Plan or other d.b. plan, unless otherwise provided under the terms of any Qualified Domestic Relations Order applicable to said participant or unless otherwise determined by the Committee, in its sole discretion. c. Any benefit payable from the Defined Benefit Portion shall be paid in the same form as payments from the SRIP. ACCOUNT. a. Subject to paragraph b., the automatic form of payment of monies in the Account shall be ten equal annual installments, payable during the month of January; provided, however, that the participant can petition the Directors or the Committee at any time at least two months prior to the participant's eligibility for payout from the Stock Savings Plan to change such payment to any lesser number of annual installments or to a single sum. If annual installments are paid, the balance of the Account shall continue to be credited with earnings as previously elected by the participant in accordance with Section 5. b. Payment of the Account shall be made in the form of cash unless the Directors/Committee determines in its discretion that it is appropriate to pay that portion of the participant's Account attributable to TRW Matching Contributions and earnings thereon in shares of the Company's Common Stock, in which event such distribution of shares shall occur no earlier than six months following the date that the participant is last employed by the Company. - 5 - 6 9. SMALL BENEFIT CASHOUTS. a. If the present value of a participant's interest in the Defined Benefit Portion of the Plan, determined as of the later of the participant's age 55 or termination of employment from the Company, is less than an amount which, if converted to a single sum equals $3,500, the benefit shall be paid out in single sum, either at the same time as his benefit commencement date under the Salaried Plan or other d.b. plan or at an earlier date as determined by the Committee in its sole discretion. b. If the balance in the participant's Account under the Plan, determined as of any of the events described in Section 8c. above, is less than $3,500, said Account balance shall automatically be paid out in the first January following said event. 10. OTHER LIMITATIONS ON BENEFITS a. Payments under the Plan shall be made by the Company, with any appropriate reimbursement being made by subsidiaries of the Company. The Plan shall be unfunded, and the Company shall not be required to establish any special or separate fund nor to make any other segregation of assets in order to assure the payment of any amounts under the Plan. Participants of the Plan have the status of general unsecured creditors of the Company and the Plan constitutes a mere promise by the Company to make benefit payments in the future. b. No benefit payable at any time under the Plan shall be subject in any manner to alienation, sale, transfer, assignment, pledge, attachment or encumbrance of any kind. No benefit under the Plan shall in any manner be subject to the debts or liabilities of any participant or former participant or beneficiary. If a participant or former participant or beneficiary shall attempt to or shall alienate, sell, transfer, assign, pledge or otherwise encumber his benefits under the Plan or any part thereof, or if by reason of his bankruptcy or other event happening at any time such benefits would devolve upon anyone else or would not be enjoyed by him, then the Committee in its discretion may terminate his interest in any such benefit and hold or apply it to or for his benefit or the benefit of his spouse, children or other dependents, or any of them, in such a manner as they may deem proper. 11. AMENDMENT AND TERMINATION. Nothing herein shall be construed to constitute a contract between the Company and the participants to continue the Plan, and the Company's Directors in their sole discretion may terminate or discontinue the Plan at any time and may at any time and from time to time amend any or all of its provisions; provided, however, that no termination or amendment shall reduce amounts credited prior to such termination or amendment. 12. MISCELLANEOUS PROVISIONS. a. As used in this document, the masculine gender shall include the feminine and the singular shall include the plural. To the extent that any term is - 6 - 7 not defined under the Plan, it shall have the same meaning as defined in the Stock Savings Plan or the Salaried Plan. b. Employment rights with the Company or any subsidiary shall not be enlarged or affected by the existence of the Plan. c. In case any provision of the Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining provisions. d. The Plan shall be governed by the laws of the State of Ohio. 7/7/95 - 7 - EX-10.4 5 TRW 10-Q EX-10.4 1 EXHIBIT 10.4 TRW SUPPLEMENTARY RETIREMENT INCOME PLAN Amended and Restated Effective August 1, 1995 1. PURPOSE. The purpose of the TRW Supplementary Retirement Income Plan (Plan), as contemplated by Section 3(36) of Title I of the Employee Retirement Income Security Act of 1974 (ERISA), is to supplement the retirement and death benefits of employees, including officers, of TRW Inc. and its subsidiaries with respect to whom such benefits under the qualified defined benefit retirement income plans maintained by such entities shall have been limited by virtue of section 415 of the Internal Revenue Code of 1986 (Code section 415). The Plan is unfunded for tax purposes and for purposes of Title I of ERISA. 2. ELIGIBILITY. All participants and beneficiaries of participants in the TRW Salaried Pension Plan ("Salaried Plan") or in any other defined benefit pension plan ("d.b. plan") sponsored by TRW Inc. (the "Company") or its domestic subsidiaries who are eligible to receive benefits from such plan or plans shall be eligible to receive benefits under the Plan if their benefits under the Salaried Plan or the d.b. plan cannot be fully provided because of the limits under Code section 415. 3. DIRECTORS/COMMITTEE. For purposes of the Plan, the term "Directors" shall mean the Compensation and Stock Option Committee of the Directors of TRW Inc. ("Company") with respect to the approval of benefits of any participant who is, or ever was, either a Director of the Company, a member of the Chief Executive Office, or a member of the Management Committee. With respect to the approval of benefits of other participants, the term "Committee" shall refer to an Administrative Committee consisting of those three employees of the Company who occupy the most senior positions in the Company Staff Finance, Human Resources, and Law Departments. The Committee or its delegate shall interpret the provisions of the Plan and determine the rights and status of participants and beneficiaries hereunder and handle the general administration of the Plan. Such interpretations and determinations shall be final and conclusive as to all interested persons. 4. BENEFITS. The amount of the benefit payable under the Plan shall be equal to the actuarial value of the benefit which would be payable to or in respect of a participant under the Salaried Plan or other qualified d.b. plan if the provisions of such qualified plans dealing with limits on pensions pursuant to Code section 415 were inapplicable but the limits in Code section 401(a)(17) were applicable, less the actuarial value of the benefit payable to or on behalf of the participant under such qualified plans taking into account such provisions. The amount of benefit payable under the Plan to a participant shall also be reduced to the extent that any other nonqualified plan established by the Company pays benefits to the participant that are attributable to limits imposed 2 upon qualified defined benefit plans other than those imposed by Code section 415. 5. PAYMENT OF BENEFITS. a. No benefit is payable from the Plan, even if the Participant has terminated his/her employment, unless a Participant has five years of vesting service as defined under the Salaried Plan or other d.b. plan and has attained age fifty-five. b. If a Participant who has five or more years of vesting service dies before his/her benefit commencement date under the Salaried Plan or other d.b. plan, the Plan benefit and any interest under the Benefits Equalization Plan (BEP) attributable to the Salaried Plan or d.b. plan shall be paid in the same form and shall commence at the same time as a pre-retirement survivor benefit under the Salaried Plan or other d.b. plan. c. Any participant in the Salaried Plan or other d.b. plan and the Plan who is entitled to a vested or deferred vested pension under such qualified plan shall have his Plan benefit and any BEP benefit attributable to the Salaried Plan or d.b. plan commence at the same time as his benefit commencement date under the Salaried Plan or other d.b. plan. d. Except as provided above or in Section 7, payment of benefits under the Plan and the BEP shall be made commencing with the January following the date the participant becomes eligible, having terminated his employment with the Company, for benefits under the qualified defined benefit plan. e. Except as provided in paragraph f. and Section 7, the automatic form of benefit payable under the Plan shall be, for an unmarried participant, a single life annuity, and, for a married participant, a 50% joint and survivor annuity with the participant's eligible spouse being the survivor annuitant. Notwithstanding the above, the participant may petition the Directors or the Committee at any time at least two months prior to termination of employment to change such form of payment into a single sum or annual installments from two to ten years, or any other payment form approved by the Directors or the Committee in their or its discretion. If annual installment payments are elected, interest, if any, on such installments shall be determined by the Actuary, subject to approval by the Company. f. Except as provided in Section 7, any participant in the Salaried Plan or other d.b. plan who is entitled to a vested or deferred vested pension under such qualified plan shall have his benefit paid from the Plan in the same form and with the same designated joint annuitant, if any, as his form of payment under the Salaried Plan or other d.b. plan unless otherwise provided under the terms of any Qualified Domestic Relations Order applicable to said participant or unless otherwise determined by the Committee in its sole discretion. -2- 3 g. Any benefit payable from the Plan shall be paid in the same form as payments from the defined benefit portion of the BEP. h. Upon approval by the Directors/Committee, any election of a form of payment or benefit commencement date other than the automatic form and commencement date shall be irrevocable. i. Payments to be made pursuant to the Plan shall be made by the Company, with any appropriate reimbursement being made by subsidiaries of the Company. The Plan shall be unfunded, and the Company shall not be required to establish any special or separate fund nor to make any other segregation of assets in order to assure the payment of any amounts under the Plan. Participants of the Plan have the status of general unsecured creditors of the Company and the Plan constitutes a mere promise by the Company to make benefit payments in the future. 7. SMALL BENEFIT CASHOUTS. If the present value of a participant's interest in the Plan, determined as of the later of the participant's age 55 or termination of employment from the Company, is less than an amount which, if converted to a single sum equals $3,500, the benefit shall be paid out in single sum, either at the same time as his benefit commencement date under the Salaried Plan or other d.b. plan or at an earlier date as determined by the Committee in its sole discretion. 8. NON-ALIENATION OF BENEFITS. No benefit payable at any time under the Plan shall be subject in any manner to alienation, sale, transfer, assignment, pledge or encumbrance of any kind. No benefit under the Plan shall in any manner be liable for or subject to the debts or liabilities of any employee or former employee or beneficiary. If an employee or former employee or beneficiary shall attempt to or shall alienate, sell, transfer, assign, pledge or otherwise encumber his benefits under the plan or any part thereof, or if by reason of his bankruptcy or other event happening at any time such benefits would devolve upon anyone else or would not be enjoyed by him, then the Directors or the Committee in their or its discretion may terminate his interest in any such benefit and hold or apply it to or for his benefit or the benefit of his spouse, children or other dependents, or any of them, in such a manner as they may deem proper. 9. AMENDMENT AND TERMINATION. Nothing herein shall be construed to constitute a contract between the Company and the participants to continue this plan. The Directors may terminate this plan at any time and may at any time and from time to time amend any or all provisions of this plan. 10. MISCELLANEOUS. a. As used in the Plan, the masculine gender shall include the feminine gender. To the extent that any term is not defined under the Plan, it shall have the same meaning as defined in the Salaried Plan or other d.b. plan. - 3 - 4 b. Employment rights with the Company or any subsidiary shall not be enlarged or affected by the existence of the Plan. c. In case any provision of the Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining provisions. d. The Plan shall be governed by the laws of the State of Ohio. 7/7/95 - 4 - EX-11 6 TRW 10-Q EX-11 1 Exhibit 11 TRW Inc. and Subsidiaries ------------------------- COMPUTATION OF EARNINGS PER SHARE - UNAUDITED --------------------------------------------- (In Millions Except Per Share Amounts)
Six Months Ended June 30 ---------------------------------- PRIMARY 1995 1994 ------- ---- ---- Net earnings $ 237.8 $ 150.7 Less preference dividend requirements 0.4 0.4 ----------- ----------- Net earnings applicable to common shares and common share equivalents $ 237.4 $ 150.3 =========== =========== Average common shares outstanding 65.0 64.4 Stock options and performance share rights, based on the treasury stock method using average market price 1.3 1.0 ----------- ----------- Average common shares and common share equivalents 66.3 65.4 =========== =========== Primary earnings per share $ 3.58 $ 2.30 =========== =========== FULLY DILUTED Net earnings applicable to common shares and common share equivalents $ 237.4 $ 150.3 Dividends assuming conversion of other dilutive securities: (A) Dilutive preference dividends 0.4 0.4 ----------- ----------- Net earnings applicable to fully diluted shares $ 237.8 $ 150.7 =========== =========== Average common shares outstanding 65.0 64.4 Common shares assuming conversion of other dilutive securities: (A) Dilutive preference shares 0.6 0.6 Stock options and performance share rights, based on the treasury stock method using closing market price if higher than average market price 1.8 1.0 ----------- ----------- Average fully diluted shares 67.4 66.0 =========== =========== Fully diluted earnings per share $ 3.53 $ 2.28 =========== ===========
[FN] (A) Assuming the conversion of the Serial Preference Stock II - Series 1 and Series 3. EX-27 7 TRW 10-Q EX-27
5 6-MOS DEC-31-1995 JAN-01-1995 JUN-30-1995 60 0 1,524 0 511 2,399 5,791 3,263 5,862 2,017 612 41 0 0 2,051 5,862 5,308 5,308 4,257 4,257 0 0 48 387 149 238 0 0 0 238 3.58 3.53
EX-99 8 TRW 10-Q EX-99 1 Exhibit 99 TRW Inc. and Subsidiaries Computation of Ratio of Earnings to Fixed Charges - Unaudited (In millions except ratio data)
Six Months Years Ended December 31 ended ------------------------------------------------------------------ June 30, 1995 1994 1993 1992 1991 1990 ------------- -------- -------- -------- -------- -------- Earnings(loss) before income taxes $386.6 $534.5 $359.1 $347.6 $(129.4)(A) $343.1 Unconsolidated affiliates 1.4 (0.6) 0.7 (0.9) (1.0) (13.2) Minority earnings 4.3 5.2 5.7 2.6 (7.8) (0.5) Fixed charges excluding capitalized interest 78.6 160.9 194.0 227.1 254.3 252.0 ---- ----- ----- ----- ----- ----- Earnings $470.9 $700.0 $559.5 $576.4 $116.1 $581.4 ------ ------ ------ ------ ------ ------ Fixed Charges: Interest expense $48.4 $104.8 $137.8 $162.9 $189.6 $186.9 Capitalized interest 2.5 6.6 7.9 12.7 10.1 7.6 Portion of rents representa- tive of interest factor 29.7 54.7 54.0 64.0 64.4 64.6 Interest expense of uncon- solidated affiliates 0.5 1.4 2.2 0.2 0.3 0.5 --- --- --- --- --- --- Total fixed charges $81.1 $167.5 $201.9 $239.8 $264.4 $259.6 ----- ------ ------ ------ ------ ------ Ratio of earnings to fixed charges 5.8x 4.2x 2.8x 2.4x 0.4x(A) 2.2x --- --- --- --- --- --- (A) The 1991 loss before income taxes of $129.4 million includes a charge of $343 million to cover costs associated with divestment and restructuring activities. Excluding this charge, the ratio of earnings to fixed charges would have been 1.7x.