-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NkQvDpfr8L1BxtWYUrq6UU1hSIZE/v7U3D2hZRro3GnIiNKbyzb5GtGysr5rEAXJ vA5Z8pCPKsSE8LAyrkCTDg== 0000950152-98-002222.txt : 19980324 0000950152-98-002222.hdr.sgml : 19980324 ACCESSION NUMBER: 0000950152-98-002222 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 29 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980323 SROS: NONE 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-K SEC ACT: SEC FILE NUMBER: 001-02384 FILM NUMBER: 98570475 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-K 1 TRW INC. 10-K 1 TRW 1997 SEC FORM 10-K 2 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-K (MARK ONE) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER 1-2384 TRW INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) OHIO 34-0575430 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.) INCORPORATION OR ORGANIZATION) 1900 RICHMOND ROAD, CLEVELAND, OHIO 44124 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(216) 291-7000 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED ------------------- --------------------- Common Stock, par value $0.625 per share New York Stock Exchange Chicago Stock Exchange Pacific Exchange Philadelphia Stock Exchange Rights to Purchase Cumulative Redeemable New York Stock Exchange Serial Preference Stock II, Series 4 Chicago Stock Exchange Pacific Exchange Philadelphia Stock Exchange Cumulative Serial Preference Stock II, New York Stock Exchange $4.40 Convertible Series 1 Cumulative Serial Preference Stock II, New York Stock Exchange $4.50 Convertible Series 3
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None 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 ____ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the registrant's voting and non-voting common equity held by non-affiliates was $6,462,102,553 as of February 27, 1998. This amount was computed on the basis of the closing price of the registrant's voting securities included in the NYSE-Composite Transactions report for such date, as published in the Midwest edition of The Wall Street Journal. As of February 27, 1998 there were 122,687,501 shares of TRW Common Stock, $0.625 par value, outstanding. The following documents have been incorporated herein by reference to the extent indicated herein: TRW Proxy Statement dated March 16, 1998 Part III TRW Annual Report to Security Holders for the year ended December 31, 1997 Parts I, II and IV
3 TRW INC. INDEX TO ANNUAL REPORT ON FORM 10-K FOR YEAR ENDED DECEMBER 31, 1997
PAGE PART I ---- Item 1. Business................................................................ 1 Item 2. Properties.............................................................. 6 Item 3. Legal Proceedings....................................................... 6 Item 4. Submission of Matters to a Vote of Security Holders..................... 7 Executive Officers of the Registrant.............................................. 7 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters... 8 Item 6. Selected Financial Data................................................. 9 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations......................................................... 9 Item 7A. Quantitative and Qualitative Disclosures about Market Risk.............. 9 Item 8. Financial Statements and Supplementary Data............................. 9 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.................................................. 9 PART III Item 10. Directors and Executive Officers of the Registrant...................... 10 Item 11. Executive Compensation.................................................. 10 Item 12. Security Ownership of Certain Beneficial Owners and Management.......... 10 Item 13. Certain Relationships and Related Transactions.......................... 10 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K........ 10
4 PART I ITEM 1. BUSINESS INDUSTRY SEGMENTS AND PRODUCT CLASSIFICATIONS TRW is an international company that provides advanced technology products and services. The principal businesses of TRW and its subsidiaries are the design, manufacture and sale of products and the performance of systems engineering, research and technical services for industry and the United States Government in two industry segments: Automotive and Space, Defense & Information Systems. TRW's principal products and services include automotive systems and components; spacecraft; software and systems engineering support services; and electronic systems, equipment and services. In 1996, TRW completed the sale of substantially all the businesses comprising its Information Systems & Services segment. TRW was incorporated under the laws of Ohio on June 17, 1916. As used herein the terms "TRW" and the "Company" refer to TRW Inc. or to TRW Inc. and its subsidiaries or to a subsidiary of TRW Inc. On December 29, 1997, the Company acquired BDM International, Inc. ("BDM") for cash of $880 million plus assumed net debt of $85 million. BDM is a multinational information technology company based in McLean, Virginia that provides systems integration and computer services to public sector and commercial customers. The results of operations have been included in the financial information set forth herein from the date of acquisition. The acquisition was accounted for by the purchase method; accordingly, the purchase price has been allocated to the net assets acquired based on their estimated fair values and to costs for certain restructuring actions to be completed in 1998. A $548 million earnings charge related to purchased in-process research and development with no tax benefit was recognized at the date of acquisition. BDM had total assets of approximately $660 million as of December 31, 1997 and revenues of approximately $1 billion for the year ended December 31, 1997. BDM employs approximately 9,000 people in 110 locations worldwide. The acquisition complements the Company's existing systems integration and information technology business. The acquisition of BDM was effectuated through a cash tender offer for all the outstanding shares of common stock of BDM followed by a merger in which BDM became a wholly-owned subsidiary of the Company. For reporting purposes, BDM is included in the re-named Space, Defense & Information Systems segment. On December 17, 1997, the Company agreed to acquire 1,500,000 shares, or approximately seven percent of the outstanding shares, of ICO Global Communications (Holdings) Limited ("ICO") for approximately $50 million. The Company and ICO also cross licensed certain patent rights related to their proposed global telecommunications systems and dismissed legal proceedings related to the patents. ICO paid TRW $25 million in January 1998 and will pay an additional $25 million by mid-1999. The Company has discontinued efforts related to its Odyssey project, a satellite-based personal communications system. In February 1997, TRW purchased from Magna International Inc. ("Magna") an 80 percent equity interest in MST Automotive GmbH Automobil-Sicherheitstechnik ("MST"), a European supplier of air bag modules, steering wheels and related automotive components, and Temic Bayern-Chemie Airbag GmbH ("TBCA"), a European supplier of air bag inflators and propellants and related automotive components, for a cost of approximately U.S. $465 million. The Company and Magna also formed a strategic alliance for the design, development and production of automotive products for the global market. In January 1998, the Company acquired the remaining 20 percent equity interest in MST and TBCA. AUTOMOTIVE TRW's Automotive segment designs, manufactures and sells a broad range of steering, suspension, engine, safety, engineered fastening, electronic, electromechanical and other components and systems for passenger cars and commercial vehicles, including trucks, buses, farm machinery and off-highway vehicles. These products include occupant safety systems such as seat belt systems and inflatable restraint systems, sensors, steering wheels, manual and power steering gears, engine valves and valve train components, suspension components, electronic monitoring and control systems, electromechanical assemblies, fasteners, stud welding systems and other components. The products included in this industry segment are sold primarily to automotive original equipment manufacturers. In addition, TRW sells its automotive components for use as aftermarket parts to automotive original equipment manufacturers and others for resale through their own independent distribution networks. SPACE, DEFENSE & INFORMATION SYSTEMS TRW's Space, Defense & Information Systems segment includes spacecraft, software and systems engineering and integration support services and electronic systems, equipment and services. 1 5 The Company's spacecraft activities include the design and manufacture of spacecraft equipment, propulsion subsystems, electro-optical and instrument systems, spacecraft payloads, high-energy lasers and laser technology and other high-reliability components. TRW's software and systems engineering and integration support services are in the fields of command and control, security for defense and nondefense applications, modeling and simulation, training, telecommunications, counterterrorism, undersea surveillance, antisubmarine warfare and other high-technology space and defense mission support systems, management of radioactive waste, automated fingerprint matching, upgrading of the nation's air traffic control program and other civilian applications. The Company's electronic systems, equipment and services include the design and manufacture of communications systems, avionics systems, commercial telecommunications and other electronic technologies for space, defense and selected commercial applications. The Company's information technology systems, products and services are in the areas of defense, health and human safety and welfare, integrated supply chain, warehousing, logistics, criminal justice, tax systems modernization and financial reporting applications for government and commercial customers. Products and services in this industry segment are sold and distributed principally to the United States Government, agencies of the United States Government, state, local and foreign governments and government agencies and commercial customers. TRW's spacecraft business involves the sale to the United States Government of subsystems and components for space propulsion and unmanned spacecraft for defense, scientific research and communications purposes. TRW is currently participating in a number of spacecraft programs. Software and systems engineering and integration support services are sold primarily to the United States Government defense agencies and to Federal civilian and other state and local governmental agencies. These services include a wide variety of computer software systems and analytical services for space and defense, air traffic control, and advanced communication and data retrieval applications. Sales to the United States Government of electronic systems, equipment and services consist of systems and subsystems for defense and space applications, including communications, command and control, guidance, navigation, electric power, sensing and electronic display equipment. Information technology systems, products and services are sold primarily to the United States Government, agencies of the United States Government, state, local and foreign governments and government agencies and commercial customers. While classified projects are not discussed herein, the operating results relating to classified projects are included in the Company's consolidated financial statements, and the business risks associated with such projects do not differ materially from those of other projects for the United States Government. TRW also performs diverse testing and general research projects in many of the technical disciplines related to its space, defense and information systems products and services under both private and United States Government contracts, including several advanced defense system projects. RESULTS BY INDUSTRY SEGMENT Reference is made to the information relating to the Company's industry segments, including sales, operating profit and identifiable assets attributable to each segment for each of the years 1995 through 1997, presented under the note entitled "Industry Segments" in the Notes to Financial Statements on pages 52 and 53 of the TRW 1997 Annual Report. Such information is incorporated herein by reference. FOREIGN AND DOMESTIC OPERATIONS TRW manufactures products or has facilities in 30 countries throughout the world. TRW's operations outside the United States are in Argentina, Australia, Austria, Belgium, Brazil, Canada, China, the Czech Republic, Egypt, France, Germany, India, Italy, Japan, Malaysia, Mexico, the Netherlands, Oman, Poland, Portugal, Saudi Arabia, South Africa, South Korea, Spain, Switzerland, Taiwan, Thailand, Turkey and the United Kingdom. TRW also exports products manufactured by it in the United States. Such export sales accounted for 7% of total sales during 1997, 8% of total sales during 1996 and 9% of total sales during 1995, or $732 million, $764 million and $813 million, respectively. TRW's foreign operations are subject to the usual risks that may affect such operations. These include, among other things, customary exchange controls and currency restrictions, currency fluctuations, changes in local economic conditions, exposure to possible expropriation or other government actions, unsettled political conditions and foreign government-sponsored boycotts of the Company's products or services for noncommercial reasons. Most of the identifiable assets associated with TRW's foreign operations are located in countries where the Company believes such risks to be minimal. Recent economic conditions in the Asia Pacific region and South America have had a negative impact on the Company's operations. Uncertainty regarding future economic conditions in these regions could result in continued negative impacts in 1998 that are not expected to be material. Reference is made to the information relating to the dollar amounts of sales, operating profit and identifiable assets by geographic area for each of the years 1995 through 1997 presented under the note entitled "Geographic Segments" in 2 6 the Notes to Financial Statements on page 54 of the TRW 1997 Annual Report. Such information is incorporated herein by reference. GENERAL COMPETITION TRW encounters intense competition in substantially all segments of its business. The Company's competitive position varies for its different products and services. However, TRW believes that it is a significant supplier of many of the products it manufactures and of many of the services it provides. In the Automotive segment, competitors include independent suppliers of parts and components as well as the Company's original equipment customers, many of whom are integrated manufacturers who produce or could produce substantial portions of their requirements for parts and components internally. Depending on the particular product, the number of the Company's competitors may vary significantly and many of the products have high capital requirements and require high engineering content. In the Automotive segment, the principal methods of competition are price, engineering excellence, product quality, customer service, delivery time and proprietary position. TRW competes for contracts covering a variety of United States Government projects and programs, principally in the Space, Defense & Information Systems segment of its business. Such competition is based primarily on technical ability, product quality and price. TRW's competitors for United States Government contracts typically are large, technically-competent firms with substantial assets, some of which have become considerably larger. CUSTOMERS Sales, directly and indirectly, to the United States Government, including the Department of Defense, the National Aeronautics & Space Administration and other agencies, constituted 33% of TRW's total sales for 1997, 32% for 1996 and 30% for 1995, or $3,523 million, $3,121 million and $2,890 million, respectively. Sales, directly and indirectly, to the United States Government, including the Department of Defense, the National Aeronautics & Space Administration and other agencies, represented 93% of the sales of the Space, Defense & Information Systems segment in 1997, 93% in 1996 and 93% in 1995, or $3,523 million, $3,120 million and $2,887 million, respectively. Companies engaged in United States Government contracting are subject to certain unique business risks, including dependence on Congressional appropriations and administrative allotment of funds, changes in Government policies that may reflect military and political developments, time required for design and development, significant changes in contract scheduling, complexity of designs and the rapidity with which they become obsolete, necessity of design improvements, difficulty in forecasting costs and schedules when bidding on developmental and highly sophisticated technical work and other factors characteristic of the industry. United States Government contracting laws also provide that the Government is to do business only with responsible contractors. In this regard, the United States Department of Defense and other federal agencies have the authority, under certain circumstances, to suspend or debar a contractor or organizational parts of a contractor from further Government contracting for a certain period "to protect the Government's interest." Such action may be taken for, among other reasons, commission of fraud or a criminal offense in connection with a United States Government contract. A suspension may also be imposed if a contractor is indicted for such matters. In the event of any suspension or debarment, the Company's existing contracts would continue unless terminated or canceled by the United States Government under applicable contract provisions. Other than the United States Government, TRW's largest customers (determined by including sales to their affiliates throughout the world but excluding sales to such customers or their affiliates that ultimately result in sales to the United States Government) are Ford Motor Company, Volkswagen AG and Chrysler Corporation. Such sales by TRW's Automotive segment to Ford, Volkswagen and Chrysler, and their respective subsidiaries, during 1997 accounted for 21%, 12% and 9%, respectively, of sales of the Automotive segment, compared to 23%, 10% and 10%, respectively, during 1996 and 23%, 10% and 9%, respectively, during 1995. Such sales by TRW's Automotive segment to Ford and its subsidiaries accounted for 14% of TRW's total sales for 1997, 15% for 1996 and 15% for 1995, or $1,469 million, $1,470 million and $1,474 million, respectively. BACKLOG The backlog of orders for TRW's domestic operations, without options, at December 31, 1997 and December 31, 1996 is estimated to have been approximately $6,025 million and $5,285 million, respectively, of which it is estimated that, directly or indirectly, United States Government business accounted for approximately $5,469 million and 3 7 $4,631 million, respectively. Reported backlog at the end of 1997 does not include approximately $3.6 billion of negotiated and priced, but unexercised, options for defense and non-defense programs. Unexercised options at the end of 1996 were valued at $2.9 billion. The exercise of options is at the discretion of the customer, and as in the case of Government contracts generally, dependent on future government funding. Of the total domestic backlog at December 31, 1997 and at December 31, 1996, 96% and 95%, respectively, were attributable to the Space, Defense & Information Systems segment, and substantially all of the backlog attributable to United States Government business related to that segment. The determination of TRW's backlog involves substantial estimating, particularly with respect to customer requirements contracts and long-term contracts of a cost-reimbursement or incentive nature. A substantial portion of the variations in TRW's estimated backlog in recent years is attributable to the timing of the award and performance of United States Government and certain other contracts. Subject to various qualifications, including those set forth herein, and assuming no terminations, cancellations or changes and completion of orders in the normal course, TRW has estimated that approximately 54% of the December 31, 1997 backlog will be delivered in 1998, 29% in 1999 and 17% thereafter. United States Government contracts and related customer orders generally are subject to termination in whole or in part at the convenience of the Government whenever the Government believes that such termination would be in its best interest. Multi-year Government contracts and related orders are subject to cancellation if funds for contract performance for any subsequent contract year become unavailable. If any of its Government contracts were to be terminated or canceled under these circumstances, TRW generally would be entitled to receive payment for work completed and allowable termination or cancellation costs. Whether the occurrence of any such termination or cancellation would have an adverse effect on TRW would depend upon the particular contract and the circumstances of the termination or cancellation. Backlog data and comparisons thereof as of different dates may not be reliable indicators of either future sales or the ratio of future direct and indirect United States Government sales to other sales. INTELLECTUAL PROPERTY TRW owns significant intellectual property, including a large number of patents, copyrights and trade secrets, and is involved in numerous licensing arrangements. Although TRW's intellectual property plays an important role in maintaining TRW's competitive position in a number of the markets that it serves, no single patent, copyright, trade secret or license, or group of related patents, copyrights, trade secrets or licenses, is, in the opinion of management, of such value to TRW that the business of TRW or of any industry segment of TRW would be materially affected by the expiration or termination thereof. TRW's general policy is to apply for patents on an ongoing basis in the United States and appropriate other countries on its significant patentable developments. TRW also views its name and mark as significant to its business as a whole. In addition, TRW owns a number of other trade names and marks applicable to certain of its businesses and products that it views as important to such businesses and products. RESEARCH AND DEVELOPMENT Research and development costs totaled $2,136 million, $1,997 million and $1,891 million in 1997, 1996 and 1995, respectively, of which customer-funded research and development was $1,501 million in 1997, $1,425 million in 1996 and $1,360 million in 1995. Company-funded research and development costs, which included research and development for commercial products, independent research and development and bid and proposal work related to government products and services, totaled $461 million in 1997, $412 million in 1996 and $392 million in 1995. A portion of the cost incurred for independent research and development and bid and proposal work is recoverable through overhead charged to government contracts. Company-funded product development costs, including engineering and field support for new customer requirements, were $174 million in 1997, $160 million in 1996 and $139 million in 1995. The 1997 amounts exclude the $548 million charge for purchased in-process research and development. EMPLOYEES At December 31, 1997, TRW had approximately 79,700 employees, of whom approximately 40,100 were employed in the United States. RAW MATERIALS AND SUPPLIES Materials used by TRW include or contain steel, stainless steel, pig iron, ferro-chrome, aluminum, brass, copper, tin, platinum, special alloys, sodium azide, glass, ceramics, plastic powders and laminations, carbon and plastic materials, 4 8 synthetic rubber, paper, and gold, silver, nickel, zinc and copper plating materials. TRW also purchases from suppliers various types of equipment and component parts that may include such materials. TRW's operations are dependent upon the ability of its suppliers of materials, equipment and component parts to meet performance and quality specifications and delivery schedules. In some cases, there is only a limited number of suppliers for a material or product due to the specialized nature of the item. Shortages of certain raw materials, equipment and component parts have existed in the past and may exist again in the future. TRW has taken a number of steps to protect against and to minimize the effect of such shortages. However, any future inability of TRW to obtain raw materials, equipment or component parts could have a material adverse effect on the Company. TRW's operations also are dependent on adequate supplies of energy. TRW has continued its programs to conserve energy used in its operations and has made available alternative sources of energy. ENVIRONMENTAL REGULATIONS Federal, state and local requirements relating to the discharge of materials into the environment, or otherwise relating to the protection of the environment, have had and will continue to have an effect on TRW and its operations. The Company has made and continues to make expenditures for projects relating to the environment, including pollution control devices for new and existing facilities. The Company is conducting a number of environmental investigations and remedial actions at current and former Company locations to comply with various federal, state and local laws and, along with other companies, has been named a potentially responsible party for certain waste management sites. Each of these matters is subject to various uncertainties, and some of these matters may be resolved unfavorably to the Company. A reserve estimate reflecting cost ranges is established using standard engineering cost estimating techniques for each matter for which sufficient information is available. In the determination of cost ranges, consideration is given to the professional judgment of the Company's environmental engineers in consultation with outside environmental specialists, when necessary. At multi-party sites, the reserve estimate also reflects the expected allocation of total project costs among the various potentially responsible parties. At December 31, 1997, the Company had reserves for environmental matters of $71 million. The Company aggressively pursues reimbursement for environmental costs from its insurance carriers. Insurance recoveries are recorded as a reduction of environmental costs when fixed and determinable. The Company does not believe that compliance with environmental protection laws and regulations will have a material effect upon its capital expenditures or competitive position, and TRW's capital expenditures for environmental control facilities during 1998 and 1999 are not expected to be material to the Company. The Company believes that any liability that may result from the resolution of environmental matters for which sufficient information is available to support cost estimates will not have a material adverse effect on the Company's earnings. However, the Company cannot predict the effect on the Company's earnings of expenditures for aspects of certain matters for which there is insufficient information. See also "Legal Proceedings" below. In addition, the Company cannot predict the effect on the Company's earnings of compliance with environmental laws and regulations with respect to currently unknown environmental matters or the possible effect on the Company's earnings of compliance with environmental requirements imposed in the future. CAPITAL EXPENDITURES During the five years ended December 31, 1997, TRW's capital expenditures and the net book value of its assets retired or sold were:
(IN MILLIONS) ----------------------------------------------------- CAPITAL EXPENDITURES ----------------------------------- LAND, NET BOOK BUILDINGS MACHINERY VALUE OF YEAR ENDED AND LEASEHOLD AND ASSETS RETIRED DECEMBER 31, IMPROVEMENTS EQUIPMENT TOTAL OR SOLD ------------ ------------- --------- ----- -------------- 1997................................... $86 $463 $549 $54 1996................................... 76 424 500 29 1995................................... 74 392 466 21 1994................................... 92 396 488 19 1993................................... 73 386 459 47
On an industry segment basis, capital expenditures during 1997 and 1996 were as follows: Automotive, $390 million and $342 million, respectively; and Space, Defense & Information Systems, $156 million and $157 million, respectively. Of total capital expenditures, 56% in 1997 and 59% in 1996 were invested in the United States. 5 9 ITEM 2. PROPERTIES TRW's operations include numerous manufacturing, research and development and warehousing facilities. TRW owns or leases principal facilities located in 27 states plus the District of Columbia in the United States and in 29 other countries. Approximately 43% of the principal domestic facilities are used by the Automotive segment and 57% are used by the Space, Defense & Information Systems segment. A substantial majority of the foreign facilities is used by the Automotive segment. The Company also owns or leases certain smaller research and development properties and administrative, marketing, sales and office facilities throughout the United States and in various parts of the world. In addition, TRW operates facilities on property owned directly or indirectly by the United States Government. The Company owns its world headquarters in Lyndhurst, Ohio and the headquarters for its Space & Electronics Group in Redondo Beach, California. In the opinion of management, the Company's facilities are generally well maintained and are suitable and adequate for their intended use. Reference is made to the information concerning long-term rental obligations under operating leases presented under the note entitled "Lease Commitments" in the Notes to Financial Statements on page 48 of the TRW 1997 Annual Report. Such information is incorporated herein by reference. ITEM 3. LEGAL PROCEEDINGS During 1996, the Company was advised by the Department of Justice ("DOJ") that it had been named as a defendant in two lawsuits brought by Richard D. Bagley, a former employee of the Company's former Space & Technology Group, and originally filed under seal in 1994 and 1995, respectively, in the United States District Court for the Central District of California under the QUI TAM provisions of the civil False Claims Act. The Act permits an individual to bring suit in the name of the United States and share in any recovery. The allegations in the lawsuits relate to the classification of costs incurred by the Company that were charged to certain of its federal contracts. Under the law, the government must investigate the allegations and determine whether it wishes to intervene and take responsibility for the lawsuits. On February 13, 1998, the DOJ intervened in the litigation. On February 19, 1998 and March 4, 1998, Bagley filed amended complaints in the Central District of California that realleged certain of the claims included in the 1994 and 1995 lawsuits and omitted the remainder. The amended complaints allege that the United States has incurred substantial damages and that the Company should be ordered to cease and desist from violations of the civil False Claims Act and is liable for treble damages, penalties, costs, including attorneys' fees, and such other relief as deemed proper by the court. On March 17, 1998, the DOJ filed its complaint against the Company upon intervention in the 1994 lawsuit, which set forth a limited number of the allegations in the 1994 lawsuit and other allegations not in the 1994 lawsuit. The DOJ elected not to pursue the other claims in the 1994 lawsuit or the claims in the 1995 lawsuit. The DOJ's complaint alleges that the Company is liable for treble damages, penalties, interest, cost and "other proper relief." The Company cannot presently predict the outcome of these matters, although management believes that the Company has meritorious defenses. On December 15, 1987, the Commissioner of the Indiana Department of Environmental Management issued an Order to TRW and several other respondents relating to alleged contamination of the public water supply in Shelbyville, Indiana by, among other sources, two closed facilities that were formerly operated by TRW's Connectors Division. The Order requires the respondents to fund the relocation of the main well field for Shelbyville to a location that can provide a safe source of potable water and to perform a remedial investigation of the source and extent of contamination within a one-mile radius of the well field. The Order also requires the respondents to pay civil penalties of $25,000 per day for violations of law which allegedly occurred prior to issuance of the Order. TRW has filed a petition for review of the Order. The Order is not expected to have a material effect on the Company's financial position. TRW Vehicle Safety Systems Inc., a wholly-owned subsidiary of the Company, has reported to the Arizona Department of Environmental Quality ("ADEQ") potential violations of the Arizona hazardous waste law at its Queen Creek, Arizona facility for the possible failure to properly label and dispose of wastewater that might be classified as hazardous waste. ADEQ is conducting an investigation into these potential violations and the Company is cooperating with the investigation. If ADEQ initiates proceedings against the Company with respect to such matters, the Company could be liable for penalties and fines and other relief. The Company has been apprised by state and federal officials that there are ongoing civil and criminal investigations with respect to these potential violations. Management is currently evaluating this matter and is unable to make a meaningful estimate of the amount or range of possible liability, if any, at this time, although management believes that the Company would have meritorious defenses. 6 10 On July 21, 1997, the United States Environmental Protection Agency ("EPA") issued a notice of violation to the Company under the Clean Air Act with respect to air emissions at the former Izumi Industries, Corporation, Inc. facility in Yaphank, New York. TRW acquired this facility in November 1996. The EPA informed TRW that the New York State Department of Environmental Conservation ("DEC") would be the lead agency in this action. On August 15, 1997, the DEC commenced an administrative enforcement action against the Company under the New York Environmental Conservation Law with respect to such emissions. On September 11, 1997, the Company agreed to an Order of Consent with the DEC, pursuant to which the Company has paid a $300,000 civil penalty to the DEC and has initiated certain specified actions to bring the facility into compliance with applicable regulatory standards relating to air emissions. These matters are not expected to have a material effect on TRW's financial position. TRW is seeking reimbursement from Izumi Industries, Corporation, Inc. for the costs arising from such Order of Consent. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None during the fourth quarter of 1997. EXECUTIVE OFFICERS OF THE REGISTRANT The names and ages of, and the positions and offices held by, each person designated an executive officer of the Company as of March 20, 1998, together with the offices held by each such person during the last five years, are listed below. For purposes hereof, the term "executive officer" includes the Chairman of the Board, the President, each Vice President in charge of a principal business function and any other officer who performs a policy-making function for the Company. Each executive officer is elected annually and, unless the executive officer resigns or terminates employment with the Company or is removed from office by action of the Company's Directors, will hold office for the ensuing year or until a successor is elected in accordance with the Company's Regulations. None of the Company's executive officers has a family relationship to any other executive officer.
POSITIONS AND BUSINESS EXPERIENCE NAME AGE DURING THE PAST FIVE YEARS ---- --- --------------------------------- B. Blankenstein 59 Executive Vice President and General Manager, TRW Steering, Suspension & Engine Group (1996 to the present) Managing Director, TRW Deutschland GmbH (1995 - 1996) Vice President and General Manager, TRW's Global Engine Components business (1994 - 1996) Managing Director, TRW Motorkomponenten GmbH & Co. KG (1991 - 1995) J. T. Gorman 60 Chairman of the Board and Chief Executive Officer (1988 to the present) and Director (1984 to the present) T. W. Hannemann 55 Executive Vice President and General Manager, TRW Space & Electronics Group (1993 to the present) P. S. Hellman 48 President, Chief Operating Officer and Director (1995 to the present) Executive Vice President and Assistant President (1994) Executive Vice President, Chief Financial Officer and Assistant President (1994) Executive Vice President and Chief Financial Officer (1991 - 1994) H. V. Knicely 62 Executive Vice President, Human Resources and Communications (1995 to the present) Executive Vice President, Human Resources, Communications & Information Resources (1989 - 1994) W. B. Lawrence 53 Executive Vice President, General Counsel and Secretary (1997 to the present) Executive Vice President, Planning, Development & Government Affairs (1989 - 1997)
7 11
POSITIONS AND BUSINESS EXPERIENCE NAME AGE DURING THE PAST FIVE YEARS ---- --- --------------------------------- C. G. Miller 55 Executive Vice President and Chief Financial Officer (1996 to the present) Executive Vice President, Chief Financial Officer and Controller (1996) Vice President and Controller (1990 - 1996) P. A. Odeen 62 Executive Vice President and General Manager, TRW Systems & Information Technology Group (1998 to the present) President, Chief Executive Officer (1992 - 1998) and Director (1992 - 1997), BDM International, Inc. J. S. Remick 59 Executive Vice President and General Manager, TRW Occupant Restraint Systems Group (1996 to the present) Executive Vice President and General Manager, TRW Steering, Suspension & Engine Group (1995 - 1996) Vice President and Deputy General Manager, Automotive (1995) Vice President and General Manager, TRW Steering & Suspension Systems, North and South America (1991 - 1995) P. Staudhammer 64 Vice President, Science & Technology (1993 to the present) Vice President and Director of the Center for Automotive Technology (1990 - 1993) J. P. Stenbit 57 Executive Vice President, TRW Telecommunications (1998 to the present) Executive Vice President and General Manager, TRW Systems Integration Group (1994 - 1997) Vice President and General Manager, TRW Systems Integration Group (1990 - 1994) R. D. Sugar 49 Executive Vice President and General Manager, TRW Automotive Electronics Group (1996 to the present) Executive Vice President and Chief Financial Officer (1994 - 1996) Vice President, Group Development, TRW Space & Electronics Group (1992 - 1994)
PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Reference is made to the information set forth in the table presented under "Stock Prices and Dividends (Unaudited)" on page 55 of the TRW 1997 Annual Report and to the information presented under the note entitled "Debt and Credit Agreements" in the Notes to Financial Statements on pages 47 and 48 of the TRW 1997 Annual Report. The information contained in such table and the information contained in the second-to-last paragraph of text in such note to financial statements are incorporated herein by reference. The Company's Common Stock is traded principally on the New York Stock Exchange and is also traded on the Chicago, Pacific, Philadelphia, London and Frankfurt exchanges. On February 27, 1998, there were 25,390 shareholders of record of the Company's Common Stock. 8 12 ITEM 6. SELECTED FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS) --------------------------------------------------- YEARS ENDED DECEMBER 31, --------------------------------------------------- 1997 1996 1995 1994 1993 ------- ------- ------- ------- ------- Sales.............................................. $10,831 $ 9,857 $ 9,568 $ 8,491 $ 7,330 Earnings (loss) from continuing operations before cumulative effect of accounting changes.......... (49) 182 395 277 177 Per share of Common Stock: Diluted earnings -- continuing operations........ (0.40) 1.37 2.94 2.09 1.35 Basic earnings -- continuing operations.......... (0.40) 1.41 3.02 2.14 1.39 Cash dividends declared.......................... 1.24 1.17 1.05 0.985 0.94 Total assets....................................... 6,410 5,899 5,670 5,435 5,042 Long-term debt..................................... 1,117 458 539 693 868 Shares used in computing per share amounts: Diluted.......................................... 123.7 132.8 134.4 132.9 130.9 Basic............................................ 123.7 128.7 130.6 129.2 126.9
In 1997, earnings (loss) from continuing operations include a $548 million, $4.43 per share, one-time noncash charge related to in-process research and development associated with the acquisition of BDM. In 1996, the Company recorded charges of $202 million after tax, $1.52 per share, primarily for actions taken, in part, to enhance the Company's competitiveness. Also during 1996, the Company applied the provisions of Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," resulting in the recognition of $50 million after tax, $0.38 per share, of impairment losses which were primarily a result of technological changes and the decision to close certain facilities in the Automotive segment. At December 31, 1997 the Company adopted Statement of Financial Accounting Standards No. 128, "Earnings Per Share." All share and per share amounts including those of prior years have been restated to comply with the new provisions. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Reference is made to the information presented under the heading "Management's Discussion and Analysis of the Results of Operations and Financial Condition" on pages 26 through 31 of the TRW 1997 Annual Report. Such information is incorporated herein by reference. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Reference is made to the information presented under the heading "Management's Discussion and Analysis of the Results of Operations and Financial Condition" on pages 26 through 31 of the TRW 1997 Annual Report. Reference is also made to the information presented under the headings "Summary of Significant Accounting Policies" and "Debt and Credit Agreements" in the Notes to Financial Statements on pages 38 through 40 and 47 and 48, respectively, of the TRW 1997 Annual Report. Such information is incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Reference is made to the financial statements headed "Statements of Earnings," "Balance Sheets," "Statements of Cash Flows" and "Statements of Changes in Shareholders' Investment," and the accompanying notes thereto, on pages 33 through 54 of the TRW 1997 Annual Report. Reference is also made to the information included in the table presented under the heading "Quarterly Financial Information (Unaudited)" on page 54 of such report. Such statements, the accompanying notes and such table are incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 9 13 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Reference is made to the information relating to TRW's Directors which is presented under the heading "Board of Directors" on pages 4 through 8 of the TRW Proxy Statement dated March 16, 1998, as filed with the Securities and Exchange Commission (the "TRW Proxy Statement"). Reference is made to the information relating to Section 16(a) compliance which is presented under the heading "Section 16(a) Beneficial Ownership Reporting Compliance" on page 23 of the TRW Proxy Statement. Such information is incorporated herein by reference. See the information presented in Part I of this Report under the heading "Executive Officers of the Registrant" for information relating to TRW's executive officers. ITEM 11. EXECUTIVE COMPENSATION Reference is made to the information presented under the heading "Compensation of Executive Officers" on pages 13 through 22 of the TRW Proxy Statement. Reference is also made to the information presented under the heading "Director Compensation" on page 11 of the TRW Proxy Statement. Such information is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Reference is made to the information presented under the heading "Management Ownership of Shares" on page 12 of the TRW Proxy Statement. Reference is also made to the information presented under the heading "Outstanding Securities" on page 23 of the TRW Proxy Statement. Such information is incorporated herein by reference. There are no agreements or arrangements known to TRW that might, at a subsequent date, result in a change in control of TRW. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Reference is made to the information presented under the heading "Director Compensation" on page 11 of the TRW Proxy Statement. Such information is incorporated herein by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) FINANCIAL STATEMENTS AND SCHEDULES (1) FINANCIAL STATEMENTS The following financial statements of the registrant and its subsidiaries included in the TRW 1997 Annual Report are incorporated herein by reference: Statements of Earnings -- Years ended December 31, 1997, 1996 and 1995 (page 33) Balance Sheets -- December 31, 1997 and 1996 (pages 34 and 35) Statements of Cash Flows -- Years ended December 31, 1997, 1996 and 1995 (page 36) Statements of Changes in Shareholders' Investment -- Years ended December 31, 1997, 1996 and 1995 (page 37) Notes to Financial Statements -- (pages 38 - 54) (2) FINANCIAL STATEMENT SCHEDULES All Schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are not applicable and, therefore, have been omitted. Financial statements and summarized financial information of unconsolidated subsidiaries and 50% or less owned persons accounted for by the equity method have been omitted because such subsidiaries and persons, considered individually or in the aggregate, do not constitute a significant subsidiary. 10 14 (3) EXHIBITS 2(a) Agreement and Plan of Merger, dated as of November 20, 1997, by and among TRW Inc., Systems Acquisition Inc. and BDM International, Inc. (Exhibit (c)(1) to TRW's Schedule 14D-1 dated November 26, 1997 is incorporated herein by reference). 3(a) Amended Articles of Incorporation as amended May 5, 1997 (Exhibit 3(a) to TRW Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 is incorporated herein by reference). 3(b) Regulations as amended April 30, 1980 (Exhibit 3(b) to TRW Annual Report on Form 10-K for the year ended December 31, 1980 is incorporated herein by reference). 4(a) Rights Agreement dated as of April 24, 1996 between TRW Inc. and National City Bank, as Rights Agent (Exhibit 1 to TRW Form 8-A Registration Statement dated April 25, 1996 is incorporated herein by reference). 4(b) Indenture between TRW Inc. and The Chase Manhattan Bank (National Association), as successor Trustee, dated as of May 1, 1986 (Exhibit 2 to TRW Form 8-A Registration Statement dated July 3, 1986 is incorporated herein by reference). 4(c) First Supplemental Indenture between TRW Inc. and The Chase Manhattan Bank (National Association), as successor Trustee, dated as of July 26, 1989 (Exhibit 4(b) to TRW Form S-3 Registration Statement, File No. 33-30350, is incorporated herein by reference). *10(a) 1979 Stock Option Plan as amended April 28, 1982 (Exhibit A to TRW Proxy Statement dated March 18, 1982 is incorporated herein by reference). *10(b) TRW Operational Incentive Plan (Exhibit 10(b) to TRW Annual Report on Form 10-K for the year ended December 31, 1989 is incorporated herein by reference). *10(c) TRW Executive Health Care Plan as amended and restated effective August 1, 1995 (Exhibit 10(c) to TRW Annual Report on Form 10-K for the year ended December 31, 1995 is incorporated herein by reference). *10(d) 1984 Stock Option Plan (Exhibit A to TRW Proxy Statement dated March 19, 1984 is incorporated herein by reference). *10(e) 1989 TRW Long-Term Incentive Plan (Exhibit A to TRW Proxy Statement dated March 17, 1989 is incorporated herein by reference). *10(f) 1994 TRW Long-Term Incentive Plan as amended and restated effective February 4, 1997 (Exhibit 10(f) to TRW Annual Report on Form 10-K for the year ended December 31, 1996 is incorporated herein by reference). *10(g) 1997 TRW Long-Term Incentive Plan (Exhibit A to TRW Proxy Statement dated March 12, 1997 is incorporated herein by reference). *10(h) Form of Strategic Incentive Grant (Exhibit 10(h) to TRW Annual Report on Form 10-K for the year ended December 31, 1996 is incorporated herein by reference). *10(i) Form of U.S. Nonqualified Stock Option Agreement. *10(j) Form of U.S. Transferable Nonqualified Stock Option Agreement. *10(k) Form of Director Transferable Nonqualified Stock Option Agreement. *10(l) Deferred Compensation Plan for Non-Employee Directors of TRW Inc. dated July 1, 1997 (Exhibit 10(d) to TRW Quarterly Report on Form 10-Q for the quarter ended June 30, 1997 is incorporated herein by reference). *10(m) TRW Directors' Pension Plan as amended and restated effective August 1, 1990 (Exhibit 10(l) to TRW Annual Report on Form 10-K for the year ended December 31, 1990 is incorporated herein by reference). *10(n) Amendment to the TRW Directors' Pension Plan (As Amended and Restated Effective August 1, 1990) effective June 30, 1997. *10(o) Form of Amended and Restated Employment Continuation Agreements with executive officers (Exhibit 10(k) to TRW Annual Report on Form 10-K for the year ended December 31, 1995 is incorporated herein by reference). *10(p) TRW Inc. Deferred Compensation Plan as amended and restated effective January 1, 1997 (Exhibit 10(p) to TRW Annual Report on Form 10-K for the year ended December 31, 1996 is incorporated herein by reference).
11 15 *10(q) TRW Benefits Equalization Plan (as Amended and Restated, effective August 1, 1996) (Exhibit 10(a) to TRW Quarterly Report on Form 10-Q for the quarter ended June 30, 1996 is incorporated herein by reference). *10(r) Amendment to the TRW Benefits Equalization Plan (As Amended and Restated Effective August 1, 1996) effective as of January 1, 1998. *10(s) TRW Supplementary Retirement Income Plan (as Amended and Restated, effective August 1, 1996) (Exhibit 10(b) to TRW Quarterly Report on Form 10-Q for the quarter ended June 30, 1996 is incorporated herein by reference). *10(t) Amendment to the TRW Supplementary Retirement Income Plan (As Amended and Restated Effective August 1, 1996) effective as of January 1, 1997. *10(u) TRW Inc. Key Executive Life Insurance Plan dated as of February 7, 1996 (Exhibit 10(v) to TRW Annual Report on Form 10-K for the year ended December 31, 1995 is incorporated herein by reference). *10(v) TRW Inc. Financial Counseling Program (Exhibit 10(w) to TRW Annual Report on Form 10-K for the year ended December 31, 1995 is incorporated herein by reference). 10(w) Three Year Revolving Credit Agreement dated July 1, 1992 among TRW Inc. and various financial institutions (Exhibit 19.1 to TRW Quarterly Report on Form 10-Q for the quarter ended June 30, 1992 is incorporated herein by reference). 10(x) Amendment dated June 30, 1993 to Three Year Revolving Credit Agreement dated July 1, 1992 among TRW Inc. and various financial institutions (Exhibit 10.1 to TRW Quarterly Report on Form 10-Q for the quarter ended June 30, 1993 is incorporated herein by reference). 10(y) Amendment dated as of March 1, 1994 to Three Year Revolving Credit Agreement dated July 1, 1992 among TRW Inc. and various financial institutions (Exhibit 10(cc) to TRW Annual Report on Form 10-K for the year ended December 31, 1993 is incorporated herein by reference). 10(z) Amendment dated February 28, 1995 to Multi-Year Revolving Credit Agreement (formerly entitled Three Year Revolving Credit Agreement) dated July 1, 1992 among TRW Inc. and various financial institutions (Exhibit 10(u) to TRW Annual Report on Form 10-K for the year ended December 31, 1994 is incorporated herein by reference). 10(aa) Amendment dated May 8, 1996 to Multi-Year Revolving Credit Agreement (formerly entitled Three Year Revolving Credit Agreement) dated July 1, 1992 among TRW Inc. and various financial institutions (Exhibit 10(y) to TRW Annual Report on Form 10-K for the year ended December 31, 1996 is incorporated herein by reference). 10(bb) Amendment to Multi-Year Revolving Credit Agreement (as amended and restated as of May 8, 1996), dated as of August 7, 1997 among TRW Inc. an various financial institutions (Exhibit 10(a) to TRW Quarterly Report on Form 10-Q for the quarter ended September 30, 1997 is incorporated herein by reference). *10(cc) Consulting Agreement dated September 18, 1997 between TRW Inc and G H. Heilmeier (Exhibit 10(b) to TRW Quarterly Report on Form 10-Q for the quarter ended September 30, 1997 is incorporated herein by reference). *10(dd) TRW Inc. Stock Plan for Non-Employee Directors (as Amended and Restated, effective August 1, 1995) (Exhibit 10.1 to TRW Quarterly Report on Form 10-Q for the quarter ended June 30, 1995 is incorporated herein by reference). 10(ee) Revolving Credit Agreement dated as of December 10, 1997 among TRW Inc. and various financial institutions. *10(ff) Employment Agreement dated as of November 20, 1997 between TRW Inc. and Philip A. Odeen. *10(gg) Form of 1998-2000 Strategic Incentive Program Grant. 11 Computation of Earnings per Share. 12 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. 33-32870, filed September 20, 1991, No. 33-61711, filed August 10, 1995, and No. 333-43931, filed January 8, 1998). 13 Portions of the TRW Annual Report to Security Holders for the year ended December 31, 1997 incorporated herein by reference. 21 Subsidiaries of the Registrant.
12 16 23(a) Consent of Independent Auditors. 23(b) Consent of Independent Auditors (with respect to financial statements of The TRW Canada Stock Savings Plan). 24(a) Power of Attorney. 24(b) Certified Resolutions. 27 Financial Data Schedule. 99(a) Financial Statements of The TRW Employee Stock Ownership and Stock Savings Plan for the year ended December 31, 1997. 99(b) Financial Statements of The TRW Canada Stock Savings Plan for the year ended December 31, 1997.
Certain instruments with respect to long-term debt have not been filed as exhibits as the total amount of securities authorized under any one of such instruments does not exceed 10% of the total assets of the registrant and its subsidiaries on a consolidated basis. The registrant agrees to furnish to the Commission a copy of each such instrument upon request. * Management contract, compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 14(c) of this report. (B) REPORTS ON FORM 8-K Current Report on Form 8-K dated February 5, 1997 as to rights agreement. Current Report on Form 8-K dated May 20, 1997 as to forward-looking statements. Current Report on Form 8-K dated December 30, 1997 as to BDM acquisition. 13 17 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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: March 20, 1998 By /s/ WILLIAM B. LAWRENCE ---------------------------------- William B. Lawrence, Executive Vice President and Secretary Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. SIGNATURE TITLE DATE J. T. GORMAN* Chairman of the Board, Chief Executive Officer and Director P. S. HELLMAN* President, Chief Operating Officer and Director C. G. MILLER* Executive Vice President and Chief Financial Officer T. A. CONNELL* Vice President and Controller M. H. ARMACOST* Director M. FELDSTEIN* Director R. M. GATES* Director C. H. HAHN* Director G. H. HEILMEIER* Director K. N. HORN* Director E. B. JONES* Director W. S. KISER* Director D. B. LEWIS* Director J. T. LYNN* Director L. M. MARTIN* Director J. D. ONG* Director R. W. POGUE* Director
March 20, 1998 William B. Lawrence, by signing his name hereto, does hereby sign and execute this report on behalf of each of the above-named officers and Directors of TRW Inc., pursuant to a power of attorney executed by each of such officers and Directors and filed with the Securities and Exchange Commission as an exhibit to this report. March 20, 1998 *By /s/ WILLIAM B. LAWRENCE ------------------------------- William B. Lawrence, Attorney-in-fact 14 18 REPORT OF INDEPENDENT AUDITORS Shareholders and Directors TRW Inc. We have audited the consolidated financial statements of TRW Inc. and subsidiaries listed in Item 14(a)(1) of the annual report on Form 10-K of TRW Inc. for the year ended December 31, 1997. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of TRW Inc. and subsidiaries at December 31, 1997 and 1996, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. /s/ Ernst & Young LLP ERNST & YOUNG LLP Cleveland, Ohio January 19, 1998 F-1 19 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION 2(a) Agreement and Plan of Merger, dated as of November 20, 1997, by and among TRW Inc., Systems Acquisition Inc. and BDM International, Inc. (Exhibit (c)(1) to TRW's Schedule 14D-1 dated November 26, 1997 is incorporated herein by reference). 3(a) Amended Articles of Incorporation as amended May 5, 1997 (Exhibit 3(a) to TRW Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 is incorporated herein by reference). 3(b) Regulations as amended April 30, 1980 (Exhibit 3(b) to TRW Annual Report on Form 10-K for the year ended December 31, 1980 is incorporated herein by reference). 4(a) Rights Agreement dated as of April 24, 1996 between TRW Inc. and National City Bank, as Rights Agent (Exhibit 1 to TRW Form 8-A Registration Statement dated April 25, 1996 is incorporated herein by reference). 4(b) Indenture between TRW Inc. and The Chase Manhattan Bank (National Association), as successor Trustee, dated as of May 1, 1986 (Exhibit 2 to TRW Form 8-A Registration Statement dated July 3, 1986 is incorporated herein by reference). 4(c) First Supplemental Indenture between TRW Inc. and The Chase Manhattan Bank (National Association), as successor Trustee, dated as of July 26, 1989 (Exhibit 4(b) to TRW Form S-3 Registration Statement, File No. 33-30350, is incorporated herein by reference). *10(a) 1979 Stock Option Plan as amended April 28, 1982 (Exhibit A to TRW Proxy Statement dated March 18, 1982 is incorporated herein by reference). *10(b) TRW Operational Incentive Plan (Exhibit 10(b) to TRW Annual Report on Form 10-K for the year ended December 31, 1989 is incorporated herein by reference). *10(c) TRW Executive Health Care Plan as amended and restated effective August 1, 1995 (Exhibit 10(c) to TRW Annual Report on Form 10-K for the year ended December 31, 1995 is incorporated herein by reference). *10(d) 1984 Stock Option Plan (Exhibit A to TRW Proxy Statement dated March 19, 1984 is incorporated herein by reference). *10(e) 1989 TRW Long-Term Incentive Plan (Exhibit A to TRW Proxy Statement dated March 17, 1989 is incorporated herein by reference). *10(f) 1994 TRW Long-Term Incentive Plan as amended and restated effective February 4, 1997 (Exhibit 10(f) to TRW Annual Report on Form 10-K for the year ended December 31, 1996 is incorporated herein by reference). *10(g) 1997 TRW Long-Term Incentive Plan (Exhibit A to TRW Proxy Statement dated March 12, 1997 is incorporated herein by reference). *10(h) Form of Strategic Incentive Grant (Exhibit 10(h) to TRW Annual Report on Form 10-K for the year ended December 31, 1996 is incorporated herein by reference). *10(i) Form of U.S. Nonqualified Stock Option Agreement. *10(j) Form of U.S. Transferable Nonqualified Stock Option Agreement. *10(k) Form of Director Transferable Nonqualified Stock Option Agreement. *10(l) Deferred Compensation Plan for Non-Employee Directors of TRW Inc. dated July 1, 1997 (Exhibit 10(d) to TRW Quarterly Report on Form 10-Q for the quarter ended June 30, 1997 is incorporated herein by reference). *10(m) TRW Directors' Pension Plan as amended and restated effective August 1, 1990 (Exhibit 10(l) to TRW Annual Report on Form 10-K for the year ended December 31, 1990 is incorporated herein by reference). *10(n) Amendment to the TRW Directors' Pension Plan (As Amended and Restated Effective August 1, 1990) effective June 30, 1997. *10(o) Form of Amended and Restated Employment Continuation Agreements with executive officers (Exhibit 10(k) to TRW Annual Report on Form 10-K for the year ended December 31, 1995 is incorporated herein by reference). *10(p) TRW Inc. Deferred Compensation Plan as amended and restated effective January 1, 1997 (Exhibit 10(p) to TRW Annual Report on Form 10-K for the year ended December 31, 1996 is incorporated herein by reference).
20
EXHIBIT NO. DESCRIPTION *10(q) TRW Benefits Equalization Plan (as Amended and Restated, effective August 1, 1996) (Exhibit 10(a) to TRW Quarterly Report on Form 10-Q for the quarter ended June 30, 1996 is incorporated herein by reference). *10(r) Amendment to the TRW Benefits Equalization Plan (As Amended and Restated Effective August 1, 1996) effective as of January 1, 1998. *10(s) TRW Supplementary Retirement Income Plan (as Amended and Restated, effective August 1, 1996) (Exhibit 10(b) to TRW Quarterly Report on Form 10-Q for the quarter ended June 30, 1996 is incorporated herein by reference). *10(t) Amendment to the TRW Supplementary Retirement Income Plan (As Amended and Restated Effective August 1, 1996) effective as of January 1, 1997. *10(u) TRW Inc. Key Executive Life Insurance Plan dated as of February 7, 1996 (Exhibit 10(v) to TRW Annual Report on Form 10-K for the year ended December 31, 1995 is incorporated herein by reference). *10(v) TRW Inc. Financial Counseling Program (Exhibit 10(w) to TRW Annual Report on Form 10-K for the year ended December 31, 1995 is incorporated herein by reference). 10(w) Three Year Revolving Credit Agreement dated July 1, 1992 among TRW Inc. and various financial institutions (Exhibit 19.1 to TRW Quarterly Report on Form 10-Q for the quarter ended June 30, 1992 is incorporated herein by reference). 10(x) Amendment dated June 30, 1993 to Three Year Revolving Credit Agreement dated July 1, 1992 among TRW Inc. and various financial institutions (Exhibit 10.1 to TRW Quarterly Report on Form 10-Q for the quarter ended June 30, 1993 is incorporated herein by reference). 10(y) Amendment dated as of March 1, 1994 to Three Year Revolving Credit Agreement dated July 1, 1992 among TRW Inc. and various financial institutions (Exhibit 10(cc) to TRW Annual Report on Form 10-K for the year ended December 31, 1993 is incorporated herein by reference). 10(z) Amendment dated February 28, 1995 to Multi-Year Revolving Credit Agreement (formerly entitled Three Year Revolving Credit Agreement) dated July 1, 1992 among TRW Inc. and various financial institutions (Exhibit 10(u) to TRW Annual Report on Form 10-K for the year ended December 31, 1994 is incorporated herein by reference). 10(aa) Amendment dated May 8, 1996 to Multi-Year Revolving Credit Agreement (formerly entitled Three Year Revolving Credit Agreement) dated July 1, 1992 among TRW Inc. and various financial institutions (Exhibit 10(y) to TRW Annual Report on Form 10-K for the year ended December 31, 1996 is incorporated herein by reference). 10(bb) Amendment to Multi-Year Revolving Credit Agreement (as amended and restated as of May 8, 1996), dated as of August 7, 1997 among TRW Inc. and various financial institutions (Exhibit 10(a) to TRW Quarterly Report on Form 10-Q for the quarter ended September 30, 1997 is incorporated herein by reference). *10(cc) Consulting Agreement dated September 18, 1997 between TRW Inc. and G. H. Heilmeier (Exhibit 10(b) to TRW Quarterly Report on Form 10-Q for the quarter ended September 30, 1997 is incorporated herein by reference). *10(dd) TRW Inc. Stock Plan for Non-Employee Directors (as Amended and Restated, effective August 1, 1995) (Exhibit 10.1 to TRW Quarterly Report on Form 10-Q for the quarter ended June 30, 1995 is incorporated herein by reference). 10(ee) Revolving Credit Agreement dated as of December 10, 1997 among TRW Inc. and various financial institutions. *10(ff) Employment Agreement dated as of November 20, 1997 between TRW Inc. and Philip A. Odeen. *10(gg) Form of 1998-2000 Strategic Incentive Program Grant. 11 Computation of Earnings per Share. 12 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. 33-32870, filed September 20, 1991, No. 33-61711, filed August 10, 1995, and No. 333-43931, filed January 8, 1998). 13 Portions of the TRW Annual Report to Security Holders for the year ended December 31, 1997 incorporated herein by reference. 21 Subsidiaries of the Registrant.
21
EXHIBIT NO. DESCRIPTION 23(a) Consent of Independent Auditors. 23(b) Consent of Independent Auditors (with respect to financial statements of The TRW Canada Stock Savings Plan). 24(a) Power of Attorney. 24(b) Certified Resolutions. 27 Financial Data Schedule. 99(a) Financial Statements of The TRW Employee Stock Ownership and Stock Savings Plan for the year ended December 31, 1997. 99(b) Financial Statements of The TRW Canada Stock Savings Plan for the year ended December 31, 1997.
- --------------- Certain instruments with respect to long-term debt have not been filed as exhibits as the total amount of securities authorized under any one of such instruments does not exceed 10% of the total assets of the registrant and its subsidiaries on a consolidated basis. The registrant agrees to furnish to the Commission a copy of each such instrument upon request. *Management contract, compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 14(c) of this report. EX-10.I 2 EXHIBIT 10(I) 1 EXHIBIT 10(i) [TRW LOGO] U.S. NONQUALIFIED STOCK OPTION AGREEMENT TERMS AND CONDITIONS 1. PURCHASE RIGHTS This option cannot be exercised before the first anniversary of the date of grant. After that you will be entitled to purchase up to 33-1/3% of the shares covered by this option, rounded down to the nearest whole share for each of the first two years, for each full year of your continuous employment with TRW Inc. ("TRW") after the date of grant. The purchase rights accumulate as shown in the following table.
Number of Full Years of Cumulative Maximum Percentage of Continuous Service After Optioned Shares That May Be Date of Grant Purchased - ----------------------------------------------------------------- 1 33-1/3% 2 66-2/3% 3 100%
Notwithstanding the foregoing, in the event of the termination of your employment due to your death or to your disability for a period of more than twelve months (as determined in accordance with the TRW Long-Term Disability Plan), or in the event of a change in control of TRW, this option will immediately become exercisable in respect of all of the shares covered by this grant. For purposes of this agreement, a change in control is defined in resolutions adopted by the Compensation and Stock Option Committee of the Directors of TRW on July 26, 1989, which, in summary, provide that a change in control is a change occurring (a) by virtue of TRW's merger, consolidation or reorganization into or with, or transfer of assets to, another corporation or (b) by virtue of a change in the majority of the Directors of TRW during any two-year period unless the election of each new Director was approved by a two-thirds vote of the Directors in office at the beginning of such period or (c) through the acquisition of shares representing 20% or more of the voting power of TRW or (d) through any other change in control reported in any filing with the Securities and Exchange Commission; provided, however, that no change in control is deemed to have occurred by the acquisition of shares, or any report of such acquisition, by TRW, a subsidiary of TRW or a TRW-sponsored employee benefit plan. The language of the resolutions controls over this summary language. 2. EXERCISE IN WHOLE OR PART To the extent this option has become exercisable, you may purchase on any date or dates all or any part of the shares which you are then entitled to purchase. However, no fractional shares may be purchased. 3. TERM OF OPTION To the extent this option has become exercisable in accordance with paragraph 1 above, it may be exercised by you at any time during the 10-year period beginning on the date of grant. To the extent this option remains unexercised at the end of the 10-year period, your unexercised purchase rights will terminate. To the extent unexercised, this stock option will terminate before the end of such 10-year period in the following cases: (a) If your employment with TRW terminates before you reach age 55, your unexercised purchase rights will terminate three months after the date your employment terminates. (b) If the Directors of TRW shall find that you intentionally committed an act materially inimical to the interests of TRW or a subsidiary, your unexercised purchase rights will terminate as of the time you committed such act, as determined by the Directors. If your employment is terminated by your death or by your disability for a period of more than twelve months (as determined in accordance with the TRW Long-Term Disability Plan), your purchase rights will not be subject to termination under clause (a) above and will continue for the entire 10-year period. In the event of a change in control of TRW (as defined herein), your purchase rights will not under any circumstances be subject to termination before the end of the 10-year period beginning on the date of grant. Nothing contained in this option shall extend this option beyond a 10-year period beginning on the date of grant or shall limit whatever right TRW or a subsidiary might otherwise have to terminate your employment at any time. 4. PAYMENT OF OPTION PRICE The option price shall be payable at the time of exercise. The option price shall be paid at the Office of Secretary at TRW's corporate headquarters or at any other place designated by the Secretary. The option price may be paid in cash, by delivery of full shares of TRW Common, by a cashless exercise, or in any combination of the foregoing, in accordance with such procedures and subject to such further conditions as the Secretary of TRW may establish from time to time. Notwithstanding the foregoing, the Compensation and Stock Option Committee of TRW at any time may suspend or terminate your right to pay any or all of the option price in shares of TRW. Cash payments shall be made in United States dollars. Shares delivered in payment of the option price shall be valued at their fair market value on the date of exercise. For purposes of this option, "fair market value" is the average of the high and low sales prices of a share of TRW Common on the date of exercise on the New York Stock Exchange Composite Transactions Listing as reported in the Midwest edition of The Wall Street Journal (or if there are no sales on such date, then the closing sale price on such Listing on the nearest date before the date of exercise) or such other method or procedure for determining fair market value as the Compensation and Stock Option Committee of TRW in its sole discretion may determine. For purposes of this option, the "date of exercise" is the date on which written notice, accompanied by the option price, is received by the Secretary 2 of TRW or his designee that you have elected to exercise all or part of this option. 5. TAXES Upon any exercise of this option, TRW may withhold delivery of certificates for the purchased shares until you make arrangements satisfactory to TRW to pay any withholding, transfer or other taxes due as a result of such exercise. You may elect, in accordance with applicable regulations of the Compensation and Stock Option Committee of TRW, to pay a portion or all of the amount of required withholding taxes in cash, through a cashless exercise or in shares of TRW Common, either by delivering to TRW previously held shares of TRW Common or by having shares of TRW Common withheld from the shares purchased hereunder. 6. SECURITIES LAWS This option shall not be exercisable if such exercise would violate any federal or state securities law. TRW will use its best efforts to make such filings and initiate such proceedings as may be necessary to prevent such violations unless the Directors of TRW determine, in their sole discretion, that such filings or proceedings would result in undue expense or hardship for TRW. TRW may place appropriate legends on the certificates for the optioned shares, give stop-transfer instructions to its transfer agents or take any other action to achieve compliance with those laws in connection with any exercise of this option or your resale of the optioned shares. 7. TRANSFERABILITY This option is not transferable other than by will or the laws of descent and distribution and shall be exercisable during your lifetime only by you or your guardian or legal representative. 8. LEAVES OF ABSENCE If you take a leave of absence for illness, military or governmental service or other reasons, and such leave has been specifically approved by the Chairman of the Board or the President of TRW for purposes of this option, then such leave will not be treated as an interruption of your employment. 9. ADJUSTMENTS The Compensation and Stock Option Committee of TRW may make such adjustments in the option price and in the number or kind of shares of TRW Common or other securities covered by this option as it in its sole discretion may determine are equitably required to prevent dilution or enlargement of your rights that would otherwise result from any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of TRW, merger, consolidation, reorganization, partial or complete liquidation or other corporate transaction or event having an effect similar to any of the foregoing. 10. CERTAIN DEFINITIONS For purposes of this option, employment with a subsidiary will be treated as equivalent to employment with TRW itself, and your continuous employment will not be deemed to be interrupted by reason of your transfer among TRW and its subsidiaries. "Subsidiary" means a corporation or other entity in an unbroken chain of entities beginning with TRW if each of the entities other than the last entity in the unbroken chain owns stock or other ownership interests possessing 50% or more of the total outstanding combined voting power of all classes of stock or other interests in the next entity in the chain. "Subsidiary" also means, if not covered by the definition of subsidiary in the preceding sentence and if specifically approved by the Chairman of the Board of TRW with respect to this option, a corporation or other entity in which TRW has a direct or indirect ownership interest. 11. MISCELLANEOUS This stock option is subject to all the terms and conditions of the TRW plan pursuant to which it is granted. The Compensation and Stock Option Committee of TRW has authority to interpret and construe any provision of this instrument and the TRW plan pursuant to which this stock option is granted, and any such interpretation and construction shall be binding and conclusive. Any reference in this option to the Directors of TRW includes the Executive Committee of the Directors. EX-10.J 3 EXHIBIT 10(J) 1 EXHIBIT 10(j) [TRW LOGO] U.S. TRANSFERABLE NONQUALIFIED STOCK OPTION AGREEMENT TERMS AND CONDITIONS 1. PURCHASE RIGHTS This option cannot be exercised before the first anniversary of the date of grant. After that you will be entitled to purchase up to 33-1/3% of the shares covered by this option, rounded down to the nearest whole share for each of the first two years, for each full year of your continuous employment with TRW Inc. ("TRW") after the date of grant. The purchase rights accumulate as shown in the following table.
Number of Full Years of Cumulative Maximum Percentage of Continuous Service After Optioned Shares That May Be Date of Grant Purchased - ----------------------------------------------------------------- 1 33-1/3% 2 66-2/3% 3 100%
Notwithstanding the foregoing, in the event of the termination of your employment due to your death or to your disability for a period of more than twelve months (as determined in accordance with the TRW Long-Term Disability Plan), or in the event of a change in control of TRW, this option will immediately become exercisable in respect of all of the shares covered by this grant. For purposes of this agreement, a change in control is defined in resolutions adopted by the Compensation and Stock Option Committee of the Directors of TRW on July 26, 1989, which, in summary, provide that a change in control is a change occurring (a) by virtue of TRW's merger, consolidation or reorganization into or with, or transfer of assets to, another corporation or (b) by virtue of a change in the majority of the Directors of TRW during any two-year period unless the election of each new Director was approved by a two-thirds vote of the Directors in office at the beginning of such period or (c) through the acquisition of shares representing 20% or more of the voting power of TRW or (d) through any other change in control reported in any filing with the Securities and Exchange Commission; provided, however, that no change in control is deemed to have occurred by the acquisition of shares, or any report of such acquisition, by TRW, a subsidiary of TRW or a TRW-sponsored employee benefit plan. The language of the resolutions controls over this summary language. 2. EXERCISE IN WHOLE OR PART To the extent this option has become exercisable, you may purchase on any date or dates all or any part of the shares which you are then entitled to purchase. However, no fractional shares may be purchased. 3. TERM OF OPTION To the extent this option has become exercisable in accordance with paragraph 1 above, it may be exercised by you at any time during the 10-year period beginning on the date of grant. To the extent this option remains unexercised at the end of the 10-year period, your unexercised purchase rights will terminate. To the extent unexercised, this stock option will terminate before the end of such 10-year period in the following cases: (a) If your employment with TRW terminates before you reach age 55, your unexercised purchase rights will terminate three months after the date your employment terminates. (b) If the Directors of TRW shall find that you intentionally committed an act materially inimical to the interests of TRW or a subsidiary, your unexercised purchase rights will terminate as of the time you committed such act, as determined by the Directors. If your employment is terminated by your death or by your disability for a period of more than twelve months (as determined in accordance with the TRW Long-Term Disability Plan), your purchase rights will not be subject to termination under clause (a) above and will continue for the entire 10-year period. In the event of a change in control of TRW (as defined herein), your purchase rights will not under any circumstances be subject to termination before the end of the 10-year period beginning on the date of grant. Nothing contained in this option shall extend this option beyond a 10-year period beginning on the date of grant or shall limit whatever right TRW or a subsidiary might otherwise have to terminate your employment at any time. 4. PAYMENT OF OPTION PRICE The option price shall be payable at the time of exercise. The option price shall be paid at the Office of Secretary at TRW's corporate headquarters or at any other place designated by the Secretary. The option price may be paid in cash, by delivery of full shares of TRW Common, by a cashless exercise, or in any combination of the foregoing, in accordance with such procedures and subject to such further conditions as the Secretary of TRW may establish from time to time. Notwithstanding the foregoing, the Compensation and Stock Option Committee of TRW at any time may suspend or terminate your right to pay any or all of the option price in shares of TRW Common. Cash payments shall be made in United States dollars. Shares delivered in payment of the option price shall be valued at their fair market value on the date of exercise. For purposes of this option, "fair market value" is the average of the high and low sales prices of a share of TRW Common on the date of exercise on the New York Stock Exchange Composite Transactions Listing as reported in the Midwest edition of The Wall Street Journal (or if there are no sales on such date, then the closing sale price on such Listing on the nearest date before the date of exercise) or such other method or procedure for determining fair market value as the Compensation and Stock Option Committee of TRW in its sole discretion may determine. For purposes of this option, the "date of exercise" is the date on which written notice, accompanied by the option price, is received by the Secretary of TRW or his designee that you have elected to exercise all or part of this option. 2 5. TAXES Upon any exercise of this option, TRW may withhold delivery of certificates for the purchased shares until you make arrangements satisfactory to TRW to pay any withholding, transfer or other taxes due as a result of such exercise. You may elect, in accordance with applicable regulations of the Compensation and Stock Option Committee of TRW, to pay a portion or all of the amount of required withholding taxes in cash, through a cashless exercise or in shares of TRW Common, either by delivering to TRW previously held shares of TRW Common or by having shares of TRW Common withheld from the shares purchased hereunder. 6. SECURITIES LAWS This option shall not be exercisable if such exercise would violate any federal or state securities law. TRW will use its best efforts to make such filings and initiate such proceedings as may be necessary to prevent such violations unless the Directors of TRW determine, in their sole discretion, that such filings or proceedings would result in undue expense or hardship for TRW. TRW may place appropriate legends on the certificates for the optioned shares, give stop-transfer instructions to its transfer agents or take any other action to achieve compliance with those laws in connection with any exercise of this option or your resale of the optioned shares. 7. TRANSFERABILITY This option is not transferable except (a) by will or the laws of descent and distribution, or (b) by gift to any member of your immediate family, to a trust for the benefit of an immediate family member, or to a partnership whose beneficiaries are members of your immediate family; provided, however, that there may be no consideration for any such transfer. For purposes of this agreement, "immediate family member" shall mean your spouse, children and grandchildren. Notwithstanding any transfer of this option pursuant to clause (b) of this Section 7, you will continue to be solely responsible for the taxes described in Section 5 of this agreement. Any option transferred pursuant to the terms of this Section 7 shall continue to be subject to the same terms and conditions as were applicable immediately prior to the transfer. 8. LEAVES OF ABSENCE If you take a leave of absence for illness, military or governmental service or other reasons, and such leave has been specifically approved by the Chairman of the Board or the President of TRW for purposes of this option, then such leave will not be treated as an interruption of your employment. 9. ADJUSTMENTS The Compensation and Stock Option Committee of TRW may make such adjustments in the option price and in the number or kind of shares of TRW Common or other securities covered by this option as it in its sole discretion may determine are equitably required to prevent dilution or enlargement of your rights that would otherwise result from any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of TRW, merger, consolidation, reorganization, partial or complete liquidation or other corporate transaction or event having an effect similar to any of the foregoing. 10. CERTAIN DEFINITIONS For purposes of this option, employment with a subsidiary will be treated as equivalent to employment with TRW itself, and your continuous employment will not be deemed to be interrupted by reason of your transfer among TRW and its subsidiaries. "Subsidiary" means a corporation or other entity in an unbroken chain of entities beginning with TRW if each of the entities other than the last entity in the unbroken chain owns stock or other ownership interests possessing 50% or more of the total outstanding combined voting power of all classes of stock or other interests in the next entity in the chain. "Subsidiary" also means, if not covered by the definition of subsidiary in the preceding sentence and if specifically approved by the Chairman of the Board of TRW with respect to this option, a corporation or other entity in which TRW has a direct or indirect ownership interest. 11. MISCELLANEOUS This stock option is subject to all the terms and conditions of the TRW plan pursuant to which it is granted. The Compensation and Stock Option Committee of TRW has authority to interpret and construe any provision of this instrument and the TRW plan pursuant to which this stock option is granted, and any such interpretation and construction shall be binding and conclusive. Any reference in this option to the Directors of TRW includes the Executive Committee of the Directors. EX-10.K 4 EXHIBIT 10(K) 1 EXHIBIT 10(k) [TRW LOGO] DIRECTOR TRANSFERABLE NONQUALIFIED STOCK OPTION AGREEMENT TERMS AND CONDITIONS 1. PURCHASE RIGHTS This option cannot be exercised before the first anniversary of the date of grant. After that date, you will be entitled to purchase all of the shares covered by this option. Notwithstanding the foregoing, in the event of the termination of your service as a Director due to your death or to your permanent disability, or in the event of a change in control of TRW Inc. ("TRW"), this option will immediately become exercisable in respect of all of the shares covered by this grant. For purposes of this agreement, a change in control is defined in resolutions adopted by the Compensation and Stock Option Committee of the Directors of TRW on July 26, 1989, which, in summary, provide that a change in control is a change occurring (a) by virtue of TRW's merger, consolidation or reorganization into or with, or transfer of assets to, another corporation or (b) by virtue of a change in the majority of the Directors of TRW during any two-year period unless the election of each new Director was approved by a two-thirds vote of the Directors in office at the beginning of such period or (c) through the acquisition of shares representing 20% or more of the voting power of TRW or (d) through any other change in control reported in any filing with the Securities and Exchange Commission; provided, however, that no change in control is deemed to have occurred by the acquisition of shares, or any report of such acquisition, by TRW, a subsidiary of TRW or a TRW-sponsored employee benefit plan. The language of the resolutions controls over this summary language. 2. EXERCISE IN WHOLE OR PART To the extent this option has become exercisable, you may purchase on any date or dates all or any part of the shares which you are then entitled to purchase. However, no fractional shares may be purchased. 3. TERM OF OPTION To the extent this option has become exercisable in accordance with paragraph 1 above, it may be exercised by you at any time during the 10-year period beginning on the date of grant. To the extent this option remains unexercised at the end of the 10-year period, your unexercised purchase rights will terminate. 4. PAYMENT OF OPTION PRICE The option price shall be payable at the time of exercise. The option price shall be paid at the Office of Secretary at TRW's corporate headquarters or at any other place designated by the Secretary. The option price may be paid in cash, by delivery of full shares of TRW Common, by a cashless exercise, or in any combination of the foregoing, in accordance with such procedures and subject to such further conditions as the Secretary of TRW may establish from time to time. Notwithstanding the foregoing, the Compensation and Stock Option Committee of TRW at any time may suspend or terminate your right to pay any or all of the option price in shares of TRW Common. Cash payments shall be made in United States dollars. Shares delivered in payment of the option price shall be valued at their fair market value on the date of exercise. For purposes of this option, "fair market value" is the average of the high and low sales prices of a share of TRW Common on the date of exercise on the New York Stock Exchange Composite Transactions Listing as reported in the Midwest edition of The Wall Street Journal (or if there are no sales on such date, then the closing sale price on such Listing on the nearest date before the date of exercise) or such other method or procedure for determining fair market value as the Compensation and Stock Option Committee of TRW in its sole discretion may determine. For purposes of this option, the "date of exercise" is the date on which written notice, accompanied by the option price, is received by the Secretary of TRW or his designee that you have elected to exercise all or part of this option. 5. TAXES Upon any exercise of this option, TRW may withhold delivery of certificates for the purchased shares until you make arrangements satisfactory to TRW to pay any withholding, transfer or other taxes due as a result of such exercise. You may elect, in accordance with applicable regulations of the Compensation and Stock Option Committee of TRW, to pay a portion or all of the amount of required withholding taxes in cash, through a cashless exercise or in shares of TRW Common, either by delivering to TRW previously held shares of TRW Common or by having shares of TRW Common withheld from the shares purchased hereunder. 6. SECURITIES LAWS This option shall not be exercisable if such exercise would violate any federal or state securities law. TRW will use its best efforts to make such filings and initiate such proceedings as may be necessary to prevent such violations unless the Directors of TRW determine, in their sole discretion, that such filings or proceedings would result in undue expense or hardship for TRW. TRW may place appropriate legends on the certificates for the optioned shares, give stop-transfer instructions to its transfer agents or take any other action to achieve compliance with those laws in connection with any exercise of this option or your resale of the optioned shares. 7. TRANSFERABILITY This option is not transferable except (a) by will or the laws of descent and distribution, or (b) by gift to any member of your immediate family, to a trust for the benefit of an immediate family member, or to a partnership whose beneficiaries are 2 members of your immediate family; provided, however, that there may be no consideration for any such transfer. For purposes of this agreement, "immediate family member" shall mean your spouse, children and grandchildren. Notwithstanding any transfer of this option pursuant to clause (b) of this Section 7, you will continue to be solely responsible for the taxes described in Section 5 of this agreement. Any option transferred pursuant to the terms of this Section 7 shall continue to be subject to the same terms and conditions as were applicable immediately prior to the transfer. 8. ADJUSTMENTS The Compensation and Stock Option Committee of TRW may make such adjustments in the option price and in the number or kind of shares of TRW Common or other securities covered by this option as it in its sole discretion may determine are equitably required to prevent dilution or enlargement of your rights that would otherwise result from any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of TRW, merger, consolidation, reorganization, partial or complete liquidation or other corporate transaction or event having an effect similar to any of the foregoing. 9. MISCELLANEOUS This stock option is subject to all the terms and conditions of the TRW plan pursuant to which it is granted. The Compensation and Stock Option Committee of TRW has authority to interpret and construe any provision of this instrument and the TRW plan pursuant to which this stock option is granted, and any such interpretation and construction shall be binding and conclusive. Any reference in this option to the Directors of TRW includes the Executive Committee of the Directors. EX-10.N 5 EXHIBIT 10(N) 1 EXHIBIT 10(n) AMENDMENT TO THE TRW DIRECTORS' PENSION PLAN (As Amended and Restated Effective August 1, 1990) The TRW Directors' Pension Plan is hereby amended, effective as of the close of business on June 30, 1997, as follows: FIRST: The definition of "Last Annual Retainer" is hereby amended to provide as follows: "Last Annual Retainer": an amount equal to the base annual retainer as of June 30, 1997 ($30,000.00) plus the value of the August 1, 1996 stock distribution ($22,656.25); such amount shall not be reduced by the amount of any deferrals elected by the Director under the "Deferred Compensation Plan for Non-Employee Directors of TRW Inc." and does not include fees paid for attending meetings or for serving as Chairperson of any Committee of the Directors. SECOND: The definition of "Normal Retirement Age" is hereby amended to provide as follows: "Normal Retirement Age": age 72, or such other age as may be determined in the future by the Directors under their policy relating to retirement of Directors. THIRD: The definition of "Participant" is hereby amended to provide as follows: "Participant": a Director who has commenced, prior to June 30, 1997, but has not terminated, participation in the Plan as provided in Article II and has not been an employee of the Company or any of its subsidiaries. FOURTH: The definition of "Years of Service" is hereby amended to provide as follows: "Years of Service": all periods of a Participant's service as a Director with each period commencing on the effective date of his or her election as a Director and ending with the earlier of June 30, 1997 or his or her Termination of Services. A partial year of service is equal to one Year of Service. 2 FIFTH: A new Section 2.3 is hereby added to the Plan to provide as follows: 2.3 Cessation of Participation -------------------------- Notwithstanding the foregoing provisions of this Article II, effective as of the close of business on June 30, 1997, no new Directors shall become Participants in the Plan. SIXTH: Section 10.2 is hereby amended to provide as follows: 10.2 Non-Alienation of Benefits -------------------------- Neither a Participant nor any other person shall have any right to sell, assign, transfer, pledge, mortgage or otherwise encumber, in advance of actual receipt, any benefit provided under the Plan. Any such attempted assignment or transfer shall be ineffective; TRW's sole obligation under the Plan shall be to pay benefits to the Participant, his beneficiary or his estate, as appropriate. No part of any Plan benefit shall, prior to actual payment, be subject to the payment of any debts, judgments, alimony or separate maintenance owed by a Plan 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 or permitted by law. In all other respects, the TRW Directors' Pension Plan is hereby ratified and confirmed. EX-10.R 6 EXHIBIT 10(R) 1 EXHIBIT 10(r) AMENDMENT TO THE TRW BENEFITS EQUALIZATION PLAN (As Amended and Restated Effective August 1, 1996) The TRW Benefits Equalization Plan is hereby amended, effective as of June 1, 1998, as follows: FIRST: Section 4. a. is deleted in its entirety and the following new Section 4. a. is inserted in lieu thereof: a. Each participant in the BEP shall be able to elect to have monies credited to his or her Account based upon the performance of the same investment fund options offered to participants under the Stock Savings Plan. Such election may be made by allocating the entire Account to one of the investment fund options or by allocating the Account between selected investment fund options in one percent multiples. Each participant may change his or her election as of the end of any month by contacting the Committee or its delegee. In all other respects, the TRW Benefits Equalization Plan is ratified and confirmed. EX-10.T 7 EXHIBIT 10(T) 1 EXHIBIT 10(t) AMENDMENT TO THE TRW SUPPLEMENTARY RETIREMENT INCOME PLAN (As Amended and Restated Effective August 1, 1996) The TRW Supplementary Retirement Income Plan is hereby amended, effective as of January 1, 1997, as follows: FIRST: Section 4. a. is hereby amended to provide as follows: a. No benefit is payable from the SRIP, even if the participant has terminated his or her employment, unless a participant has five years of vesting service as defined under the d.b. plan and has attained age fifty-five, provided, however, a benefit will be payable from the SRIP prior to the participant's attainment of age fifty-five if the participant terminates his or her employment in connection with a special voluntary early retirement program offered under the d.b. plan, the terms of which provide for eligibility prior to age fifty-five. In all other respects, the TRW Supplementary Retirement Income Plan is ratified and confirmed. EX-10.E.E 8 EXHIBIT 10(E)(E) 1 EXHIBIT 10(ee) ================================================================================ REVOLVING CREDIT AGREEMENT dated as of December 10, 1997 among TRW INC. and THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF ================================================================================ 2 TABLE OF CONTENTS
Page ---- PREAMBLE...................................................................................................1 SECTION 1 COMMITMENT OF THE BANKS; TYPES OF LOANS; PROCEDURES FOR BORROWING OR CONVERTING........................................................................1 1.1 Commitment...........................................................................1 1.2 Extension of Revolving Period Termination Date.......................................2 1.3 Various Types of Loans...............................................................2 1.4 Notice of Borrowing, Continuation, or Conversion......................................................................2 1.5 Conversion and Continuation Procedures...............................................3 1.6 Negotiated Loans.....................................................................3 1.7 Local Currency Loans.................................................................3 1.8 Loans to Designated Subsidiaries.....................................................4 SECTION 2 REPAYMENT OF LOANS; NOTES EVIDENCING LOANS...........................................4 2.1 Repayment of Loans...................................................................4 2.2 Notes................................................................................4 2.3 Other Provisions of the Notes........................................................5 2.4 Recordkeeping........................................................................5 SECTION 3 INTEREST.............................................................................5 3.1 Interest Rates.......................................................................5 3.2 Interest Payment Dates...............................................................6 3.3 Interest Periods for Fixed Rate Loans................................................6 3.4 Setting and Notice of Rates..........................................................6 3.5 Computation of Interest..............................................................6 SECTION 4 FEES.................................................................................7 4.1 Commitment Fee.......................................................................7 4.2 Computation of Fees..................................................................7 SECTION 5 REDUCTION OR TERMINATION OF THE COMMITMENTS; PREPAYMENT.........................................................7 5.1 Reduction or Termination of the Commitments..........................................7 5.2 Optional Prepayment..................................................................7 5.3 Mandatory Prepayment.................................................................7
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Page ---- SECTION 6 MAKING AND APPLICATION OF PAYMENTS...................................................8 6.1 Making of Payments...................................................................8 6.2 Application of Certain Payments......................................................8 6.3 Due Date Extension...................................................................8 SECTION 7 INCREASED COSTS AND TAXES............................................................8 7.1 Increased Capital....................................................................8 7.2 Increased Costs......................................................................9 7.3 Basis for Determining Interest Rate Inadequate......................................10 7.4 Changes in Law Rendering Certain Loans Unlawful.....................................10 7.5 Funding Losses......................................................................11 7.6 Currency Indemnity..................................................................11 7.7 Increased Tax Costs.................................................................12 SECTION 8 WARRANTIES..........................................................................12 8.1 Corporate Organization..............................................................12 8.2 Authorization; No Conflict..........................................................12 8.3 Validity and Binding Nature.........................................................13 8.4 Financial Statements................................................................13 8.5 Litigation..........................................................................13 8.6 Compliance with ERISA...............................................................13 8.7 Environmental Matters...............................................................13 8.8 Taxes...............................................................................14 8.9 Government Regulation...............................................................14 SECTION 9 COVENANTS...........................................................................14 9.1 Reports, Certificates and Other Information.........................................14 9.1.1 Audit Report.............................................................14 9.1.2 Quarterly Reports........................................................14 9.1.3 Compliance Certificates..................................................14 9.1.4 Current Reports..........................................................15 9.1.5 Other Information........................................................15 9.2 Net Worth...........................................................................15 9.3 Liens...............................................................................15 9.4 Sale and Leaseback..................................................................17 9.5 Mergers, Consolidations, Sales......................................................17 SECTION 10 CONDITIONS OF LENDING...............................................................18 10.1 Initial Loan to the Company.........................................................18 10.1.1 Note.....................................................................18
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Page ---- 10.1.2 Resolutions..............................................................18 10.1.3 Incumbency and Signatures................................................18 10.1.4 Opinion of Counsel.......................................................18 10.2 Loans to Designated Subsidiaries....................................................18 10.2.1 Resolutions..............................................................18 10.2.2 Acceptance of this Agreement.............................................19 10.2.3 Incumbency and Signatures................................................19 10.3 All Loans...........................................................................19 10.4 Conversions.........................................................................19 SECTION 11 EVENTS OF DEFAULT AND THEIR EFFECT..................................................19 11.1 Events of Default...................................................................19 11.1.1 Nonpayment of Notes or Fees..............................................19 11.1.2 Nonpayment of Other Indebtedness for Borrowed Money.........................................................19 11.1.3 Bankruptcy or Insolvency.................................................20 11.1.4 Noncompliance with Other Provisions......................................20 11.1.5 Warranties...............................................................20 11.1.6 Judgments................................................................20 11.2 Effect of Event of Default..........................................................21 SECTION 12 GUARANTY............................................................................21 SECTION 13 CERTAIN DEFINITIONS.................................................................22 SECTION 14 GENERAL.............................................................................32 14.1 Waiver; Amendments..................................................................32 14.2 Confirmations.......................................................................32 14.3 Notices.............................................................................32 14.4 Computations........................................................................33 14.5 Confidentiality.....................................................................33 14.6 Assignments and Participations......................................................34 14.6.1 Assignments..............................................................34 14.6.2 Participations...........................................................34 14.6.3 Disclosure of Information................................................35 14.7 Securities Laws.....................................................................35 14.8 Costs and Expenses..................................................................35 14.9 Governing Law.......................................................................35 14.10 Counterparts........................................................................35 14.11 Captions............................................................................36 14.12 Successors and Assigns..............................................................36 14.13 Entire Agreement....................................................................36 14.14 Appointment of Administrator........................................................36 14.15 Non-U.S. Bank Tax Information.......................................................36
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Page ---- 14.16 Regulation U........................................................................36
EXHIBITS EXHIBIT A Form of Note EXHIBIT B Form of Compliance Certificate EXHIBIT C Form of Opinion of Counsel to the Company SCHEDULES SCHEDULE 8.5 Undisclosed Material Legal Proceedings iv 6 REVOLVING CREDIT AGREEMENT This Revolving Credit Agreement, dated as of December 10, 1997 (this "AGREEMENT"), is among TRW Inc., an Ohio corporation (the "COMPANY") and the financial institutions listed on the signature pages hereof together with their successors or assigns (collectively, the "BANKS" and individually, a "BANK"). Certain terms being used in this Agreement are hereinafter defined in Section 13. W I T N E S S E T H: -------------------- WHEREAS, the Company has requested the Banks to make certain unsecured loans to the Company and certain Subsidiaries of the Company designated by the Company for general corporate purposes, including without limitation for working capital, capital expenditures, acquisitions (directly or indirectly) of assets, stock or other ownership interests, and repurchases or redemptions of securities; and WHEREAS, the Banks have agreed to make such loans on the terms and subject to the conditions set forth in this Agreement; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree as follows: SECTION 1 COMMITMENT OF THE BANKS; TYPES OF LOANS; PROCEDURES FOR BORROWING OR CONVERTING. 1.1 COMMITMENT. Subject to the terms and conditions of this Agreement, each of the Banks, severally and for itself alone, agrees to make loans (collectively, the "LOANS" and individually, a "LOAN") to the Company and, as provided in Section 1.8, to any Designated Subsidiary on a revolving basis from time to time during the period (the "REVOLVING PERIOD") from the date hereof through the Revolving Period Termination Date, as it may be extended from time to time pursuant to Section 1.2, in such aggregate amounts as the Company or any Designated Subsidiary may from time to time request from such Bank; provided, however, that the aggregate principal amount of Loans that any Bank shall be committed to have outstanding to the Company and the Designated Subsidiaries shall not at any one time exceed the amount set forth opposite such Bank's signature hereto, or any subsequent amendment hereto (except to the extent provided in Section 1.9 hereof). The foregoing commitment of each Bank to make Loans as reduced from time to time in accordance with the terms hereof is herein called such Bank's "COMMITMENT" and the commitments of all Banks are herein sometimes collectively called the "COMMITMENTS." Loans may not be made after the Revolving Period Termination Date, as it may be extended from time to time pursuant to Section 1.2, but if the Company shall have made the election provided in clause (ii) of Section 2.1, Loans 7 outstanding at the end of the Revolving Period may thereafter be Continued or Converted as herein provided. 1.2 EXTENSION OF REVOLVING PERIOD TERMINATION DATE. No later than 60 days prior to the Revolving Period Termination Date then in effect, the Company may request, by written notice, that any one or more of the Banks extend the Revolving Period Termination Date as to that Bank's Commitment for a period of 364 days commencing on the Revolving Period Termination Date then in effect. Each Bank receiving such an extension request from the Company shall notify the Company in writing no later than 20 days prior to the Revolving Period Termination Date then in effect of such Bank's determination to extend or not to extend the Revolving Period Termination Date. A notice given by a Bank to extend the Revolving Period Termination Date pursuant to this Section 1.2 shall be irrevocable (subject to Section 11.2). Any Bank that fails to respond to the Company's request to extend the Revolving Period Termination Date within such time period shall be deemed to have given notice to the Company that such Bank does not desire to extend the Revolving Period Termination Date. 1.3 VARIOUS TYPES OF LOANS. Each Loan shall be either a Base Rate Loan, a Domestic CD Loan, a Eurocurrency Loan, a Local Currency Loan, or a Negotiated Loan (each herein called a "TYPE" of Loan), as the Company shall specify in the related notice of borrowing, Continuation, or Conversion pursuant to Section 1.4 or 1.5. Domestic CD Loans, Eurocurrency Loans, Local Currency Loans, and Negotiated Loans bearing interest at a fixed rate for a fixed period of time are sometimes collectively called "FIXED RATE LOANS." Each Loan shall be made in U.S. Dollars or such other currency as is requested by the Company and shall be available at the time and for the period requested by the Company. Each Loan shall bear interest at the rate specified in Section 3.1 and shall mature on and be due and payable in full on the earliest of: (i) the Revolving Period Termination Date, unless the Company shall have made the election provided for in clause (ii) of Section 2.1 of this Agreement, (ii) the Term-Out Maturity Date, if the Company shall have made such election; (iii) the end of an Interest Period (unless the Loan is Continued or Converted); or (iv) such other date as the Company and the Relevant Bank shall otherwise agree in writing. The Eurocurrency specified in any notice of borrowing, Continuation, or Conversion given by the Company pursuant to Section 1.4 or 1.5 shall be deemed to be available for purposes of this Agreement, unless the Relevant Bank gives the Company notice (which may be by telephone) no later than the earlier of (a) 12:00 noon, Cleveland time, on the second Business Day prior to the proposed date making the Eurocurrency Loan, or (b) one hour after the Relevant Bank has received the notice of borrowing, Continuation, or Conversion, as applicable. The Relevant Bank's determination in good faith that a proposed Eurocurrency is or is not available shall be final. 1.4 NOTICE OF BORROWING, CONTINUATION OR CONVERSION. The Company, through an Authorized Person, shall give written or telephonic notice to the Relevant Bank of each proposed borrowing from such Bank, or Conversion or Continuation of Loans made by such Bank, by 11:00 a.m., Cleveland time, (a) on the proposed date of 2 8 such borrowing, Conversion, or Continuation if such borrowing, Conversion, or Continuation is comprised of Base Rate Loans, Domestic CD Loans, or Negotiated Loans, (b) at least two Business Days prior to the proposed date of such borrowing, Conversion, or Continuation if such borrowing, Conversion, or Continuation is comprised of Eurocurrency Loans (provided that at least one Business Day prior to such written or telephonic notice of proposed nondollar denominated Eurocurrency Loan borrowing, Continuation or Conversion, the Company, through an Authorized Person, shall give written or telephonic notice to the Relevant Bank of the Company's intention to request a Eurocurrency Loan), and (c) with respect to Local Currency Loans, at least two Business Days prior to the proposed date of such borrowing, Conversion, or Continuation or such other period of time as is customary for the particular Local Currency. Each such notice shall be effective upon receipt by the Relevant Bank and shall specify the date, amount, currency, and type of borrowing and, in the case of a borrowing comprising Fixed Rate Loans, the initial Interest Period for such borrowing. Each notice of a Conversion or Continuation of Loans shall specify the date and amount of such Conversion or Continuation, the Loans to be so Converted or Continued, the type and currency of Loans to be Converted into or Continued, and, in the case of a Conversion into or Continuation of Fixed Rate Loans, the initial or succeeding Interest Period, as the case may be. Each borrowing shall be on a Business Day and shall be in an aggregate amount of not less than 1,000,000 U.S. Dollars for Base Rate Loans and not less than 5,000,000 U.S. Dollars (or the Eurocurrency Equivalent Amount) for any other type of Loan, other than Local Currency Loans (which shall be as agreed between the Company and the Relevant Bank). 1.5 CONVERSION AND CONTINUATION PROCEDURES. The Company may convert all or part of any outstanding Loans to Loans of a different type, or may elect to continue any Fixed Rate Loans for an additional Interest Period, by giving notice to the Relevant Bank of such Conversion or Continuation within the time periods specified in Section 1.4. If, with respect to any Fixed Rate Loan, the Company shall not either repay the Loan in full by 2:00 p.m., Cleveland time, on the last day of the Interest Period applicable thereto or give notice of its intention to Convert or Continue such Fixed Rate Loan within the time periods specified in Section 1.4, then the Company shall be deemed to have requested that such Loan automatically be converted into a Base Rate Loan at the end of such Interest Period (and such Loan shall automatically so Convert into a Base Rate Loan at the end of such Interest Period). Except as provided in Section 7.4, no Fixed Rate Loans shall be Converted on any day other than the last day of the current Interest Period relating to such Loans. 1.6 NEGOTIATED LOANS. From time to time, the Company may request, through an Authorized Person, and a Bank may, but shall not be obligated to, agree to make, a Loan in U.S. Dollars bearing interest at a rate per annum, and for a fixed period, agreed to by the Relevant Bank and the Company (each, a "NEGOTIATED LOAN" and collectively, the "NEGOTIATED LOANS"). 1.7 LOCAL CURRENCY LOANS. From time to time, the Company may request, through an Authorized Person, and a Bank may, but shall not be obligated to, agree to make a Loan in a Local Currency specified by the Company bearing interest at a rate 3 9 per annum agreed to by the Bank and the Company (each, a "LOCAL CURRENCY LOAN" and collectively, the "LOCAL CURRENCY LOANS"). Repayments of principal of and interest on Local Currency Loans shall be made in the currency borrowed and shall be paid to the local office of the Relevant Bank which made the Loan. The local office may request additional documentation of the indebtedness if customary at the place of business of the branch; provided, however, that the terms and conditions of that documentation shall be consistent with those set forth in this Agreement unless unlawful or ineffective under local law. 1.8 LOANS TO DESIGNATED SUBSIDIARIES. Each Designated Subsidiary may request, through an Authorized Person, Local Currency Loans or Eurocurrency Loans and Convert or Continue such Loans, and shall repay the principal of and accrued interest on such Loans, all as though the Designated Subsidiaries were parties to this Agreement and references to the "Company" in Sections 1.3, 1.4, 1.5, 1.7, 2.1, 3.1, 3.4, 3.5, 5.2 and 6.1 shall mean and include the Designated Subsidiaries. The Relevant Bank may request additional documentation of the indebtedness if customary at the place of business of the Relevant Bank; provided, however, that the terms and conditions of that documentation shall be consistent with those set forth in this Agreement unless unlawful or ineffective under local law. SECTION 2 REPAYMENT OF LOANS; NOTES EVIDENCING LOANS. 2.1 REPAYMENT OF LOANS. The Company hereby promises to pay to each Bank the aggregate unpaid principal amount of such Bank's Loans on the earliest of: (i) the Revolving Period Termination Date, unless the Company shall have made the election provided for in clause (ii) below; (ii) the Term-Out Maturity Date, if the Company shall have elected in a written notice delivered to all of the Banks no later than 15 days prior to the Revolving Period Termination Date to pay, on the Term-Out Maturity Date, all Loans which are outstanding at the end of the Revolving Period; (iii) the last day of the applicable Interest Period for such Loan (unless the Loan is Continued or Converted); or (iv) such other date as the Company and the Relevant Bank may agree in writing. Repayment of any Eurocurrency Loan shall be in the same currency in which such Loan was advanced. 2.2 NOTES. The Loans of each Bank shall be evidenced by a promissory note (individually, a "NOTE", and collectively for all Banks, the "NOTES") substantially in the form set forth in Exhibit A, with appropriate insertions, dated the date of the initial 4 10 Loan (or such earlier date as shall be satisfactory to the Relevant Bank), payable to the order of such Bank in the principal amount of such Bank's Commitment (or, if less, in the aggregate unpaid principal amount of all of such Bank's Loans hereunder). 2.3 OTHER PROVISIONS OF THE NOTES. Each Note shall provide for the payment of interest as provided in Section 3. 2.4 RECORDKEEPING. Each Bank shall record in its records, or at its option on the schedule attached to its Note, the date, amount, and type of each Loan made by such Bank, each repayment, Continuation, or Conversion thereof, and the dates on which each Interest Period for each Fixed Rate Loan shall begin and end. The aggregate unpaid principal amount so recorded shall be rebuttable presumptive evidence of the principal amount owing and unpaid on such Note. The failure so to record any such amount or any error in so recording any such amount, however, shall not limit or otherwise affect the obligations of the Company hereunder or under any Note to repay the principal amount of the Loans, together with all interest accruing thereon. SECTION 3 INTEREST. 3.1 INTEREST RATES. With respect to each Loan, the Company hereby promises to pay interest on the unpaid principal amount thereof for the period commencing on the date of such Loan until such Loan is paid in full, as follows: (a) At all times while such Loan is a Base Rate Loan, at a rate per annum equal to the Base Rate from time to time in effect; (b) At all times while such Loan is a Domestic CD Loan, during each Interest Period, at a rate per annum equal to the Domestic CD Rate (Adjusted) applicable to such Interest Period, plus the Applicable Margin; (c) At all times while such Loan is a Eurocurrency Loan, during each Interest Period, at a rate per annum equal to the Eurocurrency Rate (Reserve Adjusted) applicable to such Interest Period, plus the Applicable Margin; and (d) At all times while such Loan is a Negotiated Loan or a Local Currency Loan, at the rate per annum agreed to by the Company and the Relevant Bank pursuant to Section 1.6 or 1.7, as applicable. Notwithstanding the provisions of the preceding clauses (a), (b), (c) or (d) and subject to Section 1.5, in the event that any principal of any Loan is not paid when due (whether by acceleration or otherwise), after the due date of such principal until such principal is paid, the unpaid principal amount of, and accrued but unpaid interest on, 5 11 Revolving Loan shall bear interest at a rate per annum equal to the higher of the rate borne by such Loan or the Relevant Bank's Base Rate from time to time in effect, plus 1% per annum, subject to the maximum applicable legal rate. 3.2 INTEREST PAYMENT DATES. Accrued interest on each Base Rate Loan outstanding for 45 days or more shall be payable (i) quarterly in arrears on the tenth day of each April, July, October, and January for the quarterly period ended on the last day of the preceding month, and (ii) at maturity, commencing with the earlier of such dates to occur after the date hereof. Accrued interest on each Base Rate Loan outstanding for less than 45 days shall be payable in full on the date such Base Rate Loan is paid in full. Except as otherwise agreed by the Relevant Bank, accrued interest on each Fixed Rate Loan shall be payable on the last day of the Interest Period of each such Loan (or, in the case of a Domestic CD Loan or Negotiated Rate Loan with an Interest Period of 90 days or longer or a Eurocurrency Loan with an Interest Period of three months or longer, accrued interest shall be payable quarterly in arrears on the tenth day of each April, July, October and January and on the last day of each such Interest Period). After maturity, accrued interest on all Loans shall be payable on demand. Interest on any Eurocurrency Loan shall be paid in the same currency in which such Loan was advanced. 3.3 INTEREST PERIODS FOR FIXED RATE LOANS. Prior to each borrowing, Continuation, or Conversion of Fixed Rate Loans, the Company shall specify, in the related notice of borrowing, Continuation, or Conversion pursuant to Sections 1.4 or 1.5, the duration of the Interest Period for such Fixed Rate Loans. Each notice to the Relevant Bank of an Interest Period shall be in writing or by telephone and shall be given by an Authorized Person. 3.4 SETTING AND NOTICE OF RATES. For each Loan made hereunder, the applicable interest rate for each Interest Period or other period shall be the rate quoted by the Relevant Bank to the Company for that particular type of Loan. The Relevant Bank shall, upon written request of the Company, deliver to the Company a statement showing the calculation of (i) any applicable Domestic CD Rate (Adjusted), (ii) any applicable Eurocurrency Rate (Reserve Adjusted) or (iii) the rate of interest per annum applicable to Negotiated Loans or Local Currency Loans hereunder. 3.5 COMPUTATION OF INTEREST. Interest shall be computed for the actual number of days elapsed (with interest accruing on the first day, but not the last day, of such Loan) on the basis of (a) with respect to Domestic CD Loans and Eurocurrency Loans, a 360 day year, (b) with respect to Base Rate Loans, a 365 or 366 day year, as the case may be, (c) with respect to Negotiated Loans, a 365 or 366 day year, as the case may be, or such other basis as is agreed to by the Company and the Relevant Bank, and (d) with respect to Local Currency Loans, on a basis consistent with local customs that is agreed to by the Relevant Bank and the Company. 6 12 SECTION 4 FEES. 4.1 COMMITMENT FEE. The Company agrees to pay to each Bank a commitment fee, for the period from and including the date of this Agreement to the Revolving Period Termination Date, on the daily average of the Unused Amount of such Bank's Commitment hereunder equal to the Applicable Commitment Fee in effect from time to time times the Unused Amount. Such commitment fee shall be payable quarterly in arrears on the tenth day of each April, July, October, and January (the first such payment to be made on January 10, 1998) for the quarterly period ended on the last day of the preceding month and on the Revolving Period Termination Date. The Company may make such payments according to the Electronic Payment Instructions. 4.2 COMPUTATION OF FEES. Fees shall be computed for the actual number of days elapsed on the basis of a 365 or 366 day year, as the case may be. SECTION 5 REDUCTION OR TERMINATION OF THE COMMITMENTS; PREPAYMENT. 5.1 REDUCTION OR TERMINATION OF THE COMMITMENTS. The Company may from time to time prior to the Termination Date on at least three Business Days' prior written notice given by an Authorized Person to any Bank permanently reduce the amount of such Bank's Commitment to an amount not less than the aggregate unpaid principal amount of the Loans made by such Bank then outstanding. Any such reduction shall be in an aggregate amount of not less than 1,000,000 U.S. Dollars, or such lesser amount of such Bank's Unused Amount then remaining. 5.2 OPTIONAL PREPAYMENT. The Company may from time to time prepay the Loans in whole or in part, provided that (a) an Authorized Person shall give the Relevant Bank not less than three Business Days' prior notice thereof, specifying the Loans to be prepaid, and the date and amount of prepayment and (b) each partial prepayment shall be in the principal amount of 1,000,000 U.S. Dollars (or the Eurocurrency or Local Equivalent Amount thereof) or such lesser amount as is then outstanding on the Loan being prepaid. 5.3 MANDATORY PREPAYMENT. On each day on which the aggregate outstanding principal amount of Loans owing to any Bank on such day exceeds (whether as a result of currency fluctuations or otherwise) such Bank's Commitment hereunder, the Company shall pay to such Bank on demand a mandatory prepayment in the amount of such excess. Mandatory prepayments required by this Section 5.3 shall be applied first to Base Rate Loans until paid in full and then, at the Company's election and in the order specified by the Company, to Fixed Rate Loans. 7 13 SECTION 6 MAKING AND APPLICATION OF PAYMENTS. 6.1 MAKING OF PAYMENTS. Except as otherwise provided in Section 11.2 hereof, all payments (including those made pursuant to Section 5) of principal of, or interest on, the Loans shall be made by the Company to the Relevant Bank in immediately available funds in the Obligation Currency. 6.2 APPLICATION OF CERTAIN PAYMENTS. Each payment of principal on any Loan shall be applied first to Base Rate Loans and then to such of the other Loans as the Company shall direct by written or telephonic notice given by an Authorized Person to the Relevant Bank on or before the date of such payment, or in the absence of such notice, as the Relevant Bank shall determine in its discretion. 6.3 DUE DATE EXTENSION. If any payment of principal or interest with respect to any of the Loans or Notes falls due on a Saturday, Sunday, or other day which is not a Business Day, then such due date shall be extended to the next following Business Day (except as provided in the last sentence of the definition of Interest Period), and additional interest shall accrue and be payable for the period of such extension. SECTION 7 INCREASED COSTS AND TAXES. 7.1 INCREASED CAPITAL. (a) If, after the date of this Agreement, the adoption of any applicable law, rule, or regulation regarding capital adequacy, or any change therein, or change in the interpretation or administration thereof by any governmental authority, central bank, or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank, or comparable agency, has the effect of reducing the rate of return on such Bank's capital as a consequence of its obligations hereunder to a level below that which such Bank would have achieved but for such adoption, change, or compliance (taking into consideration such Bank's policies with respect to capital adequacy) by an amount deemed by such Bank to be material, then from time to time within 15 days after demand by such Bank, the Company shall pay to such Bank such additional amount or amounts as will compensate such Bank for such reduction; provided, that, no Bank shall request, and the Company shall not be obligated to pay, any amounts in excess of the amounts charged by such Bank to similarly situated borrowers of such Bank under revolving credit facilities similar to the one provided herein. Notwithstanding the foregoing, a Bank shall not be entitled to compensation from the Company for any such additional amounts incurred more than 30 days before the date on which the Bank notifies the Company of any event which would entitle the Bank to compensation pursuant to this Section 7.1. 8 14 (b) Each Bank will promptly notify the Company of any event of which it has knowledge that will entitle such Bank to compensation pursuant to this Section 7.1, together with a certificate signed by an authorized officer of the Bank setting forth the basis of such demand and certifying that the amounts demanded hereunder are not in excess of the amounts charged by such Bank to similarly situated borrowers of such Bank under revolving credit facilities similar to the one provided herein. The Bank will designate a different lending office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the reasonable judgment of such Bank, be otherwise disadvantageous to such Bank or contrary to its stated policies. The Bank's certification of the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of demonstrable error. In determining such amount, such Bank may use reasonable averaging and attribution methods. 7.2 INCREASED COSTS. If, after the date hereof, the adoption of any applicable law, rule, or regulation or any change therein, or any change in the interpretation or administration thereof, or compliance by any Bank with any request, or directive (whether or not having the force of law) of any such authority, central bank, or comparable agency, (a) shall subject any Bank to any tax, duty, or other charge with respect to its Fixed Rate Loans, its Notes or its obligation to make Fixed Rate Loans, or shall change the basis of taxation of payments to any Bank of the principal of or interest on its Fixed Rate Loans or any other amounts due under this Agreement in respect of its Fixed Rate Loans or its obligation to make Fixed Rate Loans (except for the imposition of any tax or changes in the rate of tax imposed on the overall income of such Bank); or (b) shall impose, modify, or deem applicable any reserve (including, without limitation, any reserve imposed by the Board of Governors of the Federal Reserve System, but excluding any reserve included in the determination of interest rates pursuant to Section 3), special deposit, or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Bank; and as a result of any of the foregoing the cost to such Bank of making or maintaining any Fixed Rate Loan is increased (or a cost is imposed on such Bank), or the amount of any sum received or receivable by such Bank under this Agreement or under its Notes with respect thereto is reduced, then within 15 days after demand by such Bank (which demand shall be accompanied by a statement setting forth the basis of such demand), the Company shall pay directly to such Bank such additional amount or amounts as will compensate such Bank for such increased cost or such reduction. Notwithstanding the foregoing, a Bank shall not be entitled to any compensation from 9 15 the Company for any such increased cost or such reduction attributable to any period that is more than 30 days before the date on which the Bank notifies the Company of any event which would entitle the Bank to compensation pursuant to this Section 7.2. No Bank is entitled to reimbursement for any amounts paid as a result of taxes currently imposed on such Bank. 7.3 BASIS FOR DETERMINING INTEREST RATE INADEQUATE. If with respect to any Interest Period: (a) a Bank reasonably determines that deposits in a requested Eurocurrency (in the applicable amounts) are not being offered to the Bank in the relevant market for such Interest Period requested by the Company, or a Bank otherwise reasonably determines (which determination shall be binding and conclusive on all parties) that by reason of circumstances affecting the interbank eurocurrency market adequate and reasonable means do not exist for ascertaining the applicable Eurocurrency Rate (Reserve Adjusted); or (b) a Bank advises the Company that the making or funding of Eurocurrency Loans has become impracticable as a result of an event occurring after the date of this Agreement which in the opinion of such Bank materially affects Eurocurrency Loans, then: (i) the affected Bank shall promptly notify the Company of such circumstance, (ii) so long as such circumstances shall continue the affected Bank shall not be under any obligation to make, Continue, or Convert Loans into Eurocurrency Loans, and (iii) on the last day of the then current Interest Period for Eurocurrency Loans, such Eurocurrency Loans shall, unless then repaid in full or Converted into a Loan of a different type pursuant to Section 1.5, automatically Convert to Base Rate Loans. 7.4 CHANGES IN LAW RENDERING CERTAIN LOANS UNLAWFUL. In the event that there occurs after the date hereof any change in applicable laws or regulations (including the adoption of any new laws), or any change in the interpretation of applicable laws or regulations by any governmental or other regulatory body charged with the administration thereof, that makes it unlawful for a Bank to make, maintain, or fund a type of Fixed Rate Loans, then (a) such Bank shall promptly notify the Company of such circumstance, (b) the obligation of such Bank to make, Continue, or Convert Loans into the type of Fixed Rate Loans made unlawful for that Bank shall, upon the effectiveness of such event, be suspended for the duration of such unlawfulness, and (c) on the last day of the current Interest Period for Fixed Rate Loans of such type (or, in any event, if the Bank affected by such change so requests, on such earlier date as may be required by the relevant law, regulation, or interpretation), the Fixed Rate Loans of such type made by such Bank shall, unless then repaid in full or Converted into a Loan of a different type pursuant to Section 1.5, automatically Convert to Base Rate Loans. 10 16 7.5 FUNDING LOSSES. The Company hereby agrees that upon demand by any Bank (which demand shall be accompanied by a statement setting forth the basis for the calculations of the amount being claimed), the Company will indemnify such Bank against any net loss or expense which such Bank sustains or incurs (including, without limitation, any net loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Bank to fund or maintain Fixed Rate Loans), as reasonably determined by such Bank, as a result of (a) any payment or prepayment or Conversion of any Fixed Rate Loan of such Bank on a date other than the last day of an Interest Period for such Loan, or (b) any failure of the Company to borrow, Continue, or Convert any Loans on a date specified therefor in a notice of borrowing (which shall not include the Company's notice of intention to request a Eurocurrency Loan), Continuation, or Conversion pursuant to this Agreement. 7.6 CURRENCY INDEMNITY. (a) The obligation of the Company under this Agreement and the Notes to make payments in Dollars or in any Eurocurrency or Local Currency in which the Loans or any portion thereof are outstanding (the "OBLIGATION CURRENCY") shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed in or converted into any currency other than the Obligation Currency, except to the extent to which such tender or recovery shall result in the effective receipt by the Banks of the full amount of the Obligation Currency expressed to be payable under this Agreement or the Notes. If, for the purpose of obtaining or enforcing judgment against the Company in any court or in any jurisdiction, it becomes necessary to convert into any currency other than the Obligation Currency (such other currency being hereinafter referred to as the "JUDGMENT CURRENCY") an amount due in the Obligation Currency under the Notes, the conversion shall be made, at the option of the Relevant Bank, at the rate of exchange prevailing on the Business Day immediately preceding the day on which the judgment is given (such Business Day as the case may be, being hereinafter in this Section 7.6 referred to as the "JUDGMENT CURRENCY CONVERSION DATE"). (b) If there is a change in the rate of exchange prevailing between the Judgment Currency Conversion Date and the date of actual payment of the amount due, the Company agrees to pay such additional amounts as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the rate of exchange prevailing on the date of payment, will produce the amount of the Obligation Currency which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial award at the rate of exchange prevailing on the Judgment Currency Conversion Date. 11 17 (c) Any amount due from the Company under the foregoing subparagraph will be due as a separate debt and shall not be affected by judgment being obtained for any other sums due otherwise hereunder. 7.7 INCREASED TAX COSTS. The Company agrees to make all payments or reimbursements under this Agreement free and clear of, and without deduction for, any future taxes (including withholding taxes) imposed (except for any tax or changes in the rate of tax imposed on overall income of any Bank) on payments of principal, interest and fees or charges under the Agreement which are attributable to, or represent, the application of any such tax for any time period after the Company has received notice of such tax from such Bank. Such Bank will use its reasonable efforts to minimize any taxes and will designate a different lending office if such designation will avoid the need for, or reduce the amount of, such tax(es) and will not, in the reasonable judgment of such Bank, be otherwise disadvantageous to such Bank or contrary to its stated policies. In the event that the Company is required to directly pay any such taxes, the Company agrees to furnish such Bank with official tax receipts evidencing payment of such taxes within forty-five (45) days after the due date for each such payment. Each Bank agrees that in the event that any such additional amount paid or reimbursed by the Company to or for such Bank in respect of any taxes be recovered, in whole or in part, by such Bank (by credit, offset, deduction or otherwise), against or in computing any income, franchise or other taxes, such Bank will promptly reimburse the Company the amount of such recovery. A transferee of any interest in the Agreement or the Notes shall not be entitled to the benefits of this Section 7.7 with respect to any taxes which would not have been incurred if there had been no transfer. SECTION 8 WARRANTIES. The Company warrants to the Banks as of the date of this Agreement that: 8.1 CORPORATE ORGANIZATION. The Company is a corporation duly incorporated and in good standing under the laws of the State of Ohio and the Company is duly qualified and in good standing as a foreign corporation authorized to do business in each jurisdiction of the United States where, because of the nature of its activities or properties, such qualification is required and where the failure to be so qualified would materially and adversely affect the consolidated financial condition of the Company and its Consolidated Subsidiaries taken as a whole. 8.2 AUTHORIZATION; NO CONFLICT. The execution, delivery, and performance by the Company of this Agreement and the Notes are within the Company's corporate powers, have been duly authorized by all necessary corporate action, and do not and will not contravene or conflict with any provision of applicable law in effect on the date hereof or of the Amended Articles of Incorporation or Regulations of the Company or of any agreement for borrowed money or other material agreement binding upon the Company. The Company has duly executed and delivered this Agreement. 12 18 8.3 VALIDITY AND BINDING NATURE. This Agreement is, and the Notes when duly executed and delivered will be, legal, valid and binding obligations of the Company enforceable against the Company in accordance with their respective terms. 8.4 FINANCIAL STATEMENTS. The Company's audited consolidated financial statements as at December 31, 1996 and its unaudited consolidated financial statements as at September 30, 1997, copies of which have been furnished to each Bank, have been prepared in accordance with GAAP, applied on a basis consistent with that of the preceding fiscal year, and fairly present in all material respects the consolidated financial condition and results of operations of the Company and its Consolidated Subsidiaries as of the dates and for the periods indicated, as applicable, and since the dates thereof until the date of this Agreement there has been no material adverse change in the consolidated financial condition of the Company and its Consolidated Subsidiaries taken as a whole. 8.5 LITIGATION. Except as set forth in Schedule 8.5, there are no material legal proceedings, other than ordinary routine litigation incidental to the business, to which the Company or any of its Consolidated Subsidiaries is a party or to which any of their respective properties is subject that are required to be disclosed in the Company's periodic reports under the Securities Exchange Act of 1934 and that have not been so disclosed. 8.6 COMPLIANCE WITH ERISA. Each member of the controlled group of corporations (as defined in Section 414(b) of the Internal Revenue Code of 1986), which includes the Company (the "TRW GROUP"), has (i) fulfilled its obligations under the minimum funding standards of Part 3 of Title I of the Employee Retirement Income Security Act of 1974 ("ERISA") and Section 412 of the Internal Revenue Code of 1986 ("CODE") with respect to each defined benefit plan (as defined in Section 3 (35) of ERISA) maintained by a member of the TRW Group ("PLAN") and (ii) is in compliance in all material respects with the presently applicable provisions of ERISA and the Code with respect to each such Plan. No member of the TRW Group has (x) sought a waiver of the minimum funding standard under Section 412 of the Code in respect of any Plan, (y) failed to make any contribution or payment required to be made to a Plan or to any multi-employer plan (as defined in Section 3 (37)(A) of ERISA) or made any amendment to any Plan which has resulted or could result in the imposition of a lien or the posting of a bond or other security under ERISA or the Code or (z) incurred any liability under Title IV of ERISA other than the liability to the Pension Benefit Guaranty Corporation for premiums under Section 4007 of ERISA. 8.7 ENVIRONMENTAL MATTERS. The Company has conducted periodic reviews of the effect of compliance with federal, state and local requirements relating to the discharge of materials into the environment, in the course of which it has identified and evaluated potential liabilities and costs. The Company has established accruals for matters that are probable and reasonably estimable as required by FASB Statement No. 5, "Accounting for Contingencies." To the Company's knowledge, any liability that may result from the resolution of known environmental matters in excess 13 19 of amounts accrued therefor will not have a material adverse effect on the financial position of the Company. 8.8 TAXES. The Company and its Consolidated Subsidiaries have filed all United Stated federal income tax returns and all other material tax returns which are required to have been filed by them (subject to any available extensions) and have paid all taxes indicated as due on such returns. The Company has made adequate and reasonable provision for all material taxes not yet due and payable, if any, and all material assessments, if any. 8.9 GOVERNMENT REGULATION. Neither the Company nor any of its Consolidated Subsidiaries is registered as a public utility under the Public Utility Holding Company Act of 1935 or as an investment company under the Investment Company Act of 1940. SECTION 9 COVENANTS. Until the later of (i) the expiration or termination of the Commitments and (ii) all obligations of the Company hereunder and under the Notes are paid in full, the Company agrees that, unless at any time the Majority Banks shall otherwise expressly consent in writing: 9.1 REPORTS, CERTIFICATES AND OTHER INFORMATION. 9.1.1 AUDIT REPORT. Within 120 days after each fiscal year of the Company, the Company will provide to each Bank a copy of the Company's Annual Report to Shareholders and its Annual Report on Form 10-K for the year then ended, as filed with the Securities and Exchange Commission and which will include an annual audit report of the Company, prepared on a consolidated basis and in accordance with the Company's then current method of accounting, which methods must be in accordance with GAAP, duly certified by independent certified public accountants of nationally recognized standing selected by the Company. 9.1.2 QUARTERLY REPORTS. Within 60 days after each quarter (except the last quarter) of each fiscal year of the Company, the Company will provide to each Bank a copy of the Company's Quarterly Report on Form 10-Q for the quarter then ended, as filed with the Securities and Exchange Commission. 9.1.3 COMPLIANCE CERTIFICATES. Contemporaneously with the furnishing of a copy of each Annual Report on Form 10-K provided for in Section 9.1.1 and of each Quarterly Report on Form 10-Q provided for in Section 9.1.2, the Company will provide to each Bank a duly completed certificate in the form of Exhibit B with appropriate insertions (each such certificate called a "COMPLIANCE CERTIFICATE"), dated not more than 10 days prior to the date furnished, signed by an officer of the Company, showing compliance with the Consolidated Net Worth covenant set forth in Section 9.2, and to the effect that no Event of Default or Unmatured Event of Default 14 20 has occurred and is continuing or, if there is any such an event, describing it and the steps, if any, being taken to cure it. 9.1.4 CURRENT REPORTS. The Company will provide to each Bank copies of each Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission, promptly upon the filing thereof. 9.1.5 OTHER INFORMATION. The Company will provide to a Bank such other information concerning the Company as such Bank may reasonably request from time to time. 9.2 NET WORTH. The Company will not permit Consolidated Net Worth to be less than 1,600,000,000 U.S. Dollars less an amount equal to the lesser of (i) the aggregate amount expended by the Company subsequent to December 31, 1995 for the repurchase of its common stock and (ii) 600,000,000 U.S. Dollars. 9.3 LIENS. (a) The Company will not, and will not permit any Domestic Subsidiary to, directly or indirectly, create or assume any mortgage, encumbrance, lien, pledge, charge, or security interest of any kind (collectively and individually, a "MORTGAGE" or "LIEN") upon or in any of its interests in any Principal Property or upon or in any shares of capital stock or indebtedness of any Domestic Subsidiary, whether such interest, capital stock or indebtedness is now owned or hereafter acquired, if such mortgage secures or is intended to secure, directly or indirectly, the payment of any indebtedness for money borrowed evidenced by notes, bonds, debentures, or other written evidences of indebtedness (such indebtedness for money borrowed being hereafter in Sections 9.3 and 9.4 collectively called "DEBT") without making effective provision, and the Company in such case will make or cause to be made effective provision, whereby all of the Loans shall be secured by such mortgage equally and ratably with any other Debt thereby secured; excluding, however, from the operation of this Section 9.3: (i) mortgages on any Principal Property acquired, constructed, or improved by the Company or any Domestic Subsidiary after July 1, 1992 which are created or assumed contemporaneously with, or within 120 days after, such acquisition or completion of such construction or improvement to secure or provide for the payment of any part of the purchase price of such Principal Property or the cost of such construction or improvement incurred after July 1, 1992, or, in addition to mortgages contemplated by clauses (ii) and (iii) below, mortgages on any such Principal Property existing at the time or placed thereon at the time of acquisition or leasing thereof by the Company or any Domestic Subsidiary, or conditional sales agreements or other 15 21 title retention agreements with respect to any Principal Property now owned or leased or hereafter acquired or leased by the Company or a Domestic Subsidiary; (ii) mortgages on property (including shares of capital stock or indebtedness of a corporation) of a corporation existing at the time such corporation becomes a Domestic Subsidiary or is merged or consolidated with the Company or a Domestic Subsidiary or existing at the time of a sale, lease, or other disposition of the properties of such corporation (or a division thereof) or other Person as an entirety or substantially as an entirety (which includes the sale, lease, or other disposition of all or substantially all the assets thereof) to the Company or a Domestic Subsidiary, provided that no such mortgage shall extend to any other Principal Property of the Company or any Domestic Subsidiary or to any shares of capital stock or any indebtedness of any Domestic Subsidiary; (iii) mortgages created by the Company or a Domestic Subsidiary to secure indebtedness of the Company or a Domestic Subsidiary to the Company or to a Wholly Owned Domestic Subsidiary; (iv) mortgages in favor of the United States of America or any State, territory or possession thereof, or any foreign country or any department, agency, instrumentality, or political subdivision of any of such domestic or foreign jurisdictions to secure partial, progress, advance, or other payments pursuant to any contract or statute or to secure any debt incurred for the purpose of financing all or any part of the purchase price of, or the cost of constructing, the property subject to such mortgages; and (v) mortgages for the sole purpose of extending, renewing, or replacing (or successively extending, renewing, or replacing) in whole or in part any mortgage existing on July 1, 1992 or referred to in the foregoing clauses (i) to (iv) inclusive or of any debt secured thereby; provided, however, that the principal amount of indebtedness secured thereby shall not exceed the principal amount of indebtedness so secured at the time of such extension, renewal, or replacement, and that such extension, renewal, or replacement mortgage shall be limited to all or a part of the property which secured the mortgage so extended, renewed, or replaced (plus improvements on such property). (b) Notwithstanding the provisions of paragraph (a) of this Section 9.3, the Company or any Domestic Subsidiary may, without equally and ratably 16 22 securing all the Loans, create or assume mortgages which would otherwise be subject to the foregoing restrictions if at the time of such creation or assumption, and after giving effect thereto, Exempted Indebtedness does not exceed 15% of Consolidated Net Tangible Assets determined as of a date not more than 90 days prior thereto. 9.4 SALE AND LEASEBACK. (a) The Company will not, and will not permit any Domestic Subsidiary to, sell, lease or transfer any Principal Property owned by the Company or a Domestic Subsidiary as an entirety, or any substantial portion thereof, to anyone other than a Wholly Owned Domestic Subsidiary (or the Company or a Wholly Owned Domestic Subsidiary in the case of a Domestic Subsidiary) with the intention of taking back a lease of such property (herein referred to as a "SALE AND LEASEBACK TRANSACTION") except a lease for a period of not more than 36 months by the end of which it is intended that the use of such property by the lessee will be discontinued; provided, that, notwithstanding the foregoing, the Company or any Domestic Subsidiary may sell any such property and lease it back if the net proceeds of such sale are at least equal to the fair value (as determined by resolution adopted by the Board of Directors of the Company) of such property, and (i) the Company or such Domestic Subsidiary would be entitled pursuant to paragraph (a) of Section 9.3 to create Debt secured by a mortgage on the property to be leased in an amount equal to the Attributable Debt with respect to such Sale and Leaseback Transaction without equally and ratably securing all the Loans, or (ii) if such sale or transfer does not come within the exception provided by the preceding clause (i), the net proceeds of such sale shall, and in any such case the Company covenants that they will, within 120 days after such sale, be applied (to the greatest extent possible) either to the repayment of the Loans then outstanding when due (whereupon the Commitments hereunder shall be reduced, on a pro rata basis, to the extent that such net proceeds are so applied) or to the retirement of other Consolidated Funded Debt of the Company ranking at least on a parity with the Loans, or in part to one or more of such alternatives and in part to another. (b) Notwithstanding the provisions of paragraph (a) of this Section 9.4, the Company or any Domestic Subsidiary may enter into Sale and Leaseback Transactions if, at the time of such entering into, and after giving effect thereto, Exempted Indebtedness does not exceed 15% of Consolidated Net Tangible Assets determined as of a date not more than 90 days prior thereto. 9.5 MERGERS, CONSOLIDATIONS, SALES. The Company shall not consolidate with, or sell or convey all or substantially all its assets to, or merge into, any other Person, unless (a) the Company is the surviving corporation of such transaction; or 17 23 (b) the Company is the nonsurviving party to a merger or consolidation, the primary purpose of which is to effect a reincorporation of the Company under the laws of another state. SECTION 10 CONDITIONS OF LENDING. The obligation of each Bank to make its Loans is subject to the following conditions precedent: 10.1 INITIAL LOAN TO THE COMPANY. The obligation of each Bank to make its initial Loan to the Company is, in addition to the conditions precedent specified in Section 10.3, subject to the condition precedent that such Bank shall have received all of the following, each duly executed and dated the date of such Loan (or such earlier date as shall be satisfactory to such Bank), in form and substance satisfactory to such Bank: 10.1.1 NOTE. The Note of the Company payable to the order of such Bank, substantially in the form of Exhibit A. 10.1.2 RESOLUTIONS. Certified copies of resolutions of the Board of Directors of the Company authorizing the Company to obtain Loans hereunder. 10.1.3 INCUMBENCY AND SIGNATURES. A certificate of the Secretary or an Assistant Secretary of the Company certifying the names of the officer or officers of the Company who have signed or will sign this Agreement, the Notes, and other documents provided for in this Agreement to be executed by the Company, together with a sample of the true signature of each such officer, and a certificate of authorization setting forth each Person who is authorized to effect Loans and other transactions hereunder, together with a sample of the true signature of each such Authorized Person. Each Bank may conclusively rely on such certificates until it shall have received notice to the contrary. 10.1.4 OPINION OF COUNSEL. The opinion of counsel to the Company, substantially in the form of Exhibit C. 10.2 LOANS TO DESIGNATED SUBSIDIARIES. The obligation of each Bank to make any Loans to any Designated Subsidiary is subject to the condition precedent that such Bank shall have received the following: 10.2.1 RESOLUTIONS. A certified copy of the resolutions of the appropriate governing body of the Designated Subsidiary that requested the Loan authorizing it to obtain Loans hereunder or such other evidence of corporate authority as is customary in the country of domicile of the Designated Subsidiary. 18 24 10.2.2 ACCEPTANCE OF THIS AGREEMENT. A letter signed by an authorized officer of such Designated Subsidiary evidencing its agreement to be bound by the terms of this Agreement with respect to each Loan made to it hereunder. 10.2.3 INCUMBENCY AND SIGNATURES. A certificate of the Secretary or an Assistant Secretary of the Designated Subsidiary certifying the name and signature of the officer or officers of the Designated Subsidiary who have signed or will sign the letter referenced in Section 10.2.2, together with a sample of the true signature of each such officer, and a certificate of authorization setting forth each Person who is authorized to effect Loans and other transactions hereunder, together with a sample of the true signature of each such Authorized Person. Each Bank may conclusively rely on such certificates until it shall have received notice to the contrary. 10.3 ALL LOANS. The obligation of each Bank to make any Loan hereunder is subject to the further conditions precedent that: (a) No Event of Default or Unmatured Event of Default has occurred and is continuing or will result from the making of such Loan, and (b) the warranties of the Company contained in Sections 8.1, 8.2, and 8.3, are true and correct as of the date of such requested Loan, with the same effect as though made on the date of such Loan. 10.4 CONVERSIONS. Except for Section 10.3(a), the conditions set forth in Sections 10.1, 10.2, and 10.3 shall not apply to the Conversion of Loans from one type to another type or Continuation of Loans. SECTION 11 EVENTS OF DEFAULT AND THEIR EFFECT. 11.1 EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default under this Agreement: 11.1.1 NONPAYMENT OF NOTES OR FEES. Default in the payment when due of any principal of any Note or default in the payment when due of interest on any Note or fees payable by the Company hereunder and continuance of such failure to pay interest or fees for five Business Days after written notice thereof to the Company from the Bank to which such amounts are owed. 11.1.2 NONPAYMENT OF OTHER INDEBTEDNESS FOR BORROWED MONEY. Default in the payment when due at maturity (subject to any applicable grace period) or by acceleration of any other indebtedness for borrowed money having a principal amount in excess of 50,000,000 U.S. Dollars of, or guaranteed by, the Company ("OTHER INDEBTEDNESS"), or default in the performance or observance of any obligation or condition with respect to any such Other Indebtedness if such default results in the acceleration of the maturity of any such Other Indebtedness; provided, that, if such default shall subsequently be remedied, cured, or waived prior to either the termination of 19 25 Commitments or the declaration that all Loans are immediately due and payable, in each case pursuant to Section 11.2 hereof, and as a result the payment of such Other Indebtedness is no longer due, the Event of Default existing hereunder by reason thereof shall likewise be deemed thereupon to be remedied, cured, or waived and no longer in existence, all without any further action by the parties hereto. 11.1.3 BANKRUPTCY OR INSOLVENCY. The Company generally fails to pay, or admits in writing its inability to pay, debts as they become due; or the Company applies for, consents to, or acquiesces in the appointment of, a trustee, receiver, or other custodian for the Company or for a substantial part of the property thereof, or makes a general assignment for the benefit of creditors; or, in the absence of such application, consent or acquiescence, a trustee, receiver, or other custodian is appointed for the Company or for a substantial part of the property of the Company; or any bankruptcy, reorganization, debt arrangement, or other case or proceeding under any bankruptcy or insolvency law, or any dissolution or liquidation proceeding is commenced in respect of the Company and if such case or proceeding is not commenced by the Company, it is consented to or acquiesced in by the Company or remains for 90 consecutive days undismissed or unstayed; or the Company takes any corporate action to authorize any of the foregoing. 11.1.4 NONCOMPLIANCE WITH OTHER PROVISIONS. Failure by the Company to comply with or to perform in any material respect any other provision of this Agreement (and not constituting an Event of Default under any of the preceding provisions of this Section 11.1) and continuance of such failure for 30 days after written notice thereof to the Company from the Majority Banks. 11.1.5 WARRANTIES. Any warranty made by the Company in Sections 8 or 14.16 of this Agreement is breached or is incorrect when made in any material respect and the Company shall fail to take corrective actions reasonably satisfactory to the Majority Banks within 30 days after written notice thereof to the Company from the Majority Banks, except only in the case of a breach of the warranties contained in Section 8 or 14.16 made on the date of this Agreement, in which case there shall be no opportunity to take corrective actions. 11.1.6 JUDGMENTS. Any final and unappealable judgment or order from a judicial or administrative body (which order or judgment is fully enforceable against the Company or any of its Consolidated Subsidiaries in courts of the United States of America or any state thereof) for the payment of money in excess of 50,000,000 U.S. Dollars (after adjustments to reflect reductions for credits and set-offs asserted in good faith by the Company) shall be rendered against the Company, shall not have been discharged or vacated and shall have been in effect, in its final and unappealable form, for a period of 30 consecutive days. 20 26 11.2 EFFECT OF EVENT OF DEFAULT. If any Event of Default described in Section 11.1.3 shall occur, the Commitments (if they have not theretofore terminated) shall immediately terminate and all Loans and Notes shall automatically become immediately due and payable, all without notice of any kind; and, in the case of any other Event of Default, the Majority Banks may declare the Commitments (if they have not theretofore terminated) to be terminated and the Outstanding Majority Banks may declare that all Loans and Notes shall become immediately due and payable. The Majority Banks and the Outstanding Majority Banks shall promptly advise the Company in writing of any such declaration. Following the declaration that all Loans and Notes are immediately due and payable, all payments made by the Company on account of the Loans and Notes shall be made to the Administrator, which shall distribute such payments on a pro rata basis (in relation to the amounts of outstanding Loans) to Banks with outstanding Loans. Following such declaration, if any Bank receives a payment that is not on a pro rata basis, such Bank will remit to the Administrator any amount in excess of its pro rata portion. Upon receipt of any such remittance, the Administrator will distribute such amount to the Banks with outstanding Loans in order that all distributions will be pro rata. The effect as an Event of Default of any event described in Section 11.1.1 or Section 11.1.3 may be waived only by the written concurrence of the holders of 100% of the aggregate unpaid principal amount of the Notes and the Majority Banks, and the effect as an Event of Default of any other event described in this Section 11 may be waived by the written concurrence of the Majority Banks and the Outstanding Majority Banks. SECTION 12 GUARANTY. The Company hereby unconditionally, absolutely and irrevocably guarantees, as primary obligor and not merely as surety, the repayment to each Relevant Bank, when due pursuant to the terms and conditions of this Agreement, of the amount of any Loan made pursuant to this Agreement to a Designated Subsidiary, together with accrued interest on such Loan; provided, however, that before any amount shall be deemed due and payable pursuant to this Section 12, the Relevant Bank must first give notice to the Company of the nonpayment by the Designated Subsidiary, and the Company shall have five Business Days from the receipt of such notice to cure or cause to be cured any and all such nonpayments. The Company's obligations hereunder constitute a guaranty of payment and not of collection merely. The Company hereby waives notice of, and consents to, any extensions of time of payment, renewals, compromises, settlements, releases or other indulgences from time to time granted by the Relevant Bank in respect of Loans made to Designated Subsidiaries. Except as otherwise provided in this Section 12, the Company hereby waives presentment, protest, demand of payment, notice of dishonor and all notices and demands whatsoever. The obligations of the Company hereunder shall not be released, discharged or otherwise affected by (i) any change in the corporate existence or constitution, structure or ownership of any Designated Subsidiary or the Company, (ii) any insolvency, bankruptcy, reorganization or similar proceeding affecting the Designated Subsidiary or its assets or the Company or (iii) the existence 21 27 of any claim, set-off or other rights which the Company may have at any time against the Relevant Bank or any other person. If at any time any payment of any obligation guaranteed hereunder is rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy or reorganization of a Designated Subsidiary or otherwise, the Company's obligations under this Section 12 with respect to such payment shall be reinstated at such time as though such payment had not been made. The Company shall not exercise any of its subrogation rights with respect to amounts paid to a Relevant Bank pursuant to this Section 12 until all amounts guaranteed hereunder payable to such Relevant Bank have been paid in full. Following such payment in full with regard to a Relevant Bank, the Company shall be entitled to subrogation in the Relevant Bank's rights and, upon the reasonable request of the Company, the Relevant Bank agrees to cooperate with the Company in enforcement of the Company's subrogation rights, including the transfer and delivery by the Relevant Bank to the Company of any and all evidence of indebtedness relating to such Loan within the possession or control of the Relevant Bank. SECTION 13 CERTAIN DEFINITIONS. When used herein the following terms shall have the following meaning: "AFFILIATE" means, with respect to a particular Person, any Person which, directly or indirectly, controls, is controlled by, or is under common control with, such Person. For purposes of this definition, control of a Person shall mean the power to direct or cause the direction of the management and policies of such Person whether by contract or otherwise. "AGREEMENT" means this Agreement, as it may be amended, modified, or supplemented and in effect from time to time. 22 28 "APPLICABLE COMMITMENT FEE" means the percentage in effect from time to time as set forth in the following table opposite the highest of the then-current rating assigned to the Company's senior unsecured long-term debt by Moody's Investors Service, Inc. ("MOODY'S") or Standard & Poor's Ratings Group ("S&P"):
Rating Applicable (Moody's/S&P) Commitment Fee ------------- -------------- higher than A1/A+ 0.040% A1/A+ 0.050% A2/A 0.060% A3/A- 0.070% Baa1/BBB+ 0.080% Baa2/BBB 0.105% Baa3/BBB- 0.130% lower than Baa3/BBB- 0.155%
"APPLICABLE MARGIN" means, at any time, the percentage set forth in the following table opposite the highest of the then-current rating assigned to the Company's senior unsecured long-term debt by Moody's or S&P:
Applicable Applicable Margin for Margin for Rating Domestic CD Eurocurrency (Moody's/S&P) Loans Loans ------------------------------------------------------------------------ higher than A1/A+ 0.275% 0.175% A1/A+ 0.300% 0.200% A2/A 0.325% 0.225% A3/A- 0.350% 0.250% Baa1/BBB+ 0.400% 0.300% Baa2/BBB 0.475% 0.375% Baa3/BBB- 0.550% 0.450% lower than Baa3/BBB- 0.600% 0.500%
"ASSESSMENT RATE" means, for any Domestic CD Loan (and for the purpose of computing the Domestic CD Rate (Adjusted)), the annual assessment rate (rounded upwards, if necessary, to the nearest 1/100 of 1%) applicable to the Relevant Bank on its insured deposits under the Federal Deposit Insurance Act, determined by annualizing the most recent assessment levied on the Relevant Bank by the Federal Deposit Insurance Corporation (the "FDIC") with respect to such deposits, after giving effect to the most recent rebate granted to the Relevant Bank by the FDIC with respect to deposit insurance as well as the loss to the Relevant Bank 23 29 (determined in the good faith judgment of the Relevant Bank) of the use of such rebate prior to the date credit is taken by the Relevant Bank with respect to such rebate. "ATTRIBUTABLE DEBT" means, as to any particular lease under which any Person is liable at the time and at any date as of which the amount thereof is to be determined, the lesser of (a) the fair value of the property subject to such lease (as determined by the Directors of the Company) or (b) the total net amount of rent required to be paid by such Person under such lease during the remaining term thereof, discounted from the respective due dates thereof to such date at the actual interest factor included in such rent. The net amount of rent required to be paid under any such lease for any such period shall be the aggregate amount of the rent payable by the lessee with respect to such period after excluding amounts required to be paid on account of maintenance and repairs, insurance, taxes, assessments, water rates and similar charges. In the case of any lease which is terminable by the lessee upon the payment of a penalty, such net amount shall also include the amount of such penalty, but no rent shall be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated. "AUTHORIZED PERSON" means, as to the Company, any person designated as such in a certificate signed by the Chief Financial Officer, Treasurer, or Assistant Treasurer of the Company, and, as to any Designated Subsidiary, means any person designated as such in a certificate signed by one or more officers of the Designated Subsidiary, as authorized by resolution of the Designated Subsidiary or otherwise by law. "BANKS" or "BANK" - see Preamble. "BASE RATE" means the higher of (i) the rate of interest per annum publicly announced and in effect from time to time by the Relevant Bank at its Domestic Office identified on the signature pages hereto as its prime, base or reference rate for U.S. Dollar Loans or (ii) the Federal Funds Rate plus the Applicable Margin for Eurocurrency Loans. The Base Rate shall change simultaneously with each change in such announced prime, base or reference rate and Federal Funds Rate, as applicable. The Base Rate may not be the lowest rate charged by the Relevant Bank for commercial or other extensions of credit. "BASE RATE LOAN" means any Loan of U.S. Dollars that bears interest at or by reference to the Relevant Bank's Base Rate. "BUSINESS DAY" means (i) in the case of a Business Day that relates to a Eurocurrency Loan, any day of the year on which banks are open for business in both New York and, with regard to any such Bank only, the city in which the applicable Eurocurrency Office of such Bank is located and on which dealings are carried on in the interbank eurocurrency market; (ii) in the case of a Business Day that relates to a Base Rate Loan, a Domestic CD Loan, or a Negotiated Loan, any day of the year on which banks are open for business in both New York and, with regard to any such 24 30 Bank only, the city in which the applicable Domestic Office of such Bank is located; and (iii) in the case of a Business Day that relates to a Local Currency Loan, any day of the year on which the local office of the Relevant Bank in that locality is open for business. "COMMITMENT(S)" means the commitments of the Banks to make Loans hereunder; and Commitment as to any Bank shall mean the commitment of such Bank to make Loans hereunder in an aggregate amount not to exceed the U.S. Dollar amount set forth opposite its signature hereto or any subsequent amendment hereto. "COMPANY" - see Preamble. "COMPLIANCE CERTIFICATE" - see Section 9.1.3 and Exhibit B. "CONSOLIDATED FUNDED DEBT" means the Funded Debt of the Company and its Consolidated Subsidiaries consolidated in accordance with GAAP. "CONSOLIDATED NET TANGIBLE ASSETS" means the total of all assets of the Company and its Consolidated Subsidiaries appearing on a consolidated balance sheet prepared in accordance with GAAP, including the equity in and the net amount of advances to other Subsidiaries, after deducting therefrom (without duplication of deductions) as shown on such balance sheet, the sum of: (i) intangible assets, including goodwill, cost of acquired businesses in excess of recorded net assets at acquisition dates, patents, licenses, trademarks, trade names, copyrights, unamortized debt discount and expense less unamortized debt premium, and corporate organization expense (but excluding deferred charges and prepaid expense); (ii) any write-up of the book value of any assets (other than equity in Subsidiaries which are not Consolidated Subsidiaries and other than as a result of currency revaluations) resulting from the revaluation thereof subsequent to March 31, 1992; (iii) all liabilities of the Company and its Consolidated Subsidiaries other than: Funded Debt; capital stock; surplus; surplus reserves; reserves for deferred Federal income taxes arising from accelerated depreciation, investment and other tax credits, and similar provisions; and contingency reserves not allocated for any particular purpose; (iv) reserves for depreciation and amortization and other reserves (other than the reserves referred to in the preceding clause(iii)); and 25 31 (v) any minority interest in the shares of stock and surplus of any Consolidated Subsidiary. "CONSOLIDATED NET WORTH" means at any date the sum of the consolidated shareholders' investment and minority interests of the Company and its Consolidated Subsidiaries determined as of such date. Consolidated shareholders' investment and minority interests of the Company shall be as included in the annual and quarterly financial statements of the Company, as applicable. "CONSOLIDATED SUBSIDIARY" means each Subsidiary other than (a) any Subsidiary the accounts of which (i) are not required by GAAP to be consolidated with those of the Company for financial reporting purposes and (ii) were not consolidated with those of the Company in the Company's then most recent Annual Report to Shareholders and are not intended by the Company to be consolidated with those of the Company in its next Annual Report to Shareholders, or (b) any Subsidiary the primary business of which consists of financing the sale or lease of merchandise, equipment or services by the Company or any Subsidiary or owning, leasing, dealing in or developing real property, or providing services directly related thereto, or which is otherwise primarily engaged in the business of a finance or real estate company. "CONTINUE," "CONTINUATION" and "CONTINUED" shall refer to a continuation of Loans pursuant to Section 1.5. "CONVERT," "CONVERSION" and "CONVERTED" shall refer to a conversion of Loans pursuant to Sections 1.5, 3.3, 7.3, or 7.4. "DEBT" - see Section 9.3. "DESIGNATED SUBSIDIARY" means any Subsidiary of the Company which (i) the Company from time to time designates in writing signed by the Chief Financial Officer, Treasurer, or Assistant Treasurer of the Company as a Designated Subsidiary entitled to receive Eurocurrency and Local Currency Loans hereunder and (ii) the Relevant Bank has not objected in writing to such designation of a Designated Subsidiary within thirty (30) days of the Relevant Bank's receipt of the Company's designation. Such designation shall contain the address of the Subsidiary which shall be used to give notice to the Subsidiary pursuant to Section 14.3. "DOMESTIC CD LOAN" shall mean any Loan of U. S . Dollars that bears interest at a rate determined by reference to the Relevant Bank's Domestic CD Rate (Adjusted). "DOMESTIC CD RATE" means, with respect to any Interest Period for any Domestic CD Loan, the rate of interest determined by the Relevant Bank to be the average (rounded upward, if necessary, to the nearest 1/100 of 1%) of the rates quoted to the Relevant Bank on the first day of such Interest Period by two certificate of deposit dealers in New York of recognized standing selected by the Relevant Bank for the purchase from the Relevant Bank or major commercial banks at face value of 26 32 certificates of deposit issued by the Relevant Bank in an amount equal or comparable to the amount of the Domestic CD Loan and having a maturity equal to such Interest Period; provided, that, if such quotations from such dealers are not available to the Relevant Bank, it shall determine a reasonably equivalent rate on the basis of another source or sources selected by it. "DOMESTIC CD RATE (ADJUSTED)" means, with respect to any Interest Period for any Domestic CD Loan, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined pursuant to the following formula: Domestic CD Domestic CD = Rate + Assessment Rate (Adjusted) ------------- Rate (1 - Reserve Requirement) "DOMESTIC OFFICE" means, with respect to any Bank, the office of such Bank or Affiliate of such Bank, designated as such under such Bank's signature hereto, or such other office of such Bank or Affiliate of such Bank, as such Bank may hereafter from time to time designate as its Domestic Office. "DOMESTIC SUBSIDIARY" means each Consolidated Subsidiary other than: (a) any Consolidated Subsidiary which the Directors of the Company reasonably determine not to be material to the business or financial condition of the Company; (b) any Consolidated Subsidiary the major portion of the assets of which are located, or the major portion of the business of which is carried on, outside the United States of America, its territories and possessions; (c) any Consolidated Subsidiary which, during the 12 most recent calendar months (or such shorter period as shall have elapsed since its organization) derived the major portion of its gross revenues from sources outside the United States of America; (d) any Consolidated Subsidiary the major portion of the assets of which consists of securities or obligations, or both, of one or more corporations (whether or not Consolidated Subsidiaries) of the types described in the preceding clauses (b) and (c); and (e) any Consolidated Subsidiary organized after March 31, 1992 which the Company intends shall be operated in such manner as to come within one or more of the preceding clauses (b), (c) and (d). "ELECTRONIC PAYMENT INSTRUCTIONS" means the Bank Routing and account number information identifying the account of each Bank to receive the payment of Commitment Fees. Such Electronic Payment Instructions for each Bank are set forth below the signature block of such Bank to this Agreement and may be changed at any time by written notice by such Bank to the Company. "EUROCURRENCY" means any freely transferable and convertible currency on deposit outside the country of issuance. "EUROCURRENCY LOAN" means any Loan of a Eurocurrency that bears interest at a rate determined by reference to the Relevant Bank's Eurocurrency Rate (Reserve Adjusted). 27 33 "EUROCURRENCY OFFICE" means, with respect to any Bank, the office of such Bank or Affiliate of such Bank, designated as such under such Bank's signature hereto, or such other office of such Bank or Affiliate of such Bank, as such Bank may hereafter from time to time designate as its Eurocurrency Office. A Eurocurrency Office may be, at the option of such Bank, either a domestic or foreign office of such Bank or a domestic or foreign office of an affiliate of such Bank. "EUROCURRENCY OR LOCAL CURRENCY EQUIVALENT AMOUNT" means, in the case of a Eurocurrency or Local Currency, on any Business Day, the amount of such currency which would be freely converted into a specified amount of U.S. Dollars, computed at the spot buying rate for dollars of the Relevant Bank at the close of business on such day. "EUROCURRENCY RATE" means, with respect to any Eurocurrency Loan for any Interest Period, the rate per annum equal to the rate per annum at which deposits of the currency of the Loan in immediately available funds are offered by the Eurocurrency Office of the Relevant Bank two Business Days prior to the beginning of such Interest Period to major banks in the interbank eurocurrency market of such Eurocurrency Office for delivery on the first day of such Interest Period and for the number of days comprised therein and in an amount equal or comparable to the amount of the Eurocurrency Loan of the Relevant Bank for such Interest Period. "EUROCURRENCY RATE (RESERVE ADJUSTED)" means, with respect to any Eurocurrency Loan for any Interest Period, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined pursuant to the following formula: Eurocurrency Rate = Eurocurrency Rate (Reserve Adjusted) ----------------- 1-Eurocurrency Reserve Percentage "EUROCURRENCY RESERVE PERCENTAGE" means, with respect to each Interest Period, that percentage (expressed as a decimal) prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining reserve requirements applicable to "Eurocurrency Liabilities" pursuant to Regulation D or any other then applicable regulation of the Board of Governors that prescribes reserve requirements applicable to "Eurocurrency Liabilities" as presently defined in Regulation D. "EVENT OF DEFAULT" means any of the events described in Section 11.1. "EXEMPTED INDEBTEDNESS" means, as of any particular time, the sum of (i) the aggregate principal amount of all then outstanding indebtedness for borrowed money of the Company and Domestic Subsidiaries incurred after July 1, 1992 and secured by any mortgage, security interest, pledge or lien other than those permitted by paragraph (a) of Section 9.3 and (ii) all Attributable Debt pursuant to Sale and Leaseback Transactions (as defined in Section 9.4) incurred by the Company and 28 34 Domestic Subsidiaries after July 1, 1992 at such time outstanding other than that which is not prohibited by or is permitted pursuant to paragraph (a) of Section 9.4. "FEDERAL FUNDS RATE" means, for any Interest Period selected by the Company, the average of rates for Federal funds for the Interest Period quoted to the Relevant Bank by two leading brokers of Federal funds transactions in New York City. "FIXED RATE LOAN(S)" - see Section 1.3. "FUNDED DEBT" means all indebtedness for money borrowed having a maturity of more than 12 months from the date such indebtedness was incurred or having a maturity of 12 months or less but by its terms being renewable or extendable beyond 12 months from the date such indebtedness was incurred at the option of the borrower. "GAAP" means generally accepted accounting principles in the United States of America as in effect from time to time. "INTEREST PERIOD" means, with respect to any Fixed Rate Loan, the period commencing on the date such Loan was made, or on the date such Loan was Converted from a Loan of a different type, or on the date of expiration of the immediately preceding Interest Period for such Loan, and (i) ending 30, 60, 90, 120, 150, 180 days, or, if available, more than 180 days up to and including 360 days, thereafter in the case of a Domestic CD Loan, or (ii) ending one, two, three, or six months, or, if available, more than six months up to and including twelve months, thereafter in the case of a Eurocurrency Loan, all as the Company or any Designated Subsidiary may specify pursuant to Section 1.4, 1.5, or 3.3; the Interest Period for any Negotiated Loan or any Local Currency Loan shall be as agreed by the Company or any Designated Subsidiary and the Relevant Bank pursuant to Section 1.6 or 1.7 . Each Interest Period for a Fixed Rate Loan that would otherwise end on a day that is not a Business Day shall end on the next succeeding Business Day (unless such next succeeding Business Day is the first Business Day of a calendar month, in which case with respect to a Eurocurrency Loan such Interest Period shall end on the next preceding Business Day). "JUDGMENT CURRENCY" - see Section 7.6. "JUDGMENT CURRENCY CONVERSION DATE" - see Section 7.6. "LIEN" or "MORTGAGE" - see Section 9.3. "LOCAL CURRENCY" means, with respect to any Local Currency Loan, any legal currency of the nation where the Local Currency Loan is being funded. "LOCAL CURRENCY LOAN(S)" - see Section 1.7. "LOANS" or "LOAN" - see Section 1.1. 29 35 "MAJORITY BANKS" means Banks having an aggregate Percentage of 66-2/3% or more. "NEGOTIATED LOAN(S)" - see Section 1.6. "NOTE(S)" - see Section 2.2 and Exhibit A. "OBLIGATION CURRENCY" - see Section 7.6. "OUTSTANDING MAJORITY BANKS" means Banks having 66-2/3% or more of the aggregate principal amount of Loans outstanding. "PERCENTAGE" means as to any Bank the percentage of such Bank's share of the total Commitments of all Banks. "PERSON" shall mean an individual or a corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, government (or any agency or political subdivision thereof), or other entity of any kind. "PRINCIPAL PROPERTY" means any single manufacturing plant, engineering facility or research facility owned or leased by the Company or a Domestic Subsidiary other than any such plant or facility or portion thereof which the Board of Directors reasonably determines not to be of material importance to the Company and its Subsidiaries taken as a whole. "PROPRIETARY INFORMATION" - see Section 14.5. "RELEVANT BANK" means, with respect to any Loan, the Bank that made the Loan, and, prior to the making of such Loan or requested Loan, any Bank that has been requested to make such Loan. "RESERVE REQUIREMENT" means, with respect to each Interest Period, a percentage (expressed as a decimal) equal to the daily average during such Interest Period of the aggregate reserve requirement (including all basic, supplemental, marginal, and other reserves and taking into account any transitional adjustments or other scheduled changes in reserve requirements during such Interest Period) specified under Regulation D of the Board of Governors of the Federal Reserve System, or any other regulation of the Board of Governors which prescribes reserve requirements applicable to nonpersonal time deposits as presently defined in Regulation D, as then in effect, as applicable to the class of banks of which the Relevant Bank is a member, on deposits of the type used as a reference in determining the Domestic CD Rate and having a maturity approximately equal to such Interest Period. "REVOLVING PERIOD" - see Section 1.1. 30 36 "REVOLVING PERIOD TERMINATION DATE" means the earlier to occur of (a) December 8, 1998, subject to extension for one or more successive 364-day periods as to any Bank or Banks pursuant to Section 1.2, or (b) such other date on which the Commitments shall terminate pursuant to Section 11.2. "SALE AND LEASEBACK TRANSACTION" - see Section 9.4. "SUBSIDIARY" means a corporation of which the Company and/or its other Subsidiaries own, directly or indirectly, such number of outstanding shares as have more than 50% of the ordinary voting power for the election of directors. "TERM-OUT MATURITY DATE" means December 8, 1999, unless the Revolving Period Termination Date is extended as provided in Section 1.2, in which case the Term-Out Maturity Date shall be the first anniversary of the Revolving Period Termination Date as so extended. "TYPE OF LOAN OR BORROWING" - see Section 1.3. The various types of Loans or borrowings available under this Agreement are as follows: Base Rate Loans or borrowings and Fixed Rate Loans or borrowings. Fixed Rate Loans or borrowings consist of Domestic CD Loans or borrowings, Eurocurrency Loans or borrowings, Negotiated Loans or borrowings, and Local Currency Loans or borrowings. "U.S. DOLLAR(S)" and the sign "$" shall mean lawful money of the United States of America. "UNMATURED EVENT OF DEFAULT" means any event that if it continues uncured will, with lapse of time or notice or lapse of time and notice, constitute an Event of Default. "UNUSED AMOUNT" means the amount of the Commitment of the Relevant Bank less any outstanding Loans made by such Bank. Loans in an Obligation Currency other than U.S. Dollars will be translated into U.S. Dollars for purposes of this calculation at the spot rate for dollars published in THE WALL STREET JOURNAL on each day in which such Loan is outstanding (provided, that if such day is not a Business Day, the applicable spot rate for such day should be the spot rate on the Business Day immediately prior to such day). "WHOLLY OWNED DOMESTIC SUBSIDIARY" means each Domestic Subsidiary all the outstanding shares of which, other than directors' qualifying shares, shall at the time be owned by the Company, or by the Company and one or more Wholly Owned Domestic Subsidiaries, or by one or more Wholly Owned Domestic Subsidiaries. 31 37 SECTION 14 GENERAL. 14.1 WAIVER; AMENDMENTS. No delay on the part of any Bank or the holder of any Note in the exercise of any right, power, or remedy shall operate as a waiver thereof, nor shall any single or partial exercise by any of them of any right, power, or remedy preclude other or further exercise thereof, or the exercise of any other right, power, or remedy. No amendment, modification, or waiver of, or consent with respect to, any provision of this Agreement or the Notes shall in any event be effective unless the same shall be in writing and signed and delivered by Banks having an aggregate Percentage of not less than the aggregate Percentage expressly designated herein with respect thereto (or in the case of the Outstanding Majority Banks, the aggregate principal amount outstanding) or, in the absence of such designation as to any provision of this Agreement or the Notes, by the Majority Banks, and then any such amendment, modification, waiver, or consent shall be effective only in the specific instance and for the specific purpose for which given. No amendment, modification, waiver, or consent (i) shall extend or increase the amount of the Commitments, the maturity of the Notes or reduce the fees hereunder or the rate of interest payable with respect to the Notes or reduce the aggregate Percentage required to effect an amendment, modification, waiver, or consent or eliminate the guaranty set forth in Section 12 hereof without the written consent of all of the Banks or (ii) shall extend the maturity or reduce the principal amount of, or rate of interest on, any Note without the written consent of the holder of such Note. Notwithstanding the foregoing, the Company may add one or more financial institutions as Bank parties to this Agreement, from time to time and without the consent of the then-current Bank parties to this Agreement; provided, that in no event will the aggregate amount of the Commitments of the new financial institutions exceed 125 million U.S. Dollars in excess of the Commitments as of the date hereof. Each such addition of a Bank shall be effective upon such Bank's written agreement to become a Bank party hereto and to be bound by the terms of this Agreement applicable to "Banks." The Company shall give the then-current Bank parties to this Agreement prompt notice of any change to the Bank's respective Percentages and Commitments resulting from the addition of any Bank as a party to, or the reduction of any Bank's Commitment under, this Agreement. 14.2 CONFIRMATIONS. The Company and each holder of a Loan agree from time to time, upon written request received by it from the other, to confirm to the other in writing the aggregate unpaid principal amount of Loans then outstanding to such holder. 14.3 NOTICES. Except as otherwise provided in Sections 1.3, 1.4, 1.5, 3.3, and 6.2, all notices hereunder shall be in writing. Notices given by mail shall be deemed to have been given three days after the date sent if sent by registered or certified mail, postage prepaid, and: (i) if to the Company, addressed to the Company at its address shown below its signature hereto; 32 38 (ii) if to any Designated Subsidiary, addressed to it at the address given by the Company pursuant to its designation of such Subsidiary as a Designated Subsidiary entitled to receive Loans hereunder; or (iii) if to any Bank, addressed to such Bank at the address shown below its signature as its Domestic Office address; or in the case of each party, such other address as such party may, by written notice to the other parties to this Agreement, have designated as its address for notices. Notices given by facsimile, telegram, or telex shall be deemed to have been given when sent, if properly addressed to the party to whom sent, at its address, as aforesaid. Each Bank shall be entitled to rely upon all telephonic notices given by an Authorized Person pursuant to Sections 1.3, 1.4, 1.5, 3.3, or 6.2, and the Company shall hold each Bank harmless from any loss, cost, or expense ensuing from any such reliance, except for such loss, cost or expenses as a result of the Bank's gross negligence or willful misconduct. All notices, waivers, or consents given to, or any requests made upon, the Company by any Bank or holder of any Note shall be promptly notified to all other parties to this Agreement. Whenever a notice, declaration, or other action is required to be taken, given, or made by the Majority Banks or the Outstanding Majority Banks, such notice, declaration, or action shall be in writing and shall be signed by, as the case may be, Banks having an aggregate Percentage of 66-2/3% or more or Banks having 66-2/3% or more of the aggregate principal amount of Loans outstanding. 14.4 COMPUTATIONS. Where the character or amount of any asset or liability or item of income or expense is required to be determined, or any consolidation or other accounting computation is required to be made, for the purpose of this Agreement, such determination or calculation shall, to the extent applicable and except as otherwise specified in this Agreement, be made in accordance with the Company's then current method of accounting, which method must be in accordance with GAAP; provided, however, if any changes in accounting principles from those used in the preparation of the financial statements referred to in Section 8.4 hereafter occasioned by the promulgation of rules, regulations, pronouncements, and opinions by or required by the Financial Accounting Standards Board or the American Institute of Certified Public Accountants (or successors thereto or agencies with similar functions) result in a change in the method of calculation of the financial covenants, standards, or terms found in Section 9.2 hereof, the parties hereto agree to enter into negotiations to amend such provisions so as equitably to reflect such changes with the desired result that the criteria for evaluating the Company's financial condition shall be the same after such changes as if such changes had not been made. 14.5 CONFIDENTIALITY. Unless the Company otherwise agrees in writing, each Bank hereby agrees to keep all Proprietary Information (as defined below) confidential and not to disclose or reveal any Proprietary Information to any Person 33 39 other than the Bank's directors, officers, employees, Affiliates, and agents, and then only on a confidential basis; provided, however, that a Bank may disclose Proprietary Information (a) as required by law, rule, regulation, or judicial process, (b) to its attorneys and accountants, (c) as requested or required by any state, federal, or foreign authority or examiner regulating banks or banking, or (d) to actual or potential assignees or participants as permitted by Section 14.6.3. For purposes of this Agreement, the term "PROPRIETARY INFORMATION" shall include all information about the Company, any Subsidiary, or any of their respective Affiliates which has been furnished by the Company, any Subsidiary, or any of their respective Affiliates, whether furnished before or after the date hereof, and regardless of the manner furnished; provided, however, that Proprietary Information shall not include information which (x) is or becomes generally available to the public other than as a result of a disclosure by a Bank not permitted by this Agreement, (y) was available to a Bank on a nonconfidential basis prior to its disclosure to such Bank by the Company, any Subsidiary, or any of their respective Affiliates, or (z) becomes available to a Bank on a nonconfidential basis from a Person other than the Company, any Subsidiary, or any of their respective Affiliates who, to the best knowledge of such Bank, is not otherwise bound by a confidentiality agreement with the Company, any Subsidiary, or any of their respective Affiliates, or, to the best knowledge of such Bank, is not otherwise prohibited from transmitting the information to such Bank. 14.6 ASSIGNMENTS AND PARTICIPATIONS. 14.6.1 ASSIGNMENTS. Unless the Company otherwise consents in writing, which consent shall not be unreasonably withheld, no holder of any Note (including any Bank) shall assign or transfer such Note or any interest therein to any other Person, except as otherwise permitted under Section 14.6. Except as otherwise expressly agreed in writing by the Company, no Bank shall, by reason of the assignment or transfer of any Note or otherwise, be relieved of any of its obligations hereunder. Each transferee of any Note shall take such Note subject to the provisions of this Agreement and to any request made, waiver or consent given, or other action taken hereunder, prior to such transfer, by each previous holder of such Note; and the Company shall be entitled to conclusively assume that the transferee shall thereafter be vested with all rights and powers under this Agreement of the Bank named as the payee of the Note which is the subject of such transfer. Nothing herein shall prohibit any Bank from pledging or assigning any Note to any Federal Reserve Bank pursuant to applicable law. 14.6.2 PARTICIPATIONS. Any Bank may grant participations in or to all or any part of any Loan or Loans then owing to such Bank and the Notes held by such Bank without the consent of the Company. Except as otherwise expressly agreed in writing by the Company, no grant of a participation shall relieve any Bank of its obligations hereunder, the Company shall be entitled to deal solely with the Banks (and their respective assignees) for all purposes of this Agreement and the Notes, and no holder of a participation in all or any part of the Loans or the Notes shall have any rights under this Agreement, except that 34 40 the holder of a participation shall be entitled to the benefits of Section 7 hereunder (but the dollar amount of such Section 7 benefits shall not exceed those benefits that the assigning Bank would have otherwise received). 14.6.3 DISCLOSURE OF INFORMATION. The Company hereby consents to the disclosure of any information obtained in connection herewith by any Bank to any Person which is an assignee or potential assignee or a participant or potential participant pursuant to Section 14.6.1 or 14.6.2, it being understood that such Bank shall advise any such actual or potential assignee or participant of its obligation to keep confidential any nonpublic information disclosed to it pursuant to this Section 14.6.3 and, prior to the disclosure of such information, shall cause each such actual or potential assignee or participant to execute a confidentiality agreement containing the confidentiality provisions set forth in Section 14.5. 14.7 SECURITIES LAWS. Each Bank represents that it is the present intention of such Bank to acquire each Note drawn to its order for its own account and not with a view to the distribution or sale thereof, subject, nevertheless, to the necessity that such Bank remain in control at all times of the disposition of the property held by it for its own account, it being understood that the foregoing representation shall not affect the character of the Loans as commercial lending transactions. 14.8 COSTS AND EXPENSES. The Company agrees to pay on demand all reasonable out-of-pocket costs and expenses of the Banks (including the reasonable fees and out-of-pocket expenses of counsel for the Banks and reasonable allocated costs of in-house counsel for the Banks) in connection with the enforcement of this Agreement, the Notes, and any other instruments or documents executed in connection herewith. 14.9 GOVERNING LAW. This Agreement and each Note shall be a contract made under and governed by the internal laws of the State of Ohio. Wherever possible each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. All obligations of the Company and rights of the Banks and any other holders of the Notes expressed herein or in the Notes shall be in addition to and not in limitation of those provided by applicable law. 14.10 COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the different parties on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Agreement. When counterparts executed by all the parties shall have been lodged with the Company (or, in the case of any Bank as to which an executed counterpart shall not have been so lodged, the Company shall have received telegraphic, telex, or other written confirmation from such Bank of 35 41 execution of a counterpart hereof by such Bank), this Agreement shall become effective as of the date hereof. 14.11 CAPTIONS. Section captions used in this Agreement are for convenience only, and shall not affect the construction of this Agreement. 14.12 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the Company, each Bank, and their respective successors and assigns, and shall inure to the sole benefit of the Company, each Bank, and their respective successors and assigns. 14.13 ENTIRE AGREEMENT. This Agreement supersedes any prior agreement or understanding of the parties hereto, and contains the entire agreement of the parties hereto, with respect to the matters covered hereby. 14.14 APPOINTMENT OF ADMINISTRATOR. TRW hereby appoints National City Bank to serve as administrator (the "ADMINISTRATOR") to coordinate any votes that may be taken under this Agreement and to distribute payments, if any, required to be made to the Banks on a pro rata basis as provided in Section 11.2. In the event that National City Bank is unable or unwilling to act as Administrator, TRW shall appoint a successor, subject to the approval of the Majority Banks, which shall not be unreasonably withheld. Except as otherwise specifically provided herein, borrowing, repayment and fee procedures set forth in this Agreement shall not be affected by the appointment of the Administrator. 14.15 NON-U.S. BANK TAX INFORMATION. Upon the request of the Company, any Bank that is not organized under the laws of the United States of America or any state thereof will (i) deliver to the Company accurate and complete signed copies of Forms 1001 and 4224 (or such additional or successor forms) and any amendments or modifications thereto and (ii) inform the Company if the Company can no longer rely upon such forms. 14.16 REGULATION U. The Company hereby represents and warrants that neither the Company nor any of its Consolidated Subsidiaries is principally engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System) and covenants that the Company's use of proceeds of any borrowings under this Agreement will not cause a violation of Regulation U. Each of the Banks hereby represents and warrants to the Company that it is not relying and will not rely on any margin stock (as described above) in determining whether to extend or maintain credit under this Agreement. 36 42 SIGNATURE PAGES TO REVOLVING CREDIT AGREEMENT, DATED AS OF ---------------------------------------------------------- DECEMBER 10, 1997 ----------------- Delivered at Cleveland, Ohio, as of the day and year first above written. TRW INC. By /s/ Jeanne R. Sydenstricker ----------------------------------- Name: Jeanne R. Sydenstricker Title: Vice President and Treasurer 1900 Richmond Road Cleveland, Ohio 44124 Telephone: 216/291-7566 Facsimile: 216/291-7831 37 43 BANKS: Amount of Percentage of Commitment Commitments - ---------- ----------- $65,000,000 8.6667% Bank of America National Trust and Savings Association By: /s/ Raju N. Patel ---------------------------------- Name: Raju N. Patel Title: Vice President DOMESTIC OFFICE Bank of America NT & SA 1850 Gateway Boulevard Concord, California 94520 Telephone: (510) 675-7178 Facsimile: (510) 675-7531 Attention: Mandy Sneary EUROCURRENCY OFFICE Bank of America NT & SA 1850 Gateway Boulevard Concord, California 94520 Telephone: (510) 675-7178 Facsimile: (510) 675-7531 Attention: Mandy Sneary ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Bank of America ABA Routing No. 121000358 Account No.: 12331-83980 Account Name: Incoming Money Transfer Reference No.: TRW Commitment Fee 38 44 Amount of Percentage of Commitment Commitments - ---------- ----------- $65,000,000 8.6667% Barclays Bank PLC By: /s/ Keith Mackie ------------------------------- Name: Keith Mackie Title: Director DOMESTIC OFFICE Barclays Bank PLC 222 Broadway New York, New York 10038 Telephone: (212) 412-3728 Facsimile: (212) 412-5306 EUROCURRENCY OFFICE Barclays Nassau, Bahamas Branch c/o Barclays Bank PLC 222 Broadway New York, New York 10038 Telephone: (212) 412-3728 Facsimile: (212) 412-5306 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Barclays Bank PLC- New York ABA Routing No.: 026-002-574 Account No.: 050-019-104 Account Name: TRW Reference No.: TRW Commitment Fee; C. Tenn Sing Que 39 45 Amount of Percentage of Commitment Commitments - ---------- ----------- $65,000,000 8.6667% The Chase Manhattan Bank By: /s/ Andres G. Kalnins ------------------------------- Name: Andres G. Kalnins Title: Vice President DOMESTIC OFFICE The Chase Manhattan Bank 270 Park Avenue 10th Floor New York, New York 10017-2070 Telephone: (212) 270-5730 Facsimile: (212) 270-5127 EUROCURRENCY OFFICE The Chase Manhattan Bank One Chase Manhattan Plaza Eighth Floor New York, New York 10081 Telephone: (212) 552-7472 Facsimile: (212) 552-5662 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Chase Manhattan Bank ABA Routing No.: 021-000021 Account No.: Account Name: Commercial Loan Opns. Reference No.: TRW Commitment Fee 40 46 Amount of Percentage of Commitment Commitments - ---------- ----------- $65,000,000 8.6667% Citibank, N.A. By: /s/ Marjorie Futornick -------------------------------- Name: Marjorie Futornick Title: Vice President DOMESTIC OFFICE Citibank, N.A. c/o Citicorp Securities, Inc. 200 S. Wacker Dr. Chicago, IL 60606 Telephone: 312-993-3871 Facsimile: 312-993-6840 EUROCURRENCY OFFICE Citibank, N.A. c/o Citicorp Securities, Inc. 200 S. Wacker Dr. Chicago, IL 60606 Telephone: 312-993-3871 Facsimile: 312-993-6840 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Citibank, N.A., New York ABA Routing No. 021000089 Account No.: 38483095 Account Name: Chicago NEO Loan Acct. Reference No.: TRW Commitment Fee 41 47 Amount of Percentage of Commitment Commitments - ---------- ----------- $65,000,000 8.6667% Morgan Guaranty Trust Company of New York By: /s/ Patricia P. Lunka --------------------------------- Name: Patricia P. Lunka Title: Vice President DOMESTIC OFFICE Morgan Guaranty Trust Company of New York 60 Wall Street New York, New York 10260-0060 Telephone: _____________ Facsimile: _____________ EUROCURRENCY OFFICE Morgan Guaranty Trust Company of New York Nassau, Bahamas Office c/o J.P. Morgan Services Inc. Euro-Loan Servicing Unit 902 Market Street Wilmington, Delaware 19801 Telephone: _____________ Facsimile: _____________ ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Morgan Guaranty Trust ABA Routing No.: 021000238 Account No.: 999-99-090 Account Name: _____________ Reference No.: TRW Com. Fee Corp. Proc. Module 30 42 48 Amount of Percentage of Commitment Commitments - ---------- ----------- $65,000,000 8.6666% National City Bank By: /s/ Davis R. Bonner --------------------------------- Name: Davis R. Bonner Title: Vice President DOMESTIC OFFICE National City Bank National City Center P. O. Box 5756 Cleveland, Ohio 44101-0756 Telephone: (216) 575-3285 Facsimile: (216) 222-0003 EUROCURRENCY OFFICE National City Bank National City Center P. O. Box 5756 Cleveland, Ohio 44101-0756 Telephone: _____________ Facsimile: _____________ ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: National City Bank ABA Routing No.: 041000124 Account No.: 2537557 Account Name: _____________ Reference No.: TRW Commitment Fee 43 49 Amount of Percentage of Commitment Commitments - ---------- ----------- $65,000,000 8.6666% NBD Bank By: /s/ William J. McCaffrey ----------------------------------- Name: William J. McCaffrey Title: Vice President DOMESTIC OFFICE NBD Bank Attention: Mid-Corporate Banking 611 Woodward Detroit, Michigan 48226 Telephone: (313) 225-3444 Facsimile: (313) 225-3269 EUROCURRENCY OFFICE NBD Bank, N.A. Attention: Mid-Corporate Banking 611 Woodward Detroit, Michigan 48226 Telephone: (313) 225-3444 Facsimile: (313) 225-3269 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: NBD Bank ABA Routing No.: 072000326 Account No.: 1424183 Account Name: Commercial Loans Reference No.: TRW Commitment Fee 44 50 Amount of Percentage of Commitment Commitments - ---------- ----------- $45,000,000 6.0000% Banque Nationale de Paris By: /s/ Arnaud Collin du Bocage --------------------------------------- Name: Arnaud Collin du Bocage Title: Executive Vice President and General Manager DOMESTIC OFFICE Banque Nationale de Paris Chicago Branch Rookery Building 209 South LaSalle, 5th Floor Chicago, Illinois 60604 Telephone: (312) 977-2211 Facsimile: (312) 977-1380 EUROCURRENCY OFFICE Banque Nationale de Paris Chicago Branch Rookery Building 209 South LaSalle, 5th Floor Chicago, Illinois 60604 Telephone: (312) 977-2211 Facsimile: (312) 977-1380 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Banque Nationale de Paris, New York Branch ABA Routing No.: 026007689 Account No.: 14119400189 Account Name: BNP, Chicago Branch Reference No.: TRW Commitment Fee 45 51 Amount of Percentage of Commitment Commitments - ---------- ----------- $45,000,000 6.0000% Dresdner Bank AG By: /s/ Deborah Slusarczyk -------------------------------- Name: Deborah Slusarczyk Title: Vice President By: /s/ Ken Hamilton -------------------------------- Name: Ken Hamilton Title: Senior Vice President DOMESTIC OFFICE Dresdner Bank AG New York Branch 75 Wall Street New York, New York 10005 Telephone: (212) 429-2244 Facsimile: (212) 429-2524 EUROCURRENCY OFFICE Dresdner Bank AG Grand Cayman Branch c/o Dresdner Bank AG New York Branch 75 Wall Street New York, New York 10005 Telephone: (212) 429-2244 Facsimile: (212) 429-2524 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Chase Manhattan (NY,NY) ABA Routing No.: 021-000-021 Account No.: 920-1-059-079 Account Name: Dresdner Bank AG, New York Branch Reference No.: TRW Commitment Fee 46 52 Amount of Percentage of Commitment Commitments - ---------- ----------- $45,000,000 6.0000% KeyBank National Association By: /s/ Marianne T. Meil --------------------------------- Name: Marianne T. Meil Title: Vice President DOMESTIC OFFICE KeyBank National Association 127 Public Square Cleveland, Ohio 44114 Telephone: (216) 689-4450 Facsimile: (216) 689-4981 EUROCURRENCY OFFICE KeyBank National Association 127 Public Square Cleveland, Ohio 44114 Telephone: (216) 689-4450 Facsimile: (216) 689-4981 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: KeyBank National Association ABA Routing No.: 041001039 Account No.: 00100-39140 Account Name: Commercial Loan Opns Reference No.: TRW Commitment Fee 47 53 Amount of Percentage of Commitment Commitments - ---------- ----------- $45,000,000 6.0000% Royal Bank of Canada By: /s/ Monica Stettler ---------------------------------- Name: Monica Stettler Title: Manager, Automotive Group DOMESTIC OFFICE Royal Bank of Canada Grand Cayman (North America No. 1) Branch c/o New York Branch 32 Old Slip New York, New York 10005-3531 Telephone: (212) 428-6323 Facsimile: (212) 428-2372 EUROCURRENCY OFFICE Royal Bank of Canada Grand Cayman (North America No. 1) Branch c/o New York Branch 32 Old Slip New York, New York 10005-3531 Telephone: (212) 428-6323 Facsimile: (212) 428-2372 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Chase Manhattan, NY ABA Routing No.: 021000021 Account No.: 9201033363 Account Name: Royal Bank Reference No.: TRW Commitment Fee 48 54 Amount of Percentage of Commitment Commitments - ---------- ----------- $40,000,000 5.3333% The Sumitomo Bank, Limited By: /s/ John H. Kemper --------------------------------- Name: John H. Kemper Title: Senior Vice President DOMESTIC OFFICE The Sumitomo Bank, Limited Chicago Branch Sears Tower 233 South Wacker Drive, Suite 4800 Chicago, Illinois 60606-6448 Telephone: (312) 876-6444 Facsimile: (312) 876-6436 EUROCURRENCY OFFICE The Sumitomo Bank, Limited Chicago Branch Sears Tower 233 South Wacker Drive, Suite 4800 Chicago, Illinois 60606-6448 Telephone: (312) 879-7668 Facsimile: (312) 876-0523 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: FNB of Chicago ABA Routing No. 071000013 Account No.: 15-01208 Account Name: Sumitomo Bank Ltd, Chicago Branch. Reference No.: TRW Commitment Fee 49 55 Amount of Percentage of Commitment Commitments - ---------- ----------- $30,000,000 4.0000% The Sakura Bank, Limited By: /s/ Yukiharu Sakumoto --------------------------------- Name: Yukiharu Sakumoto Title: Joint General Manager DOMESTIC OFFICE The Sakura Bank, Limited Chicago Branch 227 West Monroe Street Suite 4700 Chicago, Illinois 60606 Telephone: (312) 580-3276 Facsimile: (312) 332-5345 EUROCURRENCY OFFICE The Sakura Bank, Limited Chicago Branch 227 West Monroe Street Suite 4700 Chicago, Illinois 60606 Telephone: (312) 580-3276 Facsimile: (312) 332-5345 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: FNB of Chicago ABA Routing No.: 071000013 Account No.: 1512951 Account Name: Sakura Bank, Chicago Reference No.: TRW Commitment Fee 50 56 Amount of Percentage of Commitment Commitments - ---------- ----------- $30,000,000 4.0000% Union Bank of Switzerland, New York Branch By: /s/ C. C. Glockler --------------------------------- Name: C. C. Glockler Title: Director By: /s/ Mary V. Turnbach --------------------------------- Name: Mary V. Turnbach Title: Assistant Treasurer DOMESTIC OFFICE Union Bank of Switzerland New York Branch 299 Park Avenue New York, New York 10171 Telephone: (212) 821-3661 Facsimile: (212) 821-3878 EUROCURRENCY OFFICE Union Bank of Switzerland New York Branch 299 Park Avenue New York, New York 10171 Telephone: (212) 821-3661 Facsimile: (212) 821-3878 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Union Bank of Switzerland ABA Routing No.: 026008439 Account No.: 519243USIDC1 Account Name: Credit Corporate Clearing Reference No.: TRW Commitment Fee 51 57 Amount of Percentage of Commitment Commitments - ---------- ----------- $15,000,000 2.0000% Wells Fargo Bank, N.A. By: /s/ Frieda Youlios ------------------------------ Name: Frieda Youlios Title: Vice President By: /s/ Rachel Uyama ------------------------------ Name: Rachel Uyama Title: Assistant Vice President DOMESTIC OFFICE Wells Fargo Bank, N.A. 707 Wilshire Blvd., 16th. Floor Los Angeles, CA 90017 Telephone: (213) 614-5038 Facsimile: (213) 614-2305 EUROCURRENCY OFFICE Wells Fargo Bank, N.A. 707 Wilshire Blvd., 16th. Floor Los Angeles, CA 90017 Telephone: (213) 614-5038 Facsimile: (213) 614-2305 ELECTRONIC PAYMENT INSTRUCTIONS Receiving Bank: Wells Fargo Bank, N.A. ABA Routing No.: 121-000-248 Account No.: 451-8054341 Account Name: SYNDIC/WFB CORP/ACH Reference No.: TRW Ref No 9118583038 ----- $750,000,000 100.0000% Total 52 58 EXHIBIT A to Revolving Credit Agreement REVOLVING NOTE Up to a maximum of $ ---------------- (or the Eurocurrency or Date: ________________, 1997 Local Currency equivalent Cleveland, Ohio hereof) FOR VALUE RECEIVED, the undersigned hereby promises to pay to the order of _____________________ (the "BANK") for the account of its Domestic or Eurocurrency Office, as applicable (capitalized terms used herein but not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement referred to below), the outstanding principal amount of the Loans made by the Bank to the undersigned pursuant to the Credit Agreement. The principal amount of each Loan evidenced hereby shall be payable on the earliest of: (i) the Revolving Period Termination Date, unless the Company shall have made the election provided for in clause (ii) of Section 2.1 of the Credit Agreement; (ii) the Term-Out Maturity Date, if the Company shall have made such election; (iii) the last day of the applicable Interest Period for such Loan (unless the Loan is Continued or Converted); or (iv) such other date as the Company and the Relevant Bank may agree in writing. The undersigned promises to pay interest on the unpaid principal amount of each Loan evidenced hereby from the date such Loan is made until the principal amount of such Loan is paid in full, at such interest rates, and payable at such times, as are specified in the Credit Agreement. Both principal of, and interest on, any Loan are payable in immediately available funds in the currency of such Loan to the Bank as its Domestic or Eurodollar Office that made the Loan. The Loans made by the Bank to the undersigned, and all payments made on account of principal thereof, shall be recorded by the Bank and, prior to any transfer hereof, endorsed on the grid attached hereto which is part of this Note. This Note is one of the Notes referred to in, and is entitled to the benefits of, the Revolving Credit Agreement, dated as of December 10, 1997, among the undersigned, the Bank, and the other bank parties named therein, as Banks (as the same may be amended, modified, or supplemented and in effect from time to time, the "CREDIT AGREEMENT"). The Credit Agreement, among other things, (i) provides for the making of Loans by the Bank to the undersigned from time to time in an aggregate principal amount not to exceed at any time the dollar amount first mentioned above and the indebtedness of the undersigned resulting from each such Loan being evidenced by this Note, and (ii) contains provisions for acceleration of the maturity 59 hereof upon the happening of certain stated events and also for payments on account of the principal hereof prior to the maturity hereof upon the terms and conditions and in accordance with the provisions therein specified. Reference is hereby made to the Credit Agreement for a statement of said terms and provisions. In addition to, and not in limitation of, the foregoing and the provisions of the Credit Agreement hereinabove referred to, the undersigned further agrees, subject only to any limitation imposed by applicable law, to pay all expenses, including reasonable attorneys' fees and expenses, incurred by the holder of this Note in seeking to collect any amounts payable hereunder which are not paid when due, whether by acceleration or otherwise. DEMAND, PRESENTMENT, PROTEST, AND NOTICE OF NON-PAYMENT ARE HEREBY WAIVED BY THE UNDERSIGNED. THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE OF OHIO. TRW INC. By: ------------------------------ Jeanne R. Sydenstricker Vice President and Treasurer 2 60 Schedule Attached to Revolving Note dated _________________, 1997 of TRW Inc. payable to the order of ------------------------------------------------- BASE RATE BORROWINGS
Unpaid Date and Date and Amount Principal Amount of of Repayment Balance of Base Rate of Base Rate Base Rate Notation Borrowing Borrowing Borrowings Made By - --------- --------- ---------- ------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------
61 Schedule Attached to Revolving Note dated _________________, 1997 of TRW Inc. payable to the order of --------------------------------------------------- FIXED RATE BORROWINGS
Date, Amount, Date and Unpaid and Type of Interest Amount of Principal Notation Borrowing Period Repayment Balance Made By - --------- ------ --------- ------- ------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------
2 62 EXHIBIT B to Revolving Credit Agreement COMPLIANCE CERTIFICATE To: Each of the Bank Parties to the Credit Agreement referred to below Reference is made to our Revolving Credit Agreement, dated as of December 10, 1997 (herein as amended, modified or supplemented and in effect from time to time called the "CREDIT AGREEMENT") with you. Terms used but not otherwise defined herein are used herein as defined in the Credit Agreement. The Company hereby certifies and warrants to you that the following is a true and correct computation as at _________________ 19 __ (the "COMPUTATION DATE") of Consolidated Net Worth contained in Section 9.2 of the Credit Agreement: Minimum Consolidated Net Worth - ------------------------------ Required Under Section 9.2 - -------------------------- $1,600,000,000 LESS: The lessor of (i) the aggregate amount expended by the Company subsequent to December 31, 1995 for repurchase of its Common Stock and (ii) $600,000,000 $_________________ $_________________ Consolidated Net Worth - ---------------------- of the Company - -------------- Consolidated shareholders' investment $_________________ PLUS: Minority interests $_________________ $_________________ The Company hereby further certifies and warrants to you that no Event of Default or Unmatured Event of Default has occurred and is continuing. 63 IN WITNESS WHEREOF, the Company has caused this Certificate to be executed and delivered by its duly authorized officer this ___ day of ________________, 19__. TRW INC. By --------------------------- Its --------------------------- 2 64 EXHIBIT C to Revolving Credit Agreement December 10, 1997 To: Each of the Banks party to the Credit Agreements referred to below Ladies and Gentlemen: I am General Counsel of TRW Inc., an Ohio corporation (the "Company"), and have acted in such capacity in connection with the Revolving Credit Agreement, dated as of December 10, 1997 (the "Credit Agreement"), among the Company and each of the financial institutions listed on the signature pages thereof. Capitalized terms used but not otherwise defined are used herein as defined in the Credit Agreement. In connection with the opinions expressed below, I have examined or caused to be examined by members of the TRW Law Department a copy of the Credit Agreement and the Notes thereunder; and I have also made or caused to be made such other examinations and inquiries as I have deemed necessary to enable me to give the opinions hereinafter expressed. However, as to each of the opinions set forth below which is limited to my knowledge, you should be aware that I have neither made nor caused to be made any independent review for purposes of rendering this opinion, although in the regular course of advising the Company I have reviewed or caused to be reviewed various documents, records and matters of law. Based upon the foregoing, I am of the opinion that: 1. The Company is a corporation duly incorporated and in good standing under the laws of the State of Ohio. 65 December 10, 1997 Page 2 2. The Company has full power to execute, deliver, and perform the Credit Agreement and to borrow moneys thereunder and to execute, deliver, and perform its obligations under the Notes. 3. The execution and delivery of the Credit Agreement and the Notes, the borrowings under the Credit Agreement, and the performance by the Company of its obligations under the Credit Agreement and the Notes, have been duly authorized by all necessary corporate action, and do not and will not contravene or conflict with any material provision of applicable law now in effect or of the Amended Articles of Incorporation or Regulations of the Company or, to my knowledge, of any agreement for borrowed money or other material agreement binding upon the Company. 4. The Credit Agreement and the Notes have been duly executed and delivered by the Company and are the legal, valid, and binding obligations of the Company, enforceable in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium laws or debtor relief proceedings or any similar laws or proceedings affecting creditors' rights generally or by general principles of equity. I am a member of the bar of the State of Ohio and do not purport to be an expert on, generally familiar with or qualified to express legal conclusions based on laws other than the laws of the State of Ohio and the United States of America. This opinion is being delivered to you solely for your benefit as creditor under the Credit Agreement and may be relied upon only by you for such purpose. Very truly yours, General Counsel 2 66 SCHEDULE 8.5 [REVOLVING CREDIT AGREEMENT dated as of December 10, 1997] In November 1997, Centoco Holdings Limited and an affiliate, KS Centoco Ltd., filed a lawsuit against TRW Inc. and certain Magna International Inc. entities in the General Division Court in Ontario, Canada, alleging, among other things, breach of contract, patent infringement and collusion. A Centoco affiliate licensed from a company named KSAG certain air bag and steering wheel technology. KSAG's successor was purchased by Magna International Inc., which in turn sold 80% of the relevant Magna subsidiaries' stock to TRW Inc. in February 1997. The plaintiffs have claimed CN$600 million in damages. TRW believes this matter is covered by an indemnification agreement between Magna and TRW. TRW management is currently evaluating the claim and is unable to make a meaningful estimate of the amount or range of possible liability at this time. TRW Vehicle Safety Systems Inc. ("VSSI") has reported to the Arizona Department of Environmental Quality ("ADEQ") potential violations of the Arizona hazardous waste law at its Queen Creek, Arizona facility for the possible failure to properly label and dispose of waste water that might be classified as hazardous waste. ADEQ is conducting an investigation into these potential violations and VSSI is cooperating with the investigation. If ADEQ initiates proceedings against VSSI with respect to such matters, VSSI could be liable for penalties and fines and other relief. VSSI has been apprised by state and federal officials that there are ongoing criminal investigations with respect to these potential violations. Management is unable to make a meaningful estimate of the amount or range of possible liability at this time. EX-10.F.F 9 EXHIBIT 10(F)(F) 1 EXHIBIT 10(ff) EMPLOYMENT AGREEMENT This EMPLOYMENT AGREEMENT (the "Agreement"), dated as of November 20, 1997, but effective as provided herein, is made and entered into by and between TRW Inc., an Ohio corporation (the "Company" or "TRW", as the context requires), and Philip A. Odeen (the "Executive"). WHEREAS, the Executive has been serving as the President and Chief Executive Officer of BDM International, Inc. ("Banneker"), a Delaware corporation; WHEREAS, pursuant to the Agreement and Plan of Merger (the "Merger Agreement") among the Company, Systems Acquisition Inc., a wholly owned subsidiary of the Company ("Merger Sub"), and Banneker (the "Merger Agreement"), as of the effective time of the Merger (the "Effective Time"), Merger Sub will be merged with and into Banneker, with Banneker as the surviving entity (the "Merger"); WHEREAS, pursuant to the Merger Agreement it is contemplated that Executive will execute this Agreement upon the signing of the Merger Agreement and, upon the date of the consummation of the Offer, as defined in the Merger Agreement (the "Closing Date"), Executive will serve in the employ of the Company or a subsidiary of the Company ("Company" as used herein will mean the Company or a subsidiary of the Company); WHEREAS, the Company considers it in the best interests of its stockholders to foster the continuous employment of certain key management personnel of Banneker; WHEREAS, the Company wishes to assure itself of both present and future continuation of management in light of the Merger; WHEREAS, the Company wishes to employ the Executive and the Executive is willing to render services, both on the terms and subject to the conditions set forth in this Agreement; NOW, THEREFORE, in consideration of the promises and of the mutual covenants herein contained, it is agreed as follows: 1. EMPLOYMENT. 1.1 The Company hereby agrees to continue to employ the Executive, and the Executive hereby agrees to continue employment with the Company, upon the terms and conditions herein set forth. 1.2 Employment will continue for a term commencing on the Closing Date and, subject to earlier expiration upon the Executive's termination under Section 3, expiring on the third anniversary of the Closing Date (the "Employment Term"). 2 1.3 DUTIES. During the Employment Term, the Executive will be the Company's full-time employee in a position requiring the Executive to provide services of a similar character to those provided by the Executive to Banneker immediately prior to the date hereof. The Executive will devote all of his business time and attention to the performance of his duties to the Company. Notwithstanding the foregoing, the Executive may, (i) subject to the approval of the Company, serve as a director of a company which is not engaged in "Competition" (as defined in Section 5.1 ) with the Company, (ii) serve as an officer, director or otherwise participate in purely educational, welfare, social, religious and civic organizations, and (iii) manage personal and family investments. 2. COMPENSATION AND RELATED MATTERS. 2.1 COMPENSATION AND BENEFITS. (i) Annual Base Salary. Executive will receive an annual base salary of not less than his annual base salary in effect immediately prior to the Effective Time. In the event that the Executive relocates his location of principal employment at the request of the Company, the Company will in good faith consider a cost of living adjustment to annual base salary. Annual base salary and merit increases to such salary will be payable at the times and in the manner consistent with Banneker's general policies regarding compensation of executive employees. (ii) Annual Incentive Compensation. Executive will be eligible to receive annual incentive compensation based on incentive target percentages of base salary comparable to such percentages in effect immediately prior to the Effective Time. Nothing in this Section 2.1 (ii) will guarantee to the Executive any specific amount of incentive compensation, or prevent the Board from establishing performance goals and compensation targets applicable to the Executive. 2.2 EXECUTIVE BENEFITS. In addition to the compensation described in Section 2.1, the Executive and his eligible dependents during the Employment Term will be entitled to participate in employee benefit plans currently offered by Banneker, including without limitation supplemental retirement plans, executive life insurance and executive deferred compensation plans, provided however that the Company reserves the right to provide comparable benefits under new or substituted benefit plans. 2.3 EXPENSES. The Company will promptly reimburse the Executive for all travel and other business expenses the Executive incurs in order to perform his duties to the Company under this Agreement in a manner commensurate with the Executive's position and level of responsibility with the Company, and in accordance with the Company's policy regarding expenses. 3. TERMINATION. Notwithstanding the Employment Term specified in Section 1.2, the termination of the Executive's employment hereunder will be governed by the following provisions: 2 3 3.1 CAUSE. (i) The Company may terminate the Executive's employment hereunder for Cause (as defined below). In the event of the Executive's termination for Cause, the Company will promptly pay to the Executive (or his representative) the unpaid annual base salary to which he is entitled, pursuant to Section 2.1, through the date the Executive is terminated and the Executive will be entitled to no other compensation, except as otherwise due to him under applicable law. (ii) For purposes of this Agreement, the term "Cause" means either (a) that the Executive shall have committed: (1) an intentional act of fraud, embezzlement or theft in connection with his duties or in the course of his employment with the Company; (2) intentional wrongful damage to property of the Company; (3) intentional misconduct that is materially injurious to the Company, monetarily or otherwise; (4) an intentional breach of the Executive's obligations set forth in Section 5, and any such act shall have been materially harmful to the Company; or (b) the failure by the Executive to comply with the policies and procedures then applicable to employees of the Company who have positions comparable to the Executive; provided, however, that the Executive shall not be terminated for Cause pursuant to this Section 3.1 (ii)(b) unless he shall have received a written report setting forth in reasonable detail the manner in which he has failed to meet such policies and procedures and within 30 calendar days after receiving such report, the Board (or Chief Executive Officer and/or President of the Company) shall have determined in good faith that the Executive shall have failed to make substantial progress in meeting the Company's policies and procedures. For purposes of this Agreement, an act or failure to act on the part of the Executive shall be deemed "intentional" only if done or omitted to be done by the Executive not in good faith and without reasonable belief that his action or omission was in the best interest of the Company. 3.2 TERMINATION. (i) Involuntary Termination. The Executive's employment hereunder may be terminated by the Company for any reason by written notice as provided in Section 8.4. The Executive will be treated for purposes of this Agreement as having been involuntarily terminated by the Company other than for Cause if the Executive terminates his employment with the Company for any of the following reasons: (a) the Company requests that the Executive provide services that are not of a similar character to those provided by the Executive to Banneker immediately prior to the date hereof; (b) the Company has breached any material provision of this Agreement and within 30 days after notice thereof from the Executive, the Company fails to cure such breach; or (c) the Company requires the Executive to relocate his principal place of employment to any location outside a fifty mile radius from the location of the Executive's principal place of employment immediately prior to the date hereof. (ii) Voluntary Termination. The Executive may voluntarily terminate the Agreement at any time by notice to the Company as provided in Section 8.4. 3 4 3.3 TERMINATION PAYMENTS AND BENEFITS. (i) Form and Amount. Upon the Executive's involuntary termination other than for Cause during the Employment Term, the Company will pay an amount to the Executive as follows: (a) if the termination occurs on or prior to the second anniversary of the Closing Date, an amount equal to three times the sum of the Executive's annual salary and target annual incentive compensation in effect immediately prior to the termination, multiplied by a fraction the numerator of which is the number of full months remaining in the Employment Term and the denominator of which is 36; and (b) if the termination occurs after the second anniversary of the Closing Date, an amount equal to the sum of the Executive's annual salary and target annual incentive compensation in effect immediately prior to the termination. Any amount due pursuant to this Section 3.3 will be payable in a lump sum less applicable taxes within 30 days following termination. (ii) Maintenance of Benefits. During the period set forth below, the Company will use its best efforts to maintain in full force and effect for the continued benefit to the Executive, and his or her eligible dependents, all health and welfare benefits which the Executive was entitled to receive immediately prior to his termination or will arrange to make available to the Executive benefits substantially similar to those that the Executive would otherwise have been entitled to receive if his employment had not been terminated. Such benefits will be provided to the Executive on the same terms and conditions (including employee contributions toward the premium payments) under which the Executive was entitled to participate immediately prior to his termination. The term of continued benefits will be as follows: (a) if the termination occurs on or prior to the second anniversary of the Closing Date, the term will be the remainder of the Employment Term if there had been no termination and (b) if the termination occurs after the second anniversary of the Closing Date, the term will be 12 months. (iii) Release. No amount or benefit will be paid or made available under this Section 3 unless (a) the Executive executes a release in a form satisfactory to the Company, and (b) to the extent such payment or benefit is subject to the seven-day revocation period prescribed by the Age Discrimination in Employment Act of 1967, as amended, or to any similar revocation period in effect on the date of termination of Executive's employment, such revocation period has expired. 4. MITIGATION AND OFFSET. The Executive is under no obligation to mitigate damages or the amount of any payment provided for hereunder by seeking other employment or otherwise; provided, however, that the Executive's coverage under the Company's health and welfare plans will be reduced to the extent that the Executive becomes covered under any comparable employee benefit plan made available by another employer and covering the same type of benefits. The Executive will report to the Company any such benefits actually received by him. 4 5 5. COMPETITION; CONFIDENTIALITY; NONSOLICITATION 5.1 The Executive hereby covenants and agrees that during the Employment Term and for the applicable period following the Employment Term specified in Section 3.3(ii)(a) or (b), whichever would be applicable if Section 3.3(ii) applied (regardless of whether the Executive's termination of employment was for cause or otherwise), he will not, without the prior written consent of the Company, engage in Competition (as defined below) with the Company. Notwithstanding the foregoing, in the event that the Executive voluntarily terminates his employment with the Company, the Non-Competition period provided for herein will end on the later of (a) the second anniversary of the Closing Date and (b) the six month anniversary of the termination date. For purposes of this Agreement, "Competition" means participating in the management of any business enterprise if such enterprise engages in substantial and direct competition with the Company and such enterprise's sales of any product or service competitive with any product or service of the Company amounted to 25% of such enterprise's net sales for its most recently completed fiscal year and if the Company's net sales of said product or service amounted to 25% of the Company's net sales for its most recently completed fiscal year. "Competition" will not include (i) the mere ownership of securities in any enterprise and exercise of rights appurtenant thereto or (ii) participation in management of any enterprise or business operation thereof other than in connection with the competitive operation of such enterprise. 5.2 During the Employment Term, the Company agrees that it will disclose to Executive its confidential or proprietary information (as defined in this Section 5.2) to the extent necessary for Executive to carry out his obligations under this Agreement. The Executive hereby covenants and agrees that he will not, without the prior written consent of the Company, during the Employment Term or thereafter disclose to any person not employed by the Company, or use in connection with engaging in Competition with the Company, any confidential or proprietary information of the Company. For purposes of this Agreement, the term "confidential or proprietary information" will include all information of any nature and in any form that is owned by the Company and that is not publicly available or generally known to persons engaged in businesses similar or related to those of the Company. Confidential information will include, without limitation, the Company's financial matters, customers, employees, industry contracts, and all other secrets and all other information of a confidential or proprietary nature. Confidential information shall not include information that comes into the possession of the Executive following termination from a source not under a duty to the Company to refrain from disclosing such information. The foregoing obligations imposed by this Section 5.2 will cease if such confidential or proprietary information will have become, through no fault of the Executive, generally known to the public or the Executive is required by law to make disclosure (after giving the Company notice and an opportunity to contest such requirement). 5.3 The Executive hereby covenants and agrees that during the Employment Term and for one year following the Employment Term he will not attempt to influence, persuade or induce, or assist any other person in so persuading or inducing, any employee of the Company to give up, or to not commence, employment or a business relationship with the Company. 5 6 5.4 For purposes of this Section 5, the term the "Company" means the Company and its subsidiaries, collectively. 6. POST-TERMINATION ASSISTANCE. The Executive agrees that after his employment with the Company has terminated he will provide, upon reasonable notice, such information and assistance to the Company as may reasonably be requested by the Company in connection with any litigation, investigation, audit or similar matter in which it or any of its affiliates is or may become a party; provided, however, that the Company agrees to reimburse the Executive for any related out-of-pocket expenses, including travel expenses. 7. SURVIVAL. The expiration or termination of the Employment Term will not impair the rights or obligations of any party hereto that accrue hereunder prior to such expiration or termination, except to the extent specifically stated herein. In addition to the foregoing, the Executive's covenants contained in Sections 5.1, 5.2, 5.3 and 6 and the Company's obligations under Section 3 will survive the expiration or termination of Executive's employment. 8. MISCELLANEOUS PROVISIONS. 8.1 BINDING ON SUCCESSORS. This Agreement will be binding upon and inure to the benefit of the Company, the Executive and each of their respective successors, assigns, personal and legal representatives, executors, administrators, heirs, distributees, devisees and legatees, as applicable. 8.2 GOVERNING LAW. This Agreement will be governed, construed, interpreted and enforced in accordance with the substantive laws of the State of Ohio, without regard to conflict of law principles. 8.3 SEVERABILITY. Any provision of this Agreement that is deemed invalid, illegal or unenforceable in any jurisdiction will, as to that jurisdiction be ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions hereof in such jurisdiction or rendering that or any other provisions of this Agreement invalid, illegal, or unenforceable in any other jurisdiction. If any covenant should be deemed invalid, illegal or unenforceable because its scope is considered excessive, such covenant will be modified so that the scope of the covenant is reduced only to the minimum extent necessary to render the modified covenant valid, legal and enforceable. 8.4 NOTICES. For all purposes of this Agreement, all communications, including without limitation notices, consents, requests or approvals, required or permitted to be given hereunder must be in writing and will be deemed to have been duly given when hand delivered or dispatched by electronic facsimile transmission (with receipt thereof confirmed), or five business days after having been mailed by United States registered or certified mail, return receipt requested, postage prepaid, or 6 7 three business days after having been sent by a nationally recognized overnight courier service such as Federal Express, UPS or Purolator, addressed as follows, or to such other address as any party may have furnished to the other in writing and in accordance herewith, except that notices of changes of address will be effective only upon receipt. (i) TO THE COMPANY. If to the Company, addressed to: TRW Inc. 1900 Richmond Road Cleveland, Ohio 44124 Attn: Secretary Telecopy: 216.291.7563 (ii) TO THE EXECUTIVE. If to the Executive, to him at: 1209 Crest Lane McLean, Virginia 22101 8.5 COUNTERPARTS. This Agreement may be executed in several counterparts, each of which will be deemed to be an original, but all of which together will constitute one and the same Agreement. 8.6 ENTIRE AGREEMENT. The terms of this Agreement are intended by the parties to be the final expression of their agreement with respect to the Executive's employment by the Company and may not be contradicted by evidence of any prior or contemporaneous agreement. The parties further intend that this Agreement will constitute the complete and exclusive statement of its terms and that no extrinsic evidence whatsoever may be introduced in any judicial, administrative or other legal proceeding to vary the terms of this Agreement. This agreement supersedes any and all prior agreements applicable to the terms and conditions of Executive's employment with any entity referred to herein. 8.7 AMENDMENTS; WAIVERS. This Agreement may not be modified, amended, or terminated except by an instrument in writing, approved by the Company and signed by the Executive and the Company. Failure on the part of either party to complain of any action or omission, breach or default on the part of the other party, no matter how long the same may continue, will never be deemed to be a waiver of any rights or remedies hereunder, at law or in equity. The Executive or the Company may waive compliance by the other party with any provision of this Agreement that such other party was or is obligated to comply with or perform only through an executed writing; provided, however, that such waiver will not operate as a waiver of, or estoppel with respect to, any other or subsequent failure. 8.8 NO INCONSISTENT ACTIONS. The parties will not voluntarily undertake or fail to undertake any action or course of action that is inconsistent with the provisions or essential intent of this Agreement. Furthermore, it is the intent of the parties hereto to act in a fair and reasonable manner with respect to the interpretation and application of the provisions of this Agreement. 7 8 8.9 HEADINGS AND SECTION REFERENCES. The headings used in this Agreement are intended for convenience or reference only and will not in any manner amplify, limit, modify or otherwise be used in the construction or interpretation of any provision of this Agreement. All section references are to sections of this Agreement, unless otherwise noted. 9. TREATMENT OF OPTIONS. Executive agrees that he will not exercise any options which he currently holds to purchase common stock of Banneker (the "Options") prior to the Closing Date, and that upon the Closing Date, Executive will receive cash in exchange for the cancellation of his Options as set forth in Section 1.9(a) of the Merger Agreement. 10. EFFECTIVENESS. This Agreement will become effective upon the Closing Date, except for the provisions of Section 9, which shall become effective as of the date hereof. Notwithstanding any other provision of this Agreement, if the Merger Agreement is terminated prior to the Effective Time, this Agreement will have no further force or effect. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written, but effective as provided in Section 10. Name: /s/ Philip A. Odeen ----------------------------------- TRW INC., an Ohio corporation By: /s/ William B. Lawrence --------------------------------- Name: William B. Lawrence Title: Executive Vice President, General Counsel and Secretary 8 EX-10.G.G 10 EXHIBIT 10(G)(G) 1 EXHIBIT 10(gg) [TRW LOGO] 1998-2000 STRATEGIC INCENTIVE PROGRAM GRANT To: Date of Grant: January 1, 1998 ------------------------ SSN: ------------------------ As a key employee of TRW Inc. or of a subsidiary, you are hereby granted the right (the "Right") to receive a three-year grant of ________ performance units subject to the attached terms and conditions. Each performance unit will have a value equivalent to the value of one share of TRW Common Stock. TRW Inc. By: ------------------------- Authorized Officer 2 [TRW LOGO] 1998 - 2000 STRATEGIC INCENTIVE PROGRAM TERMS AND CONDITIONS - -------------------------------------------------------------------------------- 1. THE RIGHT This Right entitles you to receive performance units in the event that certain financial goals are achieved with respect to the calendar years 1998 through 2000 (the "Performance Period"). 2. PERFORMANCE CRITERIA The definition of the goals, for purposes of this Right, is set forth in Exhibit A. The inclusion of the effects of unusual items in the calculations shall be at the complete discretion of the Compensation and Stock Option Committee of the Directors of TRW (the "Committee"). A goal scoring sheet for each of the three years in the Performance Period and weighted award levels related to each of the goals is set forth in Exhibit B. The Organic Sales goals will be adjusted to include sales attributable to acquisitions as specified in the acquisition "buy plan." The Return on Sales goals will be adjusted to reflect the inclusion of MPAT and sales attributable to the acquisition as specified in the acquisition "buy plan." 3. PAYMENT Promptly following the availability of year-end financial information, the number of performance units to be paid out will be determined by multiplying 33.0% of the target grant by the payout percent generated by the goal scoring sheet for each of the first two years of participation in the Program and 34.0% in the third year. Each performance unit will be converted into cash at the average of the high and the low sales prices of a share of TRW Common on the New York Stock Exchange Composite Transactions Listing on the day immediately prior to the date of payment. This amount will be paid to you in the currency in which you receive your compensation. 4. TAXES Upon any payment pursuant to this Right, TRW will deduct any withholding or other taxes due. 5. TRANSFERABILITY This Right is not transferable other than by will or the laws of descent and distribution. 6. DEATH In the event of your death, your estate or those so designated by will or the laws of descent and distribution will be entitled to receive, at such times as you would have received payment, such payment as would have been paid to you hereunder if you had remained employed throughout the entire year in which your death occurred and the following year of the Performance Period, if any. 7. TERMINATION OF EMPLOYMENT This Right shall terminate on the date of your termination of employment and you shall not be entitled to any additional payments hereunder except for any payments with respect to calendar years prior to the calendar year of your termination. However, if your employment is terminated during the last half of a calendar year, and if the Committee gives written consent on or prior to the date on which payments are to be made pursuant to this Right with respect to such year, you will be entitled to receive such payments as would have been issued to you hereunder if you remained employed through the end of the calendar year during which your employment terminated multiplied by the fraction representing the number of full months employed during such year. 8. DISABILITY Notwithstanding the foregoing, if your termination of employment is due to disability for a period of more than twelve months (as determined in accordance with the TRW Long-Term Disability Plan), you will be entitled to receive such payment as would have been issued to you hereunder if you had remained employed for the entire year in which the disability occurred and the following year of the Performance Period, if any. 3 9. ADJUSTMENTS The Committee shall make such adjustments in the number and kind of grants pursuant hereto as it may determine are equitably required to prevent dilution or enlargement of your rights that would otherwise result from any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of TRW, merger, consolidation, reorganization, partial or complete liquidation or other corporate transaction or event having an effect similar to any of the foregoing. 10. AMENDMENTS In addition to the authority to make adjustments as provided in Section 9, the Committee shall have the authority, until such time as a Change in Control as defined in Section 11 occurs, to amend otherwise this grant. Notwithstanding the foregoing, if you transfer positions or change responsibilities within TRW, the Committee may amend this Right to reflect such changed circumstances; provided, however, that any such amendment after a Change in Control occurs shall not reduce the value of this Right to you. 11. CHANGE IN CONTROL In the event of a Change in Control of TRW, this Right will remain in effect so long as you continue to be employed by TRW. For purposes of this Right, the definition of Change in Control is the same as the definition contained in resolutions adopted by the Committee on July 26, 1989. Such resolutions, in summary, provide that a Change in Control is a change occurring (a) by virtue of TRW's merger, consolidation or reorganization into or with, or transfer of assets to, another corporation or (b) by virtue of a change in the majority of the Directors during any two-year period unless the election of each new Director was approved by a two-thirds vote of the Directors in office at the beginning of such period or (c) through the acquisition of shares representing 20 percent or more of the voting power of TRW or (d) through any other change in control reported in any filing with the Securities and Exchange Commission, excluding, however, the acquisition of shares, or any report of such acquisition, by TRW, a subsidiary of TRW or a TRW-sponsored employee benefit plan. The language in the resolutions controls over this summary language. If a Change in Control occurs you will be entitled to receive any payment issuable to you but not yet issued with respect to any completed calendar year in the Performance Period preceding the Change in Control. In addition, with respect to each of the remaining years in the Performance Period, you will be entitled to receive payment equal to the number of units payable assuming maximum performance on all goals. The aggregate number of units payable with respect to the year of the Change in Control and subsequent years in the Performance Period, determined in accordance with the precedence sentence, will be issued to you promptly following the Change in Control. 12. MISCELLANEOUS This Right shall not be construed as giving you any right to continue in the employ of TRW. Subject to the requirements and limitations in Sections 10 and 11 above, the Committee has authority to interpret and construe any provision of this grant and any such interpretation and construction shall be binding and conclusive. Except as provided in Section 11 above, no rights hereunder shall accrue to you with respect to any year in the Performance Period until such year is completed and the goals performance for such year has been approved as provided in Section 3 above. Thereafter your rights will be limited to those expressly given by this Right. 13. ENTIRE AGREEMENT This Right sets forth the entire understanding between you and TRW with respect to the subject matter hereof and supersedes all prior agreements and understandings, whether oral or written, relating hereto. EX-11 11 EXHIBIT 11 1 Exhibit 11 TRW INC. AND SUBSIDIARIES ------------------------- COMPUTATION OF EARNINGS PER SHARE (A) ------------------------------------- (In Millions Except Per Share Amounts)
Years ended December 31 ------------------------------------- BASIC COMPUTATION 1997 1996 1995 - ----------------- ---- ---- ---- Earnings (loss) from continuing operations $ (48.5) $ 182.4 $ 395.4 Less preference dividend requirements 0.7 0.7 0.8 ------- ------- ------- Basic earnings (loss) - continuing (49.2) 181.7 394.6 Earnings from discontinued operations 0.0 37.9 50.8 Gain on disposal of discontinued operations 0.0 259.8 0.0 ------- ------- ------- Basic net earnings (loss) $ (49.2) $ 479.4 $ 445.4 ======= ======= ======= Average common shares outstanding 123.7 128.7 130.6 ======= ======= ======= Basic earnings (loss) per share: Continuing operations $ (0.40) $ 1.41 $ 3.02 Discontinued operations 0.00 0.29 0.39 Gain on disposal of discontinued operations 0.00 2.02 0.00 ------- ------- ------- Basic earnings (loss) per share $ (0.40) $ 3.72 $ 3.41 ======= ======= ======= DILUTED COMPUTATION - ------------------- Basic earnings (loss) - continuing $ (49.2) $ 181.7 $ 394.6 Dividends assuming conversion of other dilutive securities: (B) Dilutive preference dividends 0.7 0.7 0.8 ------- ------- ------- Earnings (loss) from continuing operations applicable to diluted shares (48.5) 182.4 395.4 Earnings from discontinued operations 0.0 37.9 50.8 Gain on disposal of discontinued operations 0.0 259.8 0.0 ------- ------- ------- Net earnings (loss) applicable to diluted shares $ (48.5) $ 480.1 $ 446.2 ======= ======= ======= Average common shares outstanding 123.7 128.7 130.6 Common shares assuming conversion of other dilutive securities: (B) Dilutive preference shares 1.0 1.1 1.2 Stock options and performance share rights, based on the treasury stock method using average market price 3.1 3.0 2.6 ------- ------- ------- Average fully diluted shares 127.8 132.8 134.4 ======= ======= ======= Diluted earnings (loss) per share: Continuing operations $ (0.38) $ 1.37 $ 2.94 Discontinued operations 0.00 0.29 0.38 Gain on disposal of discontinued operations 0.00 1.96 0.00 ------- ------- ------- Diluted earnings (loss) per share $ (0.38)(C) $ 3.62 $ 3.32 ======= ======= =======
(A) Amounts have been restated to comply with Statement of Financial Accounting Standards No. 128, Earnings per Share. (B) Assuming the conversion of the Serial Preference Stock II - Series 1 and Series 3. (C) The calculation for diluted EPS is shown above, though for disclosure the EPS presented defaults to the basic calculation since it is more dilutive than the dilutive calculation. EX-12 12 EXHIBIT 12 1 Exhibit 12 TRW Inc. and Subsidiaries Computation of Ratio of Earnings to Fixed Charges - Unaudited (In millions except ratio data)
Years Ended December 31 ---------------------------------------------------------------------------------- 1997 1996 1995 1994 1993 --------------- -------------- ------------ ------------ ----------- Earnings from continuing operations before income taxes $239.7(A) $302.2(B) $625.5 $435.5 $289.2 Unconsolidated affiliates (8.0) 1.4 1.3 (0.6) 0.7 Minority earnings 20.2 11.5 10.8 7.7 1.4 Fixed charges excluding capitalized interest 123.9 129.0 137.2 145.3 177.5 ----- ----- ----- ----- ----- Earnings $375.8 $444.1 $774.8 $587.9 $468.8 ------ ------ ------ ------ ------ Fixed Charges: Interest expense $75.4 $84.2 $94.7 $104.7 $137.4 Capitalized interest 4.5 3.5 5.1 6.6 7.9 Portion of rents representa- tive of interest factor 48.5 43.2 41.4 39.2 37.9 Interest expense of uncon- solidated affiliates 0.0 1.6 1.1 1.4 2.2 --- --- --- --- --- Total fixed charges $128.4 $132.5 $142.3 $151.9 $185.4 ----- ----- ------ ------ ------ Ratio of earnings to fixed 2.9x 3.4x 5.4x 3.9x 2.5x charges ----- ----- ------ ------ ------
(A) The 1997 earnings from continuing operations before income taxes of $239.7 million includes a $548 million earnings charge for purchased in-process research and development. See "Acquisitions" footnote in the Notes to Financial Statements. (B) The 1996 earnings from continuing operations before income taxes of $302.2 million includes a charge of $384.8 million as a result of actions taken in the automotive and space and defense businesses. See "Divestiture and Special Charges" footnote in the Notes to Financial Statements. EX-13 13 EXHIBIT 13 1 Exhibit 13 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION | TRW INC. RESULTS OF OPERATIONS In virtually every dimension, 1997 was a very good year for TRW with the company reporting record sales, earnings and earnings per share from continuing operations, excluding an acquisition charge. TRW's strategic position was further strengthened by the acquisitions of Magna International's air bag and steering wheel operations and BDM International, Inc. (BDM). Consolidated sales in 1997 of $10.8 billion represented a 10 percent increase over 1996 sales of $9.9 billion. Compared to 1995 sales of $9.6 billion, 1997 sales increased 13 percent. Including a 1997 acquisition charge, TRW incurred a net loss of $49 million in 1997, compared to net earnings of $480 million in 1996 and $446 million in 1995. Diluted loss per share in 1997 was $.40. Diluted earnings per share were $3.62 in 1996 and $3.32 in 1995. The above comparative results include the following items. The 1997 results include a $548 million, $4.43 per share, one-time noncash earnings charge with no income tax benefit related to in-process research and development associated with the acquisition of BDM. The 1996 results included three special items: a gain of $260 million after tax, $1.96 per share, related to the sale of the company's information services business; special charges of $202 million after tax, $1.52 per share, primarily for actions taken, in part, to enhance the company's competitiveness and $50 million after tax, $.38 per share, of impairment losses which were primarily a result of technological changes and the decision to close certain facilities in the Automotive segment. Excluding these items, earnings from continuing operations in 1997 were a record $499 million compared to $434 million in 1996. At December 31, 1997, the company adopted Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per Share." All share and per share amounts, including those of prior years, have been restated to comply with the new provisions. In 1997, the Financial Accounting Standards Board issued SFAS No. 130, "Reporting Comprehensive Income," and SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information," both of which expand or modify disclosures and, accordingly, will have no impact on the company's financial position, results of operations or cash flows. These Statements are effective for periods beginning after December 31, 1997, and will be adopted by the company in the first and fourth quarters of 1998, respectively. [GRAPH]
Sales ($ in billions) 95 9.6 96 9.9 97 10.8
[GRAPH]
EARNINGS FROM CONTINUING OPERATIONS ($ in millions) 95 395 96 434 97 499
Excluding 1997 earnings charge for purchased in-process R&D and 1996 special charges [GRAPH]
DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS 95 2.94 96 3.27 97 4.03
Excluding 1997 earnings charge for purchased in-process R & D and 1996 special charges. 26 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION | TRW INC. AUTOMOTIVE SEGMENT Record sales of $7.03 billion in 1997 represented an 8 percent increase over 1996 sales of $6.49 billion. The higher sales resulted primarily from acquisitions and higher volume in most product lines, partially offset by the effect of a strong U.S. dollar and lower pricing. Excluding special charges in 1996, operating profit increased 4 percent to $631 million in 1997 from the $609 million reported in 1996. The increase in operating profit was due to acquisitions and the effect of cost reduction efforts partially offset by the effect of lower pricing and higher new product research and development costs, the effect of a strong U.S. dollar and the economic weakness in the Asia Pacific region. Sales in 1996 rose to $6.49 billion from the 1995 sales level of $6.47 billion. The increase in sales resulted primarily from higher volume in virtually all product lines partially offset by lower pricing and the effect of a strong U.S. dollar. Operating profit in 1996 was $319 million compared to $607 million in 1995. Included in 1996 operating profit was $290 million of special charges relating to asset impairments and writedowns, consolidation of manufacturing plants, severance, litigation and warranty expenses. Excluding these charges, operating profit in 1996 was $609 million. The increase in operating profit was primarily due to the effect of aggressive cost reductions and the introduction of new inflator technologies which more than offset the effects of lower pricing and new product development costs. The company has invested and expects to continue to invest in areas of significant potential growth, such as electrically assisted steering, smart restraint systems, side-impact air bags, power rack and pinion steering and advanced electronic components. TRW will continue to take advantage of opportunities to enhance its global competitiveness through internal growth and strategic alliances. To enhance our capabilities as a global systems supplier, eight alliances, joint ventures and acquisitions in seven countries were completed during 1997. In January 1998, the company acquired the remaining 20 percent of Magna International's air bag and steering wheel operations. The company anticipates that 1998 North American automotive and light truck production will be stable with the 1997 levels. We foresee modest production growth in Western Europe, and strong growth in the emerging markets of Eastern Europe. Recent economic conditions in the Asia Pacific region and South America have had a negative impact on the company's operations. Uncertainty regarding future economic conditions in these regions could result in continued negative impacts in 1998 that are not expected to be material. Strong price pressure is expected to continue across all product lines; however, productivity improvements, facility rationalization, material cost reductions and the introduction of new, lower cost technologies will be the main initiatives taken to mitigate this pressure. We are well positioned to meet our customers' global requirements with quality products and services and anticipate being awarded significant new business. [GRAPH]
AUTOMOTIVE SALES ($ in billions) 95 6.5 96 6.5 97 7.0
[GRAPH]
AUTOMOTIVE OPERATING PROFIT ($ in millions) 95 607 96 609 97 631
Excluding 1996 special charges. ($ in millions) 27 3 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION | TRW INC. SPACE, DEFENSE & INFORMATION SYSTEMS SEGMENT Aided by new contract awards, sales in 1997 increased 13 percent to a record $3.80 billion from the $3.36 billion reported in 1996. The sales increase marks this segment's fourth consecutive year of sales growth. Excluding the 1997 acquisition charge and 1996 special charges, operating profit in 1997 increased 29 percent to $320 million from $247 million in 1996. The increases in sales and operating profit were due to strong program performance. Sales in 1996 increased 9 percent to $3.36 billion compared to $3.10 billion in 1995. Operating profit in 1996 was $157 million compared to $192 million in 1995. The lower operating profit was due primarily to the effect of program reserves more than offsetting the profit from the higher sales volume. Included in 1996 and 1995 operating profit were $90 million and $30 million, respectively, of charges related primarily to contract reserves. Government funding for all major TRW contracts appears to be stable, and the company does not anticipate any unfavorable effect on operations relating to program terminations or budget reallocations. The diversity of our programs helps insulate the company from funding fluctuations on any given contract. Additionally, the increase in civil, commercial and international contracts further diversifies the segment's sales mix and positions it for growth in both traditional and targeted markets. We remain focused on bidding and winning new contracts and continuing to provide outstanding products and services to our customers. Backlog estimates at the end of 1997 totaled a record $6.03 billion, up 14 percent from $5.30 billion at the end of 1996. The backlog growth was driven by a number of key program awards in both defense and nondefense related markets as well as the effect of the BDM acquisition. Our reported backlog continues to show strength with growth of 18 percent since 1995. Reported backlog at the end of 1997 does not include $3.60 billion of negotiated and priced, but not exercised, options for defense and nondefense programs. The exercise of the options is at the discretion of the customer and, as in the case of government contracts generally, dependent on future government funding. ACQUISITIONS On February 5, 1997, the company acquired an 80 percent equity interest in the air bag and steering wheel businesses of Magna International for cash of $415 million plus assumed net debt of $50 million. The remaining 20 percent of Magna International was acquired on January 30, 1998. On December 24, 1997, the company acquired the shares of BDM for cash of $880 million plus assumed net debt of $85 million. As part of the purchase price allocation, $548 million was allocated to in-process research and development projects that had not reached technological feasibility and have no alternative future use. This amount was recognized as an expense with no tax benefit at the date of acquisition. See the "Acquisitions" footnote in the Notes to Financial Statements for further discussion of these acquisitions. [GRAPH]
SPACE, DEFENSE & INFORMATION SYSTEMS SALES ($ in billions) 95 3.1 96 3.4 97 3.8
[GRAPH]
SPACE, DEFENSE & INFORMATION SYSTEMS OPERATING PROFIT ($ in millions) 95 192 96 247 97 320
Excluding 1997 earnings charge for purchased in-process R&D and 1996 special charges ($ in millions) 28 4 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION | TRW INC. DISCONTINUED OPERATIONS During 1996, the company sold its information services business for $1.1 billion. The sale resulted in a gain of $484 million ($260 million after tax, or $1.96 per share). The proceeds from the sale were used to repay debt, fund investment opportunities and acquire the company's common stock. The operating results of the information services business and the related transaction gain are reflected as discontinued operations for all periods presented in the financial statements. INTEREST EXPENSE Interest expense in 1997 was $75 million compared to $84 million in 1996 and $95 million in 1995. The decrease in interest expense in 1997 was primarily due to the absence of a 1996 special charge partially offset by higher average debt levels. The decrease in interest expense from 1995 to 1996 was due to lower average debt levels. INCOME TAXES The effective tax rate for continuing operations was 120.3 percent in 1997 compared to 39.6 percent in 1996 and 36.8 percent in 1995. Excluding the in-process research and development charge, the 1997 effective tax rate would have been 36.6 percent; thus, the lower effective rate in 1997 was attributable to various federal and state tax incentives and the tax benefit from the realignment of certain foreign operations. The higher effective tax rate from 1995 to 1996 was primarily due to the absence of a tax benefit for certain of the special charges taken during 1996. INTERNATIONAL OPERATIONS International sales were $4.37 billion, or 40 percent of TRW sales, in 1997; $3.94 billion, or 40 percent of sales in 1996; and $3.92 billion, or 41 percent of sales in 1995. U.S. export sales included in those amounts were $732 million in 1997, $764 million in 1996 and $813 million in 1995. Most of TRW's non-U.S. operations are included in the Automotive segment and are located in Europe, Canada, Brazil and the Asia Pacific region. TRW's non-U.S. operations are subject to the usual risks that may affect such operations; however, most of the assets of its non-U.S. operations are in countries where the company believes such risks to be minimal. LIQUIDITY AND FINANCIAL POSITION Cash flow from operations in 1997 of $954 million and additional borrowings of $936 million were used primarily for acquisitions of $1,270 million, capital expenditures of $549 million, acquisition of common stock of $247 million and dividend payments of $154 million. Net debt at December 31, 1997, was $1,586 million compared to $196 million at the end of 1996. The ratio of net debt (short-term debt, current portion of long-term debt and long-term debt less cash and cash equivalents) to total capital (net debt, minority interests and shareholders' investment) was 47.8 percent at December 31, 1997, compared to 8 percent at December 31, 1996. The percentage of fixed-rate debt to total debt was 32 percent at the end of 1997. During 1997, 4.6 million shares of TRW common stock were repurchased for $247 million, of which $5 million was settled in January 1998. The company purchased 7.9 million shares in 1996. Pursuant to an authorization of TRW's Directors for the acquisition of up to 20 million shares, the company may acquire up to an additional 7.5 million shares of common stock. The company plans to purchase the additional shares from time to time, but at a reduced volume from prior years. 29 5 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION | TRW INC. Capital expenditures were $549 million in 1997, $500 million in 1996 and $466 million in 1995. The company will maintain a capital program with estimated capital expenditures for 1998 totaling about $625 million. Approximately two-thirds of these expenditures will be invested in the Automotive segment and one-third in the Space, Defense & Information Systems segment. The company will continue to invest in its automotive growth businesses, including electrically assisted steering, smart restraint systems, side-impact air bags, power rack and pinion steering and advanced electronic components. Space, Defense & Information Systems expenditures will be used to support major new contract awards and our existing business base as well as to support research and development of next generation technologies. During the fourth quarter of 1998, approximately $250 million of deferred tax liabilities related to the closure of certain long-term contracts will be paid. During 1998, the company acquired 1.5 million shares, or approximately 7 percent of the outstanding shares, of ICO Global Communications (Holdings) Limited for approximately $50 million. The company and ICO also cross-licensed certain patent rights related to their proposed global telecommunications systems and dismissed legal proceedings related to the patents. As part of the patent litigation settlement, ICO paid TRW $25 million in January 1998 and will pay an additional $25 million by mid-1999. The company has discontinued efforts related to its Odyssey project, a satellite-based personal communications system. TRW's non-U.S. operations are generally financed by borrowings from banks or through intercompany loans in the local currency of the borrower and by equity capital invested by TRW and minority shareholders. There are no significant restrictions on the remittance of funds by the company's non-U.S. subsidiaries to the United States. A discussion of TRW's credit facilities is contained in the "Debt and Credit Agreements" footnote in the Notes to Financial Statements. 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 rate risks. The company uses derivatives to hedge its exposure to short-term interest rate changes as a lower cost substitute for the issuance of fixed-rate debt. The company manages cash flow transactional foreign exchange risk pursuant to a written corporate policy. Forward contracts and, to a lesser extent, options are utilized to protect the company's cash flow from adverse movements in exchange rates. The company is exposed to credit loss in the event of nonperformance by the other party to the derivative financial instruments. The company limits this exposure by entering into agreements with a number of major financial institutions that meet the minimum credit standards established by TRW and that are expected to fully satisfy their obligations under the contracts. Derivative financial instruments are viewed by the company as a risk management tool and are not used for speculative or trading purposes. Based on the company's overall interest rate exposure at December 31, 1997, including derivative interest rate instruments, a one-percentage-point increase in the average interest rate on the company's variable rate borrowings would not materially affect the results of operations of the company. Based on the company's exposure to foreign currency exchange rate risk resulting from derivative foreign currency instruments outstanding at December 31, 1997, a 10 percent uniform strengthening in the value of the U.S. dollar relative to the currencies in which those derivative foreign currency instruments are denominated would not materially affect the results of operations of the company. The company's sensitivity analyses of the effects of changes in foreign currency exchange rates do not reflect the effect of such changes on the related hedged transactions or on other operating transactions. The company's sensitivity analyses of the effects of changes in interest rates and foreign currency exchange rates do not factor in a potential change in the level of variable rate borrowings or derivative instruments outstanding that could take place if these hypothetical conditions prevailed. 30 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION | TRW INC. We believe the company's current financial position and financing arrangements allow flexibility in worldwide financing activities and permit us to respond to changing conditions in credit markets. The existing arrangements are not indicative of the company's potential borrowing capacity. We believe that funds generated from operations and existing borrowing capacity are adequate to fund the current share repurchase program and finance planned growth, capital expenditures, working capital including tax requirements, company-sponsored research and development programs and dividend payments to shareholders. OTHER MATTERS Federal, state and local requirements relating to the discharge of materials into the environment, or otherwise relating to the protection of the environment, have had and will continue to have an effect on TRW and its operations. The company is conducting a number of environmental investigations and remedial actions at current and former company locations and, along with other companies, has been named a potentially responsible party for certain waste management sites. Each of these matters is subject to various uncertainties, and it is possible that some of these matters may be resolved unfavorably to the company. During 1997, TRW Vehicle Safety Systems, a wholly owned subsidiary of the company, reported to the Arizona Department of Environmental Quality (ADEQ) potential violations of the Arizona hazardous waste law at its Queen Creek, Arizona facility for the possible failure to properly label and dispose of waste water that might be classified as hazardous waste. If ADEQ initiates proceedings against the company with respect to such matters, the company could be liable for penalties and fines and other relief. Management is currently evaluating this matter and is unable to make a meaningful estimate of the amount or range of possible liability, if any, at this time. During 1996, the company was advised by the Department of Justice (DOJ) that it had been named as a defendant in two lawsuits brought by a former employee and filed under seal in 1994 and 1995, respectively, in the United States District Court for the Central District of California under the QUI TAM provisions of the civil False Claims Act. The company cannot presently predict the outcome of these matters, although management believes that the company has meritorious defenses. Refer to the "Contingencies" footnote in the Notes to Financial Statements for further discussion of these matters. TRW has a companywide program for Year 2000 compliance for its products and services, internal systems, customers and suppliers. The company anticipates that the program plan, including remediation and validation, will be completed in 1999 and that the cost of becoming Year 2000 compliant will not have a material effect on the company's future financial results or financial position. The date of completion and the costs of the project are based on management's estimates, which were derived utilizing assumptions of future events, including the availability of certain resources, third-party modification plans and other factors. FORWARD-LOOKING STATEMENTS Statements in this report that are not historical facts are forward-looking statements, which involve risks and uncertainties that could affect the company's actual results. Information regarding the important factors that could cause TRW's actual results to differ materially from the forward-looking statements contained in this report can be found in TRW's reports filed with the Securities and Exchange Commission, including TRW's Form 8-K filed on May 20, 1997. 31 7 MANAGEMENT & AUDITORS' REPORT | TRW INC. REPORT OF MANAGEMENT Management of TRW is responsible for the preparation of the accompanying consolidated financial statements of the company and its subsidiaries. The financial statements have been prepared in conformity with generally accepted accounting principles and include the estimates and judgments of management. The financial statements have been audited by Ernst & Young LLP, independent auditors, whose report appears below. Management has established and is responsible for maintaining a system of internal accounting controls that it believes provides reasonable assurance that assets are safeguarded and transactions are executed and recorded in accordance with management's authorization. The system is tested and evaluated regularly by the company's internal auditors as well as by the independent auditors in connection with their annual audit. TRW has an audit committee composed of four directors who are not members of management. The committee meets regularly with management, the internal auditors and the independent auditors in connection with its review of matters relating to the company's financial statements, the company's internal audit program, the company's system of internal accounting controls and the services of the independent auditors. The committee also meets with the internal auditors as well as the independent auditors, without management present, to discuss appropriate matters. The committee also recommends to the directors the designation of the independent auditors. /s/ Joseph T. Gorman /s/ Carl G. Miller /s/ Thomas A. Connell Joseph T. Gorman Carl G. Miller Thomas A. Connell Chairman and Executive Vice President and Vice President and Chief Executive Officer Chief Financial Officer Corporate Controller January 19, 1998 REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS Shareholders and Directors, TRW Inc. We have audited the accompanying consolidated balance sheets of TRW Inc. and subsidiaries as of December 31, 1997 and 1996, and the related consolidated statements of earnings, cash flows and changes in shareholders' investment for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of TRW Inc. and subsidiaries at December 31, 1997 and 1996, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. /s/ Ernst & Young LLP Cleveland, Ohio January 19, 1998 32 8 FINANCIAL STATEMENTS | TRW INC. STATEMENTS OF EARNINGS
TRW Inc. and subsidiaries (In millions except per share data) Years ended December 31 1997 1996 1995 - --------------------------------------------------------------------------------------------------- Sales $ 10,831 $ 9,857 $ 9,568 Cost of sales 8,826 8,376 7,857 - --------------------------------------------------------------------------------------------------- Gross profit 2,005 1,481 1,711 Administrative and selling expenses 684 613 592 Research and development expenses 461 412 392 Purchased in-process research and development 548 -- -- Interest expense 75 84 95 Other expense (income)-net (3) 70 7 - --------------------------------------------------------------------------------------------------- Earnings from continuing operations before income taxes 240 302 625 Income taxes 289 120 230 - --------------------------------------------------------------------------------------------------- Earnings (loss) from continuing operations (49) 182 395 Discontinued operations Earnings from operations -- 38 51 Gain on disposal -- 260 -- - --------------------------------------------------------------------------------------------------- Net earnings (loss) $ (49) $ 480 $ 446 - --------------------------------------------------------------------------------------------------- Per share of common stock Diluted Continuing operations $ (.40) $ 1.37 $ 2.94 Discontinued operations Earnings from operations -- .29 .38 Gain on disposal -- 1.96 -- - --------------------------------------------------------------------------------------------------- Net earnings (loss) per share $ (.40) $ 3.62 $ 3.32 - --------------------------------------------------------------------------------------------------- Basic Continuing operations $ (.40) $ 1.41 $ 3.02 Discontinued operations Earnings from operations -- .29 .39 Gain on disposal -- 2.02 -- - --------------------------------------------------------------------------------------------------- Net earnings (loss) per share $ (.40) $ 3.72 $ 3.41 - ---------------------------------------------------------------------------------------------------
See notes to financial statements. [Graphic] 1927 First sodium-cooled engine valve, enabling the first transatlantic flight in Lindbergh's Spirit of St. Louis 33 9 FINANCIAL STATEMENTS | TRW INC. BALANCE SHEETS
TRW Inc. and subsidiaries (In millions) December 31 1997 1996 - --------------------------------------------------------------------------------------------------------------------------- Assets Current assets Cash and cash equivalents $ 70 $ 386 Accounts receivable (net of allowances of $23 million and $18 million) 1,617 1,378 Inventories Finished products and work in-process 292 295 Raw materials and supplies 281 229 - --------------------------------------------------------------------------------------------------------------------------- Total inventories 573 524 Prepaid expenses 79 69 Deferred income taxes 96 424 - --------------------------------------------------------------------------------------------------------------------------- Total current assets 2,435 2,781 Property, plant and equipment-on the basis of cost Land 111 108 Buildings 1,599 1,584 Machinery and equipment 4,364 4,188 - --------------------------------------------------------------------------------------------------------------------------- 6,074 5,880 Less accumulated depreciation and amortization 3,453 3,400 - --------------------------------------------------------------------------------------------------------------------------- Total property, plant and equipment-net 2,621 2,480 Intangible assets Intangibles arising from acquisitions 673 258 Other 232 31 - --------------------------------------------------------------------------------------------------------------------------- 905 289 Less accumulated amortization 94 78 - --------------------------------------------------------------------------------------------------------------------------- Total intangible assets-net 811 211 Investments in affiliated companies 139 51 Other assets 404 376 - --------------------------------------------------------------------------------------------------------------------------- $ 6,410 $ 5,899 ------------------------------
[Graphic] 1952 First automobile power steering 34 10 FINANCIAL STATEMENTS | TRW INC. BALANCE SHEETS
TRW Inc. and subsidiaries (In millions) December 31 1997 1996 - --------------------------------------------------------------------------------------------------------------- Liabilities and shareholders' investment Current liabilities Short-term debt $ 411 $ 52 Accrued compensation 338 386 Trade accounts payable 859 781 Other accruals 846 775 Dividends payable 38 39 Income taxes 99 52 Current portion of long-term debt 128 72 - --------------------------------------------------------------------------------------------------------------- Total current liabilities 2,719 2,157 Long-term liabilities 788 767 Long-term debt 1,117 458 Deferred income taxes 57 272 Minority interests in subsidiaries 105 56 Shareholders' investment Serial Preference Stock II (involuntary liquidation $8 million in 1997 and 1996) 1 1 Common stock (shares outstanding 122.5 million and 126.1 million) 78 80 Other capital 462 437 Retained earnings 1,776 1,978 Cumulative translation adjustments (130) 47 Treasury shares-cost in excess of par value (563) (354) - --------------------------------------------------------------------------------------------------------------- Total shareholders' investment 1,624 2,189 - --------------------------------------------------------------------------------------------------------------- $6,410 $5,899 ------------------
See notes to financial statements. [Graphic] 1953 First automobile ball-joint suspension system 35 11 FINANCIAL STATEMENTS | TRW INC. STATEMENTS OF CASH FLOWS
TRW Inc. and subsidiaries (In millions) Years ended December 31 1997 1996 1995 - ---------------------------------------------------------------------------------------------------------------------------- Operating activities Net earnings (loss) $ (49) $ 480 $ 446 Adjustments to reconcile net earnings (loss) to net cash provided by continuing operations Purchased in-process research and development 548 -- -- Depreciation and amortization 490 452 424 Deferred income taxes 116 (182) 45 Discontinued operations -- (298) (51) Other-net 10 23 29 Changes in assets and liabilities, net of effects of businesses acquired or sold Accounts receivable 32 (46) (61) Inventories and prepaid expenses (26) 8 (68) Accounts payable and other accruals (166) 298 28 Other-net (1) (24) (44) - ---------------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities of continuing operations 954 711 748 Net cash provided by discontinued operations -- -- 28 - ---------------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 954 711 776 Investing activities Capital expenditures (549) (500) (466) Acquisitions, net of cash acquired (1,270) (76) (8) Net proceeds from divestitures -- 789 9 Other-net 2 34 12 - ---------------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) investing activities (1,817) 247 (453) Financing activities Increase (decrease) in short-term debt 912 (127) (47) Proceeds from debt in excess of 90 days 113 51 36 Principal payments on debt in excess of 90 days (89) (91) (207) Dividends paid (154) (148) (134) Acquisition of common stock (247) (361) (16) Other-net 41 51 25 - ---------------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities 576 (625) (343) Effect of exchange rate changes on cash (29) (6) (30) - ---------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents (316) 327 (50) Cash and cash equivalents at beginning of year 386 59 109 - ---------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of year $ 70 $ 386 $ 59 - ---------------------------------------------------------------------------------------------------------------------------- Supplemental Cash Flow Information Interest paid (net of amount capitalized) $ 76 $ 89 $ 88 Income taxes paid (net of refunds) $ 78 $ 615 $ 239 - ----------------------------------------------------------------------------------------------------------------------------
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. See notes to financial statements. 36 12 FINANCIAL STATEMENTS | TRW INC. STATEMENTS OF CHANGES IN SHAREHOLDERS' INVESTMENT
TRW Inc. and subsidiaries (In millions) Years ended December 31 1997 1996 1995 - ------------------------------------------------------------------------------------------ Serial Preference Stock II Series 1 Balance at January 1 and December 31 $ -- $ -- $ -- - ------------------------------------------------------------------------------------------ Series 3 Balance at January 1 and December 31 1 1 1 - ------------------------------------------------------------------------------------------ Common stock Balance at January 1 80 40 40 Stock dividend -- 42 -- Purchase of shares and other (2) (2) -- - ------------------------------------------------------------------------------------------ Balance at December 31 78 80 40 - ------------------------------------------------------------------------------------------ Other capital Balance at January 1 437 398 354 Sale of stock and other 25 39 44 - ------------------------------------------------------------------------------------------ Balance at December 31 462 437 398 - ------------------------------------------------------------------------------------------ Retained earnings Balance at January 1 1,978 1,688 1,383 Net earnings (loss) (49) 480 446 Stock dividend and other -- (39) (3) Dividends declared Preference stock (1) (1) (1) Common stock ($1.24, $1.17 and $1.05 per share) (152) (150) (137) - ------------------------------------------------------------------------------------------ Balance at December 31 1,776 1,978 1,688 - ------------------------------------------------------------------------------------------ Cumulative translation adjustments Balance at January 1 47 76 66 Translation adjustments (177) (29) 10 - ------------------------------------------------------------------------------------------ Balance at December 31 (130) 47 76 - ------------------------------------------------------------------------------------------ Treasury shares-cost in excess of par value Balance at January 1 (354) (31) (22) ESOP funding 2 17 17 Purchase of shares (262) (372) (26) Sold under stock options 51 32 -- - ------------------------------------------------------------------------------------------ Balance at December 31 (563) (354) (31) - ------------------------------------------------------------------------------------------ Total shareholders' investment $ 1,624 $ 2,189 $ 2,172 - ------------------------------------------------------------------------------------------
See notes to financial statements. 1957 First intercontinental ballistic missile system 37 13 NOTES TO FINANCIAL STATEMENTS | TRW INC. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION-The financial statements include the accounts of the company and its subsidiaries except for two insurance subsidiaries. The wholly owned insurance subsidiaries and the majority of investments in affiliated companies, which are not significant individually, are accounted for by the equity method. USE OF ESTIMATES-The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of December 31, 1997 and 1996, respectively, and reported amounts of sales and expenses for the years ended December 31, 1997, 1996 and 1995, respectively. Actual results could differ from those estimates. LONG-TERM CONTRACTS - The percentage-of-completion (cost-to-cost) method is used to estimate sales under fixed-price and fixed-price incentive contracts. Sales under cost-reimbursement contracts are recorded as costs are incurred. Fees based on cost, award fees and incentive fees are included in sales at the time such amounts are reasonably estimable. Losses on contracts are recognized when determinable. ACCOUNTS RECEIVABLE - Accounts receivable at December 31, 1997 and 1996, included $698 million and $547 million, respectively, related to long-term contracts, of which $209 million and $257 million, respectively, were unbilled. Unbilled costs, fees and claims represent revenues earned and billable in the following month as well as revenues earned but not billable under terms of the contracts. A substantial portion of such amounts is expected to be billed during the following year. Retainage receivables and receivables subject to negotiation are not significant. INVENTORIES - Inventories are stated at the lower of cost, principally the first-in, first-out (FIFO) method, or market. Inventories applicable to long-term contracts are not significant. DEPRECIATION - Depreciation is computed over the assets' estimated useful lives using the straight-line method for the majority of the company's depreciable assets. The remaining assets are depreciated using accelerated methods. ASSET IMPAIRMENT - The company records impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets may be impaired and the undiscounted net cash flows estimated to be generated by those assets are less than their carrying amounts. INTANGIBLE ASSETS - Intangible assets are stated on the basis of cost. Intangibles arising from acquisitions prior to 1971 ($49 million) are not being amortized because there is no indication of diminished value. Intangibles arising from acquisitions after 1970 are being amortized by the straight-line method principally over 40 years. The carrying value of intangible assets is assessed for impairment on a quarterly basis. FORWARD EXCHANGE CONTRACTS - The company enters into forward exchange contracts the majority of which hedge firm foreign currency commitments and certain intercompany transactions. At December 31, 1997, the company had contracts outstanding amounting to approximately $186 million denominated principally in the Canadian dollar, the U.S. dollar, the German mark, the British pound and the European 38 14 NOTES TO FINANCIAL STATEMENTS | TRW INC. currency unit, maturing at various dates through December 1998. Changes in market value of the contracts are generally included in the basis of the transactions. Foreign exchange contracts are placed with a number of major financial institutions to minimize credit risk. No collateral is held in relation to the contracts, and the company anticipates that these financial institutions will satisfy their obligations under the contracts. FAIR VALUES OF FINANCIAL INSTRUMENTS -
1997 1996 ------------------------------------------ Carrying Fair Carrying Fair In millions value value value value - ------------------------------------------------------------------------------------------------- Cash and cash equivalents $ 70 $ 70 $ 386 $ 386 Short-term debt 411 411 52 52 Floating rate long-term debt 736 736 31 31 Fixed rate long-term debt 509 584 499 553 Interest rate hedges - (liability) -- (5) -- (1) Forward currency exchange contracts - (liability) -- (2) -- (4)
The fair value of long-term debt was estimated using a discounted cash flow analysis, based on the company's current borrowing rates for similar types of borrowing arrangements. The fair value of interest rate hedges and forward currency exchange contracts is estimated based on quoted market prices of offsetting contracts. ENVIRONMENTAL COSTS - TRW participates in environmental assessments and remedial efforts at operating facilities, previously owned or operated facilities, and Superfund or other waste sites. Costs related to these locations are accrued when it is probable that a liability has been incurred and the amount of that liability can be reasonably estimated. Estimated costs are recorded at undiscounted amounts based on experience and assessments and are regularly evaluated as efforts proceed. Insurance recoveries are recorded as a reduction of environmental costs when fixed and determinable. EARNINGS PER SHARE - In 1997, TRW adopted SFAS No. 128, "Earnings per Share." Statement 128 replaced the calculation of primary and fully diluted earnings per share with basic and diluted earnings per share. Unlike primary earnings per share, basic earnings per share excludes any dilutive effects of options and convertible securities. Diluted earnings per share is similar to the previously reported fully diluted earnings per share. All earnings per share amounts for all periods presented have been restated to conform to Statement 128 requirements. The effects of preferred stock dividends, convertible preferred stock and employee stock options were excluded from the calculation of 1997 diluted earnings per share as they would have been antidilutive. [Graphic] 1969 First variable thrust rocket engine, enabling the first manned moon landing 39 15 NOTES TO FINANCIAL STATEMENTS | TRW INC.
In millions except per share data 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------- Numerator Earnings (loss) from continuing operations $ (48.5) $ 182.4 $ 395.4 Preferred stock dividends (.7) (.7) (.8) - ------------------------------------------------------------------------------------------------------------- Numerator for basic earnings per share-earnings (loss) available to common shareholders (49.2) 181.7 394.6 Effect of dilutive securities Preferred stock dividends -- .7 .8 - ------------------------------------------------------------------------------------------------------------- Numerator for diluted earnings per share-earnings (loss) available to common shareholders after assumed conversions $ (49.2) $ 182.4 $ 395.4 - ------------------------------------------------------------------------------------------------------------- Denominator Denominator for basic earnings per share- weighted-average common shares 123.7 128.7 130.6 Effect of dilutive securities Convertible preferred stock -- 1.1 1.2 Employee stock options -- 3.0 2.6 - ------------------------------------------------------------------------------------------------------------- Dilutive potential common shares -- 4.1 3.8 Denominator for diluted earnings per share-adjusted weighted-average shares and assumed conversions 123.7 132.8 134.4 - ------------------------------------------------------------------------------------------------------------- Basic earnings (loss) per share from continuing operations $ (0.40) $ 1.41 $ 3.02 - ------------------------------------------------------------------------------------------------------------- Diluted earnings (loss) per share from continuing operations $ (0.40) $ 1.37 $ 2.94 - -------------------------------------------------------------------------------------------------------------
RESEARCH AND DEVELOPMENT
In millions 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------- Customer-funded $ 1,501 $ 1,425 $1,360 Company-funded Research and development 461 412 392 Product development 174 160 139 - ------------------------------------------------------------------------------------------------------------- 635 572 531 ----------------------------- $ 2,136 $ 1,997 $1,891 - -------------------------------------------------------------------------------------------------------------
Company-funded research and development programs include research and development for commercial products and independent research and development and bid and proposal work related to government products and services. A portion of the cost incurred for independent research and development and bid and proposal work is recoverable through overhead charged to government contracts. Product development costs include engineering and field support for new customer requirements. The 1997 amounts exclude the $548 million charge for purchased in-process research and development. 40 16 NOTES TO FINANCIAL STATEMENTS | TRW INC. ACQUISITIONS On February 5, 1997, the company acquired an 80 percent equity interest in the air bag and steering wheel businesses of Magna International for cash of $415 million plus assumed net debt of $50 million. These businesses supply air bag modules, inflators, propellants, steering wheels and other related automotive components. The results of operations have been included in the financial statements from the date of acquisition. The acquisition was accounted for by the purchase method; accordingly, the purchase price has been allocated to the net assets acquired based on their estimated fair values and to costs for certain restructuring actions to be completed in 1998. The purchase price in excess of the net assets is $276 million and is being amortized over 40 years. On December 24, 1997, the company acquired the shares of BDM International, Inc. (BDM) for cash of $880 million plus assumed net debt of $85 million. BDM is an information technology company operating in the systems and software integration, computer and technical services and enterprise management and operations markets. The acquisition was accounted for by the purchase method, with the purchase price tentatively allocated to the net assets acquired based on their fair values. An independent valuation was performed primarily using the income approach for valuing the intangible assets. As a result of the valuation, $548 million was allocated to in-process research and development projects that had not reached technological feasibility and have no alternative future use. This amount was recognized as an expense with no tax benefit at the date of acquisition. The intangible assets of $306 million will be amortized over an average period of 15 years. The following unaudited pro forma financial information reflects the consolidated results of operations of the company as if the acquisitions had taken place at the beginning of the respective periods. The pro forma information includes adjustments for interest expense that would have been incurred to finance the acquisitions, additional depreciation based on the fair market value of the property, plant and equipment acquired, write-off of purchased in-process research and development and the amortization of intangible assets arising from the transactions. The pro forma financial information is not necessarily indicative of the results of operations as they would have been had the transactions been affected on the assumed dates.
In millions, except per share amounts Year ended (unaudited) 1997 1996 - -------------------------------------------------------------------------------- Sales $ 11,758 $ 11,231 Loss from continuing operations (85) (392) Loss per share (.69) (3.05) - --------------------------------------------------------------------------------
[Graphic] 1971 First global military communications network - DSCS 41 17 NOTES TO FINANCIAL STATEMENTS | TRW INC. DIVESTITURE AND SPECIAL CHARGES During 1996, the company sold substantially all of the businesses in its Information Systems & Services segment. The financial statements reflect as discontinued operations for all periods presented that segment's net assets and operating results, as well as the related transaction gain. Net proceeds of $1.1 billion in cash resulted in a gain of $484 million ($260 million after tax, or $1.96 per share). Sales of the discontinued operations were $453 million and $604 million in 1996 and 1995, respectively. During 1996, the company recorded before-tax charges of $385 million ($252 million after tax, or $1.90 per share) primarily for actions taken in the automotive and space, defense and information systems businesses. The components of the charge include severance costs of $40 million, contract reserves of $99 million, litigation and warranty expenses of $127 million, asset writedowns of $96 million, and other items of $23 million. Cash expenditures related to the severance costs were substantially completed during 1997. The charges are included in the Statements of Earnings for 1996 as follows: $321 million included in cost of sales; $18 million included in interest expense; $65 million included in other expense (income)-net; and a reduction of $19 million included in other captions. For balance sheet purposes, other accruals in 1997 and 1996 include $96 million and $225 million, respectively, relating to these charges. OTHER EXPENSE (INCOME)-NET
In millions 1997 1996 1995 - -------------------------------------------------------------------------------- Other income $ (66) $ (67) $ (37) Other expense 48 119 25 Minority interests 20 12 11 Earnings of affiliates (12) (1) (2) Foreign currency translation 7 7 10 - -------------------------------------------------------------------------------- $ (3) $ 70 $ 7 ---------------------------------
Other income in 1997 includes a $15 million gain on the sale of a property. Other expense in 1996 includes $65 million of special charges. Refer to the "Divestiture and Special Charges" footnote. INCOME TAXES Earnings from continuing operations before income taxes
In millions 1997 1996 1995 - -------------------------------------------------------------------------------- U.S. $ 95 $ 133 $ 428 Non-U.S. 145 169 197 - -------------------------------------------------------------------------------- $ 240 $ 302 $ 625 ---------------------------------
[Graphic} 1983 First spacecraft to leave our solar system - Pioneer 10 42 18 NOTES TO FINANCIAL STATEMENTS | TRW INC.
Provision for income taxes In millions 1997 1996 1995 - --------------------------------------------------------------------------------------------------------- Current U.S. federal $ 136 $ 176 $ 90 Non-U.S. 84 73 57 U.S. state and local 23 20 17 - --------------------------------------------------------------------------------------------------------- 243 269 164 Deferred U.S. federal 46 (130) 31 Non-U.S. (4) (6) 14 U.S. state and local 4 (13) 21 - --------------------------------------------------------------------------------------------------------- 46 (149) 66 --------------------------------- $ 289 $ 120 $ 230 --------------------------------- Effective income tax rate 1997 1996 1995 - --------------------------------------------------------------------------------------------------------- U.S. statutory income tax rate 35.0% 35.0% 35.0% Nondeductible expenses 2.7 2.4 1.3 U.S. state and local income taxes net of U.S. federal tax benefit 7.6 3.0 3.8 Non-U.S. tax rate variances net of foreign tax credits (2.2) 3.4 (.1) Prior years adjustments (3.5) (1.9) (3.0) Purchased in-process research and development 80.0 -- -- Other .7 (2.3) (.2) - --------------------------------------------------------------------------------------------------------- 120.3% 39.6% 36.8% ---------------------------------
The effective tax rate in 1997 was 120.3 percent compared to 39.6 percent in 1996. Excluding the write-off of purchased in-process research and development, the effective tax rate would have been 36.6 percent. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. At December 31, 1997 and 1996, the company had unused tax benefits of $30 million and $23 million, respectively, related to non-U.S. net operating loss carryforwards for income tax purposes, of which $13 million and $18 million can be carried forward indefinitely and the balance expires at various dates through 2004. A valuation allowance at December 31, 1997 and 1996, of $25 million and $20 million, respectively, has been recognized to offset the related deferred tax assets due to the uncertainty of realizing the benefit of the loss carryforwards. It is the company's intention to reinvest undistributed earnings of certain of its non-U.S. subsidiaries and thereby indefinitely postpone their remittance. Accordingly, deferred income taxes have not been provided for accumulated undistributed earnings of $451 million at December 31, 1997. [Graphic] 1983 First functional very high speed integrated circuit chip 43 19 NOTES TO FINANCIAL STATEMENTS | TRW INC.
Deferred tax Deferred tax assets liabilities --------------------------------------- In millions 1997 1996 1997 1996 - ------------------------------------------------------------------------------------------------------------------- Pensions and postretirement benefits other than pensions $ 260 $ 269 $ 6 $ 23 Completed contract method of accounting for long-term contracts 49 53 457 421 State and local taxes 23 33 -- 8 Reserves and accruals 85 186 -- -- Depreciation and amortization 10 11 91 86 Insurance accruals 22 32 -- -- Non-U.S. net operating loss carryforwards 30 23 -- -- Other 180 143 41 40 - ------------------------------------------------------------------------------------------------------------------- 659 750 595 578 Valuation allowance for deferred tax assets (25) (20) -- -- - ------------------------------------------------------------------------------------------------------------------- $ 634 $ 730 $ 595 $ 578 -----------------------------------------
PENSION PLANS The company has defined benefit pension plans (generally noncontributory except for those in the United Kingdom) for substantially all employees. Plans for most salaried employees provide pay-related benefits based on years of service. Plans for hourly employees generally provide benefits based on flat-dollar amounts and years of service. Under the company's funding policy, annual contributions are made to fund the plans during the participants' working lifetimes, except for unfunded plans in Germany and certain non-qualified plans in the United States which are funded as benefits are paid to participants. Annual contributions to funded plans have met or exceeded ERISA's minimum funding requirements or amounts required by local law or custom. The company sponsors a contributory stock ownership and savings plan for which a majority of its U.S. employees are eligible. The company matches employee contributions up to 3 percent of the participant's qualified compensation. The company contributions are held in an unleveraged employee stock ownership plan. The company also sponsors other defined contribution pension plans covering employees at some of its operations.
1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------- In millions U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. - ------------------------------------------------------------------------------------------------------------------- Defined benefit plans Service cost-benefits earned during the year $ 72 $ 16 $ 73 $ 14 $ 52 $ 15 Interest cost on projected benefit obligation 179 29 165 28 153 27 Actual return on plan assets (441) (30) (344) (23) (508) (38) Net amortization and deferral 207 6 137 8 306 19 - ------------------------------------------------------------------------------------------------------------------- Defined benefit plans 17 21 31 27 3 23 Defined contribution plans 1 5 1 5 1 5 Employee stock ownership and savings plan 44 -- 40 -- 36 -- - ------------------------------------------------------------------------------------------------------------------- Total pension cost $ 62 $ 26 $ 72 $ 32 $ 40 $ 28 - -------------------------------------------------------------------------------------------------------------------
44 20 NOTES TO FINANCIAL STATEMENTS | TRW INC.
1997 1996 - ------------------------------------------------------------------------------------------------------------------- In millions U.S. Non-U.S. U.S. Non-U.S. - ------------------------------------------------------------------------------------------------------------------- Actuarial present value of benefit obligations Vested benefit obligation $ 2,343 $ 382 $ 1,947 $ 368 - ------------------------------------------------------------------------------------------------------------------- Overfunded plans $ 2,291 $ 260 $ 2,050 $ 253 Underfunded plans 167 138 55 129 - ------------------------------------------------------------------------------------------------------------------- Total accumulated benefit obligation $ 2,458 $ 398 $ 2,105 $ 382 - ------------------------------------------------------------------------------------------------------------------- Projected benefit obligation $ 2,869 $ 429 $ 2,381 $ 412 - ------------------------------------------------------------------------------------------------------------------- Overfunded plans $ 3,031 $ 301 $ 2,782 $ 300 Underfunded plans 105 21 5 14 - ------------------------------------------------------------------------------------------------------------------- Total plan assets at fair value (primarily listed stocks and bonds) 3,136 322 2,787 314 - ------------------------------------------------------------------------------------------------------------------- Plan assets in excess of (less than) projected benefit obligation 267 (107) 406 (98) Unrecognized net gain (162) (39) (253) (47) Unrecognized net assets from January 1, 1986 (January 1, 1989 for non-U.S. plans) (23) (11) (41) (11) Unrecognized prior service cost 33 11 22 9 Additional minimum liability (16) (7) (16) (7) - ------------------------------------------------------------------------------------------------------------------- Net pension asset (liability) recognized in the balance sheet $ 99 $ (153) $ 118 $ (154) - ------------------------------------------------------------------------------------------------------------------- Actuarial Assumptions 1997 1996 - ------------------------------------------------------------------------------------------------------------------- U.S. Non-U.S. U.S. Non-U.S. - ------------------------------------------------------------------------------------------------------------------- Discount rate 7.0% 6.0 - 7.0% 7.5% 6.5 - 7.75% Rate of increase in compensation levels 4.4% 3.5 - 4.0% 4.4% 4.0 - 5.0% - -------------------------------------------------------------------------------------------------------------------
The expected long-term rate of return on plan assets for U.S. plans was 9 percent for 1997, 1996 and 1995. For non-U.S. plans, the expected long-term rate of return ranged from 7 percent to 9-1/2 percent in 1997, 7 percent to 9-3/4 percent in 1996, and 7 percent to 9-1/2 percent in 1995. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS The company provides health care and life insurance benefits for a majority of its retired employees in the United States and Canada. The health care plans provide for cost sharing, in the form of employee contributions, deductibles and coinsurance, between the company and its retirees. The postretirement health care plan covering a majority of employees who retired since August 1, 1988, limits the annual increase in the company's contribution toward the plan's cost to a maximum of the lesser of 50 percent of medical inflation or 4 percent. Life insurance benefits are generally noncontributory. The company's policy is to fund the cost of postretirement health care and life insurance benefits in amounts determined at the discretion of management. Retirees in certain other countries are provided similar benefits by plans sponsored by their governments. [Graphic] 1987 First automobile seat belt pretensioning device 45 21 NOTES TO FINANCIAL STATEMENTS | TRW INC.
In millions 1997 1996 - ------------------------------------------------------------------------------------------------------------------- Accumulated postretirement benefit obligation Retirees $ 511 $ 512 Fully eligible active participants 43 35 Other active participants 240 213 - ------------------------------------------------------------------------------------------------------------------- 794 760 Plan assets at fair value (primarily listed stocks and bonds) 129 83 - ------------------------------------------------------------------------------------------------------------------- Accumulated postretirement benefit obligation in excess of plan assets (665) (677) Unrecognized prior service cost (6) (6) Unrecognized net gain (30) (35) - ------------------------------------------------------------------------------------------------------------------- Net liability recognized in the balance sheet $ (701) $ (718) - ------------------------------------------------------------------------------------------------------------------- In millions 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------- Service cost $ 13 $ 13 $ 10 Interest cost 54 54 54 Actual return on plan assets (13) (7) (9) Net amortization and deferral 4 2 5 - ------------------------------------------------------------------------------------------------------------------- Net periodic postretirement benefit cost $ 58 $ 62 $ 60 - -------------------------------------------------------------------------------------------------------------------
The discount rate used in determining the accumulated postretirement benefit obligation as of December 31, 1997 and 1996, was 7 percent and 7-1/2 percent, respectively. At December 31, 1997, the 1998 annual rate of increase in the per capita cost of covered health care benefits was assumed to be 8 percent for all participants. The rate was assumed to decrease gradually to 5 percent in the year 2009 and remain at that level thereafter. At December 31, 1996, the 1997 annual rate of increase in the per capita cost of health care benefits was assumed to be 9 percent for participants under age 65 and 8 percent for participants age 65 or older. The rates were assumed to decrease gradually to 6 percent and 5 percent, respectively, in the year 2009 and remain at that level thereafter. A one percent annual increase in these assumed cost trend rates would increase the accumulated postretirement benefit obligation at December 31, 1997, by approximately 14 percent and the aggregate of the service and interest cost components of net periodic postretirement benefit cost for 1997 by approximately 14 percent. The weighted average expected long-term rate of return on plan assets was 8 percent for 1997, 1996 and 1995. The trust holding the majority of the plan assets is not subject to federal income taxes. [Graphic] 1988 First automobile remote keyless entry system 46 22 NOTES TO FINANCIAL STATEMENTS | TRW INC.
DEBT AND CREDIT AGREEMENTS Short-term debt In millions 1997 1996 - ---------------------------------------------------------------------------------------- U.S. borrowings $ 318 $ 9 Non-U.S. borrowings 93 43 - ---------------------------------------------------------------------------------------- $ 411 $ 52 --------------------- Long-term debt In millions 1997 1996 - ---------------------------------------------------------------------------------------- U.S. borrowings $ 691 $ -- Non-U.S. borrowings 54 44 7.3% ESOP obligations due 1997 -- 20 Medium-term notes 9.35% Notes due 2020 (due 2000 at option of note holder) 100 100 9 3/8% Notes due 2021 100 100 Other medium-term notes 278 234 Other 22 32 - ---------------------------------------------------------------------------------------- Total long-term debt 1,245 530 Less current portion 128 72 - ---------------------------------------------------------------------------------------- $ 1,117 $ 458 ---------------------
TRW maintains two committed U.S. revolving credit agreements. The first agreement allows the company to borrow up to $750 million with 17 banks and extends through June 2002. The second agreement allows the company to borrow up to $750 million with 15 banks and extends to December 8, 1998. The interest rate under the agreements is either a negotiated rate, the banks' prime rates, a rate based on the banks' costs of funds in the secondary certificate of deposit market or a rate based on an Interbank Offered Rate. TRW's commercial paper borrowings are supported by these agreements. At December 31, 1997, there were $60 million and $65 million in outstanding borrowings under the U.S. revolving credit agreements, respectively. At December 31, 1997, $600 million of short-term U.S. borrowings were reclassified as long-term debt as the company intended to refinance these borrowings on a long-term basis and has the ability to do so under its U.S. revolving credit agreements. In January 1998, the company issued $500 million of notes and debentures which mature at various dates through 2028. The company also maintains a committed multi-currency revolving credit agreement with 17 banks. The agreement allows the company to borrow up to $250 million and extends through June 2002. The interest rate under the agreement is based on various interest rate indices. At December 31, 1997, there were no outstanding borrowings under the multi-currency credit agreement. On December 24, 1997, the company acquired the shares of BDM International. BDM maintained a committed multi-currency revolving credit agreement with six banks. At December 31, 1997, there were $91 million in outstanding borrowings under the BDM committed multi-currency revolving credit agreement. The borrowings were paid and the credit agreement was terminated in January 1998. 47 23 NOTES TO FINANCIAL STATEMENTS | TRW INC. As of December 31, 1997, the company has interest rate swap agreements for notional borrowings of $28 million in which the company pays a fixed rate and receives a floating rate. The weighted average pay rate and receive rate under these agreements is 6.2 percent and 3.4 percent, respectively. These agreements mature at various dates through 1998. The floating rates under the interest rate swap agreements are based on LIBOR rates and have been calculated using these rates at December 31, 1997. Net payments or receipts under the agreements are recognized as an adjustment to interest expense. The agreements were entered into with a major financial institution, and the company anticipates that the financial institution will satisfy its obligations under the agreements. No collateral is held in relation to the agreements. The weighted average interest rate on short-term borrowings outstanding, including amounts reclassified to long-term debt, at December 31, 1997 and 1996, is 6.4 percent and 9.9 percent, respectively. The other medium-term notes bear interest at rates ranging from 5.98 percent to 9.25 percent and mature at various dates through 2020. Long-term non-U.S. borrowings bear interest, stated in terms of the local currency borrowing, at rates ranging from 3.6 percent to 9.48 percent at December 31, 1997, and mature at various dates through 2005. The maturities of long-term debt are, in millions: 1998-$128; 1999-$37; 2000-$12; 2001-$33; 2002-$602; and $433 thereafter. The indentures and other debt agreements impose, among other covenants, restrictions on funded debt and maintenance of minimum net worth. Under the most restrictive interpretation of these covenants, the payment of dividends was limited to approximately $729 million at December 31, 1997. Compensating balance arrangements and commitment fees were not material. LEASE COMMITMENTS TRW leases certain offices, manufacturing and research buildings, machinery, automobiles and data processing and other equipment. Such leases, some of which are noncancelable and in many cases include renewals, expire at various dates. The company pays most maintenance, insurance and tax expenses relating to leased assets. Rental expense for operating leases was $146 million for 1997, $130 million for 1996 and $124 million for 1995. At December 31, 1997, the future minimum lease payments for noncancelable operating leases totaled $372 million and are payable as follows: 1998-$103; 1999-$79; 2000-$53; 2001-$34; 2002-$26; and $77 thereafter. [Grahpic] 1989 First millimeter microwave monolithic integrated circuit chip 48 24 NOTES TO FINANCIAL STATEMENTS | TRW INC. CAPITAL STOCK SERIAL PREFERENCE STOCK II - cumulative - stated at $2.75 a share; 5 million shares authorized. Series 1 - each share convertible into 8.8 shares of common; redeemable at $104 per share; involuntary liquidation price of $104 per share; dividend rate of $4.40 per annum. Series 3 - each share convertible into 7.448 shares of common; redeemable at $100 per share; involuntary liquidation price of $40 per share; dividend rate of $4.50 per annum. Series 4 - not convertible into common shares; redemption price and involuntary liquidation price of $125 per one one-hundredth of a share; annual dividend rate per one one-hundredth of a share of the lesser of $4.00 or the current dividend on common stock; no shares outstanding at December 31, 1997. COMMON STOCK - $0.625 par value; authorized 500 million shares; shares outstanding were reduced by treasury shares of 10.9 million in 1997 and 7.2 million in 1996. TRW has a shareholder purchase rights plan under which each shareholder of record as of May 17, 1996, received one-half of one right for each TRW common share held. Each right entitles the holder, upon the occurrence of certain events, to buy one one-hundredth of a share of Cumulative Redeemable Serial Preference Stock II, Series 4, at a price of $300. In other events, each right entitles the holder, other than the acquiring party, to purchase $600 of TRW common stock or common stock of another person at a 50 percent discount. The company may redeem these rights at its option at one cent per right under certain circumstances. At December 31, 1997, 15.8 million shares of common stock were reserved for the exercise and issuance of stock options and conversion of the Serial Preference Stock II, Series 1 and 3. There were 1.2 million shares of Cumulative Redeemable Serial Preference Stock II, Series 4, reserved for the shareholder purchase rights plan. STOCK OPTIONS TRW has granted nonqualified stock options to certain employees to purchase the company's common stock at the market price on the date of grant. Stock options granted become exercisable to the extent of one-third of the optioned shares for each full year of employment following the date of grant and expire 10 years after the date of grant. The company applies the provisions of Accounting Principles Board Opinion No. 25 in accounting for its employee stock options and, as such, no compensation expense is recognized as the exercise price equals the market price of the stock on the date of grant. [Graphic] 1993 First computer system for battlefield use 49 25 NOTES TO FINANCIAL STATEMENTS | TRW INC.
1997 1996 1995 ----------------------- ------------------------- ------------------------- Weighted- Weighted- Weighted- average average average Millions exercise Millions exercise Millions exercise of shares price of shares price of shares price - ------------------------------------------------------------------------------------------------------------------ Outstanding at beginning of year 8.5 $ 29.72 9.2 $ 26.45 9.4 $ 25.09 Granted 2.0 50.19 1.7 43.98 1.4 32.32 Exercised 1.6 25.96 1.9 25.28 1.4 23.33 Canceled, expired or terminated .4 38.63 .5 35.51 .2 28.23 Outstanding at end of year 8.5 34.94 8.5 29.72 9.2 26.45 Exercisable 5.3 27.81 5.6 25.18 6.6 24.07 Weighted-average fair value of options granted 11.92 9.45 8.24 - ------------------------------------------------------------------------------------------------------------------
At December 31, 1997, approximately 1,100 employees were participants in the plan. As of that date, the per share exercise prices of options outstanding ranged from $19.88 to $58.88. The weighted-average remaining contractual life of those options is approximately six years. Had the compensation cost for the stock options granted in 1997, 1996 and 1995 been determined based on the fair value at the grant date consistent with the fair value method of SFAS No. 123, the company's net earnings and earnings per share would have been reduced by $9 million ($.08 per share) in 1997, $5 million ($.04 per share) in 1996 and $2 million ($.02 per share) in 1995. The effect on 1996 and 1995 net earnings may not be representative of the effect on future years' net earnings amounts as the compensation cost reflects expense for only two years' vesting in 1996 and one year's vesting in 1995. Fair value was estimated at the date of grant using the Black-Scholes option pricing model and the following weighted-average assumptions for 1997, 1996 and 1995, respectively: risk-free interest rate of 5.83%, 5.43% and 7.44%; dividend yield of 2.54%, 2.84% and 2.80%; expected volatility of 20%, 20% and 19%; and an expected option life of six years for 1997, 1996 and 1995. TRW grants performance share rights to certain employees under which the employees are entitled to receive shares of the company's common stock based on the achievement of a certain return on assets employed. The rights specify a target number of shares which the employee would receive for each year that goals for returns on assets employed are met. If the goals are exceeded, the employee could receive up to 200 percent of the target shares, with the excess over 100 percent payable in cash, unless the Compensation and Stock Option Committee of TRW's Directors determines to pay the excess in shares. If the goals are not met, the employee would receive fewer than the target shares or no shares. The target number of performance share rights granted to employees and still outstanding were .2 million and .4 million at December 31, 1997 and 1996, respectively. 50 26 NOTES TO FINANCIAL STATEMENTS | TRW INC. CONTINGENCIES The company is subject to various investigations, claims and legal proceedings covering a wide range of matters that arise in the ordinary course of its business activities. In addition, the company is conducting a number of environmental investigations and remedial actions at current and former company locations and, along with other companies, has been named a potentially responsible party for certain waste management sites. Each of these matters is subject to various uncertainties, and some of these matters may be resolved unfavorably to the company. A reserve estimate for each matter is established using standard engineering cost estimating techniques. In the determination of such costs, consideration is given to professional judgment of company environmental engineers in consultation with outside environmental specialists when necessary. At multi party sites, the reserve estimate also reflects the expected allocation of total project costs among the various potentially responsible parties. At December 31, 1997, the company had reserves for environmental matters of $71 million, including $6 million of additional accruals recorded during the year. The company aggressively pursues reimbursement for environmental costs from its insurance carriers. However, insurance recoveries are not recorded as a reduction of environmental costs until they are fixed and determinable. At December 31, 1997, the "Other assets" caption on the balance sheet includes $30 million of insurance recoveries related to environmental matters. The company believes that any liability that may result from the resolution of environmental matters for which sufficient information is available to support these cost estimates will not have a material adverse effect on the company's financial position. However, the company cannot predict the effect on the company's financial position of expenditures for aspects of certain matters for which there is insufficient information. In addition, the company cannot predict the effect of compliance with environmental laws and regulations with respect to unknown environmental matters on the company's financial position or the possible effect of compliance with environmental requirements imposed in the future. Further, product liability claims may be asserted in the future for events not currently known by management. Although the ultimate liability from these potential claims cannot be ascertained at December 31, 1997, management does not anticipate that any related liability, after consideration of insurance recovery, would have a material adverse effect on the company's financial position. During 1997, TRW Vehicle Safety Systems Inc., a wholly owned subsidiary of the company, reported to the Arizona Department of Environmental Quality (ADEQ) potential violations of the Arizona hazardous waste law at its Queen Creek, Arizona facility for the possible failure to properly label and dispose of waste water that might be classified as hazardous waste. ADEQ is conducting an investigation into these potential violations, and the company is cooperating with the investigation. If ADEQ initiates proceedings against the company with respect to such matters, the company could be liable for penalties and fines and other relief. The company has been apprised by state and federal officials that there are ongoing civil and criminal investigations with respect to these potential violations. Management is currently evaluating this matter and is unable to make a meaningful estimate of the amount or range of possible liability, if any, at this time. [Graphic] 1994 First on-board signal processing for a military communications satellite - Milstar 51 27 NOTES TO FINANCIAL STATEMENTS | TRW INC. During 1996, the company was advised by the Department of Justice (DOJ) that it had been named as a defendant in two lawsuits brought by a former employee and filed under seal in 1994 and 1995, respectively, in the United States District Court for the Central District of California under the QUI TAM provisions of the civil False Claims Act. The Act permits an individual to bring suit in the name of the United States and share in any recovery. The allegations in the lawsuits relate to the classification of costs incurred by the company that were charged to certain of its federal contracts. Under the law, the government must investigate the allegations and determine whether it wishes to intervene and take responsibility for the lawsuits. On February 19, 1998, the DOJ intervened in the litigation with respect to a limited number of the allegations. The company cannot presently predict the outcome of these matters, although management believes that the company has meritorious defenses. INDUSTRY SEGMENTS TRW Inc. is a United States-based company providing advanced technology products and services for the automotive and space, defense and information systems markets. The principal markets for the company's automotive products are North American, European and Asian original equipment manufacturers and independent distributors. Space, Defense & Information Systems primarily provides products and services to the United States Government, agencies of the United States Government and commercial customers. AUTOMOTIVE - Occupant restraint systems, including sensors, steering wheels, air bag and seat belt systems. Steering systems, including power and manual rack and pinion steering for light vehicles, hydraulic steering systems for commercial truck and off-highway vehicles and suspension components. Electrical and electronic controls, engineered fasteners and stud welding and control systems. Engine valves, valve train parts and pistons. SPACE, DEFENSE & INFORMATION SYSTEMS - Spacecraft, including the design and manufacture of military and civilian spacecraft equipment, propulsion subsystems, electro-optical and instrument systems, spacecraft payloads, high-energy lasers and laser technology and other high-reliability components. Systems integration, systems engineering services and software in the fields of military command and control, intelligence collection, public safety, modeling and simulation, training, telecommunications, image processing, earth observation, nuclear waste management, air traffic control, security and counterterrorism, and other high-technology space, defense, and civil government support systems. Electronic systems, equipment, components and services, including the design and manufacture of space communication systems, airborne reconnaissance systems, unmanned aerial vehicles, avionics systems, commercial telecommunications and other electronic technologies for tactical and strategic space, defense and selected commercial applications. Information technology systems, products and services for government and commercial markets focused on defense, health and human safety, integrated supply chain, warehousing, logistics, criminal justice, tax systems modernization, and financial reporting applications. 52 28 NOTES TO FINANCIAL STATEMENTS | TRW INC.
Space, Defense & Year ended Information Company In millions December 31 Automotive Systems Staff & Other Total - ------------------------------------------------------------------------------------------------------------------ Sales 1997 $ 7,032 $ 3,799 $ -- $ 10,831 1996 6,493 3,364 -- 9,857 1995 6,468 3,100 -- 9,568 - ------------------------------------------------------------------------------------------------------------------ Operating profit (loss) 1997 $ 631 $ (228)(A) $ (163) $ 240(A) 1996 319 157 (174) 302 1995 607 192 (174) 625 - ------------------------------------------------------------------------------------------------------------------ Identifiable assets 1997 $ 4,307 $ 1,546 $ 557 $ 6,410 1996 3,683 1,278 938 5,899 1995 3,706 1,113 851 5,670 - ------------------------------------------------------------------------------------------------------------------ Depreciation and 1997 $ 352 $ 115 $ 9 $ 476 amortization of property, 1996 321 112 10 443 plant and equipment 1995 304 102 9 415 - ------------------------------------------------------------------------------------------------------------------ Capital expenditures 1997 $ 390 $ 156 $ 3 $ 549 1996 342 157 1 500 1995 314 114 38 466 - ------------------------------------------------------------------------------------------------------------------
(A) Excluding the write-off of purchased in-process research and development, Space, Defense & Information Systems and Total operating profit would have been $320 million and $788 million, respectively. Company Staff assets consist principally of cash and cash equivalents, current deferred income taxes and administrative facilities. Intersegment sales were not significant. Sales to agencies of the U.S. Government, primarily by the Space, Defense & Information Systems segment, were $3,523 million in 1997, $3,121 million in 1996 and $2,890 million in 1995. Sales to Ford Motor Company by the Automotive segment were $1,469 million in 1997, $1,470 million in 1996 and $1,474 million in 1995. [Graphic] 1995 First spacecraft to operate continuously for 30 years - Pioneer 6 53 29 NOTES TO FINANCIAL STATEMENTS | TRW INC. GEOGRAPHIC SEGMENTS
Year ended United Other Company In millions December 31 States Europe Areas Staff & Other Total - ------------------------------------------------------------------------------------------------------------------ Sales 1997 $ 6,919 $ 3,002 $ 910 $ -- $ 10,831 1996 6,469 2,522 866 -- 9,857 1995 6,212 2,525 831 -- 9,568 - ------------------------------------------------------------------------------------------------------------------ Operating profit (loss) 1997 $ 94 $ 245 $ 64 $ (163) $ 240 1996 212 224 40 (174) 302 1995 514 220 65 (174) 625 - ------------------------------------------------------------------------------------------------------------------ Identifiable assets 1997 $ 3,415 $ 1,980 $ 554 $ 461 $ 6,410 1996 3,056 1,411 590 842 5,899 1995 2,871 1,464 537 798 5,670 - ------------------------------------------------------------------------------------------------------------------
Inter-area sales are not significant to the total revenue of any geographic area. QUARTERLY FINANCIAL INFORMATION (UNAUDITED) In millions except per share data
- ------------------------------------------------------------------------------------------------------------------ First Second Third Fourth -------------------- ------------------ ---------------- ---------------- 1997 1996 1997 1996 1997 1996 1997 1996 - ------------------------------------------------------------------------------------------------------------------ (C) (D) (A)(B) (E) Sales $ 2,660 $ 2,514 $ 2,852 $ 2,572 $ 2,521 $ 2,320 $ 2,798 $ 2,451 Gross profit 482 463 534 479 466 133 523 406 Earnings (loss) from continuing operations before income taxes 195 165 219 188 166 (218) (340) 167 Net earnings (loss) 119 117 135 130 108 106 (411) 127 Net earnings (loss) per share (F) Diluted .92 .86 1.05 .97 .85 .82 (3.34) .98 Basic .95 .89 1.09 1.00 .88 .82 (3.34) 1.01 - ------------------------------------------------------------------------------------------------------------------ (A) Earnings (loss) from continuing operations before income taxes includes a $548 million ($4.46 per share) one time noncash charge related to in-process research and development with no income tax benefit. (B) Earnings (loss) from continuing operations before income taxes includes a $15 million gain ($10 million after tax, 8 cents per share) related to the sale of property. (C) Earnings (loss) from continuing operations before income taxes included an $18 million benefit ($12 million after taxes, 9 cents per share) related to an insurance claim settlement and a $15 million noncash charge ($13 million after taxes, 10 cents per share) related to SFAS No. 121. (D) Net earnings (loss) included a $243 million gain ($1.90 per share) related to the sale of the information services business and a $233 million charge ($1.83 per share) for actions taken in the automotive and space, defense and information systems businesses. (E) Net earnings (loss) included a $17 million gain (13 cents per share) related to the sale of the remaining interest in the information services business, a $10 million benefit (8 cents per share) related to the recovery of certain tax costs and a $28 million charge (22 cents per share) related primarily to product warranties. (F) Amounts have been restated to comply with SFAS No. 128, "Earnings per Share." Under the provisions of SFAS No. 128, the sum of net earnings (loss) per share for the four quarters may not equal the total year amount.
[Graphic] 1995 First commercially viable superfast gallium arsenide HBT integrated circuits for wireless communications 54 30 NOTES TO FINANCIAL STATEMENTS | TRW INC. STOCK PRICES AND DIVIDENDS (UNAUDITED) The book value per common share at December 31, 1997, was $13.19 compared to $17.29 at the end of 1996. TRW's Directors declared the 238th consecutive quarterly dividend during December 1997. Dividends declared per share in 1997 were $1.24, up 6 percent from $1.17 in 1996. The following table highlights the market prices of TRW's common and preference stocks and dividends paid for the quarters of 1997 and 1996.
Price of Price of Dividends traded shares traded shares paid per share --------------------- ------------------- ---------------- Quarter 1997 1996 1997 1996 --------- --------------------- ------------------- ---------------- High Low High Low - ------------------------------------------------------------------------------------------------------------------- Common stock 1 $ 55 7/8 $ 48 1/8 $ 46 1/8 $ 37 7/16 $ .31 $ .275 Par value $0.625 per share 2 58 3/8 47 3/8 48 1/2 43 1/2 .31 .275 3 61 5/16 51 1/4 50 3/4 41 1/16 .31 .275 4 61 3/16 50 1/2 52 43 3/4 .31 .31 - ------------------------------------------------------------------------------------------------------------------- Cumulative Serial 1 500 300 379 379 1.10 1.10 Preference Stock II 2 457 1/2 442 418 414 1.10 1.10 $4.40 Convertible 3 600 300 500 300 1.10 1.10 Series 1 4 495 495 427 427 1.10 1.10 - ------------------------------------------------------------------------------------------------------------------- Cumulative Serial 1 400 364 332 1/2 288 1.125 1.125 Preference Stock II 2 402 396 352 350 1.125 1.125 $4.50 Convertible 3 423 1/4 423 1/4 425 250 1.125 1.125 Series 3 4 420 400 329 329 1.125 1.125 - -------------------------------------------------------------------------------------------------------------------
The $4.40 Convertible Series 1 was not actively traded during the first quarter of 1997 and the third quarters of 1997 and 1996. The $4.50 Convertible Series 3 was not actively traded during the third quarter of 1996. The prices shown for these quarters represent the range of asked (high) and bid (low) quotations. [Graphic] 1997 First complete vehicle occupant restraint system 55 EX-21 14 EXHIBIT 21 1 EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT TRW has no parent or parents. As of December 31, 1997, certain of its subsidiaries, some of which also have subsidiaries, were as follows:
PERCENTAGE OF ORGANIZED UNDER VOTING SECURITIES NAME THE LAWS OF OWNED (1) ---- --------------- ----------------- TRW U.K. Limited which owns United Kingdom 100.00% TRW Automotive Systems Limited United Kingdom 100.00% TRW Steering Systems Limited United Kingdom 100.00% TRW United-Carr Limited United Kingdom 100.00% ESL Incorporated California 100.00% TRW Vehicle Safety Systems Inc. which owns Delaware 100.00% TRW Technar Inc. California 100.00% TRW Automotive Products Inc. which, together with TRW International Holding Corporation, directly or indirectly owns Delaware 100.00% TRW Deutschland GmbH which, in turn (in some cases together with TRW Inc.), directly or indirectly owns Germany 100.00% TRW Fahrwerksysteme GmbH & Co. KG Germany 100.00% TRW Fahrzeugelektrik GmbH & Co. KG Germany 100.00% TRW Occupant Restraints Systems GmbH Germany 100.00% TRW United-Carr GmbH & Co. KG Germany 100.00% TRW Steering Systems Japan Co. Ltd. Japan 100.00% TRW Canada Limited which owns Canada 100.00% TRW Vehicle Safety Systems Limited Canada 100.00% Quality Safety Systems Company Canada 60.00% TRW Automotive Brasil Ltda. Brazil 100.00% TRW Components International Inc. Virginia 100.00% TRW Italia S.p.A. which owns Italy 100.00% TRW SIPEA S.p.A. Italy 100.00% TRW France S.A. France 100.00% TRW Koyo Steering Systems Company Tennessee 51.00% TRW System Services Company Delaware 100.00% TRW Sabelt S.p.A. Italy 90.00% TRW Direcciones de Vehiculos, S.A. Spain 100.00%
2
PERCENTAGE OF ORGANIZED UNDER VOTING SECURITIES NAME THE LAWS OF OWNED (1) ---- --------------- ----------------- TRW Microwave Inc. California 100.00% TRW Australia Limited which owns Australia 100.00% TRW Australia Holdings Limited which owns Australia 62.00% TRW Steering & Suspension Australia Limited Australia 100.00% TRW Beteiligungsgesellschaft m.b.H. which owns Austria 100.00% TRW Occupant Restraints Systems Ges.m.b.H. Austria 100.00% TRW Composants Moteurs Inc. Ohio 100.00% BDM International, Inc. Delaware 100.00% TRW Automotive Safety Systems Inc. which owns Delaware 100.00% TRW Automotive Safety Systems Holding GmbH which owns Germany 100.00% TRW Airbag Systems GmbH & Co. KG Germany 80.00% TRW Automotive Safety Systems GmbH Germany 80.00%
- --------------- (1) Total percentages held by TRW and/or its subsidiaries, disregarding Directors' qualifying shares, if any. The names of certain subsidiaries, which considered in the aggregate would not constitute a "significant subsidiary" as such term is defined in the regulations under the federal securities laws, have been omitted from the foregoing list. EX-23.A 15 EXHIBIT 23(A) 1 EXHIBIT 23(a) CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in Registration Statement Nos. 333-43931 on Form S-3, 33-61711 on Form S-3, 33-42870 on Form S-3, 333-27003 on Form S-8, 333-27001 on Form S-8, 333-06633 on Form S-8, 333-03973 on Form S-8, 33-58257 on Form S-8, 33-53503 on Form S-8, 33-29751 on Form S-8, 333-20351 on Form S-8, 2-90748 on Form S-8 and 2-64035 on Form S-8 of our report dated January 19, 1998 with respect to the consolidated financial statements of TRW Inc. included in the Annual Report (Form 10-K) for the year ended December 31, 1997. We also consent to the incorporation by reference in TRW Inc.'s Registration Statement No. 333-03973 on Form S-8 pertaining to The TRW Employee Stock Ownership and Stock Savings Plan and the related prospectus of our report dated March 18, 1998 with respect to the financial statements of The TRW Employee Stock Ownership and Stock Savings Plan for the fiscal year ended December 31, 1997 included as Exhibit 99(a) to the TRW Inc. Annual Report (Form 10-K) for the year ended December 31, 1997. /s/ Ernst & Young LLP ERNST & YOUNG LLP Cleveland, Ohio March 20, 1998 EX-23.B 16 EXHIBIT 23(B) 1 EXHIBIT 23(b) CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in TRW Inc.'s Registration Statement Nos. 333-06633 and 33-58257 on Form S-8 pertaining to The TRW Canada Stock Savings Plan and the related prospectus of our report dated March 10, 1998 with respect to the financial statements of The TRW Canada Stock Savings Plan for the year ended December 31, 1997 included as Exhibit 99(b) to the TRW Inc. Annual Report (Form 10-K) for the year ended December 31, 1997. /s/ Ernst & Young ERNST & YOUNG Hamilton, Ontario March 20, 1998 EX-24.A 17 EXHIBIT 24(A) 1 EXHIBIT 24(a) POWER OF ATTORNEY Directors and Certain Officers of TRW Inc. THE UNDERSIGNED Directors and Officers of TRW Inc. hereby appoint D. B. Goldston, W. B. Lawrence, D. F. Menz, K. A. Weigand and J. L. Manning, Jr., and each of them, as attorneys for the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned in the capacity specified, to prepare or cause to be prepared, to execute and to file with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the "Act"), an annual report on Form 10-K for the year ended December 31, 1997 relating to TRW Inc., such other periodic reports as may be required pursuant to the Act, amendments and exhibits to any of the foregoing and any and all other documents to be filed with the Securities and Exchange Commission or elsewhere pertaining to such reports, with full power and authority to take such other action which in the judgment of such person may be necessary or appropriate to effect the filing of such documents. EXECUTED the dates set forth below. /s/ J. T. Gorman /s/ P. S. Hellman /s/ C. G. Miller - -------------------------------------- ---------------------------------------- ----------------------------- J. T. Gorman, P. S. Hellman, C. G. Miller, Chairman of the Board, President, Executive Vice President Chief Executive Officer Chief Operating Officer and Chief Financial Officer and Director and Director February 11, 1998 February 11, 1998 February 11, 1998 /s/ Thomas A. Connell /s/ Michael H. Armacost /s/ M. Feldstein - -------------------------------------- ---------------------------------------- ----------------------------- T. A. Connell, Vice President M. H. Armacost, Director M. Feldstein, Director and Controller February 11, 1998 February 11, 1998 February 11, 1998 /s/ Robert M. Gates /s/ C. H. Hahn /s/ George H. Heilmeier - -------------------------------------- ---------------------------------------- ----------------------------- R. M. Gates, Director C. H. Hahn, Director G. H. Heilmeier, Director February 11, 1998 February 11, 1998 February 11, 1998 /s/ Karen N. Horn /s/ E. B. Jones /s/ W. S. Kiser - -------------------------------------- ---------------------------------------- ----------------------------- K. N. Horn, Director E. B. Jones, Director W. S. Kiser, Director February 11, 1998 February 11, 1998 February 11, 1998 /s/ D. B. Lewis /s/ James T. Lynn /s/ Lynn Martin - -------------------------------------- ---------------------------------------- ----------------------------- D. B. Lewis, Director J. T. Lynn, Director L. M. Martin, Director February 11, 1998 February 11, 1998 February 11, 1998 /s/ J. D. Ong /s/ Richard W. Pogue - -------------------------------------- ---------------------------------------- J. D. Ong, Director R. W. Pogue, Director February 11, 1998 February 11, 1998
EX-24.B 18 EXHIBIT 24(B) 1 EXHIBIT 24(b) C E R T I F I C A T E I, Kathleen A. Weigand, do hereby certify that I am a duly elected, qualified and acting Assistant Secretary of TRW Inc. ("TRW"), an Ohio corporation; that attached hereto and marked as "Exhibit A" is a true and correct copy of resolutions duly adopted by the Directors of TRW at a meeting thereof duly called and held on February 11, 1998, at which meeting a quorum was present and acting throughout; and that said resolutions have not been modified, revoked or rescinded in any manner and are now in full force and effect. IN WITNESS WHEREOF, I have hereunto set my hand and have caused the seal of TRW to be affixed hereto at Lyndhurst, Ohio this 20th day of March, 1998. /s/ Kathleen A. Weigand Assistant Secretary 2 Exhibit A RESOLVED that any officer or assistant officer of the Corporation is authorized and empowered, for and on behalf of the Corporation, to prepare or cause to be prepared, to execute and to file with the Securities and Exchange Commission, Washington, D.C. (the "Commission"), the Corporation's Annual Report on Form 10-K for the year ended December 31, 1997, such other periodic reports as may be required pursuant to the Securities Exchange Act of 1934, as amended (the "Act"), amendments and exhibits to any of the foregoing and any and all other documents to be filed with the Commission or elsewhere pertaining to such reports, and to take other action deemed necessary and appropriate to effect the filing of all such reports under the Act, including the execution of a power of attorney evidencing the authority set forth herein; and FURTHER RESOLVED that David B. Goldston, William B. Lawrence, David F. Menz, Kathleen A. Weigand and J. Lawrence Manning, Jr. and each of them is appointed an attorney for the Corporation, with full power of substitution and resubstitution, to execute and file, for and on behalf of the Corporation, the Annual Report on Form 10-K, other periodic reports, amendments and exhibits to any of the foregoing and any and all other documents to be filed with the Commission or elsewhere pertaining to such reports, with full power and authority to take or cause to be taken all other actions deemed necessary and appropriate to effect the purposes of the foregoing resolution. EX-27 19 EXHIBIT 27
5 1,000,000 YEAR DEC-31-1997 JAN-01-1997 DEC-31-1997 70 0 1,640 23 573 2,435 6,074 3,453 6,410 2,719 1,117 1 0 78 1,545 6,410 10,831 10,831 8,826 8,826 0 0 75 240 289 (49) 0 0 0 (49) (.40) (.40)
EX-27.1 20 EXHIBIT 27.1
5 1,000,000 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 136 0 1,489 0 578 2,508 6,114 3,511 6,081 2,394 531 0 0 77 2,148 6,081 8,033 8,033 6,551 6,551 0 0 57 580 218 362 0 0 0 362 2.92 2.83
EX-27.2 21 EXHIBIT 27.2
5 1,000,000 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 83 0 1,606 0 525 2,578 6,116 3,498 6,145 2,423 498 0 0 77 2,111 6,145 5,512 5,512 4,496 4,496 0 0 37 414 160 254 0 0 0 254 2.04 1.97
EX-27.3 22 EXHIBIT 27.3
5 1,000,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 59 0 1,567 0 542 2,599 6,051 3,425 6,150 2,400 472 0 0 78 2,112 6,150 2,660 2,660 2,178 2,178 0 0 20 195 76 119 0 0 0 119 .95 .92
EX-27.4 23 EXHIBIT 27.4
5 1,000,000 YEAR DEC-31-1996 JAN-01-1996 DEC-31-1996 386 0 1,396 18 524 2,781 5,880 3,400 5,899 2,157 458 1 0 80 2,108 5,899 9,857 9,857 8,376 8,376 0 0 84 302 120 182 298 0 0 480 3.72 3.62
EX-27.5 24 EXHIBIT 27.5
5 1,000,000 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 720 0 1,467 0 517 2,843 5,744 3,373 5,938 2,268 479 0 0 80 2,144 5,938 7,406 7,406 6,331 6,331 0 0 76 135 62 73 280 0 0 353 2.72 2.64
EX-27.6 25 EXHIBIT 27.6
5 1,000,000 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 64 0 1,470 0 516 2,244 5,727 3,304 5,741 2,033 511 0 0 41 2,195 5,741 5,086 5,086 4,144 4,144 0 0 39 353 133 220 27 0 0 247 1.89 1.84
EX-27.7 26 EXHIBIT 27.7
5 1,000,000 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 60 0 1,471 0 540 2,299 5,714 3,256 5,745 1,934 557 0 0 41 2,194 5,745 2,514 2,514 2,051 2,051 0 0 19 165 62 103 14 0 0 117 .89 .86
EX-27.8 27 EXHIBIT 27.8
5 1,000,000 YEAR DEC-31-1995 JAN-01-1995 DEC-31-1995 59 0 1,343 16 530 2,200 5,710 3,199 5,670 1,833 539 1 0 40 2,131 5,670 9,568 9,568 7,857 7,857 0 0 95 625 230 395 51 0 0 446 3.41 3.32
EX-99.A 28 EXHIBIT 99(A) 1 Exhibit 99(a) Audited Financial Statements THE TRW EMPLOYEE STOCK OWNERSHIP AND STOCK SAVINGS PLAN December 31, 1997 and 1996 2 Report of Independent Auditors Board of Administration The TRW Employee Stock Ownership and Stock Savings Plan We have audited the accompanying statements of net assets available for benefits of The TRW Employee Stock Ownership and Stock Savings Plan as of December 31, 1997 and 1996, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of The TRW Employee Stock Ownership and Stock Savings Plan as of December 31, 1997 and 1996, and the changes in net assets available for benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental schedule of assets held for investment purposes as of December 31, 1997, and the schedule of reportable transactions for the year then ended are presented for purposes of complying with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, and are not a required part of the basic financial statements. The Fund Information in the statement of net assets available for benefits and the statement of changes in net assets available for benefits is presented for purposes of additional analysis rather than to present the net assets available for benefits and changes in net assets available for benefits of each fund. The supplemental schedules and Fund Information have been subjected to the auditing procedures applied in our audit of the 1997 financial statements and, in our opinion, are fairly stated in all material respects in relation to the 1997 basic financial statements taken as a whole. /s/ Ernst & Young LLP March 18, 1997 Cleveland, Ohio 1 3 The TRW Employee Stock Ownership and Stock Savings Plan Statements of Net Assets Available for Benefits with Fund Information December 31, 1997
TRW Stock Fund ----------------------------------- Participant Non-Participant Equity Insured Directed Directed Fund Return Fund ------------------------------------------------------------------- ASSETS Investments: TRW Inc. Common Stock $408,177,969 $ 712,898,949 $ 528,413 Guaranteed investment contracts $ 472,639,861 Common Stock 628,329,766 Bankers Trust Pyramid Directed Account Cash Fund 2,060,875 3,412,281 27,602,178 Bankers Trust Pyramid Discretionary Cash Fund 345,984 Cash 19,002 Receivable from TRW Inc. 5,354 8,866 2,772 6,704 a Receivable for investments sold 1,940,778 Participant loans receivable 22,335,726 17,914,993 16,332,516 Prepaid expenses 924 1,529 Interest receivable 46,014 2,763,378 Receivable from other funds 1,409 364,110 ------------------------------------------------------------------- Total assets 432,628,271 716,321,625 649,081,708 519,708,747 LIABILITIES Payable to other funds 365,362 Accrued expenses 36,708 60,779 80,917 56,507 ------------------------------------------------------------------- Total liabilities 36,708 60,779 446,279 56,507 ------------------------------------------------------------------- NET ASSETS AVAILABLE FOR BENEFITS $ 432,591,563 $ 716,260,846 $ 648,635,429 $ 519,652,240 =================================================================== Small Company Bond Equity Fund Index Fund Totals -------------------------------------------------- ASSETS Investments: TRW Inc. Common Stock $1,121,605,331 Guaranteed investment contracts 472,639,861 Common Stock $ 133,207,232 761,536,998 Bankers Trust Pyramid Directed Account Cash Fund 33,075,334 Bankers Trust Pyramid Discretionary Cash Fund 345,984 Cash 19,002 Receivable from TRW Inc. $ 88 23,784 Receivable for investments sold 14,770,285 27,239,231 43,950,294 Participant loans receivable 6,128,698 965,447 63,677,380 Prepaid expenses 2,453 Interest receivable 2,809,392 Receivable from other funds 365,519 -------------------------------------------------- Total assets 154,106,215 28,204,766 2,500,051,332 LIABILITIES Payable to other funds 157 365,519 Accrued expenses 50,417 10,285 295,613 -------------------------------------------------- Total liabilities 50,574 10,285 661,132 -------------------------------------------------- NET ASSETS AVAILABLE FOR BENEFITS $ 154,055,641 $ 28,194,481 2,499,390,200 ==================================================
See notes to financial statements. 2 4 The TRW Employee Stock Ownership and Stock Savings Plan Statements of Changes in Net Assets Available for Benefits with Fund Information Year Ended December 31, 1997
TRW Stock Fund ----------------------------------- Participant Non-Participant Equity Insured Directed Directed Fund Return Fund -------------------------------------------------------------------- Investment income: Dividends--TRW Inc. Common Stock $ 8,964,299 $ 17,184,237 Interest 158,833 290,564 $ 49,174 $ 33,650,423 -------------------------------------------------------------------- Investment income 9,123,132 17,474,801 49,174 33,650,423 Contributions from TRW Inc. 43,311,522 Contributions from participants 33,570,464 35,503,516 23,538,722 Contributions - rollover 1,157,756 1,733,584 1,302,178 Net realized gain on disposition of investments 13,787,889 25,854,934 384,756,181 Change in unrealized appreciation (depreciation) of 16,170,536 26,029,117 (229,445,350) investments Transfers from other funds 55,341,466 62,839,961 86,707,961 Interest income on participant loans 1,833,404 1,515,725 1,522,861 -------------------------------------------------------------------- 130,984,647 112,670,374 256,952,791 146,722,145 Less: Withdrawals and distributions: Cash 1,709,113 1,681,207 32,739,968 52,662,858 TRW Inc. Common Stock (579,184 participant 23,044,461 47,8645,019 directed shares and 804,878 non-participant directed shares) -------------------------------------------------------------------- 24,753,574 49,546,226 32,739,968 52,662,858 Distribution of dividends on TRW Inc. Common Stock 16,202,810 Administrative expenses 344,523 471,264 395,181 520,114 Transfers to other funds 64,541,553 54,091,589 99,567,077 -------------------------------------------------------------------- 89,639,650 66,220,300 87,226,738 152,750,049 -------------------------------------------------------------------- Increase (Decrease) in net assets for year 41,344,997 46,450,074 169,726,053 (6,027,904) Net assets available for benefits at beginning of year 391,246,566 669,810,772 478,909,376 525,680,144 -------------------------------------------------------------------- NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 432,591,563 $ 716,260,846 $648,635,429 $ 519,652,240 ==================================================================== Small Company Bond Equity Fund Index Fund Totals ---------------------------------------------------- Investment income: Dividends--TRW Inc. Common Stock $ 30 $ 26,148,566 Interest 36 $ 72 34,149,102 ---------------------------------------------------- Investment income 66 72 60,297,668 Contributions from TRW Inc. 43,311,522 Contributions from participants 18,232,212 3,348,933 114,193,847 Contributions - rollover 1,291,294 287,950 5,772,762 Net realized gain on disposition of investments 51,320,292 4,508,530 480,227,826 Change in unrealized appreciation (depreciation) of (24,826,056) (2,353,500) (214,425,253) investments Transfers from other funds 40,249,929 9,567,030 254,706,347 Interest income on participant loans 488,842 79,267 5,440,099 ---------------------------------------------------- 86,756,579 15,438,282 749,524,818 Less: Withdrawals and distributions: Cash 5,436,766 1,430,758 95,660,670 TRW Inc. Common Stock (579,184 participant 70,909,480 directed shares and 804,878 non-participant directed shares) ---------------------------------------------------- 5,436,766 1,430,762 166,570,154 Distribution of dividends on TRW Inc. Common Stock 16,202,810 Administrative expenses 203,906 36,578 1,971,566 Transfers to other funds 29,287,985 7,218,143 254,706,347 ---------------------------------------------------- 34,928,657 8,685,479 439,450,877 ---------------------------------------------------- Increase (Decrease) in net assets for year 51,827,922 6,752,803 310,073,941 Net assets available for benefits at beginning of year 102,227,719 21,441,678 2,189,316,255 ---------------------------------------------------- NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 154,055,641 $ 28,194,481 $2,499,390,200 ====================================================
See notes to finanical statements. 3 5 The TRW Employee Stock Ownership and Stock Savings Plan Statements of Net Assets Available for Benefits with Fund Information December 31, 1996
TRW Stock Fund ----------------------------------- Participant Non-Participant Equity Insured Directed Directed Fund Return Fund -------------------------------------------------------------------- ASSETS Investments: TRW Inc. Common Stock $ 370,742,743 $ 666,711,719 Guaranteed investment contracts $ 490,407,234 Bankers Trust Pyramid Equity Index Fund $ 462,068,568 Bankers Trust Pyramid Russell 2500 Index Fund Bankers Trust Pyramid Intermediate Government/Corporate Bond Index Fund Bankers Trust Pyramid Directed Account Cash Fund 1,743,081 2,984,140 14,739,814 Receivable from TRW Inc. 35,005 59,928 53,091 70,324 Participant loans receivable 18,539,229 16,608,418 18,690,131 Receivable from investments sold 225,304 Prepaid expenses 32,117 54,985 Interest receivable 40,194 2,798,092 Receivable from other funds 114,197 -------------------------------------------------------------------- Total assets 391,246,566 669,810,772 478,955,381 526,705,595 LIABILITIES Payable to other funds 9,673 744,540 Payable for investments acquired Accrued expenses 36,332 280,911 -------------------------------------------------------------------- Total liabilities 46,005 1,025,451 -------------------------------------------------------------------- NET ASSETS AVAILABLE FOR BENEFITS $ 391,246,566 $ 669,810,772 $ 478,909,376 $ 525,680,144 ==================================================================== Small Company Bond Equity Fund Index Fund Totals ------------------------------------------------------ ASSETS Investments: TRW Inc. Common Stock $ 1,037,454,462 Guaranteed investment contracts 490,407,234 Bankers Trust Pyramid Equity Index Fund 462,068,568 Bankers Trust Pyramid Russell 2500 Index Fund $ 96,588,565 96,588,565 Bankers Trust Pyramid Intermediate Government/Corporate Bond Index Fund $ 20,494,132 20,494,132 Bankers Trust Pyramid Directed Account Cash Fund 19,467,035 Receivable from TRW Inc. 25,730 4,358 248,436 Participant loans receivable 5,548,400 928,693 60,314,871 Receivable from investments sold 225,304 Prepaid expenses 13,902 101,004 Interest receivable 2,838,286 Receivable from other funds 562,474 77,542 754,213 ------------------------------------------------------- Total assets 102,739,071 21,504,725 2,190,962,110 LIABILITIES Payable to other funds 754,213 Payable for investments acquired 511,352 59,948 571,300 Accrued expenses 3,099 320,342 ------------------------------------------------------- Total liabilities 511,352 63,047 1,645,855 ------------------------------------------------------- NET ASSETS AVAILABLE FOR BENEFITS $ 102,227,719 $ 21,441,678 $ 2,189,316,255 =======================================================
See notes to financial statements. 4 6 The TRW Employee Stock Ownership and Stock Savings Plan Statements of Changes in Net Assets Available for Benefits with Fund Information Year Ended December 31, 1996
TRW Stock Fund ----------------------------------- Participant Non-Participant Equity Insured Directed Directed Fund Return Fund -------------------------------------------------------------------- Investment income: Dividends--TRW Inc. Common Stock $ 8,215,685 $ 15,738,158 Interest 153,951 290,907 $ 7,678 $ 33,948,650 -------------------------------------------------------------------- Investment income 8,369,636 16,029,065 7,678 33,948,650 Contributions from TRW Inc. 41,254,275 Contributions from participants 24,865,673 29,981,056 26,837,189 Net realized gain on disposition of investments 15,525,544 29,704,812 18,095,295 Change in unrealized appreciation of investments 64,083,341 118,056,264 69,643,225 Transfers from other funds 59,120,384 43,307,428 72,438,679 Interest income on participant loans 1,458,285 1,404,242 1,721,664 -------------------------------------------------------------------- 173,422,863 205,044,416 162,438,924 134,946,182 Less: Withdrawals and distributions: Cash 2,848,023 2,829,660 35,444,539 56,780,139 TRW Inc. Common Stock (621,145 participant directed shares and 1,251,970 non-participant directed shares) 28,803,604 58,079,381 -------------------------------------------------------------------- 31,651,627 60,909,041 35,444,539 56,780,139 Distribution of dividends on TRW Inc. Common Stock 14,963,225 Administrative expenses 178,273 342,227 329,400 886,500 Transfers to other funds 51,521,760 40,856,749 94,422,989 -------------------------------------------------------------------- 83,351,660 76,214,493 76,630,688 152,089,628 -------------------------------------------------------------------- Increase (decrease) in net assets for year 90,071,203 128,829,923 85,808,236 (17,143,446) Net assets available for benefits at beginning of year 301,175,363 540,980,849 393,101,140 542,823,590 -------------------------------------------------------------------- NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 391,246,566 $ 669,810,772 $ 478,909,376 $ 525,680,144 ==================================================================== Small Company Bond Equity Fund Index Fund Totals ------------------------------------------------------ Investment income: Dividends--TRW Inc. Common Stock $ 23,953,843 Interest $ 13 $ 36 34,401,235 ------------------------------------------------------ Investment income 13 36 58,355,078 Contributions from TRW Inc. 41,254,275 Contributions from participants 15,142,506 3,179,242 100,005,666 Net realized gain on disposition of investments 2,436,307 503,664 66,265,622 Change in unrealized appreciation of investments 11,162,184 15,145 262,960,159 Transfers from other funds 39,764,356 9,620,094 224,250,941 Interest income on participant loans 452,468 84,801 5,121,460 ------------------------------------------------------ 68,957,834 13,402,982 758,213,201 Less: Withdrawals and distributions: Cash 8,310,132 2,183,439 108,395,932 TRW Inc. Common Stock (621,145 participant directed shares and 1,251,970 non-participant directed shares) 86,882,985 ------------------------------------------------------ 8,310,132 2,183,439 195,278,917 Distribution of dividends on TRW Inc. Common Stock 14,963,225 Administrative expenses 105,750 28,500 1,870,650 Transfers to other funds 27,789,264 9,660,179 224,250,941 ------------------------------------------------------ 36,205,146 11,872,118 436,363,733 ------------------------------------------------------ Increase (decrease) in net assets for year 32,752,688 1,530,864 321,849,468 Net assets available for benefits at beginning of year 69,475,031 19,910,814 1,867,466,787 ------------------------------------------------------ NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 102,227,719 $ 21,441,678 $ 2,189,316,255 ======================================================
5 See notes to financial statements. 7 The TRW Employee Stock Ownership and Stock Savings Plan Notes to Financial Statements December 31, 1997 A. SIGNIFICANT ACCOUNTING POLICIES TRW STOCK FUND Investments in the TRW Stock Fund consist primarily of TRW Inc. (TRW) common stock, which is traded on the New York Stock Exchange and valued at the last reported sales price on the last business day of the fiscal year. EQUITY FUND Investments in the Equity Fund are valued at the redemption price established by the Trustee, which is based on the fair value of the Bankers Trust Pyramid Equity Index Fund assets. This Fund is constructed and maintained with the objective of providing investment results which approximate the overall performance of the Standard & Poor's Composite Index of 500 stocks. Income is accumulated and reinvested in the Fund and included in the determination of unit values. As of December 31, 1997, shares of the Bankers Trust Pyramid Equity Index fund were sold and the underlying securities were purchased in anticipation of the asset transfer to Putnam Investments (see Note H). INSURED RETURN FUND The Insured Return Fund consists of fully benefit responsive investment contracts with insurance companies, banks and other financial institutions and short-term investment funds. Benefit responsive contracts provide contract value payments for participant disbursements, loans and investment transfers as allowed under the plan. There are exceptions for payments to participants who, as a result of a corporate event, cease to be employed by TRW. A corporate event includes a divestiture of an operating unit (for example, a subsidiary or a division), a significant special early retirement program or other corporate action that could be construed as causing increased Plan payments to participants. Investment contracts provide a stated rate of interest on principal for a stated period of time. All investment contracts are accounted for at contract value because they are fully benefit responsive. In accordance with Statement of Position 94-4, which the Plan adopted effective January 1, 1995, contract value equals fair value because no event has occurred that affects the value of any contracts. The investment contracts are of three types: general account, separate account, and synthetic investment contracts. Investment contracts in the general account of an insurance company where assets are not specifically identifiable have fixed rates of interest or an indexed rate of interest for the life of the contract. Investment contracts in separate accounts of an insurance company have underlying assets that are specifically identifiable and held for the benefit of the Plan. 6 8 The TRW Employee Stock Ownership and Stock Savings Plan Notes to Financial Statements--Continued A. SIGNIFICANT ACCOUNTING POLICIES--CONTINUED Under synthetic investment contracts, the Plan owns assets with an investment contract from an insurance company, bank or other financial institution surrounding the asset. Both separate account and synthetic contracts have periodic interest rate resets (monthly, quarterly, or semi-annually) based on the performance of the underlying assets. All separate account and synthetic contracts have a guaranteed return of principal. As of December 31, 1997 and 1996, approximately $60 and $107 million was invested in general account assets, $141 and $138 million in separate account assets, and $274 and $249 million in assets owned by the Plan, respectively. The weighted average yield (excluding administrative expenses) for all investment contracts was 6.77% in 1997 and 1996. The crediting interest rate for all investment contracts was 6.69% at December 31, 1997 and 6.79% at December 31, 1996. SMALL COMPANY FUND Investments in the Small Company Equity Fund are valued at the redemption price established by the Trustee, which is based on the fair value of the Bankers Trust Pyramid Russell 2500 Index Fund assets. The Small Company Equity Fund is constructed and maintained with the objective of providing investment results which approximate the overall performance of the 2,500 common stocks included in the Russell 2500 Equity Index. Income is accumulated and reinvested in the Fund and included in the determination of unit values. As of December 31, 1997, shares of the Bankers Trust Pyramid Russell 2500 Index fund were sold and the underlying securities were purchased in anticipation of the asset transfer to Putnam Investments (see Note H). BOND INDEX FUND Investments in the Bond Index Fund are valued at the redemption price established by the Trustee, which is based on the fair value of the Bankers Trust Pyramid Intermediate Government/Corporate Bond Index Fund. The Bankers Trust Pyramid Intermediate Government/Corporate Bond Index Fund is constructed and maintained with the objective of providing investment results which approximate the overall performance of the high quality U.S. government and corporate bonds included in the Lehman Brothers Government/Corporate Index. Income is accumulated and reinvested in the fund and included in the determination of unit values. OTHER The cost of securities sold is determined by the average cost method for purposes of determining realized gains and losses. 7 9 The TRW Employee Stock Ownership and Stock Savings Plan Notes to Financial Statements--Continued The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Certain amounts in prior year financial statements have been reclassified to conform with current year presentation. On October 23, 1996, TRW's Board of Directors authorized a two-for-one stock split, effected in the form of a stock dividend, to shareholders of record as of November 8, 1996. A total of 10,463,851 additional shares were issued to the Plan in conjunction with the stock dividend. All historical share amounts have been restated to reflect retroactively the stock dividend. 8 10 The TRW Employee Stock Ownership and Stock Savings Plan Notes to Financial Statements--Continued B. DESCRIPTION OF THE PLAN The Plan is a defined contribution plan, and is comprised of the TRW Stock Fund, Equity Fund, Insured Return Fund, Small Company Equity Fund and Bond Index Fund (the Funds). Participation in the Plan is available to substantially all domestic employees of TRW who have been employed for at least three months. Prior to April 1, 1996, participants had to be employed for at least twelve months to be eligible for participation in the Plan. The Plan is governed by the Internal Revenue Code and related legislation. PARTICIPANT CONTRIBUTIONS The Plan allows eligible employees to contribute up to 16% of qualifying compensation on a before-tax basis by way of salary reduction; such contributions are made in increments of one-tenth of one percent of qualifying compensation and could not exceed $9,500 in 1997 and $9,500 in 1996. Participants may also elect to contribute, in increments of one percent, up to 10% of qualifying compensation on an after-tax basis. Participants can make up to two contribution percentage changes per month. Annual contributions to a participant's account (including before-tax, after-tax and TRW matching contributions) and to any other defined contribution plan is limited to the lesser of $30,000 or 25% of the participant's annual compensation reduced by the amount of before-tax contributions. Participants determine the funds in which to invest their contributions. Employee contributions may be invested, in multiples of 10% percent, in one or more of the five investment funds. Fund elections may be changed at any time. TRW CONTRIBUTIONS TRW contributes to the Plan, out of current or accumulated earnings, an amount equal to 100% of each participant's before-tax contributions without exceeding three percent of the participant's qualifying compensation. Participants immediately vest in the TRW contributions. All TRW matching contributions are invested in the ESOP portion of the TRW Stock Fund. TRW contributions always remain in the TRW Stock Fund and may not be transferred. TRW contributions may be in the form of cash or treasury or authorized and unissued shares of TRW Common Stock. TRW Common Stock contributed is to be valued by any reasonable method selected by TRW. 9 11 The TRW Employee Stock Ownership and Stock Savings Plan Notes to Financial Statements--Continued B. DESCRIPTION OF THE PLAN--CONTINUED The amount and type of TRW contributions are summarized as follows:
1997 1996 ---------------------------------- TRW Common Stock $ 1,695,525 $ 17,718,967 Cash 41,615,997 23,535,308 ---------------------------------- $ 43,311,522 $ 41,254,275 ==================================
WITHDRAWALS AND DISTRIBUTIONS Upon termination of employment, a participant may elect to receive his or her account, less the unpaid balance of any loan outstanding, in a single sum except a participant whose account balance exceeds $3,500 may defer such payments until he or she reaches age 70. Generally, distributions from the TRW Stock Fund will be paid only in whole shares of TRW Common Stock with the balance in cash. Participants who have less than 100 shares of TRW stock receive the value of their shares in cash unless they elect to receive shares. If a participant elects to defer payment of his or her account, the undistributed account balance remains invested in the Plan. The following is the total value of the accounts subject to deferred elections (8,484 as of December 31, 1997 and 8,144 as of December 31, 1996) that are included in the net assets of the funds:
1997 1996 ------------------------------------ TRW Stock Fund $ 275,565,258 $ 250,232,943 Equity Fund 153,911,053 110,960,560 Insured Return Fund 163,974,753 161,701,413 Small Company Equity Fund 26,464,385 17,492,623 Bond Index Fund 4,599,245 3,692,881 ------------------------------------ $ 624,514,694 $ 544,080,420 ====================================
10 12 The TRW Employee Stock Ownership and Stock Savings Plan Notes to Financial Statements--Continued B. DESCRIPTION OF THE PLAN--CONTINUED Effective January 1, 1988, participants who have attained age 55 as of the end of the preceding fiscal year-end and commenced participation in the Plan at least ten years prior may elect, within an election period during each of the succeeding five consecutive plan years, to receive a special ESOP distribution. The amount eligible for this special distribution is 50% of the prior fiscal year-end value (including previous withdrawals) of TRW Common Stock acquired for the participant's account by the ESOP since 1986, reduced by any previous withdrawals. PARTICIPANT LOANS Participants can borrow from $1,000 to $50,000 (in increments of $100) of their before-tax contributions, but such borrowings cannot exceed 50% of a participant's total Plan balance. The interest rate is fixed (prime rate at the end of the second to last business day of the quarter plus one percent) and the repayment period cannot be less than one year or more than five years. OTHER Although it has not expressed any intent to do so, TRW reserves the right to suspend or terminate the Plan. In the event of termination, the amount of each participant's account may be retained in trust for the benefit of the participant. The above description of the Plan provides only general information. Participants should refer to the Summary Plan Description, which is available from the Stock Savings Plan's Participant Service Center, and annual prospectus for a more complete description of the Plan's provisions. 11 13 The TRW Employee Stock Ownership and Stock Savings Plan Notes to Financial Statements--Continued C. INVESTMENTS The fair value of individual investments that represent 5% or more of the Plan's total assets are as follows:
DECEMBER 31 1997 1996 ------------------------------------------- TRW Inc. Common Stock $ 1,121,605,331 $ 1,037,454,462 Bankers Trust Pyramid Equity Index Fund 462,068,568
The net realized gain on disposition of investments is as follows:
TRW STOCK FUND 1997 1996 ------------------------------------ Value realized $ 174,098,988 $ 86,895,164 Average cost 134,456,165 41,664,808 ------------------------------------ NET REALIZED GAIN $ 39,642,823 $ 45,230,356 ==================================== EQUITY FUND 1997 1996 ------------------------------------ Value realized $ 662,753,539 $ 39,585,192 Average cost 277,997,358 21,489,897 ------------------------------------ NET REALIZED GAIN $ 384,756,181 $ 18,095,295 ==================================== SMALL COMPANY EQUITY FUND 1997 1996 ------------------------------------ Value realized $ 155,914,310 $ 11,390,594 Average cost 104,594,018 8,954,287 ------------------------------------ NET REALIZED GAIN $ 51,320,292 $ 2,436,307 ====================================
12 14 The TRW Employee Stock Ownership and Stock Savings Plan Notes to Financial Statements--Continued C. INVESTMENTS--CONTINUED
BOND INDEX FUND 1997 1996 ----------------------------------- Value realized $ 29,539,876 $ 5,692,322 Average cost 25,031,346 5,188,658 ----------------------------------- NET REALIZED GAIN $ 4,508,530 $ 503,664 ===================================
The net unrealized appreciation of investments included in net assets is as follows:
TRW Stock Equity Small Company Bond Index Fund Fund Equity Fund Fund -------------------------------------------------------------------- Balance at January 1, 1995 $ 371,082,956 $ 159,788,504 $ 13,663,872 $ 2,338,355 Increase for the year 182,139,605 69,643,225 11,162,184 15,145 -------------------------------------------------------------------- Balance at December 31, 1996 553,222,561 229,431,729 24,826,056 2,353,500 Increase for the year 42,199,653 (229,445,350) (24,826,056) (2,353,500) -------------------------------------------------------------------- BALANCE AT DECEMBER 31, 1997 $ 595,422,214 $ (13,921) $ 0 $ 0 ====================================================================
On a revalued basis, which is in accordance with Department of Labor Form 5500 requirements, the realized and unrealized gains (losses) are not available at the date of the Report of Independent Auditors. A separate schedule will be included in the Form 5500 when filed. D. ADMINISTRATIVE EXPENSES Generally, salaries and wages of the administrative staff are paid by TRW. Expenses relating to investment advisor fees, management fees, trustee fees, audit fees, printing and postage are paid from Plan assets. Expenses directly attributable to any one fund are charged to that fund. Expenses not directly attributable to any one fund are allocated to each fund in the proportion that the market value of the assets of each fund bears to the total market value of all Plan assets. Brokerage fees and commissions incident to the purchase or sale of securities are paid by the fund in which they are incurred and are included in the cost of securities purchased or sold. 13 15 The TRW Employee Stock Ownership and Stock Savings Plan Notes to Financial Statements--Continued E. FEDERAL INCOME TAX STATUS OF THE PLAN The Plan is exempt from federal income taxes as a qualified profit sharing plan. The Plan has received a favorable determination letter from the Internal Revenue Service as to the tax qualified status of the Plan. The Plan's Board of Administration believes that the Plan is in operational compliance with the Internal Revenue Code of 1986 and will remain qualified and exempt from federal income taxes. F. TRANSACTIONS WITH PARTIES-IN-INTEREST Party-in-interest transactions include the purchase and sale of short-term investments managed by the Plan's Trustee, Bankers Trust Company. At December 31, 1996, the Bankers Trust Pyramid Equity Index Fund holds 362,916 shares of TRW Inc. Common Stock having a fair value of $17,964,342. Bankers Trust Company managed assets of the Plan of approximately $822,379,976 and $598,618,300 at December 31, 1997 and 1996, respectively, and received, in cash, trustee fees of $633,841 and $926,388 in 1997 and 1996, respectively. There were no party-in-interest transactions which were prohibited under Department of Labor Regulations. G. NUMBER OF PARTICIPANTS BY FUND (UNAUDITED) The summary below sets forth the number of contributing participants by their current investment option(s):
DECEMBER 31 1997 1996 ------------------------- TRW Stock Fund 17,779 16,062 Equity Fund 17,738 16,438 Insured Return Fund 12,815 14,844 Small Company Equity Fund 12,014 10,631 Bond Index Fund 4,500 4,490
The total number of participants in the Plan is less than the sum of the number of employees shown above because many are participating in more than one fund. 14 16 The TRW Employee Stock Ownership and Stock Savings Plan Notes to Financial Statements--Continued H. TRANSFER OF ASSETS TO NEW TRUSTEE Effective January 1, 1998, Putnam Investments began as recordkeeper, trustee, and investment manager for the plan replacing Bankers Trust and Benefit Services Corporation. Effective January 2, 1998, all assets held by Bankers Trust were transferred to Putnam Investments. In conjunction with the change in trustee, the plan also offered additional investment options. As of January 1, 1998, participants may place their contributions in a choice of nine investment options consisting of eight investment funds and TRW Stock. The eight investment options in addition to TRW Stock are the following: Putnam Small Company Equity Portfolio (replaces Small Company Equity Fund), Putnam S&P 500 Index Portfolio (replaces Equity Fund), Putnam Income Fund (replaces Bond Index Fund), PRIMCO Stable Value Fund (formerly Insured Return Fund), Putnam Investors Fund, PBHG Emerging Growth Fund, Bernstein International Value Portfolio, and the George Putnam Fund of Boston. A full description of these investment options has been provided to participants in the October 1, 1997 Summary Plan Description. 15 17 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes December 31, 1997
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- COMMON STOCK STANDARD & POORS 500 COMMON STOCKS AEROSPACE 84,700 Boeing Co. $ 4,145,006 $ 4,145,048 5,800 General Dynamics Corp. 501,337 503,150 15,900 Lockheed Martin Corp. 1,566,150 1,566,150 5,100 Northrop Grumman Corp. 586,500 586,500 19,700 Raytheon Co. 994,850 994,850 19,400 United Technologies Corp. 1,412,563 1,412,572 ------------------------------------------- Total Aerospace 9,206,406 9,208,270 AUTOMOTIVE 47,100 Allied Signal Inc. 1,833,956 1,828,092 14,100 Autozone Inc. 408,900 408,900 56,300 Chrysler Corp. 1,981,056 1,981,084 3,400 Cummins Engine Inc. 200,813 200,814 7,500 Dana Corp. 356,250 356,250 6,400 Eaton Corp. 571,200 571,200 5,200 Echlin Inc. 188,175 188,178 94,200 Ford Motor Co. Del. 4,586,363 4,574,635 60,400 General Motors Corp. 3,661,750 3,669,300 15,200 Genuine Parts Co. 515,850 515,858 7,100 Paccar Inc. 372,750 372,750 9,600 Parker Hannifin Corp. 440,400 440,400 14,000 Tenneco Inc. New 553,000 553,000 5,200 Timken Co. 178,750 178,750 ------------------------------------------- Total Automotive 15,849,213 15,839,211
16 18 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes -- Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- STANDARD & POORS 500 COMMON STOCKS--CONTINUED BANKS 11,400 BB&T Corp. 730,313 730,318 49,500 Banc One Corp. 2,688,469 2,688,494 32,700 Bank New York Inc. 1,890,469 1,890,485 12,600 BankBoston Corp. 1,183,613 1,183,619 58,900 BankAmerica Corp. 4,299,700 4,299,700 17,400 Barnett Bks. Inc. 1,250,625 1,250,625 36,500 Chase Manhattan Corp. 3,996,750 3,996,750 39,100 Citicorp 4,943,706 4,943,726 8,700 Comerica Inc. 785,175 785,175 17,400 Corestates Finl. Corp. 1,393,088 1,400,700 12,700 Fifth Third Bancorp 1,038,225 1,038,225 48,300 First UN Corp. 2,475,375 2,475,375 14,300 Huntington Bancshares Inc. 514,800 514,800 41,500 MBNA Corp. 1,133,469 1,133,490 22,100 Mellon Bk. Corp. 1,339,813 1,339,813 15,600 Morgan J. P. & Co. 1,760,850 1,760,850 18,400 National City Corp. 1,209,800 1,209,800 60,100 Nationsbank Corp. 3,654,831 3,654,861 61,200 Norwest Corp. 2,363,850 2,371,500 27,800 PNC Bank Corp. 1,586,338 1,582,876 4,400 Republic N.Y. Corp. 502,425 502,427 13,400 State Street Corp. 779,713 779,719 19,100 SunTrust Bks. Inc. 1,363,263 1,363,263 15,000 Synovus Fincl. Corp. 491,250 491,250 20,300 US Bancorp. Del. 2,272,331 2,272,341 15,500 Wachovia Corp. 1,257,438 1,257,438 21,100 Washington Mut. Inc. 1,346,444 1,346,454 7,600 Wells Fargo & Co. 2,579,721 2,579,728 ------------------------------------------- Total Banks 50,831,844 50,843,802
17 19 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- BEVERAGE 42,600 Anheuser Busch Cos. Inc. 1,874,400 1,874,400 3,800 Brown Forman Corp. 209,950 209,950 208,300 Coca Cola Co. 13,877,988 13,891,110 3,500 Coors Adolph Cc. Cl. B 116,375 116,375 125,500 PepsiCo Inc. 4,572,906 4,549,375 ------------------------------------------- Total Beverage 20,651,619 20,641,210 BUILDING--FOREST PRODUCTS 10,600 Avery Dennison Corp. 474,350 474,350 4,200 Boise Cascade Corp. 127,050 127,050 7,700 Champion Intl. Corp. 348,906 348,910 7,600 Georgia Pac. Corp 461,700 461,700 7,200 Johnson Ctls. Inc. 343,800 343,800 4,000 Kaufman & Broad Home Corp. 89,750 89,752 46,700 Kimberly Clark Corp. 2,302,894 2,302,917 9,100 Louisiana Pac. Corp. 172,900 172,900 4,400 Owens Corning 150,150 150,150 2,500 Potlatch Corp. 107,500 107,500 15,800 Weyerhaeuser Co. 775,188 775,195 8,700 Willamette Inds. Inc. 280,031 280,036 ------------------------------------------- Total Building--Forest Products 5,634,219 5,634,260 BUILDING--OTHER 3,600 Armstrong World Inds. Inc. 269,100 269,100 3,100 Centex Corp. 195,106 195,108 3,800 Crane Cp. 164,825 164,825 3,700 Fleetwood Enterprises Inc. 157,019 157,021 6,900 Fluor Corp. 257,888 257,888 12,600 Masco Corp. 641,025 641,025 1,900 Pulte Corp. 79,444 79,445 8,400 Stanley Wks. 396,374 396,379 ------------------------------------------- Total Building--Other 2,160,781 2,160,790
18 20 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- CHEMICAL 9,900 Air Prods. & Chems. Inc. 814,275 814,275 19,000 Dow Chem. Co. 1,928,500 1,928,500 94,700 Du Pont E. I. De Nemours & Co. 5,687,919 5,687,966 6,400 Eastman Chem Co. 381,200 381,203 11,800 Engelhard Corp. 205,025 205,025 3,400 FMC Corp. New 228,863 228,864 4,700 Goodrich B. F. Co. 194,756 194,759 5,300 Great Lakes Chem. Corp. 237,838 236,513 8,300 Hercules Inc. 415,519 415,523 49,700 Monsanto Co. 2,087,400 2,087,400 11,100 Morton Intl. Inc. Ind. New 381,563 381,563 5,600 Nalco Chem. Co. 221,550 221,553 14,100 PPG Inds. Inc. 805,463 805,463 13,800 Praxair Inc. 621,000 621,000 7,900 Raychem Corp. Calif. 340,194 340,198 5,400 Rohm & Haas Co. 517,050 517,050 4,400 Safety Kleen Corp. 120,725 120,727 8,500 Sigma Aldrich Corp. 337,875 337,875 10,600 Union Carbide Corp. 455,135 455,141 ------------------------------------------- Total Chemical 15,981,850 15,980,598 COAL 500 Nacco Industries Inc. Cl. A 53,594 53,594 CONTAINER 1,200 Ball Corp. 42,375 42,450 10,600 Crown Cork & Seal Inc. 531,325 531,325 11,900 Owens Ill. Inc. New 451,456 451,462 8,400 Stone Container Corp. 87,675 91,350 5,000 Temple Inland Inc. 261,563 261,565 ------------------------------------------- Total Container 1,374,394 1,378,152
19 21 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- COSMETIC 3,200 Alberto Culver Co. 102,600 102,602 12,100 Avon Prods. Inc. 742,638 742,638 47,100 Gillette Co. 4,730,606 4,730,630 8,400 International Flavors & Fragrances Inc. 432,600 432,599 ------------------------------------------- Total Cosmetic 6,008,444 6,008,469 DRUG 54,700 American Home Prods Corp. 4,184,550 4,184,550 22,800 Amgen Inc. 1,234,050 1,234,050 84,100 Bristol Myers Squibb Co. 7,957,963 7,957,963 92,600 Lilly Eli & Co. 6,447,275 6,447,275 100,000 Merck & Co. Inc. 10,625,000 10,600,000 40,900 Pharmacia & Upjohn Inc. 1,497,963 1,497,963 108,300 Pfizer Inc. 8,075,119 8,075,173 60,600 Schering Plough Corp. 3,764,775 3,764,775 22,700 Warner Lambert Co. 2,814,799 2,819,067 ------------------------------------------- Total Drug 46,601,494 46,580,816 ELECTRICAL EQUIPMENT 37,000 Emerson Elec. Co. 2,088,188 2,088,206 273,200 General Electric Co. 20,046,050 20,046,050 4,200 General Signal Corp. 177,188 177,190 4,300 Grainger W. W. Inc. 417,906 417,908 16,600 Rockwell Intl. Corp. New 867,350 867,350 15,100 Tellabs Inc. 798,412 798,413 ------------------------------------------- Total Electrical Equipment 24,395,094 24,395,117 ELECTRICAL HOUSEHOLD APPLIANCES 8,300 Maytag Corp. 309,694 309,698 11,600 Rubbermaid Inc. 290,000 290,000 6,700 Whirlpool Corp. 368,500 368,500 ------------------------------------------- Total Electrical Household Appliances 968,194 968,198 ELECTRONICS
20 22 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- 11,200 Advanced Micro Devices Inc. 200,900 198,800 19,300 AMP Inc. 810,600 810,600 8,300 Andrew Corp. 199,200 199,200 30,600 Applied Matls. Inc. 921,825 921,825 6,800 Harris Corp. Del. 311,950 311,950 88,600 Hewlett Packard Co. 5,537,500 5,526,425 137,500 Intel Corp. 9,659,375 9,659,375 7,100 KLA-Tencor Corporation Frmly. Kla. Instrs. Corp 274,238 274,238 13,300 LSI Logic Corp. 262,675 261,013 50,700 Motorola Inc. 2,893,069 2,899,432 12,500 National Semiconductor Corp. 324,219 324,225 4,400 Perkin Elmer Corp. 312,675 312,677 8,200 Scientific Atlanta Inc. 137,350 137,350 4,000 Tektronix Inc. 158,750 158,752 32,600 Texas Instruments 1,467,000 1,467,000 4,500 Thomas & Betts Corp. 212,624 212,624 ------------------------------------------- Total Electronics 23,683,950 23,675,486 FINANCE 38,900 American Express Co. 3,471,825 3,471,825 4,900 Beneficial Corp. 407,313 407,313 4,000 Cincinnati Finl. Corp. 563,000 563,000 58,200 Federal Home Ln. Mtg. Corp. 2,440,763 2,440,792 88,900 Federal Natl. Mtg. Assn. 5,072,856 5,072,901 24,700 First Chicago NBD Corp. 2,062,450 2,062,450 22,900 Fleet Finl. Group Inc. 1,716,069 1,720,363 8,300 Household Intl. Corp. 1,058,769 1,059,288 18,700 Keycorp 1,324,194 1,324,203 10,000 MGIC Invt. Corp. 665,000 665,000 49,600 Morgan Stanley Dean Witter Discover & Co. 2,932,600 2,932,600 8,400 Providian Finl. Corp. 379,575 379,579
21 23 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- FINANCE--CONTINUED 22,400 Schwab Charles Corp. New 939,400 939,411 14,900 Sun America Inc. 636,974 636,973 ------------------------------------------- Total Finance 23,670,788 23,675,698 FOOD 49,200 Archer Daniels Midland Co. 1,067,025 1,067,050 11,700 CPC Intl. Inc. 1,260,675 1,263,600 37,200 Campbell Soup Co. 2,162,250 2,162,250 39,500 Conagra Inc. 1,296,094 1,308,438 13,500 General Mills Inc. 966,938 966,938 30,400 Heinz H. J Co. 1,544,700 1,544,715 10,100 Hershey Foods Corp. 625,569 625,574 33,500 Kellogg Co. 1,662,438 1,662,438 5,000 Pioneer Hi Bred Intl. Inc. 536,250 536,250 11,100 Quaker Oats Co. 585,525 585,525 8,700 Ralston-Ralston Purina Group 808,556 808,561 40,200 Sara Lee Corp. 2,263,763 2,263,783 6,400 Supervalu Inc. 268,000 268,000 14,900 Sysco Corp. 678,881 678,889 12,700 Tricon Global Restaurants Inc. 369,094 369,100 11,400 Wendys Intl. Inc. 274,313 274,318 8,500 Whitman Corp. 221,531 221,536 8,400 Wrigley Wm. Jr. Co. 668,323 668,326 ------------------------------------------- Total Food 17,259,925 17,275,291 HOME FURNISHINGS 13,000 Newell Co. 552,500 552,500 HOTEL--MOTEL 21,000 Hilton Hotels Corp. 624,750 624,750 10,800 Marriott Intl. Corp. 747,900 747,900 15,500 Mirage Resorts Inc. 352,625 352,625 ------------------------------------------- Total Hotel--Motel 1,725,275 1,725,275
22 24 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- HOTEL--RESTAURANT 12,900 Darden Restaurants Inc. 161,250 161,250 56,700 McDonalds Corp. 2,707,425 2,707,425 ------------------------------------------- Total Hotel--Restaurant 2,868,675 2,868,675 INSURANCE 13,100 Aetna Inc. 924,369 924,375 35,800 Allstate Corp. 3,253,325 3,239,900 21,600 American Gen. Corp. 1,167,750 1,167,761 59,400 American Intl. Group Inc. 6,459,750 6,459,750 13,500 AON Corp. 791,438 791,438 6,300 Cigna Corp. 1,090,294 1,085,963 15,200 Chubb Corp. 1,149,500 1,149,500 16,700 Conseco Inc. 758,806 758,815 6,100 General Re. Corp. 1,293,200 1,293,200 10,100 Hartford Finl. Svcs. Group Inc. 944,981 944,986 9,800 ITT Inds. Inc. 307,475 307,475 5,800 Jefferson Pilot Corp. 451,675 451,675 8,900 Lincoln Natl. Corp. Ind. 695,313 695,313 9,900 Loews Corp. 1,050,638 1,050,638 7,300 MBIA 487,731 487,735 14,100 Marsh & McLennan Cos. Inc. 1,051,331 1,051,338 6,100 Progressive Corp. Ohio 731,238 731,238 10,600 Safeco Corp. 516,750 516,750 6,900 St. Paul Cos. Inc. 566,231 566,235 9,800 Torchmark Corp. 412,213 413,442 96,900 Travelers Group Inc. F/K/A Travelers Inc. 5,220,488 5,220,488 11,600 UNUM Corp. 630,750 630,750 9,800 USF&G Corp. 216,210 216,215 ------------------------------------------- Total Insurance 30,171,456 30,154,980 INVESTMENT COMPANIES 27,900 Merrill Lynch & Co. Inc. 2,034,956 2,034,920
23 25 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- LEISURE AND RECREATION 6,400 American Greetings Corp. Cl. A 250,400 250,400 8,600 Brunswick Corp. 260,688 260,692 55,700 Disney (Walt) Company (Holding Company) 5,517,781 5,514,300 9,100 Harrahs Entmt. Inc. 171,763 171,763 11,100 Hasbro Inc. 349,650 349,650 1,800 Jostens Inc. 41,513 41,513 24,000 Mattel Inc. 893,999 894,000 ------------------------------------------- Total Leisure and Recreation 7,485,794 7,482,318 MACHINERY--AGRICULTURE 21,400 Deere & Co. 1,247,888 1,246,550 MACHINERY--TOOLS 7,900 Black & Decker Corp. 308,594 308,598 3,500 Cincinnati Milacron Inc. 90,781 90,783 20,200 Illinois Tool Wks Inc. 1,214,525 1,214,525 6,100 Snap On Inc. 266,113 266,112 ------------------------------------------- Total Machinery--Tools 1,880,013 1,880,018 MACHINERY--OTHER 2,300 Briggs & Stratton Corp. 111,694 111,695 6,200 Case Equip. Corp. 374,713 374,716 30,200 Caterpillar Inc. 1,466,588 1,464,700 9,700 Cooper Inds. Inc. 475,300 475,300 20,500 Dover Corp. 740,563 740,563 13,500 Dresser Inds. Inc. 566,156 566,163 4,100 Harnischfeger Inds. Inc. 144,781 144,783 12,300 Ingersoll Rand. Co. 498,150 498,150 3,600 Millipore Corp. 122,175 122,177 10,300 Pall Corp. 213,081 213,086 21,013,683 TRW Inc. 526,183,117 1,121,605,331 13,200 Textron Inc. 825,000 825,000 13,500 Thermo Electron Corp. 600,749 593,999 ------------------------------------------- Total Machinery--Other 532,322,067 1,127,735,663
24 26 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- MEDICAL SUPPLY AND SERVICE 65,100 Abbott Labs 4,268,119 4,264,050 4,800 Allergan Inc. 161,100 161,102 7,100 Alza Corp. Cl. A 225,869 225,872 5,800 Bard C R Inc. 181,613 181,615 4,300 Bausch & Lomb Inc. 170,388 170,388 23,700 Baxter Intl. Inc. 1,195,369 1,195,381 10,300 Becton Dickinson & Co. 515,000 515,000 9,400 Biomet Inc. 240,875 240,875 16,300 Boston Scientific Corp. 747,763 747,763 9,900 Cardinal Health Inc. 743,738 743,738 54,300 Columbia/HCA Healthcare Corp. 1,608,638 1,608,638 12,700 Guidant Corp. 790,575 790,575 16,200 HBO & Co. 777,600 777,600 30,800 Healthsouth Corp. 854,700 854,700 13,400 Humana Inc. 278,050 278,050 111,700 Johnson & Johnson 7,358,238 7,358,238 4,800 Manor Care Inc. 168,000 168,000 40,800 Medtronic Inc. 2,134,350 2,142,000 8,900 St. Jude Med. Inc. 271,450 271,450 2,100 Shared Med. Sys. Corp. 138,600 138,600 23,800 Tenet Healthcare Corp. 788,375 788,375 15,200 United Healthcare Corp. 755,250 755,258 5,500 United States Surgical Corp. 161,215 161,219 ------------------------------------------- Total Medical Supply and Service 24,534,875 24,538,487 METALS--ALUMINUM 14,800 Aluminum Co. Amer. 1,041,550 1,041,550 6,600 Reynolds Metals Co. 396,000 396,000 ------------------------------------------- Total Metals--Aluminum 1,437,550 1,437,550
25 27 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- METALS--STEEL 14,700 Allegheny Teledyne Inc. 380,363 380,363 11,000 Armco Inc. 54,313 54,318 9,400 Bethlehem Stl. Corp. 81,075 81,667 4,200 Inland Steel Inds. Inc. 71,925 71,925 7,200 Nucor Corp. 347,850 347,854 8,300 USX--US Steel Group 259,375 259,375 5,900 Worthington Inds. Inc. 97,350 97,350 ------------------------------------------- Total Metals--Steel 1,292,251 1,292,852 METALS--OTHER 4,000 Asarco Inc. 89,750 89,752 19,400 Battle Mtn. Gold Co. Cl. 113,975 111,550 7,900 Cyprus Amax Minerals Co. 121,463 121,463 8,900 Freeport-McMoran Copper & Gold Inc. Cl. B VOM 140,175 140,175 12,000 Homestake Mng. Co. 106,500 106,500 11,400 Newmont Mng. Corp. 334,875 334,875 5,200 Phelps Dodge Corp. 323,700 323,700 ------------------------------------------- Total Metals--Other 1,230,438 1,228,015 MISCELLANEOUS 2,900 Aeroquip-Vickers I 142,281 142,283 60,100 CBS Corp. 1,769,194 1,769,224 12,400 DTE Energy 430,125 430,131 33,300 Edison Intl. 905,344 905,360 16,300 Fort James Corp. 623,475 623,475 14,000 Fortune Brands Inc. 518,875 518,882 6,100 Grace W R & Co. Del. 490,669 490,672 6,200 Mallinckrodt Inc. New 235,600 235,600 11,500 Nextlevel Sys. Inc. 205,563 205,563 ------------------------------------------- Total Miscellaneous 5,321,126 5,321,190
26 28 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- OFFICE EQUIPMENT 6,200 Adobe Sys. Inc. 255,750 255,750 10,600 Apple Computer 139,125 139,125 4,400 Autodesk Inc. 162,800 162,800 24,500 Automatic Data Processing Inc. 1,503,688 1,503,688 16,500 Bay Networks Inc. 421,781 422,813 11,800 Cabletron Sys. Inc. 177,000 177,000 5,600 Ceridian Corp. 256,550 256,553 85,100 Cisco Sys. Inc. 4,744,325 4,744,325 63,900 Compaq Computer Corp. 3,606,356 3,610,350 46,500 Computer Assoc. Intl. Inc. 2,458,688 2,464,500 7,200 Computer Sciences Corp. 601,200 601,200 3,800 Data Gen. Corp. 66,263 66,264 28,100 Dell Computer Corp. 2,360,400 2,360,400 12,600 Digital Equip. Corp. 466,200 467,775 39,300 EMC Corp. Mass. 1,078,294 1,078,313 33,200 First Data Corp. 971,100 971,100 9,700 Honeywell Inc. 664,450 664,450 12,400 Ikon Office Solutions Inc. 348,750 348,750 82,000 International Business Machs. Corp. 8,574,125 8,579,250 100,900 Microsoft Corp. 13,041,325 13,041,325 17,100 Micron Technology Inc. 444,600 443,540 35,100 Minnesota Mng. & Mfg. Co. 2,880,394 2,880,411 6,200 Moore Corp. Ltd. 93,775 93,775 26,900 Novell Inc. 201,750 201,750 81,400 Oracle Corp. 1,816,238 1,816,278 10,500 Parametric Technology Corp. 497,438 497,438 12,200 Pitney Bowes Inc. 1,097,238 1,097,244 20,900 Seagate Technology 402,325 402,325 14,500 Silicon Graphics Inc. 180,344 178,539 31,000 Sun Microsystems 1,236,125 1,236,125 28,900 3 Com Corp. 1,009,694 1,009,708 14,900 Unisys Corp. 206,738 206,738 27,000 Xerox Corp. 1,992,938 1,994,625 ------------------------------------------- Total Office Equipment 53,957,767 53,974,227
27 29 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- OIL--DOMESTIC 8,500 Amerada Hess Corp. 466,438 466,438 41,300 Amoco Corp. 3,515,663 3,515,663 7,700 Apache Corp. 269,981 269,985 5,800 Ashland Inc. 311,388 311,390 27,800 Atlantic Richfield Co. 2,227,475 2,227,475 15,100 Burlington Res. Inc. 676,669 676,676 4,100 Kerr McGee Corp. 259,581 259,583 26,700 Occidental Pete. Corp. 782,644 782,657 3,600 Pennzoil Co. 240,525 240,527 20,800 Phillips Pete. Co. 1,011,400 1,011,400 6,300 Sun Co. 264,994 264,997 23,900 USX-Marathon Group. Inc. 806,625 806,625 20,800 Union Pac. Res. Group Inc. 504,400 504,400 20,800 Unocal Corp. 807,300 807,310 14,000 Williams Cos. 397,250 399,000 ------------------------------------------- Total Oil--Domestic 12,542,333 12,544,126 OIL--INTERNATIONAL 53,800 Chevron Corp. 4,142,600 4,142,600 208,200 Exxon Corp. 12,739,238 12,739,342 66,700 Mobil Corp. 4,814,906 4,814,940 41,800 Schlumberger Ltd. 3,364,900 3,364,900 44,600 Texaco Inc. 2,425,125 2,425,125 ------------------------------------------- Total Oil--International 27,486,769 27,486,907 OIL--SERVICE 13,400 Baker Hughes Inc. 584,575 584,575 4,700 Foster Wheeler Corp. 127,194 127,196 21,400 Halliburton Co. 1,111,463 1,110,125 4,200 Helmerich & Payne Inc. 142,538 142,538 5,000 McDermott Intl. Inc. 183,125 183,125
28 30 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- OIL--SERVICE--CONTINUED 9,700 Oryx Energy Co. 247,350 247,350 7,800 Rowan Cos. Inc. 237,900 237,900 179,200 Royal Dutch Pete. Co. 9,710,400 9,710,490 4,700 Western Atlas Inc. 347,800 347,800 ------------------------------------------- Total Oil--Service 12,692,345 12,691,099 PAPER 4,900 Bemis Inc. 215,906 215,909 25,600 International Paper Co. 1,104,000 1,104,000 10,300 Mead Corp. 288,400 288,400 6,100 Union Camp. Corp. 327,494 327,497 8,400 Westvaco Corp. 264,075 264,079 ------------------------------------------- Total Paper 2,199,875 2,199,885 PHOTOGRAPHIC 27,200 Eastman Kodak Co. 1,654,100 1,647,314 3,800 Polaroid Corp. 185,013 185,014 ------------------------------------------- Total Photographic 1,839,113 1,832,328 POLLUTION CONTROL 16,800 Browning Ferris Inds. Inc. 621,600 621,600 38,200 Waste Mgmt. Inc. New 1,050,500 1,050,500 ------------------------------------------- Total Pollution Control 1,672,100 1,672,100 PUBLISHING 8,000 Deluxe Corporation 276,000 276,000 12,100 Donnelley R R & Sons Co. 450,725 450,725 6,200 Dow Jones & Co. Inc. 332,863 332,866 14,500 Dun & Bradstreet Corp. 448,594 448,601 23,400 Gannett Inc. 1,446,413 1,446,424 2,500 Harland John H. Co. 52,500 52,500 7,900 Knight Ridder Inc. 410,800 410,800
29 31 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- PUBLISHING--CONTINUED 8,300 McGraw Hill Companies Inc. 614,200 614,200 4,400 Meredith Corp. 157,025 157,027 8,300 New York Times Co. Cl. A 548,838 548,838 43,300 Time Warner Inc. 2,684,600 2,684,600 5,700 Times Mirror Co. New. Com. Ser. A 350,550 350,550 10,900 Tribune Co. New. 678,525 678,525 ------------------------------------------- Total Publishing 8,451,633 8,451,656 REAL ESTATE 12,700 Green Tree Finl. Corp. F/K/A Green Tree Accep. Inc. 332,581 332,588 RETAILING 20,900 Albertsons Inc. 990,138 987,525 23,200 American Stores Co. New 477,050 477,062 13,700 CVS Corp. 877,656 877,663 6,300 Charming Shoppes Inc. 29,531 29,534 8,100 Circuit City Stores Inc. 288,056 288,060 14,500 Cognizant Corp. 646,156 647,063 18,200 Costco Cos. Inc. 812,175 812,175 19,000 Dayton Hudson Corp. 1,282,500 1,282,500 10,200 Dillards Inc. Cl. A 359,550 359,550 17,900 Federated Dept. Stores Inc. Del. 770,819 770,828 22,500 Gap Stores Inc. 797,344 797,355 5,900 Giant Food Inc. Cl. A 198,756 198,759 3,300 Great Atlantic & Pac. Tea Inc. 97,969 97,970 4,400 Harcourt General Inc. 240,900 240,900 60,400 Home Depot Inc. 3,556,050 3,556,050 9,500 ITT Corp. 787,313 784,938 41,400 K Mart Corp. 478,688 476,100 22,000 Kroger Co. 812,625 808,500 20,700 Limited Inc. 527,850 527,850
30 32 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- RETAILING--CONTINUED 3,400 Longs Drug Stores Inc. 109,225 109,225 14,400 Lowes Cos. Inc. 686,700 686,707 20,900 May Dept. Stores CO. 1,101,169 1,101,179 2,600 Mercantile Stores Inc. 158,275 158,275 6,400 Nordstrom Inc. 386,400 386,400 21,600 Penney J. C. Inc. 1,302,750 1,302,761 5,400 Pep Boys Manny Moe & Jack 128,925 128,925 9,100 Rite Aid Corp. 534,056 534,625 32,300 Sears Roebuck & Co. 1,461,575 1,461,575 14,500 Sherwin Williams CO. 402,375 402,375 13,900 TJX Cos. Inc. New 477,813 477,813 9,300 Tandy Corp. 358,631 358,636 25,200 Toys R Us Inc. 792,225 792,238 5,600 Tupperware Corp. 156,100 156,100 187,800 Wal Mart Stores Inc. 7,406,363 7,406,456 39,800 Walgreen Co. 1,248,725 1,248,725 10,600 Winn Dixie Stores Inc. 463,088 463,093 12,000 Woolworth Corp. 244,500 244,500 ------------------------------------------- Total Retailing 31,450,021 31,439,990 SAVINGS AND LOAN 8,600 Ahmanson H. F. & Co. 575,663 575,667 4,900 Golden West Finl. Corp. 479,281 479,284 ------------------------------------------- Total Savings and Loan 1,054,944 1,054,951 SERVICE 41,700 Airtouch Communication 1,733,156 1,733,177 9,300 Block H & R Inc. 416,756 416,761 67,300 Cendant Corp. 2,313,438 2,313,438 8,600 Countrywide Cr. Inds. Inc. 368,725 368,725 5,300 EG & G Inc. 110,306 110,309 4,300 Ecolab Inc. 238,381 238,383
31 33 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- SERVICE--CONTINUED 12,600 Equifax Inc. 446,513 446,519 10,500 Interpublic Group Cos. Inc. 523,031 523,037 3,700 National Svc. Inds. Inc. 183,381 183,383 6,800 Omnicon Group 288,150 288,150 2,400 Oneok Inc. New 96,900 96,900 21,100 Service Corp. Intl. 779,381 775,425 5,300 Transamerica Corp. 564,450 564,450 43,500 Tyco Intl. Ltd. New 1,960,220 1,960,240 ------------------------------------------- Total Service 10,022,788 10,018,897 SOAP 9,500 Clorox Co. 751,094 754,063 25,700 Colgate Palmolive Co. 1,888,950 1,888,950 113,300 Proctor & Gamble Co. 9,042,756 9,042,812 ------------------------------------------- Total Soap 11,682,800 11,685,825 TEXTILE AND APPAREL 18,300 Corning Inc. 679,388 679,388 5,700 Fruit of the Loom Cl. A 146,063 146,063 5,800 Liz Claiborne Inc. 242,513 242,515 16,200 Nike Inc. Cl. B 635,850 632,821 4,300 Reebok Intl. Ltd. 123,894 123,896 3,000 Russell Corp. 79,688 79,689 1,100 Springs Inds. Inc. 57,200 57,200 10,800 V F Corp. 496,123 502,199 ------------------------------------------- Total Textile and Apparel 2,460,719 2,463,771 TIRE AND RUBBER 7,800 Cooper Tire & Rubber Co. 190,125 190,125 12,300 Goodyear Tire & Rubber Co. 782,588 782,588 ------------------------------------------- Total Tire and Rubber 972,713 972,713
32 34 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- TOBACCO 202,200 Philip Morris Cos. Inc. 9,162,188 9,149,550 15,900 UST Inc. 587,306 587,314 ------------------------------------------- Total Tobacco 9,749,494 9,736,864 TRANSPORTATION--AIR TRANSPORT 7,700 AMR Corp. Del. 989,450 989,450 6,500 Delta Air Lines Inc. Del. 773,500 773,500 19,700 Southwest Airls. Co. 485,113 485,113 7,100 US Airways Group Inc. 443,750 443,750 ------------------------------------------- Total Transportation--Air Transport 2,691,813 2,691,813 TRANSPORTATION--OTHER 13,700 Burlington Nortn. Santa Fe Corp. 1,273,244 1,273,251 18,100 CSX Corp. 977,400 977,400 3,300 Caliber Sys. Inc. 160,669 160,670 2,400 Eastern Enterprises 108,000 108,000 9,700 Federal Express Corp. 592,306 592,311 5,400 Navistar Intl. Corp. New 133,988 133,990 32,400 Norfolk Southn Corp. 998,325 988,200 7,300 Ryder Sys. Inc. 239,075 239,075 20,300 Union Pac. Corp. 1,267,481 1,271,288 ------------------------------------------- Total Transportation--Other 5,750,488 5,744,185 TV AND RADIO BROADCASTERS 7,400 Clear Channel Communications Inc. 587,838 587,841 27,700 Comcast Corp. 874,281 874,295 3,100 King World Productions Inc. 179,025 179,025 39,100 Tele Communications Inc. New TCI Group Ser. A 1,092,356 1,092,376 49,800 US West Inc. 1,437,975 1,437,975 24,400 Viacom Inc. Class B Non-Vtg. 1,011,075 1,011,087 ------------------------------------------- Total TV and Radio Broadcasters 5,182,550 5,182,599
33 35 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- UTILITY--ELECTRIC 17,300 American Elec. Pwr. Inc. 893,113 893,113 12,900 Baltimore Gas & Elec. Co. 439,406 440,213 10,900 Carolina Pwr. & Lt. Co. 462,569 461,888 17,500 Central & South West Corp. 473,594 473,603 13,300 Cinergy Corp. 509,556 509,563 19,300 Consolidated Edison Co. N Y Inc. 791,300 791,300 14,900 Dominion Res. Inc. V. A. 634,181 634,189 29,400 Duke Energy Corporation 1,628,025 1,628,025 24,500 Entergy Corp. New 733,469 733,481 15,300 FPL Group Inc. 905,569 905,576 15,900 Firstenergy Corp. 461,100 461,100 10,200 GPU Inc. 429,675 429,675 20,900 Houston Inds. Inc. 557,769 559,075 11,100 Niagara Mohawk Pwr. Corp. 116,550 116,550 4,900 Northern Sts. Pwr. Co. Minn. 285,425 285,425 20,600 Peco Energy Co. 499,550 499,550 37,000 P G & E Corp. 1,126,188 1,121,581 13,600 P P & L Res. Inc. 325,550 325,557 24,900 Pacificorp Com. 680,081 680,094 19,300 Public Svc. Enterprise Group Inc. Hldg. Co. 611,569 613,991 61,200 Southern Co. 1,583,550 1,583,550 22,100 Texas Utils. Co. 918,531 917,150 18,600 Unicom Corp. 571,950 571,950 6,600 Union Elec. Co. 285,449 285,447 ------------------------------------------- Total Utility--Electric 15,923,719 15,921,646 UTILITY--NATURAL GAS 5,000 Anadarko Pete Corp. 303,438 303,440 8,800 Coastal Corp. 545,050 545,054 4,600 Columbia Gas Sys. Inc. 361,388 361,390 7,400 Consolidated Nat. Gas. Co. 447,700 447,700
34 36 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- UTILITY--NATURAL GAS--CONTINUED 23,800 Enron Corp. 989,188 989,199 4,100 Nicor Inc. 172,969 172,971 6,500 Pacific Enterprises 244,563 244,563 3,200 Peoples Energy Corp. 126,000 126,000 7,300 Sonat Inc. 333,973 333,975 ------------------------------------------- Total Utility--Natural Gas 3,524,269 3,524,292 UTILITY--TELEPHONE 136,000 AT&T Corp. 8,330,300 8,338,568 15,400 Alltel Corp. 632,363 632,370 44,800 Ameritech Corporation 3,606,400 3,606,400 66,100 Bell Atlantic Corp. 6,015,100 6,015,100 83,466 Bellsouth Corp. 4,657,044 4,700,221 9,800 DSC Communications Corp. 235,200 235,200 11,900 Frontier Corp. 286,344 285,600 80,900 GTE Corp. 4,227,025 4,227,025 53,700 Lucent Technologies Inc. 4,289,288 4,289,288 57,800 MCI Communications Corp. 2,474,563 2,474,591 76,900 SBC Communications Inc. 5,632,925 5,632,925 28,100 Sprint Corp. 1,647,363 1,647,363 42,400 US West Inc. 1,913,300 1,913,300 77,300 Worldcom Inc. GA 2,338,301 2,338,366 ------------------------------------------- Total Utility--Telephone 46,285,516 46,336,317 ------------------------------------------- TOTAL DOMESTIC COMMON STOCK 1,146,363,023 1,741,776,735
35 37 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- BEVERAGE 29,800 Seagram Ltd. 962,913 962,927 ELECTRONICS 21,900 Northern Telecom Ltd. 1,949,100 1,943,625 FOOD 53,800 Unilever N V New York Shs. 3,359,138 3,359,164 MACHINERY--OTHER 8,000 Echo Bay Mines Ltd. 19,500 19,504 METALS--ALUMINUM 17,300 Alcan Alum. Ltd. New 477,913 477,913 METALS--OTHER 32,900 Barrick Gold. Corp. 612,763 612,763 12,100 Inco Ltd. 205,700 205,700 19,900 Placer Dome Inc. 252,481 252,491 ------------------------------------------- Total Metals--Other 1,070,944 1,070,954 TRANSPORTATION--OTHER 23,800 Laidlaw Inc. 324,273 324,275 ------------------------------------------- TOTAL FOREIGN COMMON STOCK 8,163,781 8,158,362 ------------------------------------------- TOTAL STANDARD AND POORS 500 COMMON STOCK 1,154,526,804 1,749,935,097
36 38 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- RUSSELL 2500 COMMON STOCKS AEROSPACE 2,100 BE Aerospace, Inc. $ 56,175 $ 56,175 2,000 Coltec Inds. Inc. 46,375 46,376 600 Curtiss Wright Corp. 21,787 21,788 1,900 Kaman Corp. Cl. 31,113 31,112 1,300 Lavne Inc. 16,900 16,900 3,600 Newport News Shipbuilding 91,575 91,577 3,100 Orbital Science Corp. 92,225 92,225 800 Thiokol Corp. 65,000 65,000 ------------------------------------------ Total Common Stock and Aerospace 421,150 421,153 AUTOMOTIVE 2,000 Aftermarket Technology Corp. $ 36,250 $ 36,250 2,200 Arvin Inds. Inc. 73,288 73,288 3,900 Autolin Incorporated 127,725 127,725 1,200 Aviall Inc. New. 17,925 17,925 1,200 Barnes Group Inc. 27,300 27,300 600 Borg Warner Automotive Inc. 31,200 31,200 1,500 Borg Warner Secs. Corp. 26,438 26,438 1,400 Breed Technologies Inc. 25,550 25,550 1,000 Chicago Miniature Lamp Inc. 33,750 33,750 500 Compart Inc. 8,938 8,938 1,300 Detroit Diesel Corp. 30,875 30,875 1,400 Discount Auto Pts. Inc. 26,775 26,775 2,000 Donaldson Inc. 90,125 90,126 1,500 Excel Inds. Inc. 27,094 27,094 1,700 Exide Corp. 43,988 43,988 4,200 Federal Mogul Corp. 170,100 170,100 3,300 Gentex Corp. 88,688 88,688 5,800 Harley Davidson Inc. 158,775 158,050 2,800 Lear Corp. 133,000 133,000 2,200 Mascotech Inc. 40,425 40,425 2,800 Modine Mfg. Co. 95,550 95,550
37 39 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- RUSSELL 2500 COMMON STOCKS--CONTINUED AUTOMOTIVE--CONTINUED 1,300 Myers Inds. Inc. 22,181 22,181 600 O Reilly Automotive Inc. 15,750 15,750 1,600 Spx Corp. 110,400 110,400 1,100 Standard Mtr. Prods. Inc. Cl A 24,819 24,819 1,700 Standard Prods. Co. 43,563 43,563 3,200 Steward & Stevenson Svcs. Inc. 81,600 81,600 2,300 Superior Inds. Intl. Inc. 61,669 61,669 1,900 Titan International Inc. 38,119 37,882 2,000 Tower Automotive Inc. 84,125 84,126 1,300 United Auto Group Inc. 23,563 23,806 2,600 US Freightways Corp. 84,500 84,500 2,100 Wabash Natl. Corp. 59,719 59,719 1,500 Westinghouse Air Brake Co. New 38,438 38,438 1,900 Wynns Intl. Inc. 60,557 60,565 ------------------------------------------ Total Automotive 2,062,762 2,062,053 BANKS 3,300 Amsouth Bancorporation 179,231 179,233 900 Anchor Bancorp Wis Inc. 32,738 32,738 5,400 Associated Banc. Corp 297,675 297,675 800 BSB Bancorp. Inc. 28,600 28,600 2,000 Bancorpsouth Inc. 94,500 94,500 1,400 Bank Granite Corp. 43,050 43,050 3,100 Bank UTD Corp. 151,706 151,708 800 Bank North Group Inc. 51,400 51,400 1,100 Brenton Bks Inc. 44,000 44,000 600 CBT Corp. Ky. 18,600 18,600 500 CCB Finl. Corp. 53,750 53,750 1,700 CNB Banc. Shares Inc. 81,919 81,919 700 Capital Bancorp. Fla. 40,469 40,469 300 Capital One Finl. Corp. 16,256 16,256 800 Centura Bk. Inc. 55,200 55,200 1,500 Chittenden Corp. 52,500 52,500
38 40 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- BANKS--CONTINUED 1,300 Citfed Bancorp. Inc. 50,700 50,700 1,700 Citizens Bkg. Corp. Mich. 58,650 58,650 1,200 City Natl. Corp. 44,325 44,326 3,100 Colonial Bancgroup Inc. 106,756 106,758 1,800 Commerce Bancorp Inc. NH 91,800 91,800 1,400 Commerce Banchshares Inc. 94,850 94,850 600 Community Bk. Sys. Inc. 18,787 18,788 1,700 Community First Bankshares Inc. 90,525 90,525 900 Community Tr. Bancorp. Inc. 28,013 28,013 800 Corus Bankshares Inc. 31,650 31,650 4,600 Crestar Finl. Corp. 262,200 262,200 1,100 Deposit Gty. Corp. 62,563 62,563 3,700 Dime Bancorp. Inc. New 111,925 111,925 700 F&M Bancorporation Inc. 28,175 28,175 2,100 F&M National Corp. 72,056 72,188 2,500 First Amern Corp. Tenn 124,375 124,375 3,700 First of America Bank Corp. 285,363 285,363 1,100 First Citizens Bancshares Inc. N C. 114,434 114,434 1,700 First Colo Bancorp Inc. 40,375 40,375 900 First Comm. Bancshares Inc. Cl B 29,250 29,250 1,700 First Comm. Corp. 114,325 114,325 700 First Coml. Corp. 41,038 41,038 2,300 First Comwlth Finl. Corp. 80,644 80,645 800 First Fd. Cap. Corp. 27,100 27,100 300 First Empire St. Corp. 139,500 139,500 900 First Finl. Bankshares Inc. 38,588 38,588 1,600 First Finl. Bancorp 77,200 77,200 500 First Finl. Corp. Inc. 30,250 30,250 700 First Finl. Hldgs. Inc. 37,188 37,188 500 First Hawaiian Inc. 19,875 19,875 1,400 First Ind. Corp. 42,350 42,350 1,500 First Midwest Bancorp. Inc. Del 65,625 65,625 700 First Svgs. Bk. Sla Perth Amboy N J 38,150 38,150 1,100 First Svgs Bk. Wash Bancorp Inc. 30,250 30,250
39 41 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- BANKS--CONTINUED 4,800 First Sec. Corp. Del. 201,000 201,000 800 First Source Corp. 25,500 25,500 2,800 First Tenn Natl. Corp. 186,900 186,900 900 First Utd Bancshares Inc. Alk 37,800 37,800 1,800 First Va Bks Inc. 93,038 93,038 4,900 Firstar Corp New 207,944 207,946 1,200 Firstbank P R San Juan 40,875 40,876 1,600 Firstbank Ill Co. 58,900 58,900 1,800 Firstmerit Corp 51,075 51,075 1,800 Fort Wayne Natl. Corp. Ind. 82,800 82,800 4,600 Fulton Finl. Corp. PA 149,500 149,500 700 GBC Bancorp Calif. 44,625 44,625 1,800 Golden St. Bancorp. Inc. 67,275 67,388 2,800 Hubco Inc. 109,550 109,550 900 Hamilton Bancorp Inc. Fla 26,213 26,213 800 Hancock Hldg. Co. 48,400 48,400 700 Harleyville Natl. Corp. Pa 29,400 29,400 1,100 Heritage Finl. Svcs. Inc. 31,900 31,900 4,400 Hibernia Corp. 82,775 83,050 2,100 Imperial Bancorp. Inc. 103,556 103,557 800 Interwest Bancorp. Inc. 30,200 30,200 800 JSB Financial Inc. 40,050 40,050 1,200 Klamath First Bancorp Inc. 25,800 25,800 4,600 Lehman Bros. Hldgs. Inc. 234,600 234,600 1,000 Life Bancorp. Inc. 36,625 36,625 2,700 Long Is Bancorp. 133,988 133,988 1,600 Maf Bancorp. Inc. 56,600 56,600 3,600 Magna Group Inc. 164,700 164,700 900 Mainstreet Bankgroup Inc. 25,088 25,088 3,800 Marshall & Ilsley Corp. 236,075 236,075 5,300 Mercantile Bancorporation Inc. 325,950 325,950 2,500 Mercantile Bankshares Corp. 97,813 97,813 1,000 Merchants N Y Bancorp. Inc. 42,000 42,000 2,600 Mid AM Inc. 66,950 66,950
40 42 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- BANKS--CONTINUED 800 Mid Amer. Bancorp. 26,900 26,900 800 Nbt. Bancorp. Inc. 21,600 21,600 400 National Bancorp. Alaska Inc. 50,600 50,600 1,200 Natl. City Bancshares Inc. 53,700 53,700 1,300 National Comm. Bancorporation 45,825 45,825 1,000 National Penn Bancshares Inc. 33,000 33,000 2,100 New York Bancorp Inc. 83,344 83,418 2,200 Northfork Bancorporation Inc. 73,838 74,250 4,600 Northern TR Corp. 320,850 320,850 4,000 Old Kent Finl. Corp. 158,500 158,500 2,700 Old Nat'l Bancorp Inc. 130,613 130,613 700 Omega Finl. Corp. 23,450 23,450 1,300 Onbancorp. Inc. 91,650 91,650 3,100 One VY Bancorp West Va Inc. 120,125 120,125 600 Peoples Bk. Bridgeport Conn. 22,800 22,800 900 People First Corp. 34,988 34,988 900 Provident Bankshares Corp. 57,488 57,488 1,200 Queens Cnty. Bancorp Inc. 48,600 48,600 5,700 Region Finl. Corp. 240,469 240,472 1,000 Reliance Bancorps Inc. 36,625 36,625 1,700 Republic Bancorps Inc. 36,338 36,338 1,900 Resources Bancshares Mtg. Group 30,994 30,995 2,000 Riggs Natl. Wash DC 53,750 53,750 4,100 Roslyn Bancorp Inc. 95,325 95,325 900 S&T Bancorp. Inc. 38,925 38,925 3,500 St. Paul Bancorp Inc. 91,875 91,875 500 Santa Barbara Bancorp. Calif 23,563 23,563 800 Silicon VY Bankshares 45,000 45,000 4,100 Southtrust Corp. 260,094 260,096 800 Southwest Bancorpoation 24,900 24,900 8,800 Sovereign Bancorp. Inc. 182,600 182,600 3,700 Star Banc. Corp. 212,288 212,288 800 Sterling Bancshares Inc. 16,200 16,200 400 Sumitomo Bk. Calif San Fran 21,850 21,850
41 43 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- BANKS--CONTINUED 6,300 Summit Bancorp 335,475 333,113 2,900 TCF Financial Corp. 98,419 98,420 1,300 Texas Regl. Bancshares Inc. Cl A Vtg. 39,650 39,650 800 Triangle Bancorp Inc. 28,300 28,300 1,400 Trust Co of New Jersey 35,000 35,000 3,300 Trustco Bk. Corp. NY 89,925 89,925 1,700 UMB Finl. Corp. 92,650 92,650 2,500 UST Corp. 69,375 69,375 3,700 Union Planters Corp. 251,368 251,138 400 Unionbancal Corp. 43,000 43,000 1,900 United Bankshares Inc. W Va. 90,725 90,725 500 U S Bancorp Pa 36,500 36,500 1,200 Valley natl. Bancorp 47,175 47,176 1,600 Walden Residential Pptys. Inc. 40,800 40,800 1,300 Washington Fed. Inc. 40,869 40,869 1,700 Wesbanco Inc. 51,000 51,000 1,200 West Coast Bancorp Ore New Com 30,300 30,300 1,800 Westamerica Bancorporation 184,050 184,050 1,900 Westernbank P R 45,125 45,125 1,200 Wilmington Trust Corporation 74,850 74,850 2,300 Zions Bancorp 104,363 104,365 ------------------------------------------ Total Banks 11,603,491 11,601,927 BEVERAGE 1,600 Boston Bee Inc. Cl A 12,500 12,500 1,600 Canandiaigua Wine Cinc. Cl A 88,600 88,600 400 Coca Cola Bottling co. Cons. 27,600 27,600 8,400 Coca Cola Enterprise Inc. 298,725 298,729 100 Farmer Bros. Co. 18,700 18,700 1,400 Libbey Inc. 53,025 52,413 800 Mondavi Robert Corp. Cl A 39,000 39,000 1,500 On Assignment Inc. 39,750 39,750 1,800 Suiza Foods Corp. 107,212 107,211 ------------------------------------------ Total Beverage 685,112 684,507
42 44 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- BUILDING--FOREST PRODUCTS 700 Avatar Hldgs. Inc. 19,906 19,906 2,400 Caraustar Inds. Inc. 82,200 82,200 1,700 Cliffs Drilling Co. 84,788 84,788 4,600 Dal-Tile Intl. Inc. 56,350 56,350 1,200 Deltic Timber Corp. 32,850 32,850 400 Forest City Enterprises Inc. Cl A 23,250 23,250 1,800 Johns-Manville Corp. 18,113 18,113 1,400 Kimberly Clark Corp. 69,038 69,038 1,900 Martin Marietta Matls Inc. 69,469 69,470 2,000 Medusa Corp. New Com. 83,625 83,626 2,300 Minerals Technologies Inc. 104,506 104,507 700 NCI Bldg. Sys. Inc. 24,850 24,850 1,300 NVR Inc. 28,438 28,437 1,500 Pope & Talbot Inc. 22,594 22,595 600 Puerto Rican Cem Inc. 30,113 30,113 1,100 Rayonier Inc. 46,819 46,819 10,400 Republic Industries Inc. 242,450 242,455 3,500 Rock-Tenn Co. 71,750 71,750 1,400 Shorewood Packaging Corp. 37,450 37,450 2,800 TBC Corp 26,775 26,775 1,300 US Home Corp. 51,025 51,025 1,000 Universal Fst Prods. Inc. 13,625 13,625 2,900 Wausau-Mosinee Paper Corp. 58,366 58,365 -------------------------------- Total Building--Forest Products 1,298,344 1,298,357 BUILDING--OTHER 1,300 ABT Bldg. Prods. Corp. 23,400 23,400 400 Ameron Intl. Corp. F/K/A-Ameron Inc. Del. 25,300 25,300 4,700 Axtar Corp. 29,375 29,963 2,000 Calmat Co. 55,750 55,750 1,500 Centex Constr. Prods. 45,188 45,188 2,700 D.R. Horton Inc. 46,913 46,913 1,300 Elcor Corp. 31,200 31,200 1,300 Florida Rock Inds. Inc. 29,575 29,575
43 45 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- BUILDING--OTHER--CONTINUED 600 Giant Cement Holdings Inc. 13,875 13,875 1,300 Granite Constr Inc. 29,900 29,900 2,300 Jacobs Engr Group Inc. 58,363 58,363 1,400 Lafarge Corp. 41,388 41,388 3,800 Lennar Corp. 81,938 81,939 4,000 Oakwood Homes Corp. 132,750 132,750 500 Republic Group Inc. F/K/A Republic Gypsum 8,188 8,188 1,500 Ryland Group Inc. 35,438 35,250 1,700 Sealed Air Corp. 104,975 104,975 1,300 Skyline Corp. 35,750 35,750 2,400 Southdown Inc. 141,600 141,600 3,300 Standard Pac Corp. 51,975 51,563 1,600 TJ Intl. Inc. 39,600 39,600 2,200 Texas Inds. Inc. 99,000 99,000 600 Thor Inds. Inc. 20,588 20,588 2,700 Toll Bros. Inc. 72,225 72,225 1,200 Transaction Sys. Architects Inc. Cl A 45,600 45,600 1,600 Triangle Pac. Corp. Del. 54,200 54,200 1,700 Trimas Corp. 58,438 58,438 1,600 USG Corp. 78,400 78,400 1,000 Vulcan Matls. Co. 102,129 102,126 ------------------------------------------ Total Building--Other 1,593,013 1,593,005 CHEMICAL 600 Arco Chem Co. 28,013 27,900 1,900 Airgas Inc. 26,600 26,600 2,300 Albemarle Corp. 54,913 54,913 2,600 Amcol Intl. Corp. 41,275 41,275 500 Bandag Inc. 26,719 26,719 1,300 Betz Labs Inc. 79,381 79,382 900 Bio Rad Labs Inc. Cl A 23,513 23,513 2,300 Brady W H co. Cl A 71,300 71,300 1,000 Bush Boake Allen Inc. 26,188 26,188 2,600 Cabot Corp. 71,825 71,825
44 46 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- CHEMICAL--CONTINUED 3,300 Calgon Carbon Corp. 35,475 35,475 2,300 Chemfirst Inc. 64,975 64,975 3,200 Crompton & Knowles Corp. 84,800 84,800 1,700 Cytec Inds. Inc. 79,794 79,794 2,400 Dexter Corp. 103,650 103,650 3,800 Ethyl Corp. 29,213 29,213 3,500 Ferro Corp. 85,094 85,094 1,400 Fuller H B Co. 69,300 69,300 2,400 Geon Co. 56,100 56,100 3,700 Georgia Gulf Corp. 113,313 113,313 2,200 Goodrich B F. Co. 91,163 91,163 2,100 Hexcel Corp. 52,369 52,369 3,900 IMC Global Inc. F/K/A IMC Fertilizer 127,725 127,725 600 International Specialty Prods Inc. 8,963 8,963 3,700 Ivax Corp. 24,975 24,975 900 Kronos Inc. 27,731 27,732 6,100 Laidlaw environmental Svcs. Inc. 29,738 29,738 2,900 Lawter Intl. Inc. 31,538 31,538 2,700 Lilly Indl Inc. F/K/A Lilly Indl. Coating Inc. 55,688 55,688 100 Liqui Box Corp 4,025 4,025 2,600 Lubrizol Corp. 95,875 95,875 1,800 Lyondell Petrochemical Co. 47,700 47,700 800 Macdermid Inc. 67,900 67,900 2,300 Mark IV Inds. Inc. 50,313 50,313 1,700 Material Sciences Corp. 20,719 21,037 3,200 Millennium Chemicals Inc. 75,400 75,200 2,900 Mississippi Chem Corp. 52,925 52,925 500 NCH Corp. 32,750 32,750 2,100 NL Industries New 28,613 28,613 2,600 OM Group Inc. 95,225 95,225 2,000 Olin Corp. 93,750 93,750 2,100 Polymer Group Inc. 19,950 19,950 3,700 Schulman A Inc. 92,963 92,963 800 Sequa Corp. Cla 52,050 52,050
45 47 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- CHEMICAL--CONTINUED 2,000 Spartech Corp. 30,250 30,250 900 Stepan Co. 26,663 26,663 1,600 Synetic Inc. 58,400 58,400 900 Tredegar Inds. Inc. 59,288 59,288 1,100 Valspar Corp. 35,063 35,063 1,300 WD 40 Co 37,700 37,700 2,500 Witco Corp. 102,022 102,033 ------------------------------------------ Total Chemical 2,800,875 2,800,893 COAL 900 Arch Coal Inc. 24,638 24,638 2,000 Mapco Inc. 92,500 92,500 1,400 Pittston Brink's Grp, F/K/A Pittston Svcs Grp. 56,350 56,350 2,100 Zeigler Coal Hldg. Co. 34,256 34,257 ------------------------------------------ Total Coal 207,744 207,745 CONTAINER 1,300 ACX Technologies Inc. 31,769 31,769 4,900 Gaylord Container Corp. 28,175 27,871 1,400 Grief Bros Corp. Cl A 46,900 46,900 2,100 Interpool Inc. 31,106 31,107 2,800 Storage USA Inc. 111,825 111,826 1,800 US Can Corp. 30,375 30,375 2,700 Yellow Corp. 67,838 67,839 ------------------------------------------ Total Container 347,988 347,687 COSMETIC 1,600 Estee Lauder Co. 82,300 82,300 2,800 Playtex Prods, Inc. 28,700 28,700 300 Revlon Inc. 10,594 10,594 1,200 Thermolase Corp. 12,600 12,600 1,800 Windmere Corp. 40,612 40,614 ------------------------------------------ Total Cosmetic 174,806 174,808
46 48 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- DRUG 1,800 Alpharma Inc.Cl A 39,150 39,150 2,300 Amylin Pharmaceuticals Inc. 12,506 12,507 4,300 Arbor Drugs Inc. 79,550 79,550 1,200 Bindley Westn. Inds. Inc. 37,050 37,050 700 Block Drug Inc Cl A 30,275 30,275 1,200 Cadus Pharmaceutical Corp. 7,650 7,650 2,300 Carter Wallace Inc. 38,813 39,100 2,600 Cor Therapeutics Inc. 58,500 58,500 3,800 Creative Biomolecules Inc. 28,025 28,025 7,000 Cytogen Corp. 11,375 11,375 500 Del Labs Inc. 20,000 20,000 1,700 Dura Pharmaceuticals Inc. 77,988 77,988 1,500 Geltex Pharmaceuticals 39,750 39,750 3,400 Gilead Sciences Inc. 130,050 130,050 4,100 ICN Pharmaceuticals Inc. 200,131 200,900 2,100 Idex Pharmaceuticals 72,188 72,188 800 Immunex Corp. 43,200 43,200 2,700 Interneuron Pharmaceuticals Inc. 25,650 25,650 700 Miravant Med Technologies 28,000 28,000 4,900 Mylan Labs Inc. 102,594 102,596 1,900 Nbty Inc. 63,413 63,413 1,100 Neurogen Corp. 14,850 14,850 1,000 Nu Skin Asia Pac Cl A 18,250 18,250 300 Oxigene Inc. 5,250 5,250 1,800 Parexel Intl. Corp. 66,600 66,600 6,900 Perrigo Co. 92,288 92,288 1,500 Protein Design Labs Inc. 60,000 60,000 1,100 RCN Corp. 37,675 37,675 1,100 Scherer R P Corp. Del 67,100 67,100 4,100 Sequus Pharmaceuticals Inc. 30,494 30,496 400 Sonus Pharmaceuticals Inc. 13,250 13,250 1,200 Theragenics Corp. 43,200 43,200 2,300 Theratech Inc. Del 18,400 18,400 2,900 US Bioscience Inc. 26,281 26,283
47 49 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- DRUG--CONTINUED 2,900 Vertex Pharmaceuticals Inc. 95,700 95,700 1,800 Vical Inc. 21,600 21,600 2,000 Vitalink Pharmacy Svcs 48,250 48,250 3,200 Watson Pharmaceuticals 103,798 103,800 ------------------------------------------ Total Drug 1,908,844 1,909,909 ELECTRICAL EQUIPMENT 2,300 Actel Corp. 29,038 29,038 1,700 Anadigics Inc. 51,213 51,213 3,500 Anixter Intl. Inc. 57,750 57,750 2,700 Applied Magnetics Corp. 30,038 29,700 1,400 Associated Group Inc. Cl A 41,475 41,475 3,300 Baldor Elec. Co. 71,569 71,570 2,300 Belden Inc. 81,076 81,075 2,200 Burr Brown Corp, 70,675 70,675 3,100 C-Cube Microsystems Inc. 50,569 50,570 1,600 California Microwave Inc. 31,000 31,000 2,100 Calpine Corp. 31,238 31,238 1,200 Coherent Communications 33,450 33,450 300 Computer Learning Ctrs. Inc. 18,375 18,375 600 Cubic Corp. 19,650 19,650 900 Davox Corp. 29,363 29,363 1,200 Electro Rent Corp. 42,900 42,900 700 Franklin Elec. Inc. 44,975 44,975 6,800 Geotek Communications 10,413 10,411 2,000 Harbinger Corp. 56,250 56,250 1,600 Helix Technology Corp. 31,200 31,200 2,300 Hubbell Harvey Inc. Cl. B 113,419 113,420 2,300 Ionics Inc. 89,988 89,988 600 Jabil Circuit Inc 23,850 23,850 1,900 Juno Ltg. Inc. 33,250 33,250 3,600 Kemet Corp. 69,750 69,750 2,100 Littlefuse Inc. 52,238 52,238 800 Memc Electr Matls Inc. 12,200 12,200
47 50 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT--CONTINUED 3,200 Magnetek Inc. 62,400 62,400 1,500 Micrel Inc. 43,125 42,000 2,100 Microchip Technology Inc. 63,000 63,000 1,900 Molex Inc. 61,037 61,037 900 National Presto Inds. Inc. 35,606 35,607 3,900 New Centy. Energies Inc. 186,956 186,958 1,400 Pri Automation Inc. 40,425 40,425 300 Powerwave Technologies Inc. 5,044 5,044 1,300 Remec Inc. 29,250 29,250 600 Robbins & Myers Inc. 23,775 23,775 2,700 Smart Modular Technologies Inc. 62,100 62,100 1,600 Thomas Inds. Inc. 31,600 31,600 1,500 Ucar Intl. Inc. 59,906 59,907 2,600 Valence Technology Inc. 13,162 13,164 1,700 Videoserver Inc. 26,988 26,988 1,500 Woodhead Inc. 28,124 28,122 ------------------------------------------ Total Electrical Equipment 1,999,407 1,999,951 ELECTRICAL HOUSEHOLD APPLIANCES 5,200 ADC Telecommunications Inc. 217,100 217,100 800 Lancaster Colony Corp 45,100 45,100 2,600 Network Appliance Inc. 92,300 92,300 1,800 Stanhome Inc. 46,238 46,238 2,400 Sunbeam Corp. F/K/A Sunbeam-Oster 101,100 101,400 2,700 Zenith Electrs. Corp. 14,681 14,683 ------------------------------------------ Total Electrical Household Appliance 516,519 516,821 ELECTRONICS 4,300 Adaptec Inc. 159,638 159,638 600 Advanced Ltg. Technologies 11,400 11,400 3,300 Altera Corp. 109,313 109,313 1,500 Altron Inc. 19,875 19,875 1,200 American Residential Svcs. 18,750 18,750 2,900 American Pwr. Conversion 68,513 68,513
48 51 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- ELECTRONICS--CONTINUED 3,200 American Std. Cds I NC 122,600 122,602 4,400 Ametek Inc. 118,800 118,800 4,700 Ampex Corp. Del. 11,750 11,163 1,600 Amphenol Corp. New Cl A 89,100 89,101 6,600 Analog Devices Inc. 182,738 182,741 3,500 Arrow Electrs. Inc. 113,531 113,533 3,700 Atmel Corp. 68,681 68,683 2,100 Avid Technology Inc. 56,175 56,175 1,500 Avnet Inc. 99,000 99,000 1,100 Bea Sys Inc. 19,044 19,044 1,200 Benchmark Electrics Inc. 26,775 26,776 2,500 Berg Electrs Corp. 56,875 57,345 800 C&D Technologies Inc. 38,600 38,600 400 CFM Technologies Inc. 6,150 6,150 3,000 Chs Electronics Inc. 51,375 51,375 2,500 CSG Sys. Intl. Inc. 100,000 100,000 1,900 CTS Corp. 60,681 60,682 1,700 Cable Design Tech. 66,088 66,088 4,100 Checkpoint Sys Inc. 71,750 71,750 2,400 Chips & Technologies Inc. 34,650 34,651 1,500 Cidco Inc. 29,250 29,250 3,900 Ciena Corp. 238,388 238,388 3,600 Cognex Corp. 98,100 98,100 1,100 Coherent Inc. 38,638 38,638 900 Cohu Inc. 27,563 27,563 2,700 Cymer Inc. 40,500 40,500 3,900 Cypress Semiconductor Corp. 33,150 32,663 2,800 DII Group Inc. 76,300 76,300 1,200 Dallas Semi Conductor Corp. 48,900 48,900 1,400 Dionex Corp. 70,350 69,650 400 Ducommun. Inc. Del Com 13,975 13,975 1,400 ESS Technology Inc. 10,631 10,632 2,400 Etec. Sys. Inc. 111,600 111,600 1,000 Electro Scientific Inds. Inc. 38,000 38,000
49 52 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- ELECTRONICS--CONTINUED 2,500 Electronic Arts 94,531 94,533 2,200 Electronics for Imaging Inc. 36,575 36,575 900 Eltron Intl. Inc. 27,225 27,225 500 Essex Intl. Inc. Del 14,875 14,875 900 Evans & Sutherland Computer Corp. 26,100 26,100 1,200 Exar Corp. 19,800 19,800 1,700 FSI Intl. Inc. 19,975 19,975 4,800 Fedders Corp. 30,000 30,000 1,700 Federal Signal Corp. 36,763 36,763 1,400 Fluke John Mfg. Inc. 36,488 36,488 3,100 Fore Sys. Inc. 47,275 47,275 2,500 Genesco Inc. 31,875 31,875 2,600 Genrad Inc. 78,488 78,489 6,300 Glenayre Technologies Inc. 62,213 62,213 1,400 Holophane Corp. 34,650 34,650 1,300 Hughes Supply Inc. 45,419 45,419 1,800 Hutchinson Technology Inc. 39,375 39,375 2,500 Identix Inc. 24,063 23,750 1,400 Integrated Circuit Systems Inc. 39,900 39,900 8,200 Integrated Device Technology Inc. 77,388 77,391 2,200 Inter Tel Inc. 42,625 42,625 5,300 International Rectifier Corp. 62,606 62,609 8,800 Iomega Corp. 109,450 109,454 1,400 Itron Inc. 25,200 25,200 2,600 Kent Electronics Corp. 65,325 65,325 3,900 LTX Corp. 17,306 17,308 1,000 Lattice Semiconductor Corp. 47,375 47,375 800 Lecroy corp. 24,200 24,200 2,300 Level One Communication 64,975 64,975 2,900 Lexmark Intl. Group Inc. 110,200 110,200 2,900 Linear Technology Corp. 167,113 167,113 1,300 Litton Inds. Inc. 74,750 74,750 1,900 Lo Jack Corp. 28,025 28,025 3,700 Macromedia Inc. 30,756 30,758
50 53 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- ELECTRONICS--CONTINUED 1,700 Marshall Inds. 51,000 51,000 3,000 Methode Electrs Inc. 48,750 48,750 700 Micro Sys. Inc. 31,500 31,500 700 Moog Inc. Cl A 24,456 24,457 3,900 NCR Corp. 108,469 108,470 1,700 National Semiconductor Corp. 44,094 44,095 900 Natural Microsystems Corp. 41,850 41,850 700 Neomagic Corp. 8,925 8,925 3,800 Networks Assocs. Inc. 200,925 200,925 2,800 Network Equip Technologies 40,950 40,950 2,100 Nimbus Cd. Intl. Inc. 22,575 22,575 1,200 Novellus Sys. Inc. 38,775 38,776 1,200 Ods Networks Inc. 7,725 7,726 2,100 Oea Inc. 60,769 60,770 2,100 Ois Optical Imaging Sys. Inc. 2,560 2,560 2,100 Oak Inds. Inc. 62,344 62,345 2,800 PMC-Sierra Inc. 86,800 86,800 1,100 Perceptron Inc. 23,788 23,788 2,200 Photronics Inc. 53,350 53,350 2,700 Pioneer Std. Electrs Inc. 41,175 41,175 1,300 Plexus Corp. 19,338 19,338 1,000 Presstek Inc. 25,750 25,750 2,400 Qualcomm Inc. 121,200 121,200 900 Quickresponse Svcs. Inc. 33,300 33,300 1,400 Rambus Inc. Del. 64,050 64,050 3,800 Ramtron Intl. Corp. 21,138 21,139 4,200 Read-Rite Corp. 66,150 66,150 600 Rogers Corp. 24,525 24,525 2,200 Sci. Sys. Inc. 95,838 95,839 1,200 SDL Inc. 17,400 17,400 3,900 S3 Inc. 19,500 19,500 1,700 Sanmina Corp. 115,175 115,175 900 Sawtek Inc. 23,738 23,738 1,100 Scotsman Inds. Inc. 26,881 26,882
51 54 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- ELECTRONICS--CONTINUED 2,600 Sensormatic Electrs Corp. 42,738 42,739 800 Sheldahl Co. 11,200 11,200 3,100 Silicon VY Group Inc. Com. 70,137 70,138 1,000 Siliconix Inc 43,000 43,000 500 Sipex Corp. 15,125 15,125 4,400 Solectron Corp. 182,875 182,877 900 Spectrian Corp. 17,325 17,325 1,400 Stanford Telecommunications Inc. 23,713 23,713 800 Supertex Inc. 8,700 8,700 1,500 Symbol Technologies Inc. 56,625 56,625 2,000 Symmetricom Inc. 23,250 23,250 2,600 Systemsoft Corp. 16,575 16,575 1,000 Tech Sym. Corp. 25,438 25,438 1,500 Technitrol Inc. Com 45,000 45,000 1,100 Tekelec Com. 33,550 33,550 1,200 Teleflex Inc. 45,300 45,300 3,200 Teradyne Inc. 102,400 102,400 1,100 Thermo Trex Corp. 24,338 24,338 1,700 Tracor Inc. 51,638 51,638 1,800 Trimble Navigation Ltd. 39,263 39,263 700 Triquint Semiconductor Inc. 14,175 14,175 900 Triumph Group Inc. 29,925 29,925 3,700 Uniphase Corp. 153,088 153,088 600 United States Cellular Corp. 18,600 18,600 2,600 Unitrode Corp. 55,900 55,900 1,900 Vlsi Technology Inc. 44,886 44,886 1,300 Varian Assoc Inc. 65,731 65,732 3,000 Vicor Corp. 81,375 81,375 1,900 Vishay Intertechnology Inc. 44,888 44,770 1,400 Vitesse Semiconductor Corp 52,850 52,850 900 Watkins Johnson Co. 23,344 23,344 1,400 X-Rite Inc. 25,550 25,550 2,900 Xilinx Inc. 101,681 101,683
52 55 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- ELECTRONICS--CONTINUED 2,500 Yahoo Inc. 173,125 173,125 400 Yurie Systems Inc. 8,075 8,075 1,400 Zitel Corp. 13,289 13,291 ------------------------------------------ Total Electronics 7,809,516 7,807,831 FINANCE 1,800 Aames Finl. Corp. 23,288 23,288 1,200 Albank Finl. Corp. 61,725 61,726 200 Alleghany Corp. Del 56,950 56,950 1,500 Allied Capital Coml. Corp. 49,500 49,500 2,700 Allmerica Finl. Corp. 134,831 134,833 2,700 Ambac Inc. 124,200 124,200 2,400 Amcore Finl. Inc. 60,300 60,300 1,200 American Finl. Group Inc. Ohio 48,375 48,375 3,400 Americredit Corp. 94,138 94,139 4,300 Arcadia Finl. Ltd. 31,981 31,983 2,500 Associates First Cap Corp. Class A 177,813 177,970 2,600 Astoria Finl. Corp. 144,950 144,950 800 Bok Finl. Corp. 31,050 31,050 500 BT Financial Corp. 25,500 25,500 2,600 Bank Plus Corp. 32,825 32,825 1,000 Bankatlantic Bancorp Inc. 16,750 16,750 1,900 Bowne & Co. Inc. Com 75,763 76,238 1,300 CFX Corp. 39,650 39,813 2,200 CMAC Invt. Corp. 132,825 132,825 1,100 Chem Finl Corp. 49,225 49,225 600 Citizens Bancshares Inc. 43,950 43,950 1,500 Cityscape Finl. Corp. 750 750 2,100 Coast Savings Finl. Inc. 143,981 143,981 1,700 Commonwealth Bancorp. Inc. 33,787 33,787 2,700 Compass Bancshares Inc. 118,125 118,125 2,500 Concord EFS Inc. 62,188 62,188 2,500 Credit Accep. Corp. Mich 19,375 19,375
53 56 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- FINANCE--CONTINUED 1,400 Delphi Finl. Group Inc. Cl A 63,000 63,000 1,300 Dime Cmnty Bancorp. Inc. 30,875 30,875 1,500 Doral Finl Corp. 38,063 38,063 5,400 Dynex Cap Inc. 71,888 71,550 1,300 Envoy Corp. New Com. 37,863 37,863 2,000 Everest Reins Hldgs. Inc. 82,500 82,500 1,400 FNB Corp. 52,675 52,675 1,500 Fairchild Corp. Cl A 37,313 37,315 1,430 Fidelity Natl. Finl. Inc. 44,509 44,509 1,400 Financial Fed. Corp. 33,075 33,075 3,300 Financial Sec. Assurn Hldgs. Ltd. 159,225 159,225 2,000 Finova Group Inc. 99,375 99,376 1,000 First Amern Finl. Corp. Calif 73,875 73,875 1,200 First Western Penn 34,200 34,200 2,500 Firstplus Finl. Group Inc. 95,938 95,938 1,900 Firstfed Finl. Corp. Del. 73,625 73,625 1,400 Great Finl. Corp. 71,400 71,400 1,800 Green Point Financial Group 130,613 130,613 1,500 Hfnc Finl. Corp. 21,750 21,750 1,500 Hambrecht & Quist Group Inc. 54,750 54,750 2,300 Homeside Inc. 63,394 63,394 2,500 Hospitality Ppty. 82,188 82,188 2,200 Imperial Cr. Inds. Inc. 45,100 45,100 3,100 Insignia Finl. Group Inc. Cl A 71,300 71,300 1,300 Interra Finl. Inc. 89,700 89,700 2,600 John Alden Finl. Corp. 62,400 63,375 5,800 Keystone Finl. Inc. 233,450 233,450 4,000 Liberty Ppty Tr. Sh Ben Int. 114,250 114,252 1,200 ML Bancorp. Inc. 36,000 36,000 1,800 Mail-Well Inc. 72,900 72,900 17,500 Mercury Fin. Co. 10,938 9,853 2,500 Moneygram Pmt Sys. Inc. 26,875 26,875 1,700 Money Stores Inc. Com. 35,700 35,700 1,900 National Auto Cr. Inc. New 10,093 9,975
54 57 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- FINANCE--CONTINUED 2,400 Ocwen Asset Invt. Corp. 49,200 49,200 2,600 Ocwen Finl. Corp. 66,138 66,139 1,100 PMI Group Inc. 79,544 79,544 2,800 Pacific Centry Finl. Corp. 69,300 69,300 500 Park Natl. Corp. 44,063 44,063 700 PEC Israel Economic Group 15,138 15,138 2,800 People Heritage Finl. Group Inc. 128,800 128,800 4,500 Phoenix Duff & Phelps Corp. 36,000 36,000 2,100 Pioneer Group Inc. 59,063 59,063 3,100 Primark Corp. 126,131 126,133 1,400 Provident Finl. Group Inc. 67,900 67,900 2,800 Raymond James Finl. Inc. 111,125 111,126 2,000 Slm Hldg. Corp. 278,250 278,250 1,100 Southern Pac Fdg. Corp. 14,438 14,438 500 State Auto Finl. Corp. 16,125 16,125 300 Student Ln. Corp. 14,813 14,813 900 Total Sys. Svcs. Inc. 22,275 22,275 1,200 Trans Finl. Inc. 46,650 46,650 1,600 Triad Gty Inc. 46,400 46,400 300 Value Line Inc. 11,850 11,850 2,700 Vencor Inc. 65,981 65,983 1,100 Vermont Finl. Svcs. Corp. 30,525 30,663 1,300 Webster Finl. Corp. Waterbury Conn. 86,450 86,450 1,800 Westcorp Com. 30,375 30,375 400 White Riv. Corp. 31,800 31,800 2,100 Whitney Holding Corp. 119,692 119,696 ------------------------------------------ Total Finance 5,762,621 5,763,007 FOOD 1,500 Alexander & Baldwin Inc. 40,970 40,970 4,400 Bob Evans Farms Inc. 97,350 97,350 900 Chiquita Brands Intl. Inc. 14,681 14,682 1,500 Dean Foods Co. 89,250 89,625 3,000 Dekalb Genetics Corp. Cl. B 117,750 117,750
55 58 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- FOOD--CONTINUED 2,100 Dole Food Company 96,075 96,075 2,700 Dreyers Grand Ice Cream 65,138 65,138 2,000 Earthgrains Co. 94,000 94,000 3,000 Flowers Inds. Inc. (Georgia) 61,688 61,689 1,500 Hormel Foods Corp. 49,125 49,125 2,200 Hudson Foods Inc. Cl. A 45,238 45,239 3,800 IBP Inc. 79,563 79,564 1,700 International Dairy Queen Inc. Cl. A 45,528 45,528 1,700 International Multifoods Corp. 48,131 48,132 1,700 Interstate Bakeries Corp. Del. New 63,538 63,538 4,500 JP Food Service Inc. 166,219 166,221 2,500 Lance Inc. 65,781 65,783 3,000 McCormick & Co. Inc. Com. Non Vtg. 84,000 84,000 1,400 Michael Foods Inc. New 34,125 34,125 2,300 Nabisco Hldgs. Corp. Cl. A 111,406 111,550 1,200 Nash Finch Co. 22,800 22,800 700 Performance Food Group Co. 16,625 16,625 500 Pilgrim's Pride Corp. 7,781 7,782 2,000 Premark Intl. Inc. 58,000 58,000 5,500 Richfood Hldgs. Inc. Cl. A 155,375 155,375 1,300 Riviana Food Inc. Del. 27,138 27,138 900 Sanderson Farms Inc. 13,050 13,050 2,400 Savannah Foods 48,600 28,683 100 Seaborad Corp. Del. 44,000 44,000 1,200 Smart & Final Inc. 21,600 21,600 3,500 Smithfield Foods Inc. 115,500 115,500 2,300 Smucker JM Co. 54,338 54,338 1,600 Tejon Ranch Co. 38,900 38,901 400 Tootsie Roll Inds. Inc. 25,000 25,000 5,700 Tyson Foods Inc. Cl. A 116,850 116,850 2,600 Universal Foods Corp. 109,850 109,850 600 Worthington Foods Inc. 8,396 8,396 ------------------------------------------ Total Food 2,353,359 2,333,972
56 59 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- HOME FURNISHINGS 3,100 Apogee Enterprises Inc. 36,813 36,813 1,300 Bassett Furniture Inds. Inc. 39,000 39,000 800 Bush Inds. Inc. Cl. A 20,800 20,800 4,200 Dial Corp. New 87,413 87,415 3,100 Ethan Allen Interiors Inc. 119,544 119,545 6,000 Furniture Brands Intl. Inc. 123,000 123,000 4,500 Interdigital Communications Corp. 13,781 13,784 3,800 Kimball Intl. Inc. Cl. B 70,063 70,064 1,600 La z Boy Chair Co. 69,000 69,000 400 Mikasa Inc. 5,825 5,825 900 Oneida Ltd. 24,019 24,019 1,600 O'Sullivan Inds. Hldgs. Inc. 16,000 16,000 900 USA Detergents Inc. 7,313 7,313 1,900 Williams Sonoma Inc. 79,560 79,562 ------------------------------------------ Total Home Furnishings 712,131 712,140 HOTEL--MOTEL 3,100 Bristol Hotel Co. 90,094 90,095 2,300 Extended Stay Amer. Inc. 28,606 28,607 2,100 Interstates Hotels Co. 73,631 73,721 2,900 La Quinta Mtr. Inns Inc. 56,006 56,008 900 MGM Grand Inc. 32,456 32,513 3,300 Promus Hotel Corp. New 138,600 138,600 1,700 Showboat Inc. 49,938 49,938 600 Suburban Lodges Amer. Inc. 7,988 7,988 900 Wyndham Hotel Corp. 36,337 36,336 ------------------------------------------ Total Hotel--Motel 513,656 513,806
57 60 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- HOTEL--RESTAURANT 1,300 American Gen. Hospitality 34,775 34,775 3,500 Apple South Inc. 45,938 45,938 3,800 Applebees Intl. Inc. 68,638 68,639 2,200 Boston Chicken 14,163 14,164 6,700 Brinker Intl. Inc. 107,200 107,200 4,700 Buffets Inc. 44,063 44,063 4,100 CKE Restaurants Inc. 172,713 172,713 1,200 Cheesecake Factory Inc. 36,600 36,600 1,375 Consolidated Prods. Inc. 22,516 22,516 2,500 Cracker Barrel Old Ctry. Store Inc. 83,438 83,438 800 Einstein/Noah Bagel Corp. 4,450 4,450 4,200 Equity Inns Inc. 61,950 61,950 4,300 Foodmaker Inc. New 64,769 64,771 1,600 Homestead Vlg. Pptys. Inc. 24,100 24,101 6,900 Host Marriott Corp. 135,413 135,413 1,100 IHOP Corp. New 35,750 35,750 2,900 Landrys Seafoods Restaurants Inc. 69,600 69,600 3,600 Lone Star Steakhouse Saloon 63,000 63,000 2,400 Lubys Cafeterias Inc. 42,150 42,151 1,600 Marcus Corp. 29,500 29,501 1,100 NPC Intl. Inc. 13,338 13,338 1,800 Outback Steakhouse Inc. 51,750 51,750 2,200 Papa Johns Intl. Inc. 76,725 76,725 4,200 Prime Hospitality Corp. 85,575 85,575 2,000 Rainforest Cafe Inc. 66,000 66,000 1,400 Sbarro Inc. 36,838 36,838 4,100 Shoneys Inc. 13,069 13,325 1,400 Showbiz Pizza Time Inc. New 32,200 32,200 1,700 Sonic Corp. 47,813 47,813 2,300 Triarc Cos. In. Cl. A 62,675 62,675 2,600 Trump Hotels & Casino Resorts Inc. 17,388 17,389 1,700 Webb Del. Corp. 44,194 44,196 ------------------------------------------ Total Hotel--Restaurant 1,708,291 1,708,557
58 61 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- INSURANCE 5,600 AFLAC Corp. 286,300 286,300 1,300 Acceptance Insurance Companies Inc. 31,444 31,444 1,900 Alfa Corp. 32,775 32,775 2,300 Allied Group Inc. 65,838 65,838 1,500 American Bankers Ins. Group Inc. 68,906 68,907 400 American Natl. Ins. Co. 37,200 37,200 1,500 Amerus Life Hldgs. Inc. 55,313 55,313 2,300 WR Berkley Corp. 100,913 100,913 1,600 Blanch EW Hldgs. Inc. 55,100 55,101 200 CNA Finl. Corp. 25,550 25,550 1,100 Capital RE Corp. 68,269 68,269 700 Capitol Transamerica 14,919 14,919 900 Capmac Hldg. Inc. 31,275 31,275 900 Chartwell RE Corp. 30,375 30,375 1,200 Citizens Corp. 34,500 34,500 2,100 Commerce Group Inc. Mass 68,513 68,513 800 Compdent Corp. 16,225 16,225 4,300 Crawford & Co. Cl. B 87,881 87,883 2,900 Equitable Cos. Inc. 144,275 144,275 2,400 Erie Indty. Co. Cl. A 70,800 70,800 1,100 Executive Risk Inc. 76,794 76,794 1,700 FBL Finl. Group Inc. Cl. A 68,213 68,213 800 Foremost Corp. Amer. 55,800 55,800 3,100 Franklin Resources Inc. 269,506 269,508 2,300 Fremont Gen. Corp. 125,925 125,925 3,400 Frontier Ins. Group Inc. New 77,775 77,775 3,200 Gainsco Inc. 27,200 27,200 1,700 Gallagher Arthur J & Co. 58,544 58,545 2,800 HCC Ins. Hldgs. Inc. 59,500 59,500 2,000 HSB Group Inc. 110,375 110,376 1,300 Harleysville Group Inc. 31,200 31,200 1,400 Highlands Ins. Group Inc. 39,725 39,725 2,200 Hilb Rogal & Hamilton Co. 42,488 42,489 1,400 Horace Mann Educators Corp 39,813 39,813 2,400 Kaiser Aluminum Corp. 21,150 21,300
59 62 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- INSURANCE--CONTINUED 400 Kansas City Life Ins. Co. 39,600 39,600 1,400 Leucadia Natl. Corp. 48,300 48,300 1,200 Liberty Corp. SC 56,100 56,100 1,800 Life USA Hldg. Inc. New 30,375 30,375 900 Life RE Corp. 58,669 58,669 1,100 MMI Cos. Inc. 27,638 27,638 500 Markel Corp. 78,063 78,063 900 Mercury Gen. Corp. New 49,725 49,725 1,500 NAC RE Corp. 73,219 73,220 300 National Westn. Life Ins. Co. Cl. A 30,450 30,450 1,200 Ohio CAS Corp. 53,550 53,550 3,900 Old Rep. Intl. Corp. 145,031 145,033 3,100 Orion Cap. Corp. 143,956 143,958 1,200 PXRE Corp. 39,825 39,826 900 Penn Treaty Amern. Corp. 28,575 28,575 600 Philadelphia Cons. Hldg. Corp. 10,650 10,650 1,000 Poe & Brown Inc. 44,625 44,625 2,500 Presidential Life Corp. 50,625 50,625 1,100 Protective Life Corp. 65,725 65,725 2,700 Provident Cos. Inc. 104,288 104,288 4,000 Reinsurance Group Amer. Inc. 170,250 170,252 1,800 Reliance Group Hldg. Inc. 25,425 25,425 3,800 Reliastar Financial Corp. 156,513 156,514 700 Rightchoice Managed Care Inc. Cl. A 6,738 6,738 1,700 Risk Cap. Hldgs. Inc. 37,825 37,825 1,100 SCPIE Hldgs. Inc. 31,831 31,832 3,000 Selective Ins. Group Inc. 81,000 81,000 2,100 Tig Hldgs. Inc. 69,694 69,695 600 Transatlantic Hldgs. Inc. 42,900 42,900 1,900 Travelers PPTY CAS Corp. Cl. A 83,600 83,600 1,200 Trenwick Group Inc. 45,150 45,150 1,400 Twentieth Century Inds. Cal. 36,400 36,400 1,100 UICI 38,363 38,363 2,500 United Cos. Finl. Corp. 38,750 38,750
60 63 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- INSURANCE--CONTINUED 800 United Fire & CAS Co. 35,400 35,400 900 United WIS Svcs. Inc. 23,175 23,175 1,300 Unitrin Inc. 84,013 84,013 1,500 Vesta Ins. Group Inc. 89,063 89,063 1,100 Zenith Natl. Ins. Corp. 28,325 28,325 ------------------------------------------ Total Insurance 4,733,775 4,733,947 INVESTMENT COMPANIES 1,300 AMLI Residential PPTYS Tr. Ben. Int. 28,925 28,925 600 Alamo Group Inc. 13,013 13,013 1,400 American Annuity Group Inc. 30,800 30,800 2,400 American Health PPTYS Inc. 66,150 66,151 900 American Heritage Life Invt. Corp. 32,400 32,400 2,400 Apartment Invt. & Mgmt. Co. Cl. A 88,200 88,200 400 Aphton Corp. 4,050 4,050 1,900 Aptar Group Inc. 105,450 105,450 1,200 Aquarion Co. Stk. 41,475 41,476 1,200 Baldwin & Lyons Cl. B 28,950 28,950 5,500 Bear Stearns Cos. Inc. 261,250 261,250 1,200 Bedford PPTY Incs. Inc. Com. Par $0.02 26,250 26,250 1,500 Blyth Inds. Inc. 44,906 44,907 1,200 CPB Inc. 24,675 24,676 3,700 Coventry Corp. 56,425 56,425 4,900 Criimi Mai Inc. 73,500 73,500 3,100 Crown Amern. Rlty. Tr. Com Sh. Ben. Int. 28,869 28,870 2,500 Cullen Frost Bankers Inc. 151,719 151,720 2,600 Downey Financial Corp. 56,875 56,876 1,500 Eaton Vance Corp. Com. Non Vtg. 56,625 56,625 4,100 Edwards A.G. Inc. 162,975 162,975 1,300 Enhance Finl. Svcs. Group Inc. 77,350 77,350 500 Everen Capital Corp. 23,750 23,750 4,500 Franchise Fin. Corp. Amer. 121,500 121,500 500 Fund American Enterprises Holding Inc. 60,500 60,500 1,500 GTECH Holdings Corp. 47,906 47,907
61 64 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- INVESTMENT COMPANIES--CONTINUED 2,100 Illinois Centl. Corp. Com. Ser. A 71,531 71,532 3,400 Input/Output Inc. 100,938 100,939 1,300 Inso Corp. 15,031 15,032 2,600 Intersolv Inc. 52,650 52,650 600 Investment Technology Group Inc. 16,800 16,800 400 Investors Finl. Service Corp. 18,400 18,400 500 Irwin Finl. Corp. 20,938 20,938 2,400 Jefferies Group Inc. 98,250 98,251 600 John Nuveen Co. Cl. A 21,000 21,000 2,500 Legg Mason Inc. 139,844 139,845 1,100 Lone Star NDS Inc. 58,438 58,438 700 Lunar Corp. 14,350 14,350 700 Maverick Tube Corp. 17,719 17,719 1,600 McDonald & Co. Invts. Inc. 45,400 45,400 2,200 Medimmune Inc. 94,325 94,325 2,300 Morgan Keegan Inc. 58,219 58,220 1,800 Mueller Inds. Inc. 106,200 106,200 800 Nymagic Inc. 22,050 22,050 4,400 Paine Webber Inc. 152,075 152,077 2,800 Penncorp Finl. Group Inc. 99,925 99,926 1,100 Piper Jaffray Companies Inc. 40,081 40,082 2,000 Rowe T. Price & Assoc. Inc. 125,750 125,750 2,300 Quick & Reilly Group Inc. 98,900 98,900 2,500 RFS Hotel Invs. Inc. 49,844 49,845 1,100 Redwood Tr. Inc. 22,413 22,413 1,100 SEI Investment Company 46,200 46,200 2,400 Security Cap. Indl. Ta Sh Ben. Int. 59,700 59,700 3,900 Sotheby's Hldgs Inc. Cl. A 72,150 73,125 1,800 Thornburg Mtg. Asset Corp. 29,700 29,700 3,400 Trustmark Corp. 10 2 157,250 157,250 3,100 United Asset Mgmt. Corp. 75,756 75,758 1,000 Universal Health Rlty. Income Tr. Sh. Ben. Int. 21,875 21,875 4,400 Vintage Pete Inc. 83,600 83,600
62 65 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- INVESTMENT COMPANIES--CONTINUED 1,900 Western Invt. Real Estate Tr. Sh. Ben. Int. 26,125 26,125 3,100 Western Natl. Corp. 91,838 91,838 3,400 Zila Inc. Com. Par $0.01 20,185 20,187 ------------------------------------------ Total Investment Companies 3,959,938 3,960,937 LEISURE AND RECREATION 4,700 Acclaim Entmt. Inc. Com. Par $0.02 17,037 17,038 1,600 Activision Inc. New 28,600 28,600 1,600 Action Performance Cos. Inc. 60,600 60,600 2,200 Arctic Cat Inc. 21,313 21,314 3,100 Ascent Entmt. Group Inc. 32,163 32,163 3,400 Boyd Gaming Corp. 22,525 22,525 3,000 Callaway Golf Co. 85,688 85,689 2,100 Central Garden & Pet Co. 55,125 55,125 4,600 Champion Enterprises Inc. 94,588 94,590 3,400 Circus Circus Enterprise Inc. 69,700 69,700 1,500 Cross AT Co. Cl. A 15,188 15,188 2,000 Department 56 Inc. 57,500 57,500 1,600 Family golf Ctrs. Inc. 50,200 50,200 3,000 Florida Panthers Hldgs. Inc. Cl. A 51,750 51,750 2,400 Galoob Toys Inc. 24,450 24,451 3,400 Grand Casinos Inc. 46,325 46,325 3,700 Handleman Co. Dell 25,669 25,671 2,200 Huffy Corp. 29,700 29,700 4,000 International Gam Technology 101,000 101,000 2,300 K2 Inc. 52,325 52,900 3,200 Malibu Entmt. Worldwide Inc. 10,200 10,202 1,300 North Face Inc. 28,600 28,600 400 Penn Natl. Gaming 3,900 3,900 3,100 Polaris Inds. Inc. 94,744 94,745 1,300 Primadonna Resorts Inc. 21,694 21,694 1,400 Regal Cinemas Inc. 39,025 39,025 1,200 Scientific Games Hldg. Corp. 24,300 24,300 1,200 Sodak Gaming Inc. 7,650 7,650
63 66 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- LEISURE AND RECREATION--CONTINUED 1,600 Speedway Motorsports 39,700 39,701 3,100 Sports Auth. Inc. 45,725 45,725 3,000 Station Casinos Inc. 30,563 30,564 1,600 TCA Cable TV Inc. 73,600 73,600 1,500 Toy Biz Inc. Cl. A 11,625 11,625 2,400 Vail Resorts Inc. 62,247 62,249 ------------------------------------------ Total Leisure and Recreation 1,435,019 1,435,609 MACHINERY--AGRICULTURE 800 ADE Corp. 14,000 14,000 2,600 AGCO Corp. 76,050 76,050 800 Butler Mfg. Co. Del. 25,800 25,800 1,100 Lindsay Mfg. 47,713 47,713 4,200 Terra Industries Inc. 54,862 54,864 ------------------------------------------ Total Machinery--Agriculture 218,425 218,427 MACHINERY--TOOLS 1,100 Alltrista Corp. 31,213 31,213 1,900 Brown & Sharpe Mfg. Co. 19,356 19,238 900 Gleason Corp. 24,244 24,244 3,100 Kaydon Corp. 101,138 101,138 2,900 Kennametal Inc. 150,256 150,983 2,200 Kulicke & Soffa Inds. Inc. 40,975 40,975 900 Omniquip Intl. Inc. 17,944 17,944 800 Precision Castparts Corp. 48,250 48,250 1,900 Regal Beloit Corp. 56,169 56,170 700 Starrett LS Co. Cl. A 25,594 25,594 600 Terex Corp. New 14,099 14,099 ------------------------------------------ Total Machinery--Tools 529,238 529,848
64 67 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- MACHINERY--OTHER 100 AG Chem. Equip. Inc. 1,388 1,388 1,900 Albany Intl. Corp. New Cl. A 43,700 43,700 1,100 Alliant Techsystems Inc. 61,325 61,325 2,400 Alpine Group Inc. 45,000 45,000 1,900 Alumax Inc. 64,600 65,075 700 Asyst Technologies 15,225 15,225 1,400 Beckman Instrs. Inc. New 56,000 56,000 2,400 Boston Technology Inc. Com. New 60,300 60,300 1,600 Cascade Corp. 27,200 27,200 2,200 Centennial Cellular Corp. Cl. A 45,100 45,100 400 Chart Inds. Inc. 9,125 9,125 1,600 Coachmen Inds. Inc. 34,500 34,501 2,000 Credence Sys. Corp. 59,250 59,250 800 DT Inds. Inc. 27,200 27,200 2,200 Electroglas Inc. 33,963 33,964 900 Esterline Technologies 32,400 32,400 1,700 Figgie Intl. Inc. Cl. A 22,313 22,313 1,500 Gardner Denver Machy. Inc. 37,969 37,970 2,300 Global Indl. Technologies Inc. 38,956 38,957 1,900 Graco Inc. 70,894 70,895 3,200 Idex Corp. 111,600 111,600 1,000 Integrated Process Equip. Corp. 15,750 15,750 2,000 Integrated Sys. Inc. 27,500 27,500 3,500 JLG Inds. Inc. 49,438 49,438 1,700 Manitowoc Inc. 55,250 55,250 900 NN Ball & Roller Inc. 7,988 7,988 3,500 National Oilwell Inc. 119,656 119,658 1,600 Nordson Corp. 73,400 73,400 700 Penn Engr. & Mfg. Corp. 17,413 17,325 500 Rental Svc. Corp. 12,281 12,282 3,500 Roper Inds. Inc. New 98,875 98,875 3,100 Royal Appliance Mfg. Co. 20,538 20,538 1,100 SPS Technologies Inc. 47,988 47,988 3,200 Safeguard Scientific 100,400 100,400
65 68 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- MACHINERY--OTHER--CONTINUED 1,200 Smith AO Corp. 50,700 50,700 1,900 Speciality Equip. Cos. Inc. Com. New 31,825 31,825 2,500 Sundstrand Corp. 125,938 125,938 900 Tecumseh Prods. Co. Com. Cl. A 43,875 43,875 900 Tennant Co. 32,738 32,738 1,200 Toro Co. 51,150 51,150 300 Turbochef Inc. 2,175 2,175 2,100 Watsco Inc. Cl. A 51,844 51,845 1,900 Watts Ind. Inc. Cl. A 53,794 53,795 2,400 Wyman Gordon Co. 47,100 47,100 1,900 York International Corp. New 75,164 75,164 ------------------------------------------ Total Machinery--Other 2,110,788 2,111,185 MEDICAL SUPPLY AND SERVICE 2,600 Acuson 43,063 43,064 1,700 ADAC Labs Com. New 33,575 33,575 3,600 Advanced Tissue Sciences Inc. 44,550 44,550 2,900 Agouron Pharmaceuticals Inc. 85,188 85,188 2,500 Alkermes Inc. 49,688 49,688 2,100 Allegiance Corp. 74,419 74,420 2,800 Alliance Pharmaceutical Corp. 20,300 20,300 1,700 American Home Patient Inc. 39,950 39,950 3,200 American Oncology Res. Inc. 51,200 51,200 2,800 Amerisource Health Corp. Cl. A 164,500 163,100 5,600 Apria Healthcare Group Inc. 75,250 75,253 2,200 Arris Pharmaceutical Corp. 18,425 18,425 1,200 Arrow Intl. Inc. 44,400 44,400 3,100 Arterial Vascular Engr. Inc. 201,500 201,500 1,400 Atria Cmntys. Inc. 23,975 23,975 2,500 Ballard Med. Prods. 60,625 60,625 800 Barr Labs. Inc. 27,300 27,300 2,100 Bergen Brunswig Corp. Cl. A 88,463 88,463 5,300 Biotechnology Gen. Corp. 56,975 56,975 2,500 Biogen Inc. 90,938 90,938
66 69 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- MEDICAL SUPPLY AND SERVICE--CONTINUED 900 Biomatrix, Inc. 27,000 27,000 3,700 CNS Inc. 24,744 24,746 1,100 Carematrix Corp. 31,625 31,625 2,800 Centocor Inc. 93,100 93,100 2,800 Cephalon Inc. 31,850 31,850 2,500 Cerner Corp. 52,813 52,813 7,200 Chiron Corp. 122,400 122,400 900 Clintrails Resh. Inc. 7,088 7,088 3,100 Concentra Managed Care Inc. 104,625 104,625 1,900 Conmed Corp. 49,875 49,875 6,600 Covance Inc. 131,175 131,175 1,100 Curative Technologies Inc. 33,413 33,413 1,700 Cygnus Inc. 33,788 33,788 1,400 Cytyc Corp. 34,825 34,825 1,500 Datascope Corp. 38,813 38,813 1,900 Dentsply Intl. Inc. New 57,950 57,950 1,100 Diagnostic Prods. Inc. 30,525 30,525 800 Emisphere Technologies Inc. 14,900 14,900 1,900 Enzo Biochem. Inc. 27,788 27,788 2,200 FPA Med. Mgmt. Inc. 40,975 40,975 1,300 Forest Labs Inc. 64,106 64,107 4,700 Foundation Health Sys. Inc. 105,163 104,575 1,500 Genesis Health Venture Inc. 39,563 40,125 7,500 Gensia Sicor Inc. 43,594 43,598 3,100 Genzyme Corp. 86,025 86,025 2,000 Graham Field Health Products Inc. 33,375 33,376 1,100 Gulf South Med. Supply 40,975 40,975 1,500 HBO & Co. 72,000 72,000 2,600 Haemonetics Corp. Mass 36,400 36,400 1,400 Healthcare Compare Corp. 71,575 71,575 5,700 Health Mgmt. Assoc. Inc. New Cl. A 143,925 143,925 1,600 Healthplan Svcs. Corp. 33,600 33,600 1,900 Heartport Inc. 38,713 38,713 2,500 Health Care Reit. Inc. 70,313 70,313
67 70 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- MEDICAL SUPPLY AND SERVICE--CONTINUED 1,700 Healthdyne Technologies Inc. 34,638 34,638 1,700 Hillenbrand Inds. Inc. 87,019 87,020 1,400 Hologic Inc. 28,963 28,963 2,100 Human Genome Sciences Inc. 83,475 83,475 3,100 Icos Corp. 56,769 56,770 1,600 I-Stat Corp. 25,300 25,301 3,800 Idexx Labs Inc. 60,563 60,564 9,000 Imatrom Inc. 20,813 20,817 2,200 Immunomedic Inc. 7,975 7,975 2,100 Incylte Pharmaceuticals Inc. 94,500 94,500 3,100 Integrated Health Services Inc. 96,681 96,683 4,600 Interim Svcs. Inc. 119,025 119,025 2,800 Invacare Corp. 60,900 60,900 2,400 Isis Pharmaceutical 29,550 29,551 2,600 Jones Med. Inds. Inc. 99,450 99,450 300 Kos Pharmaceuticals Inc. 4,631 4,631 1,400 LCA-Vision Inc. Com. New 1,575 1,575 1,000 Lab Holdings Inc. 23,250 23,250 6,800 Laboratory Corp. Amer. Hldgs. 11,475 11,900 1,100 Lam Resh Corp. 32,175 32,175 1,100 Landauer Inc. 30,800 30,800 1,000 Life Technologies Inc. Com. New 33,250 33,250 2,300 Ligand Pharmaceuticals Inc. Cl. B 29,613 29,613 1,300 Lincare Holdings Inc. 74,100 74,100 3,100 Liposome Inc. 14,338 14,338 3,600 Magellan Health Svcs., Inc. 77,400 77,400 2,500 Mariner Health Group Inc. 40,625 40,625 1,400 Marquette Med. Sys. Inc. 37,275 37,275 1,800 Martek Biosciences 14,850 14,850 1,600 Maxicare Health Plans Inc. Com. New 17,400 17,400 7,200 Medaphis Corp. 46,800 46,800 2,100 Medical Assurn Inc. 59,063 56,250 105 Medical Assurn Inc. Shares from Pending Stock Dividend 0 2,812
68 71 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- MEDICAL SUPPLY AND SERVICE--CONTINUED 900 Medical Resources, Inc. 8,438 8,438 1,300 Medicis Pharmaceutical Corp. Cl. A New 66,463 66,463 1,400 Medquist Inc. 48,650 48,650 5,900 Medpartners Inc. New 132,013 132,013 2,300 Mentor Corp. Minn. 83,950 83,950 4,500 Mid Atlantic Med. Svs. Inc. 57,375 57,375 3,200 Millennium Pharmaceuticals Inc. 60,800 60,800 500 Mine Safety Appliances Co. 32,750 32,750 500 Morrison Health Care Inc. 10,000 10,000 1,500 Mycogen Corp. 28,125 28,125 1,100 Myriad Genetics Inc. 26,675 26,675 4,000 Nabi Inc. 13,625 13,624 2,100 NCS Healthcare Inc. 55,388 55,388 2,500 National Health Invs. Inc. 104,688 104,688 2,000 National Surgery Ctrs. Inc. 52,500 52,500 4,600 Nationwide Health PPTYS Inc. 117,300 117,300 1,900 Neopath Inc. 24,700 24,700 1,900 Neoprobe Corp. 11,400 11,400 2,000 Neurex Corp. 27,750 27,750 2,300 Neuromedical Sys. Inc. 6,469 6,470 2,500 Nexstar Pharmaceuticals Inc. CMM 28,438 28,438 6,000 Novacare Inc. 78,375 78,750 3,500 Omnicare Inc. 108,500 108,500 2,500 Omega Healthcare Invs. Inc. 96,563 96,563 2,600 Organo Genesis Inc. 68,575 69,875 3,500 Orthodontic Ctrs. Amer. Inc. 58,188 58,188 1,100 Osmonics Inc. 17,394 17,394 2,400 Owens & Minor Inc. 34,800 34,800 3,000 Oxford Health Plans Inc. 46,688 46,689 1,200 PHP Healthcare Corp. 18,075 18,076 1,600 Pacificare Health Sys. Inc. Del. Cl. B 83,800 83,800 1,000 Paragon Health Networks Com. Stk. 19,563 19,563 1,900 Pathogenesis Corp. 70,538 70,538 1,700 Patterson Dental Co. 76,925 76,925
69 72 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- MEDICAL SUPPLY AND SERVICE--CONTINUED 1,000 Pediatrix Med. Group 42,750 42,750 600 Perclose Inc. 11,550 11,550 900 Pharmerica Inc. 9,338 9,338 2,800 Phycor Inc. 75,600 75,600 2,600 Physician Relance Network Inc. 27,138 27,139 3,600 Physical Sales & Svc. Inc. 77,400 77,400 4,100 Physicians Resource Group Inc. 17,938 17,938 1,600 Physio-Control Intl. Corp. 25,400 25,400 1,200 Prime Med. Svcs. Inc. 16,575 16,576 3,100 Quest Diagnostics Inc. 52,313 52,313 2,200 Quintiles Transnational Corp. 84,150 84,150 3,200 Quorum Health Group 83,600 83,600 1,800 Regeneron Pharmaceuticals Inc. 15,413 15,413 2,400 Renal Treatment Ctrs. Inc. 86,700 86,700 2,700 Renal Care Group Inc. 86,400 86,400 300 Res-Care Inc. 8,700 8,700 2,400 Respironics Inc. 53,700 53,700 2,200 Roberts Pharmaceutical Corp. 21,038 21,039 1,900 Safeskin Corp. 107,825 107,825 1,900 Sangstat Med. Corp. 76,950 76,950 4,900 Scios-Nova Inc. 49,000 49,000 3,000 Sepracor Inc. 120,188 120,189 1,600 Sierra Health Svcs. Inc. 53,800 53,800 700 Sofamor/Danek Group Inc. 45,544 45,675 2,900 Sola Intl. Inc. 94,250 94,250 1,100 Space Labs Med. Inc. 20,900 20,900 1,200 Spine-Tech Inc. 61,725 61,726 1,900 Staar Surgical Co. Com. (New) Par 0.01 32,656 32,657 1,500 Steris Corp. 72,375 72,375 2,700 Stryker Corp. 100,575 100,575 4,400 Sun Healthcare Group Inc. 85,250 85,250 700 Sunrise Assisted Living Inc. 30,188 30,188 1,900 Sunrise Med. Inc. 29,331 29,332 1,800 Sybron International Corp. 84,488 84,488
70 73 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- MEDICAL SUPPLY AND SERVICE--CONTINUED 2,500 Techne Corp. 43,750 43,750 1,800 Thermo Cardiosystems Inc. 48,150 48,150 2,500 Thermedics Inc. 40,938 40,938 4,500 Total Renal Care Hldgs. Inc. 123,750 123,750 1,500 Triangle Pharmaceuticals 21,938 21,938 4,600 Trigon Healthcare Inc. 120,175 120,175 2,100 Ultratech Stepper 41,738 41,738 1,100 Universal Health Svcs. Inc. Cl. B 55,413 55,413 1,400 Veterinary Ctrs. Amer. Inc. 18,813 18,813 1,300 Visx Inc. Del. 28,763 28,763 700 Vital Signs Inc. 13,650 13,650 3,100 Vivus Inc. 32,938 32,938 3,400 Wang Labs Inc. Com. New 75,225 75,225 700 Wellpoint Health Networks Inc. New 29,575 29,575 1,300 West Inc. 38,675 38,675 1,100 Zygo Corp. 20,600 20,607 ------------------------------------------ Total Medical Supply and Service 9,007,444 9,008,288 METALS--ALUMINUM 1,500 Commonwealth Inds. Inc. Del. 21,750 21,750 2,400 IMCO Recycling Inc. 38,550 38,551 600 Maxxam Inc. 26,175 26,175 ------------------------------------------ Total Metals--Aluminum 86,475 86,476 METALS--STEEL 4,600 AK Steel 81,363 81,365 1,800 Acme Metals Inc. 17,775 17,775 1,000 Amcast Indl. Corp. 22,938 22,938 3,100 Birmingham Stl. Corp. 48,825 48,825 2,000 Carpenter Technology Corp. 96,125 96,126 600 Chaparral Stl. Com. 9,263 9,263 600 Citiation Corp. ALA 9,750 9,750 1,100 Cleveland Cliffs Inc. 50,394 50,394 700 Gibraltar Stl. Corp. 13,825 13,825
71 74 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- METALS--STEEL--CONTINUED 4,700 MA Hanna Co. 118,675 118,675 2,600 Intermet Corp. 45,500 45,500 2,900 J&L Specialty Stl. Inc. 29,181 29,000 4,200 LTV Corp. New 40,950 41,475 2,300 Lone Star Technologies Inc. 65,263 65,263 1,500 Lukens Inc. 42,844 42,938 2,200 National Steel Corp. Cl. B 25,438 25,439 1,600 Oregon Metallurgical Corp. 53,400 53,400 2,000 Oregon Stl. Mls. Inc. 42,625 42,626 1,000 Reliance Stl. & Alum. Co. 29,750 29,750 1,100 Rouge Inds. Inc. Del. Cl. A 13,338 13,338 4,200 Steel Dynamics Inc. 67,200 67,200 1,800 Trinity Inds. Inc. 80,325 80,325 1,900 Valmont Inds. Inc. 37,047 37,048 ------------------------------------------ Total Metals--Steel 1,041,794 1,042,238 METALS--OTHER 1,400 Allied Prods. Corp. Del. 33,600 33,600 7,100 Amax Gold Inc. 16,419 16,422 1,300 Applied Indl. Technologies Inc. 34,775 34,775 1,600 Brush Wellman Inc. 39,200 39,200 1,300 Castle AM & Co. 29,738 29,738 1,700 Century Alum. Co. 22,950 22,950 1,700 Clarcor Inc. 50,363 50,363 2,400 Coeur D Alene Mines Corp. Idaho 21,600 21,451 3,000 Columbia Labs Inc. 47,625 52,500 1,400 Commercial Intertec Corp. 29,050 29,050 1,500 Commercial Metals Co. 47,344 47,345 1,200 Emcore Wire Corp. 36,825 36,826 1,200 Fastenal Co. 45,900 45,900 2,500 Getchell Gold Corp. 60,000 61,250 1,200 Handy & Harman 41,400 41,400 1,700 Harsco Corp. 73,313 73,313 5,700 Hecla Mng. Co. 28,144 28,147
72 75 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- METALS--OTHER--CONTINUED 900 Hon Inds. Inc. 53,100 53,100 1,300 Kuhlman Corp. 50,863 50,863 1,000 Learonal Inc. 23,500 23,500 3,500 Miller Inds. Inc. Tenn. 37,625 38,063 700 Newmont Gold Co. 20,867 20,869 4,000 OMI Corp. 36,750 36,752 5,500 Ogden Corp. 155,031 155,034 1,100 Park Electrochemical Corp. 31,213 31,213 1,500 Quanex Corp. 42,188 42,188 1,200 RMI Titanium Co. Com. New 24,000 24,150 2,200 Rohn Inds. Inc. 11,344 11,343 1,100 Shaw Group Inc. 25,300 25,300 2,700 Simpson Inds. Inc. 31,725 31,725 1,700 Stillwater Mining Co. 28,475 28,688 2,600 Sturm Ruger & Co. Inc. 47,938 47,939 2,100 Titanium Metals Corp. 60,638 60,638 500 Tremont Corporation (New) 26,125 26,125 1,900 WMS Inds. Inc. 40,138 40,138 1,500 Wolverine Tube Inc. 46,500 46,500 1,200 Zero Corp. 35,547 35,694 ------------------------------------------ Total Metals--Other 1,487,113 1,494,052 MISCELLANEOUS 2,100 ATL Ultrasound Inc. 96,600 96,600 1,000 ATMI Inc. 24,250 24,250 900 AVX Corp. 16,594 16,594 6,300 Acnielsen Corp. 153,563 153,563 300 Advent Software Inc. 8,588 8,588 2,100 Affymetrix Inc. OC-Cap. Stk. 65,363 65,363 1,300 Airnet Sys. Inc. 27,950 27,950 900 Algos Pharmaceutical Corp. 27,000 27,000 2,600 Allen Telecom Inc. 47,938 47,939 800 Alternative Living Svcs. Inc. 23,650 23,650 1,300 Amerco 33,313 33,313
73 76 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- MISCELLANEOUS--CONTINUED 3,000 Amerin Corp. 84,000 84,000 700 Andrx Corp. 23,972 23,975 600 Applied Analytical Inds. Inc. 9,900 9,900 1,500 Arqule Inc. 34,406 34,407 1,000 Aspect Dev. Inc. 52,000 52,000 1,200 Atlas Air Inc. 28,800 28,800 400 Aviation Sales Co. 15,050 15,050 1,900 Aware Inc. Mass 19,475 19,475 500 BT Office Prods. Intl. Inc. 3,875 3,875 300 Ballys Grand Inc. 15,356 15,356 1,500 Big Flower Hldgs. Inc. 36,188 36,188 1,900 Billing Information Concepts Corp. 91,200 91,200 1,800 Blount Intl. Inc. Cl. A 48,038 48,038 1,200 Boykin Lodging Tr. Inc. 31,725 31,726 1,500 Budget Group Inc. Com. Cl. A 51,844 51,845 500 CNET Inc. 14,750 14,750 1,100 Ctg. Res. Inc. 28,669 28,669 500 Carbide/Graphite Group Inc. 16,875 16,875 1,800 Capstar Hotel Co. 61,763 61,763 4,000 Cellnet Data Sys. Inc. 31,000 31,000 1,200 Central Pkg. Corp. 54,375 54,376 1,200 Chase Inds. Inc. 30,600 30,600 2,200 Chateau Cmntys Inc. 69,300 69,300 1,100 Circle Intl. Group Inc. 25,231 25,232 1,900 Clarify Inc. 22,088 22,088 1,700 Commscope Inc. 22,844 23,163 400 Contifinancial Corp. 10,075 10,075 1,400 Cooper Cos. Inc. Com. New 57,225 57,225 600 Cost Plus Inc. Calif. 17,400 17,400 400 DBT Online Inc. 9,975 9,975 900 Data Dimensions Inc. Com. Par $0.001 15,525 15,525 900 Data Processing Resource Inc. 22,950 22,950 1,200 Dominicks Supermarkets Inc. 43,800 43,800 400 Donaldson Lufkin & Jenrette 31,800 31,800
74 77 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- MISCELLANEOUS--CONTINUED 1,100 Donna Karan Intl. Inc. 14,163 14,163 300 Dupont Photomarks Inc. 10,463 10,463 1,000 Eagle USA Airfreight Inc. 28,500 28,500 600 Education Mgmt. Corp. 18,600 18,600 3,700 Enova Corp. 100,131 99,671 3,100 Equity Office PPTYS Tr. 97,844 97,845 600 FEI Co. 7,463 7,463 1,700 Fabri Ctrs. Amer. Inc. 37,931 37,932 400 Factset Resh. Sys. Inc. 12,300 12,300 2,900 Footstar Inc. 77,938 77,938 2,400 Freeport-McMoran Sulphur Inc. 28,200 28,200 1,600 Fuisz Technologies Ltd. 13,600 13,600 900 Gaylord Entmt. Co. New 28,744 28,744 2,200 General Cable Corp. Del. New 79,613 79,614 1,100 General Chem. Group Inc. 29,425 29,425 4,200 General Mtrs. Corp. Cl. H. New 155,138 155,140 2,400 Glenborough Rlty. Tr. Inc. 71,100 71,100 1,100 Great Lakes Reit. Inc. 21,381 21,382 900 Guarantee Life Cos. Inc. 25,650 25,650 1,700 Guilford Pharmaceuticals Inc. 34,213 34,213 2,900 Gulfstream Aerospace Corp. 84,825 84,825 4,200 HMT Technology Corp. 54,600 54,600 2,500 Hartford Life Inc. Cl. A 113,281 113,283 600 Herbalife Intl. Inc. Cl. A 12,600 12,600 2,100 Highwaymaster Communications Inc. 11,944 11,945 1,200 Hollinger International Inc. Cl. A 16,800 16,800 3,400 Homebase Inc. 26,775 26,775 2,200 IMC Mtg. Co. 26,125 26,125 1,900 IXC Communications Inc. 59,613 59,613 2,600 Industri-Matematik Intl. Corp. 76,700 76,700 1,600 Infinity Finl. Technology Inc. 33,500 33,501 1,800 Ingram Micro Inc. Cl. A 52,425 52,425 300 Iron Mtn. Inc. Del. 10,800 10,800 500 LHS Group Inc. 29,875 29,875
75 78 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- MISCELLANEOUS--CONTINUED 1,700 Lamar Advertising Cl. A 67,575 67,575 3,700 Learning Co. Inc. 59,431 59,433 1,200 Linens N Things Inc. 52,350 52,350 1,300 Metromail Corp. New 23,238 23,238 3,500 Midamerican Energy Hldgs. Co. 77,000 77,000 400 Minimed Inc. 15,550 15,550 1,700 Morrison Knudsen Corp. New 16,575 16,575 1,800 Oakley Inc. 16,313 16,313 1,900 Object Design Inc. 15,913 15,913 1,400 Ocean Energy Inc. 69,038 69,038 800 Ocean Finl. Corp. 29,800 29,800 2,700 Omnipoint Corp. 62,775 62,775 100 Oriental Finl. Group Inc. 2,956 2,956 3,150 Outdoor Sys. Inc. 80,588 80,850 1,700 PFF Bancorp Inc. 33,788 33,788 1,400 Palm HBR Homes Inc. 39,550 39,550 1,100 Panamsat Corp. New 47,438 47,438 2,400 Popular Inc. 118,800 118,800 2,800 Prentiss PPTYS Tr. Sh. Ben. Int. 78,225 78,226 3,900 Ralcorp Hldgs. Inc. New 66,056 66,058 2,600 Reckson Assocs. Rlty. Corp. 65,975 65,975 2,700 Red Roof Inns Inc. 41,344 41,345 1,500 Rofin Sinar Technologies Inc. 18,188 18,188 1,200 Semco Energy Inc. 21,750 21,750 700 Sabratek Corp. 20,125 20,125 2,600 Sabre Group Hldgs. Inc. Cl. A 75,075 75,075 300 St. Joe Corp. 27,150 27,150 800 Schein Henry Inc. 28,000 28,000 1,100 Scripps Co. Cl. A 53,281 53,282 1,700 Security Cap Atlantic Inc. 35,913 35,913 600 Semtech Corp. 23,475 23,475 1,500 Serologicals Corp. 39,000 39,000 2,400 Sigcorp Inc. 70,500 70,500 2,100 Silgan Hldgs. Inc. 68,250 68,250
76 79 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- MISCELLANEOUS--CONTINUED 200 Simpson Mtg. Inc. 6,663 6,663 4,100 Sitel Corp. 37,413 37,413 4,400 Solutia Inc. 117,425 117,427 600 Southern Peru Copper Corp. 8,025 8,025 700 Speedfam Intl. Inc. 18,550 18,550 1,000 Splash Technology Hldgs. Inc. 22,500 22,500 600 Strayer Ed. Inc. 19,800 19,800 3,100 Sunburst Hospitality Corp. 30,612 30,613 1,700 Sunstone Hotel Invs. Inc. 29,325 29,325 700 Superior Telecom Inc. 24,194 24,194 5,300 TCI Satellite Entmt. Inc. Cl. A 36,438 36,438 1,900 Telespectrum Worldwide Inc. 6,888 6,888 400 Thermo Terratech Inc. 3,250 3,250 1,700 Transkaryotic Therapies Inc. 59,713 59,713 4,200 Transocean Offshore Inc. 202,388 202,390 1,700 Trico Marine Svcs. Inc. 49,938 49,938 4,000 Tucson Elec. Pwr. Co. F/K/A Tucson Gas & Elec. Co. Com. New 72,500 72,500 2,200 Twinlab Corp. 54,450 54,450 1,800 US Tr. Corp. New 112,725 112,725 300 Univision Communications Inc. Cl. A 20,944 20,944 1,300 Vantive Corp. 32,825 32,825 2,400 Veritas DGC Inc. 94,800 94,800 2,100 Visio Corp. 80,588 80,588 3,400 Waters Corp. 127,925 129,625 2,000 Weatjerfprd Emterra 87,500 87,500 1,000 Wilmar Inds. Inc. 23,875 23,875 2,400 Wireless Telecom Group Inc. 14,850 15,000 1,100 Zoran Corp. 13,259 13,257 ------------------------------------------ Total Miscellaneous 6,129,488 6,131,491
77 80 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- OFFICE EQUIPMENT 1,500 Aaron Rents Inc. Cl. B 29,063 29,063 2,000 Access Health Inc. 58,750 58,750 3,300 Acxiom Corp. 63,525 63,525 3,900 America Online Inc. Del. 347,831 352,950 1,200 American Business Information Inc. Com. Cl. B 12,300 12,300 1,200 American Business Prods. Inc. GA 25,950 25,950 3,800 American Mgmt. Sys. Inc. 74,100 74,100 2,700 American Pad & Paper Co. New 25,988 25,988 700 Analogic Corp. Com. Par $.05 26,600 26,600 2,800 Antec Corporation 43,750 43,750 1,200 Arbor Software Corp. 48,600 48,600 2,400 Aspen Technologies 82,200 82,200 2,500 Auspex Sys. Inc. 25,000 25,000 2,900 Bisys Group Inc. 96,425 96,425 2,700 BMC Inds. Inc. Minn 43,538 44,045 800 BRC Hldgs. Inc. 30,600 30,600 4,200 BMC Software Inc. 275,625 275,625 2,400 Banctec Inc. 64,350 64,351 700 Barra Inc. 16,888 16,888 1,000 Bell & Howell Co. New 24,188 24,188 1,600 Black Box Corp. Del. 56,600 56,600 3,900 Borland Intl. Inc. 28,519 28,521 1,900 Broderbund Software 48,688 48,688 1,800 CCC Information Svcs. Group 35,550 35,550 900 CDW Computer Ctrs. Inc. 46,913 46,913 500 Caci International Inc. Cl. A 9,906 9,907 8,000 Cadence Design Sys. Inc. 196,000 196,000 1,200 Cambrex Corp. 55,200 55,200 1,600 Cambridge Technology Partners Mass Inc. 66,600 66,600 800 Cellular Communications International Inc. 37,400 37,400 1,000 Ciber Inc. 58,000 58,000 5,500 Cirrus Logic Inc. 58,438 58,438 2,600 Citrix Sys. Inc. 197,600 197,600
78 81 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- OFFICE EQUIPMENT--CONTINUED 2,100 Comdisco Inc. 70,219 70,220 2,300 Compucom Sys. Inc. 18,975 18,975 2,300 Computer Prods. Inc. 52,038 52,038 1,400 Computer Task Group Inc. 49,788 49,788 5,400 Computervision Corp. New 20,588 20,590 5,500 Compuware Corp. 176,000 176,000 2,300 Converse Technology Inc. Com. Par $0.10 89,700 89,700 5,900 Copytele Inc. 20,650 20,650 1,300 Cybermedia Inc. 19,581 19,582 1,000 DST Sys. Inc. Del. 42,688 42,688 800 Dialogic Corp. 35,000 35,000 3,500 Diamond Multimedia Systems Inc. 31,063 31,063 3,000 Diebold Inc. 151,875 151,875 3,500 Digital Microwave Corp. 50,750 50,750 1,600 Dynatech Corp. 75,000 75,000 3,300 E Trade Group Inc. 75,900 75,900 1,500 Edify Corp. 28,125 28,125 13,600 Electronic Data Sys. Corp. New 597,550 597,557 1,100 Encad Inc. 30,250 30,250 2,300 Exabyte Corp. 14,806 14,807 4,500 FTP Software Inc. 10,125 10,125 900 Faire Issac & Co. Inc. 29,981 29,982 1,500 Filenet Corp. 45,188 45,188 2,200 Fiserv Inc. 108,075 108,075 1,800 Forte Software Inc. 13,725 13,725 2,500 GT Interactive Software Corp. 15,938 15,938 2,400 Gateway 2000 Inc. 78,300 78,600 1,600 General Datacomm Inds. Inc. 7,500 7,501 2,100 Gerber Scientific Inc. 41,738 41,738 1,200 HCIA Inc. 14,250 14,250 1,700 HNC Software Inc. 73,100 73,100 1,100 Hadco Corp. 49,775 49,775 1,100 Henry Jack & Assoc. Inc. 29,975 29,975 300 Hunt Corporation 7,106 7,106
79 82 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- OFFICE EQUIPMENT--CONTINUED 2,000 Hyperion Software Corp. 71,500 71,500 800 IDX Sys. Corp. 29,600 29,600 1,000 IKOS Sys. Inc. Com. New 6,125 6,125 1,100 In Focus Sys. Inc. 33,413 33,413 900 Imnet Sys. Inc. 14,625 14,625 6,000 Informix Corp. 28,500 28,500 2,200 Interface Inc. Cl. A 63,800 63,800 4,300 Intergraph Corp. 43,000 43,000 2,100 Intervoice Inc. 15,750 15,750 1,700 Intuit Inc. 70,125 70,125 800 I2 Technologies Inc. 42,200 42,200 800 JDA Software Group Inc. 28,000 28,000 1,000 Knoll Inc. 32,125 32,125 2,200 Komag Inc. 32,725 32,725 2,000 Legato Sys. Inc. 88,000 88,000 1,600 Lycos Inc. 66,200 66,200 900 MTS Sys. Corp. 33,750 33,750 1,900 Manugistics Group Inc. 84,788 84,788 1,200 Mastec Inc. 27,450 27,450 5,000 Maxim Integrated Prods Inc. 172,500 172,500 6,200 Mentor Graphics Corp. 60,063 60,066 2,000 Mercury Interactive Corp. 53,500 53,500 1,600 Microage Inc. 24,100 24,101 600 Micron Electronics Inc. 5,475 5,475 800 Microtouch Systems Inc. 12,600 12,600 1,900 Miller Herman Inc. 103,669 103,670 3,000 Mylex Corp. 27,000 27,000 1,600 National Computer Sys. Inc. 56,400 56,400 1,200 National Data Corp. 43,350 43,350 1,300 National Instrs. Corp. 37,700 37,700 1,100 National Techteam Inc. 9,900 9,900 1,900 Netscape Communications Corp. 46,313 46,313 2,200 Network Computing Devices Inc. 20,625 20,625 1,100 New England Business Svc. Inc. 37,125 37,125
80 83 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- OFFICE EQUIPMENT--CONTINUED 5,900 Office Depot Inc. 141,231 141,234 700 Pegasystems Inc. 14,131 14,132 6,100 Peoplesoft Inc. 237,900 237,900 1,700 Phoenix Technology Ltd. 20,613 20,613 3,600 Physician Computer Network Inc. 14,400 14,400 800 Pixar 17,300 17,300 6,600 Platinum Technology Inc. 186,450 186,450 1,700 Policy Mgmt. Sys. Corp. 118,256 118,257 1,200 Progress Software Corp. 25,950 25,950 900 Project Software & Dev. Inc. 21,150 21,150 4,300 Quantum Corp. 86,269 86,271 800 Radisys Corp. 29,800 29,800 7,500 Rational Software Corp. Com. New 85,313 85,313 2,300 Remedy Corp. 48,300 48,300 2,800 Reynolds & Reynolds Co. Cl. A 51,625 51,626 1,800 Robotic Vision Sys. Inc. Com. 20,700 20,700 1,000 SPSS Inc. 19,250 19,250 1,900 Sandisk Corp. Com. Direct Placement 38,594 38,595 200 Sapient Corp. 12,250 12,250 2,100 Scopus Technology Inc. 25,200 25,200 800 Seachange Intl. Inc. 5,700 5,700 1,200 Security Dynamics Technologies 42,900 42,900 4,100 Sequent Computer Sys. Inc. 82,000 82,000 1,900 Siebel Sys. Inc. 79,444 79,445 1,300 Standard Register Co. 45,175 45,175 6,600 Staples Inc. 183,150 183,150 3,300 Sterling Com. Inc. 126,844 126,845 1,100 Sterling Software Inc. 45,100 45,100 2,300 Storage Technology Corp. Com. Par $0.10 142,456 142,457 2,800 Stratus Computer Inc. 105,875 105,876 3,900 Structural Dynamics Resh. Corp. 87,750 87,750 2,700 Sungard Data Sys. Inc. 83,700 83,363 3,400 Sybase Inc. 45,263 45,264 1,000 Sykes Enterprises Inc. 19,500 19,500
81 84 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- OFFICE EQUIPMENT--CONTINUED 5,300 Symantec Corp. 116,269 116,271 3,200 Synopsys Inc. 114,400 114,400 3,700 System Software Assoc. Inc. 32,375 32,375 1,900 Systems & Computer Technology Corp. 94,288 94,288 1,600 Tech Data Corp. 62,200 62,200 2,700 Technology Solutions Co. 71,213 71,213 2,200 Telxon Corp. 52,525 52,525 2,100 Transition Sys. Inc. Mass 46,463 46,463 1,300 Trident Microsystems Inc. 11,781 11,782 2,100 USCS Intl. Inc. 35,700 35,700 4,900 Vanstar Corp. 55,431 55,434 2,500 Veritas Software Co. 127,500 127,500 2,100 Viasoft Inc. 88,725 88,725 3,600 Viking Office Products 78,525 78,527 1,900 Walker Interactive Systems Inc. 26,125 26,125 1,400 Wall Data Inc. 19,075 19,075 1,500 Wallace Computer Secs. Inc. 58,313 58,313 3,600 Western Digital Corp. 57,825 57,600 1,800 Wind Riv Sys. Inc. 71,438 71,438 2,300 Wonderware Corp. 32,488 32,488 900 Woodward Governor Co. 29,138 29,138 1,900 Xircom 19,119 19,120 3,400 Xylan Corp. 51,425 51,425 2,300 Zebra Technologies Cl. A 68,425 68,425 2,100 Zilog Inc. 40,027 40,021 ------------------------------------------ Total Office Equipment 9,778,325 9,783,739 OIL--DOMESTIC 2,000 Argonaut Group Inc. 67,750 67,750 1,300 Atwood Oceanics Inc. 61,588 61,588 3,500 Barrett Res. Corp. Com. Par $0.01 105,875 105,875 2,400 Berry Pete Co. Cl. A 41,850 41,851 2,600 Brown Tom Inc. 50,050 50,050 4,200 Chesapeake Energy Corp. 31,763 31,765
82 85 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- OIL--DOMESTIC--CONTINUED 2,000 Cooper Cameron Corp. 122,000 122,000 2,100 Cross Timbers Oil Co. 52,369 52,370 6,600 Grey Wolf Inc. 35,475 35,891 800 Holly Corp. Com. Par $0.01 22,100 22,100 1,100 Key Energy Group 23,856 23,857 1,700 Lomak Pete Inc. Com. New 27,625 27,625 1,900 Louis Dreyfus Nat. Gas Corp. 35,506 35,507 3,900 NGC Corp. 68,250 68,250 1,000 NUI Corp. 28,688 28,688 3,800 Newfield Expl. Co. 88,588 88,589 2,100 Noble Affiliates Inc. 74,025 74,025 4,600 Noble Drilling Corp. 140,875 140,875 2,000 Plains Res. Inc. Com. Par $0.10 34,375 34,376 3,600 Quaker State Corp. 51,300 50,850 1,100 St. Mary LD & Expl. Co. 38,500 38,500 1,300 Stone Energy Corp. 43,550 43,550 2,100 Swift Energy Co. 44,231 44,232 2,800 Tesoro Pete Corp. 43,400 43,400 2,300 Tidewater Inc. Com. 126,788 127,363 6,700 USA Waste Services Inc. 262,975 262,975 1,400 United Meridian Corp. 39,375 39,375 600 Vastar Res. Inc. 21,448 21,449 ------------------------------------------ Total Oil--Domestic 1,784,175 1,784,726 OIL--INTERNATIONAL 3,400 Benton Oil & Gas Co. 43,988 43,989 1,600 Camco Intl. Inc. 101,900 101,901 4,200 EEX Corp. 38,063 38,065 1,300 EVI Inc. 67,275 67,275 2,700 Enron Oil & Gas Co. 57,206 57,208 5,000 Global Industries Ltd. 85,000 85,000 2,300 LG &E Energy Corp. 56,925 57,070 1,100 Mitchell Energy & Dev. Corp. Cl. A 32,313 32,313 1,400 Murphy Oil Corp. 75,863 75,863
83 86 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- OIL--INTERNATIONAL--CONTINUED 1,000 Patterson Energy Inc. 38,688 38,688 1,800 Texaco Inc. 97,875 97,875 3,300 Titan Expl. Inc. 31,350 31,350 3,500 Union Tex Pete Hldgs. Inc. 72,842 72,844 ------------------------------------------ Total Oil--International 799,288 799,441 OIL--SERVICE 1,500 BJ Services 107,906 107,907 1,900 Cabot Oil & Gas Corp. Cl. A 36,931 36,932 1,600 COHO Energy Inc. 14,600 14,600 1,500 Daniel Inds. Inc. Com. (Del.) 28,875 28,875 2,000 Devon Energy Corp. 77,000 77,000 2,500 Diamond Offshore Drilling Inc. 120,313 120,313 5,400 Ensco Intl. Inc. 180,900 180,900 3,200 Falcon Drilling Inc. 112,200 111,600 300 Fina Inc. Cl. A 19,200 19,200 2,900 Forest Oil Corp. Com. New 47,850 47,850 1,000 Getty Realty Corp. 22,125 22,125 5,500 Global Marine Inc. 134,750 135,097 2,100 HS Res. Inc. 29,006 29,007 600 Houston Expl. Co. 11,025 11,025 2,700 KCS Energy Inc. Com. New 56,025 56,025 10,200 Kelly Oil Gas Corp. 22,313 22,318 2,500 Kirby Corp. 48,281 48,283 5,500 Marine Drilling Cos. Inc. Com. Par $0.01 114,125 114,125 1,400 Meridian Resource Corp. 13,388 13,388 4,000 Nabors Inds. Inc. 125,750 126,500 3,100 Oceaneering Intl. Inc. 61,225 61,225 2,200 Offshore Logistics Inc. 47,025 47,025 7,700 Parker Drilling Co. 93,844 93,848 3,000 Pioneer Nat. Res. Co. 86,813 87,000 2,000 Pool Energy Svcs. Co. 44,500 44,500 5,000 Pride Intl. Inc. 126,250 126,250 1,500 RPC Inc. F/K/A RPC Energy Svcs. Inc. 17,719 17,720
84 87 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- OIL--SERVICE--CONTINUED 3,000 Reading & Bates Corp. Com. New 125,625 125,625 3,500 Santa Fe Energy Res. Inc. 39,375 39,375 2,200 Seitel Inc. Com. New 37,675 37,675 1,600 Smith Intl. Inc. 98,200 98,200 2,700 Snyder Oil Corp. 49,275 49,275 2,300 Susquehanna Bancshares Inc. 87,975 87,975 1,100 Tetra Technologies Inc. Del. 23,169 23,169 5,900 Tosco Corp. Com. New 223,094 223,097 1,700 Transmontaigne Oil Co. 25,500 25,500 3,300 Ultramar Diamond Shamrock 105,188 105,188 3,100 Unit Corp. 29,838 29,838 3,200 Varco Intl. Inc. 68,597 68,600 ------------------------------------------ Total Oil--Service 2,713,450 2,714,154 PAPER 1,700 Bowater Inc. 75,544 75,545 2,100 Chesapeake Corp. 72,188 72,188 900 Consolidated Paper Inc. 48,038 48,038 2,900 Glatfelter P H Co. 54,013 54,013 1,200 Jefferson Smurfit Corp. New 16,950 16,950 5,300 Longview Fibre Co. (Washington) 80,494 80,496 1,700 Lydall Inc. 33,150 33,150 1,200 Pentair Inc. 43,125 43,126 3,500 Sonoco Prods. Co. 121,406 121,408 2,300 Unisource Worldwide Inc. 32,773 32,773 ------------------------------------------ Total Paper 577,681 577,687 PHOTOGRAPHIC 1,200 CPI Corp. 27,150 27,150 1,600 Innovex Inc. 36,700 36,701 ------------------------------------------ Total Photographic 63,850 63,851
85 88 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- POLLUTION CONTROL 2,200 Cuno Inc. 33,550 33,550 2,300 Dames & Moore Inc. 30,475 30,475 6,000 Newpark Res. Inc. Com. Par $0.01 New 105,000 105,000 1,500 OHM Corp. 11,438 11,438 2,600 Tetra Tech Inc. New 52,000 52,000 600 Thermo Instr. Sys. Inc. 20,663 20,663 3,100 United States Filter Corp. New 92,806 92,808 2,800 Wellman Inc. 54,600 54,600 3,200 Wheelabrator Technologies Inc. New Com. Par $0.01 51,400 51,402 1,300 Zurn Inds. Inc. 40,868 40,868 ------------------------------------------ Total Pollution Control 492,800 492,804 PUBLISHING 400 Applied Graphics Technologies Inc. 21,300 21,300 3,200 Banta George Inc. 86,400 86,400 1,600 Belo AH Corp. 89,800 89,800 400 Berlitz Intl. Inc. New 10,400 10,350 400 CKS Group Inc. 5,650 5,650 1,000 CSS Ind. Inc. 31,875 31,875 500 Central Newspapers Inc. Cl. A 36,969 36,969 1,000 Consolidated Graphics Inc. 46,625 46,625 700 Devon Group Inc. New 32,200 32,200 1,900 Gartner Group Inc. New 70,775 70,775 600 General Binding Corp. 18,000 18,000 1,700 Gibson Greetings Inc. 37,188 37,188 2,100 Golden Books Family Entmt. Inc. 21,656 21,657 500 Harte-Hanks Communications Inc. New 18,563 18,500 3,900 Houghton Mifflin Co. 149,663 149,663 5,400 Journal Register Co. 113,400 113,400 1,600 Lee Enterprises Inc. 47,300 47,301 1,600 McClatchy Newspapers Inc. Cl. A 43,500 43,501 1,200 Media Gen. Inc. Cl. A 50,175 50,176 2,000 Nelson Thomas Inc. 23,125 23,126
86 89 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- PUBLISHING--CONTINUED 400 Pittway Corp. Del. Cl. A 27,850 27,850 1,900 Playboy Enterprises Inc. Cl. B 29,806 29,807 4,400 Primedia Inc. 55,550 55,550 1,300 Pulitzer Pubg. Co. 81,656 81,657 3,900 Readers Digest Assn. Inc. Cl. A Non Vtg. 92,138 92,138 1,300 Scholastic Corp. 48,750 48,750 1,600 Snyder Communications Inc. 58,400 58,400 1,200 Standex Intl. Corp. 42,300 42,300 1,100 United Stationers Inc. 52,938 52,938 1,100 Valassis Communications Inc. 40,700 40,700 300 Washington Post Co. Cl. B 145,950 145,950 300 Waverly Inc. 14,100 14,100 1,200 Wiley John & Sons Inc. Cl. A 65,100 65,100 3,800 World Color Press Inc. Del. 100,936 100,937 ------------------------------------------ Total Publishing 1,810,738 1,810,633 REAL ESTATE 3,300 Amresco Inc. 99,825 99,825 1,700 Associated Estate Realty Corp. 40,269 40375 3,600 Avalon Pptys. Inc. 111,375 111,377 3,700 Bre Pptys Inc. Cl A 104,063 104,525 2,500 Bay Apt Cmntys Inc. 97,500 97,500 2,800 Berkshire Rlty Inc. 33,600 33,600 2,300 Bradley Rlty. Inc. 48,300 48,300 1,900 Burnham Pac. Pptys. Inc. 29,094 29,095 900 CB Coml. Real Estate Svcs. 28,969 28,969 3,000 CBL & Assoc. Pptys Inc. 74,063 74,064 3,000 Camden Ppty Tr Sh Ben Int. 93,000 93,000 4,000 Capstead Mortgage Corp. 79,750 79,752 1,700 Carramerica Rlty Corp. 53,869 53,870 1,700 Castle & Cooke Inc. 28,688 28,688 1,900 Catellus Dev. Corp. 38,000 38,000 2,100 Centerpoint Pptys. Tr. 73,763 73,763 1,000 Chelsea Gca. Rlty. Inc. 38,188 38,188
87 90 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- REAL ESTATE--CONTINUED 3,100 Clayton Homes Inc. 55,800 55,800 2,800 Colonial Ppts. Tr. 84,350 84,350 2,400 Commercial Nt. Lease Rlty. Inc. 42,900 42,900 4,200 Cornerstone Pptys Inc. 80,588 80,590 2,600 Cornerstone Rlty Income Tr. Inc. 31,363 31,364 3,300 Cousins Pptys Inc. Com. 96,731 96,733 3,600 Crescent Real Estate Equities Inc. 141,750 141,750 2,200 Developers Diversified Rlty Corp. 84,150 84,150 2,800 Duke Rlty Invst Inc. 67,900 67,900 1,300 Eastgroup Pptys. Inc. 28,113 28,113 5,100 Equity Residential Pptys. Tr. Sh. Ben. Int. 257,869 257,869 2,200 Excel Rlty Tr. Inc. 69,300 69,300 2,100 Fairfield Cmntys. Inc. Comp Par $0.01 92,663 92,400 3,700 Federal Rlty Invt. Tr Sh Ben. Int. New 95,275 95,275 2,900 First Indl. Rlty. Tr. Inc. 104,763 104,763 2,500 First Un. Real Estate Equity & Mtge Invts. Sh Ben Int. 40,625 40,625 2,000 Gables Residential Tr. Sh. Ben. Int. 55,250 55,250 4,000 General Growth Pptys. Inc. 144,500 144,500 2,400 Glimcher Rlty. Tr. Sh. Ben. Int. 54,150 54,150 1,600 Grub & Ellis Co. 21,900 21,901 3,600 Health Care Ppty. Invs. Inc. 136,125 136,127 2,500 Healthcare Rlty. Tr. 72,344 72,345 3,900 Highwoods Pptys Inc. 145,031 145,031 2,000 Hollywood Pk. Inc. 44,000 44,000 300 Home Ppts NY Inc. 8,156 8,156 1,900 Horizon Group Inc. 20,781 20,782 5,900 Inmc Mtg. Hldgs. Inc. 138,281 138,284 2,700 IRT Ppty. Co. 31,894 31,895 4,000 Innkeepers USA Tr. 62,000 62,000 1,500 Irvine Apts. Cmntys Inc. 47,719 47,720 2,300 JDN Realty Corp. 74,463 74,463 1,100 J P Rlty. Inc. 28,531 28,532 1,900 Kilroy Rlty. Corp. 54,625 54,625
88 91 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- REAL ESTATE--CONTINUED 700 Kimco Rlty Corp. 24,675 24,675 2,100 Koger Equity Inc. 46,069 46,070 1,900 Lnr. Ppty. Corp. 44,888 44,888 2,500 LTC Pptys. Inc. 51,875 51,875 1,400 MGI Pptys. 33,600 33,600 4,000 Mack Cali Rlty. Corp. 164,000 164,000 2,300 Manufactured Home Cmntys. Inc. 62,100 62,100 1,100 Meridian Indl. TR Inc. 28,050 28,050 4,200 Merry Ln. & Invt. Inc. 96,075 96,075 1,100 Mid-Amer. Apt. Cmnts. Inc. 31,419 31,419 2,900 Mills Corp. 71,050 71,050 1,400 National Golf Pptys. Inc. 45,938 45,938 2,100 New Plan Rlty Tr. Sh. Ben. Int. 53,550 53,550 1,700 Oasis Residential Inc. 37,931 37,932 1,400 Pennsylvania Real Estate Invt. Tr. 34,388 34,388 1,400 Price Enterprices Inc. 25,550 25,550 2,600 Realty Income Corp. 66,138 66,138 2,300 Regency Rlty Corp. 63,681 63,681 1,400 Renters Choice Inc. 28,700 28,700 2,400 Rouse Co. 78,600 78,600 1,400 Sual Ctrs Inc. 25,463 25,463 1,900 Security Cap Pac. Tr. Sh. Ben. Int. 46,075 46,312 3,000 Shurgard Storage Ctrs. Inc. Cl A 87,000 87,000 3,000 Smith Charles E Residential Rlty Inc. 106,500 106,500 1,900 Spieker Pptys. Inc. 81,463 81,463 2,200 Summit Ppty. Inc. 46,475 46,475 200 Tanger Factory Outlet Ctrs. Inc. 6,113 6,113 3,500 Taubman Ctrs. Inc. 45,500 45,500 2,600 Town & Cnty Tr. Sh Ben. Int. 45,988 45,989 2,000 Trinet Corp Rlty Tr Inc. 77,375 77,376 4,300 United Dominion Rlty Tr. Inc. 59,931 59,933 2,200 Urban Shopping Center 76,725 76,725
89 92 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- REAL ESTATE--CONTINUED 2,100 Vornado Rlty Tr. 98,569 98,570 3,100 Washington Real Estate Invt. Tr. Sh. Ben. Int. 51,925 51,925 1,600 Weeks Corp. 51,200 51,200 500 Weingarten Rlty Invs. Sh. Ben. Int. 22,406 22,407 1,800 Winston Hotels Inc. 23,738 23,622 ------------------------------------------ Total Real Estate 5,626,919 5,627,392 RETAILING 400 Abercrobie & Fitch Co Cl A 12,500 12,500 500 Alexanders Inc. 45,406 45,407 3,500 Alliance Semiconductor Corp. 15,969 15,969 200 Amazon Com Inc. 12,050 12,050 1,200 American Homestar Corp. 19,800 19,800 2,300 Ames Dept. Stores Inc. 40,250 40,250 2,700 Ann Taylor Stores Corp. 36,113 36,113 6,500 Ascend Communications Inc. 159,250 159,250 4,000 BJS Whsl Club Inc. 125,500 125,500 1,600 Barnes & Noble Inc. 53,400 53,400 2,000 Barnett Inc. 44,000 44,000 1,900 Bed Bath & Beyond Inc. 73,150 73,150 3,700 Best Buy Inc. 136,438 136,438 500 Boise Cascade Office Prods. 7,469 7,469 2,800 Borders Group Inc. 87,675 87,676 400 Bryland Inc. 19,700 19,700 300 Buckle Inc. 10,275 10,275 1,200 Capstone Cap Corp. 30,750 30,676 1,600 Carson Pirie Scott & Co. Ill 80,200 80,200 2,600 Caseys Gen. Stores Inc. 65,975 65,975 2,500 Cash Amer Invts. Inc. 32,344 32,345 1,200 Cellstar 23,850 23,850 1,200 Circuit City Stores Inc. Carmax Group 10,800 10,800 2,100 Cintas Corp., 81,900 81,900 4,500 Claire's Stores Inc. 87,469 87,471 1,200 Cole Natl. Corp. New Cl A 35,925 35,926
90 93 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- RETAILING--CONTINUED 500 Cole Kenneth Prodtns Inc. Cl A 8,031 8,032 1,200 Columbus McKinnon Corp. N Y 29,100 29,100 3,500 Compusa Inc. 108,500 108,500 3,200 Consolidated Stores Corp. 140,600 140,602 2,600 Corestaff Inc. 68,900 68,900 4,800 Corporate Express Inc. 61,800 61,800 700 Daisytek Intl. 24,325 24,325 300 Dart Group Corp Cl A 34,800 34,800 600 Day Runner Inc. 24,300 24,300 3,600 Delta & Pine Ld. Co. 109,800 109,800 3,500 Dollar Gen. Corp. 126,875 126,875 1,200 Dollar Tree Stores Inc. 49,650 49,650 3,300 Eagle Hardware & Garden Inc. 63,938 63,938 1,000 Essex Ppty. Tr Inc. 35,000 35,000 2,100 Family Dlr Stores Inc. 61,556 61,557 3,100 Felcor Suite Hotels Inc. 110,050 110,050 4,800 Fingerhut Companies Inc. 102,600 102,600 2,000 Finish Line Inc. Class A 26,250 26,250 2,100 Fisher Scientific Intl. Inc. 100,275 100,275 12,500 Food Lion Inc. Cl B 103,125 103,125 2,200 Friedmans Inc. 29,975 29,975 1,200 Gadzooks Inc. 25,200 25,200 2,100 Garden Ridge Corp. 29,925 29,925 3,300 General Nutrition Cos. Inc. 112,200 112,200 1,400 Global Directmail Corp. 24,238 24,238 400 Goodys Family Clothing Inc. 10,875 10,875 2,700 Griffon Corp. 39,488 39,488 1,200 Guitar Center Inc. 27,600 27,600 2,400 Gymboree Corp. 65,700 65,700 1,100 Hannaford Bros. 47,781 47,782 4,600 Health & Retirement Properties Trust N/K/A Health & Rehab. Prop. Trust 92,000 92,290 5,900 Heilig Meyers Co. 70,800 70,800 2,300 Hollywood Entertainment 24,438 24,438
91 94 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- RETAILING--CONTINUED 1,300 Inacom Corporation 36,481 36,482 900 Ingles Mkts Inc. Cl A 12,825 12,825 300 Insight Enterprises Inc. 11,025 11,025 700 Insilco Corp. 23,100 23,100 2,100 Intibrands Inc. Cl A 50,531 50,532 2,200 Kellwood Co. 66,000 66,000 2,700 Kohl's Corp. 183,938 183,938 2,300 Lands End. Inc. 80,644 80,645 3,500 Legget & Platt Inc. 146,563 146,563 500 MSC Indl. Direct Inc. Cl A 21,188 21,000 2,400 Mac Frugal's Bargains Close Outs Inc. 98,700 98,700 3,000 Macerich Co. 85,500 85,500 900 Matthews Intl. Corp. 39,600 39,600 1,600 Mens Warehouse Inc. 55,600 55,600 5,300 Metromedia Intl. Group Inc. 50,350 50,350 3,300 Meyer Fred Inc. Del. New 120,038 120,038 2,300 Michaels Stores Inc. 67,275 67,275 3,300 Micro Whse Inc. 45,994 45,995 1,500 Nature Sunshine Prods. Inc. 39,000 39,000 700 Neiman-Marcus Group Inc. 21,175 21,175 4,600 Officemax Inc. 65,550 65,550 1,900 Pacific Gulf Pptys Inc. 45,125 45,125 1,600 Pacific Sunwear Calif Inc. 47,300 47,301 1,500 Paragon Trade Brands Inc. 19,313 19,313 1,500 Paul Harris Stores Inc. 15,094 15,095 3,700 Paxar Corp. 54,806 54,808 1,600 Payless Shoesource Inc. 107,400 107,400 2,200 Petco Animal Supplies Inc. 52,800 52,800 4,700 Petsmart Inc. 34,075 34,075 6,800 Pier 1 Imports Inc. 153,850 153,850 2,100 Plantronics Inc. 84,000 84,000 3,200 Post Pptys Inc. 130,000 130,000 1,100 Price Reit Inc. 45,031 45,032 2,900 Prime Retail Inc. 41,144 41,145
92 95 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- RETAILING--CONTINUED 4,200 Proffitts Inc. 119,438 119,440 1,900 Public Storage Inc. 55,813 55,813 1,500 Quality Food Ctrs. Inc. 100,500 100,500 500 Rare Hospitality Intl. 4,500 4,500 3,400 Rexall Sundown Inc. 102,638 102,639 2,900 Ruddick Corp. 50,569 50,570 1,100 Russ Berrie & Co. Inc. 28,875 28,875 9,400 Safeway Inc. 594,550 594,550 2,800 Saks Hldgs. Inc. 57,925 57,926 1,400 Samsonite Corp. 44,275 44,275 1,700 Scotts Co Cl A 51,425 51,425 1,400 Seattle Film Works 15,575 15,575 10,300 Service Merchandise Inc. 21,888 21,888 2,600 Shiva Corp 22,263 22,264 1,400 Shopko Stoes Inc. 30,450 30,800 3,900 Simon Debartolo Group Inc. 127,481 127,483 5,500 Southland Corp 11,688 11,688 1,400 Sovran Self Storage Inc. 45,413 45,413 2,600 Stage Stores Inc. 97,175 97,175 3,100 Starbucks Corp. 118,963 118,963 1,200 Stein Mart Inc. 32,100 32,100 1,300 Storage Tr. Rlty. Sh. Den. Int. 34,206 34,207 2,200 Sun Communities Inc. 79,063 79,064 7,600 Sunglass Hut Intl. Inc. 47,975 47,979 400 TWP Worldwide Inc. 9,200 9,200 1,200 Talbots Inc. 21,750 21,750 1,500 Tiffany & Co. New 54,094 54,095 7,900 Topps Inc. 17,529 17,530 700 Tractor Supply Co. 10,325 10,325 3,200 U S Inds. Inc. 96,400 96,400 12,400 US Office Prods. Inc. 243,350 243,350 1,900 Universal Outdoor Hldgs. Inc. 98,800 98,800 1,200 Urban Outfitters Inc. 21,900 21,900 1,300 Value City Department Stores Inc. 11,538 11,538
94 96 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- RETAILING--CONTINUED 500 Weis Mkts. Inc. 17,500 17,500 1400 West Marine Inc. 31,325 31,325 1000 Wet Seal Inc. Cl A 29,500 29,500 1800 Whole Foods Market Inc. 92,025 92,025 3700 Zale Corp. 85,100 85,100 1200 Zoltek Com. Inc. 33,439 33,443 ------------------------------------------ Total Retailing 8,257,391 8,257,810 SAVINGS AND LOAN 1,200 Bay View Cap Corp. Del. 43,500 43,500 3,600 Commercial Fed. Corp. 128,025 128,027 1,200 Danaher Corp. 75,750 75,750 1,000 First Rep. Bk. San. Francisco Calif 31,938 31,938 400 Harbor Fed. Svgs. Bk. Fla. 26,500 26,500 800 IBS Finl. Corp. 14,150 14,150 700 St. Francis Cap Corp. 35,350 35,350 1,600 Tr Finl. Corp. 53,200 53,200 100 Wesco Finl. Corp. 30,000 30,000 ------------------------------------------ Total Savings and Loan 438,413 438,415 SERVICE 1,400 AAR Corp. 54,250 54,250 2,800 ABR Information Inc. 66,850 66,850 1,700 ABM Inds. Inc. 51,956 51,957 1,600 Apac Teleservices Inc. 21,600 21,600 1,000 Abacus Direct Corp. 41,000 41,000 3,200 Accustaff Inc. 73,600 73,600 1,700 Adtran Inc. 46,750 46,750 3,300 Advo Inc. F/K/A Advo Sys. Inc. 64,350 64,350 1,800 Advanta Corp. 47,250 47,250 4,200 Affiliated Comuter Svcs. Inc. Cl. A 110,513 110,515 9,500 Allied Waste Inds. Inc. Par 221,469 221,474 1,300 Alternative Res. Corp. 29,981 29,982 2,600 Analysts Intl. Corp. 89,700 89,700
95 97 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- SERVICE--CONTINUED 1,100 Apollo Group Cl. A 51,975 51,975 3,600 Arden Realty Group Inc. 110,700 110,700 2,100 Avant Corp. 35,175 35,175 1,000 BA Merchant Svcs. Inc. Cl. A 17,750 17,750 1,500 Boole & Babbage Inc. 44,813 44,813 4,600 Brightpoint Inc. 63,825 63,825 1,400 CDI Corp. 64,050 64,050 1,200 Caribiner Intl. Inc. 53,400 53,400 3,300 Cellular Technical Svcs. Inc. 10,519 10,520 1,800 Century Tel. Enterprises Inc. 89,663 89,663 4,700 Checkfree Corp. 126,900 126,900 400 Choicepoint Inc. 19,100 19,100 1,400 Claremont Technology Group 25,900 25,900 1,300 Commnet Cellular Inc. 46,231 46,232 2,500 Computer Horizons 112,500 113,750 3,000 Corrections Corp. Amer. 111,188 111,189 1,700 Cort Business Svcs. Corp. 67,681 67,682 1,300 Cylink Corp. 12,675 12,675 1,300 Data Trans. Network 36,400 36,400 2,500 Devry Inc. 79,688 79,688 1,200 Documentum Inc. 50,550 50,550 3,500 Employee Solutions Inc. 15,094 15,096 1,800 Equity Corp. Intl. 41,625 41,625 1,100 Express Scripts Inc. Cl. A 66,000 66,000 1,000 Fine Host Corp. 10,125 10,125 2,600 Franklin Covey Co. 57,200 57,200 100 Grey Advertising Inc. 32,800 32,800 1,700 Ha-Lo Inds. Inc. 44,200 44,200 1,400 Health Care & Retirement Corp. 56,350 56,350 1,000 Hertz Corp. Com. Cl. A 40,250 40,250 5,100 Host Marriott Svcs. Corp. 75,863 75,863 300 ITT Edl. Svcs. Inc. 6,694 6,694 4,200 Imation Corp. 67,200 67,200 1,100 Information Mgmt. Res. Inc. 41,250 41,250
96 98 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- SERVICE--CONTINUED 3,000 Information Res. Inc. 40,125 40,125 1,200 Inhale Therapeutic Sys. 31,200 31,200 2,200 International Network Svc. 50,875 50,875 2,500 Keane Inc. 101,563 101,563 1,600 Kelly Svcs. Inc. Class A 48,000 48,000 200 Labone Inc. 3,513 3,513 1,000 Lawson Prods. Inc. 29,750 29,750 900 Learning Tree Intl. Inc. 25,988 25,988 2,200 MRV Communications Inc. 52,525 52,525 3,300 Manpower Inc. 116,325 116,325 300 Mastech Corp. 9,525 9,525 1,000 May & Speh Inc. 13,500 13,500 600 McGrath Rentcorp 14,700 14,700 1,400 McKesson Corp. New 151,463 151,725 800 McWhorter Technologies 20,600 20,600 1,400 Memberworks Inc. 29,400 29,400 1,800 Merrill Corp. 41,850 41,850 8,300 Nextel Communications Inc. Cl. A 215,800 215,800 1,900 Nichols Resh Corp. 47,500 47,500 1,300 Norrel Corp. GA 25,838 25,838 2,300 Nova Corp. GA 57,500 57,500 2,200 Nuevo Energy Co. 89,650 89,650 3,800 Oak Technology Inc. 24,700 24,700 2,600 Olsten Corp. 39,000 39,000 2,600 Oneok Inc. New 104,975 104,975 1,400 Open Mkt. Inc. 13,475 13,475 3,700 PMT Svcs. Inc. 51,338 51,338 10,000 Paging Network Inc. 107,500 107,500 2,700 Pairgain Technologies Inc. 52,313 52,313 3,800 Paychex Inc. 192,375 192,375 1,800 Personnel Group Amer. Inc. 59,400 59,400 1,500 Pharmaceutical Prod. Dev. Inc. 23,063 23,063 1,100 Phymatrix Corp. 17,325 17,325 1,300 Pinkertons Inc. New 30,550 30,550
97 99 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- SERVICE--CONTINUED 1,500 Possis Medical Inc. 16,500 16,500 2,600 Pre Paid Legal Svcs. Inc. 88,888 88,889 4,200 Psinet Inc. 21,525 21,525 700 RLI Corp. 34,869 34,869 1,100 Regis Corp. Minn 27,638 27,638 900 Registry Inc. 41,288 41,288 3,800 Robert Half Intl. Inc. 152,000 152,000 2,600 Rollins Inc. 52,813 52,650 1,500 Romac Intl. Inc. 36,656 36,657 300 SPS Transaction Services Inc. 6,769 6,769 1,000 Service Experts Inc. 28,625 28,625 600 Smartalk Teleservices Inc. 13,650 13,650 1,000 Source Svcs. Corp. 21,625 21,625 1,100 Staffmark Inc. 34,788 34,788 1,700 Stewart Enterprises Inc. 79,263 79,263 700 Stone & Webster Inc. 32,813 32,813 2,500 Superior Svcs. Inc. 72,188 72,188 1,900 Swift Transportation Co. Inc. 61,513 61,513 2,100 Sylvan Learning Sys. Inc. 81,900 81,900 1,100 TNP Enterprises Inc. 36,575 36,575 900 Teletech Hldgs. Inc. 10,238 10,238 700 Thermadyne Hldgs. Corp. New 20,650 20,650 1,200 Transaction Network Svcs. Inc. 20,700 20,700 100 Tringen Energy Corp. 1,994 1,994 2,100 True North Communications Inc. 51,975 51,975 4,200 Tuboscope Inc. 101,063 101,065 1,000 US Rentals Inc. 23,500 23,500 900 Unifirst Corp. 25,256 25,257 700 Unitog Co. New 15,575 15,575 1,800 VWR Corp. 50,850 50,850 1,000 Veeco Instrs. Inc. 22,000 22,000 3,200 Viad Corp. 61,800 61,802 800 Volt Information Sciences Inc. 43,100 43,100 1,300 Wackenhut Corp. Ser. A 30,144 30,144
98 100 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- SERVICE--CONTINUED 1,300 Wackenhut Corrections Corp. 34,938 34,938 3,900 Walter Inds. Inc. 80,631 80,438 2,200 West Teleservices Corp. 26,400 26,400 7,800 Western Wireless Corp. Cl. A 135,525 135,525 2,700 Westwood One Inc. 100,238 100,238 800 Whittman-Hart Inc. 27,400 27,400 1,700 World Access Inc. 40,588 40,588 1,600 Xtra Corp. 93,786 93,787 ------------------------------------------ Total Service 6,598,044 6,599,223 SOAP 900 Chemed Corp. 37,294 37,294 1,900 Church & Dwight Inc. 53,319 53,320 4,700 First Brands Corp. 126,606 126,609 ------------------------------------------ Total Soap 217,219 217,223 TEXTILE AND APPAREL 2,800 Authentic Fitness Corp. 51,625 52,150 1,900 Brown Group Inc. 25,294 25,295 2,000 Burlington Coat Factory Whse. Corp. 32,875 32,876 5,800 Burlington Inds. Inc. New 80,113 80,115 1,900 Catalina Marketing Corp. 87,875 87,875 6,100 Collins & Aikman Corp. New 52,613 52,613 3,800 Cone Mills Corp. NC 29,450 29,450 1,500 Converse Inc. 9,000 9,000 1,700 Dress Barn Inc. 48,238 48,238 600 Fab. Inds. Inc. 18,675 18,675 700 Fossil Inc. 17,500 17,500 1,800 G&K Svcs. Inc. Class A 75,600 75,600 1,300 Galey & Lord Inc. 23,238 23,238 2,000 Guilford Mls. Inc. 54,750 54,750 3,000 Hancock Fabrics Inc. 43,500 43,500 3,500 Hartmarx Corp. 26,688 26,688 1,400 Jones Apparel Group Inc. 60,200 60,200
99 101 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- TEXTILE AND APPAREL--CONTINUED 2,800 Just for Feet Inc. 36,750 36,750 1,700 Justin Inds. Inc. 23,163 23,163 3,400 Mohawk Inds Inc. 74,588 74,589 3,300 Nautica Enterprises Inc. 76,725 76,725 1,000 Nine West Group Inc. 25,938 25,938 1,100 Nortek Inc. 29,219 29,219 1,500 Oshkosh B Gosh Inc. Cl. A 49,500 49,500 1,000 Oxford Inds. Inc. 32,500 32,500 2,500 Phillips Van Heusen Corp. 35,625 35,625 800 Quick Silver Inc. 22,900 22,900 3,200 RPM Inc. Ohio 48,800 48,800 2,100 Ross Stores Inc. 76,388 76,388 2,000 St. John Knhs. Inc. 80,000 80,000 4,200 Shaw Inds. Inc. 48,825 48,825 4,600 Stride Rite Corp. 55,200 55,200 700 Timberland Co. Cl. A 40,644 40,644 4,800 Tultex Corp. 19,500 19,502 2,100 Unifi Inc. 85,444 85,445 1,900 Warnaco Group Inc. Cl. A 59,613 59,613 1,000 Westpoint Stevens Inc. 47,250 47,250 1,800 Wolverine World Wide Inc. 40,719 40,722 ------------------------------------------ Total Textile and Apparel 1,746,525 1,747,061 TILE AND RUBBER 2,500 Carlisle Corp. 106,875 106,875 2,100 Foamex Intl. Inc. 22,838 22,838 1,700 Furon Co. 35,488 35,488 2,500 Gencorp Inc. 62,499 62,499 ------------------------------------------ Total Tile and Rubber 227,700 227,700
100 102 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- TOBACCO 400 Consolidated Cigar Hldgs. Cl. A 11,025 11,025 3,600 Dimon Inc. 94,500 94,500 1,100 General Cigar Hldgs. Inc. Cl. A 23,444 23,444 12,800 RJR Nabisco Hldgs. Corp. F/K/A RJR Hldgs. Corp. New 480,000 480,000 1,700 Schweitzer-Mauduit Intl. Inc. 63,325 63,325 1,400 Universal Corp. VA 57,575 57,576 ------------------------------------------ Total Tobacco 729,869 729,870 TRANSPORTATION--AIR TRANSPORT 3,500 Air Express Intl. Corp. 106,750 106,750 3,100 Airtran Hldgs. Inc. 12,400 12,400 1,500 Alaska Air Group Inc. 58,125 58,125 4,100 America West Hdng. Corp. Cl. B 76,363 76,363 2,800 ASA Hldgs. Inc. 79,625 79,626 3,100 Comair Holdings, Inc. 74,788 74,788 1,800 Continental Airls. Inc. Cl. B 86,625 86,625 2,300 Expeditors Intl. Wash Inc. Com. 88,550 88,550 300 Florida East Cost Inds. Inc. 28,838 28,838 900 Midwest Express Hldgs. Inc. 34,931 34,932 2,100 Northwest Airls. Corp. Cl. A 100,538 100,538 4,900 Trans World Airls. Inc. Com. Par $.01 New 49,613 49,309 2,500 UAL Corp. 231,248 231,248 ------------------------------------------ Total Transportation--Air Transport 1,028,394 1,028,092 TRANSPORTATION--OTHER 2,400 Airborne Fght. Corp. 149,100 149,100 2,500 American Freightways Corp. 24,688 24,688 2,100 Arnold Inds. Inc. 36,225 36,225 1,200 Avondale Inds. Inc. 35,625 35,626 1,900 CNF Transportation Inc. 72,913 73,625 1,200 Coach USA Inc. 40,200 40,200 2,300 Consolidated Freightways Corp. 31,338 31,338 700 Covenant Trans. Inc. Cl. A 10,675 10,675
101 103 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- TRANSPORTATION--OTHER--CONTINUED 2,000 Fritz Cos. Inc. 27,875 27,876 1,000 Gatx Corp. 72,563 72,563 6,400 Greyhound Lines Inc. 23,600 23,603 1,400 Heartland Express Inc. 37,625 37,625 2,300 Hunt JB Trans. Svc. Inc. 43,125 43,125 1,200 Hvide Marine Inc. Cl. A 30,900 30,900 4,200 Kansas City Southn Inds. Inc. 133,350 133,350 1,400 Lanstar Sys. Inc. 36,925 36,925 1,000 MS Carriers Inc. 24,875 24,875 1,800 Motivepower Inds. Inc. 41,850 41,850 2,800 Overseas Shipholding Group Inc. 61,075 61,076 2,100 Pittston Svcs. Group Burlington Group 55,125 55,125 1,300 Roadway Express Inc. Del. 28,763 28,763 3,600 Rollins Truck Leasing Corp. 64,350 64,350 1,100 Rural/Metro Corp. 36,713 36,713 1,600 Seacor Smit Inc. Frmly. Seacor Hldgs. Inc. 96,400 96,400 2,200 Werner Enterprises Inc. 45,100 45,100 2,200 Wisconsin Central Transportation 51,422 51,423 ------------------------------------------ Total Transportation--Other 1,312,400 1,313,119 TV AND RADIO BROADCASTERS 400 AMC Entmt. Inc. 8,900 8,900 1,400 Ackerley Group Inc. 23,713 23,713 3,900 American Media Inc. Cl. A 30,225 30,225 2,500 american Mobile Satellite Corp. 17,500 17,500 2,000 American Radio Sys. Corp. Cl. A 106,625 106,626 600 Anchor Gaming 33,450 33,450 200 BHC Communications Inc. Cl. A 26,050 26,050 700 Bet Holdings Inc. 38,238 38,238 1,800 CFW Communications Co. 40,275 40,275 1,500 Cablevision Sys. Corp. Cl. A 143,625 143,625 800 Carmike Cinemas Inc. Cl. A 22,950 22,950 4,700 Century Communications Corp. Cl. A 45,825 45,825 2,500 Chancellor Media Corp. 186,563 186,563
102 104 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- TV AND RADIO BROADCASTERS--CONTINUED 600 Chris Craft Inds. Inc. 31,388 31,388 5,400 Comsat Corp. Com. Ser. 1 130,950 130,950 2,300 Cox Communications Inc. New Cl. A 92,144 92,145 400 Cox Radio Inc. 16,100 16,100 4,300 DSP Communications Inc. 51,600 51,600 900 Emmis Broadcasting Corp. Cl. A 41,063 41,063 600 GC Cos. Inc. 28,425 28,425 1,900 HSN Inc. 97,850 97,850 1,900 Harman Intl. Inds. Inc. New 80,631 81,225 2,000 Heftel Broadcasting Corp. Cl. A 93,500 93,500 4,400 Jacor Communications Inc. 233,750 233,750 1,900 Jones Intercable Inc. Cl. A 33,369 33,370 5500 LCI Intl. 169,125 169,125 700 Lin Television 38,150 38,150 2100 National Media Corp. 6,825 6,563 1800 Panavision Inc. 46,463 46,463 1300 Paxson Communications Corp. 9,588 9,750 300 Penske Motorsports Inc. 7,463 7,463 3500 Picturetel Corp. 22,750 22,750 1900 Powertel Inc. 31,825 31,825 1100 Premier Pks. Inc. Com. New 44,275 44,550 900 Proxim Inc. 10,181 10,182 1900 Rio Hotel & Casino Inc. 39,900 39,900 700 SFX Broadcasting Inc. Cl. A 56,175 56,175 600 Saga Communications Inc. Cl. A 12,750 12,750 1,900 Signature Resorts Inc. 41,563 41,563 3,400 Spelling Entertainment Grp. Inc. 23,800 23,800 1,300 Tele-Communications Intl. Inc. Com. Ser. A 23,400 23,400 8,900 Tele Communications Inc. New Com. Liberty Media Group Ser. A 322,625 322,625 1,500 Ticketmaster Group Inc. 34,500 34,500 2,500 United Intl. Hldgs. Inc. Cl. A 28,750 28,750 4,900 United Sts. Satellite Broadcasting Inc. Cl. A 38,894 38,896
103 105 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- TV AND RADIO BROADCASTERS--CONTINUED 400 United television Inc. 41,550 41,550 1,600 United Video Satellite Group Inc. Cl. A 46,000 46,000 3,700 Winstar Communications Inc. 92,269 92,271 1,400 Young Broadcasting Inc. Cl. A 54,245 54,247 ------------------------------------------ Total TV and Radio Broadcasters 2,897,775 2,898,554 UTILITY--ELECTRIC 5,700 AES Corp. 265,763 265,763 1,600 Applied Pwr. Inc. Cl. A 110,400 110,400 5,400 Atlantic Energy Inc. NJ 114,413 114,415 1,500 Black Hills Pwr. & Lt. Co. 52,875 52,875 1,600 Boston Edison Co. 60,600 60,600 1,200 Cipsco Inc. 53,100 53,100 4,100 CMS Energy Corp. 180,656 180,658 2,100 Calenergy Inc. 60,375 60,375 1,800 Central Hudson Gas & Elec. Corp. 78,975 78,975 2,300 Central LA Elec. Inc. Com. New 74,463 74,463 3,300 Central ME Pwr. Co. 50,325 50,325 1,400 Cilcorp Inc. 68,425 68,425 8,800 Citizens Utils. Co. Del. Com. Ser. B 84,700 84,700 1,900 Commonwealth Energy Sys. Com. Sh. Ben. Int. 63,175 63,175 3,400 DQE 119,425 119,425 3,600 DPL Inc. 103,500 103,500 6,700 Delmarva Pwr. & Lt. Co. 154,519 154,522 2,100 Eastern Utils. Assoc. 55,125 55,125 6,200 El Paso Elec. Co. Com. New 45,338 45,341 1,700 Empire Dist. Elec. Co. 33,363 33,363 4,100 Florida Progress Corp. 160,925 160,925 3,400 Hawaiian Elec. Inds. Inc. 138,975 138,975 3,100 IES Inds. Inc. 114,119 114,120 1,300 Idaho Pwr. Co. 48,913 48,913 3,300 Illinova Corp. 88,894 88,895 UTILITY--ELECTRIC--CONTINUED
104 106 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- 1,000 Interstate Pwr. Co. 37,438 37,438 2,200 Ipalco Enterprises Inc. 92,263 92,264 1,300 KU Energy Corp. 51,025 51,025 2,100 Kansas City Pwr. & Lt. Co. 62,081 62,083 2,500 Lincoln Elec. Co. Cl. A 90,000 90,000 5,200 Long Island Ltg. Co. 156,650 156,650 1,700 Madison Gas & Elec. Co. 39,100 39,100 3,300 Minnesota Pwr. & Lt. Co. 143,756 143,758 1,900 Montana Pwr. Co. 60,444 60,325 5,400 Nevada Pwr. Co. 143,438 143,440 2,200 New England Elec. Sys. 94,050 94,050 3,100 New York St. Elec. & Gas Corp. 110,050 110,050 4,400 Northeast Utils. 51,975 51,977 1,800 Northwestern Pub. Svc. Co. 41,400 41,400 1,400 OGE Energy Corp. 76,563 76,563 1,400 Orange & Rockland Utils. Inc. 65,188 65,188 1,200 Otter Tail Pwr. Co. 45,450 45,450 3,400 Pinnacle West Cap. Corp. 144,075 144,075 5,000 Potomac Elec. Pwr. Co. 129,063 129,065 4,300 Public Svc. Co. N Mex. 101,856 101,858 3,400 Puget Sound Pwr. & Lt. Co. 102,638 102,639 4,300 Rochester Gas & Elec. Corp. 146,200 146,200 4,900 Scana Corp. 146,694 146,696 2,500 Southwestern Energy Co. 32,188 32,188 5,100 Teco Energy Inc. 143,438 143,438 1,500 United Illum. Co. 68,906 68,907 2,100 Utilicorp United Inc. 81,506 81,507 3,200 WPL Hldgs. Inc. 106,000 106,000 2,500 WPS Resources Corp. 84,531 84,533 6,100 Washington Wtr. Pwr. Co. 148,306 148,309 2,200 Western Resources Inc. 94,600 94,600 5,100 Wisconsin Energy Corp. 146,625 146,625 1,100 Yankee Energy Sys. Inc. 29,350 29,355 ------------------------------------------ Total Utility--Electric 5,448,188 5,448,109 UTILITY--NATURAL GAS
105 107 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- 6,200 AGL Res. Inc. 126,713 126,716 3,000 Atmos Energy Corp. 90,750 90,750 1,400 Baystates Gas Co. New 51,975 51,975 600 Belco Oil & Gas Corp. 11,288 11,288 1,100 Colonial Gas Co. 31,694 31,694 2,300 Comstock Res. Inc. Com. New 27,456 27,457 900 Connecticut Energy Corp. 27,113 27,113 2,600 El Paso Nat. Gas Co. Com. New 172,900 172,900 1,100 Evergen Corp. 43,725 43,725 3,900 Equitable Res. Inc. 137,963 137,963 4,500 Flowserve Corp. 125,719 125,721 900 Forcenergy Inc. 23,569 23,569 9,500 Harken Energy Corp. 66,500 66,500 2,300 Indiana Energy Inc. 75,756 75,757 800 KN Energy Inc. 43,200 43,200 1,700 Keyspan Energy Corp. 62,581 62,582 1,800 Laclede Gas Co. 50,513 50,513 3,400 MCN Corp. 137,275 137,275 3,000 MDU Res. Group Inc. 94,875 94,875 2,900 Nipsco Inds. Inc. 143,369 143,370 1,300 National Fuel Gas Co. NJ 63,294 63,294 1,800 New Jersey Res. Corp. 72,113 72,113 700 North Carolina Nat. Gas Corp. 24,325 24,325 2,300 Northwest Nat. Gas 71,300 71,300 1,000 Pennsylvania Enterprises Inc. 25,250 25,250 3,100 Piedmont Nat. Gas Inc. 111,406 111,408 1,300 Pogo Producing Co. 38,350 38,350 2,000 Public Svc. Co. NC Inc. 45,750 45,750 1,600 Questar Corp. 71,400 71,400 2,300 Seagull Energy Corp. 47,438 47,438 3,200 Sierra Pac. Res. 120,000 120,000 1,000 South Jersey Inds. Inc. 30,313 30,313 UTILITY--NATURAL GAS--CONTINUED 1,400 Southern Un. Co. New 33,425 33,425 2,800 Southwest Gas Corp. Del. 52,325 52,326
106 108 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- 2,000 Texas Gas Corp. Del. 122,500 122,500 3,400 UGI Corp. New 99,663 99,664 1,800 Valero Refng. & Marketing Co. 56,588 56,588 1,900 Wicor Inc. 88,231 88,232 4,800 Washington Gas Lt. Co. 148,500 148,502 2,100 Western Gas Res. Inc. 46,458 46,465 ------------------------------------------ Total Utility--Natural Gas 2,913,563 2,913,586 UTILITY--TELEPHONE 1,600 ACC Corp. 80,800 80,800 2,700 Advanced Fibre Communication 78,638 78,638 3,600 Aliant Communications Inc. 112,950 112,950 4,700 Aspect Telecommunications Corp. 98,113 98,113 2,900 Brooks Fiber PPTYS Inc. 159,500 159,500 5,800 Cincinnati Bell Inc. 179,800 179,800 1,100 Commonwealth Tel. Enterprises Inc. New 28,463 28,463 1,600 Corecomm Inc. 16,200 16,200 1,200 Echostar Communications Corp. New Cl. A 20,100 20,100 1,300 Geotel Communications Corp. 20,313 20,313 1,900 Intermedia Communications Inc. 115,425 115,425 2,600 McLeodusa Inc. 83,200 83,200 5,200 Mobile Telecommunications Technologies Corp 114,400 114,400 3,000 NTL Inc. 83,625 83,625 1,200 North Pittsburgh Sys. Inc. 21,975 21,976 4,100 P-Com Inc. 70,725 70,725 700 Pacific Gateway Exchange 37,669 37,669 3,300 Pagemart Wireless Inc. Cl. A 25,988 25,988 1,300 Periphonics Corp. 11,375 11,375 2,000 Premiere Technologies Inc. 55,250 55,250 2,800 Premisys Communications Inc. 73,150 73,150 2,800 Southern New England Tele. Corp. 140,875 140,876 3,700 Tel-Save Hldgs. Inc. 73,538 73,538 1,900 Telephone & Data Sys. Inc. 88,469 88,470
107 109 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- UTILITY--TELEPHONE--CONTINUED 1,200 Teleport Communications Group Inc. Cl. A 65,850 65,850 4,400 360 Communications Co. 88,825 88,827 4,200 Vanguard Cellular Cl. A 53,550 53,550 1,400 Westell Technologies Inc. Cl. A 17,847 17,847 ------------------------------------------ Total Utility--Telephone 2,016,613 2,016,618 UTILITY--WATER 2,200 American Wtr. Wks. Inc. 60,088 60,089 600 California Water Svc. Co. 35,438 35,438 2,700 Culligan Wtr. Technologies Inc. 135,675 135,675 800 E Town 32,150 32,150 1,700 Philadelphia Subn. Corp. Com. Par $0.50 (New) 50,044 50,045 1,000 Southern Calif. Wtr. Co. 25,125 25,125 2,700 United Wtr. Res. Inc. 52,818 52,820 ------------------------------------------ Total Utility--Water 391,338 391,342 VENDING AND FOOD SERVICE 700 Planet Hollywood Intl. Inc. Cl. A 9,275 9,275 1,600 Ruby Tuesday Inc. 41,200 41,200 4,900 Ryans Family Steak Houses Inc. 41,956 41,959 ------------------------------------------ Total Vending and Food Service 92,431 92,434 MISCELLANEOUS/REAL ESTATE/POOLED REAL ESTATE 1,400 Imperial Ct. Mtg. Hldgs. Inc. 25,017 25,022 ------------------------------------------ Total Russell 2500 Common Stock 133,207,232 133,207,232 Total Common Stock 1,287,734,036 1,883,142,329
108 110 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS Cash 19,002 19,002 Bankers Trust Pyramid Discretionary Cash Fund 345,984 345,984 Bankers Trust Pyramid Directed Account Cash Fund 33,075,334 33,075,334 ------------------------------------------ 33,440,320 33,440,320 GUARANTEED INVESTMENT CONTRACTS Security Backed Investments: Bankers Trust: Contract 97-892 THT, due December 30, 2000, 7.04% 52,545,113 52,545,113 People's Security Life: Contract 00212TR-11, due December 1, 2000, 6.50% 10,069,810 10,069,810 Continental Insurance Co. Contract 630-05575, due September 1, 2003, 5.67% 45,158,121 45,158,121 Transamerica Life & Annuity: Contract 76540, due November 15, 2004, 6.49% 23,271,899 23,271,899 ------------------------------------------ 131,044,943 131,044,943 Separate Account Contracts: Aetna Life Insurance Co.: Contract 014460, due November 15, 2002, 7.96% 34,859,091 34,859,091 Allstate Life Ins. Co. Contract 31053, due February 15, 2002, 6.62% 5,401,619 5,401,619 Crown Life Insurance Co.: Contract 9004392, due March 3, 1998, 4.13% 903,986 903,986
109 111 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- GUARANTEED INVESTMENT CONTRACTS--CONTINUED John Hancock Mutual Life: Contract 7441, due May 1, 2007, 7.18% 49,188,507 49,188,507 Contract 7441-2, due June 30, 2000, 4.50% 2,613,907 2,613,907 Contract 8712, due June 30, 2003, 6.60% 5,968,053 5,968,053 Metropolitan Life Insurance Co: Contract 12702, due January 8, 1998, 6.45% 35,927,107 35,927,107 Contract 18544-B, due December 31, 1998, 6.75% 1,087,540 1,087,540 Prudential Insurance Co. of American: Contract 6581-1, due July 11, 2001, 9.79% 600,567 600,567 Contract 6661-2, due July 15, 2001, 9.84% 3,694,937 3,694,937 Contract 6702-3, due November 20, 2000, 8.59% 331,776 331,776 ------------------------------------------ 140,577,090 140,577,090 Synthetic Investment Contracts: CDC Investment Management Corp. Contract 115-01, due April 15, 1998, 6.45% 2,563,083 2,563,083 Contract 115-02, due April 30, 1999, 7.14% 6,036,079 6,036,079 Contract 115-03, due August 31, 1998, 7.19% 5,999,980 5,999,980 Contract 115-04, due Dec. 31, 1998, 8.08% 5,959,754 5,959,754 Contract 115-05, due June 30, 2000, 7.48% 4,563,199 4,563,199 Contract 115-06, due July 2, 2001, 6.76% 6,954,192 6,954,192 Contract 115-07, due Dec. 11, 2002, 6.02% 10,000,000 10,000,000 Continental Assurance Co. Contract 630-05751, due Jan. 1, 1998, 7.13% 9,971,689 9,971,689 People Security Life: Contract 00025TR, due March 30, 2007, 7.06% 67,453,032 67,453,032
110 112 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- GUARANTEED INVESTMENT CONTRACTS--CONTINUED Rabobank Nederland: Contract TRW 99601, due Oct. 25, 2003, 7.12% 5,811,053 5,811,053 Contract TRW 69701, due July 15, 2003, 6.75% 5,947,705 5,947,705 Contract TRW 79701, due Oct. 21, 2002, 6.89% 4,888,944 4,888,944 Contract TRW 109501, due June 30, 2001, 6.19% 4,974,698 4,974,698 ------------------------------------------ 141,123,408 141,123,408 Fixed Rate and Fixed Term: Canada Life Assurance Company: Contract 45800, due June 1, 1998, 5.23% 5,228,535 5,228,535 Contract 45839, due June 16, 1999, 7.06% 6,190,229 6,190,229 Sun Life Assurance Co. Contract S-0882-G, due July 31, 1998, 5.54% 8,812,881 8,812,881 Contract S-0910-G, due August 2, 1999, 7.39% 6,354,179 6,354,179 ------------------------------------------ 26,585,824 26,585,824 Variable rate and fixed term: Jackson National Life Contract G-1152-1, due Nov. 25, 2000, 6.03% 10,025,700 10,025,700 John Hancock Mutual Life Contract 7314, due Dec. 2, 2002, 5.88% 6,155,875 6,155,875 Contract 7839, due March 1, 2000, 5.53% 10,000,000 10,000,000 ------------------------------------------ 26,181,575 26,181,575
111 113 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Assets Held for Investment Purposes--Continued
Number of Book Market Shares Description Value Value - --------------------------------------------------------------------------------------------------------------------- GUARANTEED INVESTMENT CONTRACTS--CONTINUED Variable rate and term: People Security Life: Contract BDA185ST1, due March 31, 1998, 6.05% 7,127,021 7,127,021 ------------------------------------------ TOTAL GUARANTEED INVESTMENT CONTRACTS 472,639,861 472,639,861 Participant loans, 9.25% 63,677,380 63,677,380 ------------------------------------------ TOTAL INVESTMENTS $1,857,491,597 $2,452,899,890 ==========================================
112 114 The TRW Employee Stock Ownership and Stock Savings Plan Schedule of Reportable Transactions Year Ended December 31, 1997
Purchase Selling Cost Identity of Party Involved Description of Assets Price Price of Asset - ------------------------------------------------------------------------------------------------------------------------------- SINGLE TRANSACTIONS IN EXCESS OF 5% OF THE FAIR VALUE OF PLAN ASSETS Bankers Trust BT Pyramid Russell 2500 Index Fund - $133,207,232 $ 88,726,725 Bankers Trust BT Pyramid Equity Index Fund - 628,871,800 261,662,855 SERIES OF TRANSACTIONS IN EXCESS OF 5% OF THE FAIR VALUE OF PLAN ASSETS Bankers Trust: BT Pyramid Directed Account 172 Purchases Cash Fund $122,458,380 122,458,380 40 Sales 109,596,016 109,596,016 Bankers Trust: BT Pyramid Equity Index Fund 44 Sales 661,138,840 276,382,659 159 Purchases 43,746,001 43,746,001 Bankers Trust: BT Pyramid Russell 34 Sales 2500 Index Fund 155,693,062 104,372,770 164 Purchases 43,234,830 43,234,830 Fair Value of Asset on Transaction Net Gain Identity of Party Involved Description of Assets Date (Loss) - ---------------------------------------------------------------------------- -------------------------------- SINGLE TRANSACTIONS IN EXCESS OF 5% OF THE FAIR VALUE OF PLAN ASSETS Bankers Trust BT Pyramid Russell 2500 Index Fund $ 133,207,232 $ 44,480,507 Bankers Trust BT Pyramid Equity Index Fund 628,871,800 367,208,995 SERIES OF TRANSACTIONS IN EXCESS OF 5% OF THE FAIR VALUE OF PLAN ASSETS Bankers Trust: BT Pyramid Directed Account 172 Purchases Cash Fund 122,458,380 40 Sales 109,596,016 0 Bankers Trust: BT Pyramid Equity Index Fund 44 Sales 661,138,840 384,756,181 159 Purchases 43,746,001 Bankers Trust: BT Pyramid Russell 34 Sales 2500 Index Fund 155,693,062 51,320,292 164 Purchases 43,234,830
EX-99.B 29 EXHIBIT 99(B) 1 Exhibit 99(b) FINANCIAL STATEMENTS THE TRW CANADA STOCK SAVINGS PLAN DECEMBER 31, 1997 AND 1996 2 REPORT OF INDEPENDENT AUDITORS To the Participants and the Board of Administration of THE TRW CANADA STOCK SAVINGS PLAN We have audited the statements of financial condition of the TRW Stock Fund, Pooled Money Market Fund Employees Profit Sharing Plan, Pooled Balanced Fund Registered Retirement Savings Plan and Pooled Money Market Fund Registered Retirement Savings Plan [constituting THE TRW CANADA STOCK SAVINGS PLAN] as at December 31, 1997 and 1996 and the related statements of operations and changes in fund equity for these funds for the years then ended. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these financial statements present fairly, in all material respects, the financial position of the several funds of THE TRW CANADA STOCK SAVINGS PLAN as at December 31, 1997 and 1996 and the results of their operations and the changes in fund equity for the years then ended in accordance with accounting principles generally accepted in Canada. /s/ Ernst & Young Hamilton, Canada, March 10, 1998. Chartered Accountants 3 THE TRW CANADA STOCK SAVINGS PLAN TRW STOCK FUND STATEMENTS OF FINANCIAL CONDITION As at December 31
1997 1996 $ $ - ---------------------------------------------------------------------------------------------------- [expressed in Canadian dollars] ASSETS Cash 1,058 2,080 Receivable from TRW Canada Limited 58,074 58,180 Investments at quoted market value TRW Inc. common stock 11,922 shares [cost $870,734] in 1997 and 13,254 shares [cost $791,684] in 1996 910,280 899,151 - ---------------------------------------------------------------------------------------------------- 969,412 959,411 ==================================================================================================== LIABILITIES AND FUND EQUITY LIABILITIES Withdrawals, terminations, and short-term distributions 731,640 756,925 Fund equity [including net unrealized appreciation of investments] 237,772 202,486 - ---------------------------------------------------------------------------------------------------- 969,412 959,411 ==================================================================================================== NUMBER OF SHARES OUTSTANDING AT DECEMBER 31 11,922 13,254 ==================================================================================================== FUND EQUITY PER SHARE AT DECEMBER 31 19.9440 15.2774 ====================================================================================================
See accompanying notes 4 THE TRW CANADA STOCK SAVINGS PLAN TRW STOCK FUND STATEMENTS OF OPERATIONS AND CHANGES IN FUND EQUITY Years ended December 31
1997 1996 $ $ - ------------------------------------------------------------------------------------------------- [expressed in Canadian dollars] INVESTMENT INCOME Dividends on TRW Inc. common stock 10,709 7,868 Interest 54 239 - ------------------------------------------------------------------------------------------------- 10,763 8,107 - ------------------------------------------------------------------------------------------------- CONTRIBUTIONS Participants 424,717 371,426 TRW Canada Limited 50% of total participants' contributions to all funds 400,602 363,022 - ------------------------------------------------------------------------------------------------- 825,319 734,448 - ------------------------------------------------------------------------------------------------- Net realized gain on transfer of investments to participants [note 4] 94,473 49,422 Unrealized appreciation (depreciation) of investments [note 4] (67,921) 47,305 - ------------------------------------------------------------------------------------------------- 26,552 96,727 - ------------------------------------------------------------------------------------------------- 862,634 839,282 - ------------------------------------------------------------------------------------------------- Less withdrawals and terminations Paid Cash 4,462 3,183 TRW Inc. common stock 1,192 shares in 1997; 598 shares in 1996 91,246 35,293 - ------------------------------------------------------------------------------------------------- 95,708 38,476 - ------------------------------------------------------------------------------------------------- Payable Cash 13,464 12,448 TRW Inc. common stock 9,406 shares in 1997; 10,974 shares in 1996 718,176 744,476 - ------------------------------------------------------------------------------------------------- 731,640 756,924 - ------------------------------------------------------------------------------------------------- 827,348 795,400 - ------------------------------------------------------------------------------------------------- INCREASE IN FUND EQUITY 35,286 43,882 Fund equity at January 1 202,486 158,604 - ------------------------------------------------------------------------------------------------- FUND EQUITY AT DECEMBER 31 237,772 202,486 =================================================================================================
See accompanying notes 5 THE TRW CANADA STOCK SAVINGS PLAN POOLED MONEY MARKET FUND EMPLOYEES PROFIT SHARING PLAN STATEMENTS OF FINANCIAL CONDITION As at December 31
1997 1996 $ $ - ------------------------------------------------------------------------------------------------- [expressed in Canadian dollars] ASSETS Cash 14,657 10 Receivable from TRW Canada Limited 15,145 15,973 Interest receivable -- 728 Investments at market value Royal Trust Company Classified Money Market Fund 20,334 units [cost $203,338] in 1997 and 22,388 units [cost $223,883] in 1996 203,338 223,883 - ------------------------------------------------------------------------------------------------- 233,140 240,594 ================================================================================================= LIABILITIES AND FUND EQUITY LIABILITIES Withdrawals, terminations, and short-term distributions 201,377 205,288 Fund equity 31,763 35,306 - ------------------------------------------------------------------------------------------------- 233,140 240,594 ================================================================================================= NUMBER OF UNITS OUTSTANDING AT DECEMBER 31 3,176.3 3,530.6 ================================================================================================= FUND EQUITY PER UNIT AT DECEMBER 31 10.0 10.0 =================================================================================================
See accompanying notes 6 THE TRW CANADA STOCK SAVINGS PLAN POOLED MONEY MARKET FUND EMPLOYEES PROFIT SHARING PLAN STATEMENTS OF OPERATIONS AND CHANGES IN FUND EQUITY Years ended December 31
1997 1996 $ $ - ------------------------------------------------------------------------------------------------- [expressed in Canadian dollars] INTEREST INCOME 4,546 6,911 Participants' contributions 212,269 214,997 - ------------------------------------------------------------------------------------------------- 216,815 221,908 - ------------------------------------------------------------------------------------------------- Less cash withdrawals and terminations Paid 18,981 14,978 Payable 201,377 205,288 - ------------------------------------------------------------------------------------------------- 220,358 220,266 - ------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN FUND EQUITY (3,543) 1,642 Fund equity at January 1 35,306 33,664 - ------------------------------------------------------------------------------------------------- FUND EQUITY AT DECEMBER 31 31,763 35,306 =================================================================================================
See accompanying notes 7 THE TRW CANADA STOCK SAVINGS PLAN POOLED BALANCED FUND REGISTERED RETIREMENT SAVINGS PLAN STATEMENTS OF FINANCIAL CONDITION As at December 31
1997 1996 $ $ - ------------------------------------------------------------------------------------------------- [expressed in Canadian dollars] ASSETS Cash 11,701 -- Receivable from TRW Canada Limited 8,635 8,119 Dividends receivable 16,127 25,243 Investments at quoted market value Royal Trust Company Classified Balanced Fund 29,406.9403 units [cost $377,446] in 1997 and 26,024.6831 units [cost $321,087] in 1996 451,362 384,497 - ------------------------------------------------------------------------------------------------- 487,825 417,859 ================================================================================================= LIABILITIES AND FUND EQUITY LIABILITIES Withdrawals, terminations, and short-term distributions -- 33,925 Fund equity [including net unrealized appreciation of investments] 487,825 383,934 - ------------------------------------------------------------------------------------------------- 487,825 417,859 ================================================================================================= NUMBER OF UNITS OUTSTANDING AT DECEMBER 31 29,406.9403 26,024.6831 ================================================================================================= FUND EQUITY PER UNIT AT DECEMBER 31 16.589 14.753 =================================================================================================
See accompanying notes 8 THE TRW CANADA STOCK SAVINGS PLAN POOLED BALANCED FUND REGISTERED RETIREMENT SAVINGS PLAN STATEMENTS OF OPERATIONS AND CHANGES IN FUND EQUITY Years ended December 31
1997 1996 $ $ - ------------------------------------------------------------------------------------------------- [expressed in Canadian dollars] INCOME 32,205 38,280 - ------------------------------------------------------------------------------------------------- CONTRIBUTIONS Participants' contributions 111,048 91,655 Transfer from Pooled Money Market Fund RRSP 1,362 -- - ------------------------------------------------------------------------------------------------- 112,410 91,655 - ------------------------------------------------------------------------------------------------- Net realized gain on disposition of investments [note 4] 7,862 316 Unrealized appreciation of investments [note 4] 10,506 41,357 - ------------------------------------------------------------------------------------------------- 18,368 41,673 - ------------------------------------------------------------------------------------------------- 162,983 171,608 - ------------------------------------------------------------------------------------------------- Less cash withdrawals and terminations Paid 59,092 47,125 Payable -- 33,925 - ------------------------------------------------------------------------------------------------- 59,092 81,050 - ------------------------------------------------------------------------------------------------- INCREASE IN FUND EQUITY 103,891 90,558 Fund equity at January 1 383,934 293,376 - ------------------------------------------------------------------------------------------------- FUND EQUITY AT DECEMBER 31 487,825 383,934 =================================================================================================
See accompanying notes 9 THE TRW CANADA STOCK SAVINGS PLAN POOLED MONEY MARKET FUND REGISTERED RETIREMENT SAVINGS PLAN STATEMENTS OF FINANCIAL CONDITION As at December 31
1997 1996 $ $ - -------------------------------------------------------------------------------------------------- [expressed in Canadian dollars] ASSETS Cash 4,243 -- Receivable from TRW Canada Limited 4,301 3,730 Interest receivable -- 865 Investments at market value Royal Trust Company Classified Pooled Money Market Fund 23,078 units [cost $230,780] in 1997 and 25,734 units [cost $257,339] in 1996 230,780 257,339 - ------------------------------------------------------------------------------------------------- 239,324 261,934 ================================================================================================= LIABILITIES AND FUND EQUITY LIABILITIES Withdrawals, terminations, and short-term distributions -- 11,259 Fund equity 239,324 250,675 - ------------------------------------------------------------------------------------------------- 239,324 261,934 ================================================================================================= NUMBER OF UNITS OUTSTANDING AT DECEMBER 31 23,932.4 25,067.5 ================================================================================================= FUND EQUITY PER UNIT AT DECEMBER 31 10.0 10.0 =================================================================================================
See accompanying notes 10 THE TRW CANADA STOCK SAVINGS PLAN POOLED MONEY MARKET FUND REGISTERED RETIREMENT SAVINGS PLAN STATEMENTS OF OPERATIONS AND CHANGES IN FUND EQUITY Years ended December 31
1997 1996 $ $ - ------------------------------------------------------------------------------------------------- [expressed in Canadian dollars] INTEREST INCOME 8,693 13,418 Participants' contributions 53,152 47,960 - ------------------------------------------------------------------------------------------------- 61,845 61,378 - ------------------------------------------------------------------------------------------------- Less cash withdrawals and terminations Paid 71,834 44,823 Payable -- 11,259 Transfer to Pooled Balanced Fund RRSP 1,362 -- - ------------------------------------------------------------------------------------------------- 73,196 56,082 - ------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN FUND EQUITY (11,351) 5,296 Fund equity at January 1 250,675 245,379 - ------------------------------------------------------------------------------------------------- FUND EQUITY AT DECEMBER 31 239,324 250,675 =================================================================================================
See accompanying notes 11 THE TRW CANADA STOCK SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS December 31, 1997 and 1996 1. GENERAL PLAN PROVISIONS The investment programs of the TRW Canada Stock Savings Plan [the "Plan"] are as follows: PARTICIPANT CONTRIBUTIONS Upon enrollment or re-enrollment, each participant directs that his contributions [computed in increments of one percent, from two per cent to six per cent of qualifying compensation] are to be invested in accordance with any of the following investment options: [a] 100% in the TRW Stock Fund [the common stock of TRW Inc. in accordance with the trust agreement and the Plan]. [b] 100% in the Pooled Money Market Fund Employees Profit Sharing Plan. At present, the Trustee invests all of the Pooled Money Market Fund amounts in the Royal Trust Company, Classified Money Market Fund in accordance with the Trust agreement and the Plan. [c] 100% in the Pooled Balanced Fund Registered Retirement Savings Plan. At present, the Trustee invests all of the Pooled Balanced Fund amounts in the Royal Trust Company, Classified Balanced Fund, in accordance with the Trust agreement and the Plan. [d] 100% in the Pooled Money Market Fund Registered Retirement Savings Plan. At present, the Trustee invests all of the Pooled Money Market Fund amounts in the Royal Trust Company, Classified Pooled Money Market Fund in accordance with the Trust agreement and the Plan. [e] A combination of options [a] through [d] in multiples of 25%. Such direction may be revised on 30 days prior notice, effective January 1 of any year. TRW CANADA LIMITED CONTRIBUTIONS TRW Canada Limited shall contribute to the plan for each month, out of current or accumulated earnings, an amount equal to 50% of participant contributions for such month. TRW Canada Limited contributions vest immediately. All TRW Canada Limited contributions are invested in the TRW Stock Fund. TRW Canada Limited does not charge a fee for administering the Plans. 12 THE TRW CANADA STOCK SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS December 31, 1997 and 1996 The number of participants in each Fund at December 31 is as follows:
1997 1996 - -------------------------------------------------------------------------------------------------- TRW Stock Fund 280 281 Pooled Money Market Fund Employees Profit Sharing Plan 72 114 Pooled Balanced Fund Registered Retirement Savings Plan 77 66 Pooled Money Market Fund Registered Retirement Savings Plan 52 48
The total number of participants in the Plan is less than the sum of the number of participants shown above because many are participating in more than one Fund. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES These financial statements have been prepared in accordance with accounting principles generally accepted in Canada, and are within the framework of the accounting policies summarized below. GAIN AND LOSSES ON INVESTMENTS The realized gain or loss on disposition or transfer of an investment is determined from the market value of the investment at the date of disposition or transfer and the average cost base of that specific pool of investments prior to the disposition or transfer. Unrealized gains or losses are determined as the net effect of the change in appreciation (depreciation) of investments from January 1 to December 31, based on market value and the average cost base of each investment at those respective dates. INCOME RECOGNITION Dividends are recognized as earned. Interest income is recognized as it is earned consistent with the accrual basis of accounting. 2 13 THE TRW CANADA STOCK SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS December 31, 1997 and 1996 3. INCOME TAXES The Plan is exempt from Canadian federal income taxes under provisions of the Income Tax Act. Federal income tax consequences to the participants under the Plan are as provided in the Income Tax Act. TRW Canada Limited contributions are taxable to the participants as is the income and all post-1971 capital gains less post-1971 capital losses of the Plan, all of which are allocated to the participants by the Trustee during the year, whether or not such amounts are paid to the participants by the Trustee during the year. In some circumstances, the amounts taxable could exceed the amounts allocated. The amount of foreign non-business income tax paid on foreign source income by the trusts under the Plan for the year is allocated to and deemed to have been paid by the participants for Canadian federal income tax purposes. Participants who are non-resident taxpayers are subject to special rules depending on whether they have performed duties in Canada during the year and are subject to 15% withholding tax on amounts paid or credited to them under the Plan. 4. UNREALIZED AND REALIZED (LOSSES) GAINS Investments are stated at their quoted market value. The net unrealized appreciation (depreciation) of investments included in fund equity is as follows:
TRW POOLED STOCK BALANCED FUND FUND $ $ - ------------------------------------------------------------------------------------------------- [expressed in Canadian dollars] BALANCE AT DECEMBER 31, 1995 60,162 22,053 Change for the year Market value 47,305 41,357 - ------------------------------------------------------------------------------------------------- BALANCE AT DECEMBER 31, 1996 107,467 63,410 Change for the year Market value (67,921) 10,506 - ------------------------------------------------------------------------------------------------- BALANCE AT DECEMBER 31, 1997 39,546 73,916 ==================================================================================================
3 14 THE TRW CANADA STOCK SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS December 31, 1997 and 1996 The net realized gains on the transfer or disposition of investments are summarized as follows:
TRW STOCK FUND ------------------------------- 1997 1996 $ $ - ------------------------------------------------------------------------------------------------- [expressed in Canadian dollars] AMOUNT REALIZED 845,411 756,618 Cost - average 750,938 707,196 - ------------------------------------------------------------------------------------------------- NET REALIZED GAIN 94,473 49,422 ================================================================================================== POOLED BALANCED FUND REGISTERED RETIREMENT SAVINGS PLAN ---------------------------- 1997 1996 $ $ - ------------------------------------------------------------------------------------------------- [expressed in Canadian dollars] AMOUNT REALIZED 60,297 3,900 Cost - average 52,417 3,584 - ------------------------------------------------------------------------------------------------- NET REALIZED GAIN 7,862 316 ==================================================================================================
5. RELATED PARTY TRANSACTIONS All expenses related to the TRW Canada Stock Savings Plan are paid by TRW Canada Limited. 4 -----END PRIVACY-ENHANCED MESSAGE-----