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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): September 19, 1996
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TRW Inc.
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(Exact Name of Registrant as Specified in Charter)
Ohio 1-2384 34-0575430
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(State or Other (Commission File Number) (I.R.S. Employer
Jurisdiction of Identification No.)
Incorporation)
1900 Richmond Road, Cleveland, Ohio 44124
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
(216) 291-7000
N/A
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(Former Name or Former Address, if Change Since Last Report)
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Item 2. Acquisition or Disposition of Assets
On September 19, 1996, TRW Inc. ("TRW") sold substantially all of the businesses
of its Information Systems and Services business ("IS&S Business") to Experian
Corporation ("Experian), a Delaware corporation, in a transaction structured as
a recapitalization, for an aggregate purchase price of approximately $1.1
billion pursuant to the Recapitalization Agreement, dated as of February 9, 1996
(the "Recapitalization Agreement), as amended, among Experian, TRW and certain
TRW affiliates, including IS&S Holdings, Inc. (f/k/a TRW Target Marketing
Services, Inc.) ("Holdings"), a Delaware corporation and a wholly-owned
subsidiary of TRW. Experian was organized by certain investors, including Bain
Capital, Inc. and certain of its affiliates (collectively, "Bain") and Thomas H.
Lee Company and certain of its affiliates (collectively, "THL").
The sale of the IS&S Business was effected by a recapitalization of TRW's IS&S
Business (the "Recapitalization Transactions"), pursuant to which TRW received
in exchange for its Holdings' stock approximately $1.010 billion in cash and
approximately 16% of the stock of Experian on fully diluted basis. Holdings was
renamed Experian in connection with the Recapitalization Transactions. The
aggregate consideration for the IS&S Business was determined on the basis of
arm's-length negotiations by the parties. After giving effect to the
Recapitalization Transactions, Bain and THL will own collectively a majority of
the voting power of Experian.
Prior to the consummation of the Recapitalization Transactions, TRW had no
material relationship with Experian, Bain, THL or any other investor in Experian
other than pursuant to the Recapitalization Agreement. After consummation of the
Recapitalization Transactions, TRW will be a party, together with Bain, THL and
certain other investors in Experian, to a stockholders' agreement relating to
Experian.
Item 7. Financial Statements and Exhibits
(a) Not applicable
(b) Pro forma financial information
This report includes an unaudited pro forma condensed
consolidated balance sheet as of June 30, 1996 and unaudited
pro forma consolidated income statements for the
fiscal year ended December 31, 1995 and the fiscal six months
ended June 30, 1996, giving pro forma effect to the
disposition described above.
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The accompanying Pro Forma Condensed Consolidated Balance Sheet of TRW
Inc. ("TRW") as of June 30, 1996 and Pro Forma Statements of
Consolidated Earnings for the six months ended June 30, 1996 and
for the year ended December 31, 1995 have been prepared to reflect the
historical financial position and results of continuing operations
adjusted to reflect the elimination of TRW's Information
Systems and Services business as Pro Forma Adjustments. The results
of TRW's Information Systems and Services business will be reported
as discontinued operations in TRW's historical financial statements in
the September 30, 1996 Quarterly Report on Form 10-Q.
In the opinion of management, all adjustments necessary to present
fairly such pro forma financial statements have been made.
The pro forma financial information is unaudited.
SUBSEQUENT EVENTS
On September 19, 1996, the Company completed the sale of substantially
all of its Information Systems & Services business to an investor group
led by Bain Capital, Inc. and the Thomas H. Lee Company for $1.01
billion and stock of Experian Corporation, representing a continuing
interest of approximately 16 percent. The proceeds from the sale will
be used to fund investment opportunities in the Automotive and Space
and Defense businesses and to purchase the Company's Common Stock.
In addition, the sale resulted in a gain to be recognized in the third
quarter which will be offset by certain charges and restructuring
actions primarily in the Company's Automotive and Space and Defense
businesses. The gain on sale and the certain charges and restructuring
actions have not been included in the Pro Forma Adjustments.
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TRW INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1996
In millions
Pro Forma
Historical Adjustments Pro Forma
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Assets
Current assets
Cash and cash equivalents $ 64 $ -- $ 64
Accounts receivable 1,558 (88) 1,470
Inventories 517 -- 517
Prepaid expenses 110 (10) 100
Deferred income taxes 113 (19) 94
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Total current assets 2,362 (117) 2,245
Property, plant and equipment - on the basis of cost 5,867 (140) 5,727
Less accumulated depreciation and amortization 3,399 (95) 3,304
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Total property, plant and equipment - net 2,468 (45) 2,423
Intangible assets
Intangibles arising from acquisitions 476 (239) 237
Capitalized data files 509 (509) --
Other 91 (53) 38
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1,076 (801) 275
Less accumulated amortization 431 (353) 78
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Total intangible assets - net 645 (448) 197
Other assets 448 (16) 432
Net assets of discontinued operations 0 444 444
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$ 5,923 $ (182) $ 5,741
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Liabilities and shareholders' investment
Current liabilities
Short-term debt $ 239 $ -- $ 239
Accounts payable 717 (17) 700
Current portion of long-term debt 68 (1) 67
Other current liabilities 1,097 (70) 1,027
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Total current liabilities 2,121 (88) 2,033
Long-term liabilities 789 -- 789
Long-term debt 513 (2) 511
Deferred income taxes 184 (65) 119
Minority interests in subsidiaries 80 (27) 53
Capital Stock 41 -- 41
Other Capital 432 -- 432
Retained earnings 1,898 -- 1,898
Cumulative translation adjustments 48 -- 48
Treasury shares - cost in excess of par value (183) -- (183)
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Total shareholders' investment 2,236 -- 2,236
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$ 5,923 $ (182) $ 5,741
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TRW INC. AND SUBSIDIARIES
PRO FORMA STATEMENT OF CONSOLIDATED EARNINGS
SIX MONTHS ENDED JUNE 30, 1996
In millions except earnings per share data
Pro Forma
Historical Adjustments Pro Forma
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Sales $5,399 $ (313) $5,086
Cost of sales 4,329 (185) 4,144
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Gross profit 1,070 (128) 942
Administrative and selling expenses 397 (67) 330
Research and development expenses 225 (20) 205
Interest expense 39 -- 39
Other expense - net 10 5 15
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Earnings from continuing operations before income taxes 399 (46) 353
Income taxes 152 (18) 134
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Earnings from continuing operations 247 (28) 219
Earnings from discontinued operations -- 28 28
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Net earnings $ 247 $ -- $ 247
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Per share of common stock
Fully diluted
Continuing operations $ 3.67 $(0.42) $ 3.25
Discontinued operations -- 0.42 0.42
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Net earnings $ 3.67 $ -- $ 3.67
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Primary
Continuing operations $ 3.70 $(0.42) $ 3.28
Discontinued operations -- 0.42 0.42
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Net earnings $ 3.70 $ -- $ 3.70
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Shares used in computing per share amounts
Fully diluted 67.4
Primary 66.8
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TRW INC. AND SUBSIDIARIES
PRO FORMA STATEMENT OF CONSOLIDATED EARNINGS
YEAR ENDED DECEMBER 31, 1995
In millions except earnings per share data
Pro Forma
Historical Adjustments Pro Forma
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Sales $ 10,172 $ (604) $ 9,568
Cost of sales 8,190 (322) 7,868
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Gross profit 1,982 (282) 1,700
Administrative and selling expenses 747 (151) 596
Research and development expenses 422 (45) 377
Interest expense 95 - 95
Other expense - net 10 (3) 7
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Earnings from continuing operations before income taxes 708 (83) 625
Income taxes 262 (32) 230
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Earnings from continuing operations 446 (51) 395
Earnings from discontinued operations - 51 51
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Net earnings $ 446 $ - $ 446
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PER SHARE OF COMMON STOCK
Fully diluted
Continuing operations $ 6.62 $ (0.76) $ 5.86
Discontinued operations - 0.76 0.76
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Net earnings $ 6.62 $ - $ 6.62
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Primary
Continuing operations $ 6.69 $ (0.77) $ 5.92
Discontinued operations - 0.77 0.77
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Net earnings $ 6.69 $ - $ 6.69
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Shares used in computing per share amounts
Fully diluted 67.4
Primary 66.6
(c) Exhibits
2.1 Recapitalization Agreement, dated as of February 9,
1996, among IS&S Acquisition Corp., TRW Inc., TRW
IS&S
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International, Inc., Information Systems and
Services, Inc. (f/k/a TRW Environmental Management
Company), TRW Hotel Company Inc., TRW Microwave Inc.
and IS&S Holdings, Inc. (f/k/a TRW Target Marketing
Services, Inc.).
In accordance with Item 601(b)(2) of Regulation S-K,
certain of the exhibits described in the Table of
Contents of Exhibit 2 have not been filed. The
Registrant hereby agrees to furnish supplementally
copies of such exhibits to the Commission upon
request.
2.2 Amendment No. 1, dated June 17, 1996, to
Recapitalization Agreement, dated as of February
9, 1996, among IS&S International, Inc., Information
Systems and Services, Inc. (f/k/a TRW Environmental
Management Company), TRW Hotel Company Inc., TRW
Microwave Inc. and IS&S Holdings, Inc. (f/k/a TRW
Target Marketing Services, Inc.).
2.3 Amendment No. 2, dated August 13, 1996, to Agreement,
dated as of February 9, 1996, among IS&S
International, Inc., Information Systems and
Services, Inc. (f/k/a TRW Environmental Management
Company), TRW Hotel Company Inc., TRW Microwave Inc.
and IS&S Holdings, Inc. (f/k/a TRW Target Marketing
Services, Inc.).
2.4 Amendment No. 3, dated September 18, 1996, to
Recapitalization Agreement, dated as of February 9,
1996, among IS&S International, Inc., Information
Systems and Services, Inc. (f/k/a TRW Environmental
Management Company), TRW Hotel Company Inc., TRW
Microwave Inc. and IS&S Holdings, Inc. (f/k/a TRW
Target Marketing Services, Inc.).
99.1 Press release dated September 19, 1996, regarding
the sale of TRW's IS&S Business.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TRW INC.
Date: October 4, 1996 By: /s/ Martin A. Coyle
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Martin A. Coyle
Executive Vice President, General
Counsel and Secretary
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INDEX TO EXHIBITS
EXHIBIT DESCRIPTION OF EXHIBIT
2.1 Recapitalization Agreement, dated as of February 9, 1996, among
IS&S Acquisition Corp., and TRW Inc., TRW IS&S International,
Inc., Information Systems and Services, Inc. (f/k/a TRW
Environmental Management Company), TRW Hotel Company Inc., TRW
Microwave Inc. and IS&S Holdings, Inc. (f/k/a TRW Target
Marketing Services, Inc.).
2.2 Amendment No. 1, dated June 17, 1996, to Recapitalization
Agreement, dated as of February 9, 1996, among IS&S
International, Inc., Information Systems and Services, Inc.
(f/k/a TRW Environmental Management Company), TRW Hotel Company
Inc., TRW Microwave Inc. and IS&S Holdings, Inc. (f/k/a TRW
Target Marketing Services, Inc.).
2.3 Amendment No. 2, dated August 13, 1996, to Recapitalization
Agreement, dated as of February 9, 1996, among IS&S
International, Inc., Information Systems and Services, Inc.
(f/k/a TRW Environmental Management Company), TRW Hotel Company
Inc., TRW Microwave Inc. and IS&S Holdings, Inc. (f/k/a TRW
Target Marketing Services, Inc.).
2.4 Amendment No. 3, dated September 18, 1996, to Recapitalization
Agreement, dated as of February 9, 1996, among IS&S
International, Inc., Information Systems and Services, Inc.
(f/k/a TRW Environmental Management Company), TRW Hotel Company
Inc., TRW Microwave Inc. and IS&S Holdings, Inc. (f/k/a TRW
Target Marketing Services, Inc.).
99.1 Press Release dated September 19, 1996 regarding the sale of
TRW's IS&S Business.