1
Exhibit 99(b)
FINANCIAL STATEMENTS
THE TRW CANADA STOCK SAVINGS PLAN
DECEMBER 31, 1996 AND 1995
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, 1996 and 1995 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, 1996 and 1995 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 LLP
Hamilton, Canada,
March 12, 1997. Chartered Accountants
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THE TRW CANADA STOCK SAVINGS PLAN
TRW STOCK FUND
STATEMENTS OF FINANCIAL CONDITION
As at December 31
1996 1995
$ $
- --------------------------------------------------------------------------------------------------
[expressed in Canadian dollars]
ASSETS
Cash 2,080 39,477
Receivable from TRW Canada Limited 58,180 18,483
Investments at quoted market value
TRW Inc. common stock
13,254 shares [cost $791,684] in 1996 and
15,536 shares [cost $760,993] in 1995 899,151 821,155
- --------------------------------------------------------------------------------------------------
959,411 879,115
==================================================================================================
LIABILITIES AND FUND EQUITY
LIABILITIES
Withdrawals, terminations and short-term distributions 756,925 720,511
Fund equity [including net unrealized appreciation of investments] 202,486 158,604
- --------------------------------------------------------------------------------------------------
959,411 879,115
==================================================================================================
NUMBER OF SHARES OUTSTANDING AT DECEMBER 31 [note 5] 13,254 15,536
==================================================================================================
FUND EQUITY PER SHARE AT DECEMBER 31 [note 5] 15.2774 10.2088
==================================================================================================
See accompanying notes
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THE TRW CANADA STOCK SAVINGS PLAN
TRW STOCK FUND
STATEMENTS OF OPERATIONS AND CHANGES IN FUND
EQUITY
Years ended December 31
1996 1995
$ $
- -------------------------------------------------------------------------------------------------
[expressed in Canadian dollars]
INVESTMENT INCOME
Dividends on TRW Inc. common stock 7,868 10,474
Interest 239 493
- -------------------------------------------------------------------------------------------------
8,107 10,967
- -------------------------------------------------------------------------------------------------
CONTRIBUTIONS
Participants 371,426 389,397
TRW Canada Limited
50% of total participants' contributions to all funds 363,022 362,356
- -------------------------------------------------------------------------------------------------
734,448 751,753
- -------------------------------------------------------------------------------------------------
Net realized gain on transfer
of investments to participants [note 4] 49,422 2,810
Unrealized appreciation of investments [note 4] 47,305 54,592
- -------------------------------------------------------------------------------------------------
96,727 57,402
- -------------------------------------------------------------------------------------------------
839,282 820,122
- -------------------------------------------------------------------------------------------------
Less withdrawals and terminations in respect
of the current year
Paid
Cash 3,183 2,248
TRW Inc. common stock
598 shares in 1996; 1,612 shares in 1995 35,293 82,956
- -------------------------------------------------------------------------------------------------
38,476 85,204
- -------------------------------------------------------------------------------------------------
Payable
Cash 12,448 18,913
TRW Inc. common stock
10,974 shares in 1996; 13,274 shares in 1995 744,476 701,598
- -------------------------------------------------------------------------------------------------
756,924 720,511
- -------------------------------------------------------------------------------------------------
795,400 805,715
- -------------------------------------------------------------------------------------------------
INCREASE IN FUND EQUITY 43,882 14,407
Fund equity at January 1 158,604 144,197
- -------------------------------------------------------------------------------------------------
FUND EQUITY AT DECEMBER 31 202,486 158,604
=================================================================================================
See accompanying notes
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THE TRW CANADA STOCK SAVINGS PLAN
POOLED MONEY MARKET FUND EMPLOYEES PROFIT SHARING PLAN
STATEMENTS OF FINANCIAL CONDITION
As at December 31
1996 1995
$ $
- --------------------------------------------------------------------------------------------------
[expressed in Canadian dollars]
ASSETS
Cash 10 11
Receivable from TRW Canada Limited 15,973 15,581
Interest receivable 728 1,351
Investment at market value
Royal Trust Company Classified Money Market Fund
22,388 units [cost $223,883]
in 1996 and
21,846 units [cost $218,457] in 1995 223,883 218,457
- --------------------------------------------------------------------------------------------------
240,594 235,400
==================================================================================================
LIABILITIES AND FUND EQUITY
LIABILITIES
Withdrawals, terminations and short-term distributions 205,288 201,736
Fund equity 35,306 33,664
- --------------------------------------------------------------------------------------------------
240,594 235,400
==================================================================================================
NUMBER OF UNITS OUTSTANDING AT DECEMBER 31 3,530.6 3,366.4
==================================================================================================
FUND EQUITY PER UNIT AT DECEMBER 31 10.0 10.0
==================================================================================================
See accompanying notes
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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
1996 1995
$ $
- -------------------------------------------------------------------------------------------------
[expressed in Canadian dollars]
INTEREST INCOME 6,911 8,664
Participants' contributions 214,997 203,587
- -------------------------------------------------------------------------------------------------
221,908 212,251
- -------------------------------------------------------------------------------------------------
Less cash withdrawals and terminations
Paid 14,978 2,536
Payable 205,288 201,736
- -------------------------------------------------------------------------------------------------
220,266 204,272
- -------------------------------------------------------------------------------------------------
INCREASE IN FUND EQUITY 1,642 7,979
Fund equity at January 1 33,664 25,685
- -------------------------------------------------------------------------------------------------
FUND EQUITY AT DECEMBER 31 35,306 33,664
=================================================================================================
See accompanying notes
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THE TRW CANADA STOCK SAVINGS PLAN
POOLED BALANCED FUND REGISTERED RETIREMENT SAVINGS PLAN
STATEMENTS OF FINANCIAL CONDITION
As at December 31
1996 1995
$ $
- -------------------------------------------------------------------------------------------------
[expressed in Canadian dollars]
ASSETS
Cash -- 5
Receivable from TRW Canada Limited 8,119 6,803
Interest receivable 25,243 3,111
Investments at quoted market value
Royal Trust Company Classified Balanced Fund
26,024.6831 units [cost $321,087] in 1996 and
21,702.0528 units [cost $261,441] in 1995 384,497 283,493
- -------------------------------------------------------------------------------------------------
417,859 293,412
=================================================================================================
LIABILITIES AND FUND EQUITY
LIABILITIES
Withdrawals, terminations and short-term distributions 33,925 36
Fund equity [including net unrealized appreciation of investments] 383,934 293,376
- -------------------------------------------------------------------------------------------------
417,859 293,412
=================================================================================================
NUMBER OF UNITS OUTSTANDING AT DECEMBER 31 26,024.6831 21,702.0528
=================================================================================================
FUND EQUITY PER UNIT AT DECEMBER 31 14.753 13.518
=================================================================================================
See accompanying notes
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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
1996 1995
$ $
- -------------------------------------------------------------------------------------------------
[expressed in Canadian dollars]
INCOME 38,280 13,305
- -------------------------------------------------------------------------------------------------
CONTRIBUTIONS
Participants' contributions 91,655 84,084
- -------------------------------------------------------------------------------------------------
Net realized gain (loss) on disposition of investments [note 4] 316 (182)
Unrealized appreciation of investments [note 4] 41,357 23,955
- -------------------------------------------------------------------------------------------------
41,673 23,773
- -------------------------------------------------------------------------------------------------
171,608 121,162
- -------------------------------------------------------------------------------------------------
Less cash withdrawals and terminations
Paid 47,125 26,529
Payable 33,925 36
- -------------------------------------------------------------------------------------------------
81,050 26,565
- -------------------------------------------------------------------------------------------------
INCREASE IN FUND EQUITY 90,558 94,597
Fund equity at January 1 293,376 198,779
- -------------------------------------------------------------------------------------------------
FUND EQUITY AT DECEMBER 31 383,934 293,376
=================================================================================================
See accompanying notes
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THE TRW CANADA STOCK SAVINGS PLAN
POOLED MONEY MARKET FUND REGISTERED RETIREMENT SAVINGS PLAN
STATEMENTS OF FINANCIAL CONDITION
As at December 31
1996 1995
$ $
- -------------------------------------------------------------------------------------------------
[expressed in Canadian dollars]
ASSETS
Cash -- 4
Receivable from TRW Canada Limited 3,730 3,845
Interest receivable 865 1,546
Investment at market value
Royal Trust Company Classified Pooled Money Market Fund
25,733.9 units [cost $257,339] in 1996
and 24,192.6 units [cost $241,926] in 1995 257,339 241,926
- -------------------------------------------------------------------------------------------------
261,934 247,321
=================================================================================================
LIABILITIES AND FUND EQUITY
LIABILITIES
Withdrawals, terminations and short-term distributions 11,259 1,942
Fund equity 250,675 245,379
- -------------------------------------------------------------------------------------------------
261,934 247,321
=================================================================================================
NUMBER OF UNITS OUTSTANDING AT DECEMBER 31 25,067.5 24,537.9
=================================================================================================
FUND EQUITY PER UNIT AT DECEMBER 31 10.0 10.0
=================================================================================================
See accompanying notes
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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
1996 1995
$ $
- -------------------------------------------------------------------------------------------------
[expressed in Canadian dollars]
INTEREST INCOME 13,418 15,009
Participants' contributions 47,960 47,636
- -------------------------------------------------------------------------------------------------
61,378 62,645
- -------------------------------------------------------------------------------------------------
Less cash withdrawals and terminations
Paid 44,823 10,047
Payable 11,259 1,942
- -------------------------------------------------------------------------------------------------
56,082 11,989
- -------------------------------------------------------------------------------------------------
INCREASE IN FUND EQUITY 5,296 50,656
Fund equity at January 1 245,379 194,723
- -------------------------------------------------------------------------------------------------
FUND EQUITY AT DECEMBER 31 250,675 245,379
=================================================================================================
See accompanying notes
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THE TRW CANADA STOCK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 and 1995
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.
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THE TRW CANADA STOCK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 and 1995
The number of participants in each Fund at December 31 is as follows:
1996 1995
- --------------------------------------------------------------------------------------------------
TRW Stock Fund 281 267
Pooled Money Market Fund Employees Profit Sharing Plan 114 112
Pooled Balanced Fund Registered Retirement Savings Plan 66 67
Pooled Money Market Fund Registered Retirement Savings Plan 48 49
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 the investments from January 1 to December 31,
based on market values 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.
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THE TRW CANADA STOCK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 and 1995
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
$ $
- --------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1994 5,570 (1,902)
Change for the year
Market value 54,592 23,955
- --------------------------------------------------------------------------------------------------
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
==================================================================================================
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THE TRW CANADA STOCK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 and 1995
The net realized gain on the transfer or disposition of investments is
summarized as follows:
TRW STOCK FUND
--------------
1996 1995
$ $
- --------------------------------------------------------------------------------------------------
AMOUNT REALIZED 756,618 720,679
Cost - average 707,196 717,869
- --------------------------------------------------------------------------------------------------
NET REALIZED GAIN 49,422 2,810
==================================================================================================
POOLED BALANCED FUND
REGISTERED RETIREMENT
SAVINGS PLAN
------------
1996 1995
$ $
- --------------------------------------------------------------------------------------------------
AMOUNT REALIZED 3,900 17,750
Cost - average 3,584 17,932
- --------------------------------------------------------------------------------------------------
NET REALIZED GAIN 316 (182)
==================================================================================================
5. STOCK SPLIT
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 6,192 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.
6. RELATED PARTY TRANSACTIONS
All expenses related to the TRW Canada Stock Savings Plan are paid by TRW Canada
Limited.
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