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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
March 13, 2002
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(Date of earliest event reported)
TRW INC.
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(Exact name of registrant as specified in its charter)
Ohio 001-02384 34-0575430
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(State or other jurisdiction of (Commission File No.) (I.R.S. Employer
incorporation or organization) Identification No.)
1900 Richmond Road
Cleveland, Ohio 44124
(216) 291-7000
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(Address of principal executive offices and telephone number, including area
code)
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Item 5. Other Events
On March 13, 2002, TRW Inc. issued a press release (a copy of
which is attached as Exhibit 99.1 hereto) announcing the recommendation of
the Board of Directors with respect to Northrop Grumman Corporation's Offer
to Exchange dated as of March 4, 2002, and the calling of a special meeting
of shareholders for Monday, April 22, 2002, for the purpose of voting under
Ohio law on Northrop Grumman Corporation's proposed control share
acquisition.
Item 7. Financial Statements and Exhibits
(a) Not applicable
(b) Not applicable
(c) Exhibits
99.1 TRW Inc.'s press release dated
March 13, 2002.
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.
By: /s/ Kathleen A. Weigand
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Kathleen A. Weigand
Vice President, Assistant General
Counsel and Secretary
DATE: March 13, 2002
EXHIBIT INDEX
Exhibit Number Description
99.1 TRW Inc.'s press release dated March 13,
2002.
Exhibit (99.1)
TRW Inc.
NEWS RELEASE 1900 Richmond TRW
Road
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For Immediate Release Contact
Judy Wilkinson or Barrett Godsey
Joele Frank, Wilkinson Brimmer Katcher
212-355-4449
Jay McCaffrey, TRW Media
216-291-7179
Ron Vargo, TRW Investors
216-291-7506
TRW BOARD DETERMINES NORTHROP GRUMMAN'S $47 EXCHANGE OFFER IS FINANCIALLY
INADEQUATE
Recommends TRW Shareholders Reject the Northrop Grumman Offer
Announces Strategic Plan to Enhance Shareholder Value
Special Meeting of Shareholders Set For April 22, 2002
CLEVELAND, March 13, 2002 - TRW Inc. (NYSE: TRW) announced today that after
careful consideration, including a thorough review with independent
financial and legal advisors, its board of directors has unanimously
determined that Northrop Grumman Corporation's (NYSE: NOC) March 4, 2002
unsolicited exchange offer for all outstanding shares of TRW common stock
for $47 per share is financially inadequate and not in the best interests
of TRW's shareholders. Accordingly, the TRW board of directors urges TRW
shareholders to reject Northrop Grumman's offer and not exchange their
shares.
"As we indicated when we rejected Northrop Grumman's earlier proposal, this
is all about shareholder value," said Philip A. Odeen, TRW's chairman.
In making its recommendation, TRW's board of directors considered, among
other things, that:
o Northrop Grumman's offer grossly undervalues TRW's businesses and
opportunities.
o The opinion of each of its independent financial advisors, Goldman,
Sachs & Co. and Credit Suisse First Boston, that Northrop Grumman's
offer is inadequate to the company's common shareholders from a
financial point of view.
o Northrop Grumman's offer price remains below the current market price
of TRW's common stock. As of March 12, 2002, TRW's closing stock price
was $50.28 per share.
o Northrop Grumman's offer is highly conditional, which results in
significant uncertainty that the offer will be consummated.
"Our board of directors continues to believe that $47 is grossly inadequate
and does not reflect the value of TRW's advanced portfolio of technology
and unique market leading positions. Further, since this offer is subject
to a collar which could result in a price of less than $47 per share, this
offer is less favorable than Northrop Grumman's earlier proposal," said Mr.
Odeen.
The board noted that Northrop Grumman made its offer at a time when TRW's
stock price was temporarily depressed following the unexpected resignation
of David Cote, TRW's former chairman, president and chief executive
officer.
"Northrop Grumman's offer is clearly an opportunistic attempt to acquire
TRW's premier franchise. In particular, the current planned increases in
government defense spending are expected to benefit many technologies and
arenas where TRW's space, electronics and systems businesses are a leader.
Additionally, we believe that our automotive and commercial aerospace
businesses will benefit from positive economic trends in these sectors,"
continued Mr. Odeen.
TRW's Value Enhancing Strategic Plan
TRW's board of directors believes that the company can significantly
enhance value for TRW shareholders through the continued execution of its
strategic plan. As part of this plan, TRW intends to accelerate its debt
reduction program and separate its Automotive business in a tax-efficient
manner. Key elements of the plan include:
o Acceleration of TRW's deleveraging initiatives through asset sales and
other alternatives.
In 2001, the company reduced its net debt by almost $1 billion and,
over the past three years, it has reduced net debt by approximately
$3.9 billion. The company is targeting an additional $1.6 billion to
$2.0 billion debt reduction in 2002.
o Exploration of additional actions, including the spin-off of TRW's
Automotive business.
As planned, the Automotive business would become an appropriately
capitalized, independent, publicly traded company. TRW has targeted
completion of the spin-off of the Automotive business in approximately
six to nine months.
"TRW has been examining a potential separation of our Automotive business
for some time," added Mr. Odeen. "We believe that our strategic plan
announced today will create two `pure play' independent businesses, each
positioned to deliver superior growth and returns. Additionally, this plan
will enable each company to optimize strategic and financial flexibility
and capture value against best-in-class industry benchmarks. We believe our
strategic plan will deliver greater value to TRW shareholders than Northrop
Grumman's offer."
Since the announcement of Northrop Grumman's proposal on February 22, 2002,
TRW and its independent financial advisors have received unsolicited
indications of interest from third parties with respect to a transaction
with the company as a whole which would involve a separation of the
Automotive business. In addition, the company has received unsolicited
indications of interest from third parties with respect to each of its
operating businesses as well as a private equity investment in the entire
company. Also, TRW is engaged in preliminary discussions with third parties
concerning transactions involving all or a portion of the Automotive
business, and the company has commenced preliminary negotiations for a
potential sale of its Aeronautical Systems Group.
TRW Is Well Positioned To Capitalize On The Positive Economic Trends Across
Auto, Defense and Aerospace Businesses
o Given positive recent economic trends, industry analysts have raised
their forecast for 2002 North American automotive light vehicle
production from between 15.0 million and 15.3 million vehicles to
between 15.7 million and 15.9 million units. TRW holds the number one
or two market positions in the worldwide supply of key automotive
products, including seat belts, air bags, antilock brakes (North
America) and steering gears, and is well positioned to capitalize on
this market growth.
o The United States defense budget is projected to have a 7.2% compound
annual growth rate through 2006, and TRW's space and defense
businesses are in the "sweet spot" of this growth. TRW's capabilities
in space, defense and communications are aligned with the U.S. Defense
Department's focus on information superiority, missile defense,
battlefield superiority and homeland security.
o According to a recent report from a leading trade organization for
airlines in the United States, the commercial aerospace sector appears
to have stabilized. TRW believes this will enhance its spares and
maintenance, repair and overhaul businesses.
TRW Is On Track To Deliver Sustainable Earnings And Cash Flow Growth
The board and senior management of TRW are committed to continuing to focus
on the company's aggressive cost cutting initiatives, productivity
improvements and enhancing relationships with its customers. The company is
on track to meet or exceed its 2002 commitments.
The company affirmed that the board's executive search committee, comprised
of outside directors, has selected a prominent executive search firm and is
actively engaged in a search for a new chief executive officer.
Special Meeting of Shareholders Set
TRW also announced today that its board of directors has called a Special
Meeting of TRW shareholders for Monday, April 22, 2002 for the purpose of
voting under Ohio law on Northrop Grumman's proposed control share
acquisition. Shareholders of record on the close of business on March 28,
2002 will be eligible to vote at the special meeting.
TRW noted that it expects to furnish shareholders with a notice of meeting
and related proxy statement later this month.
Goldman, Sachs & Co. and Credit Suisse First Boston Corporation are serving
as financial advisors to TRW, and Skadden, Arps, Slate, Meagher & Flom LLP
is serving as legal counsel.
TRW provides advanced-technology products and services for the aerospace,
systems, and automotive markets.
Certain of the information contained in this press release should be
considered "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 which is subject to a number of
risks and uncertainties. The preparation of forward-looking statements
requires the use of estimates of future revenues, expenses, activity levels
and economic and market conditions, many of which are outside the Company's
control. The Company's results could be affected by the ability to obtain
new contract awards; the level of defense funding by the government and the
termination of existing government contracts; pricing pressures from
customers; moderation or decline in the automobile build rate; changes in
consumer debt levels; work stoppages; unanticipated downturn in the
financial condition of, or business relationships with customers or
suppliers; the ability to reduce the level of outstanding debt from cash
flow from operations and the proceeds from asset dispositions; a credit
rating downgrade; increase in interest rates; customer recall and warranty
claims; product liability and litigation issues; changes to the regulatory
environment regarding automotive safety; the introduction of competing
products or technology by competitors; the ability to attract and retain
skilled employees with high-level technical competencies; the financial
results of companies in which we have made technology investments; the
availability of funding for research and development; economic, regulatory
and political domestic and international conditions; fluctuations in
currency exchange rates; and the impact of additional terrorist attacks,
which could result in reduced automotive production, disruptions to the
transportation system, or significant and prolonged disruption to air
travel. In addition, there can be no assurance: (i) that an agreement
relating to any investment in the Company, or relating to any sale or other
distribution of all or a part of the Company's operating businesses will be
reached, or that if an agreement is reached, that the transactions
contemplated by such agreement will be consummated; (ii) that the Company
will spin off the Automotive business or that such spin-off will be
complete within six to nine months; (iii) that the Company will be
successful in delevering the Company, or that the methods described for
delevering will be utilized; (iv) as to the amount by which debt will be
reduced; (v) that the Company's strategy will deliver any particular level
of value to TRW shareholders; (vi) that defense spending will rise and
research, development, test and evaluation budgets will increase; (vii)
that the commercial aerospace industry will stabilize; (viii) that North
American 2002 light vehicle production will increase from 2001 levels; (ix)
that 2002 earnings per share estimates will be met or exceeded; (x) with
respect to the expected amounts of the Company's operating cash flows in
2002, that such amounts will be utilized to delever the Company's balance
sheet; (xi) with respect to the amounts that will be realized, if any, by
the Company from divestitures; (xii) with respect to the amount of sales,
earnings per share or cash flow that will be realized by the Company in
2002; and (xiii) that the Company's costs will decrease in 2002. Other
factors and assumptions not identified above are also involved in the
preparation of forward-looking statements, and the failure of such other
factors and assumptions to be realized may also cause actual results to
differ materially from those discussed. The Company assumes no obligation
to update such estimates to reflect actual results, changes in assumption
or changes in other factors affecting such estimates other than as required
by law.
The directors and certain executive officers of TRW may be deemed to be
participants in the solicitation of proxies from shareholders of TRW in
connection with TRW's special meeting of shareholders under the Ohio
Control Share Acquisition Statute. Information concerning such participants
is contained in TRW's definitive proxy statement relating to TRW's 2002
Annual Meeting filed with the Securities and Exchange Commission on March
4, 2002 on Schedule 14A.
This press release relates to Northrop Grumman's exchange offer commenced
March 4, 2002. Shareholders of TRW are advised to read TRW's
Solicitation/Recommendation Statement on Schedule 14D-9, filed March 13,
2002, as it may be amended from time to time, and TRW's PROXY STATEMENT FOR
THE SPECIAL MEETING IN CONNECTION WITH THE SOLICITATION OF PROXIES FROM TRW
SHAREHOLDERS WHEN IT BECOMES AVAILABLE, BECAUSE THEY CONTAIN IMPORTANT
INFORMATION. Shareholders of TRW and other interested parties may obtain,
free of charge, copies of the Schedule 14D-9, TRW's proxy statement and
other documents filed by TRW with the SEC at the SEC's internet website at
www.sec.gov. Each of these documents may also be obtained, free of charge,
by calling investor relations at TRW at 216-291-7506.
Financial Teleconference and Webcast:
TRW will host a conference call on March 13, 2002 at 9:45 a.m. EST to
discuss this announcement. Investors, the news media, and others may listen
to the teleconference by calling 888-324-8503, from within the United
States, or 712-271-3869, internationally. Please call at least 15 minutes
prior to the start of the teleconference and ask to be connected to the TRW
conference call. A recording of this call will be available beginning at
1:00 p.m. EST on March 13, 2002 through 4:00 p.m. EST on March 20, 2002 and
can be accessed by dialing 800-945-0304 from within the United States, or
402-220-3526 internationally. The rebroadcast passcode is 3182067.
The teleconference will also be Webcast at www.TRW.com/investorpresentation
by clicking on an available audio link. Microsoft Media Player is required
to access the Webcast. It can be downloaded from
www.microsoft.com/windows/mediaplayer. This Webcast will be archived on the
company's web site for replay purposes beginning on March 13, 2002 through
March 20, 2002.
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