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TRW INC.
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News Release TRW Inc. [TRW Logo]
1900 Richmond Road
Cleveland, OH 44124
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 DISMAYED BY NORTHROP'S CONTINUED MISSTATEMENTS
Willing To Discuss Length Of Standstill Provision But Must Protect TRW
Shareholders' Interests
CLEVELAND, May 1, 2002 - TRW Inc. (NYSE: TRW) today issued the following
statement in response to Northrop Grumman Corporation's (NYSE: NOC)
misstatements regarding its negotiations with TRW referenced in Northrop's
press release issued today.
"TRW is increasingly dismayed that it is forced to correct
Northrop's misstatements in the press. We believe Northrop's
public statements released today were misleading and
mischaracterize the dialogue between our two companies.
As TRW has stated many times, it would like Northrop to
participate in the Board's process, but at the same time, TRW must
ensure that its confidential information is protected for the
benefit of TRW shareholders. As Northrop is well aware, TRW and
Northrop have been in almost daily communications both by phone
and letter over the past week. In fact, at TRW's Annual Meeting on
Wednesday, April 24, 2002, TRW invited Northrop to sit down and
discuss the terms of a mutually agreeable confidentiality
agreement, but Northrop and its representatives declined to do so.
TRW's commitment continues to be to deliver full value to TRW
shareholders. While TRW hopes to be able to work with Northrop,
statements like those made today by Northrop continue to thwart
the process."
TRW noted that a 1997 Confidentiality Agreement entered into between TRW
and Northrop contained a two-year standstill provision at Northrop's
insistence.
[Page]
Just yesterday, William B. Lawrence, Executive Vice President, General
Counsel and Secretary of TRW, sent the following letter to W. Burks Terry,
Northrop's Corporate Vice President and General Counsel:
April 30, 2002
W. Burks Terry, Esq.
Corporate Vice President and
General Counsel
Northrop Grumman Corporation
1840 Century Park East
Los Angeles, CA 80067-2199
Dear Burks:
Thank you for your letter of April 29th and the markup of the
revised confidentiality agreement which we provided to you. As you
correctly recognize, the key open issue is the length of the
standstill period. You state in your letter as follows: "We are
prepared to stand still for a period that reflects the length of
time that our experience shows could allow us to complete due
diligence and negotiate and sign a definitive agreement." You
further state: "An unreasonable stand still period, given the
current circumstances, is not in the best interests of anyone,
particularly the TRW shareholders."
The fact of the matter is that, given the current circumstances,
the standard you propose for the standstill period simply doesn't
work for the TRW shareholders. As you know full well, TRW's Board
has made clear that we are embarked on a path to develop the best
value we can for our shareholders. This path involves both pursuit
of our announced Value Enhancement Plan and, concurrently, seeking
a strategic alternative that could provide even greater value. The
standstill provision in our confidentiality agreement - which has
been executed by several interested parties - is directly tied to
the creation of value from both of these alternatives. Simply put,
we want parties who obtain confidential, business sensitive
information from TRW to be committed to bidding for the company
within the process we have established and at their highest and
best price. We believe that this will maximize the sale value of
the company. The standstill time frame you are suggesting would
not serve that objective. Rather, it would permit each party to
game the system, and disincentivize bidding. Moreover, if no
satisfactory bid results, it is critical that the Value
Enhancement Plan be given the opportunity to develop the value
inherent in it, and not be short-circuited by a unilateral bid on
a near term basis.
Hopefully, this will give you a clear understanding of why we do
not accept the approach you have proposed. Having said that, I
believe that we can address the standstill period's length to some
extent. We can also talk about the other matters raised in your
markup. I would be pleased to discuss these matters with you.
Sincerely,
/s/ William B. Lawrence
TRW provides advanced-technology products and services for the aerospace,
systems, and automotive markets.
[Page]
This press release contains certain "forward-looking statements" that TRW
believes are within the meaning of the Private Securities Litigation Reform
Act of 1995. The safe harbors intended to be created thereby are not
available to statements made in connection with a tender offer and TRW is
not aware of any judicial determination as to the applicability of such
safe harbors to forward-looking statements made in proxy solicitation
materials when there is a simultaneous tender offer. However, shareholders
should be aware that the preparation of any such 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. Further, 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 by the end of the fourth quarter 2002; (iii) that the Company will
be successful in reducing the amount of its indebtedness, or that the
methods described for debt reduction 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 reduce the amount of the Company's indebtedness; (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 assumptions or
changes in other factors affecting such estimates other than as required by
law.
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