TRW Urges Shareholders to Reject Northrop’s Proposals and Not Tender Shares

TRW Inc. today
responded to Institutional Shareholder Services’ (ISS) recommendations on
various proposals to be voted on at TRW’s upcoming shareholder meetings,
including those submitted by Northrop Grumman Corporation in
connection with its unsolicited attempt to acquire TRW.
TRW’s Board believes
that Northrop’s proposals are unnecessary and nothing more than disingenuous
tactics to facilitate the acquisition of TRW at an inadequate price.

Philip A. Odeen, chairman of TRW said, “We are very pleased that ISS
commended the TRW Board for its independence and fair process and recognized
the Board’s efforts to maximize value for shareholders.
Through its reports,
ISS acknowledged what we have been saying all along — this is all about
shareholder value.
Our Board and management are taking the steps necessary to
deliver value to TRW shareholders in excess of Northrop’s offer.
We are
continuing to execute our shareholder value enhancement plan and, as the
Company announced yesterday, TRW’s Board has authorized management and its
advisors to initiate a process to explore all strategic alternatives.
continue to believe that Northrop’s proposals do nothing more than facilitate
an offer that we believe is inadequate and that would transfer value that
rightfully belongs to TRW shareholders to Northrop shareholders.”

With respect to the proposal, “Provide Shareholders with Opportunity to
Exchange Shares,”
ISS recommended that TRW shareholders support TRW’s Board
and reject Northrop’s proposal. ISS stated:

“ISS believes that the Board’s process in evaluating Northrop’s $53 per
share offer was fair and in shareholders’ best interests.
Furthermore, the
Board announced that it is willing to engage in discussions with legitimate
interested parties.
There is no compelling evidence to suggest that the Board
is entrenched and is not serving to maximize shareholder value.
ISS believes
that excluding TRW’s Board from the negotiation process is not desirable and
not in the best interest of TRW shareholders.”

Regarding the proposal, “Provide Non-Public Information,” ISS recommended
that Northrop be allowed access to TRW’s non-public information.
announced yesterday, the Board has already determined to share non-public
information regarding TRW with interested parties, subject to entering into
appropriate confidentiality agreements.
Northrop may participate in this
process, should it so desire.

Concerning the proposal, “Establish a Committee of Independent Directors,”
ISS noted that the TRW Board is “predominantly comprised of independent,
outside directors” and commended the Board for its willingness to engage in
discussions with legitimate interested parties.
In its report ISS noted, “we
support the independent nature of the key Board committees, which include no
insiders or affiliated outsiders.”
However, ISS stated: “ISS prefers that
companies establish an independent committee in determining if an offer or
transaction is fair to shareholders … as a matter of principle.”
Since 11
of TRW’s 13 directors are independent, TRW continues to believe this proposal
is unnecessary.

ISS also recommended that TRW shareholders vote for the election of TRW’s

Finally, regarding Northrop’s “Control Share Acquisition” proposal, ISS
has recommended that shareholders vote to approve this proposal.
In making
its recommendation, ISS’s analysis seems to be based on Northrop’s threat that
it would walk away if it did not succeed in the scheduled vote.
TRW does not
believe that this is an appropriate basis on which to make a recommendation.
Separately, as ISS noted, “ISS is not viewing the control share acquisition
proposal as a referendum on the $47 offer, the $53 offer or any price….”
TRW’s Board believes that approval of Northrop’s proposal could help
facilitate the acquisition of TRW at a price that TRW’s Board has already
determined is financially inadequate, highly conditional and not in the best
interest of our shareholders.

TRW shareholders are urged to vote against Northrop’s proposals.
For more
information about how to vote, shareholders can call the Company’s proxy
solicitor, Georgeson Shareholder Communications Inc. toll-free at
(866) 649-8030.

TRW provides advanced-technology products and services for the aerospace,
systems, and automotive markets.

Northrop Grumman’s Offer to Exchange would provide for each share of TRW
common stock to be exchanged for that number of shares of Northrop Grumman
common stock having a value equal to $53.
The exact exchange ratio would be
determined by dividing $53 by the average of the closing price of Northrop
Grumman common stock for the five consecutive trading days ending immediately
prior to the second trading day prior to the expiration of the Offer to
Exchange, but in no event will the exchange ratio be more than 0.4690
($53/$113) or less than 0.4309 ($53/$123)

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.