Willing to Discuss Length of Standstill Provision But Must Protect TRW Shareholders’ Interests

TRW Inc. today
issued the following statement in response to Northrop Grumman Corporation’s
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

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.


    William B. Lawrence

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

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.