17 Apr 02. TRW Inc. (NYSE: TRW – news) announced today that after careful consideration, including consultation with independent financial and legal advisors, its Board of Directors has unanimously (with one director absent) determined that Northrop Grumman Corporation’s (NYSE: NOC – news) April 15, 2002 exchange offer for all outstanding shares of TRW common stock for $53* per share is financially inadequate and not in the best interests of TRW’s shareholders. Accordingly, the Board of Directors strongly recommends that TRW shareholders reject Northrop’s offer and not tender their shares for exchange. In making its recommendation that shareholders reject Northrop’s offer, TRW’s Board of Directors considered, among other things, that:
· Northrop’s revised offer continues to undervalue TRW’s businesses and its opportunities.
· The Board believes that the Company’s strategic plan to accelerate its debt reduction and separate its automotive and defense businesses is well-positioned to deliver more value than Northrop’s revised offer.
· Goldman, Sachs & Co. and Credit Suisse First Boston Corporation, the Company’s independent financial advisors, have both expressed the opinion that Northrop’s offer is inadequate to the Company’s common shareholders from a financial point of view.
· The revised offer does not adequately compensate TRW shareholders for transferring control of the Company to Northrop, or for the value of the synergies that the Board believes Northrop would be likely to realize if a transaction were consummated.
· Northrop’s revised offer continues to be highly conditional. Unlike its previous proposal, it is further conditioned upon Northrop’s completion of a due diligence investigation to its satisfaction.
Philip A. Odeen, TRW’s chairman, said, “We view this revised offer as recognition on Northrop’s part that their earlier offer was grossly inadequate. As our excellent first quarter earnings announced today attest, TRW’s financial performance is strong and, as a result of favorable trends in both our automotive and defense businesses, we have increased our earnings expectations for the full year 2002.”Today TRW Inc. (NYSE: TRW – news) reported a 24 percent increase in operating earnings and a 20 percent increase in operating earnings per share for the first quarter of 2002, Chairman Philip A. Odeen announced today. “A leaner and more focused corporation, TRW again demonstrated its dedication to meeting commitments, strong profit growth, and debt reduction,” Odeen said. “Restructuring actions and increased productivity, coupled with the strengthening economy and the U.S. government’s increased defense spending, well position TRW for a strong year. For these reasons, we are increasing our 2002 guidance to $3.55 – $3.60, from $3.30.”
*Financial highlights of the quarter include:
*Operating earnings increased 24 percent to $92m, (2001: $74m).
*Operating earnings per share, which excluded extraordinary and unusual items, increased 20 percent to $0.71, (2001: $0.59), exceeding analysts’ consensus estimates by 7 cents. All comparisons are on a comparable basis (2001 adjusted for SFAS 142).
· Net debt was maintained at $5.5bn.
· Sales of $4.1bn and segment profit of $227m were down 2 percent and 4 percent, respectively, from the first quarter 2001. Systems and space & electronics profits improved 5 percent due to improved program performance on flat sales.
TRW space & electronics’ sales improved $17m, or 4 percent, to $501m while operating profit improved by nearly $1m, or 2 percent, to $35m over the first quarter of 2001. Increases in the Advanced EHF communications and avionics programs offset the discontinuation of the Astrolink program.
Comment: These results show an increase in sales but the debt remains stubbornly st $5bn. The fact that