<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
-------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to ______________
Commission file number 1-2384
----------------------------------
TRW Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 34-0575430
--------------------------------------------- ------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
1900 Richmond Road, Cleveland, Ohio 44124
------------------------------------------
(Address of principal executive offices)
(Zip Code)
(216) 291-7000
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
--------- ---------
As of August 4, 1995, there were 66,070,037 shares of
TRW Common Stock, $0.625 par value, outstanding.
This is page one of a total of 51 pages.
The Exhibit Index is on page 15 of this filing.
<PAGE> 2
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------
Statements of Earnings (unaudited)
TRW Inc. and subsidiaries
------------------------------------------------------------------------------------------------------------
<CAPTION>
Second quarter ended Six months ended
June 30 June 30
In millions except per share data 1995 1994 1995 1994
--------------------------------------------------------------------------- -----------------------------
<S> <C> <C> <C> <C>
Sales $2,712 $2,317 $5,308 $4,476
Cost of sales 2,184 1,846 4,257 3,566
--------------------------------------------------------------------------- -----------------------------
Gross profit 528 471 1,051 910
Administrative and selling expenses 184 176 385 352
Research and development expenses 123 112 226 218
Interest expense 24 27 48 56
Other (income)expense-net - 17 5 38
--------------------------------------------------------------------------- -----------------------------
Earnings before income taxes 197 139 387 246
Income taxes 74 52 149 95
--------------------------------------------------------------------------- -----------------------------
Net earnings $ 123 $ 87 $ 238 $ 151
--------------------------------------------------------------------------- -----------------------------
--------------------------------------------------------------------------- -----------------------------
PER SHARE OF COMMON STOCK
Fully diluted $ 1.81 $ 1.31 $ 3.53 $ 2.28
Primary 1.84 1.33 3.58 2.30
Dividends declared .50 .47 .50 .47
--------------------------------------------------------------------------- -----------------------------
Shares used in computing per share
amounts
Fully diluted 68.0 65.6 67.4 66.0
Primary 66.7 65.0 66.3 65.4
--------------------------------------------------------------------------- -----------------------------
</TABLE>
<PAGE> 3
<TABLE>
Statements of Cash Flows (unaudited)
TRW Inc. and subsidiaries
------------------------------------------------------------------------------------------------------------
<CAPTION>
Six months ended
June 30
In millions 1995 1994
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operating activities
Net earnings $ 238 $ 151
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 260 240
Restructuring - (13)
Deferred income taxes 11 27
Other-net 7 33
Changes in assets and liabilities, net of effects of
businesses acquired or sold:
Accounts receivable (162) (260)
Inventories and prepaid expenses (28) (19)
Accounts payable and other accruals (4) 59
Other-net (12) 34
------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 310 252
------------------------------------------------------------------------------------------------------------
Investing activities
Capital expenditures (197) (187)
Proceeds from divestitures 10 10
Investments in other assets (28) (31)
Other-net - (19)
------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (215) (227)
------------------------------------------------------------------------------------------------------------
Financing activities
Increase (decrease) in short-term debt (24) (54)
Proceeds from debt in excess of 90 days 15 158
Principal payments on debt in excess of 90 days (65) (49)
Dividends paid (65) (61)
Other-net 8 9
------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (131) 3
------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (13) (33)
------------------------------------------------------------------------------------------------------------
Decrease in cash and cash equivalents (49) (5)
Cash and cash equivalents at beginning of period 109 79
------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 60 $ 74
------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 4
<TABLE>
Balance Sheets (unaudited)
TRW Inc. and subsidiaries
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
June 30 December 31
In millions 1995 1994
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 60 $ 109
Accounts receivable 1,524 1,338
Inventories 511 470
Prepaid expenses 65 59
Deferred income taxes 239 239
-----------------------------------------------------------------------------------------------------------------------------
Total current assets 2,399 2,215
Property, plant and equipment-on the basis of cost 5,791 5,556
Less accumulated depreciation and amortization 3,263 3,067
-----------------------------------------------------------------------------------------------------------------------------
Total property, plant and equipment-net 2,528 2,489
Intangible assets
Intangibles arising from acquisitions 479 477
Capitalized data files 463 441
Other 74 69
-----------------------------------------------------------------------------------------------------------------------------
1,016 987
Less accumulated amortization 370 331
-----------------------------------------------------------------------------------------------------------------------------
Total intangible assets-net 646 656
Other assets 289 276
-----------------------------------------------------------------------------------------------------------------------------
$ 5,862 $ 5,636
-----------------------------------------------------------------------------------------------------------------------------
Liabilities and shareholders' investment
Current liabilities
Short-term debt $ 125 $ 122
Accounts payable 725 737
Current portion of long-term debt 165 157
Other current liabilities 1,002 970
-----------------------------------------------------------------------------------------------------------------------------
Total current liabilities 2,017 1,986
Long-term liabilities 793 796
Long-term debt 612 694
Deferred income taxes 281 269
Minority interests in subsidiaries 67 69
Capital stock 41 41
Other capital 391 354
Retained earnings 1,588 1,383
Cumulative translation adjustments 105 66
Treasury shares-cost in excess of par value (33) (22)
-----------------------------------------------------------------------------------------------------------------------------
Total shareholders' investment 2,092 1,822
-----------------------------------------------------------------------------------------------------------------------------
$ 5,862 $ 5,636
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 5
<TABLE>
Results by Business Segments (unaudited)
TRW Inc. and subsidiaries
--------------------------------------------------------------------------------------------------------------------
<CAPTION>
Second quarter ended Six months ended
June 30 June 30
In millions 1995 1994 1995 1994
--------------------------------------------------------------------------------- --------------------------------
<S> <C> <C> <C> <C>
Sales
Automotive $ 1,719 $ 1,452 $ 3,460 $ 2,783
Space & Defense 842 709 1,548 1,389
Information Systems & Services 151 156 300 304
--------------------------------------------------------------------------------- --------------------------------
Sales $ 2,712 $ 2,317 $ 5,308 $ 4,476
--------------------------------------------------------------------------------- --------------------------------
Operating profit
Automotive $ 172 $ 119 $ 345 $ 214
Space & Defense 54 45 99 91
Information Systems & Services 22 28 43 48
--------------------------------------------------------------------------------- --------------------------------
Operating profit 248 192 487 353
Company Staff and other (27) (27) (52) (53)
Interest expense (24) (27) (48) (56)
Earnings from affiliates -- 1 -- 2
--------------------------------------------------------------------------------- --------------------------------
Earnings before income taxes $ 197 $ 139 $ 387 $ 246
--------------------------------------------------------------------------------- --------------------------------
</TABLE>
<PAGE> 6
NOTES TO FINANCIAL STATEMENTS
(unaudited)
PRINCIPLES OF CONSOLIDATION
---------------------------
The financial statements include the accounts of the Company and its
subsidiaries except for an insurance subsidiary. The wholly-owned insurance
subsidiary and the majority of investments in affiliated companies, which are
not significant individually or in the aggregate, are accounted for by the
equity method.
INVENTORIES
-----------
Inventories consist of the following:
(In millions)
<TABLE>
<CAPTION>
June 30 December 31
1995 1994
---- ----
<S> <C> <C>
Finished products and work in process $278 $246
Raw materials and supplies 233 224
--- ---
$511 $470
=== ===
</TABLE>
LONG-TERM LIABILITIES
---------------------
For balance sheet purposes, long-term liabilities at
June 30, 1995, and December 31, 1994, include $683 million
and $682 million, respectively, relating to postretirement benefits other than
pensions.
OTHER (INCOME) EXPENSE-NET
--------------------------
Other (income) expense included the following:
(In millions)
<TABLE>
<CAPTION>
Second quarter ended Six months ended
June 30 June 30
1995 1994 1995 1994
--------------------- ---------------------
<S> <C> <C> <C> <C>
Other income $(13) $(20) $(28) $(30)
Other expense 10 18 25 32
Foreign currency translation 3 19 8 36
--- --- --- ---
$ - $ 17 $ 5 $ 38
=== === === ===
</TABLE>
<PAGE> 7
EARNINGS PER SHARE
------------------
Fully diluted earnings per share have been computed based on the weighted
average number of shares of Common Stock outstanding during each period,
including common stock equivalents and assuming the conversion of the Serial
Preference Stock II--Series 1 and 3. Primary earnings per share have been
computed based on the weighted average number of shares of Common Stock
outstanding during each period including common stock equivalents.
SUPPLEMENTAL CASH FLOW INFORMATION
----------------------------------
(In millions)
<TABLE>
<CAPTION>
Six months ended
June 30
-------------------------
1995 1994
---- ----
<S> <C> <C>
Interest paid (net of amount capitalized) $ 44 $57
Income taxes paid (net of refunds) $136 $10
</TABLE>
For purposes of the statements of cash flows, the Company considers all highly
liquid investments purchased with a maturity of three months or less to be cash
equivalents.
INTERIM STATEMENTS
------------------
The financial statements are based in part on approximations and are subject to
adjustments that may develop, such as unsettled contract and renegotiation
matters and matters that arise in connection with the annual audit of the
financial statements; however, in the opinion of management, all adjustments
(which consist of normal recurring accruals) necessary for a fair presentation
of the results of operations for the periods presented have been included.
Results of operations for any interim period are not necessarily indicative of
the results to be expected for the full year.
<PAGE> 8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
(In millions except per share data)
<TABLE>
<CAPTION>
Six Months Ended
Second Quarter June 30
--------------------------------- --------------------------------
Percent Percent
1995 1994 Inc (Dec) 1995 1994 Inc (Dec)
---- ---- --------- ---- ---- ---------
<S> <C> <C> <C> <C> <C> <C>
Sales $2,712 $2,317 17% $5,308 $4,476 19%
Operating Profit $ 248 $ 192 30% $ 487 $ 353 38%
Net Earnings $ 123 $ 87 42% $ 238 $ 151 58%
Fully Diluted Earnings
Per Share $ 1.81 $ 1.31 38% $ 3.53 $ 2.28 55%
Effective Tax Rate 37.5% 37.5% 38.5% 38.7%
</TABLE>
The increase in sales for the second quarter and first six months of 1995
resulted from higher volume in the Automotive segment, primarily in the North
American airbag business and all European businesses, as well as increased
volume in the Space & Defense segment.
Operating profit for the second quarter and first six months of 1995 increased
primarily from the increased sales noted above.
The increase in net earnings for the second quarter and first six months of
1995 resulted from the higher operating profit noted above. Net earnings for
the first six months of 1995 also benefited from lower interest expense.
Interest expense was $48 million for the first six months of 1995 compared to
$56 million for the first half of 1994. The decrease in interest expense was
due primarily to lower average debt levels.
<PAGE> 9
AUTOMOTIVE
(In millions)
<TABLE>
<CAPTION>
Six Months Ended
Second Quarter June 30
----------------------------------- ----------------------------------------
Percent Percent
1995 1994 Inc (Dec) 1995 1994 Inc (Dec)
---- ---- --------- ---- ---- ---------
<S> <C> <C> <C> <C> <C> <C>
Sales $1,719 $1,452 18% $3,460 $2,783 24%
Operating Profit $ 172 $ 119 44% $ 345 $ 214 61%
</TABLE>
The increase in sales for the second quarter and first six months of 1995
resulted from higher volume in the North American airbag business and increased
volume in all European businesses. Favorable exchange rates also contributed
to the sales increase.
Operating profit increased for the second quarter and first six months of 1995
as a result of the increase in sales from the North American airbag business as
well as the increased volume in all European businesses.
SPACE & DEFENSE
(In millions)
<TABLE>
<CAPTION>
Six Months Ended
Second Quarter June 30
----------------------------------- ---------------------------------------
Percent Percent
1995 1994 Inc (Dec) 1995 1994 Inc (Dec)
---- ---- --------- ---- ---- ---------
<S> <C> <C> <C> <C> <C> <C>
Sales $842 $709 19% $1,548 $1,389 11%
Operating Profit $ 54 $ 45 20% $ 99 $ 91 9%
</TABLE>
Sales for the second quarter and first six months of 1995 increased due to new
business volume and improvements in ongoing program performance, partially
offset by the effect of contracts nearing completion.
The increase in operating profit for the second quarter and first six months
of 1995 resulted from the increased sales volume and the absence of investments
related to diversification into commercial markets, partially offset by program
profit adjustments.
INFORMATION SYSTEMS & SERVICES
(In millions)
<TABLE>
<CAPTION>
Six Months Ended
Second Quarter June 30
----------------------------------- ---------------------------------------
Percent Percent
1995 1994 Inc (Dec) 1995 1994 Inc (Dec)
---- ---- --------- ---- ---- ---------
<S> <C> <C> <C> <C> <C> <C>
Sales $151 $156 ( 4)% $300 $304 (1)%
Operating Profit $ 22 $ 28 (19)% $ 43 $ 48 (9)%
</TABLE>
The decrease in sales and operating profit for the second quarter and
first six months of 1995 was primarily due to lower volume in the
Information Systems and Real Estate Information Services businesses,
partially offset by higher revenue in the Information Services
business.
<PAGE> 10
LIQUIDITY AND FINANCIAL POSITION
In the first six months of 1995, cash flow provided by operating activities of
$310 million was used primarily for capital expenditures of $197 million,
dividend payments of $65 million, a net decrease in debt of $74 million and
$23 million in other items. As a result, cash and cash equivalents decreased
by $49 million.
Total debt (short-term debt, the current portion of long-term debt and
long-term debt) was $902 million at June 30, 1995, compared to $973 million at
December 31, 1994. The ratio of total debt to total capital (total debt, total
deferred income taxes, minority interests and shareholders' investment) at
June 30, 1995 was 29 percent compared to 34 percent at December 31, 1994.
During the first six months of 1995, the Company's committed U.S. 364-day
revolving credit agreement, which allowed the Company to borrow up to $150
million, expired. Also during the first six months, the Company renegotiated
the terms of its multi-year U.S. revolving credit agreement. The credit
agreement, which previously allowed the Company to borrow up to $400 million,
has been revised to allow the Company to borrow up to $550 million. The revised
agreement now extends through February 2000 and contains lower commitment fees
and borrowing rates.
Also during the first six months of 1995, the Company renegotiated the terms of
its committed multi-currency revolving credit agreement. The agreement, which
previously consisted of two tranches with 13 banks and allowed the Company to
borrow up to $200 million, now consists of one tranche and allows the Company to
borrow up to $200 million. The revised agreement now extends through February
2000 and contains lower commitment fees and borrowing rates.
The Company is subject to inherent risks attributed to operating in a global
economy. It is the Company's policy to utilize derivative financial instruments
to manage its interest rate and foreign currency exchange risks. The effect of
these derivative transactions on the Company's net earnings is not material.
Management believes that funds generated from operations and existing borrowing
capacity will be adequate to support and finance planned growth, capital
expenditures, company-sponsored research and development programs and dividend
payments to shareholders.
<PAGE> 11
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
On February 15, 1994, TRW filed suit in the United States District Court
for the District of Arizona against Talley Industries, Inc. and certain
Talley subsidiary companies. The suit relates to TRW's 1989 purchase of
Talley's air bag business. In the complaint, TRW claimed that, among
other violations of TRW's rights, Talley breached the non-compete
provision contained in the purchase agreement by providing products and
services to competitors of TRW. As a result of the breach, TRW
exercised its rights under the agreement and the license from Talley to
TRW to make a one-time payment of $26.5 million to Talley for a paid-up
royalty-free license to use Talley's air bag patents and technology. On
March 1, 1994, Talley filed an answer and counterclaims against TRW
alleging that TRW had acted improperly in making the $26.5 million
payment and requesting that TRW be ordered to pay immediately to Talley
the value of all anticipated royalties, claimed by Talley to be not less
than $250 million. On May 19, 1994, the court granted Talley's motion
for an injunction requiring TRW to continue to make quarterly royalty
payments pursuant to the 1989 asset purchase agreement and ancillary
agreements pending trial of TRW's claims. On April 5, 1995, trial began
before a jury on TRW's claims and Talley's counterclaims. On May 30,
1995, at the close of all the evidence, the trial judge directed a
verdict against TRW on TRW's claims against Talley, ruling that there
was not sufficient evidence to send TRW's claims to the jury. However,
the judge allowed Talley's counterclaims to go to the jury. On June 6,
1995, the jury entered its verdict that Talley was entitled to the present
value of the future royalty stream in the sum of $138 million on the contract
claim, but that TRW had not acted in bad faith and that the technology on which
royalties were due was limited to that in existence when TRW purchased
Talley's air bag business.
Judgment was entered against TRW on June 27, 1995 and TRW timely filed a
notice of appeal on July 12, 1995. On July 26, 1995, the trial judge
entered an order requiring that TRW continue to pay quarterly royalty
payments to Talley as they become due, notwithstanding the fact it filed
an appropriate bond in connection with its notice of appeal. TRW will
immediately appeal the judge's decision requiring continued royalty
payments and will also appeal the judge's decision directing a verdict
against TRW on its claims against Talley. The judgment against TRW is
not expected to have a material financial effect on the Company.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a) The Company held its 1995 Annual Meeting of Shareholders
on April 26, 1995.
(b) Proxies for the Annual Meeting of Shareholders were
solicited pursuant to Regulation 14 under the Act; there
was no solicitation in opposition to
11
<PAGE> 12
management's nominees as listed in the proxy statement; and all
of such nominees were elected.
(c) Michael H. Armacost was elected a Director of the Company
with 56,257,390 votes for election, 369,679 votes withheld
from voting and 8,354,791 shares not voted, including
broker non-votes.
Carl H. Hahn was elected a Director of the Company with
56,254,033 votes for election, 373,036 votes withheld from
voting and 8,354,791 shares not voted, including broker
non-votes.
George H. Heilmeier was elected a Director of the Company
with 56,274,950 votes for election, 352,119 votes withheld
from voting and 8,354,791 shares not voted, including
broker non-votes.
Richard W. Pogue was elected a Director of the Company with
55,854,456 votes for election, 772,613 votes withheld from
voting and 8,354,791 shares not voted, including broker non-
votes.
The shareholders ratified the appointment of Ernst & Young
as the Company's independent auditors for the 1995 fiscal
year with 56,287,105 votes for, 158,605 votes against,
181,359 votes abstaining and 8,354,791 shares not voted,
including broker non-votes.
A shareholder proposal concerning a report to shareholders
on research and development of space weapons was defeated,
with 5,445,138 votes for, 46,082,129 votes against,
2,153,861 votes abstaining and 11,300,732 shares not voted,
including broker non-votes.
(d) None.
12
<PAGE> 13
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
10.1 TRW Inc. Stock Plan for Non-Employee Directors (as
Amended and Restated, effective August 1, 1995)
10.2 TRW Inc. Deferred Compensation Plan (as Amended and
Restated, effective August 1, 1995)
10.3 TRW Benefits Equalization Plan (as Amended and
Restated, effective August 1, 1995)
10.4 TRW Supplementary Retirement Income Plan (as Amended
and Restated, effective August 1, 1995)
11 Computation of Earnings Per Share -- Unaudited.
27 Financial Data Schedule.
99 Computation of Ratio of Earnings to Fixed Charges --
Unaudited (Supplement to Exhibit 12 of the following
Form S-3 Registration Statements of the Company:
No. 33-30350, filed August 4, 1989, and No. 33-42870
filed September 20, 1991).
(b) Reports on Form 8-K:
No report on Form 8-K was filed during the quarter for which this report
is filed.
13
<PAGE> 14
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 thereunto duly authorized.
TRW Inc.
Date: August 9, 1995 By: /s/ Martin A. Coyle
-------------------
Martin A. Coyle
Executive Vice President
and Secretary
Date: August 9, 1995 By: /s/ Carl G. Miller
------------------
Carl G. Miller
Vice President
and Corporate Controller
14
<PAGE> 15
FORM 10-Q
Quarterly Report for Quarter Ended June 30, 1995
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit No. Description Page No.
----------- ----------- --------
<S> <C> <C>
10.1 TRW Inc. Stock Plan for Non-Employee Directors
(as Amended and Restated, effective August 1, 1995) 16
10.2 TRW Inc. Deferred Compensation Plan (as Amended
and Restated, effective August 1, 1995) 19
10.3 TRW Benefits Equalization Plan (as Amended and
Restated, effective August 1, 1995) 35
10.4 TRW Supplementary Retirement Income Plan (as
Amended and Restated, effective August 1, 1995) 42
11 Computation of Earnings Per Share -- Unaudited. 46
27 Financial Data Schedule. 47
99 Computation of Ratio of Earnings to Fixed Charges --
Unaudited (Supplement to Exhibit 12 of the following
Form S-3 Registration Statements of the Company:
No. 33-30350, filed August 4, 1989, and No. 33-42870
filed September 20, 1991). 51
</TABLE>
15
<PAGE> 1
EXHIBIT 10.1
AMENDED AND RESTATED EFFECTIVE AUGUST 1, 1995
TRW INC.
STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
1. PURPOSE
-------
The purposes of this Stock Plan for Non-Employee Directors (the
"Plan") of TRW Inc. (the "Company") are to increase the ownership interest in
the Company of non-employee Directors whose services are considered essential
to the Company's continued growth and progress and to provide a further
incentive to serve as a Director of the Company.
2. ADMINISTRATION
--------------
The Plan shall be administered by a Committee consisting of all
Directors who are concurrently employees of the Company. Subject to the
provisions of the Plan, the Committee shall have authority to adopt rules and
regulations for carrying out the Plan and to interpret, construe and administer
its provisions. The decisions of the Committee shall be final and binding upon
all parties. The Committee may consist of as few as one person, and a quorum
of the Committee shall be one.
3. ELIGIBILITY
-----------
Directors of the Company who are not employees of the Company or any
subsidiary or affiliate of the Company shall be eligible to participate in the
Plan. Any Director who is a director or chairman of the board of directors of
a subsidiary or affiliate of the Company shall not, solely by virture thereof,
be deemed to be an employee of the Company or such subsidiary or affiliate for
purposes of such eligibility.
<PAGE> 2
4. GRANTS
------
Each eligible Director shall be granted 250 shares of TRW Common Stock
("TRW Common"), par value $0.625 per share, on August 1, 1995. Thereafter, on
August 1 of each year, each eligible Director then serving shall be granted 250
shares of TRW Common. Only shares of TRW Common which previously have been
issued and reacquired by the Company shall be utilized for grants under this
Plan. Certificates for shares granted shall be issued as of the date of grant.
Shares granted hereunder shall constitute compensation for services as
a Director and shall supplement cash retainer fees. The value of shares of TRW
Common granted hereunder shall be deemed to be the mean of the high and the low
sales prices of TRW Common (1) as reported on the composite tape (or other
appropriate reporting vehicle as determined by the Committee) for the date of
grant or, if no such report shall be available for such date, as reported for
the New York Stock Exchange for such date, or (2) if such day is not a trading
day, as so reported for the next preceding trading day.
5. REGULATORY LIMITATIONS
----------------------
No share of TRW Common granted to a Director under this Plan may be
sold for at least six months after the date of grant, except in the case of
death or disability of such Director. The Company reserves the right to legend
the share certificates, to retain custody of certificates for an appropriate
period of time and to take other actions designed to assure compliance with
applicable securities laws and stock exchange rules.
6. ADJUSTMENT UPON CHANGES IN TRW COMMON
-------------------------------------
In the event there shall be any change in TRW Common through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split,
exchange of stock or other change in the corporate structure
-2-
<PAGE> 3
or shares of the Company, appropriate adjustments shall be made in the number
and kind of shares or other securities or property subject to subsequent grants
hereunder to reflect such changes.
7. AMENDMENT AND TERMINATION PLAN
------------------------------
The Directors may from time to time amend, modify, suspend or
terminate this Plan; provided, however, that the provisions of this Plan
regarding eligibility, timing of grants and the number of shares included in
any grant may not be amended or revised more than once every six months other
than to conform to changes in the Internal Revenue Code of 1986, as amended, or
the rules and regulations thereunder.
8. MISCELLANEOUS
-------------
This Plan shall not be construed as conferring any rights upon any
Director to continue as a Director for any period of time, or at any particular
rate of compensation.
The Company shall have the right to require, prior to the delivery of
any share certificate, payment of any taxes required by law to be withheld with
respect to the grant.
- 3 -
<PAGE> 1
EXHIBIT 10.2
AMENDED AND RESTATED AUGUST 1, 1995
TRW INC.
DEFERRED COMPENSATION PLAN
THIS AMENDED AND RESTATED PLAN is established by TRW Inc. ("TRW")
effective July 28, 1993, and as amended effective August 1, 1994 and August 1,
1995, for the benefit of certain employees of the Corporation in executive,
managerial or professional capacities so as to enhance the Corporation's
ability to attract and retain outstanding employees who are expected to
contribute to its success. It shall remain in effect, as it may be amended
from time to time, until termination as provided in Article VII of the Plan.
ARTICLE I
DEFINITIONS
For the purposes of the Plan, the following words and phrases shall
mean:
1.1 ACCOUNT. The bookkeeping or accounting records maintained
(having and requiring no segregation or holding of any assets) by TRW pursuant
to Article IV with respect to and resulting from a Participant's Deferral
Election.
1.2 AFFILIATE.
(a) Any corporation incorporated under the laws of one of
the United States of America of which TRW owns, directly or
indirectly, in excess of fifty percent (50%) of the combined voting
power of all classes of stock or in excess of fifty percent (50%) of
the total value of the shares of all classes of stock (all within the
meaning of Section 1563 of the Code);
(b) any partnership or other business entity organized
under such laws, in which TRW owns, directly or indirectly, (i) in
excess of fifty percent (50%) of the total capital or profits interest
of such partnership, or (ii) in excess of fifty percent (50%) or more
of the total value of such other business entity (all within the
meaning of Section 414(c) of the Code); and
(c) any other company designated as an Affiliate by the
Committee.
1.3 BENEFICIARY. The person, persons or entity entitled under
Article VI to receive any Plan Benefits payable after a Participant's death.
-1-
<PAGE> 2
1.4 CODE. The Internal Revenue Code of 1986, as amended.
References in the Plan to Sections of the Code are to such Sections as in
effect on the Effective Date.
1.5 COMMITTEE. The Compensation and Stock Option Committee of the
Directors.
1.6 CORPORATION. TRW or an Affiliate of TRW.
1.7 DATE OF DEPOSIT. The Determination Date immediately preceding
the date that, but for the Deferral Election, the Incentive Compensation would
be paid.
1.8 DEFERRAL ELECTION. An election pursuant to Article III by an
Eligible Employee to defer receipt of all or part of his Incentive
Compensation.
1.9 DEFERRED COMPENSATION. The portion of Incentive Compensation
which an Eligible Employee elects to defer pursuant to a Participation
Agreement.
1.10 DETERMINATION DATE. The last day of each calendar quarter;
that is March 31, June 30, September 30 and December 31.
1.11 DIRECTORS. The Directors of TRW.
1.12 EFFECTIVE DATE. July 28, 1993, the effective date of the
establishment of the Plan.
1.13 ELIGIBLE EMPLOYEE. A person (who must be a U.S. citizen or a
U.S. resident alien) in the full time active salary employ of the Corporation
who is employed at Operational Incentive Plan Level III or above at the end of
the year for which a Deferral Election applies.
1.14 EXECUTIVE OFFICER. Any Eligible Employee who is an "executive
officer" of TRW for the purposes of Rule 3b-7 under the Securities Exchange Act
of 1934.
1.15 FINANCIAL HARDSHIP. A severe financial hardship to the
Participant resulting from a sudden and unexpected illness or accident of the
Participant or of a dependent (as defined in Section 152(a) of the Code) of the
Participant, loss of the Participant's property due to casualty, or other
similar extraordinary and unforeseeable circumstance arising as a result of
events beyond the control of the Participant. In case of the Participant's
death, the word "Beneficiary or other person or entity entitled to receive a
Plan Benefit" shall be substituted for the word "Participant" wherever the
latter appears in this Section 1.15.
1.16 HIGHLY PAID EMPLOYEE. A person in the full time active salary
employ of the Corporation who (i) will earn, in salary and in bonus (assuming
full year employment and no deferral of compensation), at least $150,000 (or
such
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greater sum if the qualified benefit plan limitation is increased by the
Internal Revenue Service) in the year of the Deferral Election or (ii) is
already a participant in TRW's supplemental nonqualified benefit plans or (iii)
is a U.S. citizen or U.S. resident alien who is Operational Incentive Plan
Level III or above and is employed by either TRW Overseas Inc. or TRW Systems
Overseas Inc.
1.17 INCENTIVE BONUS. A cash award payable to an Eligible Employee
under TRW's Operational Incentive Plan (or similar compensation program that
replaces the Operational Incentive Plan).
1.18 INCENTIVE COMPENSATION. Any cash award payable to an Eligible
Employee as an Incentive Bonus or, if applicable, a Strategic Grant that, but
for a Deferral Election under the Plan, would be paid to the Eligible Employee
and considered to be "wages" for purposes of United States federal income tax
withholding (or other appropriate jurisdiction).
1.19 INTEREST RATE. One-quarter of the annual interest rate, equal
to 110% of the applicable long-term federal rate as published by the Internal
Revenue Service pursuant to Code Section 1274(d) and in effect on the first
business day of each calendar quarter.
1.20 PARTICIPANT. An Eligible Employee who has elected to
participate in the Plan and has executed and filed with TRW a Participation
Agreement as provided in Article III; provided, however, that such term shall
include a person who no longer has an effective Deferral Election so long as he
retains, under the Plan, an interest in an Account under the Plan.
1.21 PARTICIPANT AGREEMENT. An agreement between TRW and a
Participant setting forth the Participant's Deferral Election.
1.22 PLAN. This Deferred Compensation Plan, as it may be amended
from time to time.
1.23 PLAN BENEFIT. The benefit payable to a Participant in
accordance with Article V hereof.
1.24 PLAN YEAR. Each of the twelve (12) month periods ending
December 31 and occurring while the Plan remains in effect. The term "Plan
Year" shall also include the period beginning on the Effective Date and ending
December 31, 1993, and any period of less than twelve (12) months beginning
January 1 and ending on the date the Plan is terminated.
1.25 PRE-RETIREMENT PAYMENT SUB-ACCOUNT. A Sub-Account of a
Participant's Account, established pursuant to Section 4.3, to which there
shall be credited Deferred Compensation under a single Deferral Election, and
all interest accrued thereon, as to which the Participant has elected payment
of his Plan Benefit in either five years or ten years from the Date of Deposit.
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1.26 RETIREMENT PAYMENT SUB-ACCOUNT. A Sub-Account of a
Participant's Account, established pursuant to Section 4.3, to which there
shall be credited Deferred Compensation under all Deferral Elections, and all
interest accrued thereon, as to which the Plan Benefit is intended to be
payable following retirement of the Participant from the Corporation.
1.27 SPECIAL COMMITTEE. The committee composed of the head of
Human Resources, the General Counsel and the Chief Financial Officer of TRW,
which committee reviews and acts upon the requests of Participants (other than
Participants who are Executive Officers, whose requests are acted upon by the
Committee) to receive early payout as a result of a Financial Hardship or to
change payout upon retirement.
1.28 STRATEGIC GRANT. A cash award payable to an Eligible
Employee pursuant to TRW's Strategic Incentive Program (or similar long-term
compensation plan that replaces the Strategic Incentive Program).
1.29 SUB-ACCOUNT. A Pre-Retirement Payment Sub-Account or a
Retirement Payment Sub-Account.
1.30 TERMINATION OF EMPLOYMENT. Any severance of a Participant
from full-time active salaried employment by the Corporation for any reason
(other than a transfer of employment from TRW to an Affiliate, from an
Affiliate to another Affiliate or from an Affiliate to TRW).
1.31 TRW. TRW Inc., an Ohio corporation.
ARTICLE II
ADMINISTRATION
2.1 ADMINISTRATORS. The Plan shall be administered by the
Committee, the Special Committee and the head of Human Resources, and certain
decisions concerning Financial Hardship and change in payment upon retirement
may be made by the Special Committee. Except as otherwise provided herein,
decisions of the Committee, the head of Human Resources or the Special
Committee shall be final and binding on all parties.
2.2 COMMITTEE. The Committee shall have the authority (a) to
make, amend, interpret and enforce all rules and regulations for the
administration of the Plan and (b) to decide all questions, including
interpretation of the Plan as may arise in connection with the Plan insofar as
it is applicable to Participants (i) who are Executive Officers or (ii) with
respect to whom questions are referred to the Committee by the head of Human
Resources. A majority of the members of the Committee shall constitute a
quorum. The Committee may act by a vote of a majority of a quorum at a meeting
or by a writing signed by a majority of the members of the Committee.
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2.3 HUMAN RESOURCES. The head of Human Resources shall administer
the Plan in accordance with the terms of the Plan and the rules and regulations
of the Plan as established by the Committee. Consistent with the authorized
precedents and the rules and regulations authorized by the Committee, the head
of Human Resources shall have the authority to decide all questions, including
interpretations of the Plan, as may arise in connection with the Plan insofar
as it is applicable to Participants other than Executive Officers.
2.4 SPECIAL COMMITTEE. With regard to all Participants, other
than Participants who are Executive Officers, the Special Committee shall act
upon (i) written requests of Participants concerning early payout of some or
all of the Participant's Account balances as a result of Financial Hardship and
(ii) written requests of Participants to change the payout of a Participant's
Retirement Payment Sub-Account as provided by Section 5.1(b). The Special
Committee may act by a vote of the majority at a meeting or by a writing signed
by a majority of the members of the Special Committee.
2.5 FINANCIAL HARDSHIP AND RETIREMENT PAYOUT CHANGE REQUESTS. In
order for a request to be considered by the Special Committee (or, in the case
of a request as set forth in clauses (i) or (ii) of Section 2.4 by an Executive
Officer, the Committee), the requests must (i) be in writing and delivered to
the head of Human Resources, (ii) set forth whether the Participant is
requesting an early payout because of a Financial Hardship or a change of
payout upon retirement, (iii) set forth the reasons for such request, including
in detail the Financial Hardship or the circumstances that necessitate the
change of payout upon retirement, (iv) in the case of a request as a result of
a Financial Hardship set forth the amount of such Participant's Account that
the Participant wishes to be paid and the Sub-Accounts from which such early
payout shall be made and (v) in the case of a change of payout at retirement
set forth the manner in which the Participant wishes to receive payout (e.g.,
single sum or in five annual installments). Compliance with the petition
procedures set forth in this Section 2.5 does not insure that the request will
be granted by the Special Committee (or the Committee).
ARTICLE III
PARTICIPATION
3.1 PARTICIPATION.
(a) Subject to the limitations set forth in this Article
III, any person who is an Eligible Employee in the year for which the
Incentive Compensation deferred under a Deferral Elections under this
Section 3.1 is payable may participate in the Plan by executing and
filing with the head of Human Resources a Participation Agreement;
provided, however, the election to defer Incentive Bonus will not be
effective unless the Eligible Employee is also a Highly Paid Employee.
The head of Human Resources shall determine, in his sole discretion,
which Eligible Employees are likely to be Highly Paid Employees during
the year in
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which the Deferral Election is made. The head of Human Resources
shall then notify Eligible Employees whether their elections to defer
Incentive Bonuses are effective.
(b) In each Participation Agreement, the Eligible
Employee shall specify the percentage or dollar amount of Incentive
Bonus and the percentage or the dollar amount of Strategic Grant in
respect of a specified TRW fiscal year to be deferred and the Eligible
Employee shall specify, subject to the limitations of Section 5.1, the
form of Plan Benefit (i.e., whether such benefits are intended to be
paid following retirement or five or ten years from the Date of
Deposit). If the Eligible Employee chooses to defer a dollar amount
of the Incentive Bonus or the Strategic Grant and to the extent that
dollar amount specified exceeds the eligible amount of the Incentive
Bonus or the Strategic Grant, as applicable, the amount actually
deferred shall be eligible amount of the Incentive Bonus or the
Strategic Grant, as applicable. If the Eligible Employee has chosen
to have Deferred Compensation paid five or ten years from the Date of
Deposit, such payments shall be made as provided in Section 5.1(d)
below.
(c) Before September 30, 1993 with respect to 1993, and
September 30 of each subsequent Plan Year with respect to each Plan
Year thereafter, each Eligible Employee who elects to become a
Participant shall file with the head of Human Resources a
Participation Agreement specifying his Deferral Election for any
Incentive Compensation payable in respect of that Plan Year and
whether such Deferred Compensation is intended to be payable the year
following retirement or five or ten years from the Date of Deposit.
3.2 DEFERRAL ELECTIONS. Subject to the restrictions concerning
deferral of Incentive Bonus set forth in Section 3.1(a), any Eligible Employee
may elect to defer any percentage or dollar amount (but not both a percentage
and dollar amount, but an Eligible Employee can defer a specified dollar amount
of one of his Incentive Bonus and Strategic Grant and a percentage of the
other) of each of his Strategic Grant and his Incentive Bonus; provided,
however, that, to the extent that the Eligible Employee chooses to defer a
percentage of his Incentive Bonus and/or Strategic Bonus, each Deferral
Election, to be effective, must result in deferral of a minimum of 10% of the
Eligible Employee's Incentive Bonus and/or Strategic Grant (provided that an
Eligible Employee may elect to defer a portion of his Incentive Bonus and none
of his Strategic Grant and vice versa) and the Deferral Elections must be in
increments of 5% for each of the Strategic Grant and Incentive Bonus, which
election percentages do not need to be identical; further, provided, however,
that, to the extent that the Eligible Employee chooses to defer a specified
amount of his Incentive Bonus and/or Strategic Bonus, each Deferral Election,
to be effective, must result in deferral of a minimum of $10,000 of the
Eligible Employee's Incentive Bonus and/or Strategic Grant (provided that an
Eligible Employee may elect to defer a portion of his Incentive Bonus and none
of his Strategic Grant and vice versa) and the Deferral
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Elections must be in increments of $1,000 for each of the Strategic Grant and
Incentive Bonus, which election amounts do not need to be identical.
3.3 MODIFICATION OF DEFERRAL ELECTION. By written notice to TRW,
a Deferral Election filed in any Plan Year may be modified or revoked at any
time prior to October 1 of such Plan Year. Thereafter, a Deferral Election
specified in a Participation Agreement shall be irrevocable, except that the
Committee or the Special Committee, as appropriate under Article II, may permit
a Participant at any time prior to the actual deferral of the Incentive
Compensation to reduce the designated percentage to be deferred upon a finding,
based upon uniform standards established by the Committee, that the Participant
has suffered a Financial Hardship.
ARTICLE IV
DEFERRED COMPENSATION
4.1 DEFERRED COMPENSATION. The amount of Incentive Compensation
deferred pursuant to a Deferral Election shall be withheld in a single sum at
the time such Incentive Compensation, but for a Deferral Election, would be
paid.
4.2 WITHHOLDING OF TAXES AND SSP/BEP CONTRIBUTIONS. Any
withholding of taxes or other amounts which is required by any federal, state,
or local law shall be withheld from the Participant's remaining undeferred
Incentive Compensation, if any. If necessary in order to comply with any
federal, state or local law, the amount of Incentive Compensation deferred may
be reduced by an amount equal to any required withholding. Otherwise, such
withholding may be made from any of the Participant's other compensation
payable by the Corporation, or, at the election of the head of Human Resources,
a Participant may be permitted to pay to the Corporation the amount of any such
required withholding at or prior to the time such withholding would otherwise
be required to be made. In addition, the amount of Incentive Compensation
deferred shall be reduced by the amount of TRW Stock Savings Plan and Benefits
Equalization Plan contributions to be made by the Eligible Employee on account
of such Incentive Compensation.
4.3 ACCOUNTS. For recordkeeping purposes only, a separate Account
shall be established and maintained by TRW for each Participant to which his
Deferred Compensation and interest accrued thereon pursuant to Section 4.4
shall be credited. Each such Account shall be divided into the following
Sub-Accounts for purposes of Section 5.1: (i) a Retirement Payment Sub-Account
to which there shall be credited all Incentive Compensation deferred (and all
interest thereon) pursuant to all Deferral Elections under which a Plan Benefit
is payable the year following retirement; and (ii) a separate Pre-Retirement
Payment Sub-Account for each Deferral Election under which the Participant has
elected that his Plan Benefit be payable five or ten years from the Date of
Deposit, to which the Incentive Compensation deferred (and all interest
thereon) pursuant to such Deferral Election shall be credited.
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4.4 DETERMINATION OF ACCOUNT. The value of each Participant's
Account as of each Determination Date shall be the total of the Participant's
Retirement Payment and Pre-Retirement Payment Sub-Accounts. The value of each
such Sub-Account shall consist of (i) the balance of such Sub-Account as of the
last preceding Determination Date plus (ii) any Deferred Compensation credited
to such Sub-Account since the last preceding Determination Date, plus (iii)
interest in the amount determined by multiplying the average daily balance of
such Sub-Account during the three calendar months since the last preceding
Determination Date by the Interest Rate applicable to such three-month period,
less (iv) the amount of all Plan Benefits, if any, paid during the period since
the last preceding Determination Date. Interest, determined as provided in
(iii) above, shall be credited to each such Sub-Account as of the Determination
Date as of which such Sub-Account is valued.
4.5 STATEMENT OF ACCOUNTS. TRW shall submit to each Participant,
within one hundred twenty (120) days after the close of each Plan Year and at
such other times as determined by the Committee, a statement setting forth the
total balance of the Participant's Account, and the balance of each Sub-Account
thereof, as of the last day of such Plan Year and as of the last day of the
immediately preceding Plan Year, the Deferred Compensation and interest
credited to each Sub-Account during the Plan Year and the payments of the Plan
Benefits from each Sub- Account during the Plan Year.
ARTICLE V
PLAN BENEFITS
5.1 PLAN BENEFITS PAYABLE ON TERMINATION OF EMPLOYMENT, FIVE YEARS
FROM DATE OF DEPOSIT OR TEN YEARS FROM DATE OF DEPOSIT.
(a) Subject to the provisions of Section 5.1(b) and except as
otherwise provided below, upon Termination of Employment a Participant
shall receive a Plan Benefit equal to the balance of his Account as of
the Determination Date immediately preceding such Termination of
Employment, plus the amount of any Deferred Compensation credited his
Account after such Determination Date. Such Plan Benefit shall be
payable as a single sum within a reasonable time following such
Termination of Employment. In addition, the Participant shall receive
interest on the balance of his Account for the period from such
Determination Date to the date of payment at a daily simple interest
rate equivalent to the Interest Rate then in effect. However, in the
event that the Termination of Employment is the result of a
divestiture of the unit or operations of the Corporation where the
Participant worked prior to Termination of Employment and the
Participant obtains employment with the entity that acquired such unit
or operations, then the balance of such Participant's Retirement
Payment Sub-Account shall not be payable until such Participant
commences receiving retirement benefits from the
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Corporation and the balance of such Participant's Pre-Retirement
Payment Sub-Account shall not be payable until such time as the
Participant would have received payment in accordance with the
original Deferral Election had the Participant's employment with the
Corporation not been terminated. At such time, the amounts in such
Participant's Account shall be paid as set forth in Sections
5.1(b) and 5.1(e). Interest shall continue to be earned on such
Participant's Account following such Participant's Termination of
Employment through payment in full of his or her Account.
(b) In the event that a Participant's Termination of
Employment occurs as a result of his retirement, the Participant shall
receive the Plan Benefit payable in respect of his Retirement Payment
Sub-Accounts in ten annual installments commencing in the year
following the year that Termination of Employment occurred; provided,
however, that the Participant can petition the Special Committee (or
the Committee in the case of an Executive Officer) at any time at
least six months prior to retirement to change such payment into five
annual installments or a single sum; further provided, that any such
payment change approved by the Special Committee (or the Committee)
shall not be effective until the calendar year following the date of
the payment change. In the event that payment shall be made in a
single sum, such payment shall be in accordance with the procedures
set forth in Section 5.1(a) above, but in no event in the same
calendar year as the year of any requested change and no earlier than
January 1 of the calendar year following the year that Termination of
Employment occurred. In the event that the payment shall be made in
installments, such payments shall be made in accordance with Section
5.1(e) below. If, at the time of retirement, the Participant has a
credit in a Pre-Retirement Payment Sub-Account, such Sub-Account
balances shall be paid in a single sum following retirement in
accordance with the procedures set forth in Section 5.1(a) above.
(c) In the event that a Participant's Termination of
Employment occurs because of his death, his Beneficiary or, if no
designated Beneficiary shall survive him, his estate shall receive the
Plan Benefit in the manner provided in Section 5.1(a); provided,
however, that if the Participant's Beneficiary designation shall
result in all or any part of his Plan Benefit passing to his surviving
spouse or to an entity for the benefit of his surviving spouse in such
a way as to qualify for the marital deduction under Section 2056 of
the Code, and at the time of his death the Participant was eligible to
retire and had elected to receive his Plan Benefits in his Retirement
Payment Sub-Account in installments pursuant to Section 5.1(b),
payments from his Retirement Payment Sub-Account shall be made to such
surviving spouse or to such entity for the benefit of such surviving
spouse, as the case may be, in the manner provided in Section 5.1(b).
Notwithstanding the foregoing, if such surviving spouse shall die
prior to complete distribution of all Plan Benefits, the balance then
remaining in such Retirement Payment Sub-Account shall be paid to
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the estate of such surviving spouse or to such entity for the benefit
of such surviving spouse, as the case may be, in a single sum within a
reasonable time following such spouse's death.
(d) If the Participant has chosen in his Deferral
Election to receive payouts either five or ten years from the Date of
Deposit (as opposed to upon retirement from the Corporation), payments
shall be made in a single sum form from each Pre-Retirement Payment
Sub-Account of the Participant on or before February 15 of the year
either five or ten years (depending upon the applicable Deferral
Election) following the applicable Date of Deposit; provided, however,
that if Termination of Employment has occurred prior to payment,
payment of the Participant's Plan Benefits shall be made as provided
in Section 5.1(a).
(e) If the payments from the Participant's Retirement
Payment Sub-Account are to be paid in installment form, such
installments shall be paid in either five or ten annual installments
between February 1 and February 15 of each year in which an
installment is to be made; provided, however, that the initial
installment payment will be made a reasonable time following
Termination of Employment (but no earlier than February 1 of the
calendar year following the year that Termination of Employment
occurred). Installment payments will commence in the year following
the Participant's Termination of Employment. The five year
installment payments shall be made as follows: in the first year in
which a payment is to be made, an amount equal to one-fifth of the
balance of the Sub-Account on December 31 immediately preceding the
first payment shall be paid; in the second year in which a payment is
to be made, an amount equal to one-fourth of the balance of the
Sub-Account on December 31 immediately preceding the second payment
shall be paid; in the third year in which a payment is to be made, an
amount equal to one-third of the balance of the Sub-Account on
December 31 immediately preceding the third payment shall be paid; in
the fourth year in which a payment is to be made, an amount equal to
one-half of the balance of the Sub-Account on December 31 immediately
preceding the fourth payment shall be paid; and in the fifth year in
which a payment is to be made, an amount equal to the remaining
balance of the Sub-Account on December 31 immediately preceding the
fifth payment shall be paid. The ten installment payments shall be
made as follows: in the first year in which a payment is to be made,
an amount equal to one-tenth of the balance of the Sub-Account on the
December 31 immediately preceding the first payment shall be paid; in
the second year in which a payment is to be made, an amount equal to
one-ninth of the balance of the Sub-Account on the December 31
immediately preceding the second payment shall be paid; in the third
year in which a payment is to be made, an amount equal to one-eighth
of the balance of the Sub-Account on the December 31 immediately
preceding the third payment shall be paid; in the fourth year in which
a payment is to be made, an amount equal to one-seventh of the
balance of the Sub-Account on the December 31 immediately preceding
the fourth payment shall be paid; in the fifth year in which a
payment is to be made, an
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amount equal to one-sixth of the balance of the Sub-Account on the
December 31 immediately preceding the fifth payment shall be paid; in
the sixth year in which a payment is to be made, an amount equal to
one-fifth of the balance of the Sub-Account on the December 31
immediately preceding the sixth payment shall be paid; in the seventh
year in which a payment is to be made, an amount equal to one-fourth
of the balance of the Sub-Account on the December 31 immediately
preceding the seventh payment shall be paid; in the eighth year in
which a payment is to be made, an amount equal to one-third of the
balance of the Sub-Account on the December 31 immediately preceding
the eighth payment shall be paid; in the ninth year in which a payment
is to be made, an amount equal to one-half of the balance of the
Sub-Account on the December 31 immediately preceding the ninth payment
shall be paid; and in the tenth year in which a payment is to be made,
the balance of the Sub-Account remaining on the December 31
immediately preceding the tenth payment shall be paid. Interest on
Retirement Payment Sub-Account from which installment payments are
made shall accrue until the December 31 immediately preceding the
payment of the tenth installment.
5.2 WITHDRAWAL OF PLAN BENEFIT. No Plan Benefit shall be payable
prior to the Participant's Termination of Employment other than in the form
determined pursuant to Section 5.1(d), except that the Committee or the Special
Committee, as appropriate under Article II, may permit a Participant or, after
a Participant's death, a Participant's Beneficiary or other person or entity
entitled to receive such Plan Benefit, to withdraw from the Participant's
Account an amount necessary to meet a Financial Hardship.
5.3 WITHHOLDING; PAYROLL TAXES. TRW shall withhold from Plan
Benefits payable under the Plan any taxes required to be withheld from an
employee's wages for the federal or any state or local governments.
5.4 FULL PAYMENT OF BENEFITS. Notwithstanding any other provision
of the Plan, all Plan Benefits shall be paid to the Participant no later than
the January 5 next preceding the Participant's eightieth (80th) birthday.
ARTICLE VI
BENEFICIARY DESIGNATION
6.1 BENEFICIARY DESIGNATION. Each Participant shall have the
right, at any time, to designate any person or persons as his Beneficiary (both
principal as well as contingent) to whom payment under the Plan shall be made
in the event of his death prior to complete distribution of all Plan Benefits
due him under the Plan. Any Beneficiary designation shall be made in writing
on a form prescribed by the Committee and shall become effective only when
filed with the head of Human Resources.
6.2 AMENDMENTS. Subject to the limitations of Section 6.1 of the
Plan, any Beneficiary designation may be changed by a Participant only by
written
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notice of such change to the head of Human Resources on a form prescribed by
the Committee. The filing of a new Beneficiary designation form will cancel
all prior Beneficiary designations.
6.3 ABSENCE OF EFFECTIVE BENEFICIARY DESIGNATION. If a
Participant fails to designate a Beneficiary as provided above or if all
designated Beneficiaries predecease the Participant or die prior to complete
distribution of the Participant's Plan Benefit, the Participant's remaining
Plan Benefit shall be paid to his estate.
6.4 EFFECT OF PAYMENT. Payment to the Beneficiary designated
pursuant to Sections 6.1 and 6.2 or to the Participant's estate pursuant to
Section 6.3 shall completely discharge TRW's obligations under the Plan.
ARTICLE VII
AMENDMENT AND TERMINATION OF PLAN
7.1 TERMINATION. The Committee shall have the power in its sole
discretion to suspend or terminate the Plan at any time, except that no such
action shall adversely affect rights with respect to any Account without the
consent of the person affected.
7.2 AMENDMENT. The Committee can amend any part of this Plan
(including, without limitation, changing the interest rate to be paid to
current and future Participants or changing who can become Participants) in its
sole discretion without notice to Participants.
ARTICLE VIII
MISCELLANEOUS
8.1 UNFUNDED PLAN. The Plan is an unfunded plan maintained by TRW
primarily to provide Deferred Compensation benefits for a select group of
executive, managerial or professional employees of the Corporation.
8.2 UNSECURED GENERAL CREDITOR. Participants and their
Beneficiaries, estates, heirs, successors and assigns shall have no legal or
equitable rights, interest or claims in any property or assets of TRW. Such
assets of TRW shall not be held under any trust or in any other way as
collateral security for the fulfillment of the obligations of TRW under the
Plan. Any and all of TRW's assets shall be, and remain, the general,
unpledged, unrestricted assets of TRW. TRW's sole obligation under the Plan
shall be merely that of an unfunded and unsecured promise of TRW to pay money
in the future.
8.3 NONASSIGNABILITY. Neither a Participant nor any other person
shall have any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, transfer, hypothecate or convey, in advance of
actual receipt, any Plan Benefit. Plan Benefits and all rights to Plan
Benefits are and
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shall be nonassignable and nontransferable prior to actual payment as provided
by the Plan. Any such attempted assignment or transfer shall be ineffective;
TRW's sole obligation shall be to pay Plan Benefits to the Participant, his
Beneficiary or his estate as appropriate. No part of any Plan Benefit shall,
prior to actual payment as provided by the Plan, be subject to seizure or
sequestration for the payment of any debts, judgments, alimony or separate
maintenance owed by a Participant or any other person; nor shall any Plan
Benefit be transferable by operation of law in the event of a Participant's or
any other person's bankruptcy or insolvency, except as required by law.
8.4 NOT A CONTRACT OF EMPLOYMENT. Neither the terms and
conditions of the Plan nor those of any Participation Agreement shall be deemed
to constitute a contract of employment between the Corporation and the
Participant, and neither the Participant, his Beneficiary nor his estate shall
have any rights against TRW under the Plan except as may otherwise be
specifically provided in the Plan. Moreover, nothing in the Plan shall be
deemed to give a Participant the right to be retained in the service of the
Corporation or to interfere with the right of the Corporation to discipline,
discharge or change the status of a Participant at any time. Further, nothing
in the Plan shall be deemed to give a Participant a right to receive any
Incentive Compensation.
8.5 PROTECTIVE PROVISIONS. A Participant will cooperate with TRW
by furnishing any and all information requested by TRW in order to facilitate
the payment of Plan Benefits under the Plan, and by taking such other action as
may be reasonably requested by TRW.
8.6 TERMS. Whenever any words are used in the Plan in the
masculine, they shall be construed as though they were used in the feminine in
all cases where they would so apply; and wherever any words are used in the
Plan in the singular or in the plural, they shall be construed as though they
were used in the plural or singular, as the case may be, in all cases where
they would so apply.
8.7 CAPTIONS. The captions of the articles and sections of the
Plan are for convenience only and shall not control or affect the meaning or
construction of any of its provisions.
8.8. GOVERNING LAW. The provisions of the Plan shall be construed
and interpreted according to the laws of the State of Ohio.
8.9 VALIDITY. In case any provision of the Plan shall be held
illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining provisions of the Plan, and the Plan shall be construed
and enforced as if such illegal or invalid provision were not included in the
Plan.
8.10 NOTICE OR FILING. Any notice or filing required or permitted
to be given to TRW or a Participant under the Plan shall be sufficient if in
writing and hand delivered, or sent by regular mail or by registered or
certified mail, to the principal office of TRW or to the last known address of
the Participant, as the
- 13 -
<PAGE> 14
case may be. Such notice or filing shall be deemed given or made (i) when hand
delivered to the residence or offices of the recipient, (ii) as of five (5)
days after the date of mailing if delivery is made by regular mail, or, (iii)
as of five (5) days after the date shown on the postmark on the receipt for
registration or certification provided to the sender at the time of mailing, if
by registered or certified mail.
8.11 SUCCESSORS. The provisions of the Plan shall bind and
obligate TRW and any successors. The term "successors" as used in this Section
8.11 shall include any corporate or other business entity which shall, whether
by merger, consolidation, purchase or otherwise acquire all or substantially
all of the business and assets of TRW and successors of any such corporation or
other business entity.
8.12 EXPENSES AND COSTS. TRW shall bear all expenses and costs in
connection with the operation of the Plan.
8.13 RELIANCE ON CERTIFIED PUBLIC ACCOUNTANTS. TRW, the Directors,
the Committee, the Special Committee, the head of Human Resources and any
employee of TRW or the Corporation shall be fully protected for actions taken
in good faith based on the computations and reports made pursuant to or in
connection with the Plan by the independent certified public accountants who
audit TRW's accounts.
8.14 PRONOUN REFERENCES. References to "he," "his" or "him" in
the Plan are used in the generic sense and shall apply to all Participants
without reference to the gender of the Participant.
ARTICLE IV
CLAIMS PROCEDURE
9.1 CLAIM. Any person claiming a Plan Benefit, requesting an
interpretation or ruling under the Plan (other than a ruling under Section 2.5
above or the determination as to whether an Eligible Employee is a Highly Paid
Employee), or requesting information under the Plan shall present the request
in writing to the head of Human Resources who (a) shall respond in writing
within ninety (90) days following his receipt of the request or (b) in the case
of a claimant who is an Executive Officer, shall refer the claim with his
recommended response to the Committee, which shall respond in writing within
one hundred twenty (120) days following the receipt of the request by the head
of Human Resources.
9.2 DENIAL OF CLAIM. If the claim or request is denied, the
written notice of denial shall state (i) the reasons for denial; (ii) a
description of any additional material or information required and an
explanation of why it is necessary; and (iii) an explanation of the Plan's
claim review procedure.
- 14 -
<PAGE> 15
9.3 REVIEW OF CLAIM. Any person whose claim or request is denied
may make a second request for review by notice given in writing to the head of
Human Resources. The claim or request shall be reviewed further by the head of
Human Resources or the Committee, as appropriate, and he or it may, but shall
not be required to, grant the claimant a hearing.
9.4 FINAL DECISION. A decision on such second request shall
normally be made within sixty (60) days after the date of the second request.
If an extension of time is required for a hearing or other special
circumstances, the claimant shall be notified and the time limit shall be one
hundred twenty (120) days from the date of the second request. The decision
shall be in writing and, whether made by the head of Human Resources or the
Committee, shall be final and bind all parties concerned.
- 15 -
<PAGE> 16
PARTICIPATION AGREEMENT
The undersigned hereby agrees to participate in the TRW Inc. Deferred
Compensation Plan (the "Plan") for the following Incentive Compensation
received by the undersigned on account of the year 19__. The undersigned
acknowledges that if in accordance with the Plan the undersigned is not a
Highly Paid Employee under the Plan, the undersigned's election to defer the
Incentive Compensation will become invalid. The undersigned agrees that he/she
has read the Plan and agrees that the following elections are governed by the
Plan.
Deferral Percentages or Amounts (Percentage elections must be in increments of
5%, with a 10% minimum election, and dollar elections must be in increments of
$1,000, with a $10,000 minimum election; elections for OIP bonus and strategic
incentive grant need not be the same; you cannot elect both a perecentage and a
dollar amount for the same payment source):
OIP Bonus ______% or $_______
Strategic Incentive Grant (to extent applicable) ______% or $_______
Election Options (Choose only one):
___ Paid in lump sum five years from the Date of Deposit
___ Paid in lump sum ten years from the Date of Deposit
___ Paid following retirement in ten annual installments unless a
change has been approved in accordance with Section 2.5 of the Plan
In order for the above elections to be effective, this form must be fully
completed and returned to the head of Human Resources no later than September
30, 19__.
Unless the undersigned has a Beneficiary Designation Form on file for this Plan
with Human Resources, this Participation Agreement must be accompanied by an
executed Beneficiary Designation Form.
___________________________ ________________________________
Signature of Participant Participant's Full Name
___________________________ ________________________________
Date Participant's Social Security #
- 16 -
<PAGE> 1
EXHIBIT 10.3
TRW BENEFITS EQUALIZATION PLAN
Amended and Restated
Effective August 1, 1995
1. PURPOSE. This plan, the TRW Benefits Equalization Plan
("Plan"), combines the provisions of the TRW Inc. Supplemental Executive
Retirement Plan and the TRW Inc. Nonqualified Benefits Equalization Plan as
modified and restated herein. The Plan is unfunded for tax purposes and for
purposes of Title I of the Employee Retirement Income Security Act ("ERISA")
and is maintained primarily for the purpose of providing deferred compensation
for a select group of management or highly compensated employees, including
officers, of TRW Inc. and its domestic subsidiaries (the "Company"). Its
purposes are to provide supplemental benefits to those:
a. whose benefits under the TRW Salaried Pension Plan (the
"Salaried Plan"), any other defined benefit pension plan for which TRW Inc. or
a domestic subsidiary is a sponsor ("d.b. plan") or The TRW Employee Stock
Ownership and Stock Savings Plan (the "Stock Savings Plan") are limited by
section 401(a)(17) of the Internal Revenue Code of 1986 ("Code");
b. whose benefits otherwise payable under the Stock Savings Plan
are limited by section 402(g)(1) of the Code;
c. whose benefits under the Stock Savings Plan have been limited
to the extent that the Company cannot contribute to the Stock Savings Plan the
full amount of TRW Matching Contributions as defined therein without exceeding
the amount provided by Code section 415(c)(1)(A);
d. whose (i) compensation otherwise included as "Earnings" under
the Salaried Plan or other d.b. plan or as "Compensation" under the Stock
Savings Plan and (ii) service otherwise included as Benefit Service under the
Salaried Plan or other d.b. plan would not be so included because of a
determination by the Company that such inclusion could violate the regulations
under Code section 401(a)(4); and
e. whose compensation otherwise included as "Earnings" under the
Salaried Plan or other d.b. plan or as "Compensation" under the Stock Savings
Plan would not be included because such compensation was deferred under the
provisions of the TRW Inc. Deferred Compensation Plan rather than received.
2. ELIGIBILITY.
a. Employees (i) whose base pay and bonus paid in 1994 exceeded
$150,000 and (ii) whose base pay and bonus paid in any subsequent year exceed
the Code section 401(a)(17) compensation limit for such year will be eligible
to participate in the portion of the Plan attributable to benefits otherwise
payable under the Stock Savings Plan, provided they are otherwise eligible to
participate in the Stock Savings Plan and have timely elected to participate in
the
<PAGE> 2
Plan. An account ("Account") shall be established in the name of each such
eligible employee; amounts shall be credited to such Account in accordance with
the provisions of Section 4. Once such employees have met the eligibility
requirements under this paragraph a., they will continue to be eligible to
participate in subsequent years even if their base pay and bonus paid fall
below the compensation limit of Code section 401(a)(17).
b. Any employee whose benefits under the Salaried Plan or other
d.b. plan are limited due to any reason identified in Section 1 a., d. or e.
above, is eligible to participate in the Plan; his interest will be referred to
herein as the Defined Benefit Portion.
3. DIRECTORS/COMMITTEE. For purposes of the Plan, the term "Directors"
shall mean the Compensation and Stock Option Committee of the Directors of TRW
Inc. ("Company") with respect to the approval of benefits of any participant
who is, or ever was, either a Director of the Company, a member of the Chief
Executive Office, or a member of the Management Committee. With respect to the
approval of benefits of other participants, the term "Committee" shall refer to
an Administrative Committee consisting of those three employees of the Company
who occupy the most senior positions in the Company Staff Finance, Human
Resources, and Law Departments. The Committee or its delegate shall interpret
the provisions of the Plan, determine the rights and status of participants and
beneficiaries hereunder, and handle the general administration of the Plan.
Such interpretations and determinations shall be final and conclusive as to all
interested persons.
4. ACCOUNTS.
a. An Account shall be established for each employee identified
in Section 2 a. above into which shall be credited monthly the following
amounts:
i. that percentage of the participant's current
compensation which the participant elected to contribute to the Stock
Savings Plan as "Before-Tax Contributions" and that percentage of the
participant's current compensation which the Company would have
contributed to the Stock Savings Plan as "TRW Matching Contributions"
(both terms as defined under the Stock Savings Plan) to the extent
that such amounts cannot be contributed to the Stock Savings Plan due
to any of the reasons identified in Section 1; provided, however, that
the percentage of the participant's compensation credited to the
Account, when combined with the percentage elected under the Stock
Savings Plan, may not at any time be greater than that amount of
"Before-Tax Contributions" which the participant would be permitted to
contribute, as a highly-compensated participant, to the Stock Savings
Plan without regard to the above-referenced limitations; and further
provided, that the TRW Matching Contributions credited to the Account
shall be reduced by any amounts actually contributed for the
participant by the Company to the Stock Savings Plan as TRW Matching
Contributions; plus
-2-
<PAGE> 3
ii. earnings on the amounts credited under subparagraph
i. above in accordance with the participant's election as provided in
Section 5 below, as if such amounts had been invested on a monthly
basis in the Equity Fund and/or Insured Return Fund (also sometimes
referred to as the Stable Value Fund) of the Stock Savings Plan.
b. The participant's annual election to participate by having his
Account credited as provided in paragraph a. shall be filed with the Committee
in a form prescribed by it and shall be filed at such time as the Committee may
specify, but in all cases prior to the time such compensation is to be earned
by the participant. No changes in the percentage of compensation credited to
the Account shall be made during the calendar year following the election,
unless the participant elects 0%.
c. Participants shall have, at all times, a nonforfeitable
interest in the amounts credited to their Account, subject to the provisions of
Section 10a.
d. Participants shall receive an annual statement of their
Account established under the Plan within a reasonable period after the end of
each calendar year.
5. EARNINGS.
a. Each participant shall be able to elect whether the monies
credited to his or her Account will be credited with investment earnings based
upon the performance of the Equity Fund or the Insured Return Fund (also
sometimes referred to as the Stable Value Fund) of the Stock Savings Plan.
Such election may be made by allocating the entire Account to one of the
earnings options or by allocating the Account between the options in 25 percent
multiples. Each participant may change his or her election at the middle or end
of any month by contacting the Committee or its delegee.
b. All TRW Matching Contributions allocated to a participant's
Account will be credited in the same manner as the participant's election under
Section 4a.
6. TRW SUPPLEMENTARY RETIREMENT INCOME PLAN BENEFITS. To the extent that
the participant is restricted from accruing full benefits under the Salaried
Plan or other d.b. plan, the Plan shall provide the annual pension benefits
which would be payable from the Salaried Plan or other d.b. plan but for the
limits in Section 1, less the sum of the annual pension benefits payable from
the TRW Supplementary Retirement Income Plan (SRIP) and the Salaried Plan or
other d.b. plan.
- 3 -
<PAGE> 4
7. TIME OF PAYMENT.
DEFINED BENEFIT PORTION.
a. No benefit is payable from the Defined Benefit Portion of the
Plan, even if the Participant has terminated his/her employment, unless a
Participant has five years of vesting service as defined under the Salaried
Plan or other d.b. plan and has attained age fifty-five.
b. If a Participant who has five or more years of vesting service
dies before his/her benefit commencement date under the Salaried Plan or other
d.b. plan, the Participant's Defined Benefit Portion benefit and the SRIP, if
any, shall be paid in the same form and shall commence at the same time as a
pre-retirement survivor benefit under the Salaried Plan or other d.b. plan.
c. Any participant in the Salaried Plan or other d.b. plan and
the Defined Benefit Portion of this Plan who is entitled to a vested or
deferred vested pension under such qualified plan shall have his Defined
Benefit Portion benefit and SRIP benefit, if any, commence at the same time as
his benefit commencement date under the Salaried Plan or other d.b. plan.
d. Except as provided above or in Section 9, payment of benefits
under the Defined Benefit Portion and SRIP, if any, shall be made commencing
with the January following the date the participant becomes eligible, having
terminated his employment with the Company, for benefits under the qualified
defined benefit plan.
ACCOUNT.
a. Except as provided in Section 9, payment of the Account to the
participant (or, in the event of his death, to his beneficiary as designated in
writing to the Committee) shall be made as of the January following the
following events:
i. the participant's becoming disabled as defined by the
terms and conditions of the Stock Savings Plan;
ii. the death of the participant; or
iii. the termination of the participant's employment with
the Company through retirement or otherwise.
b. Notwithstanding the above, the Directors/Committee, upon
determining that the participant has suffered an emergency event beyond his
control which would impose an immediate and heavy financial hardship if the
payment of his benefits were not made, may pay to the participant that part of
his Account which is needed to satisfy such hardship.
8. FORM OF PAYMENT.
Upon approval by the Directors/Committee, any election of a form of payment
other than the automatic form of payment provided in this Section 8 shall be
irrevocable.
- 4 -
<PAGE> 5
DEFINED BENEFIT PORTION.
a. Except as provided in paragraph b. and Section 9, the
automatic form of payment under the Defined Benefit Portion shall be, for an
unmarried participant, a single life annuity, and, for a married participant, a
50% joint and survivor annuity with the participant's eligible spouse the
survivor annuitant. Notwithstanding the above, the participant may petition
the Directors/Committee at any time at least two months prior to termination of
employment to change such form of payment into a single sum or annual
installments from two to ten years, or any other payment form approved by the
Directors/Committee in their or its discretion. If annual installment payments
are elected, interest, if any, on such installments shall be determined by the
Actuary, subject to approval by the Company.
b. Except as provided in Section 9, any participant in the
Salaried Plan or other d.b. plan and the Defined Benefit Portion of this Plan
who is entitled to a vested or deferred vested pension under such qualified
plan shall have his vested or deferred vested benefit paid from the Defined
Benefit Portion in the same form and with the same designated joint annuitant,
if any, as his form of payment under the Salaried Plan or other d.b. plan,
unless otherwise provided under the terms of any Qualified Domestic Relations
Order applicable to said participant or unless otherwise determined by the
Committee, in its sole discretion.
c. Any benefit payable from the Defined Benefit Portion shall be
paid in the same form as payments from the SRIP.
ACCOUNT.
a. Subject to paragraph b., the automatic form of payment of
monies in the Account shall be ten equal annual installments, payable during
the month of January; provided, however, that the participant can petition the
Directors or the Committee at any time at least two months prior to the
participant's eligibility for payout from the Stock Savings Plan to change such
payment to any lesser number of annual installments or to a single sum. If
annual installments are paid, the balance of the Account shall continue to be
credited with earnings as previously elected by the participant in accordance
with Section 5.
b. Payment of the Account shall be made in the form of cash
unless the Directors/Committee determines in its discretion that it is
appropriate to pay that portion of the participant's Account attributable to
TRW Matching Contributions and earnings thereon in shares of the Company's
Common Stock, in which event such distribution of shares shall occur no earlier
than six months following the date that the participant is last employed by the
Company.
- 5 -
<PAGE> 6
9. SMALL BENEFIT CASHOUTS.
a. If the present value of a participant's interest in the
Defined Benefit Portion of the Plan, determined as of the later of the
participant's age 55 or termination of employment from the Company, is less
than an amount which, if converted to a single sum equals $3,500, the benefit
shall be paid out in single sum, either at the same time as his benefit
commencement date under the Salaried Plan or other d.b. plan or at an earlier
date as determined by the Committee in its sole discretion.
b. If the balance in the participant's Account under the Plan,
determined as of any of the events described in Section 8c. above, is less than
$3,500, said Account balance shall automatically be paid out in the first
January following said event.
10. OTHER LIMITATIONS ON BENEFITS
a. Payments under the Plan shall be made by the Company, with any
appropriate reimbursement being made by subsidiaries of the Company. The Plan
shall be unfunded, and the Company shall not be required to establish any
special or separate fund nor to make any other segregation of assets in order
to assure the payment of any amounts under the Plan. Participants of the Plan
have the status of general unsecured creditors of the Company and the Plan
constitutes a mere promise by the Company to make benefit payments in the
future.
b. No benefit payable at any time under the Plan shall be
subject in any manner to alienation, sale, transfer, assignment, pledge,
attachment or encumbrance of any kind. No benefit under the Plan shall in any
manner be subject to the debts or liabilities of any participant or former
participant or beneficiary. If a participant or former participant or
beneficiary shall attempt to or shall alienate, sell, transfer, assign, pledge
or otherwise encumber his benefits under the Plan or any part thereof, or if by
reason of his bankruptcy or other event happening at any time such benefits
would devolve upon anyone else or would not be enjoyed by him, then the
Committee in its discretion may terminate his interest in any such benefit and
hold or apply it to or for his benefit or the benefit of his spouse, children
or other dependents, or any of them, in such a manner as they may deem proper.
11. AMENDMENT AND TERMINATION. Nothing herein shall be construed to
constitute a contract between the Company and the participants to continue the
Plan, and the Company's Directors in their sole discretion may terminate or
discontinue the Plan at any time and may at any time and from time to time
amend any or all of its provisions; provided, however, that no termination or
amendment shall reduce amounts credited prior to such termination or amendment.
12. MISCELLANEOUS PROVISIONS.
a. As used in this document, the masculine gender shall include
the feminine and the singular shall include the plural. To the extent that any
term is
- 6 -
<PAGE> 7
not defined under the Plan, it shall have the same meaning as defined in the
Stock Savings Plan or the Salaried Plan.
b. Employment rights with the Company or any subsidiary shall not
be enlarged or affected by the existence of the Plan.
c. In case any provision of the Plan shall be held illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining provisions.
d. The Plan shall be governed by the laws of the State of Ohio.
7/7/95
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<PAGE> 1
EXHIBIT 10.4
TRW SUPPLEMENTARY
RETIREMENT INCOME PLAN
Amended and Restated
Effective August 1, 1995
1. PURPOSE. The purpose of the TRW Supplementary Retirement
Income Plan (Plan), as contemplated by Section 3(36) of Title I of the Employee
Retirement Income Security Act of 1974 (ERISA), is to supplement the retirement
and death benefits of employees, including officers, of TRW Inc. and its
subsidiaries with respect to whom such benefits under the qualified defined
benefit retirement income plans maintained by such entities shall have been
limited by virtue of section 415 of the Internal Revenue Code of 1986 (Code
section 415). The Plan is unfunded for tax purposes and for purposes of Title
I of ERISA.
2. ELIGIBILITY. All participants and beneficiaries of participants in
the TRW Salaried Pension Plan ("Salaried Plan") or in any other defined benefit
pension plan ("d.b. plan") sponsored by TRW Inc. (the "Company") or its
domestic subsidiaries who are eligible to receive benefits from such plan or
plans shall be eligible to receive benefits under the Plan if their benefits
under the Salaried Plan or the d.b. plan cannot be fully provided because of
the limits under Code section 415.
3. DIRECTORS/COMMITTEE. For purposes of the Plan, the term
"Directors" shall mean the Compensation and Stock Option Committee of the
Directors of TRW Inc. ("Company") with respect to the approval of benefits of
any participant who is, or ever was, either a Director of the Company, a member
of the Chief Executive Office, or a member of the Management Committee. With
respect to the approval of benefits of other participants, the term "Committee"
shall refer to an Administrative Committee consisting of those three employees
of the Company who occupy the most senior positions in the Company Staff
Finance, Human Resources, and Law Departments. The Committee or its delegate
shall interpret the provisions of the Plan and determine the rights and status
of participants and beneficiaries hereunder and handle the general
administration of the Plan. Such interpretations and determinations shall be
final and conclusive as to all interested persons.
4. BENEFITS. The amount of the benefit payable under the Plan
shall be equal to the actuarial value of the benefit which would be payable to
or in respect of a participant under the Salaried Plan or other qualified d.b.
plan if the provisions of such qualified plans dealing with limits on pensions
pursuant to Code section 415 were inapplicable but the limits in Code section
401(a)(17) were applicable, less the actuarial value of the benefit payable to
or on behalf of the participant under such qualified plans taking into account
such provisions. The amount of benefit payable under the Plan to a participant
shall also be reduced to the extent that any other nonqualified plan
established by the Company pays benefits to the participant that are
attributable to limits imposed
<PAGE> 2
upon qualified defined benefit plans other than those imposed by Code section
415.
5. PAYMENT OF BENEFITS.
a. No benefit is payable from the Plan, even if the Participant
has terminated his/her employment, unless a Participant has five years of
vesting service as defined under the Salaried Plan or other d.b. plan and has
attained age fifty-five.
b. If a Participant who has five or more years of vesting service
dies before his/her benefit commencement date under the Salaried Plan or other
d.b. plan, the Plan benefit and any interest under the Benefits Equalization
Plan (BEP) attributable to the Salaried Plan or d.b. plan shall be paid in the
same form and shall commence at the same time as a pre-retirement survivor
benefit under the Salaried Plan or other d.b. plan.
c. Any participant in the Salaried Plan or other d.b. plan and
the Plan who is entitled to a vested or deferred vested pension under such
qualified plan shall have his Plan benefit and any BEP benefit attributable to
the Salaried Plan or d.b. plan commence at the same time as his benefit
commencement date under the Salaried Plan or other d.b. plan.
d. Except as provided above or in Section 7, payment of benefits
under the Plan and the BEP shall be made commencing with the January following
the date the participant becomes eligible, having terminated his employment
with the Company, for benefits under the qualified defined benefit plan.
e. Except as provided in paragraph f. and Section 7, the
automatic form of benefit payable under the Plan shall be, for an unmarried
participant, a single life annuity, and, for a married participant, a 50% joint
and survivor annuity with the participant's eligible spouse being the survivor
annuitant. Notwithstanding the above, the participant may petition the
Directors or the Committee at any time at least two months prior to termination
of employment to change such form of payment into a single sum or annual
installments from two to ten years, or any other payment form approved by the
Directors or the Committee in their or its discretion. If annual installment
payments are elected, interest, if any, on such installments shall be
determined by the Actuary, subject to approval by the Company.
f. Except as provided in Section 7, any participant in the
Salaried Plan or other d.b. plan who is entitled to a vested or deferred vested
pension under such qualified plan shall have his benefit paid from the Plan in
the same form and with the same designated joint annuitant, if any, as his form
of payment under the Salaried Plan or other d.b. plan unless otherwise provided
under the terms of any Qualified Domestic Relations Order applicable to said
participant or unless otherwise determined by the Committee in its sole
discretion.
-2-
<PAGE> 3
g. Any benefit payable from the Plan shall be paid in the same
form as payments from the defined benefit portion of the BEP.
h. Upon approval by the Directors/Committee, any election of a
form of payment or benefit commencement date other than the automatic form and
commencement date shall be irrevocable.
i. Payments to be made pursuant to the Plan shall be made by the
Company, with any appropriate reimbursement being made by subsidiaries of the
Company. The Plan shall be unfunded, and the Company shall not be required to
establish any special or separate fund nor to make any other segregation of
assets in order to assure the payment of any amounts under the Plan.
Participants of the Plan have the status of general unsecured creditors of the
Company and the Plan constitutes a mere promise by the Company to make benefit
payments in the future.
7. SMALL BENEFIT CASHOUTS. If the present value of a participant's
interest in the Plan, determined as of the later of the participant's age 55 or
termination of employment from the Company, is less than an amount which, if
converted to a single sum equals $3,500, the benefit shall be paid out in
single sum, either at the same time as his benefit commencement date under the
Salaried Plan or other d.b. plan or at an earlier date as determined by the
Committee in its sole discretion.
8. NON-ALIENATION OF BENEFITS. No benefit payable at any time under
the Plan shall be subject in any manner to alienation, sale, transfer,
assignment, pledge or encumbrance of any kind. No benefit under the Plan shall
in any manner be liable for or subject to the debts or liabilities of any
employee or former employee or beneficiary. If an employee or former employee
or beneficiary shall attempt to or shall alienate, sell, transfer, assign,
pledge or otherwise encumber his benefits under the plan or any part thereof,
or if by reason of his bankruptcy or other event happening at any time such
benefits would devolve upon anyone else or would not be enjoyed by him, then
the Directors or the Committee in their or its discretion may terminate his
interest in any such benefit and hold or apply it to or for his benefit or the
benefit of his spouse, children or other dependents, or any of them, in such a
manner as they may deem proper.
9. AMENDMENT AND TERMINATION. Nothing herein shall be construed to
constitute a contract between the Company and the participants to continue this
plan. The Directors may terminate this plan at any time and may at any time
and from time to time amend any or all provisions of this plan.
10. MISCELLANEOUS.
a. As used in the Plan, the masculine gender shall include the
feminine gender. To the extent that any term is not defined under the Plan, it
shall have the same meaning as defined in the Salaried Plan or other d.b. plan.
- 3 -
<PAGE> 4
b. Employment rights with the Company or any subsidiary shall not
be enlarged or affected by the existence of the Plan.
c. In case any provision of the Plan shall be held illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining provisions.
d. The Plan shall be governed by the laws of the State of Ohio.
7/7/95
- 4 -
<PAGE> 1
Exhibit 11
TRW Inc. and Subsidiaries
-------------------------
COMPUTATION OF EARNINGS PER SHARE - UNAUDITED
---------------------------------------------
(In Millions Except Per Share Amounts)
<TABLE>
<CAPTION>
Six Months Ended June 30
----------------------------------
PRIMARY 1995 1994
------- ---- ----
<S> <C> <C>
Net earnings $ 237.8 $ 150.7
Less preference dividend requirements 0.4 0.4
----------- -----------
Net earnings applicable to common shares
and common share equivalents $ 237.4 $ 150.3
=========== ===========
Average common shares outstanding 65.0 64.4
Stock options and performance share rights,
based on the treasury stock method using
average market price 1.3 1.0
----------- -----------
Average common shares and common share
equivalents 66.3 65.4
=========== ===========
Primary earnings per share $ 3.58 $ 2.30
=========== ===========
FULLY DILUTED
Net earnings applicable to common shares and
common share equivalents $ 237.4 $ 150.3
Dividends assuming conversion of other
dilutive securities: (A)
Dilutive preference dividends 0.4 0.4
----------- -----------
Net earnings applicable to fully diluted shares $ 237.8 $ 150.7
=========== ===========
Average common shares outstanding 65.0 64.4
Common shares assuming conversion of
other dilutive securities: (A)
Dilutive preference shares 0.6 0.6
Stock options and performance share rights,
based on the treasury stock method using
closing market price if higher than
average market price 1.8 1.0
----------- -----------
Average fully diluted shares 67.4 66.0
=========== ===========
Fully diluted earnings per share $ 3.53 $ 2.28
=========== ===========
</TABLE>
[FN]
(A) Assuming the conversion of the Serial Preference Stock II - Series 1 and
Series 3.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 60
<SECURITIES> 0
<RECEIVABLES> 1,524
<ALLOWANCES> 0
<INVENTORY> 511
<CURRENT-ASSETS> 2,399
<PP&E> 5,791
<DEPRECIATION> 3,263
<TOTAL-ASSETS> 5,862
<CURRENT-LIABILITIES> 2,017
<BONDS> 612
<COMMON> 41
0
0
<OTHER-SE> 2,051
<TOTAL-LIABILITY-AND-EQUITY> 5,862
<SALES> 5,308
<TOTAL-REVENUES> 5,308
<CGS> 4,257
<TOTAL-COSTS> 4,257
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 48
<INCOME-PRETAX> 387
<INCOME-TAX> 149
<INCOME-CONTINUING> 238
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 238
<EPS-PRIMARY> 3.58
<EPS-DILUTED> 3.53
</TABLE>
<PAGE> 1
<TABLE>
Exhibit 99
TRW Inc. and Subsidiaries
Computation of Ratio of Earnings
to Fixed Charges - Unaudited
(In millions except ratio data)
<CAPTION>
Six Months Years Ended December 31
ended ------------------------------------------------------------------
June 30, 1995 1994 1993 1992 1991 1990
------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Earnings(loss) before
income taxes $386.6 $534.5 $359.1 $347.6 $(129.4)(A) $343.1
Unconsolidated affiliates 1.4 (0.6) 0.7 (0.9) (1.0) (13.2)
Minority earnings 4.3 5.2 5.7 2.6 (7.8) (0.5)
Fixed charges excluding
capitalized interest 78.6 160.9 194.0 227.1 254.3 252.0
---- ----- ----- ----- ----- -----
Earnings $470.9 $700.0 $559.5 $576.4 $116.1 $581.4
------ ------ ------ ------ ------ ------
Fixed Charges:
Interest expense $48.4 $104.8 $137.8 $162.9 $189.6 $186.9
Capitalized interest 2.5 6.6 7.9 12.7 10.1 7.6
Portion of rents representa-
tive of interest factor 29.7 54.7 54.0 64.0 64.4 64.6
Interest expense of uncon-
solidated affiliates 0.5 1.4 2.2 0.2 0.3 0.5
--- --- --- --- --- ---
Total fixed charges $81.1 $167.5 $201.9 $239.8 $264.4 $259.6
----- ------ ------ ------ ------ ------
Ratio of earnings to fixed
charges 5.8x 4.2x 2.8x 2.4x 0.4x(A) 2.2x
--- --- --- --- --- ---
<FN>
(A) The 1991 loss before income taxes of $129.4 million includes a charge of $343 million to
cover costs associated with divestment and restructuring activities. Excluding this charge,
the ratio of earnings to fixed charges would have been 1.7x.
</TABLE>
