<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 27, 1999
REGISTRATION STATEMENT NO. 333-83227
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
---------------
TO
--
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
TRW INC.
(Exact name of registrant as specified in its charter)
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<CAPTION>
OHIO 3714 34-0575430
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<S> <C> <C>
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification Number)
incorporation or
organization)
</TABLE>
TRW INC.
1900 RICHMOND ROAD
CLEVELAND, OHIO 44124
(216) 291-7000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
WILLIAM B. LAWRENCE
EXECUTIVE VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
TRW INC.
1900 RICHMOND ROAD
CLEVELAND, OHIO 44124
(216) 291-7000
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE> 2
SUBJECT TO COMPLETION, DATED SEPTEMBER 27, 1999
TRW INC.
OFFER TO EXCHANGE
ANY AND ALL OUTSTANDING 6.45% NOTES DUE 2001
($425,000,000 TOTAL PRINCIPAL AMOUNT OUTSTANDING) FOR 6.45% EXCHANGE NOTES DUE
2001,
ANY AND ALL OUTSTANDING 6 1/2% NOTES DUE 2002
($400,000,000 TOTAL PRINCIPAL AMOUNT OUTSTANDING) FOR 6 1/2% EXCHANGE NOTES DUE
2002,
ANY AND ALL OUTSTANDING 6 5/8% NOTES DUE 2004
($700,000,000 TOTAL PRINCIPAL AMOUNT OUTSTANDING) FOR 6 5/8% EXCHANGE NOTES DUE
2004,
ANY AND ALL OUTSTANDING 7 1/8% NOTES DUE 2009
($750,000,000 TOTAL PRINCIPAL AMOUNT OUTSTANDING) FOR 7 1/8% EXCHANGE NOTES DUE
2009, AND
ANY AND ALL OUTSTANDING 7 3/4% DEBENTURES DUE 2029
($550,000,000 TOTAL PRINCIPAL AMOUNT OUTSTANDING) FOR 7 3/4% EXCHANGE DEBENTURES
DUE 2029
We are making this exchange offer on the terms and conditions set forth
in this prospectus and the accompanying letter of transmittal. We have
registered the debt that we will issue in this exchange offer (the "registered
debt") under the Securities Act of 1933 but we have not registered the debt
referred to above that you may exchange for the registered debt (the
"outstanding debt").
The exchange offer expires at 5:00 p.m., New York City time on
_____________, 1999, unless we extend.
-----------------
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 11 OF
THIS PROSPECTUS BEFORE PARTICIPATING IN THE EXCHANGE OFFER.
-----------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF OUR OFFER OR THE NOTES AND DEBENTURES
TO BE ISSUED IN THE EXCHANGE OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The information in this prospectus is not complete and may be changed.
We may not sell or exchange these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus
is not an offer to sell or exchange these securities and it is not soliciting an
offer to buy or exchange these securities in any state where the offer, sale or
exchange is not permitted.
The date of this prospectus is ____________________, 1999.
<PAGE> 3
TABLE OF CONTENTS
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PAGE
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<S> <C>
Available Information.............................................................................................i
Incorporation of Certain Documents by Reference...................................................................i
Summary...........................................................................................................1
Risk Factors.....................................................................................................11
Disclosure Regarding Forward-Looking Statements..................................................................11
TRW..............................................................................................................12
Business of TRW..................................................................................................13
Recent Developments..............................................................................................15
Use of Proceeds..................................................................................................16
Capitalization...................................................................................................17
Ratio of Earnings to Fixed Charges...............................................................................18
Unaudited Pro Forma Statements of Operations.....................................................................19
Unaudited Balance Sheet of TRW as of June 30, 1999...............................................................26
The Exchange Offer...............................................................................................28
Description of the Registered Debt...............................................................................35
Registration Rights..............................................................................................48
Book Entry; Delivery and Form....................................................................................50
United States Federal Income Tax Consequences....................................................................53
Plan of Distribution.............................................................................................56
Validity of Securities...........................................................................................58
Experts..........................................................................................................58
Independent Appraisal............................................................................................58
Listing and General Information..................................................................................58
</TABLE>
AVAILABLE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. Our SEC filings
are available to the public over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any materials we file with the
SEC at the SEC's public reference rooms in Washington, DC, New York, New York
and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information about the public reference rooms. Our common stock is listed on the
New York, Chicago, Philadelphia, Pacific, Frankfurt and London Stock Exchanges.
You may inspect information about TRW at the offices of the NYSE located at 20
Broad Street, New York, New York 10005. As long as any of the outstanding debt
or registered debt is listed on the Luxembourg Stock Exchange and the rules of
that exchange require, our SEC filings that are incorporated by reference into
this prospectus and our future SEC filings will also be available for inspection
during normal business hours on any business day at the registered office of
Bankers Trust Luxembourg, 14, Boulevard F.D. Roosevelt, L-2450 Luxembourg.
You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone else to provide you
with different or additional information. We are not making an offer of the
registered debt in any state or country where the offer is not permitted. You
should not assume that the information in this prospectus is accurate as of any
date other than the date on the front cover of this document or the documents
incorporated by reference in this prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows TRW to "incorporate by reference" into this prospectus
some of the information that TRW files with the SEC, which means that TRW can
disclose important information to you by referring you to information in those
documents. The information incorporated by reference is an
i
<PAGE> 4
important part of this prospectus. The following documents, which TRW has
filed with the SEC, are incorporated into and specifically made a part of this
prospectus by this reference:
- Annual Report on Form 10-K for the year ended December 31,
1998;
- Quarterly Reports on Form 10-Q for the quarter ended March 31,
1999 and the quarter ended June 30, 1999; and
- Current Reports on Form 8-K filed on January 28, 1999,
February 5, 1999, March 26, 1999, as amended on May 17, 1999,
May 27, 1999 and June 21, 1999.
In addition, (1) all documents filed by us with the SEC pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after
the date of this prospectus and (2) all documents filed by us with the SEC
pursuant to the Exchange Act after the date of the initial registration
statement of which this prospectus is a part and prior to the termination of the
exchange offer shall be deemed to be incorporated by reference into this
prospectus and to be a part of this prospectus from the date of filing of those
documents with the SEC. Any statement contained in this prospectus or in a
document incorporated by reference in this prospectus shall be deemed to be
modified or superseded for purposes of this prospectus to the extent that a
statement contained in this prospectus or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this prospectus.
We have filed with the SEC a registration statement on Form S-4 under
the Securities Act of 1933 with respect to the registered debt being offered by
this prospectus. This prospectus, which forms a part of the registration
statement, does not contain all of the information set forth in the registration
statement. You should refer to the registration statement for more information.
Statements contained in or incorporated by reference in this prospectus
regarding the contents of any contract or other document referred to in this
prospectus or in any incorporated document are presented in summary form. In
each case, we refer you to the contract or other document filed as an exhibit to
this prospectus or the documents incorporated by reference for complete terms of
that document. The actual contract or document, not the statements in this
prospectus, govern the matters set forth in those contracts and documents.
This prospectus incorporates documents by reference that contain
important business and financial information about TRW that is not included in
or delivered with this document. Copies of those documents, other than exhibits
to those documents that are not specifically incorporated by reference into the
documents, are available without charge to any person to whom this prospectus is
delivered, upon written or oral request to:
TRW Inc.
1900 Richmond Road
Cleveland, Ohio 44124-2760
Attention: Financial Services
(216) 291-7654
IN ORDER TO RECEIVE THESE DOCUMENTS BEFORE THE EXPIRATION DATE OF THE
EXCHANGE OFFER, YOU MUST MAKE YOUR REQUEST NO LATER THAN _______________, 1999,
WHICH IS FIVE BUSINESS DAYS BEFORE THE EXPIRATION DATE OF THE EXCHANGE OFFER.
As long as any of the registered debt is listed on the Luxembourg Stock
Exchange and the rules of that exchange require, the documents incorporated by
reference in this prospectus, other than exhibits to the documents unless the
exhibits are specifically incorporated by reference into the documents, will be
available at no cost to you during normal business hours on any business day at
the registered office of Bankers Trust Luxembourg.
ii
<PAGE> 5
SUMMARY
The following summary highlights selected information from this
prospectus and may not contain all of the information that is important to you.
We encourage you to read this prospectus in its entirety. The terms "TRW," "we,"
"our" or "us" as used in this prospectus refer to TRW Inc., the issuer of the
outstanding debt and of the registered debt to be issued in the exchange offer,
and its subsidiaries as a combined entity, except where it is made clear that
the term means only TRW Inc., the parent company.
THE COMPANY
TRW is an international company that provides advanced technology
products and services. The principal businesses of TRW and its subsidiaries are
the design, manufacture and sale of products and the performance of systems
engineering, research and technical services for private industry and the United
States Government in two industry segments: Automotive and Aerospace &
Information Systems.
TRW was incorporated in 1916 under the laws of Ohio. TRW's principal
executive offices are located at 1900 Richmond Road, Cleveland, Ohio 44124-2760.
The telephone number of our executive offices is (216) 291-7000.
PURPOSE OF THE EXCHANGE OFFER
On May 26, 1999, TRW sold, through a private placement exempt from the
registration requirements of the Securities Act,
- $400 million of its 6 1/2% Notes Due 2002,
- $700 million of its 6 5/8% Notes Due 2004,
- $750 million of its 7 1/8% Notes Due 2009 and
- $550 million of its 7 3/4% Debentures Due 2029.
On June 18, 1999, TRW sold, through a private placement exempt from the
registration requirements of the Securities Act, $425 million of its 6.45% Notes
due 2001. We refer to these five series of outstanding notes and debentures as
"outstanding debt" in this prospectus.
Simultaneously with the sale of the outstanding debt, TRW entered into
a registration rights agreement with the respective initial purchasers of the
outstanding debt. We refer to the exchange notes and exchange debentures we are
registering under this exchange offer registration statement as "registered
debt" in this prospectus. If TRW does not consummate the exchange offer within a
specified time period, TRW must pay additional interest to the holders of
outstanding debt until the earlier of
- the consummation of the exchange offer, or
- the date TRW causes a shelf registration statement covering
resales of the outstanding debt to become effective.
The purpose of this exchange offer is to fulfill TRW's obligations
under the registration rights agreements.
1
<PAGE> 6
SUMMARY OF THE EXCHANGE OFFER
Registration Rights TRW sold the Notes Due 2002, the Notes Due 2004, the
Notes Due 2009 and the Debentures Due 2029 on May 26, 1999
to several initial purchasers. TRW sold the Notes due 2001
on June 18, 1999, in an unrelated transaction, to a
different set of initial purchasers. The initial
purchasers in each offering sold the outstanding debt to
qualified institutional buyers and, in the case of the
offering of the 6 1/2% Notes Due 2002, 6 5/8% Notes Due
2004, 7 1/8% Notes Due 2009 and 7 3/4% Debentures Due
2029, non-U.S. persons. In connection with the sale of the
outstanding debt to the respective sets of initial
purchasers, TRW entered into a registration rights
agreement with each set of initial purchasers. Each of the
registration rights agreements provide for the exchange
offer.
You may exchange your outstanding debt for registered
debt, which has substantially identical terms. The
exchange offer satisfies TRW's obligations under each of
the registration rights agreements. After the exchange
offer is over, you will not be entitled to any exchange or
registration rights with respect to your outstanding debt.
Therefore, if you do not exchange your outstanding debt,
you will not be able to reoffer, resell or otherwise
dispose of your outstanding debt unless (1) you comply
with the registration and prospectus delivery requirements
of the Securities Act, or (2) the transaction is exempt
from those Securities Act requirements.
Each broker-dealer that receives registered debt for its
own account in exchange for outstanding debt, where that
outstanding debt was acquired by that broker-dealer as a
result of market-making activities or other trading
activities, must acknowledge that it will deliver a
prospectus in connection with any resale of that
registered debt. A broker-dealer may use this prospectus
for an offer to resell, a resale or other retransfer of
the registered debt.
The Exchange Offer TRW is offering to exchange its
- 6.45% Exchange Notes due 2001,
- 6 1/2% Exchange Notes Due 2002,
- 6 5/8% Exchange Notes Due 2004,
- 7 1/8% Exchange Notes Due 2009 and
- 7 3/4% Exchange Debentures Due 2029
which have been registered under the Securities Act, for,
respectively, its outstanding
- 6.45% Notes due 2001,
- 6 1/2% Notes Due 2002,
- 6 5/8% Notes Due 2004,
- 7 1/8% Notes Due 2009 and
- 7 3/4% Debentures Due 2029.
To exchange your outstanding debt, you must properly
tender it, and TRW must accept it. TRW will exchange
registered debt for all outstanding debt that you validly
tender and do not validly withdraw. TRW will issue
registered debt promptly after the completion of the
exchange offer.
2
<PAGE> 7
Resales Based on interpretations by the staff of the SEC set
forth in no-action letters issued to third parties, TRW
believes that you can offer for resale, resell or
otherwise transfer the registered debt without complying
with the registration and prospectus delivery requirements
of the Securities Act as long as:
(1) you are not an affiliate of TRW;
(2) you acquire the registered debt in the ordinary course
of your business;
(3) you have no arrangement or understanding with any
person to participate in a distribution of the
registered debt; and
(4) if you are not a broker-dealer, you are not engaged
in, and do not intend to engage in, a distribution
of the registered debt.
If any of these conditions is not satisfied and you
transfer any registered debt without delivering a proper
prospectus or without qualifying for a registration
exemption, you may have liability under the Securities
Act. TRW will not assume or indemnify you against that
liability.
Each broker-dealer that receives registered debt for its
own account in exchange for outstanding debt, where that
outstanding debt was acquired by that broker-dealer as a
result of market-making activities or other trading
activities, must acknowledge that it will deliver a
prospectus in connection with any resale of that
registered debt. A broker-dealer may use this prospectus
for an offer to resell, a resale or other retransfer of
the registered debt.
Expiration Date The exchange offer expires at 5:00 p.m., New York City
time, on _______________, 1999, unless TRW extends the
exchange offer to allow additional tenders of outstanding
debt.
Conditions to the The exchange offer is subject to conditions which are
Exchange Offer described later in this prospectus under "The Exchange
Offer--Conditions to the Exchange Offer."
Procedures for TRW issued the outstanding debt as global securities,
Tendering which are securities held by a depository and which
Outstanding Debt represent the beneficial interests of all the holders
of the outstanding securities. The global securities are
registered in the name of Cede & Co., as nominee of The
Depository Trust Company. Beneficial interests in the
outstanding debt, which are held by direct or indirect
participants in The Depository Trust Company, are shown on
records maintained in book-entry form by The Depository
Trust Company.
You may tender your outstanding debt through book-entry
transfer in accordance with The Depository Trust Company's
Automated Tender Offer Program. To tender your outstanding
debt by a means other than this program, a letter of
transmittal must be completed and signed according to the
instructions contained in the letter. The letter of
transmittal and any other documents required by the letter
of transmittal must be delivered to the exchange agent by
mail, facsimile, hand delivery or overnight courier. In
addition, before the expiration date of the exchange
offer, you must deliver your outstanding debt to the
exchange agent or comply with the procedures for
guaranteed delivery.
Do not send letters of transmittal or certificates
representing outstanding debt, if any, to TRW. Send these
documents only to the exchange agent.
3
<PAGE> 8
Special Procedures If you are a beneficial owner whose outstanding debt is
for Beneficial Owners registered in the name of a broker, dealer, commercial
bank, trust company or other nominee, and you wish to
tender your outstanding debt in the exchange offer, please
contact the registered holder as soon as possible and
instruct them to tender on your behalf and comply with the
instructions set forth elsewhere in this prospectus.
Withdrawal Rights Tenders may be withdrawn at any time before the expiration
date.
Appraisal or Holders of outstanding debt do not have any appraisal or
Dissenters' Rights dissenters' rights in the exchange offer. If you do not
tender your outstanding debt before the expiration date of
the exchange offer, or TRW does not accept your tender
because, among other things, you invalidly tendered it,
you will not be entitled to any further exchange or
registration rights under the registration rights
agreement, except under limited circumstances. However,
the outstanding debt you hold will remain outstanding and
entitled to the benefits of the indenture.
Federal Income Tax The exchange of outstanding debt for registered debt will
Considerations not be a taxable exchange for United States Federal income
tax purposes. You should not recognize any taxable gain or
loss or any interest income as a result of the exchange.
Use of Proceeds TRW will not receive any proceeds from the issuance of the
registered debt, and TRW will pay the expenses of the
exchange offer.
Exchange Agent The Chase Manhattan Bank is serving as exchange agent in
the exchange offer. The mailing address of the exchange
agent is 55 Water Street, Room 234, North Building, New
York, New York 10041. For information about the exchange
offer, call or fax the exchange agent at telephone number
(212) 638-0828 or facsimile number (212) 638-7375.
Effect on Holders of By making and consummating the exchange offer, TRW will
Outstanding Debt have fulfilled a covenant contained in the registration
rights agreement. Accordingly, there will be no increase
in the interest rate on the outstanding debt under the
circumstances described in the registration rights
agreements.
Consequences of All untendered outstanding debt will continue to be
Failure to Exchange subject to the restrictions on transfer provided for in
the outstanding debt and in the indenture. In general, the
outstanding debt may not be offered or sold, unless
registered under the Securities Act, except pursuant to an
exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. Other
than in connection with the exchange offer, TRW does not
intend to register the outstanding debt under the
Securities Act.
SUMMARY OF TERMS OF THE REGISTERED DEBT
The form and terms of the registered debt are the same as the form and
terms of the outstanding debt, except that the registered debt
(1) will be registered under the Securities Act,
(2) will not bear legends restricting its transfer, and
(3) will not contain the registration rights and related
additional interest provisions contained in the outstanding
debt.
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<PAGE> 9
The registered debt represents the same debt as the outstanding debt. Both the
outstanding debt and the registered debt are governed by the indenture.
Total Amount $425,000,000 principal amount of 6.45% Exchange Notes due
2001,
$400,000,000 principal amount of 6 1/2% Exchange Notes
Due 2002,
$700,000,000 principal amount of 6 5/8% Exchange Notes Due
2004,
$750,000,000 principal amount of 7 1/8% Exchange Notes
Due 2009 and
$550,000,000 principal amount of 7 3/4% Exchange
Debentures Due 2029
Interest Exchange Notes due 2001: Interest will accrue from the
date of initial issuance and will be payable on June 15
and December 15 of each year, beginning December 15, 1999.
Holders of the Exchange Notes due 2001 will receive
interest on December 15, 1999 from the date of initial
issuance of the registered Notes due 2001, plus an amount
equal to the accrued, but unpaid, interest on the
outstanding debt.
Exchange Notes Due 2002, Exchange Notes Due 2004, Exchange
Notes Due 2009 and Exchange Debentures Due 2029: Interest
will accrue from the date of initial issuance and will be
payable on June 1 and December 1 of each year, beginning
December 1, 1999. Holders of these series of registered
debt will receive interest on December 1, 1999 from the
date of initial issuance of the registered debt, plus an
amount equal to the accrued, but unpaid, interest on the
outstanding debt.
Ranking The registered debt will be senior unsecured obligations
of TRW Inc. and will rank equally with all other existing
and future senior unsecured and unsubordinated
indebtedness of TRW Inc. Each series of registered debt
ranks equally with each other series of registered debt.
TRW Inc. had $8.5 billion of indebtedness for borrowed
money outstanding as of June 30, 1999, including the
outstanding debt for which this exchange offer is being
made. As of June 30, 1999, subsidiaries of TRW Inc. had
$0.2 billion of indebtedness for borrowed money
outstanding that was guaranteed by TRW Inc. All of TRW
Inc.'s debt and all of TRW Inc.'s obligations under the
guarantees of subsidiary debt rank equally with the
registered debt. No debt of TRW Inc. will rank senior to
the registered debt upon our completion of the exchange
offer. TRW Inc. has no subordinated debt outstanding.
There are no restrictions on the incurrence of debt that
ranks equally with the registered debt. TRW Inc. cannot
issue debt that ranks senior to any series of registered
debt without the consent of the holders of not less than
66 2/3% in total principal amount of that series of
registered debt. This consent requirement is the only
limitation in the indenture on the amount of
indebtedness that TRW Inc. could issue that ranks senior
to the registered debt.
Optional Redemption The Exchange Notes due 2001 are not redeemable prior to
maturity.
The Exchange Notes Due 2002 are not redeemable prior to
maturity except for tax reasons described later in this
prospectus.
Each other series of registered debt will be redeemable as
a whole or in part, at TRW's option, at any time at a
redemption price equal to the greater of:
(1) 100% of the principal amount of the registered debt
to be redeemed; and
(2) the sum of the present values of the remaining
scheduled principal and interest payments, exclusive
of any accrued interest, discounted, on a semiannual
basis, at a rate equal to the sum of the applicable
Treasury Rate, as defined later in this prospectus,
plus 0.15% for the Exchange Notes Due
5
<PAGE> 10
2004, 0.20% for the Exchange Notes Due 2009, and
0.25% for the Exchange Debentures Due 2029,
plus, in each case, interest accrued but not paid to the
date of redemption.
Form of the The registered debt will be represented by one or more
Registered Debt permanent global securities registered in the name of a
nominee of The Depository Trust Company. You will not
receive notes or debentures in registered form unless one
of the events set forth under the heading "Book-Entry;
Delivery and Form -- Definitive Registered Securities"
occurs. Instead, beneficial interests in the registered
debt will be shown on, and transfers of these interests
will be effected only through, records maintained in
book-entry form by The Depository Trust Company with
respect to its participants.
6
<PAGE> 11
SELECTED FINANCIAL DATA
TRW INC.
The following summary historical consolidated financial information for
each of the five years in the period ended December 31, 1998, is derived from
TRW's consolidated financial statements. The consolidated financial statements
for each of the five years in the period ended December 31, 1998, have been
audited by Ernst & Young LLP, independent auditors. The summary historical
consolidated financial information for the six-month periods ended June 30, 1998
and 1999, is derived from unaudited consolidated condensed financial statements
which include all adjustments, consisting of normal recurring accruals, that
management considers necessary for a fair presentation of the financial position
and results of operations for these periods. The results of operations for the
six months ended June 30, 1999, are not necessarily indicative of the results
that may be expected for the entire year ending December 31, 1999. The table
should be read in conjunction with the consolidated financial statements and
notes thereto included in TRW's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998, and the consolidated condensed financial statements and
notes thereto included in TRW's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1999, incorporated into this prospectus by reference.
<TABLE>
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SIX MONTHS
ENDED JUNE 30,
YEAR ENDED DECEMBER 31, (UNAUDITED)
------------------------------------------------- -------------
1994 1995 1996 1997 1998 1998 1999
---- ---- ---- ---- ---- ---- ----
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales .................................... $8,491 $9,568 $9,857 $10,831 $11,886 $6,123 $ 7,882
Gross profit.............................. 1,555 1,711 1,481 2,005 2,171 1,067 1,324
Interest expense.......................... 105 95 84 75 114 76 185
Earnings from continuing operations
before income taxes..................... 436 625 302 240 746 402 224
Earnings (loss) from
continuing operations................... 277 395 182 (49) 477 255 111
Discontinued operations:
Earnings from operations................ 56 51 38 -- -- -- --
Gain on disposal........................ -- -- 260 -- -- -- --
Net earnings (loss)....................... 333 446 480 (49) 477 255 111
Diluted earnings (loss) per share--
continuing operations................... 2.09 2.94 1.37 (0.40) 3.83 2.03 0.91
Basic earnings (loss) per share--
continuing operations................... 2.14 3.02 1.41 (0.40) 3.93 2.08 0.92
BALANCE SHEET DATA:
Total assets.............................. 5,435 5,670 5,899 6,410 7,169 6,938 17,341
Short-term debt........................... 122 133 52 411 839 633 3,406
Long-term debt............................ 693 539 458 1,117 1,353 1,444 5,661
Long-term liabilities..................... 796 779 767 788 826 825 1,708
Retained earnings......................... 1,384 1,693 1,980 1,778 2,021 1,926 2,089
CASH FLOW DATA: PROVIDED BY (USED IN)
Operating Activities...................... 866 748 711 954 661 215 346
Investing Activities...................... (507) (453) 247 (1,817) (857) (503) (6,266)
Financing Activities...................... (365) (343) (625) 576 210 298 6,486
Increase (Decrease) in cash and cash
equivalents............................ 46 (50) 327 (316) 13 6 526
OTHER DATA:
Depreciation and amortization of
property, plant and equipment........... 382 415 443 476 520 258 315
EBITDA(a)................................. 932 1,144 838 805 1,426 756 772
Capital expenditures--property,
plant and equipment .................... 488 466 500 549 544 237 314
Cash dividends declared per share
of common stock......................... 0.985 1.05 1.17 1.24 1.28 0.31 0.33
Shares used in computing per
share amounts:
Diluted................................. 132.9 134.4 132.8 123.7 124.4 125.8 123.0
Basic................................... 129.2 130.6 128.7 123.7 121.3 122.3 120.4
</TABLE>
7
<PAGE> 12
(a) EBITDA is defined as earnings from continuing operations before income
taxes plus interest expense, depreciation, and amortization including
other intangibles. EBITDA is not intended to represent an alternative
to net earnings or net cash provided by operating activities as
determined by generally accepted accounting principles. We believe that
EBITDA is a meaningful measure because it is commonly used in our
industry to analyze operating performance, leverage and liquidity.
EBITDA as presented for TRW is not necessarily comparable with other
companies' definition of the measure.
EBITDA includes the following one-time charges as follows:
- The 1996 earnings from continuing operations before income taxes
of $302 million includes a charge of $385 million as a result of
actions taken in the automotive and space and defense businesses.
- The 1997 earnings from continuing operations before income taxes
of $240 million includes a $548 million earnings charge for
purchased in-process research and development related to the
acquisition of BDM International, Inc.
- The earnings from continuing operations before income taxes of
$224 million for the six months ended June 30, 1999 includes an
$85 million earnings charge for purchased in-process research and
development related to the acquisition of LucasVarity plc.
8
<PAGE> 13
LUCASVARITY PLC
The following summary historical consolidated financial information for
the following periods: the years ended January 31, 1999 and 1998, and the six
months ended January 31, 1997, which includes the results for LucasVarity and
Lucas Industries for six months and Varity for five months, and the year ended
July 31, 1996, which includes the results for LucasVarity for the two months
ended July 31, 1996, and Lucas Industries for the year ended July 31, 1996, is
reported in accordance with U.S. generally accepted accounting principles. The
table should be read in conjunction with the consolidated financial statements
and notes thereto included in TRW's Current Report on Form 8-K filed on March
26, 1999, as amended on May 17, 1999, incorporated into this prospectus by
reference. The consolidated financial statements for each of the two years in
the period ended January 31, 1999, have been audited by KPMG Audit Plc. The
consolidated financial statements of LucasVarity for the six month period ended
January 31, 1997, have been audited jointly by KPMG Audit Plc and Ernst & Young.
The consolidated financial statements of LucasVarity as of July 31, 1996, and
the year ended July 31, 1996, have been audited by Ernst & Young. The
consolidated balance sheet data has been translated using the noon buying rate
certified for customs purposes by the Federal Reserve Bank of New York as of
January 31, 1999. The consolidated income statement data has been translated at
the average rate for the year.
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
JULY 31, JANUARY 31, YEAR ENDED JANUARY 31,
1996 1997 1998 1999
----------- ------------ ----------- ------------------------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(POUND) (POUND) (POUND) (POUND) $
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales .................................... 2,989 1,841 4,018 4,270 7,088
Gross profit(a)........................... 675 381 885 931 1,546
Interest expense.......................... 58 32 64 57 95
Income (loss) before income taxes, earnings
of associated companies, minority
interests and discontinued operations.. 220 (31) 243 536 890
Income (loss) before discontinued
operations............................. 110 (66) 148 333 553
Net income (loss)......................... 110 (51) 180 374 621
Diluted earnings (loss) per share--
Continuing operations.................. 12.3 (4.9) 10.3 23.3 0.38
Discontinued operations................ -- 1.1 2.2 2.9 0.05
----- ------ ------ ----- ------
Total ................................. 12.3 (3.8) 12.5 26.2 0.43
BALANCE SHEET DATA:
Cash and cash equivalents................. 241 192 116 606 994
Total assets.............................. 2,620 4,430 4,509 4,545 7,453
Long-term debt............................ 392 322 315 334 548
Long-term liabilities..................... n/a 623 576 553 907
Total shareholders' equity................ 910 2,139 2,099 2,431 3,987
OTHER DATA:
Depreciation and amortization............. 102 104 177 192 319
EBITDA(b)................................. 380 105 484 785 1,304
Capital expenditures...................... 131 112 232 274 455
Cash dividends declared per
share of common stock (pence).......... 11.9p -- 4.5p 4.75p
Ratio of earnings to fixed
charges(c)............................. 4.2x -- 4.1x 9.1x
</TABLE>
n/a -- Financial data not available
(a) Gross profit is calculated as sales less cost of goods sold. It does
not include engineering and product development costs or restructuring
charges.
(b) EBITDA is defined as income before income taxes, earnings of associated
companies, minority interests and discontinued operations plus interest
expense, depreciation, and amortization. EBITDA is not intended to
represent an alternative to net income or net cash provided by
operating activities as determined by generally
9
<PAGE> 14
accepted accounting principles. EBITDA as presented is not necessarily
comparable with other companies' definition of the measure.
(c) For purposes of this ratio, "earnings" is income before income taxes,
earnings of associated companies, minority interests, discontinued
operations and fixed charges. "Fixed charges" consist of interest
expense and one-third of hire of plant and equipment plus property
rentals which is representative of the interest factor. Earnings were
insufficient to cover fixed charges by (pound) 31 million for the six
months ended January 31, 1997.
10
<PAGE> 15
RISK FACTORS
You should carefully consider the following risk factors, together with
the other information in this prospectus, before deciding to participate in the
exchange offer.
LACK OF PUBLIC MARKET FOR THE REGISTERED DEBT -- YOU MAY NOT BE ABLE TO SELL THE
REGISTERED DEBT.
There is no existing market for the registered debt, and there can be
no assurance as to the liquidity of any markets that may develop for the
registered debt, your ability to sell your registered debt or the prices at
which you would be able to sell your registered debt. Future trading prices of
the registered debt will depend on many factors, including, among other things,
prevailing interest rates, our operating results and the market for similar
securities. We understand that the representatives of the initial purchasers of
the outstanding debt currently intend to make a market in the registered debt.
However, they are not obligated to do so and any market making may be
discontinued at any time without notice. Each series of the outstanding debt,
other than the Notes due 2001, is listed on the Luxembourg Stock Exchange. We
have applied for listing of each series of the registered debt other than the
Exchange Notes due 2001, on the Luxembourg Stock Exchange.
FAILURE TO EXCHANGE -- IF YOU CHOOSE NOT TO EXCHANGE THE OUTSTANDING DEBT YOU
HOLD, THE PRESENT TRANSFER RESTRICTIONS WILL REMAIN IN FORCE AND THE MARKET
PRICE OF YOUR OUTSTANDING DEBT COULD DECLINE.
If you do not exchange the outstanding debt for registered debt under
the exchange offer, then you will continue to be subject to the transfer
restrictions on the outstanding debt as set forth in the offering document
distributed in connection with the offering of the outstanding debt. In general,
the outstanding debt may not be offered or sold unless it is registered or
exempt from registration under the Securities Act and applicable state
securities laws. Except as required by the registration rights agreements, we do
not intend to register resales of the outstanding debt under the Securities Act.
The tender of outstanding debt under the exchange offer will reduce the
outstanding principal amount of the outstanding debt, which may have an adverse
effect upon, and increase the volatility of, the market price of the outstanding
debt due to a reduction in liquidity.
However, if you do not participate in the exchange offer, you will be
entitled to the same principal and interest payments on the same terms as
holders of the registered debt and your rights under the outstanding debt will
not be affected, except that you will no longer have registration rights or
rights to additional interest provided by the registration rights agreements.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
Statements made or incorporated by reference in this prospectus that
are not statements of historical fact may be forward-looking statements. In
addition, from time to time, TRW and its representatives make statements that
may be forward-looking. All forward-looking statements involve risks and
uncertainties. This section provides readers with cautionary statements
identifying, for purposes of the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995, important factors that could cause
TRW's actual results to differ materially from those contained in
forward-looking statements made in this prospectus or otherwise made by, or on
behalf of, TRW.
The following are some of the factors that could cause actual results
to differ materially from estimates contained in TRW's forward-looking
statements:
Our consolidated results could be affected by:
11
<PAGE> 16
- unanticipated events and circumstances that may occur and render
TRW's acquisition of LucasVarity less beneficial to TRW than
anticipated;
- intense competition in our markets that make it impossible to
guarantee that we will achieve the expected financial and operating
results and synergies from the acquisition of LucasVarity;
- the ability of TRW to integrate LucasVarity into its operations and
thereby achieve the anticipated cost savings and be in a position to
take advantage of potential growth opportunities;
- the ability to continue technical innovation and the development of
and demand for new products and contract awards;
- pricing pressures from customers;
- the ability to reduce the level of outstanding indebtedness from
cash flow from operations and proceeds from the dispositions planned
in our automotive business;
- the ability to effectively implement the company-wide Y2K compliance
program in accordance with TRW's estimated timetable and costs and
the preparedness of our critical suppliers;
- the introduction of competing products or technology by competitors;
- availability of funding for research and development;
- the ability to meet performance and delivery requirements on systems
for customers;
- the economic, regulatory and political instability of Brazil, Asia
and certain emerging countries; and
- the ability to attract and retain skilled employees with high-level
technical competencies.
Our automotive business also could be affected by:
- the ability to effectively implement our automotive restructuring
program and improve automotive margins;
- changes in consumer debt levels and interest rates;
- the cyclical nature of the automotive industry;
- moderation or decline in the automobile build rate;
- work stoppages;
- customer warranty claims; and
- changes to the regulatory environment regarding automotive safety.
Our aerospace and information systems business also could be affected
by:
- the level of defense funding by the government;
- the termination of existing government contracts; and
- the ability to develop and market products and services for
customers outside of the traditional aerospace and information
systems markets.
The above list of important factors is not exclusive.
We caution you that any forward-looking statement reflects only the
beliefs of TRW or its management at the time the statement is made. TRW
undertakes no obligation to update any forward-looking statement to reflect
events or circumstances after the date on which the statement was made.
TRW
TRW is an international company that provides advanced technology
products and services. The principal businesses of TRW and its subsidiaries are
the design, manufacture and sale of products and the performance of systems
engineering, research and technical services for private industry and the United
States Government in two industry segments: Automotive and Aerospace &
Information Systems. TRW's principal products and services include:
12
<PAGE> 17
- automotive systems and components;
- spacecraft;
- software and systems engineering support services;
- electronic systems, equipment and services;
- information technology; and
- aerospace systems, products and services.
TRW was incorporated under the laws of Ohio on June 17, 1916. TRW
conducts its business directly and through a number of direct and indirect
subsidiaries. TRW had 124,000 employees as of June 30, 1999, including employees
of the LucasVarity businesses.
ACQUISITION OF LUCASVARITY
On May 10, 1999, TRW closed the acquisition of LucasVarity for an
aggregate cash purchase price of approximately $6.8 billion. LucasVarity
designs, manufactures and supplies advanced technology systems, products and
services in the world's automotive and aerospace industries. LucasVarity had
sales of approximately $7.088 billion for the year ended January 31, 1999, and
total assets of approximately $7.453 billion as of January 31, 1999. TRW
unconditionally committed to purchase all LucasVarity shares tendered on or
prior to March 25, 1999, and LucasVarity is included in TRW's financial
statements subsequent to that date.
The automotive components industry is in a stage of consolidation and
TRW believes that the leading participants in the industry will be those capable
of delivering superior technology and systems on a global basis to customers who
increasingly require total systems solutions. TRW believes that the combination
of TRW and LucasVarity creates one of the world's leading automotive
organizations, capable of providing its customers globally with advanced
engineering and manufacturing capabilities. In TRW's view, the combination of
TRW and LucasVarity offers a leading presence in a broad range of vehicle
control and safety systems, including steering, brakes, occupant restraints and
related electronics. TRW also believes that LucasVarity's position in aerospace
systems in Europe and North America complements TRW's position in aerospace and
information systems and offers substantial cross-selling opportunities. TRW
expects to achieve in excess of $200 million in annual cost saving synergies by
the end of 2001 in the combined businesses.
INTEGRATION OF LUCASVARITY BUSINESS INTO TRW
On April 28, 1999, TRW announced a reorganization of its business into
two segments: Automotive and Aerospace & Information Systems. TRW's and
LucasVarity's automotive businesses were combined into TRW's Automotive segment
and TRW's existing Space, Defense & Information Systems businesses were combined
with LucasVarity's Aerospace business to form the Aerospace & Information
Systems segment. This segment includes the following businesses: space and
electronics, systems and information technology, aeronautical systems, formerly
Lucas Aerospace, and telecommunications.
BUSINESS OF TRW
AUTOMOTIVE
TRW's Automotive segment designs, manufactures and sells a broad range
of steering, suspension, engine, safety, engineered fastening, electronic, and
other components and systems for passenger cars and commercial vehicles. These
products include:
13
<PAGE> 18
- occupant restraint systems, including airbag and seat belt systems,
steering wheels, and sensors;
- steering systems, including hydraulic and electrically assisted
power and manual rack and pinion steering for light vehicles, power
steering systems and suspension components for commercial vehicles;
- electrical and electronic controls, engineered fasteners and stud
welding systems; and
- engine valves and valve train parts.
TRW sells the products included in this industry segment primarily to
automotive original equipment manufacturers. In addition, TRW sells its
automotive components for use as aftermarket and service parts to automotive
original equipment manufacturers and others for resale through their own
independent distribution networks.
With the acquisition of LucasVarity, TRW's Automotive segment also
includes the following:
- light vehicle braking systems, which supplies braking systems and
components to the world's major automotive manufacturers, with
strengths in foundation brakes, actuation and rear-wheel and
four-wheel anti-lock braking systems;
- diesel systems, one of the world's largest manufacturers of diesel
fuel injection systems. Its products range from mechanical rotary
fuel pumps, fuel injectors and filters to fully-integrated
electronically-controlled systems, such as common rail;
- electrical and electronics systems, a supplier of advanced
electronic controls, wiring and body electrical systems to the
global automotive industry; and
- aftermarket operations, a provider of comprehensive parts, service,
technical and diagnostic support to both vehicle manufacturers and
the global independent automotive aftermarket.
On May 17, 1999, TRW announced that it will divest its engine
businesses, which consist of TRW Engine Components and Lucas Diesel Systems
operations; TRW Nelson Stud Welding; and the LucasVarity Wiring companies.
Please read "Recent Developments--Planned Divestitures."
AEROSPACE & INFORMATION SYSTEMS
TRW's Aerospace & Information Systems segment includes spacecraft,
electronic systems, equipment components and services; systems integration and
information technology systems, products and services and aeronautical systems.
TRW's spacecraft and electronic systems include design, manufacture and
services in the following areas:
<TABLE>
<S> <C>
- space systems for communications, - telecommunications radio frequency
strategic surveillance, space circuits and modules
science and earth observation - advanced integrated/modular avionics
- high energy lasers for missile defense systems and engineering
- industrial lasers - space electronic payloads and
- onboard and ground data processing instruments
and distribution systems - spacecraft equipment and propulsion
subsystems
</TABLE>
TRW's systems integration, systems engineering, software development
and information technology systems products and services are in the following
areas:
14
<PAGE> 19
<TABLE>
<S> <C>
- military command and control - financial and electronic commerce messaging
- strategic defense systems systems
- intelligence requirements management - nuclear waste management
- unmanned aerial vehicle systems - air traffic control
- reconnaissance and surveillance systems - health and human safety
- public safety systems - warehousing
- modeling and simulation - test and evaluation
- training - tax system modernization
- telecommunications - sensor data processing
- integrated supply chain solutions - signals analysis
- logistics - battle management control systems
- criminal justice
</TABLE>
TRW's aeronautical systems activities are in the following areas:
- engine controls - hoists and winches
- power generation - missile actuation
- flight controls - repair and overhaul
- cargo systems
TRW's telecommunications activities are focused on building a
substantial commercial telecommunications business based upon the leading-edge
technological assets created from TRW's role as an aerospace and government
contractor.
TRW sells and distributes its products and services in this industry
segment principally to the United States Government, agencies of the United
States Government, state, local and foreign governments and international and
commercial customers.
While classified projects are not discussed in this document or in any
of the documents incorporated by reference herein, the operating results
relating to classified projects are included in TRW's consolidated financial
statements, and the business risks associated with those projects do not differ
materially from those of other projects for the United States Government.
RECENT DEVELOPMENTS
PLANNED DIVESTITURES
On May 17, 1999, TRW announced that it will divest its engine
businesses, which consist of TRW Engine Components and Lucas Diesel Systems
operations; TRW Nelson Stud Welding; and the LucasVarity Wiring companies.
Exiting these businesses will contribute significantly to the timely achievement
of TRW's debt reduction goals. Net proceeds from these divestitures, estimated
to be $1.2 billion to $1.5 billion, will be applied to reduce debt incurred to
finance the acquisition of LucasVarity. TRW expects to complete the divestitures
of these businesses by year-end 1999. TRW has established a goal of reducing its
net debt by year-end 2000 by approximately $2.5 billion, including divestiture
proceeds. Divesting these non-core operations permits TRW to focus on the growth
synergies of its newly formed automotive units.
The unaudited pro forma financial information for the year ended
December 31, 1998 and the six months ended June 30, 1999 included sales of
approximately $2.0 billion and $950 million, respectively, relating to the
businesses to be sold. Please read "Unaudited Pro Forma Statements of
Operations."
INVESTMENT IN ASTROLINK
On May 6, 1999, TRW announced that it will make a $250 million
investment in Astrolink LLC, a strategic venture initiated by Lockheed Martin.
In addition to TRW's investment, Lockheed Martin Global
15
<PAGE> 20
Telecommunications will invest $400 million, and Telespazio, a Telecom Italia
Group company, will invest $250 million. With this funding, Astrolink will
commence construction of a system that will enable it to provide high speed
computer networks on-demand on a global basis. Service is scheduled to begin in
2003.
Astrolink will focus on the high-growth area of broadband data
services, carrying traffic for Internet, intranet, multimedia and corporate data
networks. TRW will build the switches on board the satellite that route data
from one network user to another. These switches can instantly rearrange
connections to allow users to send data to different destinations as needed. TRW
will also have the opportunity to be an Astrolink service provider. The
communications payloads to be built by TRW are satellite electronics designed to
receive data signals in individually addressed packets from multiple ground
cells, route the data, and transmit the data to the appropriate ground cell
based on the destination address. TRW's $250 million investment will be made in
five installments over eighteen months.
USE OF PROCEEDS
TRW will not receive any proceeds from the exchange offer. In
consideration for issuing the registered debt, TRW will receive in exchange
outstanding debt of like principal amount, the terms of which are identical in
all material respects to the registered debt. The outstanding debt surrendered
in exchange for registered debt will be retired and canceled and cannot be
reissued. Accordingly, issuance of the registered debt will not result in any
increase in TRW's indebtedness. TRW has agreed to bear the expenses of the
exchange offer. No underwriter is being used in connection with the exchange
offer.
The net proceeds from the sale of 6 1/2% Notes Due 2002, 6 5/8% Notes
Due 2004, 7 1/8% Notes Due 2009 and 7 3/4% Debentures Due 2029, after deducting
offering expenses and the initial purchasers' discounts, were approximately
$2,370 million. TRW used those proceeds for the repayment of a portion of TRW's
commercial paper borrowings related to its acquisition of LucasVarity. The
effective interest on the borrowings was between 4.83% and 5.22% per annum with
a maturity of 63 days or less.
The net proceeds from the sale of the 6.45% Notes due 2001, after
deduction of offering expenses and the initial purchasers' discount were
approximately $424.7 million. TRW used those proceeds for the repayment of a
portion of TRW's commercial paper borrowings related to its acquisition of
LucasVarity. The weighted average interest rate on the outstanding commercial
paper was 5.22% with due dates that ranged from overnight to 244 days.
16
<PAGE> 21
CAPITALIZATION
The following table sets forth the consolidated capitalization of TRW
at June 30, 1999. This table should be read in conjunction with TRW's financial
statements, the notes to the financial statements and other financial and
statistical information included or incorporated by reference in this
prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1999 (a)
(UNAUDITED)
-------------
(IN MILLIONS)
<S> <C>
Short-term debt:
Short-term debt (including current portion
of long-term debt)............................................................ $ 4,031
========
Long-term debt:
U.S. borrowings.................................................................. $ 1,000
Non-U.S. borrowings.............................................................. 150
Medium-term notes:
6.05% Notes due 2005.......................................................... 200
6.25% Notes due 2010.......................................................... 150
6.65% Notes due 2028.......................................................... 150
6.30% Notes due 2008.......................................................... 100
9.35% Notes due 2020 (due 2000 at option of note holder)...................... 100
9.375% Notes due 2021......................................................... 100
Other medium-term notes....................................................... 294
Outstanding Debt:
6.45% Notes due 2001.......................................................... 425
6 1/2% Notes Due 2002......................................................... 400
6 5/8% Notes Due 2004......................................................... 700
7 1/8% Notes Due 2009......................................................... 750
7 3/4% Debentures Due 2029.................................................... 550
Other ........................................................................... 592
--------
Total long-term debt....................................................... $ 5,661
========
Minority interests in subsidiaries.................................................. $ 107
========
Shareholders' investment:
Serial Preference Stock II (5,000,000 shares, without par value,
authorized; 102,658 issued and outstanding)................................... $ --
Common Stock (500,000,000 shares, par value $0.625 per share,
authorized; 120,904,229 issued and outstanding)............................... 76
Other capital.................................................................... 462
Retained earnings................................................................ 2,089
Treasury shares--cost in excess of par value..................................... (598)
Accumulated other comprehensive income (loss).................................... (373)
--------
Total shareholders' investment............................................. $ 1,656
========
Total capitalization....................................................... $ 11,455
========
(a) There has been no material change in the capitalization of TRW since
June 30, 1999, other than as set forth in this prospectus.
</TABLE>
17
<PAGE> 22
RATIO OF EARNINGS TO FIXED CHARGES
(UNAUDITED)
The following table shows the ratio of earnings to fixed charges of TRW
and its subsidiaries. For purposes of this ratio, "earnings" consist of earnings
from continuing operations before income taxes adjusted for minority interests
in earnings of consolidated subsidiaries, plus fixed charges, less undistributed
earnings of affiliates which are less than fifty percent owned by TRW. "Fixed
charges" consist of interest on borrowed funds, amortization of debt discount
and expense and one-third of rental expense which is representative of the
interest factor.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS
------------------------------------------------ ENDED
1994 1995 1996 1997 1998 JUNE 30, 1999
---- ---- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges............. 3.9x 5.4x 3.4x(a) 2.9x(b) 5.2x 1.9x(c)
</TABLE>
(a) The 1996 earnings from continuing operations before income taxes of
$302 million includes a charge of $385 million as a result of actions
taken in the automotive and space and defense businesses.
(b) The 1997 earnings from continuing operations before income taxes of
$240 million includes a $548 million earnings charge for purchased
in-process research and development related to the acquisition of BDM
International, Inc.
(c) The earnings from continuing operations before income taxes of $224
million for the six months ended June 30, 1999 includes an $85 million
earnings charge for purchased in-process research and development
related to the acquisition of LucasVarity.
18
<PAGE> 23
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
The unaudited pro forma statements of operations for the year ended
December 31, 1998 and for the six months ended June 30, 1999 have been prepared
to illustrate the effect of the acquisition of LucasVarity as if the acquisition
had occurred on January 1, 1998 and January 1, 1999, respectively. Synergies and
expected cost savings from the integration of LucasVarity with TRW's previously
existing businesses have not been included in the pro forma statements of
operations.
The unaudited pro forma statement of operations presented for the year
ended December 31, 1998 includes the historical financial results for the year
ended December 31, 1998 for TRW and the year ended January 31, 1999 for
LucasVarity. The unaudited pro forma statement of operations for the six months
ended June 30, 1999 includes the statement of operations for the six months
ended June 30, 1999 for TRW, which includes LucasVarity operations from the date
of acquisition and the fourth quarter ended January 31, 1999 for LucasVarity.
Unusual and/or one-time items recorded for LucasVarity subsequent to
LucasVarity's year ended January 31, 1999 audited financial statements through
the date of disposition, March 25, 1999, included primarily the investment
banker fees of $21 million relating to TRW's acquisition of LucasVarity. The
historical statements of operations for LucasVarity have been presented using
U.S. Generally Accepted Accounting Principles, GAAP. The statements were
translated from British pounds to U.S. dollars using an average exchange rate
for the applicable period.
The unaudited pro forma statements of operations include the
adjustments, with a continuing impact, to reflect the transaction using purchase
accounting. The pro forma adjustments are described in the notes to the
unaudited pro forma statements of operations. The adjustments are based upon
preliminary information and certain management judgments. Certain
reclassifications have been reflected to conform to TRW's presentation. The
purchase accounting adjustments are subject to revisions which will be reflected
in future periods. Revisions, if any, are not expected to have a material effect
on the statement of operations or financial condition of TRW.
The unaudited pro forma statements of operations are presented for
illustrative purposes only and are not necessarily indicative of the results of
operations which may occur in the future, or that would have occurred if the
acquisition had been consummated on January 1, 1998 and January 1, 1999 for the
statements of operations for the year ended December 31, 1998 and for the six
months ended June 30, 1999, respectively. The unaudited pro forma statements of
operations should be read in conjunction with the consolidated financial
statements and notes thereto included in TRW's Annual Report on Form 10-K for
the year ended December 31, 1998, the consolidated condensed unaudited financial
statements and the notes thereto included in TRW's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1999 and the consolidated financial statements
and notes thereto of LucasVarity for the year ended January 31, 1999 included in
TRW's Current Report on Form 8-K dated March 26, 1999, as amended on May 17,
1999, each incorporated into this prospectus by reference.
19
<PAGE> 24
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
-------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
TRW LUCASVARITY
HISTORICAL AS HISTORICAL AS PRO FORMA ADJUSTED
REPORTED REPORTED ADJUSTMENTS TRW
-------- -------- ----------- ---
<S> <C> <C> <C> <C>
Sales.......................................... $11,886 $7,088 $ (10) (a) $18,964
Cost of sales.................................. 9,715 5,542 93 (b) 15,350
-------- ------- ------ -------
Gross profit................................... 2,171 1,546 (103) 3,614
Administrative and selling expenses............ 826 495 -- (c) 1,321
Research and development expenses.............. 522 305 (62) (d) 765
Interest expense............................... 114 58 450 (f) 622
Amortization of goodwill and intangible
assets ..................................... 43 -- 88 (g) 131
Other expense (income)--net.................... (80) (180) (93) (h) (353)
-------- ------- ------ -------
Earnings from continuing operations before
income taxes................................ 746 868 (486) 1,128
Income taxes................................... 269 315 (182) (i) 402
-------- ------- ------ -------
Earnings from continuing operations............ $ 477 $ 553 $ (304) $ 726
======== ======= ====== =======
Per share of common stock
Diluted
From continuing operations................ $ 3.83 $ 5.84
Basic
From continuing operations................ $ 3.93 $ 5.98
Shares used in computing per share amounts
Diluted..................................... 124.4 124.4
Basic....................................... 121.3 121.3
</TABLE>
See Notes to the Unaudited Pro Forma Statement of Operations
20
<PAGE> 25
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
-------------------------------------------
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
TRW LUCASVARITY
HISTORICAL AS HISTORICAL AS PRO FORMA ADJUSTED
REPORTED REPORTED ADJUSTMENTS TRW
-------- -------- ----------- ---
<S> <C> <C> <C> <C>
Sales ............................................. $7,882 $1,733 $(107) (a) $9,508
Cost of sales...................................... 6,559 1,340 (48) (b) 7,851
------ ------ ----- ------
Gross profit....................................... 1,323 393 (59) 1,657
Administrative and selling expenses................ 514 123 (14) (c) 623
Research and development expenses.................. 315 81 (21) (d) 375
Purchased in-process research and development...... 85 -- (85) (e) --
Interest expense................................... 185 10 106 (f) 301
Amortization of goodwill and intangible
assets.......................................... 45 -- 21 (g) 66
Other expense (income)--net........................ (45) (152) (53) (h) (250)
------- ------ ----- ------
Earnings from continuing operations before
income taxes.................................... 224 331 (13) 542
Income taxes....................................... 113 117 (37) (i) 193
------ ------ ----- ------
Earnings from continuing operations................ $ 111 $ 214 $ 24 $ 349
====== ====== ===== ======
Per share of common stock
Diluted
From continuing operations................... $ 0.91 $ 2.84
Basic
From continuing operations................... $ 0.92 $ 2.90
Shares used in computing per share amounts
Diluted......................................... 123.0 123.0
Basic .......................................... 120.4 120.4
</TABLE>
See Notes to the Unaudited Pro Forma Statement of Operations
21
<PAGE> 26
NOTES TO THE UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
(a) Sales were adjusted to reflect the elimination of sales between TRW and
LucasVarity of $10 million for the year ended December 31, 1998, and $1
million for the six months ended June 30, 1999. In addition, Sales for
the six months ended June 30, 1999, were adjusted to eliminate $106
million of LucasVarity sales included in the "TRW Historical as
Reported" amount for the period subsequent to the date of acquisition,
March 25, 1999, to March 31, 1999.
(b) Cost of sales is adjusted to reflect the net amount of the following
adjustments:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1998 JUNE 30, 1999
(IN MILLIONS)
<S> <C> <C>
Elimination of LucasVarity Cost of sales included in the "TRW
Historical as Reported" amount for the period subsequent to the
date of acquisition, March 25, 1999,
to March 31, 1999....................................................... $ -- $(84)
Reclassification of restructuring cost reported in LucasVarity
historical accounts from Other expense (income)--net.................... 73 42
Reclassification of engineering expenses from Research
and development expenses to conform with TRW's presentation............. 62 21
Elimination of goodwill amortization reported in LucasVarity
historical amounts...................................................... (55) (12)
Additional depreciation resulting from the write-up of fixed assets
to fair value. The assets are depreciated over their estimated
useful lives, primarily from 8 to 20 years. The adjustment also
includes the reduction in earnings to reflect the adjustment of
the fair market value of inventory...................................... 32 1
Capitalization of entry fees associated with an investment for
aerospace partnering arrangements....................................... (17) (6)
Elimination of the cost and profit for sales between LucasVarity
and TRW................................................................. (10) (1)
Adjustment for LucasVarity pension and OPEB expense to reflect
the actuarial valuation as of the acquisition date...................... 8 (9)
------ -------
$ 93 $(48)
==== ====
</TABLE>
(c) Elimination of LucasVarity Administrative and selling expenses of $14
million included in the "TRW Historical as Reported" amount for the
period subsequent to the date of acquisition, March 25, 1999, to March
31, 1999.
(d) Reclassification of $62 million and $21 million of engineering costs to
Cost of sales for the year ended December 31, 1998 and the six months
ended June 30, 1999, respectively, to conform with TRW's presentation.
(e) Elimination of the charge for Purchased in-process research and
development of $85 million in the six months ended June 30, 1999
reported in connection with the acquisition of LucasVarity. Although
the charge is part of the purchase price allocation, it has been
excluded from the pro forma adjusted TRW amounts because it does not
have a continuing impact on the Statement of Operations.
(f) Interest expense is adjusted to reflect the net amount of the following
adjustments:
22
<PAGE> 27
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1998 JUNE 30, 1999
(IN MILLIONS)
<S> <C> <C>
Increase in interest expense to reflect the cash purchase
price of LucasVarity.................................................. $418 $ 93
Reclassification of LucasVarity's interest income to Other
expense (income)--net................................................. 32 13
---- ----
$450 $106
==== ====
</TABLE>
The interest expense increase to reflect the cash purchase price of
LucasVarity assumes that commercial paper of approximately $3.3 billion
is outstanding at an interest rate of 5.33% and approximately $3.5
billion of long-term debt is outstanding with an average interest rate
of 6.81%. The long-term debt assumes a blend of notes with maturities
of 5, 10, and 30 years. Interest expense also includes incremental
financing fees associated with the increase in leverage.
A 1/4% change in the commercial paper rates changes interest expense by
$8 million per year. The impact on earnings and earnings per share is
$5 million and $0.04, respectively.
(g) Amortization of goodwill and intangible assets is adjusted to reflect
the net amount of the following adjustments:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1998 JUNE 30, 1999
(IN MILLIONS)
<S> <C> <C>
Amortization over 40 years of goodwill resulting from
the acquisition....................................................... $ 73 $ 17
Amortization of the fair value of identified intangibles over
their estimated useful lives from 16 to 30 years...................... 15 4
----- ----
$ 88 $ 21
==== ====
</TABLE>
(h) Other expense (income)--net is adjusted to reflect the net amount of
the following adjustments:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1998 JUNE 30, 1999
(IN MILLIONS)
<S> <C> <C>
Reclassification of restructuring costs reported in LucasVarity's
historical accounts to Cost of sales.................................. $(73) $(42)
Reclassification of LucasVarity interest income from Interest
expense............................................................... (32) (13)
Elimination of the LucasVarity gain on the formation of a joint
venture with TRW...................................................... 12 --
Elimination of LucasVarity Other expense (income)--net included
in the "TRW Historical as reported" amount for the period
subsequent to the date of acquisition, March 25, 1999,
to March 31, 1999..................................................... -- 2
---- ----
$(93) $(53)
==== ====
</TABLE>
(i) Reduction in income taxes of $182 million and $37 million for the
applicable tax effect of the before tax pro forma adjustments to the
statement of operations for the year ended December 31, 1998 and the
six months ended June 30, 1999, respectively. For the year ended
December 31, 1998, the pro forma adjustments do not reflect a tax cost
of $20 million which would have occurred if TRW had acquired
LucasVarity as of January 1, 1998. The $20 million tax cost represents
unused foreign tax credits with the assumption that neither TRW nor
LucasVarity would have paid certain dividends from their respective
foreign subsidiaries.
23
<PAGE> 28
Unusual and/or one-time special items included in the historical
statements of operations for TRW and LucasVarity for the year ended December 31,
1998 are set forth below.
-- an after-tax gain of $32 million from the settlement of patent
litigation by ICO Global Communications (Holdings) Limited with
TRW
-- an after-tax charge of $22 million for litigation, contract
reserves, and severance costs relating to the combination of
TRW's Systems Integration Businesses with BDM International,
Inc., a company acquired in 1997
-- an after-tax charge of $18 million for restructuring primarily
for plant closings and severance costs for TRW's Automotive
businesses
-- an after-tax benefit of $16 million for TRW's interest accrual
adjustment for tax litigation settlement
-- an after-tax charge for LucasVarity of $21 million for costs
incurred for its proposed change of domicile
-- an after-tax loss of $10 million recognized upon the termination
of LucasVarity's interest rate swap portfolio
-- net after-tax gains of $206 million relating to the sale of
businesses during the year, including LucasVarity's heavy vehicle
braking business
-- after-tax charges of $36 million for restructuring related to
LucasVarity's automotive businesses for the closure of two plants
and severance costs, the loss associated with the termination of
a product line within the aerospace business and fourth quarter
restructuring costs relating to the merger of Lucas Industries
and Varity Corporation.
Unusual and/or one-time special items included in the historical
statements of operations for TRW and LucasVarity for the six months ended June
30, 1999 are set forth below.
-- after-tax gains of $19 million from the issuance of stock by RF
Micro Devices, Inc., an affiliate of TRW, and $61 million from
TRW's concurrent sale of stock of the affiliate
-- an after-tax charge of $28 million for TRW's losses from a
commercial fixed price contract and a capped cost reimbursable
contract for the U.S. Army
-- a non-recurring after-tax loss of $33 million on foreign currency
hedges relating to the acquisition of LucasVarity
-- $13 million after taxes of unrealized losses on foreign currency
hedges
-- an after-tax charge of $16 million for the underwriting and
participation fees incurred to secure committed credit facilities
and the cost of the unutilized credit line in anticipation of
TRW's acquisition of LucasVarity
-- an after-tax charge of $47 million for severance and other costs
relating to the restructuring of TRW's automotive businesses
-- a cost of $85 million, with no income tax benefit, for the
valuation of in-process research and development associated with
TRW's acquisition of LucasVarity. The cost is eliminated as a pro
forma adjustment
24
<PAGE> 29
-- an after-tax charge of $13 million to reflect the adjustment of
the fair market value of inventory
-- an after-tax gain of $8 million to reflect the effect of
discontinuing the depreciation of assets of businesses held for
sale
-- an after-tax gain of $129 million principally related to the sale
of LucasVarity's heavy vehicle braking system business
-- an after-tax charge of $26 million for restructuring for the
automotive business of LucasVarity including the closure of two
plants and severance costs.
On May 17, 1999, TRW announced that it will divest its engine
businesses, which consist of TRW Engine Components and Lucas Diesel Systems
operations; TRW Nelson Stud Welding; and the LucasVarity Wiring companies. The
estimated net proceeds from these divestitures of $1.2 to $1.5 billion will be
applied to reduce debt incurred to finance the acquisition of LucasVarity. The
unaudited pro forma statements of operations for the year ended December 31,
1998 and the six months ended June 30, 1999 included sales of approximately $2.0
billion and $950 million, respectively, relating to the businesses to be sold.
The results of operations of the businesses to be divested will be reported in
Earnings from continuing operations up to the date of their disposition. TRW
expects to complete the divestitures of these businesses by year-end 1999.
25
<PAGE> 30
UNAUDITED BALANCE SHEET OF TRW AS OF JUNE 30, 1999
The following unaudited balance sheet of TRW includes the acquisition
of LucasVarity accounted for as a purchase. The June 30, 1999 unaudited balance
sheet of TRW includes the accounts of TRW and LucasVarity. The balance sheet
also reflects a preliminary purchase price allocation based upon the estimated
fair value of assets and liabilities as of the date of acquisition. A pro forma
balance sheet is not included as the unaudited balance sheet of TRW as of June
30, 1999 includes LucasVarity.
<TABLE>
<CAPTION>
ASSETS
TRW AS
REPORTED
--------
(IN MILLIONS)
<S> <C>
Current assets
Cash and cash equivalents.............................................................................. $ 609
Accounts receivable.................................................................................... 2,684
Inventories............................................................................................ 1,048
Prepaid expenses....................................................................................... 237
Net assets of acquired businesses held for sale........................................................ 963
Deferred income taxes.................................................................................. 227
--------
Total current assets...................................................................................... 5,768
Property, plant, and equipment--on the basis of cost...................................................... 7,915
Less accumulated depreciation and amortization......................................................... 3,999
--------
Total property, plant and equipment--net.................................................................. 3,916
Intangible Assets
Intangibles arising from acquisitions.................................................................. 3,359
Other ........................................................................................ 921
--------
4,280
Less accumulated amortization.......................................................................... 180
--------
Total intangible assets--net.............................................................................. 4,100
Investments in affiliated companies....................................................................... 298
Other notes and accounts receivable....................................................................... 394
Prepaid pension cost...................................................................................... 2,471
Other assets.............................................................................................. 394
--------
$ 17,341
========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current liabilities
Short-term debt........................................................................................ $ 3,406
Accounts payable....................................................................................... 1,596
Current portion of long-term debt...................................................................... 625
Other current liabilities.............................................................................. 1,995
--------
Total current liabilities................................................................................. 7,622
Long-term liabilities..................................................................................... 1,708
Long-term debt............................................................................................ 5,661
Long-term deferred income taxes........................................................................... 587
Minority interests in subsidiaries........................................................................ 107
Shareholders' investment
Capital stock.......................................................................................... 76
Other capital.......................................................................................... 462
Retained earnings...................................................................................... 2,089
Treasury shares--cost in excess of par value........................................................... (598)
Accumulated other comprehensive (loss)................................................................. (373)
--------
Total shareholders' investment............................................................................ 1,656
--------
$17,341
========
</TABLE>
On May 17, 1999, TRW announced that it will divest its engine
businesses, which consist of TRW Engine Components and Lucas Diesel Systems
operations; TRW Nelson Stud Welding; and the LucasVarity Wiring companies. The
net operating assets of the LucasVarity businesses to be sold of $963 million as
of June 30, 1999 are included in the caption "Net assets of acquired businesses
held for sale." The net assets of the TRW businesses to be sold are
approximately $329 million and are reported in their respective balance sheet
accounts.
26
<PAGE> 31
PURCHASE PRICE ALLOCATION OF LUCASVARITY
The assets and liabilities of LucasVarity have been consolidated with
TRW based upon the fair value of assets and liabilities. During the second
quarter 1999, the valuation of LucasVarity employee benefit plans was completed
and pre-acquisition contingencies were adjusted along with the deferred tax
impact. A preliminary allocation of the cash purchase price of $6,778 million is
as follows:
<TABLE>
<CAPTION>
(IN MILLIONS)
<S> <C>
Cash and cash equivalents.......................................................................... $ 774
Accounts receivable................................................................................ 887
Inventory.......................................................................................... 524
Net assets of businesses held for sale............................................................. 986
Other current assets............................................................................... 219
----------
Total current assets............................................................................... 3,390
Property, plant and equipment...................................................................... 1,357
Intangible assets.................................................................................. 556
Prepaid pension costs.............................................................................. 2,471
Other assets....................................................................................... 426
----------
Total assets....................................................................................... $ 8,200
==========
Accounts payable................................................................................... $ (686)
Other accruals..................................................................................... (773)
Debt............................................................................................... (970)
Long-term liabilities.............................................................................. (856)
Long-term deferred taxes........................................................................... (773)
----------
Total liabilities.................................................................................. $ (4,058)
==========
Minority Interests................................................................................. $ (39)
==========
Purchased in-process research and development...................................................... $ 85
==========
Excess of purchase price over fair value of net assets acquired.................................... $ 2,590
==========
</TABLE>
The purchase price allocation is preliminary and is subject to
adjustments for the final appraisal and resolution of preacquisition
contingencies, completion of TRW management's assessment of the recognition of
liabilities in connection with the LucasVarity purchase business combination in
accordance with EITF 95-3, and for the valuation of net assets of businesses
held for sale based upon the actual proceeds received from the sale of these
businesses. The adjustments, if any, are not expected to have a material effect
on TRW's results of operations or financial condition.
27
<PAGE> 32
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
TRW entered into a registration rights agreement with Morgan Stanley &
Co. Incorporated, J.P. Morgan Securities Inc. and Salomon Smith Barney Inc., as
representatives of the initial purchasers of the 6 1/2% Notes Due 2002, 6 5/8%
Notes Due 2004, 7 1/8% Notes due 2009 and 7 3/4% Debentures Due 2029. At the
closing of the sale of the Notes due 2001, TRW entered into a registration
rights agreement with Goldman, Sachs & Co., as representative of the initial
purchasers of the Notes due 2001. Under these registration rights agreements,
TRW agreed to file a registration statement regarding the exchange of the
outstanding debt for registered debt with terms identical in all material
respects. TRW also agreed to use its reasonable best efforts to cause that
registration statement to become effective with the SEC. A copy of each
registration rights agreement has been filed as an exhibit to the registration
statement of which this prospectus is a part.
TRW is conducting the exchange offer to satisfy its contractual
obligations under the registration rights agreements. The form and terms of the
registered debt are the same as the form and terms of the outstanding debt,
except that the registered debt will be registered under the Securities Act, and
the registered debt will not contain terms with respect to transfer
restrictions, registration rights or additional interest for failure by TRW to
observe obligations in the registration rights agreement. TRW is not extending
the exchange offer to holders of outstanding debt in any jurisdiction where the
exchange offer does not comply with the securities or blue sky laws of that
jurisdiction.
TERMS OF THE EXCHANGE OFFER
TRW is offering to exchange up to $2.825 billion total principal amount
of registered debt for a like total principal amount of outstanding debt. To
validly tender your outstanding debt, you must tender it on or before the
expiration date of the exchange offer and not withdraw your tender. In exchange
for outstanding debt properly tendered and accepted, TRW will issue a like total
principal amount of up to $2.825 billion in registered debt.
TRW is not conditioning the exchange offer upon holders tendering a
minimum principal amount of outstanding debt. As of the date of this prospectus,
$2.825 billion total principal amount of outstanding debt is outstanding.
Holders of the outstanding debt do not have any appraisal or
dissenters' rights in the exchange offer. If holders do not tender outstanding
debt or tender outstanding debt that TRW does not accept, their outstanding debt
will remain outstanding. Any outstanding debt will be entitled to the benefits
of the indenture, but will not be entitled to any further registration rights
under the registration rights agreement, except under limited circumstances.
After the expiration date of the exchange offer, TRW will return to the
holder any tendered outstanding debt that TRW did not accept for exchange due
to, among other things, an invalid tender.
Holders exchanging outstanding debt will not have to pay brokerage
commissions or fees or, subject to the instructions in the letter of
transmittal, transfer taxes. TRW will pay the charges and expenses, other than
applicable taxes in the exchange offer.
Neither TRW nor TRW's Board of Directors recommends that you tender or
not tender your outstanding debt in the exchange offer. In addition, TRW has not
authorized anyone to make any recommendation about the exchange offer. You must
decide whether to tender your outstanding debt in the exchange offer and, if so,
the aggregate amount of the outstanding debt to tender.
28
<PAGE> 33
EXPIRATION DATES; EXTENSIONS; AMENDMENTS
As used in this prospectus, the "expiration date" of the exchange offer
is 5:00 p.m., New York City time, on ___________, 1999, unless TRW extends the
exchange offer to allow additional tenders of outstanding debt, in which case
the expiration date will be the latest date to which the exchange offer is
extended.
TRW has the right, in accordance with applicable law, at any time to:
- terminate the exchange offer if TRW determines that any of the
conditions to the exchange offer have not occurred or have not
been satisfied;
- extend the expiration date of the exchange offer and keep all
outstanding debt tendered other than outstanding debt properly
withdrawn; and/or
- waive any condition or amend the terms of the exchange offer.
If TRW exercises any of the rights listed above, it will promptly give
oral or written notice of the action to the exchange agent and will issue a
release to an appropriate news agency. In the case of an extension, an
announcement will be made no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled expiration date.
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF REGISTERED DEBT
TRW will issue registered debt to the exchange agent for outstanding
debt tendered and accepted, and not withdrawn, promptly on or after the
expiration date. The exchange agent may not deliver the registered debt to all
tendering holders at the same time. The timing of delivery depends upon when the
exchange agent receives and processes the required documents.
TRW will be deemed to have exchanged outstanding debt validly tendered
and not withdrawn when TRW gives oral or written notice to the exchange agent of
their acceptance. The exchange agent is an agent for TRW for purposes of
receiving tenders of outstanding debt, letters of transmittal and related
documents. The exchange agent also is an agent for tendering holders for
purposes of receiving outstanding debt, letters of transmittal and related
documents and transmitting registered debt to validly tendering holders. If for
any reason, TRW
- delays the acceptance or exchange of any outstanding debt,
- extends the exchange offer, or
- is unable to accept or exchange outstanding debt,
then any outstanding debt previously tendered will remain subject to the
exchange offer and may be accepted for exchange by TRW. Tendered outstanding
debt may be withdrawn only by following the withdrawal procedures outlined in
the section entitled "--Withdrawal Rights" below.
In tendering outstanding debt, you must warrant in the letter of
transmittal or in an "agent's message," as described below, that:
- you have full power and authority to tender, exchange, sell,
assign and transfer your outstanding debt;
- TRW will acquire good, marketable and unencumbered title to the
tendered outstanding debt, free and clear of all liens,
restrictions, charges and encumbrances; and
- the outstanding debt tendered for exchange is not subject to any
adverse claims or proxies.
29
<PAGE> 34
You also must warrant and agree that you will, upon request, execute
and deliver any additional documents requested by TRW or the exchange agent to
complete the exchange, sale, assignment, and transfer of the outstanding debt
and that you will comply with your obligations under the registration rights
agreement.
PROCEDURES FOR TENDERING OUTSTANDING DEBT
VALID TENDER
You may tender your outstanding debt by book-entry transfer or, if you
hold certificated securities, by other means, as described below. For book-entry
transfer, you must deliver to the exchange agent either (1) a completed and
signed letter of transmittal or (2) an "agent's message." An agent's message
means a message transmitted by DTC, received by the exchange agent and forming
part of a confirmation of a book-entry confirmation, that:
- DTC has received an express acknowledgment in its Automated
Tender Offer Program that it is tendering outstanding debt that is
the subject of the book-entry confirmations;
- the tendering participant has received and agrees to be bound by
the letter of transmittal, or, in the case of an agent's message
related to guaranteed delivery, that the participant has received
and agrees to be bound by the applicable notice of guaranteed
delivery; and
- TRW may enforce the letter of transmittal against that
participant.
You must deliver your letter of transmittal or the agent's message by
mail, facsimile, hand delivery or overnight courier to the exchange agent on or
before the expiration date. In addition, to complete a book-entry transfer, you
must also either
- have DTC transfer the outstanding debt into the exchange agent's
account at DTC using the ATOP procedures for transfer, and obtain
a confirmation of the transfer, or
- follow the guaranteed delivery procedures described below under
"--Guaranteed Delivery Procedures."
If you tender less than all of your outstanding debt, you should fill
in the principal amount of each series of outstanding debt tendered in the
appropriate box on the letter of transmittal. If you do not indicate the amount
tendered in the appropriate box, TRW will assume you are tendering all
outstanding debt that you hold.
For tendering your outstanding debt other than by book-entry transfer,
you must deliver a completed and signed letter of transmittal to the exchange
agent. You must deliver the letter of transmittal by mail, facsimile, hand
delivery or overnight courier to the exchange agent on or before the expiration
date. In addition, to complete a valid tender you must either
- deliver your outstanding debt to the exchange agent on or before
the expiration date, or
- follow the guaranteed delivery procedures set forth below under
"--Guaranteed Delivery Procedures."
Delivery of required documents by whatever method you choose is at your
sole risk. Delivery is complete when the exchange agent actually receives the
items to be delivered. Delivery of documents to DTC in accordance with DTC's
procedures does not constitute delivery of the documents to the exchange agent.
If delivery is made by mail, then registered mail, return receipt requested,
properly insured, or an overnight delivery service is recommended. In all cases,
you should allow sufficient time to ensure delivery to the exchange agent before
the expiration date.
30
<PAGE> 35
SIGNATURE GUARANTEES
You do not need to endorse certificates for the outstanding debt or
provide signature guarantees on the letter of transmittal, unless
(1) someone other than the registered holder tenders the certificate
or
(2) you complete the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" in the letter of transmittal.
In the case of (1) or (2) above, you must sign your outstanding debt or provide
a properly executed bond power, with the signature on the bond power and on the
letter of transmittal guaranteed by a firm or other entity identified in Rule
17Ad-15 under the Exchange Act as an "eligible guarantor institution."
An "eligible guarantor institution" includes:
- a bank;
- a broker, dealer, municipal securities broker or dealer or
government securities broker or dealer;
- a credit union;
- a national securities exchange, registered securities association or
clearing agency; or
- a savings association,
in each case, that is a participant in a securities transfer
association.
GUARANTEED DELIVERY PROCEDURES
If the certificates for the outstanding debt are not immediately
available or all required documents are unlikely to reach the exchange agent on
or before the expiration date, or if a book-entry transfer cannot be completed
in time, you may tender your outstanding debt if you comply with the following
guaranteed delivery procedures:
- you tender through an eligible guarantor institution;
- you deliver a properly completed and signed notice of guaranteed
delivery, like the form provided with the letter of transmittal, to
the exchange agent on or before the expiration date; and
- you deliver the certificates or a confirmation of book-entry
transfer and a properly completed and signed letter of transmittal
to the exchange agent within three New York Stock Exchange trading
days after the notice of guaranteed delivery is executed.
You may deliver the notice of guaranteed delivery by hand, facsimile or
mail to the exchange agent and you must include a guarantee by an eligible
guarantor institution in the form described in the notice.
TRW's acceptance of properly tendered outstanding debt is a binding
agreement between the tendering holder and TRW. However, TRW is permitted to
terminate the exchange offer if the exchange offer violates applicable law or
any applicable interpretation of the SEC's staff or if an injunction is issued
related to the exchange offer. See "--Conditions to the Exchange Offer."
31
<PAGE> 36
DETERMINATION OF VALIDITY
TRW will resolve all questions regarding the form of documents,
validity, eligibility, including time of receipt, and acceptance for exchange of
any tendered outstanding debt. TRW's resolution of these questions and TRW's
interpretation of the terms and conditions of the exchange offer, including the
letter of transmittal, are final and binding on all parties. A tender of
outstanding debt is invalid until all irregularities have been cured or waived.
TRW, its affiliates or assigns, and the exchange agent are not under any
obligation to give notice of any irregularities in tenders and none of them will
be liable for failing to give any such notice. TRW reserves the absolute right,
in its sole and absolute discretion, to reject any tenders determined to be in
improper form or unlawful. TRW also reserves the absolute right to waive any of
the conditions of the exchange offer or any condition or irregularity in the
tender of outstanding debt by any holder. TRW need not waive similar conditions
or irregularities in the case of other holders.
If any letter of transmittal, endorsement, bond power, power of
attorney, or any other document required by the letter of transmittal is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
that person must indicate that capacity when signing. In addition, unless waived
by TRW, the person must submit proper evidence satisfactory to TRW, in its sole
discretion, of his or her authority to so act.
A beneficial owner of outstanding debt that is held by or registered in
the name of a broker, dealer, commercial bank, trust company or other nominee or
custodian should contact that entity promptly if the holder wants to participate
in the exchange offer.
RESALE OF REGISTERED DEBT
TRW is exchanging the registered debt for outstanding debt based upon
the position of the SEC's staff, set forth in interpretive letters to Exxon
Capital Holdings Corporation, which became available on April 13, 1989, and
Morgan Stanley & Co. Incorporated, which became available June 5, 1991. TRW will
not seek its own interpretive letter. As a result, TRW cannot assure you that
the SEC's staff will take the same position on this exchange offer as it did in
those prior interpretive letters. Based on these prior interpretations of the
SEC's staff, TRW believes that holders of registered debt, other than
broker-dealers, can offer the registered debt for resale, resell and otherwise
transfer the registered debt without delivering a prospectus to prospective
purchasers, other than as described below.
Any holder of outstanding debt who is an "affiliate" of TRW or who
intends to distribute registered debt, or any broker-dealer who purchased
outstanding debt from TRW for resale pursuant to Rule 144A or any other
available exemption under the Securities Act:
- cannot rely on the SEC staff's interpretations in the
above-mentioned interpretive letters;
- cannot tender outstanding debt in the exchange offer; and
- must comply with the registration and prospectus delivery
requirements of the Securities Act to transfer the outstanding debt,
unless the sale is exempt from those requirements.
If any broker-dealer acquired outstanding debt for its own account as a
result of market-making or other trading activities and exchanges the
outstanding debt for registered debt, the broker-dealer must deliver a
prospectus with any resales of the registered debt.
If you want to exchange your outstanding debt for registered debt, you
will be required to affirm that:
- you are not an "affiliate" of TRW, as defined in Rule 405 of the
Securities Act;
- you are acquiring the registered debt in the ordinary course of your
business;
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- you have no arrangement or understanding with any person to
participate in a "distribution," within the meaning of the
Securities Act, of the registered debt; and
- if you are not a broker-dealer, you are not engaged in, and do not
intend to engage in, a "distribution," within the meaning of the
Securities Act, of the registered debt.
In addition, TRW may require you to provide information regarding the
number of "beneficial owners," within the meaning of Rule 13d-3 under the
Exchange Act, of the outstanding debt. Each broker-dealer that receives
registered debt for its own account must acknowledge that it acquired its
outstanding debt for its own account as the result of market-making activities
or other trading activities and must agree that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
the registered debt. By making this acknowledgment and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" under the Securities Act.
Based on the SEC staff's position in its interpretive letter to
Shearman & Sterling, which became available July 2, 1983, TRW believes that
broker-dealers who acquired outstanding debt for their own accounts as a result
of market-making activities or other trading activities may fulfill their
prospectus delivery requirements with respect to the registered debt with a
prospectus meeting the requirements of the Securities Act. Accordingly, a
broker-dealer may use this prospectus to satisfy the requirements. TRW has
agreed that, for a period of 90 days after the expiration date of the exchange
offer, it will make this prospectus, as amended or supplemented, available to
any broker-dealer for use in connection with any such resale. See "Plan of
Distribution."
A broker-dealer intending to use this prospectus in the resale of
registered debt must notify TRW, on or prior to the expiration date, that it is
a participating broker-dealer. This notice may be given in the letter of
transmittal or may be delivered to the exchange agent. Any participating
broker-dealer that is an "affiliate" of TRW may not rely on the SEC staff's
interpretive letters referred to above and must comply with the registration and
prospectus delivery requirements of the Securities Act when reselling its
registered debt.
WITHDRAWAL RIGHTS
You can withdraw tenders of outstanding debt at any time on or before
the expiration date of the exchange offer.
For a withdrawal to be effective, you must deliver a written or
facsimile transmission of a "notice of withdrawal" to the exchange agent on or
before the expiration date. The notice of withdrawal must specify:
- the name of the person tendering the outstanding debt to be
withdrawn,
- the total principal amount of outstanding debt withdrawn, and
- the name of the registered holder of the outstanding debt if it is
different from the name of the person tendering the outstanding
debt.
If you delivered outstanding debt to the exchange agent, you must
submit the serial numbers of the outstanding debt to be withdrawn and the
signature on the notice of withdrawal must be guaranteed by an eligible
guarantor institution, except in the case of outstanding debt tendered for the
account of an eligible guarantor institution. If you tendered outstanding debt
as a book-entry transfer, the notice of withdrawal must specify the name and
number of the account at DTC to be credited with the withdrawal of outstanding
debt and you must deliver the notice of withdrawal to the exchange agent by
written, telegraphic, telex or facsimile transmission. You may not rescind
withdrawals of tender. Outstanding debt properly withdrawn may again be tendered
at any time on or before the expiration date.
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TRW will determine all questions regarding the validity, form and
eligibility of withdrawal notices. TRW's determination will be final and binding
on all parties. None of TRW, any of its affiliates or assigns, the exchange
agent nor any other person is under any obligation to give notice of any
irregularities in any notice of withdrawal, nor will they be liable for failing
to give any such notice. Withdrawn outstanding debt will be returned to the
holder after withdrawal.
CONDITIONS TO THE EXCHANGE OFFER
If the exchange offer violates applicable law or any applicable
interpretation of the SEC's staff or a court or governmental agency has issued
an injunction, order or decree that would prohibit, prevent or otherwise
materially impair TRW's ability to proceed with the exchange offer, then TRW
may:
- terminate the exchange offer, whether or not any outstanding debt
has been accepted for exchange,
- waive any condition to the exchange offer, or
- amend the terms of the exchange offer in any respect.
TRW's failure at any time to exercise any of these rights will not waive those
rights, and each right will be deemed an ongoing right which may be asserted at
any time or from time to time.
If TRW consummates the exchange offer, it must accept all outstanding
debt validly tendered in accordance with the terms of the exchange offer.
EXCHANGE AGENT
TRW appointed The Chase Manhattan Bank as exchange agent for the
exchange offer. All executed letters of transmittal should be directed to the
exchange agent at the address set forth below. Holders should direct questions
and requests for assistance, requests for additional copies of this prospectus
or of the letter of transmittal and requests for notice of guaranteed delivery
to the exchange agent as follows:
Delivery To: The Chase Manhattan Bank
By Mail, Hand or Overnight Delivery: By Facsimile Transmission:
The Chase Manhattan Bank (For Eligible Institutions Only)
55 Water Street (212) 638-7375
Room 234, North Building
New York, New York 10041 Confirm by Telephone:
Attention: Carlos Esteves Carlos Esteves (212) 638-0828
For Information Call:
(212) 638-0828
IF YOU DELIVER LETTERS OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS
TO AN ADDRESS OR FACSIMILE NUMBER OTHER THAN THOSE LISTED ABOVE, YOUR TENDER IS
INVALID.
The Chase Manhattan Bank also serves as trustee under the indenture.
FEES AND EXPENSES
TRW will pay the cash expenses incurred in connection with the exchange
offer, including the expenses of soliciting tenders. The expenses include fees
and expenses of the exchange agent and the
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<PAGE> 39
trustee, accounting and legal fees and printing costs, among others. The
principal solicitation for tenders is being made by mail. Additional
solicitations, however, may be made by TRW's officers and employees in person,
by telegraph or telephone.
TRW has not retained any dealer-manager in connection with the exchange
offer and will not make any payments to brokers, dealers or other persons
soliciting acceptances of the exchange offer. TRW will pay the exchange agent,
however, reasonable and customary fees for its services and will reimburse the
exchange agent for its reasonable out-of-pocket expenses in connection with the
exchange offer.
TRW will pay the transfer taxes for the exchange of the outstanding
debt in the exchange offer. If, however, certificates for registered debt are
delivered to or issued in the name of a person other than the registered holder
of the tendered outstanding debt, or if a transfer tax is imposed for any reason
other than for the exchange of outstanding debt in the exchange offer, then the
tendering holder will pay the transfer taxes. If a tendering holder does not
submit satisfactory evidence of payment of taxes or exemption from taxes with
the letter of transmittal, the taxes will be billed directly to the tendering
holder.
ACCOUNTING TREATMENT
The registered debt will be recorded at the same carrying value as the
outstanding debt. Accordingly, TRW will not recognize any gain or loss for
accounting purposes. TRW intends to amortize the expenses of the exchange offer
and issuance of the outstanding debt over the respective terms of each series of
the registered debt.
DESCRIPTION OF THE REGISTERED DEBT
The outstanding debt was, and the registered debt will be, issued as
separate series under an Indenture dated as of May 1, 1986, as supplemented and
amended by the First Supplemental Indenture dated as of August 24, 1989, the
Second Supplemental Indenture dated as of June 2, 1999, the Third Supplemental
Indenture dated as of June 2, 1999, the Fourth Supplemental Indenture dated as
of June 2, 1999, the Fifth Supplemental Indenture dated as of June 2, 1999, and
the Sixth Supplemental Indenture dated as of June 23, 1999, between TRW and The
Chase Manhattan Bank, as successor trustee to Mellon Bank, N.A. Except as set
forth below, the provisions of the indenture apply to all of the outstanding
debt and all of the registered debt.
The following description is a summary of the material provisions of
the indenture with respect to the registered debt. It does not restate the
indenture in its entirety. A copy of the indenture has been filed as an exhibit
to the registration statement of which this prospectus is a part. The terms of
the registered debt are the same as the terms of the outstanding debt, except
that:
- TRW registered the registered debt under the Securities Act, and,
unlike the outstanding debt, its transfer is not restricted; and
- holders of the registered debt are not entitled to rights to
additional interest for failure to comply with provisions of the
registration rights agreement.
We urge you to read the indenture because it, and not this description, defines
your rights as holders of the registered debt. In this description, references
to "TRW" mean TRW Inc., alone and not together with any of its subsidiaries.
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<PAGE> 40
BASIC TERMS
The registered debt will have the following terms:
<TABLE>
<CAPTION>
Maximum
Principal Interest
Amount Rate Maturity Date
------ ---- -------------
<S> <C> <C> <C>
Exchange Notes due 2001 $425,000,000 6.45% June 15, 2001
Exchange Notes Due 2002 $400,000,000 6 1/2% June 1, 2002
Exchange Notes Due 2004 $700,000,000 6 5/8% June 1, 2004
Exchange Notes Due 2009 $750,000,000 7 1/8% June 1, 2009
Exchange Debentures Due 2029 $550,000,000 7 3/4% June 1, 2029
</TABLE>
At maturity, each series of registered debt will be repaid at 100% of
its principal amount.
RANKING
Each series of the registered debt will be senior unsecured
indebtedness of TRW, ranking equally with all other existing and future
unsecured senior indebtedness of TRW. Each series of registered debt ranks
equally with each other series of registered debt. TRW Inc. had $8.5 billion of
indebtedness for borrowed money outstanding as of June 30, 1999, including the
outstanding debt for which this exchange offer is being made. As of June 30,
1999, subsidiaries of TRW Inc. had $0.2 billion of indebtedness for borrowed
money outstanding that was guaranteed by TRW Inc. All of TRW Inc.'s debt and all
of TRW Inc.'s obligations under the guarantees of subisdiary debt rank equally
with the registered debt. No debt of TRW Inc. will rank senior to the registered
debt upon our completion of the exchange offer. TRW Inc. has no subordinated
debt outstanding. There are no restrictions on the incurrence of debt that ranks
equally with the registered debt. TRW Inc. cannot issue debt that ranks senior
to any series of registered debt without the consent of the holders of not less
than 66 2/3% in total principal amount of that series of registered debt. This
consent requirement is the only limitation in the indenture on the amount of
indebtedness that TRW Inc. could issue that ranks senior to the registered debt.
INTEREST PAYMENTS
The registered debt will bear interest from its date of issuance.
Interest is payable semiannually on June 1 and December 1 of each year
commencing on December 1, 1999, at the rates set forth above, except for the
Exchange Notes due 2001. Interest on the Exchange Notes due 2001 is payable on
June 15 and December 15 of each year, commencing on December 15, 1999, at the
rate of 6.45% per annum. The holders of outstanding debt that TRW accepts for
exchange will receive, in cash, accrued interest on the outstanding debt to, but
not including, the issuance date of the registered debt. That interest will be
paid with the first interest payment on the registered debt. Consequently,
holders who exchange their outstanding debt for registered debt will receive the
same interest payment on December 1, 1999, or December 15, 1999 with respect to
the Exchange Notes due 2001, which is the first interest payment date with
respect to the outstanding debt, that they would have received had they not
accepted the exchange offer. Interest on the outstanding debt accepted for
exchange will cease to accrue upon issuance of the registered debt.
Interest on the registered debt will be payable in United States
dollars at the office or agency of the trustee in the Borough of Manhattan, the
City of New York, New York, or at TRW's option in the event the registered debt
is not represented by global securities, by check mailed to the address of the
registered holder at the close of business on the May 15 or November 15, or May
31 or November 30 in the case of the Exchange Notes due 2001, preceding the
interest payment date. Interest will be calculated on the basis of a 360-day
year consisting of twelve 30-day months. Payment of the principal on individual
certificated securities in fully registered form, "definitive registered
securities", if any are issued, will be payable against remittance of a
definitive registered security at the office of Bankers Trust Luxembourg, or the
office of such other person located in Luxembourg and reasonably acceptable to
the trustee appointed as additional paying and transfer agent.
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Any definitive registered securities will be issued in fully registered
form in denominations of $1,000 principal amount and integral multiples thereof.
Except for the Notes due 2001, each series of the outstanding debt is
listed on the Luxembourg Stock Exchange. Application has been made to list each
series of the registered debt, other than the Exchange Notes due 2001, on the
Luxembourg Stock Exchange.
OPTIONAL REDEMPTION
The Exchange Notes due 2001 are not redeemable prior to maturity.
The Exchange Notes Due 2002 are not redeemable prior to maturity except
for tax reasons as described under "--Redemption for Tax Reasons."
The Exchange Notes Due 2004, the Exchange Notes Due 2009 and the
Exchange Debentures Due 2029 are redeemable as a whole at any time or in part
from time to time, at the option of TRW, at a redemption price equal to the
greater of
(1) 100% of the principal amount of the notes to be redeemed and
(2) the sum of the present values of the remaining scheduled
payments of principal and interest thereon from the redemption
date to the applicable maturity date, exclusive of any accrued
interest, discounted, in each case, to the redemption date on
a semiannual basis, assuming a 360-day year consisting of
twelve 30-day months, at the Treasury Rate plus
(a) 0.15% in the case of the Exchange Notes Due 2004,
(b) 0.20% in the case of the Exchange Notes Due 2009 and
(c) 0.25% in the case of the Exchange Debentures Due
2029,
plus, in each case, any interest accrued but not paid to the date of redemption.
"Treasury Rate" means, with respect to any redemption date for the
Exchange Notes Due 2004, the Exchange Notes Due 2009 or the Exchange Debentures
Due 2029, as the case may be:
(1) the yield, under the heading which represents the average for
the immediately preceding week, appearing in the most recently
published statistical release designated "H.15(519)" or any
successor publication which is published weekly by the Board
of Governors of the Federal Reserve System and which
establishes yields on actively traded United States Treasury
securities adjusted to constant maturity under the caption
"Treasury Constant Maturities," for the maturity corresponding
to the Comparable Treasury Issue; or
(2) if that release, or any successor release, is not published
during the week preceding the calculation date or does not
contain such yields, the rate per annum equal to the
semi-annual equivalent yield to maturity of the Comparable
Treasury Issue, calculated using a price for the Comparable
Treasury Issue, expressed as a percentage of its principal
amount, equal to the Comparable Treasury Price for that
redemption date.
With respect to clause (1) above, if no maturity is within three months before
or after the maturity date for the Exchange Notes Due 2004, the Exchange Notes
Due 2009 or the Exchange Debentures Due 2029, as the case may be, yields for the
two published maturities most closely corresponding to the Comparable Treasury
Issue shall be determined and the Treasury Rate shall be interpolated or
extrapolated from such yields on a straight line basis, rounding to the nearest
month. The Treasury Rate in each case will be calculated on the third business
day preceding the redemption date.
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"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Exchange Notes Due 2004, the Exchange Notes Due 2009
or the Exchange Debentures Due 2029, as the case may be, to be redeemed that
would be utilized, at the time of selection and in accordance with customary
financial practice, in pricing new issues of corporate debt securities of
comparable maturity to the remaining term of such securities. "Independent
Investment Banker" means one of the Reference Treasury Dealers appointed by the
trustee after consultation with TRW.
"Comparable Treasury Price" means with respect to any redemption date
for the Exchange Notes Due 2004, the Exchange Notes Due 2009 or the Exchange
Debentures Due 2029, as the case may be,
(i) the average of four Reference Treasury Dealer Quotations for
that redemption date, after excluding the highest and lowest
such Reference Treasury Dealer Quotations, or
(ii) if the trustee obtains fewer than four such Reference Treasury
Dealer Quotations, the average of all such quotations.
"Reference Treasury Dealer" means each of Morgan Stanley & Co.
Incorporated, J.P. Morgan & Co. Incorporated, Salomon Smith Barney Inc., and one
other primary U.S. Government securities dealer in New York City, each, a
"Primary Treasury Dealer," appointed by the trustee in consultation with TRW;
provided, however, that if any of the foregoing shall cease to be a Primary
Treasury Dealer, TRW shall substitute therefor another Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the trustee, of the bid and asked prices for the Comparable Treasury Issue,
expressed in each case as a percentage of its principal amount, quoted in
writing to the trustee by that Reference Treasury Dealer at 5:00 p.m., New York
City time, on the third business day preceding that redemption date.
Notice of any redemption will be mailed at least 30 days but no more
than 60 days before the redemption date to each holder of the registered debt to
be redeemed. In addition, so long as any of outstanding debt or registered debt
is listed on the Luxembourg Stock Exchange and the rules of that exchange
require, notice of any redemption will be published in a newspaper having a
general circulation in Luxembourg, which is expected to be the Luxemburger Wort.
On and after the redemption date interest will cease to accrue on the
registered debt or portions thereof called for redemption, unless TRW defaults
in payment of the redemption price.
PAYMENT OF ADDITIONAL AMOUNTS
TRW will pay as additional interest on the registered debt, other than
the Exchange Notes due 2001, such additional amounts as are necessary in order
that the net payment by TRW or a paying agent of the principal of and interest
on the registered debt to a Foreign Holder, as defined in the section "United
States Federal Income Tax Consequences," after deduction or withholding for any
present or future tax, assessment or governmental charge of the United States or
a political subdivision or taxing authority thereof or therein, imposed by
withholding with respect to the payment, will not be less than the amount
provided in the registered debt to be then due and payable.
The obligation to pay additional amounts shall not apply:
(1) to a tax, assessment or governmental charge that is imposed or
withheld solely by reason of the Foreign Holder, or a
fiduciary, settlor, beneficiary, member or shareholder of the
Foreign Holder if the Foreign Holder is an estate, trust,
partnership or corporation, or a person holding a power over
an estate or trust administered by a fiduciary holder,
considered as:
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(a) being or having been present or engaged in a trade or
business in the United States or having or having had
a permanent establishment in the United States;
(b) having a current or former relationship with the
United States, including a relationship as a citizen
or resident thereof;
(c) being or having been a foreign or domestic personal
holding company, a passive foreign investment company
or a controlled foreign corporation with respect to
the United States or a corporation that has
accumulated earnings to avoid United States Federal
income tax; or
(d) being or having been a "10-percent shareholder" of
TRW as defined in Section 871(h)(3) of the United
States Internal Revenue Code of 1986, as amended, or
any successor provision;
(2) to any Foreign Holder that is not the sole beneficial owner of
the registered debt, or a portion thereof, or that is a
fiduciary or partnership, but only to the extent that a
beneficiary or settlor with respect to the fiduciary or a
beneficial owner or member of the partnership would not have
been entitled to the payment of an additional amount had the
beneficiary, settlor, beneficial owner or member received
directly its beneficial or distributive share of the payment;
(3) to a tax, assessment or governmental charge that is imposed or
withheld solely by reason of the failure of the Foreign Holder
or any other person to comply with certification,
identification or information reporting requirements
concerning the nationality, residence, identity or connection
with the United States of the Foreign Holder or beneficial
owner of such registered debt, if compliance is required by
statute, by regulation of the United States Treasury
Department or by an applicable income tax treaty to which the
United States is a party as a precondition to exemption from,
or reduction of, such tax, assessment or other governmental
charge;
(4) to a tax, assessment or governmental charge that is imposed
otherwise than by withholding by TRW or a paying agent from
the payment;
(5) to a tax, assessment or governmental charge that is imposed or
withheld solely by reason of a change in law, regulation, or
administrative or judicial interpretation that becomes
effective more than 15 days after the payment becomes due or
is duly provided for, whichever occurs later;
(6) to an estate, inheritance, gift, sales, excise, transfer,
wealth or personal property tax or a similar tax, assessment
or governmental charge;
(7) to any tax, assessment or other governmental charge required
to be withheld by any paying agent from any payment of
principal of or interest on any registered debt, if such
payment can be made without such withholding by any other
paying agent; or
(8) in the case of any combination of items "(1)" through "(7)."
The registered debt is subject in all cases to any tax, fiscal or other
law or regulation or administrative or judicial interpretation applicable to the
registered debt. Except as specifically provided under this heading, "Payment of
Additional Amounts," TRW will not be required to make any payment with respect
to any tax, assessment or governmental charge imposed by any government or a
political subdivision or taxing authority thereof or therein.
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<PAGE> 44
REDEMPTION FOR TAX REASONS
If
(1) as a result of any change in, or amendment to, the laws, or
any regulations or rulings promulgated thereunder, of the
United States or any political subdivision or taxing authority
thereof or therein, or any change in, or amendments to, the
official position regarding the application or interpretation
of such laws, regulations or rulings, which change or
amendment is announced or becomes effective on or after May
26, 1999, TRW becomes or will become obligated to pay
additional amounts on the registered debt, other than the
Exchange Notes due 2001, as described herein under the heading
"--Payment of Additional Amounts" or
(2) any act is taken by a taxing authority of the United States on
or after May 26, 1999, whether or not such act is taken with
respect to TRW or any affiliate, that results in a substantial
probability that TRW will or may be required to pay such
additional amounts,
then TRW may, at its option, redeem, as a whole, but not in part, the registered
debt, other than the Exchange Notes due 2001, on not less than 30 nor more than
60 days' prior notice, at a redemption price equal to 100% of their principal
amount, together with interest accrued but unpaid thereon to the date fixed for
redemption.
TRW may exercise this redemption right only if TRW determines, in its
business judgment, that the obligation to pay such additional amounts cannot be
avoided by the use of reasonable measures available to it, not including
substitution of the obligor under the registered debt. No redemption pursuant to
clause (2) in the previous paragraph may be made unless
(1) TRW receives an opinion of independent counsel to the effect
that an act taken by a taxing authority of the United States
results in a substantial probability that it will or may be
required to pay the additional amounts described under the
heading "--Payment of Additional Amounts," and
(2) TRW delivers to the trustee a certificate, signed by a duly
authorized officer, stating that based on such opinion, TRW is
entitled to redeem the registered debt pursuant to its terms.
DEFINITIONS FROM THE INDENTURE
The following are some of the terms defined in the indenture:
"Attributable Debt" means, as to any particular lease under which any
Person is liable at the time and at any date as of which the amount thereof is
to be determined, the lesser of:
(1) the fair value of the property subject to that lease, as
determined by the Board of Directors of TRW; or
(2) the total net amount of rent required to be paid by that
Person under that lease during the remaining term thereof,
discounted from the respective due dates thereof to that date
at the actual interest factor included in that rent. The net
amount of rent required to be paid under any such lease for
any such period shall be the aggregate amount of the rent
payable by the lessee with respect to that period after
excluding amounts required to be paid on account of
maintenance and repairs, insurance, taxes, assessments, water
rates and similar charges.
In the case of any lease which is terminable by the lessee upon the payment of a
penalty, that net amount shall also include the amount of that penalty, but no
rent shall be considered as required to be paid under that lease subsequent to
the first date upon which it may be so terminated.
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"Board of Directors" or "Board," when used with reference to TRW, shall
mean the Board of Directors of TRW, or the Executive Committee of the Board or
any other committee of the Board to the extent that the powers of the Board have
lawfully been delegated.
"Consolidated Funded Debt" means the Funded Debt of TRW and its
Consolidated Subsidiaries consolidated in accordance with generally accepted
accounting principles.
"Consolidated Net Tangible Assets" means the total of all assets of TRW
and its Consolidated Subsidiaries appearing on a consolidated balance sheet
prepared in accordance with generally accepted accounting principles, including
the equity in and the net amount of advances to other Subsidiaries, after
deducting therefrom, without duplication of deductions, as shown on such balance
sheet, the sum of:
(1) intangible assets, including goodwill, cost of acquired
businesses in excess of recorded net assets at acquisition
dates, patents, licenses, trademarks, trade names, copyrights,
unamortized debt discount and expense less unamortized debt
premium, and corporate organization expense, but excluding
deferred charges and prepaid expense;
(2) any write-up of the book value of any assets, other than
(a) equity in Subsidiaries which are not Consolidated
Subsidiaries and
(b) as a result of currency revaluations, resulting from
the revaluation thereof subsequent to March 31, 1986;
(3) all liabilities of TRW and its Consolidated Subsidiaries other
than:
(a) Funded Debt;
(b) capital stock;
(c) surplus;
(d) surplus reserves;
(e) reserves for deferred Federal income taxes arising
from accelerated depreciation, investment and other
tax credits; and
(f) similar provisions; and contingency reserves not
allocated for any particular purpose;
(4) reserves for depreciation and amortization and other reserves,
other than the reserves referred to in the preceding clause
(3); and
(5) any minority interest in the shares of stock and surplus of
any Consolidated Subsidiary.
"Consolidated Subsidiary" means each Subsidiary other than:
(1) any Subsidiary the accounts of which
(a) are not required by generally accepted accounting
principles to be consolidated with those of TRW for
financial reporting purposes and
(b) were not consolidated with those of TRW in TRW's then
most recent annual report to shareholders and are not
intended by TRW to be consolidated with those of TRW
in its next annual report to shareholders; or
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(2) any Subsidiary the primary business of which consists of
financing the sale or lease of merchandise, equipment or
services by TRW or any Subsidiary or owning, leasing, dealing
in or developing real property, or providing services directly
related thereto, or which is otherwise primarily engaged in
the business of a finance or real estate company.
"Domestic Subsidiary" means each Consolidated Subsidiary other than:
(1) any Consolidated Subsidiary which the Board of Directors
reasonably determines not to be material to the business or
financial condition of TRW;
(2) any Consolidated Subsidiary the major portion of the assets of
which are located, or the major portion of the business of
which is carried on, outside the United States of America, its
territories and possessions;
(3) any Consolidated Subsidiary which, during the 12 most recent
calendar months, or such shorter period as shall have elapsed
since its organization, derived the major portion of its gross
revenues from sources outside the United States of America;
(4) any Consolidated Subsidiary the major portion of the assets of
which consists of securities or obligations, or both, of one
or more corporations, whether or not Consolidated
Subsidiaries, of the types described in the preceding clauses
(2) and (3); and
(5) any Consolidated Subsidiary organized after March 31, 1986,
which TRW intends shall be operated in such manner as to come
within one or more of the preceding clauses (2), (3) and (4).
"Exempted Indebtedness" means, as of any particular time, the sum of:
(1) the aggregate principal amount of all then outstanding
indebtedness for borrowed money of TRW and its Domestic
Subsidiaries incurred after May 1, 1986, and secured by any
mortgage, security interest, pledge or lien other than those
permitted under any of clauses (1) through (5) under the
heading "--Covenants--Limitation on Liens" below; and
(2) all Attributable Debt pursuant to Sale and Leaseback
Transactions incurred by TRW and its Domestic Subsidiaries
after May 1, 1986, at that time outstanding other than that
which is not prohibited by or is permitted pursuant to clause
(1) or (2) under the heading "--Covenants--Limitation on Sale
and Leaseback" below.
"Funded Debt" means all indebtedness for money borrowed having a
maturity
(1) of more than 12 months from the date that indebtedness was
incurred, or
(2) of 12 months or less but by its terms being renewable or
extendable beyond 12 months from the date that indebtedness
was incurred at the option of the borrower.
"Person" means any individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated organization, joint venture,
government or any agency or political subdivision thereof or other entity.
"Principal Property" means any single manufacturing plant, engineering
facility or research facility owned or leased by TRW or a Domestic Subsidiary
other than any such plant or facility or portion thereof which the Board of
Directors reasonably determines not to be of material importance to TRW and its
Subsidiaries taken as a whole.
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"Securities" means any securities authenticated and delivered under the
indenture, including the outstanding debt and the registered debt.
"Subsidiary" means each corporation of which TRW, or TRW and one or
more Subsidiaries, or any one or more Subsidiaries, directly or indirectly owns
securities entitling the holders thereof to elect a majority of the directors,
either at all times or so long as there is no default or contingency which
permits the holders of any other class or classes of securities to vote for the
election of one or more directors. As used in this definition, the term
"corporation" includes comparable types of business organizations
authorized under the laws of foreign countries and the term "directors"
includes the members of the governing bodies of those business organizations.
"Wholly Owned Domestic Subsidiary" means each Domestic Subsidiary all
the outstanding shares of which, other than directors' qualifying shares, shall
at the time be owned by TRW, or by TRW and one or more Wholly Owned Domestic
Subsidiaries, or by one or more Wholly Owned Domestic Subsidiaries.
COVENANTS
TRW is subject to the following covenants under the indenture with
respect to the registered debt.
LIMITATION ON LIENS
So long as any of the registered debt remains outstanding, TRW will
not, and will not cause or permit any Domestic Subsidiary to, directly or
indirectly, create or assume any mortgage, encumbrance, lien, pledge, charge or
security interest of any kind upon or in
(1) any of its interests in any Principal Property, or
(2) any shares of capital stock or indebtedness of any Domestic
Subsidiary,
whether that interest, capital stock or indebtedness is now owned or hereafter
acquired, if that mortgage secures or is intended to secure, directly or
indirectly, the payment of any indebtedness for borrowed money evidenced by
notes, bonds, debentures or other similar evidences of indebtedness ("Debt")
without making effective provision, and TRW in that case will make or cause to
be made effective provision, whereby all of the Securities shall be secured by
that mortgage equally and ratably with any other Debt thereby secured.
This restriction does not apply to:
(1) mortgages on any Principal Property acquired, constructed or
improved by TRW or any Domestic Subsidiary after the date of
the indenture which are created or assumed contemporaneously
with, or within 120 days after, that acquisition or completion
of that construction or improvement to secure or provide for
payment of any part of the purchase price of that Principal
Property or the cost of that construction or improvement
incurred after May 1, 1986, or, in addition to mortgages
contemplated by clauses (2) and (3) below, mortgages on any
such Principal Property existing at the time or placed thereon
at the time of acquisition or leasing thereof by TRW or any
Domestic Subsidiary, or conditional sales agreements or other
title retention agreements with respect to any Principal
Property now owned or leased or hereafter acquired or leased
by TRW or a Domestic Subsidiary;
(2) mortgages on property, which includes shares of capital stock
or indebtedness of a corporation, of a corporation existing
(a) at the time that corporation becomes a Domestic
Subsidiary or is merged or consolidated with TRW or a
Domestic Subsidiary, or
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(b) at the time of a sale, lease or other disposition of
the properties of that corporation, or a division
thereof, or other Person as an entirety or
substantially as an entirety, to TRW or a Domestic
Subsidiary,
provided that no such mortgage shall extend to any other
Principal Property of TRW or any Domestic Subsidiary or to any
shares of capital stock or any indebtedness of any Domestic
Subsidiary;
(3) mortgages created by TRW or a Domestic Subsidiary to secure
indebtedness of TRW or a Domestic Subsidiary to TRW or to a
Wholly Owned Domestic Subsidiary;
(4) mortgages in favor of the United States of America or any
state, territory or possession thereof, or any foreign
country, or any department, agency, instrumentality or
political subdivision of any of such domestic or foreign
jurisdictions, to secure partial, progress, advance or other
payments pursuant to any contract or statute or to secure any
debt incurred for the purpose of financing all or part of the
purchase price of, or the cost of constructing, the property
subject to such mortgages; and
(5) mortgages for the sole purpose of extending, renewing or
replacing, or successively extending, renewing or replacing,
in whole or in part any mortgage existing on May 1, 1986 or
referred to in the foregoing clauses (1) to (4) inclusive or
of any debt secured thereby; provided, however, that the
principal amount of indebtedness secured thereby shall not
exceed the principal amount of indebtedness so secured at the
time of that extension, renewal or replacement, and that
extension, renewal or replacement mortgage will be limited to
all or a part of the property which secured the mortgage so
extended, renewed or replaced, plus improvements on that
property.
Notwithstanding the foregoing provisions, TRW or any Domestic
Subsidiary may, without equally and ratably securing all the Securities of each
series, create or assume mortgages which would otherwise be subject to the
foregoing restrictions if at the time of such creation or assumption, and after
giving effect thereto, Exempted Indebtedness does not exceed 15% of Consolidated
Net Tangible Assets determined as of the date not more than 90 days prior
thereto.
LIMITATION ON SALE AND LEASEBACK
TRW will not, and it will not permit any Domestic Subsidiary to sell,
lease or transfer any Principal Property owned by TRW or a Domestic Subsidiary
as an entirety, or any substantial portion thereof, to anyone other than a
Wholly Owned Domestic Subsidiary, or TRW or a Wholly Owned Domestic Subsidiary
in the case of a Domestic Subsidiary, with the intention of taking back a lease
of that property, a "Sale and Leaseback Transaction," except a lease for a
period of not more than 36 months by the end of which it is intended that the
use of that property by the lessee will be discontinued.
Notwithstanding the foregoing, TRW or any Domestic Subsidiary may sell
any such property and lease it back if the net proceeds of that sale are at
least equal to its fair value, as determined by resolution adopted by the Board
of Directors of TRW, of that property, and:
(1) TRW or such Domestic Subsidiary would be entitled, pursuant to
clauses (1) through (5) of the foregoing Limitation on Liens
covenant, to create Debt secured by a mortgage on the
Principal Property to be leased in an amount equal to the
Attributable Debt with respect to that Sale and Leaseback
Transaction without equally and ratably securing all the
Securities of each series, or
(2) if that sale or transfer does not come within the exception
provided by the preceding clause, the net proceeds of that
sale shall, and in any such case TRW covenants that they will,
within 120 days after that sale, be applied, to the greatest
extent possible, either
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(a) to the redemption of Securities subject to and in
accordance with the provisions of the indenture and
at the then applicable Redemption Price or to the
acquisition and delivery to the trustee for
cancellation of Securities, that acquisition to be at
a price not exceeding the principal amount thereof
plus accrued and unpaid interest and brokerage fees,
or
(b) to the retirement of other Consolidated Funded Debt
of TRW ranking at least on a parity with the
Securities of each series, or in part to one or more
of such alternatives and in part to another;
provided that, in lieu of applying all or any part of that net
proceeds to that redemption, TRW may, within 90 days after
that sale, deliver to the trustee for cancellation, or receive
credit for theretofore delivered and cancelled, Securities
previously authenticated and delivered by the trustee and not
theretofore tendered for mandatory sinking fund purposes or
called for the mandatory sinking fund and with respect to
which credit under this Limitation on Sale and Leaseback
section had not theretofore been received, and an officers'
certificate stating that TRW elects to deliver such Securities
in lieu of redeeming Securities as provided above shall so
deliver Securities to the trustee, or receive credit for
Securities so delivered, the amount of cash which TRW shall be
required to apply to the redemption of securities under this
Limitation on Sale and Leaseback section shall be reduced by
an amount equal to the aggregate principal amount of such
Securities.
Notwithstanding the foregoing provisions, TRW or any Domestic
Subsidiary may enter into Sale and Leaseback Transactions if, at the time of
such entering into, and after giving effect thereto, Exempted Indebtedness does
not exceed 15% of Consolidated Net Tangible Assets determined as of a date not
more than 90 days prior thereto.
LEVERAGED TRANSACTIONS
Other than the restrictions on liens and sale and leaseback
transactions described above, the indenture does not contain and the registered
debt will not contain any covenants or other provisions designed to afford
holders of the registered debt protection in the event of a highly leveraged
transaction involving TRW.
EVENTS OF DEFAULT
The indenture defines an event of default with respect to each series
of registered debt as being any one of the following events, unless it is
inapplicable:
(1) failure of TRW for 60 days to pay interest on any security of
that series;
(2) failure of TRW to pay principal or premium, if any, when due
with respect to any securities of that series of registered
debt;
(3) failure of TRW for 10 days to satisfy any sinking fund
obligation with respect to any securities of that series of
registered debt;
(4) failure of TRW for 75 days after appropriate notice to perform
any other covenant or agreement in the indenture applicable to
that series of registered debt; or
(5) events of bankruptcy, insolvency or reorganization specified
in the indenture.
No event of default with respect to a particular series of securities
necessarily constitutes an event of default with respect to any other series of
securities. In case an event of default shall occur and be continuing with
respect to any series of securities, the trustee or the holders of not less than
25% in aggregate principal amount of the securities of that series then
outstanding may declare the principal of
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that series, or a portion of the principal amount in the case of original issue
discount securities, to be due and payable. Any event of default with respect to
a particular series of registered debt, except in each case a failure to pay
principal, premium, if any, or interest may be waived by the holders of a
majority in aggregate principal amount of the outstanding registered debt of
that series.
The indenture requires TRW to file annually with the trustee a written
statement of certain of our officers as to the existence of defaults in
performance of any covenants contained in the indenture. The trustee may
withhold notice to the holders of the securities of a particular series of any
default, except in payment of principal, premium, if any, or interest with
respect to that series of securities if the trustee determines in good faith
that the withholding of notice is in the interest of the holders of those
securities.
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
The indenture provides that TRW may consolidate with, or sell or convey
all or substantially all of its assets to, or merge into, any other entity, if:
(1) the corporation formed by that consolidation or into which TRW
is merged, or the entity which acquired all or substantially
all of TRW's assets shall be organized and existing under the
laws of the United States of America or any state thereof;
(2) that entity expressly assumes the due and punctual payment of
the principal of, and premium, if any, and interest on the
Securities according to their tenor and the due and punctual
performance and observance of all of the covenants and
conditions of the indenture to be performed, observed or
satisfied by TRW;
(3) immediately after that merger or consolidation, or that sale
or conveyance, no Event of Default shall have occurred or be
continuing; and
(4) that entity shall not immediately thereafter have outstanding
any secured indebtedness not permitted by the covenant
described under "-Covenants--Limitation on Liens," unless that
entity has secured the securities equally and ratably with the
debt secured by the mortgage securing that other indebtedness,
if that entity could not create such other mortgage without
violating that covenant.
DEFEASANCE
The indenture provides that TRW, at its option, either:
(1) will be discharged from any and all obligations with respect
to any series of securities, except for certain obligations to
register the transfer or exchange of the securities, replace
stolen, lost or mutilated securities, maintain paying agencies
and hold moneys for payment in trust, or
(2) need not comply with the restrictive covenants of the
indenture as described under "--Covenants--Limitation on
Liens" and "--Limitation on Sale and Leaseback" with respect
to any series of securities,
upon the deposit with the trustee or, in the case of a discharge of obligations,
91 days after that deposit, in trust, of money or the equivalent in securities
of the government that issued the currency in which the securities are
denominated or government agencies backed by the full faith and credit of that
government, or a combination thereof, which through the payment of interest
thereon and principal thereof in accordance with their terms will provide money
in an amount sufficient to pay all the principal of, and interest on that series
of securities on the dates such payments are due in accordance with the terms of
the securities.
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To exercise any such option, no event of default, or event which with
notice or lapse of time would become an event of default, with respect to such
series of securities shall have occurred and be continuing. TRW is required to
deliver to the trustee an opinion of counsel to the effect that the deposit and
related defeasance would not cause the holders of the securities to recognize
income, gain or loss for United States Federal income tax purposes and, in the
case of a discharge of obligations, accompanied by a ruling to that effect
received from or published by the Internal Revenue Service.
MODIFICATION OF THE INDENTURE
TRW may, without the consent of any holder of any debt securities
issued under the indenture, enter into one or more supplemental indentures to,
among other things,
- cure any ambiguity,
- correct or supplement any provision that may be defective or
inconsistent with any other provision, or
- make such other provisions under the indenture as shall not
adversely affect the interests of the holders of the debt securities
issued under the indenture.
In addition, the rights and obligations of TRW and the rights of the
holders of the registered debt may be modified by TRW with the consent of the
holders of not less than 66 2/3% in aggregate principal amount of the
outstanding registered debt of each series to be affected. However, TRW may not,
without the consent of the holders of all outstanding registered debt to be
affected make modifications that would, among other things:
- change the maturity of any series of registered debt;
- reduce the principal amount of any registered debt security;
- reduce the rate or extend the time of payment of interest on any
series of registered debt; or
- reduce the percentage of outstanding debt securities of each series
where consent is required to modify or alter the indenture.
A supplemental indenture which changes or eliminates any covenant or other
provision of the indenture which has expressly been included solely for the
benefit of one or more particular series of registered debt, or which modifies
the rights of the holders of registered debt of that series with respect to that
covenant or other provision, shall be deemed not to affect the rights under the
indenture of the holders of registered debt of any other series.
THE TRUSTEE
The Chase Manhattan Bank is the successor trustee to Mellon Bank, N.A.
under the indenture. The trustee is a depository for funds and performs other
services for, and transacts other banking business with, TRW in the normal
course of business. The trustee is also acting as exchange agent for the
exchange offer.
The holders of a majority in aggregate principal amount of the then
outstanding securities will have the right, subject to limitations, to direct
the time, method and place of conducting any proceeding for any remedy available
to the trustee or exercising any trust or power conferred on the trustee.
If an event of default occurs and is not cured or waived, the trustee
will be required to exercise such of its rights and powers under the indenture
and to use the degree of care and skill in their exercise that a prudent man
would exercise or use in the conduct of his own affairs. Subject to this
requirement, the trustee will be under no obligation to exercise any of its
rights or powers under the indenture at the
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request of any of the holders of the securities of any series, unless they shall
have offered to the trustee reasonable security or indemnity.
GOVERNING LAW
The indenture is governed by and construed in accordance with the laws
of the State of New York.
REGISTRATION RIGHTS
TRW entered into separate registration rights agreements with the
initial purchasers in the two offerings in which the outstanding debt was issued
for the benefit of the holders of the outstanding debt issued in each of those
offerings.
In the registration rights agreements, TRW agreed, for the benefit of
the holders of the outstanding debt,
(1) to file with the SEC a registration statement, of which this
prospectus forms a part, with respect to the registered debt,
and
(2) to use its reasonable best efforts to cause that exchange
offer registration statement to be declared effective under
the Securities Act within 180 calendar days after June 2,
1999, with respect to the 6 1/2% Notes due 2002, 6 5/8% Notes
Due 2004, 7 1/8% Notes Due 2009 and 7 3/4 Debentures Due 2029,
or June 23, 1999 with respect to the 6.45% Notes due 2001.
If
(1) because of any change in law or in currently prevailing
interpretations of the SEC's staff, TRW is not permitted to
effect the exchange offer,
(2) the exchange offer is not completed by December 29, 1999 with
respect to the 6 1/2% Notes Due 2002, 6 5/8% Notes Due 2004, 7
1/8% Notes Due 2009 and 7 3/4% Debentures Due 2029, or January
19, 2000 with respect to the Notes due 2001, or
(3) at the time of the completion of the exchange offer, any of
the initial purchasers shall not have sold to investors who
are not affiliates of that initial purchaser all of the
outstanding debt initially purchased from TRW, and that
initial purchaser requests that TRW file a shelf registration
statement,
then TRW will
(a) file a shelf registration statement to cover resales of the
applicable outstanding debt by holders who satisfy the
conditions relating to the provision of information in
connection with the shelf registration statement, as described
in the registration rights agreement
(b) use its reasonable best efforts to cause the shelf
registration statement to be declared effective under the
Securities Act and
(c) use its reasonable best efforts to keep effective the shelf
registration statement until the earlier of two years after
June 2, 1999, with respect to the 6 1/2% Notes due 2002, 6
5/8% Notes Due 2004, 7 1/8% Notes Due 2009 and 7 3/4%
Debentures Due 2029, or June 23, 1999, with respect to the
6.45% Notes due 2001, unless Rule 144(k) is amended to provide
a shorter restrictive period, or such time as all of the
outstanding debt or registered debt covered by the
registration statement, as applicable, has been sold under
that registration statement.
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TRW will, in the event that a shelf registration statement is filed,
provide to each applicable holder copies of the prospectus that is a part of the
shelf registration statement, notify each of those holders when the shelf
registration statement for the outstanding debt has become effective and take
other actions as are required by the registration rights agreement to permit
unrestricted resales of the outstanding debt. A holder that sells outstanding
debt or registered debt, as applicable, pursuant to the shelf registration
statement will be required to be named as a selling security holder in the
related prospectus and to deliver a current prospectus to purchasers, will be
subject to applicable civil liability provisions under the Securities Act in
connection with those sales and will be bound by the provisions of the
registration rights agreement that are applicable to that holder, including
indemnification rights and obligations.
If
(1) the exchange offer is not completed prior to the earlier of
(a) 45 days after effective date of this registration
statement and
(b) (i) December 29, 1999, with respect to the Notes
Due 2002, the Notes Due 2004, the Notes Due
2009 and the Debentures Due 2029, and
(ii) January 19, 2000 with respect to the Notes
due 2001, or,
(2) if applicable, a shelf registration statement providing for
resales of the outstanding debt has been declared effective
but that shelf registration statement ceases to be effective
at any time prior to the earlier of
(a) the expiration of the holding period referred to in
Rule 144(k) and
(b) the sale of all the outstanding debt pursuant to the
shelf registration statement,
TRW will be obligated to pay additional interest on the outstanding debt at a
rate of .25% per year commencing on the day after the date on which TRW was
obligated to complete the exchange offer, in the case of (1) above or the day
the shelf registration statement ceases to be effective, in the case of (2)
above. The aggregate amount of additional interest payable pursuant to the above
provision will in no event exceed .25% per year. Upon the completion of the
exchange offer or the effectiveness of the applicable shelf registration
statement, as the case may be, additional interest will cease to accrue.
Outstanding debt not tendered in the exchange offer will bear interest at the
same rates in effect at the time of issuance of the outstanding debt.
In the event that TRW declares the prospectus included in a shelf
registration statement unusable in accordance with the registration rights
agreements, TRW will notify each holder of outstanding debt covered by that
shelf registration statement to suspend use of the prospectus included in that
registration statement. TRW may give that notice only twice during any 365 day
period. If the aggregate number of days in any consecutive 365 day period for
which all notices to suspend use of a prospectus are issued and effective
exceeds 60 days, additional interest on the outstanding debt covered by that
registration statement will begin to accrue on the 61st day in an amount equal
to .25% per year and will stop accruing when TRW declares that the shelf
registration statement is usable.
For each series of outstanding debt other than the Notes due 2001, any
additional interest due pursuant to the foregoing paragraph will be payable in
cash on June 1 and December 1 of each year to the holders of record on the
preceding May 15 and November 15, respectively. For the Notes due 2001, any
additional interest due pursuant to the foregoing paragraph will be payable in
cash on June 15 and December 15 of each year to the holders of record on the
preceding May 31 and November 30, respectively.
The registration rights agreements are governed by, and construed in
accordance with, the laws of the State of New York. This summary describes the
material provisions of the registration rights agreements, but does not restate
the registration rights agreements in their entirety. The registration
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rights agreements, and not this summary, defines your rights under those
agreements. In addition, the information set forth above concerning the
interpretations of and positions taken by the SEC's staff is not intended to
constitute legal advice, and holders of outstanding debt should consult their
own legal advisors with respect to those matters.
BOOK-ENTRY; DELIVERY AND FORM
GENERAL
The outstanding debt is, and the registered debt will initially be,
represented by one or more global securities in fully registered form.
The global securities will be deposited with, or on behalf of, DTC and
registered in the name of its nominee, Cede & Co. Beneficial interests in the
global securities will be shown on, and transfers thereof will be effected only
through, records maintained in book-entry form by DTC, with respect to its
participants, and those participants. DTC's participants include Cedel Bank,
societe anonyme, or Morgan Guaranty Trust Company of New York, Brussels Office,
as operator of the Euroclear Clearance System, as participants in DTC.
All interests in the global securities, including those held through
Euroclear or Cedel, may be subject to the procedures and requirements of DTC.
Those interests held through Euroclear and Cedel may also be subject to the
procedures and requirements of those systems.
DESCRIPTION OF BOOK-ENTRY SYSTEM
Ownership of interests in the global securities will be limited to
persons who have accounts with DTC, including Euroclear and Cedel, or with
Euroclear or Cedel, or persons who have accounts through participants,
"indirect participants," in DTC, Euroclear or Cedel. Ownership of beneficial
interests in the global securities will be shown on, and the transfer of that
ownership will be effected only through, records maintained by DTC with respect
to interests of participants, and the records of participants with respect to
interests of indirect participants.
The laws of some countries and some states in the United States may
require that some types of purchasers of any securities take physical delivery
of those securities in definitive form. Those limits and those laws may impair
the ability to own, transfer or pledge the book-entry interests in the global
securities.
So long as DTC or its nominee is the holder of the global securities,
DTC or its nominee, as the case may be, will be considered the sole holder of
the global securities for all purposes under the indenture and the securities.
Except as described under "--Definitive Registered Securities" below,
participants or indirect participants will not be entitled to have the
securities registered in their names, will not receive or be entitled to receive
physical delivery of securities in definitive form and will not be considered
the owners or holders thereof under the indenture. Accordingly, each direct or
indirect participant must rely on the procedures of the DTC and, if that person
is an indirect participant in DTC, on the procedures of the participant in DTC,
including Euroclear or Cedel, through which that person owns its interest, to
exercise any rights and remedies of a holder under the indenture.
DEFINITIVE REGISTERED SECURITIES
Owners of book-entry interests in the global securities will receive
definitive registered securities if:
(1) DTC
(a) notifies TRW that it is unwilling or unable to
continue to act as a depository for the global
securities and we fail to appoint a successor
depository, or
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(b) is no longer eligible or in good standing to act as a
clearing agency under the Exchange Act, and TRW does
not appoint a successor depository within 90 days; or
(2) TRW determines that the global securities for any series of
securities, in whole but not in part, should be exchanged for
definitive registered securities.
In addition to the foregoing, during the continuance of an Event of
Default, holders of book-entry interests will be entitled to request and receive
definitive registered securities. Definitive registered securities will be
issued to and registered in the name of, or as directed by, that person only
upon the request in writing made through a DTC participant.
Any definitive registered securities will be issued in fully registered
form in denominations of $1,000 principal amount and integral multiples thereof.
To the extent permitted by law, TRW, the trustee and any paying agent shall be
entitled to treat the person in whose name any definitive registered security is
registered as the absolute owner thereof. While any global security is
outstanding, holders of definitive registered securities may exchange their
definitive registered securities for a corresponding book-entry interest in that
global security by surrendering their definitive registered securities to the
trustee and providing the certificates and opinions required by the indenture.
The trustee will make the appropriate adjustments to the global security
underlying that book-entry interest to reflect any issue or surrender of
definitive registered securities.
The indenture contains provisions relating to the maintenance by a
registrar of registers reflecting ownership of definitive registered securities,
if any, and other provisions customary for a debt security listed on the
register maintained by the registrar. Payment of principal and interest on each
definitive registered security will be made to the holder appearing on the
applicable register at the close of business on the record date at his address
shown on the applicable register on the record date.
ADDITIONAL PAYING AND TRANSFER AGENT
If definitive registered securities are issued, other than for the
Exchange Notes due 2001, TRW will appoint Bankers Trust Luxembourg, or such
other person located in Luxembourg and reasonably acceptable to the trustee, as
an additional paying and transfer agent. Upon the issuance of definitive
registered securities, other than for the Exchange Notes due 2001, holders will
be able to transfer and exchange definitive registered securities at the
Luxembourg office of the paying and transfer agent, provided that all transfers
and exchanges must be effected in accordance with the terms of the indenture
and, among other things, be recorded in the register maintained by the
registrar. Transfer and/or exchange of the definitive registered securities may
be made at the office of the paying and transfer agent in Luxembourg upon
presentation of the definitive registered security. When the new definitive
registered security is issued it will be available at the same transfer and
paying agent in Luxembourg. TRW may terminate the appointment of a transfer
agent at any time and appoint additional or other transfer agents. Notice of
termination, appointment or any change in the specified office of any transfer
agent will be published in accordance with the indenture and, so long as any of
the outstanding debt or registered debt is listed on the Luxembourg Stock
Exchange and the rules of that stock exchange require, in a newspaper having a
general circulation in Luxembourg, which is expected to be the Luxemburger Wort.
PAYMENTS ON THE SECURITIES
Payments of any amounts owing in respect of the global securities will
be made through one or more paying agents appointed under the indenture to DTC
as the holder of the global securities. Initially, the paying agent for the
securities will be The Chase Manhattan Bank, as trustee.
TRW expects that DTC or its nominee, upon receipt of any payment made
in respect of the global securities, will credit its participants' accounts with
those payments in amounts proportionate to their
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respective interest in the principal amount of the global security as shown on
the records of DTC or its nominee. Payments by participants to owners of
interests held through those participants will be governed by standing customer
instructions and customary practices of the participants. Payments on interest
held through Euroclear or Cedel will be credited to the cash accounts of
Euroclear participants or Cedel participants in accordance with the relevant
system's rules and procedures.
None of TRW or any paying agent, will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of book-entry interests or for maintaining, supervising or reviewing all records
relating to the book-entry interests or beneficial ownership interests.
INFORMATION CONCERNING DTC, EUROCLEAR AND CEDEL
DTC, Euroclear and Cedel, as the case may be, have advised TRW that:
DTC is a limited purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
was created to hold securities of its participants and to facilitate the
clearance and settlement of transactions among its participants in those
securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. DTC participants include securities brokers and dealers, including
the initial purchasers, banks, trust companies, clearing corporations and other
organizations, some of whom, and/or their representatives, own DTC. Access
to the DTC book-entry system is also available to indirect participants, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
Euroclear and Cedel hold securities for participating organizations and
facilitate the clearance and settlement of securities transactions between their
respective participants through electronic book-entry changes in accounts of
those participants. Euroclear and Cedel provide to their participants, among
other things, services for safekeeping, administration, clearance and settlement
of internationally traded securities and securities lending and borrowing.
Euroclear and Cedel interface with domestic securities markets. Euroclear and
Cedel participants are financial institutions such as underwriters, securities
brokers and dealers, banks, trust companies and other organizations. Indirect
access to Euroclear or Cedel is also available to others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodian
relationship with a Euroclear or Cedel participant, either directly or
indirectly.
Subject to compliance with the transfer restrictions applicable to the
securities, cross-market transfers between the participants in DTC, on the one
hand, and Euroclear or Cedel participants, on the other hand, will be effected
through DTC in accordance with DTC's rules on behalf of Euroclear or Cedel, as
the case may be, by its respective depositary; however, cross-market
transactions will require delivery of instructions to Euroclear or Cedel, as the
case may be, by the counterparty in that system in accordance with the rules and
procedures and within the established deadlines, Brussels time, of that system.
Euroclear or Cedel, as the case may be, will, if the transaction meets its
settlement requirements, deliver instructions to its respective depositary to
take action to effect final settlement on its behalf by delivering or receiving
interests in the relevant global securities in DTC, and making or receiving
payment in accordance with normal procedures for same-day funds settlement
applicable to DTC. Euroclear participants and Cedel participants may not deliver
instructions directly to the depositaries for Euroclear or Cedel.
Because of time zone differences, the securities account of a Euroclear
or Cedel participant purchasing an interest in a global security from a
participant in DTC will be credited, and that crediting will be reported to the
relevant Euroclear or Cedel participant, during the securities settlement
processing day, which must be a business day for Euroclear and Cedel,
immediately following the settlement date of DTC. Cash received in Euroclear or
Cedel as a result of sales of interests in a global security by or through a
Euroclear or Cedel participant to a participant in DTC will be received with
value on the settlement date of DTC but will be available in the relevant
Euroclear or Cedel cash account only as of the business day for Euroclear or
Cedel following DTC's settlement date.
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Although DTC, Euroclear and Cedel have agreed to the foregoing
procedures to facilitate transfers of interests in the global securities among
participants in DTC, Euroclear and Cedel, they are under no obligation to
perform or to continue to perform those procedures, and those procedures may be
discontinued at any time. Neither TRW nor the trustee will have any
responsibility for the performance by DTC, Euroclear or Cedel or their
respective participants or indirect participants of their respective obligations
under the rules and procedures governing their operations.
YEAR 2000
DTC management is aware that some computer applications, systems, and
the like for processing data that are dependent upon calendar dates, including
dates before, on and after January 1, 2000, may encounter "year 2000 problems."
DTC has informed its participants and other members of the financial community
that it has developed and is implementing a program so that its Systems, as they
relate to the timely payment of distributions, including principal and income
payments, to securityholders, book-entry deliveries, and settlement of trades
within DTC, continue to function appropriately. This program includes a
technical assessment and a remediation plan, each of which is complete.
Additionally, DTC's plan includes a testing phase, which is expected to be
completed within appropriate time frames.
However, DTC's ability to perform properly its services is also
dependent upon other parties, including but not limited to issuers and their
agents, as well as third party vendors from whom DTC licenses software and
hardware, and third party vendors on whom DTC relies for information or the
provision of services, including telecommunication and electrical utility
service providers, among others. DTC has informed its participants and other
members of the financial community that it is contacting and will continue to
contact third party vendors from whom DTC acquires services to:
(1) impress upon them the importance of those services being year
2000 compliant; and
(2) determine the extent of their efforts for year 2000
remediation, and, as appropriate, testing, of their services.
In addition, DTC is in the process of developing the contingency plans it deems
appropriate.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes the material United States Federal
income and estate tax consequences of an exchange of the outstanding debt for
registered debt and the ownership and disposition of the registered debt. This
discussion is limited in the following ways:
- The discussion only covers holders of registered debt that bought
the outstanding debt for cash in the initial offering.
- The discussion only covers holders that hold the outstanding debt
and will hold the registered debt as capital assets, that is, for
investment purposes, and that do not have a special tax status.
- The discussion covers the general tax consequences to holders of
the registered debt. It does not cover tax consequences that
depend upon a holder's individual tax circumstances.
- The discussion is based on current law. Changes in the law may
change the tax treatment of the registered debt on a prospective
or retroactive basis.
- The discussion does not cover state, local or foreign law.
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<PAGE> 58
- The discussion does not apply to holders owning 10% or more of
the voting stock of TRW, or corporate holders that are controlled
foreign corporations with respect to TRW.
YOU SHOULD CONSULT YOUR OWN TAX ADVISOR ABOUT THE TAX CONSEQUENCES OF
THE EXCHANGE OF THE OUTSTANDING DEBT FOR REGISTERED DEBT AND THE OWNERSHIP AND
DISPOSITION OF THE REGISTERED DEBT IN YOUR SITUATION.
INCOME TAX EFFECTS OF THE EXCHANGE OFFER
Your exchange of outstanding debt for registered debt will not be a
taxable event for you, and you will not recognize any taxable gain or loss as a
result of this exchange. Accordingly, you would have the same adjusted basis and
holding period in the registered debt as you had in the outstanding debt
immediately before the exchange. Further, the tax consequences of ownership and
disposition of any registered debt by you will be the same as the tax
consequences of ownership and disposition of outstanding debt.
GENERAL
As used in this prospectus, the term "United States Holder" means a
holder of registered debt that is, for United States Federal income tax
purposes,
- a citizen or resident of the United States;
- a corporation or other entity taxable as a corporation created or
organized under United States federal or state law; or
- an estate or trust whose world-wide income is subject to United
States Federal income tax.
If a partnership holds registered debt, the tax treatment of a partner
will generally depend upon the status of the partner and upon the activities of
the partnership. Partners of partnerships holding registered debt should consult
their tax advisors.
TAX CONSEQUENCES TO UNITED STATES HOLDERS
INTEREST
- If you are a cash method taxpayer, you must report the interest
in your income when you receive it.
- If you are an accrual method taxpayer, you must report the
interest in your income as it accrues.
SALE, REDEMPTION OR DISPOSITION OF SECURITIES
On a sale, redemption, retirement at maturity or other disposition of
registered debt:
- You will have taxable gain or loss equal to the difference
between the tax basis of registered debt and the amount received
on the sale, exchange, redemption, retirement at maturity or other
disposition.
- Any gain or loss will generally be capital gain or loss, and will
be long term capital gain or loss if the registered debt was held
for more than one year.
- If you sell the registered debt between interest payment dates, a
portion of the amount you receive will reflect interest that has
accrued on the registered debt but has not yet been paid by the
sale date. That amount is treated as ordinary interest income and
not as sale proceeds.
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INFORMATION REPORTING AND BACKUP WITHHOLDING
Under the tax rules concerning information reporting to the Internal
Revenue Service:
- Assuming you hold your registered debt through a broker or other
securities intermediary, the intermediary is required to provide
information to the IRS concerning interest and redemption proceeds
we pay on registered debt you own, unless an exemption applies.
- Similarly, unless an exemption applies, you are required to
provide the intermediary with a correct Taxpayer Identification
Number for its use in reporting information to the IRS. If you are
an individual, this is your social security number. You are also
required to comply with other IRS requirements concerning
information reporting.
- If you are subject to these requirements but do not comply, the
intermediary is required to withhold 31% of all amounts payable to
you on the registered debt, including principal payments. If it
does withhold payments, you may use the withheld amount as a
credit against your United States Federal income tax liability.
- All United States Holders that are individuals are subject to
these requirements. Certain United States Holders, including all
corporations, tax exempt organizations and individual retirement
accounts, are exempt from these requirements.
TAX CONSEQUENCES TO FOREIGN HOLDERS
As used in this prospectus, the term Foreign Holder means a holder of
registered debt that is, for United States Federal income tax purposes:
- a non-resident alien individual;
- a foreign corporation; or
- an estate or trust that is not a United States Holder.
WITHHOLDING TAXES
If you are a Foreign Holder, payments of principal and interest on the
registered debt generally will not be subject to United States withholding
taxes. However, in order for the exemption from withholding taxes to apply, you
must meet the following requirements:
- As the beneficial owner of registered debt, you must provide a
statement to the effect that you are not a United States Holder.
This statement is generally made on Internal Revenue Service Form
W-8.
You should consult your own tax advisor about the specific method
to satisfy this requirement. The procedures for satisfying this
requirement will change on January 1, 2001.
- You must not be a bank that is making a loan in the ordinary
course of its business.
Foreign Holders that do not qualify for exemption from withholding generally
will be subject to United States withholding tax at a rate of 30%, or lower, if
a treaty applies.
SALE OR REDEMPTION OF REGISTERED DEBT
If you sell registered debt or if it is redeemed, you will not be
subject to United States Federal income tax on any gain unless either of the
following applies:
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<PAGE> 60
- The gain is connected with a trade or business that you conduct
in the United States.
- You are an individual and are present in the United States for at
least 183 days during the year in which you dispose of the
registered debt, and other applicable conditions are satisfied.
UNITED STATES TRADE OR BUSINESS
If you hold registered debt in connection with a trade or business that
you are conducting in the United States:
- Any interest on the registered debt, and any gain from disposing
of the registered debt, generally will be subject to income tax as
if you were a United States Holder.
- Any interest and gain will be exempt from United States
withholding tax as discussed above as long as you submit to us a
proper form, generally Internal Revenue Service Form 4224, that
includes the required information. You should consult your own tax
advisor about how to satisfy this requirement. The procedures
for satisfying this requirement will change on January 1, 2001.
- If you are a corporation, you may be subject to a branch profits
tax on your earnings that are connected with your United States
trade or business, including earnings from the registered debt.
This tax is 30%, but may be reduced or eliminated by an applicable
income tax treaty.
ESTATE TAXES
If you are an individual Foreign Holder, the registered debt will not
be subject to United States estate tax when you die. However, this rule only
applies if, at the time of your death, payments on the registered debt would not
have been connected to a trade or business that you were conducting in the
United States.
INFORMATION REPORTING AND BACKUP WITHHOLDING
United States rules concerning information reporting and backup
withholding are described above. Under these rules:
- Principal and interest payments received by you automatically
will be exempt from the usual information reporting and backup
withholding rules if you provide the tax certifications needed to
avoid withholding tax on interest, as described above, unless the
recipient of the applicable form knows that the form is false.
However, interest payments made to you will be reported to the IRS
on Form 1042-S.
- Sale proceeds you receive on a sale of your registered debt
through a broker may be subject to these rules if you are not
eligible for an exemption. In particular, information reporting
and backup withholding may apply if you use the United States
office of a broker, and information reporting, but not backup
withholding, may apply if you use the foreign office of a broker
if the broker has the types of connections to the United States
that would require information reporting. You should consult your
tax advisor concerning information reporting and backup
withholding on a sale.
PLAN OF DISTRIBUTION
Based on existing interpretations of the Securities Act by the SEC's
staff as set forth in several no-action letters to third parties, and subject to
the immediately following sentence, TRW believes that the registered debt issued
in the exchange offer may be offered for resale, resold and otherwise
transferred by
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the holders thereof, other than holders who are broker-dealers, without further
compliance with the registration and prospectus delivery provisions of the
Securities Act. However, any purchaser of outstanding debt who is an affiliate
of TRW or who intends to participate in the exchange offer for the purpose of
distributing the registered debt, or any broker-dealer who purchased the
outstanding debt from TRW to resell pursuant to Rule 144A or any other available
exemption under the Securities Act,
- will not be able to rely on the interpretations of the SEC's staff
set forth in the above-mentioned no-action letters,
- will not be entitled to tender its outstanding debt in the
exchange offer, and
- must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale or
transfer of the outstanding debt,
unless the sale or transfer is made pursuant to an exemption from those
requirements. TRW does not intend to seek its own no-action letter, and there
can be no assurance that the SEC's staff would make a no-action letters to
third parties.
Each holder of the outstanding debt who wishes to exchange the
outstanding debt for registered debt in the exchange offer is required to
represent that:
- it is not an affiliate of TRW;
- the registered debt to be received by it is being acquired in the
ordinary course of its business;
- at the time of the exchange offer, it has no arrangement or
understanding with any person to participate in a "distribution,"
within the meaning of the Securities Act, of the registered debt;
and
- if the holder is not a broker-dealer, it is not engaged in, and
does not intend to engage in, a "distribution," within the meaning
of the Securities Act, of the registered debt.
Each broker-dealer that receives registered debt for its own account in
exchange for outstanding debt acquired as a result of market-making or other
trading activities must acknowledge that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of that
registered debt. For a period of 90 days after the expiration date of the
exchange offer, this prospectus, as it may be amended or supplemented from time
to time, may be used by a broker-dealer in connection with resales of that
registered debt. During that 90-day period, we have agreed that we will make
this prospectus available to any broker-dealer for use in connection with those
resales, provided that the broker-dealer indicates in the letter of transmittal
that it is a broker-dealer. Each broker-dealer agrees that it will suspend use
of this prospectus upon notice from TRW of the occurrence of an event which
makes any statement in this prospectus untrue in any material respect or which
requires the making of any changes in this prospectus in order to make the
statements in this prospectus not misleading until TRW has amended or
supplemented the prospectus so that it does not contain any untrue statements or
omissions of material facts. If TRW gives that notice to broker-dealers, TRW
will extend the 90-day period referred to above by the number of days during the
period from and including the date TRW gives the notice to and including the
date when broker-dealers will receive copies of the supplement or amended
prospectus.
We will not receive any proceeds from any sale of registered debt by
broker-dealers. Registered debt received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the registered debt or a combination of those methods
of resale, at market prices prevailing at the time of resale, at prices related
to prevailing market prices or negotiated prices. Those resales may be made
directly to purchasers or to or through broker-dealers who may receive
compensation
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in the form of commissions or concessions from any such broker-dealer and/or the
purchasers of the registered debt. Any broker-dealer that resells registered
debt that was received by it for its own account pursuant to the exchange offer
and any person that participates in the distribution of that registered debt may
be deemed to be an "underwriter" within the meaning of the Securities Act and
any profit on any resale of registered debt and any commissions or concessions
received by those persons may be deemed to be underwriting compensation under
the Securities Act. The letter of transmittal states that a broker-dealer, by
acknowledging that it will deliver and by delivering a prospectus, will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
TRW will indemnify the holders of the outstanding debt, including any
broker-dealers, against certain liabilities, including liabilities under the
Securities Act.
VALIDITY OF SECURITIES
William B. Lawrence, Executive Vice President, General Counsel and
Secretary of TRW, will issue an opinion about the validity of the registered
debt.
EXPERTS
Ernst & Young LLP, independent auditors, have audited TRW's
consolidated financial statements included in TRW's Annual Report on Form 10-K
for the year ended December 31, 1998, as set forth in their report, which is
incorporated by reference in this prospectus. TRW's consolidated financial
statements are incorporated into this prospectus by reference in reliance on
Ernst & Young LLP's report, given upon their authority as experts in accounting
and auditing.
The consolidated financial statements of LucasVarity as of January 31,
1999 and 1998, and for each of the years in the two-year period ended January
31, 1999, have been incorporated by reference into this prospectus in reliance
upon the report of KPMG Audit Plc, independent auditors, upon the authority of
said firm as experts in accounting and auditing.
The consolidated financial statements of LucasVarity for the six month
period ended January 31, 1997 have been incorporated by reference into this
prospectus in reliance upon the joint report of KPMG Audit Plc and Ernst &
Young, independent auditors, upon the authority of such firms as experts in
accounting and auditing.
Ernst & Young, independent auditors, have audited LucasVarity's
consolidated financial statements for the year ended July 31, 1996 appearing in
TRW's Current Report (Form 8-K/A) dated May 17, 1999, as set forth in their
report which is incorporated by reference in this prospectus. Those consolidated
financial statements are incorporated into this prospectus by reference in
reliance on Ernst & Young's report, given upon their authority as experts in
accounting and auditing.
INDEPENDENT APPRAISAL
Certain LucasVarity assets were appraised by American Appraisal
Associates, Inc. These assets included inventories, fixed assets, identifiable
intangibles and in-process research and development projects and have been
included in TRW's unaudited consolidated balance sheet based on their
preliminary appraised values.
LISTING AND GENERAL INFORMATION
Except for the Notes due 2001, the outstanding debt is listed on the
Luxembourg
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Stock Exchange. We have applied to list the registered debt, except for the
Exchange Notes due 2001, on the Luxembourg Stock Exchange in accordance with the
rules and regulations of that exchange. Our Articles of Incorporation and
Regulations, and a legal notice, Notice Legale, relating to the issuance of the
outstanding debt was deposited with the Chief Registrar of the District Court of
Luxembourg, Greffier en Chef du Tribunal d'Arrondissement de et a Luxembourg,
where you may examine these documents and obtain copies upon request.
All notices relating to the exchange offer will be published in
accordance with the notice provisions of the indenture. So long as any of the
outstanding debt is listed on the Luxembourg Stock Exchange and the rules of
that stock exchange require, prior to the commencement of the exchange offer,
notice of the exchange offer will be given to the Luxembourg Stock Exchange and
will be published in a newspaper having a general circulation in Luxembourg,
which is expected to be the Luxemburger Wort. That notice will, among other
things, provide details of the conditions to the exchange offer and the
commencement and expected completion dates of the exchange offer. So long as any
of the outstanding debt is listed on the Luxembourg Stock Exchange and the rules
of that stock exchange require, notice of the results of the exchange offer will
be given to the Luxembourg Stock Exchange and will be published in a newspaper
having a general circulation in Luxembourg, which is expected to be the
Luxemburger Wort, in each case, as promptly as practicable following the
completion of the exchange offer. Similar notice will also be provided in
connection with the payment of additional interest and the declaration of the
effective date of interest rates.
All documents prepared in connection with the exchange offer will be
available at the office of the special agent in Luxembourg and all necessary
actions and services in respect of the exchange offer may be done at the office
of the special agent in Luxembourg. The special agent appointed for these
purposes is Bankers Trust Luxembourg, 14, Boulevard F.D. Roosevelt, L-2450
Luxembourg.
Copies of the indenture, our Articles of Incorporation and our annual,
quarterly and current reports will be available for inspection at the office of
Bankers Trust Luxembourg in Luxembourg as long as any of the Notes Due 2002,
Exchange Notes Due 2002, Notes Due 2004, Exchange Notes Due 2004, Notes Due
2009, Exchange Notes Due 2009, Debentures Due 2029 or Exchange Debentures Due
2029 are outstanding. Our annual reports will contain audited consolidated
financial statements, and our quarterly reports will contain unaudited
consolidated financial statements. Bankers Trust Luxembourg will act as
intermediary between us and holders of the listed securities. In addition, you
may obtain free copies of these reports at Bankers Trust Luxembourg's office at
the above address.
The registered debt, other than the Exchange Notes due 2001, have been
accepted for clearance through Euroclear and Cedel. The CUSIP numbers, the
International Security Identification Number, or ISIN, and the Euroclear common
code number assigned to each series of the listed registered debt is as follows:
<TABLE>
<CAPTION>
EXCHANGE EXCHANGE EXCHANGE EXCHANGE
NOTES NOTES NOTES DEBENTURES
DUE 2002 DUE 2004 DUE 2009 DUE 2029
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CUSIP number 872649 BE 7 872649 BF 4 872649 BG 2 872649 BH 0
ISIN US82649BE77 US872649BF43 US872649BG26 US872649BH09
Common Code 010236070 010236126 010236142 010236169
</TABLE>
The CUSIP number for the Exchange Notes due 2001 issued in the exchange
offer is 872649 BD 9. The ISIN for the Exchange Notes due 2001 issued in the
exchange offer is US872649BD94.
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TRW Inc.
Exchange Offer for
$425,000,000 6.45% Notes due 2001
$400,000,000 6 1/2% Notes Due 2002
$700,000,000 6 5/8% Notes Due 2004
$750,000,000 7 1/8% Notes Due 2009
$550,000,000 7 3/4% Debentures due 2029
----------------
PROSPECTUS
----------------
___________, 1999
Until _______________, all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
<PAGE> 65
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Generally, a director of an Ohio corporation will not be found to have
violated his fiduciary duties unless there is proof by clear and convincing
evidence that the director has not acted in good faith, in a manner he
reasonably believes to be in or not opposed to the best interests of the
corporation, or with the care that an ordinarily prudent person in a like
position would use under similar circumstances. In general, a director is liable
for monetary damages for any action or omission as a director only if it is
proved by clear and convincing evidence that such act or omission was undertaken
either with deliberate intent to cause injury to the corporation or with
reckless disregard for the best interests of the corporation.
Under Ohio law, a corporation must indemnify its directors, as well as
its officers, employees and agents, against expenses where any such person is
successful on the merits or otherwise in defense of an action, suit or
proceeding. A corporation may indemnify such persons in actions, suits and
proceedings (including derivative suits) if the individual has acted in good
faith and in a manner that he believes to be in or not opposed to the best
interests of the corporation. In the case of a criminal proceeding, the
individual must also have no reasonable cause to believe that his conduct was
unlawful. Indemnification may be made only if ordered by a court or if
authorized in a specific case upon a determination that the applicable standard
of conduct has been met. Such a determination may be made by a majority of
disinterested directors, by independent legal counsel or by the shareholders. In
order to obtain reimbursement for expenses in advance of the final disposition
of any action, the individual must provide an undertaking to repay the amount if
it is ultimately determined that he is not entitled to be indemnified.
In general, Ohio law requires that all expenses, including attorneys
fees, incurred by a director in defending any action, suit or proceeding be paid
by the corporation as they are incurred in advance of final disposition if the
director agrees to repay such amounts if it is proved by clear and convincing
evidence that his action or omission was undertaken with deliberate intent to
cause injury to the corporation or with reckless disregard for the best
interests of the corporation and if the director reasonably cooperates with the
corporation concerning the action, suit or proceeding. TRW's Regulations provide
for indemnification that is coextensive with that permitted under Ohio law.
In addition, TRW maintains insurance indemnifying Directors and
officers in certain cases and with certain deductible limitations. Reference is
also made to the forms of Registration Rights Agreements incorporated herein by
reference as Exhibits 4(m) and 4(n) to the Registration Statement for provisions
regarding indemnification of TRW, officers, directors and controlling persons
against certain liabilities.
ITEM 21. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
4(a)* Indenture between TRW and The Chase Manhattan Bank (National
Association), as successor Trustee, dated as of May 1, 1986
(incorporated by reference to Exhibit 2 to TRW Inc.'s Form 8-A
Registration Statement dated July 3, 1986, File No. 1-2384)
4(b)* First Supplemental Indenture between TRW and The Chase
Manhattan Bank (National Association), as successor Trustee,
dated as of August 24, 1989 (incorporated by reference to
Exhibit 4(b) to TRW Inc.'s Form S-3 Registration Statement,
File No. 33-30350)
4(c)* Second Supplemental Indenture between TRW and The Chase
Manhattan Bank, as successor Trustee, dated as of June 2, 1999
4(d)* Third Supplemental Indenture between TRW and The Chase
Manhattan Bank, as successor Trustee, dated as of June 2, 1999
II-1
<PAGE> 66
4(e)* Fourth Supplemental Indenture between TRW and The Chase
Manhattan Bank, as successor Trustee, dated as of June 2, 1999
4(f)* Fifth Supplemental Indenture between TRW and The Chase
Manhattan Bank, as successor Trustee, dated as of June 2, 1999
4(g)* Sixth Supplemental Indenture between TRW and The Chase
Manhattan Bank, as successor Trustee, dated as of June 23,
1999
4(h)* Form of Exchange Note due 2001 (included in Exhibit 4(g))
4(i)* Form of Exchange Note Due 2002 (included in Exhibit 4(c))
4(j)* Form of Exchange Note Due 2004 (included in Exhibit 4(d))
4(k)* Form of Exchange Note Due 2009 (included in Exhibit 4(e))
4(l)* Form of Exchange Debenture Due 2029 (included in Exhibit 4(f))
4(m)* Registration Rights Agreement, dated May 26, 1999, among TRW
and Morgan Stanley & Co. Incorporated, J.P. Morgan Securities
Inc. and Salomon Smith Barney Inc., as representatives of the
initial purchasers
4(n)* Registration Rights Agreement, dated June 23, 1999, between
TRW and Goldman, Sachs & Co., as representative of the initial
purchasers
5* Opinion of William B. Lawrence, Esq. as to the validity of the
securities being registered
12* Statement Regarding Computation of Ratio of Earnings to Fixed
Charges (incorporated by reference to Exhibit 99 to TRW Inc.'s
Quarterly Report on Form 10-Q for the Quarter Ended June 30,
1999, File No. 1-2384)
23(a)* Consent of Ernst & Young LLP
23(b)* Consent of KPMG Audit Plc
23(c)* Consent of Ernst & Young and KPMG Audit Plc
23(d)* Consent of Ernst & Young
23(e)* Consent of William B. Lawrence, Esq. (included in his opinion
filed as Exhibit 5)
23(f)* Consent of American Appraisal Associates, Inc.
24* Powers of Attorney of certain Directors and officers of TRW
Inc.
25* Statement of Eligibility and Qualification on Form T-1 of The
Chase Manhattan Bank to act as Trustee under the Indenture, as
supplemented
99(a)* Form of Letter of Transmittal
99(b)* Form of Notice of Guaranteed Delivery
99(c)* Form of Tender Instructions
- ------------------
* previously filed
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ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the total
dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement; provided, however,
that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports
filed by the registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of any
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item 15, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
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<PAGE> 68
question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
(d) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11, or 13 of Form S-4, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(e) The undersigned registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
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<PAGE> 69
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Amendment No. 2 to the Registration Statement on
Form S-4 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Lyndhurst, State of Ohio, on the 27th day of
September, 1999.
TRW INC.
By: /s/ WILLIAM B. LAWRENCE
William B. Lawrence
Executive Vice President,
General Counsel and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 2 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman of the Board, September 27, 1999
- ------------------------------
J. T. Gorman Chief Executive Officer and
Director
* Executive Vice President September 27, 1999
- ------------------------------
C. G. Miller and Chief Financial Officer
* Vice President and Controller September 27, 1999
- ------------------------------
T. A. Connell
* Director September 27, 1999
- ------------------------------
M. H. Armacost
* Director September 27, 1999
- ------------------------------
M. Feldstein
* Director September 27, 1999
- ------------------------------
R. M. Gates
* Director September 27, 1999
- ------------------------------
G. H. Heilmeier
* Director September 27, 1999
- ------------------------------
K. N. Horn
* Director September 27, 1999
- ------------------------------
E. B. Jones
* Director September 27, 1999
- ------------------------------
W. S. Kiser
* Director September 27, 1999
- ------------------------------
D. B. Lewis
* Director September 27, 1999
- ------------------------------
L. M. Martin
</TABLE>
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<PAGE> 70
<TABLE>
<S> <C> <C>
* Director September 27, 1999
- ------------------------------
R. W. Pogue
</TABLE>
William B. Lawrence, by signing his name hereto, does hereby sign and
execute this Amendment No. 2 to the Registration Statement on behalf of those
officers and Directors of TRW Inc. indicated above by asterisks pursuant to
powers of attorney executed by such officers and Directors and filed with the
Securities and Exchange Commission as an exhibit to this Registration Statement.
*By /s/ WILLIAM B. LAWRENCE September 27, 1999
William B. Lawrence
Attorney-in-Fact
II-6
