FILING PURSUANT TO RULE 425 OF THE
SECURITIES ACT OF 1933, AS AMENDED
FILER: NORTHROP GRUMMAN CORPORATION
SUBJECT COMPANY: TRW INC. NO 1-2384
FILING: REGISTRATION STATEMENT ON FORM S-4
(REGISTRATION NO. 333-83672)
Northrop Grumman Corporation filed a registration statement on Form S-4 (File
No. 333-83672) and a tender offer statement on Schedule TO with the SEC on March
4, 2002 with respect to its offer to exchange all outstanding shares of TRW Inc.
capital stock for Northrop Grumman Corporation stock. These documents contain
important information. TRW Inc. shareholders should read these documents and any
amendments or supplements thereto before making any decision regarding the offer
to exchange. Copies of such documents may be obtained without charge at the
SEC's website at www.sec.gov or from D.F. King & Co., Inc. the information agent
for the offer to exchange, at 800-755-7520.
The directors, certain executive officers and other employees and
representatives of Northrop Grumman Corporation may be deemed to be participants
in the solicitation of proxies of TRW Inc. shareholders in connection with
shareholder proposals relating to the 2002 Annual Meeting of TRW Inc.
Shareholders and a Special Meeting of TRW Inc. Shareholders to be held on April
24, 2002 and April 22, 2002, respectively. Northrop Grumman Corporation has
filed preliminary materials for these shareholder meetings which contain
information regarding such potential participants. Northrop Grumman
Corporation's proxy materials contain important information and should be read
by TRW Inc. shareholders. These proxy materials and any amendments thereto may
be obtained at no charge at the SEC's website at www.sec.gov as they become
available.
---------------------------------------------------------
The text of the following press release was issued by TRW Inc. on March 13,
2002.
TRW Board Determines Northrop Grumman's $47 Exchange Offer Is Financially
Inadequate
Recommends TRW Shareholders Reject the Northrop Grumman Offer
Announces Strategic Plan to Enhance Shareholder Value
Special Meeting of Shareholders Set For April 22, 2002
CLEVELAND, March 13 /PRNewswire-FirstCall/ -- TRW Inc. (NYSE: TRW) announced
---
today that after careful consideration, including a thorough review with
independent financial and legal advisors, its board of directors has unanimously
determined that Northrop Grumman Corporation's (NYSE: NOC) March 4, 2002
---
unsolicited exchange offer for all outstanding shares of TRW common stock for
$47 per share is financially inadequate and not in the best interests of TRW's
shareholders. Accordingly, the TRW board of directors urges TRW shareholders to
reject Northrop Grumman's offer and not exchange their shares.
"As we indicated when we rejected Northrop Grumman's earlier proposal, this
is all about shareholder value," said Philip A. Odeen, TRW's chairman.
In making its recommendation, TRW's board of directors considered, among
other things, that:
* Northrop Grumman's offer grossly undervalues TRW's businesses and
opportunities.
* The opinion of each of its independent financial advisors, Goldman, Sachs
& Co. and Credit Suisse First Boston, that Northrop Grumman's offer is
inadequate to the company's common shareholders from a financial point of
view.
* Northrop Grumman's offer price remains below the current market price of
TRW's common stock. As of March 12, 2002, TRW's closing stock price was
$50.28 per share.
* Northrop Grumman's offer is highly conditional, which results in
significant uncertainty that the offer will be consummated.
"Our board of directors continues to believe that $47 is grossly inadequate
and does not reflect the value of TRW's advanced portfolio of
technology and unique market leading positions. Further, since this offer is
subject to a collar which could result in a price of less than $47 per share,
this offer is less favorable than Northrop Grumman's earlier proposal," said Mr.
Odeen.
The board noted that Northrop Grumman made its offer at a time when TRW's
stock price was temporarily depressed following the unexpected resignation of
David Cote, TRW's former chairman, president and chief executive officer.
"Northrop Grumman's offer is clearly an opportunistic attempt to acquire
TRW's premier franchise. In particular, the current planned increases in
government defense spending are expected to benefit many technologies and arenas
where TRW's space, electronics and systems businesses are a leader.
Additionally, we believe that our automotive and commercial aerospace businesses
will benefit from positive economic trends in these sectors," continued Mr.
Odeen.
TRW's Value Enhancing Strategic Plan
TRW's board of directors believes that the company can significantly enhance
value for TRW shareholders through the continued execution of its strategic
plan. As part of this plan, TRW intends to accelerate its debt reduction program
and separate its Automotive business in a tax-efficient manner. Key elements of
the plan include:
* Acceleration of TRW's deleveraging initiatives through asset sales and
other alternatives. In 2001, the company reduced its net debt by almost $1
billion and, over the past three years, it has reduced net debt by
approximately $3.9 billion. The company is targeting an additional $1.6
billion to $2.0 billion debt reduction in 2002.
* Exploration of additional actions, including the spin-off of TRW's
Automotive business. As planned, the Automotive business would become an
appropriately capitalized, independent, publicly traded company. TRW has
targeted completion of the spin-off of the Automotive business in
approximately six to nine months.
"TRW has been examining a potential separation of our Automotive business
for some time," added Mr. Odeen. "We believe that our strategic plan
announced today will create two `pure play' independent businesses, each
positioned to deliver superior growth and returns. Additionally, this plan will
enable each company to optimize strategic and financial flexibility and capture
value against best-in-class industry benchmarks. We believe our strategic plan
will deliver greater value to TRW shareholders than Northrop Grumman's offer."
Since the announcement of Northrop Grumman's proposal on February 22, 2002,
TRW and its independent financial advisors have received unsolicited indications
of interest from third parties with respect to a transaction with the company as
a whole which would involve a separation of the Automotive business. In
addition, the company has received unsolicited indications of interest from
third parties with respect to each of its operating businesses as well as a
private equity investment in the entire company. Also, TRW is engaged in
preliminary discussions with third parties concerning transactions involving all
or a portion of the Automotive business, and the company has commenced
preliminary negotiations for a potential sale of its Aeronautical Systems Group.
TRW Is Well Positioned To Capitalize On The Positive Economic Trends
Across Auto, Defense and Aerospace Businesses
* Given positive recent economic trends, industry analysts have raised their
forecast for 2002 North American automotive light vehicle production from
between 15.0 million and 15.3 million vehicles to between 15.7 million and
15.9 million units. TRW holds the number one or two market positions in
the worldwide supply of key automotive products, including seat belts, air
bags, antilock brakes (North America) and steering gears, and is well
positioned to capitalize on this market growth.
* The United States defense budget is projected to have a 7.2% compound
annual growth rate through 2006, and TRW's space and defense businesses
are in the "sweet spot" of this growth. TRW's capabilities in space,
defense and communications are aligned with the U.S. Defense Department's
focus on information superiority, missile defense, battlefield superiority
and homeland security.
* According to a recent report from a leading trade organization for
airlines in the United States, the commercial aerospace sector appears to
have stabilized. TRW believes this will enhance its spares and
maintenance, repair and overhaul businesses.
TRW Is On Track To Deliver Sustainable Earnings And Cash Flow Growth
The board and senior management of TRW are committed to continuing to focus
on the company's aggressive cost cutting initiatives, productivity improvements
and enhancing relationships with its customers. The company is on track to meet
or exceed its 2002 commitments.
The company affirmed that the board's executive search committee, comprised
of outside directors, has selected a prominent executive search firm and is
actively engaged in a search for a new chief executive officer.
Special Meeting of Shareholders Set
TRW also announced today that its board of directors has called a Special
Meeting of TRW shareholders for Monday, April 22, 2002 for the purpose of voting
under Ohio law on Northrop Grumman's proposed control share acquisition.
Shareholders of record on the close of business on March 28, 2002 will be
eligible to vote at the special meeting.
TRW noted that it expects to furnish shareholders with a notice of meeting
and related proxy statement later this month.
Goldman, Sachs & Co. and Credit Suisse First Boston Corporation are
serving as financial advisors to TRW, and Skadden, Arps, Slate, Meagher & Flom
LLP is serving as legal counsel.
TRW provides advanced-technology products and services for the aerospace,
systems, and automotive markets.
Certain of the information contained in this press release should be
considered "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 which is subject to a number of risks
and uncertainties. The preparation of forward-looking statements requires the
use of estimates of future revenues, expenses, activity levels and economic and
market conditions, many of which are outside the Company's control. The
Company's results could be affected by the ability to obtain new contract
awards; the level of defense funding by the government and the termination of
existing government contracts; pricing pressures from customers; moderation or
decline in the automobile build rate; changes in consumer debt levels; work
stoppages; unanticipated downturn in the financial condition of, or business
relationships with customers or suppliers; the ability to reduce the level of
outstanding debt from cash flow from operations and the proceeds from asset
dispositions; a credit rating downgrade; increase in interest rates; customer
recall and warranty claims; product liability and litigation issues; changes to
the regulatory environment regarding automotive safety; the introduction of
competing products or technology by competitors; the ability to attract and
retain skilled employees with high-level technical competencies; the financial
results of companies in which we have made technology investments; the
availability of funding for research and development; economic, regulatory and
political domestic and international conditions; fluctuations in currency
exchange rates; and the impact of additional terrorist attacks, which could
result in reduced automotive production, disruptions to the transportation
system, or significant and prolonged disruption to air travel. In addition,
there can be no assurance: (i) that an agreement relating to any investment in
the Company, or relating to any sale or other distribution of all or a part of
the Company's operating businesses will be reached, or that if an agreement is
reached, that the transactions contemplated by such agreement will be
consummated; (ii) that the Company will spin off the Automotive business or that
such spin-off will be complete within six to nine months; (iii) that the Company
will be successful in delevering the Company, or that the methods described for
delevering will be utilized; (iv) as to the amount by which debt will be
reduced; (v) that the Company's strategy will deliver any particular level of
value to TRW shareholders; (vi) that defense spending will rise and research,
development, test and evaluation budgets will increase; (vii) that the
commercial aerospace industry will stabilize; (viii) that North American 2002
light vehicle production will increase from 2001 levels; (ix) that 2002 earnings
per share estimates will be met or exceeded; (x) with respect to the expected
amounts of the Company's operating cash flows in 2002, that such amounts will be
utilized to delever the Company's balance sheet; (xi) with respect to the
amounts that will be realized, if any, by the Company from divestitures; (xii)
with respect to the amount of sales, earnings per share or cash flow that will
be realized by the Company in 2002; and (xiii) that the Company's costs will
decrease in 2002. Other factors and assumptions not identified above are also
involved in the preparation of forward-looking statements, and the failure of
such other factors and assumptions to be
realized may also cause actual results to differ materially from those
discussed. The Company assumes no obligation to update such estimates to reflect
actual results, changes in assumption or changes in other factors affecting such
estimates other than as required by law.
The directors and certain executive officers of TRW may be deemed to be
participants in the solicitation of proxies from shareholders of TRW in
connection with TRW's special meeting of shareholders under the Ohio Control
Share Acquisition Statute. Information concerning such participants is contained
in TRW's definitive proxy statement relating to TRW's 2002 Annual Meeting filed
with the Securities and Exchange Commission on March 4, 2002 on Schedule 14A.
This press release relates to Northrop Grumman's exchange offer commenced
March 4, 2002. Shareholders of TRW are advised to read TRW's
Solicitation/Recommendation Statement on Schedule 14D-9, filed March 13, 2002,
as it may be amended from time to time, and TRW's PROXY STATEMENT FOR THE
SPECIAL MEETING IN CONNECTION WITH THE SOLICITATION OF PROXIES FROM TRW
SHAREHOLDERS WHEN IT BECOMES AVAILABLE, BECAUSE THEY CONTAIN IMPORTANT
INFORMATION. Shareholders of TRW and other interested parties may obtain, free
of charge, copies of the Schedule 14D-9, TRW's proxy statement and other
documents filed by TRW with the SEC at the SEC's internet website at
http://www.sec.gov. Each of these documents may also be obtained, free of
------------------
charge, by calling investor relations at TRW at 216-291-7506.
Financial Teleconference and Webcast:
TRW will host a conference call on March 13, 2002 at 9:45 a.m. EST to
discuss this announcement. Investors, the news media, and others may listen to
the teleconference by calling 888-324-8503, from within the United States, or
712-271-3869, internationally. Please call at least 15 minutes prior to the
start of the teleconference and ask to be connected to the TRW conference call.
A recording of this call will be available beginning at 1:00 p.m. EST on March
13, 2002 through 4:00 p.m. EST on March 20, 2002 and can be accessed by dialing
800-945-0304 from within the United States, or 402-220-3526 internationally. The
rebroadcast passcode is 3182067.
The teleconference will also be Webcast at
http://www.TRW.com/investorpresentation by clicking on an available audio link.
---------------------------------------
Microsoft Media Player is required to access the Webcast. It can be downloaded
from http://www.microsoft.com/windows/mediaplayer.
--------------------------------------------
This Webcast will be archived on the company's web site for replay purposes
beginning on March 13, 2002 through March 20, 2002.
CONTACT: Jay McCaffrey, TRW Media, 216-291-7179, or Ron Vargo, TRW
Investors 216-291-7506; or Judy Wilkinson or Barrett Godsey, both of Joele
Frank, Wilkinson Brimmer Katcher, 212-355-4449, for TRW Inc.