TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
	Item 1. Financial Statements
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures about Market Risk
PART II. OTHER INFORMATION
	Item 1. Legal Proceedings.
	Item 6. Exhibits and Reports on Form 8-K.
SIGNATURES
EX-15 UNAUDITED FINANCIAL INFORMATION
EX-99 COMP. OF RATIO OF EARNINGS TO FIXED CHARGES

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

(Mark One)

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the quarterly period ended June 30, 2002

OR

		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the ~~quarterly~~transition period ~~ended~~from to Commission ~~September 30,~~file ~~2001~~number 1-2384

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-2384

TRW Inc.

(Exact name of registrant as specified in its charter)


Ohio		34-0575430

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1900 Richmond Road, Cleveland, Ohio 44124 ~~(Address of principal executive offices) (Zip Code)~~

(Address of principal executive offices)
(Zip Code)

(216) 291-7000 ~~(Registrant’s telephone number, including area code)~~

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports

required to be filed by Section 13 or 15(d) of the Securities Exchange Act of

1934 during the preceding 12 months (or for such shorter period that the

registrant was required to file such reports), and (2) has been subject to such

filing requirements for the past 90 days.

Yes X No

As of ~~November 2~~August 9, ~~2001~~2002, there were ~~126~~ 128,~~286~~620,~~307~~093 shares of TRW Common Stock, $0.625 par value, outstanding.

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION
	Item 1. Financial Statements
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures about Market Risk
PART II. OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 4. Submission of Matters to a Vote of Security Holders
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
EX-10(A) Amend #2 to Receivables Purchase Agrmt
EX-10(D) Master Agreement of Purchase of Sale
EX-10(E) Employment Continuation Agreement DCP
EX-15 Letter Re: Unaudited Financial Information
EX-99(A) Comput. Ratio of Earnings/Fixed Charges
EX-99(B) 906 Certification of Timothy W. Hannemann
EX-99(C) 906 Certification of John C. Plant
EX-99(D) 906 Certification of Robert H. Swan

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements Statements of Operations (unaudited) TRW Inc. and subsidiaries

Statements of Operations (unaudited) TRW Inc. and subsidiaries


				Quarter ended						Six months ended
				June 30						June 30

(In millions except per share data)				2002			2001			2002			2001

Sales				$	4,269		$	4,006		$	8,119		$	7,908
Cost of sales					3,665			3,476			6,999			6,875

Gross profit					604			530			1,120			1,033

Administrative and selling expenses					219			226			426			443
Research and development expenses					100			93			193			193
Interest expense					102			122			205			251
Amortization of intangible assets and goodwill in 2001					5			24			8			48
Other (income)expense-net					(14	)		62			(18	)		48

Earnings from continuing operations before income taxes and extraordinary items					192			3			306			50
Income taxes					68			21			104			30

Earnings(loss) from continuing operations before extraordinary items					124			(18	)		202			20
Discontinued operations, net of income taxes					(683	)		21			(672	)		38

Earnings(loss) before extraordinary items					(559	)		3			(470	)		58
Extraordinary items, net of income taxes					—			—			2			—

Net earnings(loss)				$	(559	)	$	3		$	(468	)	$	58

Per share of common stock
		Diluted earnings per share
			Earnings(loss) from continuing operations before extraordinary items	$	0.98		$	(0.15	)	$	1.59		$	0.17
			Discontinued operations		(5.36	)		0.17			(5.30	)		0.30
			Extraordinary items		—			—			0.02			—

			Net earnings(loss)	$	(4.38	)	$	0.02		$	(3.69	)	$	0.47

		Basic earnings per share
			Earnings(loss) from continuing operations before extraordinary items	$	0.98		$	(0.15	)	$	1.59		$	0.17
			Discontinued operations		(5.36	)		0.17			(5.30	)		0.30
			Extraordinary items		—			—			0.02			—

			Net earnings(loss)	$	(4.38	)	$	0.02		$	(3.69	)	$	0.47

		Dividends declared		$	0.175		$	0.35		$	0.175		$	0.35

Shares used in computing per share amounts
	Diluted				127.5			125.6			126.8			125.2
	Basic				127.5			124.5			126.8			124.1

			Third quarter ended					Nine months ended
			September 30					September 30
In millions except per share data			2001			2000		2001			2000
Sales			$	3,862		$	4,053	$	12,305		$	13,094
Cost of sales				3,261			3,479		10,467			10,985
Gross profit				601			574		1,838			2,109
Administrative and selling expenses				260			237		795			815
Research and development expenses				117			117		353			340
Interest expense				117			131		368			393
Amortization of goodwill and intangible assets				44			38		108			106
Other (income)expense-net				179			1		222			(251	)
Earnings(loss) before income taxes				(116	)		50		(8	)		706
Income taxes				(36	)		18		14			265
Net earnings(loss)			$	(80	)	$	32	$	(22	)	$	441
Per share of common stock
	Diluted earnings(loss) per share		$	(0.65	)	$	0.26	$	(0.18	)	$	3.52
	Basic earnings(loss) per share			(0.65	)		0.26		(0.18	)		3.58
	Dividends declared			0.35			0.33		0.70			0.66
Shares used in computing per share amounts
		Diluted		125.2			125.0		124.5			125.1
		Basic		125.2			123.5		124.5			123.0

Balance Sheets (unaudited) TRW Inc. and subsidiaries

		September 30			December 31
		June 30			December 31
In millions		2001			2000
(In millions)		2002			2001
Assets
Current assets
	Cash and cash equivalents	$	~~242~~259		$	~~267~~213
	Accounts receivable		21,~~201~~875			21,~~328~~418
	Inventories		871			870
	Interest in securitized receivables		182			162
	Prepaid expenses		147			149
	Inventories		615			575
	Deferred income taxes		210			353
	Prepaid expenses		175			160
Total current assets			3,671			3,967
	Deferred income taxes		274			201
Property, plant and equipment-on the basis of cost			8,206			7,915
	Assets of business held for sale		1,644			2,018
	Less accumulated depreciation and amortization		4,720			4,328
Total current assets			5,024			4,747
Total property, plant and equipment-net			3,486			3,587
Property, plant and equipment-on the basis of cost			8,224			7,924
Intangible assets
	Less accumulated depreciation and amortization		4,983			4,641
	Goodwill		3,606			3,547
Total property, plant and equipment-net			3,241			3,283
	Other intangible assets		964			975
Intangible assets			539			586
			4,570			4,522
	Less accumulated amortization		284			272
	Less accumulated amortization		661			510
Intangible assets-net			255			314
Total intangible assets-net			3,909			4,012
Goodwill			2,639			2,417
Investments in affiliated companies			~~453~~131			~~1,040~~243
Other notes and accounts receivable			~~244~~189			~~283~~204
Prepaid pension cost			3,014			2,902
Other assets			278			480
Other assets			573			676
Prepaid pension cost			2,882			2,756
		$	1514,~~350~~639		$	1614,~~467~~444
Liabilities and shareholders’ investment
Current liabilities
	Short-term debt	$	~~809~~652		$	~~1,450~~115
	Trade accounts payable		1,~~744~~883			1,~~795~~575
	Current portion of long-term debt		~~731~~81			~~489~~724
	Other current liabilities		2,100			2,126
	Liabilities of business held for sale		468			423
Total current liabilities			5,384			5,860
	Other current liabilities		2,105			2,029
Long-term liabilities			1,925			2,038
Total current liabilities			5,189			4,866
Long-term debt			4,~~942~~807			4,~~765~~865
Deferred income taxes			702			1,030
Long-term liabilities			1,803			1,827
Minority interests in subsidiaries			71			123
Deferred income taxes			761			626
Capital stock			79			78
Minority interests in subsidiaries			84			74
Other capital			480			472
Shareholders’ investment
Retained earnings			2,426			2,565
	Capital stock		80			79
Treasury shares-cost in excess of par value			(390	)		(472	)
	Other capital		490			480
Accumulated other comprehensive income (loss)			(269	)		8
	Retained earnings		1,964			2,468
Total shareholders’ investment			2,326			2,651
	Treasury shares-cost in excess of par value		(271	)		(372	)
		$	15,350		$	16,467
	Accumulated other comprehensive income(loss)		(268	)		(469	)
Total shareholders’ investment			1,995			2,186
		$	14,639		$	14,444

Statements of Cash Flows (unaudited)
TRW Inc. and subsidiaries

		Nine months ended
		Six months ended
		September 30
		June 30
In millions		2001			2000
(In millions)		2002			2001
Operating activities
Net earnings(loss)		$	(22468	)	$	~~441~~58
Adjustments to reconcile net earnings(loss) to net cash provided by operating activities:
	Depreciation and amortization		558			620
	Discontinued operations		672			(38	)
	Pension income		(185	)		(190	)
	Depreciation and amortization		306			348
	Asset impairment charges		346			52
	Pension income		(123	)		(120	)
	Pending and threatened litigation		97			25
	Net gain on sale of assets		(27	)		(26	)
	Net gain on sale of assets		(204	)		(262	)
	Asset impairment charges		3			65
	Gain on Endwave merger		–			(57	)
	Deferred income taxes		(21	)		(37	)
	Deferred income taxes		(51	)		72
	Other-net		42			56
	Other-net		83			44
Changes in assets and liabilities, net of effects of businesses acquired or divested:
Changes in assets and liabilities, net of effects of businesses acquired or sold:
	Accounts receivable, net		(436	)		(130	)
	Accounts receivable		67			(64	)
	Accounts receivable securitized		32			–
	Inventories		(2919	)		342
	Trade accounts payable		~~(16~~242	)		~~130~~69
	Prepaid expenses and other liabilities		~~(84~~110	)		7(113	)
	Other-net		~~121~~70			~~(28~~110	)
Net cash provided by operating activities			681			793
Net cash provided by operating activities of continuing operations			383			284
Investing activities
Capital expenditures including other intangibles			(~~499~~212	)		(~~475~~300	)
Net proceeds from divestitures			196			1,431
Net proceeds from sales of assets			61			25
Other-net			~~(88~~24	)		(58105	)
Net cash (used in) provided by investing activities			(391	)		898
Net cash used in investing activities of continuing operations			(127	)		(380	)
Financing activities
Decrease in short-term debt			(392	)		(964	)
Increase(decrease) in short-term debt			291			(138	)
Proceeds from debt in excess of 90 days			~~998~~469			~~1,283~~910
Principal payments on debt in excess of 90 days			(~~812~~955	)		(~~1,897~~743	)
Dividends paid			(~~132~~45	)		(~~123~~87	)
Other-net			2126			40134
Net cash used in financing activities			(317	)		(1,661	)
Net cash (used in)provided by financing activities of continuing operations			(214	)		76
Effect of exchange rate changes on cash flows			2			40
Effect of exchange rate changes on cash			18			8
(Decrease) increase in cash and cash equivalents			(25	)		70
Net cash (used in)provided by discontinued operations			(14	)		3
Cash and cash equivalents at beginning of period			267			228
Increase(decrease) in cash and cash equivalents			46			(9	)
Cash and cash equivalents at end of period		$	242		$	298
Cash and cash equivalents at beginning of period			213			248
Cash and cash equivalents at end of period		$	259		$	239
Supplemental Cash Flow Information


	Six months ended
	June 30

(In millions)	2002		2001

Interest paid, net of amount capitalized	$	193	$	231
Income taxes paid, net of refunds		26		48

NOTES TO FINANCIAL STATEMENTS
(unaudited)

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a a fair presentation have been included. Operating results for the three-month and ~~nine~~six-month periods ended ~~September~~June 30, ~~2001~~2002 are not necessarily indicative of the results that may be expected for the year ended December 31, ~~2001~~2002.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s ~~annual~~Annual ~~report~~Report on Form 10-K for the year ended December 31, ~~2000~~2001.

Reclassifications

Certain amounts in the prior year financial statements and related notes have been reclassified to conform to the current year presentation.

~~Restructurings~~TRW and Northrop Grumman Merger Agreement

~~The~~On June 30, 2002 the Company, ~~has~~Northrop ~~recorded~~Grumman ~~severance~~Corporation ~~costs~~(Northrop) and Richmond ~~plant~~Acquisition ~~closing~~Corp., ~~accruals~~a ~~related~~wholly-owned ~~to restructuring~~subsidiary ~~actions~~ of ~~$70 million~~Northrop, ~~before~~entered ~~tax~~into a asdefinitive ofmerger ~~December 31~~agreement, ~~2000.~~whereby Northrop will acquire all of the ~~During~~Company’s outstanding common stock and the ~~nine~~Company ~~months~~will ~~ended~~become ~~September 30,~~a ~~2001~~wholly-owned subsidiary of Northrop. In the merger, each share of the Company’s ~~recorded~~common ~~additional~~stock ~~before~~will ~~tax~~be ~~charges~~converted into the right to receive a number of shares of Northrop common stock equal to the exchange ratio. The exchange ratio is calculated by dividing $~~86 million,~~60 ~~primarily~~by the average closing sale prices for ~~headcount reductions,~~a share of Northrop ~~which~~common ~~$26 million~~stock ~~was~~on ~~recorded~~the inNew York Stock Exchange during the ~~third~~five consecutive ~~quarter.~~trading ~~Charges~~days ofending on (and including) the second trading day prior ~~$52 million~~to ~~were~~the ~~recorded~~date the merger is completed. However, in ~~administrative~~no ~~and~~event ~~selling~~will ~~expenses~~the ~~and~~exchange ratio be greater than 0.5357 ($3460/$112) or less than 0.4348 ($60/$138), even if ~~million~~the inactual ~~cost~~average price per share of ~~sales.~~Northrop ~~The~~common ~~Company~~stock used to calculate the exchange ratio is less than $~~17 million~~112 ~~and~~or greater than $~~80 million~~138. inThe ~~the~~transaction ~~third~~requires ~~quarter~~approval ~~and~~from ~~nine~~European ~~months~~and ~~ended~~U.S. ~~September 30,~~regulatory ~~2001~~agencies, ~~respectively,~~as ~~for~~well as ~~severance~~approval ~~payments~~by TRW shareholders and ~~plant~~Northrop ~~closings~~stockholders. ~~The~~Northrop ~~balance~~has atannounced that ~~September 30~~after the completion of the merger, ~~2001~~it plans to separate the Company’s automotive business, either through a sale or a spin-off of the business to ~~$76 million~~shareholders. isThe ~~expected~~Company’s previously announced agreement to besell Aeronautical ~~used~~Systems byto ~~the~~Goodrich ~~fourth~~Corporation ~~quarter~~is ofunaffected ~~2002~~by the merger agreement.

~~Asset~~Discontinued ~~Impairments~~Operations

~~During~~In ~~1999~~June 2002, the Company, ~~along~~announced that it had reached a definitive agreement with ~~Lockheed~~Goodrich ~~Martin~~Corporation ~~Global~~for ~~Telecommunications,~~the sale of its Aeronautical Systems business for ~~Telespazio,~~gross aproceeds ~~Telecom~~of ~~Italia~~approximately ~~Group~~$1.5 billion. ~~Company~~Proceeds will be used to reduce debt and ~~Liberty~~for ~~Media~~other ~~Group~~cash ~~formed~~needs. ~~a joint~~In ~~venture,~~accordance ~~Astrolink~~with ~~International,~~Statement ~~LLC~~of Financial Accounting Standards (~~Astrolink~~SFAS) No. 144, to“Accounting ~~provide~~for the Impairment or Disposal ~~satellite~~of Long-~~based~~Lived ~~global~~Assets,” ~~broadband~~the ~~services.~~results ~~The~~of ~~equity~~operations ~~partners~~of ~~made~~this anbusiness ~~initial~~are reported ~~investment~~as discontinued operations, net of $1applicable income taxes, for all periods presented.~~3 billion.~~ ~~The~~In ~~Astrolink~~addition, ~~business~~the ~~plan~~assets and liabilities of the ~~Company’s~~Aeronautical Systems ~~assessment~~business ofhave ~~impairment~~been ofreclassified ~~its~~as ~~investment~~held ~~contemplated~~for ~~obtaining~~sale. ~~additional~~The business was measured at ~~funding~~the agreed upon contract price of $21.45 billion less cost to sell. Earnings(loss) ~~The~~before ~~Company~~income ~~has~~taxes ~~invested~~from ~~$255 million~~discontinued ~~and~~operations ~~accounts~~ for ~~its~~the ~~19%~~quarter and ~~interest~~six-months inended ~~Astrolink~~June 30, 2002 included a loss on ~~the~~disposal ~~equity~~of ~~method~~$182 million, of which $144 million was recorded for the curtailment of ~~accounting~~the Company’s UK pension plan.

At September 30, 2001 Astrolink was in discussions with additional equity partners and with current shareholders to raise the necessary funding through 2001. On October 25, 2001 Lockheed Martin Global Telecommunications announced that it would not provide additional financing beyond its initial $400 million investment. Concurrently, the Company also decided it will not provide additional funding. The future viability of Astrolink is contingent upon additional funding. Astrolink’s Board is considering several options including whether to significantly delay the project’s launch date or cancel the venture.

As a result of these events, the Company’s assessment of impairment changed and the Company concluded that the carrying amount of its investment will not be recoverable and therefore, recognized an impairment loss of approximately $242 million at September 30, 2001.

Also in the third quarter of 2001, the Company recorded asset impairment charges of $25 million related to the write-down of identifiable intangible assets, capitalized software and other assets. In addition, as a result of a loss of several existing and future contracts at two Chassis components facilities, the Company recorded asset impairment charges of $14 million. A comparison of projected undiscounted future cash flows for the facilities to their carrying value indicated that the assets were impaired. Assets were written down to fair value.

~~Other~~In addition, as a result of the proposed sale of Aeronautical Systems, the Company updated its valuation of the business under SFAS 142 taking into account the purchase price and cumulative translation adjustment which resulted in an impairment of goodwill of $483 million. The impairment charge was recorded in earnings(~~Income~~loss)~~Expense-Net~~ from operations before income taxes of discontinued operations in the second quarter of 2002. The Company expects to complete the sale of this business by the end of the third quarter of 2002.

	Third quarter ended						Nine months ended
In millions	September 30						September 30
	2001			2000			2001			2000
Net gain on sale of assets	$	(174	)	$	–		$	(204	)	$	(262	)
Asset impairments		257			–			322			–
Pending and threatened litigation		97			–			97			25
(Earnings)loss of affiliates		5			(1	)		26			(6	)
Foreign currency exchange		(1	)		23			(4	)		66
Gain on Endwave merger		–			(2	)		–			(57	)
Miscellaneous other (income) expense		(5	)		(19	)		(15	)		(17	)
	$	179		$	1		$	222		$	(251	)

The results of Aeronautical Systems were as follows:

During the third quarter of 2001, the Company recorded net gain on sale of assets which primarily included the sales of RF Micro Devices, Inc. (RFMD) common stock, and asset impairment charges of $257 million, primarily related to its investment in Astrolink. In addition to the third quarter asset impairment charges, the Company recorded asset impairment charges of $65 million related to its investment in, and its share of asset impairment recorded by Endwave Corporation (Endwave) in the nine months ended September 30, 2001. During the first nine months of 2000, the net gain on sale of assets included the sale of RFMD common stock, the Company’s Nelson Stud Welding and Australian steering businesses and the exchange of the Company’s interest in Paracel Inc., an affiliate, for shares in Applera Genomics Corporation-Celera Group (Celera). In addition, the Company recorded other income of $57 million during the first nine months of 2000 relating to the merger of TRW Milliwave Inc., a wholly owned subsidiary, with Endgate Corporation to form Endwave.


	Quarter ended					Six months ended
	June 30					June 30

(In millions)	2002			2001		2002			2001

Sales	$	258		$	270	$	490		$	535

Earnings(loss) from operations	$	(462	)	$	32	$	(447	)	$	58
Loss on disposal		(182	)		—		(182	)		—

		(644	)		32		(629	)		58
Income taxes		39			11		43			20

Earnings(loss) from discontinued operations	$	(683	)	$	21	$	(672	)	$	38

The major classes of assets and liabilities for Aeronautical Systems were as follows:


	June 30		December 31
(In millions)	2002		2001

Accounts receivable	$	169	$	178
Inventories		220		188
Intangible assets — net		336		336
Property, plant and equipment		296		259
Goodwill		312		743
Other assets		311		314

Total assets	$	1,644	$	2,018

Accounts payable	$	138	$	167
Other liabilities		330		256

Total liabilities	$	468	$	423

Accounting Pronouncements

Effective January 1, 2002, the Company adopted Financial Accounting Standards Board (FASB) SFAS 141, “Business Combinations,” SFAS 142, “Goodwill and Intangible Assets,” and SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS 141 requires that acquisitions entered into after June 30, 2001 are to be accounted for using the purchase method and establishes criteria to be used in determining whether acquired intangible assets are to be separated from goodwill. As a result of the Company’s analysis, only the value of assembled workforce of approximately $65 million was reclassified from intangible assets to goodwill at January 1, 2002.

~~Operating~~assets ~~Segments~~held for sale. With the adoption of SFAS 142, the Company reassessed the useful lives and residual values of all acquired intangible assets to make any necessary amortization period adjustments, which resulted in no adjustments being made. Amounts in 2001 have not been restated in accordance with the statement.

~~Effective~~The ~~January~~following ~~2001,~~table reflects the ~~Other~~reconciliation ~~Automotive~~of ~~segment~~reported ~~was~~earnings(loss) ~~combined with the~~from ~~Chassis~~continuing ~~Systems~~operations ~~segment.~~before ~~Financial~~extraordinary ~~information~~items into ~~prior~~adjusted ~~periods~~net earnings(loss) and related ~~to these~~per ~~segments~~share ~~has~~amounts ~~been~~for ~~restated~~the toexclusion ~~reflect~~of ~~such~~goodwill ~~combination~~amortization.

			Third quarter ended								Nine months ended
					Quarter ended								Six months ended
			September 30								September 30
					June 30								June 30
In millions			2001				2000				2001				2000
(In millions except per share data)					2002				2001				2002				2001
Sales
Net earnings(loss)
	Systems		$	761			$	836			$	2,349			$	2,447
Reported earnings(loss) from continuing operations before extraordinary items					$	124			$	(18	)		$	202			$	20
	Space & Electronics			505				463				1,518				1,416
		Add back: Goodwill amortization, net of tax				—				18				—				35
	Aeronautical Systems			269				257				804				806
Adjusted earnings(loss) from continuing operations before extraordinary items						124				—				202				55
	Chassis Systems			1,381				1,480				4,537				5,011
Reported discontinued operations, net of tax						(683	)			21				(672	)			38
	Occupant Safety Systems			622				639				2,034				2,127
		Add back: Goodwill amortization, net of tax				—				4				—				9
	Automotive Electronics			324				378				1,063				1,287
Extraordinary items, net of tax						—				—				2				—
Sales			$	3,862			$	4,053			$	12,305			$	13,094
Adjusted net earnings(loss)					$	(559	)		$	25			$	(468	)		$	102
Profit(loss) before taxes
Per share of common stock
	Systems		$	40			$	57			$	141			$	181
Diluted:
	Space & Electronics			(47	)			41				(53	)			411
	Reported earnings(loss) from continuing operations before extraordinary items				$	0.98			$	(0.15	)		$	1.59			$	0.17
	Aeronautical Systems			22				35				86				101
	Add back: Goodwill amortization, net of tax					—				0.14				—				0.28
	Chassis Systems			60				74				196				347
	Adjusted earnings(loss) from continuing operations before extraordinary items					0.98				(0.01	)			1.59				0.45
	Occupant Safety Systems			26				(19	)			58				54
	Reported discontinued operations, net of tax					(5.36	)			0.17				(5.30	)			0.30
	Automotive Electronics			6				11				44				76
			Add back: Goodwill amortization, net of tax			—				0.03				—				0.07
				107				199				472				1,170
	Extraordinary items, net of tax					—				—				0.02				—
Corporate expense and other				(164	)			(69	)			(273	)			(230	)
	Adjusted net earnings(loss)				$	(4.38	)		$	0.19			$	(3.69	)		$	0.82
Pension income				59				52				164				163
Basic:
Financing costs				(118	)			(132	)			(371	)			(397	)
	Reported earnings(loss) from continuing operations before extraordinary items				$	0.98			$	(0.15	)		$	1.59			$	0.17
Earnings(loss) before income taxes			$	(116	)		$	50			$	(8	)		$	706
	Add back: Goodwill amortization, net of tax					—				0.14				—				0.28
	Adjusted net earnings(loss) from continuing operations before extraordinary items					0.98				(0.01	)			1.59				0.45
	Reported discontinued operations, net of tax					(5.36	)			0.17				(5.30	)			0.30
			Add back: Goodwill amortization, net of tax			—				0.03				—				0.07
	Extraordinary items, net of tax					—				—				0.02				—
	Adjusted net earnings(loss)				$	(4.38	)		$	0.19			$	(3.69	)		$	0.82

~~Corporate~~SFAS ~~expense~~143, ~~and~~“Accounting ~~other~~for ~~included~~Asset ~~charges~~Retirement ~~for~~Obligations,” ~~pending~~requires ~~and~~the ~~threatened~~fair ~~litigation~~value of ~~$105 million~~a ~~and~~liability ~~restructuring~~for ~~and~~ asset ~~impairment~~retirement ~~charges~~obligations ofto be recorded in the ~~$19 million~~period in ~~third~~which ~~quarter~~it ~~2001~~is ~~and~~incurred. ~~$22 million~~The ofstatement ~~unrealized~~applies ~~foreign~~to a company’s legal or ~~exchange~~contractual ~~loss~~obligation onassociated ~~hedges~~with the retirement of ~~anticipated~~a ~~transactions~~tangible inlong-lived asset ~~2000.~~that ~~Corporate~~resulted ~~expense and~~from ~~other~~the ~~for~~acquisition, construction or development or through the ~~nine~~normal ~~months~~operation ~~ended~~of ~~September 30,~~a ~~2001~~long-lived ~~included charges~~asset. ~~for~~The ~~pending~~statement ~~and~~is effective ~~threatened~~for ~~litigation~~the ofCompany ~~$105~~beginning January ~~million~~1, ~~restructuring~~2003. ~~and~~Management ~~asset~~has ~~impairment charges~~evaluated the impact of ~~$25 million~~SFAS 143 and inbelieves ~~2000,~~that ~~$70 million~~its ofadoption ~~unrealized~~should ~~foreign~~not ~~exchange loss~~have a material effect on the ~~hedges~~Company’s offinancial ~~anticipated~~position ~~transactions~~or results of operations.

		Third quarter ended				Nine months ended
		September 30				September 30
In millions		2001		2000		2001		2000
Intersegment sales
	Systems	$	44	$	32	$	139	$	97
	Space & Electronics		15		15		45		41
	Aeronautical Systems		–		–		–		–
	Chassis Systems		–		3		3		16
	Occupant Safety Systems		–		–		–		2
	Automotive Electronics		29		22		86		69

~~Inventories~~SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” addresses the accounting and reporting for the impairment or disposal of long-lived assets. The statement provides a consistent method to value long-lived assets to be disposed of and broadens the presentation of discontinued operations. The adoption of SFAS 144 did not have a material effect on the Company’s financial statements.

	September 30		December 31
In millions	2001		2000
Finished products and work in process	$	536	$	513
Raw materials and supplies		335		357
	$	871	$	870

In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” SFAS 145 requires gains and losses on extinguishments of debt to be reclassified as income or loss from continuing operations rather than as extraordinary items as previously required by SFAS 4, “Reporting Gains and Losses from Extinguishment of Debt.” SFAS 145 also amends SFAS 13 requiring certain modifications to capital leases to be treated as sale-leaseback transactions and to subleases when the original lessee remains a secondary obligor, or guarantor.

~~Financial~~The ~~Instruments~~provisions of SFAS 145 related to the rescission of SFAS 4 are effective for the Company on January 1, 2003. The extraordinary gains recorded for the extinguishment of debt in the first quarter of 2002 will be reclassified into earnings from continuing operations when the statement is adopted. The remaining provisions of SFAS 145 were effective for transactions and reporting subsequent to May 15, 2002. The adoption of SFAS 145 did not have a material impact to the Company’s financial position or results of operations.

~~The~~Other ~~Company manufactures and sells its products in countries throughout the~~(Income)Expense-Net ~~world. As a result, it is exposed to fluctuations in foreign currency exchange~~ ~~rates. The Company enters into forward contracts and, to a lesser extent,~~ purchased currency options to hedge portions of its foreign currency denominated forecasted revenues, purchases, and the subsequent cash flows. The critical terms of the hedges are the same as the underlying forecasted transactions and the hedges are considered to be perfectly effective to offset the changes in fair value of cash flows from the hedged transactions. These cash flow instruments mature at various dates through April 2007.

The Company enters into interest rate swaps to manage the risks and costs associated with its financing activities. At September 30, 2001, the Company had $100 million notional principal amount of interest rate swaps outstanding that converted a portion of its variable rate debt to a fixed rate for the next four years. These interest rate swaps have a fair market value loss of $11 million.


	Quarter ended						Six months ended
	June 30						June 30

(In millions)	2002			2001			2002			2001

Investment in Endwave	$	—		$	70		$	—		$	70
Foreign currency exchange		1			(2	)		1			(3	)
Net gain on sale of assets		(18	)		—			(27	)		(26	)
(Earnings)loss of affiliates		—			6			1			16
Miscellaneous other (income)expense		3			(12	)		7			(9	)

	$	(14	)	$	62		$	(18	)	$	48

~~The~~In ~~Company~~the ~~hedges~~second ~~certain~~quarter ~~equity~~of ~~investments~~2002, ingains ~~publicly~~on ~~traded companies. These instruments protect~~ the ~~forecasted cash flows resulting from the~~ sale of ~~shares~~ inreal ~~the~~estate ~~Company’s~~of ~~investments~~$18 million were ~~in RFMD and Celera~~recorded. ~~These~~During ~~hedges were redesignated to cash flow hedges during~~ the second quarter ~~2001.~~of ~~Prior to their redesignation~~2001, the ~~ineffective~~Company ~~portion~~recorded ofan asset aimpairment ~~$10 million~~charge ~~gain~~related ~~was~~to ~~recorded in~~its ~~Other~~investment ~~(income)expense-net.~~in, ~~The~~and ~~fair~~its ~~market~~share ~~value~~ of ~~these~~asset impairment ~~hedges~~and asrestructuring ~~of September 30~~charges recorded by, ~~2001~~Endwave isCorporation a(Endwave) of $~~155~~70 million ~~gain~~.

~~Gains/losses~~Net gain on ~~these~~the ~~cash~~sale ~~flow~~of ~~instruments~~assets ~~are~~for ~~generally~~the ~~recorded~~first insix ~~other comprehensive~~months ~~income(loss)~~of ~~until~~2002 ~~the~~included ~~underlying~~$18 million ~~transaction~~related isto ~~recognized~~the ~~in net~~sale ~~earnings.~~of ~~The~~real ~~earnings~~estate ~~impact~~and is$9 million ~~reported~~for inthe ~~either~~sale ~~Sales, Cost~~ of ~~sales,~~RF orMicro ~~Other~~Devices, Inc. (~~income~~RFMD)~~expense-net,~~ common ~~to match the underlying transaction~~stock.

In addition, the Company enters into certain forward currency exchange contracts that are not treated as hedges under Statement of Financial Accounting Standards No. 133 to hedge recognized foreign currency transactions. Gains and losses on these contracts are recorded in earnings and are substantially offset by the earnings effect of the revaluation of the underlying foreign currency denominated transaction.

~~Debt~~Operating ~~and Credit Agreements~~Segments

~~The~~As ~~Company~~a ~~amended~~result ~~and restated its revolving credit agreement that expired on January 23, 2001. The amended and restated agreement, in an aggregate amount~~ of ~~$1.8 billion~~the ~~with~~pending 26sale ~~banks, has an expiration date~~ of ~~January 22,~~Aeronautical ~~2002 with an option to extend the maturity of outstanding borrowings at that time to January 22~~Systems, ~~2003. The interest rate under~~ the ~~agreement~~business is ~~either the prime~~ ~~rate~~reported oras adiscontinued ~~rate based on the London Interbank Offered Rate (LIBOR)~~operations, atrather ~~the option~~than ofas ~~the Company. The Company also canceled~~ a ~~revolving~~separate ~~credit agreement~~business ~~for use by its Brazilian operations during the first quarter of 2001~~segment.

During the first quarter of 2001, the Company issued $500 million of 7.625% Notes due March 2006, utilizing its universal shelf registration statement. The proceeds were used to reduce short-term borrowings. At September 30, 2001, $1.2 billion remained available under TRW’s universal shelf registration statement.


		Quarter ended						Six months ended
		June 30						June 30

(In millions)		2002			2001			2002			2001

Sales
	Automotive	$	2,840		$	2,678		$	5,411		$	5,307
	Systems		919			799			1,697			1,588
	Space & Electronics		510			529			1,011			1,013

Sales		$	4,269		$	4,006		$	8,119		$	7,908

Profit(loss) before taxes
	Automotive	$	174		$	108		$	287		$	206
	Systems		68			53			124			101
	Space & Electronics		33			(40	)		77			(6	)

Profit(loss) before taxes			275			121			488			301

Corporate expense and other			(24	)		(29	)		(49	)		(69	)
Financing costs			(105	)		(123	)		(211	)		(253	)
Net employee benefits income			46			34			78			71

Earnings(loss) from continuing operations before income taxes and extraordinary items		$	192		$	3		$	306		$	50

~~During~~Goodwill ~~the~~amortization ~~second~~included ~~quarter~~in ofeach ~~2001,~~segment for the ~~Company~~second ~~refinanced~~quarter ~~$100 million~~and ofthe ~~commercial~~six ~~paper~~months ~~borrowings~~ended byJune 30, ~~entering~~2001, ~~into~~respectively, awas ~~debt~~$15 million ~~agreement~~and ~~due~~$31 million for ~~April~~Automotive, ~~2003. The~~$5 million ~~interest~~and ~~rate~~$9 million ~~under~~for ~~the~~Systems, ~~agreement~~and is$1 million aand ~~floating~~$1 million ~~rate~~for ~~based~~Space on& ~~three-month LIBOR~~Electronics.

At September 30, 2001, $400 million of short-term obligations were reclassified to long-term obligations, as the Company intends to refinance the obligations on a long-term basis and has the ability to do so under its revolving credit agreements.


		Quarter ended				Six months ended
		June 30				June 30

(In millions)		2002		2001		2002		2001

Intersegment sales
	Automotive	$	—	$	1	$	—	$	2
	Systems		43		53		84		95
	Space & Electronics		6		15		12		30

~~Earnings Per Share~~Inventories

				Third quarter ended						Nine months ended
		June 30				December 31
(In millions except per share data)				September 30						September 30
(In millions)		2002				2001
				2001				2000		2001			2000
Finished products and work in process		$	350			$	324
Numerator
Raw materials and supplies			265				251
	Net earnings(loss)			$	(80.8	)		$	32.0	$	(22.3	)	$	440.8
		$	615			$	575
	Preferred stock dividends				.1				.1		.4			.4
	Numerator for basic earnings per share–net
		earnings(loss) available to common shareholders			(80.9	)			31.9		(22.7	)		440.4
	Effect of dilutive securities
		Preferred stock dividends			–				.1		–			.4
	Numerator for diluted earnings per share–net earnings(loss) available to common shareholders			$	(80.9	)		$	32.0	$	(22.7	)	$	440.8
Denominator
	Denominator for basic earnings per share–weighted-average common shares				125.2				123.5		124.5			123.0
	Effect of dilutive securities
		Convertible preferred stock			–				.8		–			.8
		Employee stock options			–				.7		–			1.3
	Dilutive potential common shares				–				1.5		–			2.1
	Denominator for diluted earnings per share–adjusted weighted-average shares after assumed conversions				125.2				125.0		124.5			125.1
Basic earnings(loss) per share				$	(0.65	)		$	0.26	$	(0.18	)	$	3.58
Diluted earnings(loss) per share				$	(0.65	)		$	0.26	$	(0.18	)	$	3.52

~~Supplemental Cash Flow Information~~Restructurings

	Nine months ended
(In millions)	September 30
	2001			2000
Interest paid (net of amount capitalized)	$	317		$	341
Income taxes paid (net of refunds)		(2	)		135

Automotive

~~Comprehensive~~Severance ~~Income(Loss)~~costs and plant closing accruals related to restructuring plans including reorganizing and downsizing operations were $145 million at December 31, 2001. During the six months ended June 30, 2002, additional charges of $9 million before tax were recorded in cost of sales, primarily for severance costs, of which $6 million was recorded in the second quarter. For the second quarter and six months ended June 30, 2002, $22 million and $51 million, respectively, was used for severance payments and costs related to the consolidation of certain facilities. During the first six months of 2002, a reduction of approximately 1,000 employees, relating to these programs, was achieved. The majority of the remaining balance of $103 million is expected to be used by the end of 2002.

~~The components of comprehensive income(loss), net of related tax, for the third~~Corporate ~~quarter and nine months of 2001 and 2000 are as follows:~~

	Third quarter ended						Nine months ended
(In millions)	September 30						September 30
	2001			2000			2001			2000
Net earnings(loss)	$	(80	)	$	32		$	(22	)	$	441
Effect of foreign currency changes		145			(87	)		(44	)		(297	)
Unrealized gains (losses) on securities		(228	)		(142	)		(231	)		(84	)
Deferred cash flow hedges		55			–			(2	)		–
Comprehensive income(loss)	$	(108	)	$	(197	)	$	(299	)	$	60

During 2001, the Company announced restructuring actions to reduce employee headcount and related costs. The Company had restructuring reserves of $10 million for severance and related costs at December 31, 2001, of which $5 million was used in the six months ended June 30, 2002. The balance of $5 million is expected to be used by the end of 2002.

~~The~~Accounts ~~components~~Receivables ~~of accumulated other comprehensive income(loss), net of related~~Securitized ~~tax, at September 30, 2001 and December 31, 2000 are as follows:~~

	September 30			December 31
(In millions)	2001			2000
Effect of foreign currency changes	$	(467	)	$	(423	)
Unrealized gains on securities		222			453
Deferred cash flow hedges		(2	)		–
Minimum pension liability adjustments		(22	)		(22	)
Accumulated other comprehensive income(loss)	$	(269	)	$	8

During the fourth quarter of 2001, the Company established a $350 million accounts receivable securitization program. Under this program, the Company sells accounts receivables to a wholly-owned, fully consolidated, bankruptcy remote, special purpose subsidiary, TRW Receivables Inc. The outstanding balance of receivables sold to the special purpose subsidiary at June 30, 2002 was $532 million compared to $489 million at December 31, 2001. The undivided interest in the receivables portfolio sold to the financial conduits at June 30, 2002 was $350 million compared to $327 million at December 31, 2001. The loss on sale for the second quarter and six months of 2002 was $2 million and $4 million, respectively, and was recorded in other (income)expense-net.

~~New~~The ~~Accounting~~table ~~Pronouncements~~below summarizes certain cash flows of the special purpose subsidiary for the six months ended June 30, 2002:

In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 141, “Business Combinations” and SFAS No. 142, “Goodwill and Intangible Assets”. Statement 141 requires companies to account for acquisitions entered into after June 30, 2001 using the purchase method and establishes criteria to be used in determining whether acquired intangible assets are to be recorded separately from goodwill. This criterion is to be applied to business combinations completed after June 30, 2001. Statement 142 sets forth the accounting for goodwill and intangible assets after the completion of a business acquisition and for goodwill and intangible assets already recorded. Goodwill will no longer be amortized, rather, it will be tested for impairment by comparing the asset’s fair value to its carrying value as required by the statement. The Company will adopt Statement 142 on January 1, 2002.


(In millions)

Average monthly proceeds from receivables securitization	$	325
Monthly accumulation of proceeds from receivables securitization		1,951

~~The~~This ~~Company~~transaction ~~has~~is ~~approximately~~accounted ~~$3.3 billion~~for ~~of goodwill recorded in its balance sheet~~ as ofa ~~September 30,~~sale ~~2001. Amortization expense related to goodwill for the first nine months~~ of ~~2001 was approximately $74 million before taxes, $65 million after taxes. Management is currently evaluating~~ the ~~impact~~receivables ofunder the ~~adoption~~provisions of ~~these~~SFAS ~~statements.~~140, ~~The~~“Accounting ~~effect~~for onTransfers ~~the~~and ~~Company’s~~Servicing ~~results~~ of Financial ~~operations~~Assets and ~~financial~~Extinguishments ~~position during 2002 and any cumulative effect as a result~~ of ~~adopting Statement 142 are not determinable at this time~~Liabilities.”

~~The~~Financial ~~FASB also recently issued SFAS No. 143, “Accounting for Asset Retirement~~Instruments ~~Obligations” and SFAS No. 144, “Accounting for the Impairment or Disposal of~~ ~~Long-Lived Assets”.~~

~~Statement~~Foreign ~~143~~currency ~~requires~~forward ~~companies~~contracts to– ~~record~~The ~~the~~Company ~~fair~~manufactures ~~value~~and ofsells ~~a liability for~~its ~~asset~~products ~~retirement~~in ~~obligations~~countries inthroughout the ~~period~~world. As a result, it is exposed to fluctuations in ~~which~~foreign ~~they~~currency ~~are~~exchange ~~incurred~~rates. The Company enters into ~~statement~~forward ~~applies~~contracts and, to a ~~company’s~~lesser ~~legal~~extent, ~~obligations~~purchased ~~associated~~currency ~~with~~options ~~the~~to hedge ~~retirement~~portions of aits ~~tangible~~foreign ~~long-lived~~currency ~~asset~~denominated ~~that~~forecasted ~~results~~revenues, ~~from~~purchases and the ~~acquisition,~~subsequent cash flows. The critical terms of the hedges are the same as ~~construction~~the underlying forecasted transactions, and ~~development~~the hedges are considered to be perfectly effective to offset the changes in fair value of cash flows from the hedged transactions. Gains or losses on these instruments, which mature at various dates through April 2007, are generally recorded in other comprehensive income(loss) until the ~~normal~~underlying ~~operation~~transaction is recognized in net earnings. The earnings impact is reported in either sales, cost of asales, ~~long~~or other (income)expense-~~lived~~net, to match the underlying transaction. The Company ~~asset~~designated these contracts as cash flow hedges. The fair values of foreign currency forward contracts related to the Aeronautical Systems business are reported in the Balance Sheets in assets and liabilities held for sale.

~~When~~In ~~a liability is initially recorded~~addition, the ~~company~~Company ~~would~~enters ~~capitalize~~into ~~the~~certain ~~cost, thereby~~foreign ~~increasing~~currency ~~the~~forward ~~carrying amount of the related asset. The capitalized~~contracts ~~asset~~that ~~retirement~~are ~~cost~~not istreated ~~depreciated~~as ~~over~~hedges ~~the~~under ~~life~~SFAS of133, ~~the~~“Accounting ~~respective~~for ~~asset~~Derivative ~~while~~Instruments ~~the~~and ~~liability~~Hedging isActivities” ~~accreted~~ to ~~its~~hedge ~~present~~recognized ~~value.~~foreign ~~Upon settlement of the~~currency ~~liability,~~transactions. ~~the~~Gains ~~obligation~~and islosses ~~settled~~on atthese ~~its~~contracts are recorded ~~amount~~in ornet ~~the company~~earnings ~~incurs~~and aare ~~gain~~substantially oroffset ~~loss.~~by ~~The~~the ~~statement~~earnings iseffect ~~effective~~of ~~for~~the ~~fiscal~~revaluation ~~years~~of ~~beginning~~the ~~after~~underlying ~~June 30,~~foreign ~~2002~~currency denominated transaction.

~~Statement~~At ~~144~~June 30, ~~addresses~~2002, the ~~accounting~~Company ~~and~~had ~~reporting~~foreign ~~for~~currency ~~the~~forward ~~impairment or~~contracts ~~disposal~~outstanding ofwith ~~long-lived~~a ~~assets.~~notional ~~The~~amount ~~statement~~of ~~provides~~$1.9 billion, adenominated ~~single~~principally ~~accounting~~in ~~model~~the ~~for~~U.S. ~~long-lived~~dollar, ~~assets~~the toeuro beand ~~disposed~~the ~~of.~~British ~~New~~pound, ~~criteria~~of ~~must~~which be$1.2 billion ~~met to~~related ~~classify~~to the ~~asset~~Aeronautical asSystems ~~an asset held-for-sale~~business. ~~This~~Foreign ~~statement~~exchange ~~also~~contracts ~~focuses~~are onplaced ~~reporting~~with ~~the~~a ~~effects~~number of amajor ~~disposal~~financial ofinstitutions ato ~~segment~~minimize ofcredit ~~a business~~risk. ~~This statement~~No collateral is ~~effective~~held ~~for~~in ~~fiscal~~relation ~~years~~to ~~beginning~~the ~~after December 15~~contracts, ~~2001~~and the Company anticipates that these financial institutions will satisfy their obligations under the contracts.

Interest rate swap agreements – The Company ~~believes~~enters ~~that~~into interest rate swaps to manage the ~~adoption~~risks ofand ~~SFAS~~costs Noassociated with its financing activities. The net payments or receipts under the agreements are recognized as an adjustment to interest expense. At June ~~143~~30, ~~and~~2002, ~~144~~the ~~will~~Company ~~not~~had ~~have~~$100 million anotional ~~material~~principal ~~impact~~amount onof interest rate swaps outstanding that converted a portion of its ~~financial~~variable ~~position~~rate ordebt ~~results~~to a fixed rate through August 2005. The interest rate swaps have a fair market value loss of ~~operations~~$12 million at June 30, 2002. These agreements were designated as cash flow hedges.

~~Contingencies~~Forward share sale agreements – The Company hedges certain equity investments in publicly traded companies. These instruments protect the forecasted cash flows resulting from the sale of shares in the Company’s investments in RFMD and Applera Corporation – Celera Genomics Group (Celera). The fair market value of these hedges as of June 30, 2002 was a $201 million gain. These agreements were designated as cash flow hedges.

~~Various~~The ~~claims,~~following ~~lawsuits~~table ~~and~~represents ~~administrative proceedings are pending or threatened against~~ the ~~Company~~movement ~~or its subsidiaries, arising from the ordinary course~~ of ~~business~~amounts ~~with~~reported ~~respect~~in ~~to commercial, product liability and~~other ~~environmental~~comprehensive ~~matters.~~income(loss) ~~Taking into account established reserves, management believes that the ultimate resolution~~ of ~~each~~deferred ~~of the following lawsuits will not have a material effect on the Company’s financial condition or results of operations. The resolution of one or more of such claims may have a material effect on~~ cash flow ~~for~~hedges, ~~the~~net ~~period~~of ~~in which such claims are resolved~~tax.

During 1996, the United States Department of Justice (DOJ) advised the Company that it had been named as a defendant in lawsuits brought by a former employee of the Company originally filed under seal in 1994 and 1995 in the United States District Court for the Central District of California under the qui tam provisions of the civil False Claims Act. The DOJ subsequently advised that it would intervene in the litigation. In a consolidated complaint filed jointly by the former employee and the DOJ, it is alleged that the Company misclassified various costs and improperly charged those costs to certain of its federal contracts, that the United States has incurred substantial damages, and that the Company is liable for treble damages, penalties, post-judgment interest, costs (including attorneys’ fees) and “all other proper relief.” All substantive allegations against the Company have been denied in the Company’s answer to the consolidated complaint. The Company cannot presently predict the outcome of this lawsuit.


	Quarter ended						Six months ended
	June 30						June 30

(In millions)	2002			2001			2002			2001

Beginning balance	$	(2	)	$	(31	)	$	(2	)	$	—
Net change in derivative fair value and other movements		79			(29	)		79			(61	)
Amounts reclassified to earnings		2			3			2			4

Other comprehensive income(loss)	$	79		$	(57	)	$	79		$	(57	)

In October 2000, Kelsey-Hayes Company (formerly known as Fruehauf Corporation) was served with a grand jury subpoena relating to a criminal investigation being conducted by the U.S. Attorney for the Southern District of Illinois. The U.S. Attorney has informed the Company that the investigation relates to possible wrongdoing by Kelsey-Hayes Company and others involving certain loans made by Kelsey-Hayes Company’s then parent corporation to Fruehauf Trailer Corporation, the handling of the trailing liabilities of Fruehauf Corporation and actions in connection with the 1996 bankruptcy of Fruehauf Trailer Corporation. Kelsey-Hayes Company became a wholly-owned subsidiary of TRW upon TRW’s acquisition of LucasVarity in 1999. The Company is cooperating with the investigation and cannot presently predict the outcome of the investigation.

~~Independent~~Debt ~~Accountants’~~and ~~Review~~Credit ~~Report~~Agreements

~~Audit~~The ~~Committee~~Company amended and restated the revolving credit agreement that expired on January 22, 2002 in a reduced aggregate amount of $1.25 billion with 20 banks and established a new expiration date of January 21, 2003. The Company has an option to extend the maturity of outstanding borrowings at that time to January ~~Board~~21, 2004. The Company also refinanced $250 million of ~~Directors~~commercial paper ~~TRW~~borrowings ~~Inc~~by entering into a term loan agreement with 10 banks due January 25, 2005. The interest rate under the agreements is either the prime rate or a rate based on London Interbank Offered Rate (LIBOR), at the option of the Company.

WeThe ~~have~~Company ~~reviewed~~repaid ~~the~~$300 million ~~accompanying~~of ~~unaudited~~medium-term ~~balance~~notes ~~sheet~~that ofmatured ~~TRW~~during ~~Inc. and~~the ~~subsidiaries~~first asquarter of ~~September 30,~~2002. ~~2001,~~Interest ~~and~~on the ~~related~~notes ~~unaudited~~was ~~statements~~based ~~of operations~~on ~~for the~~ three-month ~~and nine-month periods ended September 30, 2001~~LIBOR. ~~and~~A ~~2000,~~subsidiary ~~and~~of the ~~unaudited~~Company ~~statements~~also ofcompleted ~~cash~~an ~~flows~~unsolicited ~~for~~repurchase ~~the~~of ~~nine-month periods~~£5.4 ~~ended~~million ~~September 30,~~of ~~2001~~its ~~and~~10.875 percent ~~2000,~~bonds ~~included~~due in2020 during the ~~Form 10-Q~~first quarter of ~~TRW Inc~~2002. ~~for~~ ~~the~~The ~~quarterly~~repurchase ~~period~~resulted ~~ended~~in ~~September 30,~~an ~~2001.~~extraordinary ~~These~~gain ~~financial~~of ~~statements~~$4 million ~~are~~before taxes ($2 ~~the~~million ~~responsibility~~after oftaxes, ~~the~~or ~~Company’s~~$0.02 ~~management~~per share).

WeDuring ~~conducted our reviews in accordance with standards established by~~ the ~~American~~ ~~Institute~~second ofquarter ~~Certified Public Accountants. A review~~ of ~~interim financial information consists principally of applying analytical procedures to financial data~~2002, ~~and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in~~ the ~~United~~Company ~~States, which~~repaid ~~will~~$400 million ~~be performed for the full year with the objective~~ of ~~expressing an~~fixed ~~opinion~~rate ~~regarding~~notes ~~the~~that ~~financial statements taken as a whole~~matured. ~~Accordingly, we~~ ~~do not express such an opinion.~~

Based on our reviews, we are not aware of any material modifications that should be made to the financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States.

We have previously audited, in accordance with auditing standards generally accepted in the United States, the balance sheet of TRW Inc. as of December 31, 2000, and the related statements of operations, cash flows, and changes in shareholders’ investment for the year then ended (not presented herein), and in our report dated January 22, 2001, we expressed an unqualified opinion on those financial statements. Those financial statements and our report on them are included in the Form 10-K of TRW Inc. for the year ended December 31, 2000. In our opinion, the information set forth in the accompanying balance sheet as of December 31, 2000, is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived.

/s/ Ernst & Young LLP

Cleveland, Ohio November 7, 2001

~~Item 2.~~Earnings ~~Management’s~~Per ~~Discussion and Analysis of Financial Condition and Results of Operations~~Share

RESULTS OF OPERATIONS


			Quarter ended						Six months ended
			June 30						June 30

(In millions except per share data)			2002			2001			2002			2001

Numerator

	Earnings(loss) from continuing operations before extraordinary items		$	124.5		$	(18.2	)	$	201.7		$	20.4
	Discontinued operations			(683.4	)		21.2			(672.0	)		38.1

	Earnings(loss) before extraordinary items			(558.9	)		3.0			(470.3	)		58.5
	Extraordinary items			—			—			2.5			—

	Net earnings(loss)			(558.9	)		3.0			(467.8	)		58.5
	Preferred stock dividends			0.1			0.1			0.3			0.3

	Numerator for basic earnings per share — net earnings(loss) available to common shareholders			(559.0	)		2.9			(468.1	)		58.2
	Effect of dilutive securities Preferred stock dividends			0.1			0.1			0.3			0.3

	Numerator for diluted earnings per share — net earnings(loss) available to common shareholders		$	(558.9	)	$	3.0		$	(467.8	)	$	58.5

Denominator
	Denominator for basic earnings per share — weighted-average common shares			127.5			124.5			126.8			124.1
	Effect of dilutive securities
		Convertible preferred stock		—			0.7			—			0.7
		Employee stock options		—			0.4			—			0.4

	Dilutive potential common shares			—			1.1			—			1.1

	Denominator for diluted earnings per share — adjusted weighted-average shares after assumed conversions			127.5			125.6			126.8			125.2

Earnings Per Share
	Basic:
		Earnings(loss) from continuing operations before extraordinary items	$	0.98		$	(0.15	)	$	1.59		$	0.17
		Discontinued operations		(5.36	)		0.17			(5.30	)		0.30
		Extraordinary items		—			—			0.02			—

		Net earnings(loss)	$	(4.38	)	$	0.02		$	(3.69	)	$	0.47

	Diluted:
		Earnings(loss) from continuing operations before extraordinary items	$	0.98		$	(0.15	)	$	1.59		$	0.17
		Discontinued operations		(5.36	)		0.17			(5.30	)		0.30
		Extraordinary items		—			—			0.02			—

		Net earnings(loss)	$	(4.38	)	$	0.02		$	(3.69	)	$	0.47

(In millions except per share data)

	Third quarter ended												Nine months ended
	September 30												September 30
										Percent												Percent
	2001			2000			Change			Inc (Dec)			2001			2000			Change			Inc (Dec)
Sales	$	3,862		$	4,053		$	(191	)		(5	%)	$	12,305		$	13,094		$	(789	)		(6	%)
Profit before taxes		107			199			(92	)		(47	%)		472			1,170			(698	)		(60	%)
Net earnings(loss)		(80	)		32			(112	)		–			(22	)		441			(463	)		–
Earnings (loss) per share		(0.65	)		0.26			(0.91	)		–			(0.18	)		3.52			(3.70	)		–
Effective tax rate		30.4	%		36.0	%								(178.8	%)		37.6	%

The third quarter 2001 sales decreased 5 percent compared with third quarter 2000 sales as a result of lower volumes of approximately $70 million; divestitures of approximately $59 million; price reductions of approximately $30 million; and the effect of foreign currency exchange of approximately $24 million.

Net earnings(loss) and earnings per share for the third quarter of 2001 were a loss of $80 million after tax, or $0.65 per share, compared with net earnings of $32 million, or $0.26 per share, in 2000.

For the third quarter 2001, unusual items resulted in a net loss of $234 million before tax, $155 million after tax, or $1.24 per share. The unusual items in the third quarter 2001 included after tax charges of $184 million for asset impairments, $63 million for pending and threatened litigation, and restructuring costs of $19 million, offset by after tax gains from the sales of assets, primarily RFMD common stock, of $111 million.

For the third quarter of 2000, unusual items resulted in a net loss of $90 million before tax, $59 million after tax, or $0.47 per share. The unusual items for the third quarter of 2000 primarily included after tax charges related to the consolidation of two air bag manufacturing operations of approximately $36 million, unrealized losses on foreign currency hedges of $14 million and automotive restructuring charges of $10 million.

Gross profit of $601 million in the third quarter of 2001 increased approximately 5 percent from $574 million in 2000. Gross profit in the third quarter 2001 included unusual items related to restructuring of $5 million and asset impairment charges of $14 million. Gross profit in the third quarter of 2000 included amounts primarily for asset impairment charges related to the consolidation of two air bag manufacturing operations, of approximately $55 million and automotive restructuring expenses of $4 million. Excluding the effects of these charges in both years, gross profit declined $13 million primarily due to pricing pressure of approximately $30 million, lower volume and adverse product mix of approximately $30 million and divestitures of approximately $15 million, partially offset by net cost reductions of approximately $55 million, including a product recall and inventory adjustments of approximately $20 million. Excluding unusual items, gross profit, as a percentage of sales, was 16.1 percent for the third quarter 2001, compared to 15.6 percent in the third quarter 2000.

Administrative and selling expenses of $260 million in the third quarter 2001 increased $23 million compared with the third quarter of 2000. Administrative and selling expenses included unusual items of $21 million and $10 million in the third quarters of 2001 and 2000, respectively, related to restructuring charges. Excluding the effects of unusual items, administrative and selling expenses increased $12 million, primarily as a result of higher expenses on reimbursable government contracts, which more than offset net reductions in the automotive segments.

Interest expense of $117 million in the third quarter of 2001 decreased $14 million from $131 million in 2000, primarily due to lower average debt outstanding and lower short-term interest rates in the United States, partially offset by higher interest rates on fixed-rate debt issuances.

~~Amortization~~Comprehensive ~~of goodwill and intangible assets of $44 million in the third~~Income(Loss) ~~quarter of 2001 increased from $38 million in 2000 as a result of asset~~ ~~impairment charges relating to intangible assets of $10 million.~~

~~Other~~The ~~(income)expense-net~~components ~~was expense~~ of ~~$179 million~~comprehensive inincome(loss), ~~the~~net ~~third quarter~~ of ~~2001~~ ~~and~~tax, ~~expense~~for ~~of $1 million in~~ the ~~third~~ second quarter ~~of 2000. Included in 2001 were gains on sales of assets, primarily sales of shares of RFMD common stock, of $174 million, net charges related to pending~~ and ~~threatened~~six ~~litigation~~months of ~~$97 million~~2002 and ~~asset~~ ~~impairments~~2001 ofare ~~$257 million,~~as ~~primarily related to the Company’s~~follows: ~~investment in Astrolink. Included in 2000 was $22 million related to foreign~~ ~~currency exchange losses on hedges of anticipated transactions.~~

The effective income tax rate was 30.4 percent in the third quarter of 2001 compared with 36.0 percent in the third quarter of 2000. Excluding unusual items, the effective income tax rates were 36.1 percent in the third quarter of 2001 and 34.6 percent in the third quarter of 2000.


	Quarter ended						Six months ended
	June 30						June 30

(In millions)	2002			2001			2002			2001

Net earnings(loss)	$	(559	)	$	3		$	(468	)	$	58
Foreign currency exchange gain(loss)		219			(70	)		187			(189	)
Unrealized gain(loss) on securities		(39	)		238			(68	)		(3	)
Unrealized gain(loss) on cash flow hedges		81			(26	)		81			(57	)
Minimum pension liability		1			—			1			—

Comprehensive income(loss)	$	(297	)	$	145		$	(267	)	$	(191	)

~~Sales~~The ~~for~~components ~~the first nine months~~ of ~~2001~~accumulated ~~decreased~~other ~~$789 million~~comprehensive income(loss), ornet ~~6 percent compared with 2000 sales. The decrease in sales is due to lower volumes~~ of ~~approximately~~ ~~$260 million~~tax, ~~the effect of foreign currency exchange of~~at ~~approximately $230~~June ~~million~~30, ~~divestitures~~2002 ofand ~~approximately $165~~December ~~million~~31, ~~and lower~~2001 ~~pricing~~are ofas ~~approximately $120 million.~~follows:

Net earnings(loss) and earnings per share for the first nine months of 2001 were a loss of $22 million after tax, or $0.18 per share, compared with net earnings of $441 million, or $3.52 per share, in 2000.


	June 30			December 31
(In millions)	2002			2001

Foreign currency exchange loss	$	(337	)	$	(524	)
Unrealized gain on securities		50			118
Unrealized gain(loss) on cash flow hedges		79			(2	)
Minimum pension liability adjustments		(60	)		(61	)

Accumulated other comprehensive income(loss)	$	(268	)	$	(469	)

~~For the first nine months of 2001, unusual items resulted in a net loss of $333~~Contingencies ~~million before tax, $230 million after tax, or $1.85 per share. The unusual~~ ~~items for the first nine months of 2001 included a $236 million after tax~~ charge for asset impairments, other after tax charges, primarily automotive restructuring, of approximately $73 million and pending and threatened litigation of $63 million. These charges were partially offset by after tax gains from asset sales of approximately $142 million.

~~For~~Various ~~the first nine months of 2000~~claims, ~~unusual~~lawsuits items resulted in net gains of $31 million after tax, or $0.24 per share. The unusual items for the first nine months of 2000 included after tax gains from asset sales, including sales of shares of RFMD common stock and ofadministrative ~~the~~proceedings ~~Company’s~~with ~~Nelson~~respect ~~Stud Welding and Australian Steering businesses of $154 million, income relating~~ to ~~the merger~~ ~~of TRW Milliwave Inc.~~commercial, ~~with~~product ~~Endgate~~liability ~~Corporation to form Endwave Corporation of $23 million~~ and onenvironmental ~~the~~matters ~~exchange~~are ofpending ~~TRW’s interest in~~or ~~Paracel Inc. for shares in Celera of $15 million. These gains were partially offset by after tax charges for warranty reserves, claims, and~~ threatened ~~litigation~~against ofthe ~~$49 million,~~Company ~~unrealized~~or ~~losses~~its ~~on foreign currency hedges of $45 million~~subsidiaries, ~~charges~~arising ~~relating~~from to the ~~consolidation of two~~ordinary ~~air~~course ~~bag manufacturing operations~~ of ~~approximately $36 million, and severance and plant closing costs for the automotive restructuring program of $31 million~~business.

~~Gross profit of $1~~Further,~~838 million~~ ~~for~~product ~~the~~liability ~~first~~claims ~~nine~~may ~~months~~be ofasserted ~~2001 decreased $271 million, or approximately 13 percent from $2,109 million~~ in ~~2000, due to~~ the ~~combination~~future offor ~~lower~~events ~~volume,~~not currently ~~unfavorable~~known ~~product~~by ~~mix~~management. ~~and~~Although the ~~effect~~ultimate ofliability ~~a seatbelt~~from ~~recall totaling $205 million, price reductions of approximately $120~~these ~~million,~~potential ~~the~~claims ~~effect~~cannot ofbe ~~foreign~~ascertained ~~currency~~at ~~exchange of approximately $55~~June ~~million and~~30, ~~divestitures of approximately $45 million~~2002, ~~partially~~management ~~offset~~does ~~by net cost~~not ~~reductions~~anticipate ofthat ~~approximately~~any $80 million and by lower unusual items of $71 million. Gross profit in 2001 included unusual items for restructuring charges of approximately $34 million and asset impairment charges of $14 million. Unusual items in 2000 included amounts primarily for asset impairment charges related ~~to the consolidation of two air bag manufacturing operations~~liability, ofafter ~~approximately~~consideration ~~$55 million, warranty reserves, and claims~~ of ~~$40 million and automotive~~insurance ~~restructuring expenses of $24 million. Excluding unusual items~~recovery, ~~gross~~would ~~profit, as~~have a ~~percentage~~material ofadverse ~~sales,~~effect ~~was~~on ~~15.3 percent for~~ the ~~first~~Company’s ~~nine months of 2001,~~financial ~~compared to 17~~position.~~0 percent in 2000.~~

~~Administrative~~During ~~and~~1996, ~~selling~~the ~~expenses~~United States Department of ~~$795~~Justice (DOJ) ~~million~~advised the Company that it had been named as a defendant in lawsuits brought by a former employee of the Company originally filed under seal in 1994 and 1995 in the United States District Court for the ~~first~~Central ~~nine~~District ~~months~~of California under the qui tam provisions of ~~2001~~the ~~decreased~~civil ~~$20 million~~False ~~from~~Claims ~~$815 million~~Act. The DOJ subsequently advised that it would intervene in ~~2000~~the litigation. ~~Excluding~~In ~~unusual~~a consolidated complaint filed jointly ~~items~~by inthe ~~2001~~former employee and ~~2000~~the ~~related~~DOJ, toit ~~restructuring~~is ~~charges~~alleged ofthat ~~approximately~~the ~~$52~~Company ~~million~~misclassified various costs and ~~$19 million,~~improperly ~~respectively,~~charged ~~administrative~~those ~~and~~costs ~~selling~~to ~~expenses~~certain of ~~decreased~~its ~~$53 million.~~federal ~~The~~contracts, ~~decrease~~that ~~was~~the ~~primarily~~United ~~due~~States tohas incurred substantial damages, and that the ~~effect~~Company ofis liable for treble damages, penalties, post-judgment ~~divestitures~~interest, ofcosts ~~approximately~~(including ~~$42 million~~attorneys’ fees) and “all other proper relief.” All substantive allegations against the ~~effect~~Company ofhave ~~foreign~~been ~~currency~~denied in the Company’s ~~exchange~~answer to the consolidated complaint. The Company cannot currently predict the outcome of ~~$16 million~~this lawsuit.

~~Research~~possible wrongdoing by Kelsey-Hayes Company and ~~development~~others ~~expenses~~involving ofcertain ~~$353 million~~loans made ~~for~~by ~~the~~Kelsey-Hayes ~~first~~Company’s ~~nine~~then ~~months~~parent ofcorporation to Fruehauf Trailer ~~2001~~Corporation, ~~increased~~the ~~$13 million~~handling ~~from~~of ~~$340 million~~the intrailing ~~2000,~~liabilities ~~primarily~~of ~~due~~Fruehauf toCorporation ~~increased~~and ~~spending~~actions in ~~Space~~connection &with ~~Electronics~~the ~~for~~1996 ~~initiatives~~bankruptcy ~~focused~~of onFruehauf Trailer ~~commercializing~~Corporation. ~~the~~Kelsey-Hayes Company became a wholly-owned subsidiary of TRW upon TRW’s ~~defense~~acquisition ~~technologies~~of LucasVarity in 1999. The Company is cooperating with the investigation and is unable to predict the outcome of the investigation at this time.

~~Interest~~On ~~expense~~May 6, of2002, ~~$368 million~~ArvinMeritor ~~for~~Inc. filed suit against the ~~first~~Company ~~nine~~in ~~months~~the United States District Court for the Eastern District of ~~2001~~Michigan, ~~decreased~~claiming breach of ~~$25 million~~contract ~~from~~and ~~$393 million~~breach of warranty in ~~2000,~~connection ~~due~~with tocertain ~~lower~~tie ~~average~~rod ~~debt~~ends ~~outstanding~~that the Company supplied to ArvinMeritor and ~~lower~~the ~~short-term~~voluntary ~~interest~~recall ~~rates~~of insome of these tie rod ends. ArvinMeritor subsequently recalled all of the ~~United~~tie ~~States~~rod ends, ~~partially~~and claims ~~offset~~that it is entitled to reimbursement by the Company for the costs ~~higher~~associated ~~interest~~with ~~expense~~both the products recalled by the Company and those recalled by ArvinMeritor on ~~fixed~~its ~~rate~~own. ~~debt~~ArvinMeritor ~~issuances~~is seeking an undisclosed amount of compensatory and consequential damages. Management believes the Company has meritorious defenses and intends to defend vigorously the claims asserted against the Company, but cannot predict the outcome of this lawsuit.

~~Other~~The ~~(income)expense-net~~Company ~~was~~and ~~expense~~certain of ~~$222 million~~its insubsidiaries ~~the~~have ~~first~~been ~~nine~~subject ~~months of 2001 and income of $251 million~~ in ~~2000.~~recent ~~Included in 2001 were the~~years ~~following~~to ~~items:~~some ~~gains~~asbestos-related onclaims. ~~sales~~Management ofbelieves ~~assets,~~that ~~primarily~~such ~~sales~~claims ofwill ~~shares of RFMD~~not ~~common~~have ~~stock, of approximately $204 million,~~ a ~~charge~~material ~~related~~adverse toeffect ~~pending~~on ~~and threatened litigation of $97 million and asset impairment charges of $322 million, primarily related to~~ the Company’s ~~investment~~financial incondition ~~Astrolink.~~or ~~Included~~results ~~in 2000 were the following items: gains on sales~~ of ~~shares~~operations. ofIn ~~RFMD common stock of $217 million~~general, ~~gain~~these onclaims ~~the~~seek ~~sale~~damages offor ~~Nelson~~illnesses ~~Stud~~alleged ~~Welding of~~to ~~approximately~~have ~~$31 million,~~resulted ~~gain~~from onexposure ~~the~~to ~~exchange~~asbestos ofused ~~Paracel~~in ~~stock~~certain ofcomponents ~~$23 million,~~sold ~~gain~~by on the Company ~~Endwave merger of $57 million~~ and/or ~~$70 million~~its ~~related to foreign currency exchange losses on hedges of anticipated transactions~~subsidiaries.

~~The~~Management ~~effective~~believes ~~tax~~the ~~rate~~majority ~~was~~of ~~178~~the claimants were assembly workers at major U.~~8 percent~~S. ~~for~~automobile ~~the~~manufacturers. ~~nine~~The ~~months~~vast ~~ended~~majority ~~September~~of these claims name as ~~30,~~defendants ~~2001~~numerous ~~compared~~manufacturers toand suppliers of a wide variety of products ~~37.6 percent~~allegedly incontaining ~~2000~~asbestos. ~~Excluding~~Management ~~unusual~~believes ~~items~~that, to the ~~effective~~extent ~~tax~~that any ~~rates~~of ~~were 36.0 percent~~the ~~and~~products ~~35.6 percent~~sold ~~for~~by the ~~nine~~Company’s ~~months~~automotive-related ~~ended~~subsidiaries ~~September 30~~and at issue in these cases contained asbestos, ~~2001~~the ~~and~~asbestos was encapsulated. Based upon several ~~2000~~years of experience with such claims, ~~respectively~~management believes that only a small proportion of the claimants has or will ever develop any asbestos-related impairment.

Total annual settlement costs in connection with asbestos-related claims over the last five years as well as legal fees and expenses to defend these cases have been immaterial. These claims are strongly disputed and it has been the Company’s policy to defend against them aggressively. The Company and its subsidiaries have been successful in obtaining dismissal of many cases without any payment whatsoever. Moreover, there is significant insurance coverage with solvent carriers with respect to these claims.

Taking into account established reserves, management believes that the ultimate resolution of each of the foregoing matters will not have a material effect on the Company’s financial condition or results of operations. The resolution of one or more of such matters may have a material effect on cash flow for the period in which such matters are resolved.

Subsequent Event

On July 26, 2002 the Company gave notice that on August 30, 2002 all outstanding shares of its Cumulative Serial Preference Stock II, $4.40 Convertible Series 1 (the “Series 1 Preferred Stock”), will be redeemed at a redemption price of $104 per share, and all outstanding shares of its Cumulative Serial Preference Stock II, $4.50 Convertible Series 3 (the “Series 3 Preferred Stock”), will be redeemed at a redemption price of $100 per share.

~~RESULTS~~business OFon ~~SEGMENTS~~August 30, 2002. As of July 24, 2002, approximately 77,800 shares of Series 1 and Series 3 Preferred Stock were outstanding. To the extent that all of these shares are converted into TRW common stock, then approximately 617,400 shares of TRW common stock will be issued.

~~Systems~~The ~~(formerly~~regular ~~known~~quarterly asdividends ~~Systems~~of $1.10 per share on the Series 1 Preferred &Stock ~~Information~~and ~~Technology)~~$1.125 per share on the Series 3 Preferred Stock, are payable on September 15, 2002 to holders of record on August 9, 2002.

	Third quarter ended											Nine months ended
(In millions)	September 30											September 30
									Percent										Percent
		2001		2000		Change			Inc (Dec)			2001		2000		Change			Inc(Dec)
Sales		$	761	$	836	$	(75	)		(9	%)	$	2,349	$	2,447	$	(98	)		(4	%)
Profit before taxes			40		57		(17	)		(30	%)		141		181		(40	)		(22	%)

Sales for the third quarter of 2001 decreased 9 percent compared to the third quarter of 2000, primarily due to lower volume from the completion of several contracts early in 2001, including the U.S. Census Bureau and the TRW Environmental Safety Systems (TESS) programs of approximately $130 million. These decreases were partially offset by higher volume on existing core programs, including space and missile systems contracts of $56 million.

Profit before taxes of $40 million in the third quarter 2001 decreased $17 million from the prior year. Excluding unusual items in 2001 of $13 million relating to asset impairment charges for the write-down of intangible assets, profit before taxes decreased $4 million, which was primarily due to lower volume.

Sales for the nine months ended September 30, 2001 decreased $98 million from 2000, primarily due to lower volume on contracts nearing completion or completed during the year of $306 million, offset by higher volume on existing programs of $175 million and new business of $34 million.

Profit before taxes of $141 million for the nine months ended September 30, 2001 included unusual items related to asset impairment charges of $13 million. Profit before taxes for the nine months ended September 30, 2000 included an unusual item related to a gain on exchange of the Company’s interest in Paracel Inc. for shares in Celera of $23 million. Excluding unusual items, profit before taxes for the nine months ended September 30, 2001 decreased $4 million primarily due to lower volume.

Space & Electronics

	Third quarter ended												Nine months ended
(In millions)	September 30												September 30
										Percent											Percent
		2001			2000		Change			Inc (Dec)			2001			2000		Change			Inc(Dec)
Sales		$	505		$	463	$	42			9	%	$	1,518		$	1,416	$	102			7	%
Profit(loss) before taxes			(47	)		41		(88	)		–			(53	)		411		(464	)		–

Sales for the third quarter of 2001 increased 9 percent compared to the third quarter of 2000, primarily due to higher volume on core programs of $57 million, offset in part by $11 million in sales from a previously consolidated subsidiary now accounted for under the equity method.

Profit(loss) before taxes of a loss of $47 million for the third quarter 2001 decreased $88 million compared to the third quarter of 2000. During the third quarter of 2001, unusual items included an asset impairment charge related to the Company’s investment in Astrolink of $242 million, offset by net gains of $168 million, which primarily consisted of gains on the sales of shares of RFMD common stock. In the prior year third quarter, a gain of $2 million relating to the Company’s investment in an affiliate was recorded. Excluding unusual items, profit before taxes for the third quarter 2001 decreased $12 million mainly due to increased investments and costs in the commercialization of defense technologies of approximately $21 million, partially offset by higher volume on several core satellite programs of $11 million.

~~Sales~~Independent ~~for~~Accountants’ ~~the~~Review ~~nine months ended September 30, 2001 of $1,518 million increased~~Report ~~$102 million from $1,416 million in 2000, primarily due to higher volume on~~ existing core programs of approximately $130 million, offset in part by $11 million in sales from a previously consolidated subsidiary now accounted for under the equity method and lower volume on several defense programs nearing completion or completed of approximately $8 million.

~~Profit(loss)~~Audit ~~before~~Committee ~~taxes for the nine months ended September 30, 2001 was a loss~~ of ~~$53 million as compared to profit of $411 million in 2000. Profit(loss) before taxes for~~ the ~~nine months ended September 30, 2001 included~~ ~~unusual~~Board ~~items consisting~~ of ~~asset impairment charges of approximately~~Directors ~~$242~~TRW million related to the Company’s investment in Astrolink, charges of $65 million related to the Company’s investment in, and its share of asset impairment recorded by Endwave, and restructuring charges of $6 million, partially offset by gains, primarily sales of shares of RFMD common stock, of $169 millionInc. ~~Unusual items in 2000~~ ~~included gains on the sales of shares of RFMD common stock of approximately~~ $217 million and a gain of $53 million related to the Endwave merger. Excluding the effect of unusual items, profit before taxes for the first nine months of 2001 decreased $50 million due to increased equity losses of $17 million and increased investments and costs in the commercialization of defense technologies of approximately $30 million.

~~Asset~~We ~~Impairment~~have reviewed the accompanying unaudited balance sheet of TRW Inc. and subsidiaries as of June 30, 2002, and the related unaudited statements of operations for the three-month and six-month periods ended June 30, 2002 and 2001, and statements of cash flows for the six-month periods ended June 30, 2002 and 2001, included in the Form 10-Q of TRW Inc. for the quarterly period ended June 30, 2002. These financial statements are the responsibility of the Company’s management.

~~During~~We ~~1999,~~conducted ~~the~~our ~~Company,~~reviews ~~along~~in accordance with ~~Lockheed~~standards ~~Martin~~established ~~Global~~by ~~Telecommunications,~~the ~~Telespazio,~~American aInstitute ~~Telecom~~of ~~Italia~~Certified ~~Group~~Public ~~Company~~Accountants. ~~and~~A ~~Liberty~~review ~~Media~~of ~~Group~~interim financial ~~formed~~information aconsists principally of applying analytical procedures to ~~joint~~financial ~~venture~~data, ~~Astrolink~~and ~~International,~~making ~~LLC~~inquiries ~~(Astrolink),~~of topersons ~~provide satellite-based~~responsible ~~global~~for ~~broadband~~financial ~~services~~and accounting matters. ~~The~~It ~~equity~~is ~~partners~~substantially ~~made~~less in scope than an ~~initial~~audit conducted ~~investment~~in ofaccordance ~~$1.3 billion.~~with ~~The~~auditing ~~Astrolink~~standards ~~business~~generally ~~plan~~accepted ~~and~~in the ~~Company’s~~United States, ~~assessment~~which ofwill ~~impairment~~be ofperformed ~~its~~for ~~investment~~the ~~contemplated~~full ~~obtaining~~year ~~additional funding~~with ofthe ~~$2.4 billion.~~objective ~~The~~of ~~Company~~expressing ~~has~~an opinion ~~invested~~regarding ~~$255 million~~the ~~and~~financial ~~accounts for~~statements ~~its~~taken ~~19%~~as ~~interest~~a inwhole. ~~Astrolink~~Accordingly, onwe do ~~the~~not ~~equity~~express ~~method~~such ofan ~~accounting~~opinion.

AtBased ~~September 30,~~on ~~2001~~our ~~Astrolink was in discussions with additional equity partners and with current shareholders to raise the necessary funding through 2001. On October 25~~reviews, ~~2001~~we ~~Lockheed~~are ~~Martin Global Telecommunications announced that it would~~ not ~~provide~~aware ~~additional~~of ~~financing~~any ~~beyond~~material ~~its~~modifications ~~initial $400 million~~that ~~investment.~~should ~~Concurrently,~~be ~~the~~made ~~Company~~to ~~also~~the ~~decided~~financial itstatements ~~will~~referred ~~not~~to ~~provide additional~~above ~~funding.~~for ~~The~~them ~~future~~to ~~viability~~be ~~of Astrolink is contingent upon~~in ~~additional~~conformity ~~funding.~~with ~~Astrolink’s~~accounting ~~Board~~principles isgenerally ~~considering~~accepted ~~several~~in ~~options including whether to significantly delay~~ the ~~project’s~~United ~~launch date or cancel the venture~~States.

AsWe ahave ~~result~~previously ofaudited, ~~these~~in ~~events~~accordance with auditing standards generally accepted in the United States, the ~~Company’s~~balance ~~assessment~~sheet of ~~impairment~~TRW ~~changed~~Inc. ~~and the~~as ~~Company~~of ~~concluded~~December 31, 2001, ~~that~~and the ~~carrying~~related ~~amount~~statements of ~~its~~operations, cash flows, and changes in shareholders’ investment ~~will~~for the year then ended (not ~~be recoverable~~presented herein), and ~~therefore~~in our report dated January 22, ~~recognized~~2002, we expressed an ~~impairment~~unqualified ~~loss~~opinion ofon ~~approximately~~those financial ~~$242~~statements. Those financial statements and our report on them are ~~million~~included ~~before~~in ~~tax,~~the ~~$157~~Form ~~million~~10-K ~~after~~of ~~tax~~TRW atInc. ~~September~~for the year ended December 3031, 2001. In our opinion, the information set forth in the accompanying balance sheet as of December 31, 2001, is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived.

/s/ Ernst & Young LLP

Cleveland, Ohio
July 18, 2002,
except for the “Subsequent Event” note,
as to which the date is July 26, 2002

~~Aeronautical~~Item 2. ~~Systems~~Management’s Discussion and Analysis of Financial Condition and Results of Operations

	Third quarter ended										Nine months ended
(In millions)	September 30										September 30
								Percent										Percent
	2001		2000		Change			Inc(Dec)			2001		2000		Change			Inc(Dec)
Sales	$	269	$	257	$	12			4	%	$	804	$	806	$	(2	)		–
Profit before taxes		22		35		(13	)		(37	%)		86		101		(15	)		(15	%)

On June 30, 2002 the Company, Northrop Grumman Corporation (Northrop) and Richmond Acquisition Corp., a wholly-owned subsidiary of Northrop, entered into a definitive merger agreement, whereby Northrop will acquire all of the Company’s outstanding common stock and the Company will become a wholly-owned subsidiary of Northrop. In the merger, each share of the Company’s common stock will be converted into the right to receive a number of shares of Northrop common stock equal to the exchange ratio. The exchange ratio is calculated by dividing $60 by the average closing sale prices for a share of Northrop common stock on the New York Stock Exchange during the five consecutive trading days ending on (and including) the second trading day prior to the date the merger is completed. However, in no event will the exchange ratio be greater than 0.5357 ($60/$112) or less than 0.4348 ($60/$138), even if the actual average price per share of Northrop common stock used to calculate the exchange ratio is less than $112 or greater than $138. The transaction requires approval from European and U.S. regulatory agencies, as well as approval by TRW shareholders and Northrop stockholders. Northrop has announced that after the completion of the merger, it plans to separate the Company’s automotive business, either through a sale or a spin-off of the business to shareholders. The Company’s previously announced agreement to sell Aeronautical Systems to Goodrich Corporation is unaffected by the merger agreement.

~~Sales~~On ~~for~~June 18, 2002, as part of the ~~third~~Company’s ~~quarter~~strategic shareholder value enhancement plan, the Company announced that it had reached a definitive agreement with Goodrich Corporation for the sale of ~~2001~~its ~~increased~~Aeronautical 4Systems business for $1.5 ~~percent~~billion. ~~compared~~Proceeds will be used to reduce debt and for other cash needs. In accordance with Statement of Accounting Standards (SFAS) 144, “Accounting for the ~~third~~Impairment or Disposal of Long-Lived Assets,” the results ~~quarter~~of operations of ~~2000~~this ~~driven~~business byare ~~growth~~reported inas ~~repair~~discontinued ~~and~~operations, ~~overhaul~~net ~~services~~of applicable income taxes, for all periods presented. In addition, the assets and liabilities of the Aeronautical Systems business have been reclassified as ~~approximately~~held ~~$13 million~~for sale. Refer to the Discontinued Operations note to financial statements for further discussion.

~~Despite~~Results ~~an increase in sales, profit before taxes for the third quarter~~ of ~~2001~~Operations ~~decreased~~(In ~~$13 million~~millions asexcept ~~compared~~per toshare ~~the third quarter of 2000 due primarily to~~data) ~~an adverse mix of products sold, specifically a decline of high margin spare~~ ~~parts and increased operating costs, including higher research and development expenditures.~~

Sales for the nine months ended September 30, 2001 were comparable to the nine month period in 2000. Increased sales volume of approximately $25 million was offset by the effect of foreign currency exchange of $29 million.


		Quarter ended												Six months ended
		June 30												June 30

											Percent												Percent
		2002			2001			Change			Inc (Dec)			2002			2001			Change			Inc (Dec)

Sales		$	4,269		$	4,006		$	263			7	%	$	8,119		$	7,908		$	211			3	%
Profit from continuing operations before taxes and extraordinary items			275			121			154			127	%		488			301			187			62	%
Earnings(loss) from continuing operations before extraordinary items			124			(18	)		142		nm				202			20			182		nm
Discontinued operations			(683	)		21			(704	)	nm				(672	)		38			(710	)	nm
Net earnings(loss)			(559	)		3			(562	)	nm				(468	)		58			(526	)	nm
Diluted earnings(loss) per share:
	Continuing operations		0.98			(0.15	)		1.13		nm				1.59			0.17			1.42		nm
	Discontinued operations		(5.36	)		0.17			(5.53	)					(5.30	)		0.30			(5.60	)
	Extraordinary items		—			—			—						0.02			—			0.02
	Net earnings(loss)		(4.38	)		0.02			(4.40	)	nm				(3.69	)		0.47			(4.16	)	nm
Effective tax rate			34.9	%		651.5	%								34.0	%		59.4	%

nm –not meaningful

Profit before taxes for the nine months ended September 30, 2001 decreased $15 million compared to 2000. Excluding approximately $4 million of unusual items in 2001, consisting of a gain on sale of assets, profit before taxes decreased $19 million. The lower profit before taxes resulted from an unfavorable program mix and lower volume of higher margin spare parts totaling $12 million and increased operating costs, including higher research and development expenditures of $8 million.

As of December 31, 2000, the Company had recorded reserves of approximately $7 million for severance and other costs to close certain facilities of the Aeronautical Systems segment. During the nine months ended September 30, 2001, as a result of severance payments, the reserve was reduced by $3 million. The remaining balance will be used by the first quarter of 2002.

In October 2001, the Company announced further restructuring actions as a result of decreased demand for its civil aviation equipment in the Aeronautical Systems business. Cost reduction measures are being implemented including a reduction in the number of employees by approximately 1,100 by the end of 2002. The Company is evaluating the impact of these actions, which cannot be quantified at this time.

~~Automotive~~The ~~Segments~~second quarter 2002 sales of $4,269 million increased 7 percent compared to $4,006 million in the second quarter of 2001. The increase was the result of higher automotive production volumes of $158 million, primarily in North America, increased sales on new business and ongoing defense programs of approximately $100 million and the favorable effects of foreign currency exchange of $82 million, partially offset by divestitures in 2001 of $48 million and lower pricing of $30 million.

	Third quarter ended										Nine months ended
(In millions)	September 30										September 30
								Percent											Percent
Sales	2001		2000		Change			Inc (Dec)				2001		2000		Change			Inc (Dec)
Chassis Systems	$	1,381	$	1,480	$	(99	)		(7	%)		$	4,537	$	5,011	$	(474	)		(10	%)
Occupant Safety Systems		622		639		(17	)		(3	%)			2,034		2,127		(93	)		(4	%)
Automotive Electronics		324		378		(54	)		(14	%)			1,063		1,287		(224	)		(17	%)
Total	$	2,327	$	2,497	$	(170	)		(7	%)		$	7,634	$	8,425	$	(791	)		(9	%)

Earnings(loss) from continuing operations before extraordinary items for the second quarter of 2002 were $124 million, or $0.98 per share, compared to a loss of $18 million, or $0.15 per share, for the second quarter of 2001. Net earnings(loss) and net earnings(loss) per share for the second quarter 2002 were a loss of $559 million, or $4.38 per share, compared to earnings of $3 million, or $0.02 per share, in 2001. The Company reported a net loss on discontinued operations of $683 million after tax, or $5.36 per share, for the second quarter 2002 compared to earnings of $21 million after tax, or $0.17 per share, in the second quarter of 2001. Adjusting second quarter of 2001 for the effect of adopting SFAS 142 on January 1, 2002, second quarter net earnings from continuing operations for 2001 would have increased by $18 million, or $0.14 per share.

~~Third~~Unusual items in the second quarter ~~sales~~of 2002 negatively impacted earnings from continuing operations by $9 million, or $0.07 per share. Unusual items in 2002 included after tax charges of $18 million related to the Company’s activities associated with Northrop’s exchange offer and automotive restructuring ~~businesses~~and ~~declined~~asset 7%impairment tocharges of $2.3 ~~billion~~million, which were offset partially by after tax gains on sales of real estate of $12 million. Unusual ~~Sales~~items ~~declined~~for ~~primarily~~the ~~due~~second toquarter ~~divestitures,~~of ~~lower~~2001 ~~volumes,~~included ~~primarily~~after intax ~~North~~charges of $58 million ~~America,~~for ~~lower~~asset ~~pricing~~impairment and ~~the~~restructuring ~~effect~~expenses ofrelated ~~foreign~~to ~~currency~~Endwave, ~~exchange~~and other charges, primarily automotive restructuring, of approximately $21 million.

~~Automotive~~Gross ~~sales~~profit ~~for~~of $604 million in the ~~nine~~second ~~months~~quarter ~~ended~~of ~~September 30~~2002 increased $74 million, ~~2001~~or ~~declined~~14 percent from $~~791~~530 million in 2001. This increase was the result of net cost reductions of $67 million, toincreased volume of $~~7.6~~8 ~~billion~~million, the ~~compared~~net toreduction ~~2000.~~of ~~Sales~~$30 million ~~declined~~in expenses, primarily ~~due~~as ~~to lower~~a ~~volumes,~~result ~~mainly~~of ina product ~~North~~recall ~~America~~in 2001, and the favorable effect of foreign currency exchange of $5 million, ~~divestitures~~which ~~and~~were offset by lower pricing of $30 million and divestitures in 2001 of $14 million. Gross profit included $64 million and $59 million of net pension income from an overfunded pension plan in the second quarters of 2002 and 2001, respectively. Gross profit margin (gross profit as a percentage of sales) increased to 14.1 percent for the second quarter 2002 compared to 13.2 percent in the second quarter 2001.

~~Third~~Administrative and selling expenses of $219 million in the second quarter ~~variances~~2002 decreased by$7 million compared to $226 million in the second quarter of 2001. ~~segment:~~Administrative and selling expenses included expenses associated with Northrop’s exchange offer of $23 million in 2002 and $15 million related to automotive restructuring charges in 2001. Without unusual items, administrative and selling expenses decreased $15 million due primarily to reduced headcount and related expenses from the Company’s corporate restructuring actions taken in 2001, and divestitures of $6 million, partially offset by increased expenditures on reimbursable government contracts of $6 million and higher spending on new program awards of $5 million.

				Occupant Safety			Automotive			Total Automotive
(In millions)	Chassis Systems			Systems			Electronics			Segments
Volume	$	(39	)	$	3		$	(21	)	$	(57	)
Translation		(21	)		2			(3	)		(22	)
Divestitures		(33	)		–			(26	)		(59	)
Price		(6	)		(22	)		(4	)		(32	)
Total	$	(99	)	$	(17	)	$	(54	)	$	(170	)

Research and development expenses of $100 million in the second quarter of 2002 increased $7 million from the second quarter in 2001. The increase was primarily due to higher spending on new business opportunities in Space & Electronics of $5 million.

~~Nine~~As ~~month~~a ~~variances~~result byof ~~segment:~~lower average debt outstanding and lower short-term interest rates in the United States, interest expense in the second quarter of 2002 decreased $20 million to $102 million compared to the second quarter of 2001 of $122 million.

				Occupant Safety			Automotive			Total Automotive
(In millions)	Chassis Systems			Systems			Electronics			Segments
Volume	$	(233	)	$	21		$	(93	)	$	(305	)
Translation		(137	)		(40	)		(24	)		(201	)
Divestitures		(73	)		–			(93	)		(166	)
Price		(31	)		(74	)		(14	)		(119	)
Total	$	(474	)	$	(93	)	$	(224	)	$	(791	)

Amortization of intangible assets and goodwill of $5 million in the second quarter of 2002 decreased $19 million compared to $24 million in the second quarter of 2001, primarily as a result of the adoption of SFAS 142, January 1, 2002, whereby the Company no longer amortizes goodwill.

	Third quarter ended											Nine months ended
(In millions)	September 30											September 30
									Percent										Percent
Profit before taxes	2001		2000			Change			Inc (Dec)			2001		2000		Change			Inc (Dec)
Chassis Systems	$	60	$	74		$	(14	)		(20	%)	$	196	$	347	$	(151	)		(43	%)
Occupant Safety Systems		26		(19	)		45			–			58		54		4			6	%
Automotive Electronics		6		11			(5	)		(50	%)		44		76		(32	)		(43	%)
Total	$	92	$	66		$	26			37	%	$	298	$	477	$	(179	)		(38	%)

Other (income)expense-net was income of $14 million in the second quarter of 2002 compared to expense of $62 million in 2001. Included in 2002 were gains on the sales of real estate of $18 million. Included in 2001 were asset impairment and restructuring charges related to Endwave of $70 million.

~~Profit~~The ~~before~~effective ~~taxes~~income ~~for~~tax rate from continuing operations was 34.9 percent in the ~~third~~second quarter of 2002 compared to 651.5 percent in the second quarter of 2001,. ~~excluding~~Excluding unusual items, ~~for~~ the ~~automotive~~effective ~~businesses~~income ~~declined~~tax torate ~~$114 million~~ from ~~$135~~continuing operations would have been 34 ~~million~~percent in ~~2000. The~~the ~~decline~~second quarter of 2002 and 37 percent in ~~profit~~the ~~before~~second ~~taxes~~quarter ~~resulted~~of ~~from~~2001. ~~lower~~The ~~volume~~effective ~~primarily~~income intax rate for the ~~North~~second ~~America~~quarter ~~and~~of ~~unfavorable~~2002 ~~product~~was ~~mix,~~reduced ~~price~~primarily ~~reductions,~~by the ~~effect~~adoption of ~~foreign~~ ~~currency~~SFAS ~~exchange~~142 resulting ~~and~~in ~~divestitures,~~the ~~which~~elimination ~~were~~of ~~partially~~the ~~offset~~amortization byof ~~net cost~~nondeductible ~~reductions~~goodwill.

~~Profit~~Sales ~~before taxes~~ for the ~~nine~~first ~~months~~half ~~ended~~of ~~September 30~~2002 of $8,119 million ~~2001~~increased $211 million, ~~excluding~~or ~~unusual items~~3 percent, ~~for~~compared ~~the automotive businesses declined~~ to $~~348~~7,908 million ~~from $618 million~~ in ~~2000~~2001. The ~~decline~~increase ~~resulted~~in ~~from~~sales ~~lower~~was due to higher automotive volume, primarily in North America, ~~unfavorable~~of ~~product~~$204 million, ~~mix~~a ~~and~~net increase ~~the~~in ~~effect~~volume ofon anew ~~seatbelt~~and ~~recall,~~existing ~~price reductions,~~defense ~~the~~programs ~~effect~~ of $105 million and favorable foreign currency exchange ~~and~~of ~~divestitures~~$33 million, ~~which were~~ partially offset by divestitures ~~net~~of ~~cost~~$76 million ~~reductions~~and lower pricing of $58 million.

~~Third~~Earnings(loss) from continuing operations before extraordinary items for the first half of 2002 were $202 million, or $1.59 per share, compared to $20 million, or $0.17 per share, in 2001. Net earnings(loss) and net earnings(loss) per share for the first half of 2002 were a loss of $468 million, or $3.69 per share, compared to earnings of $58 million, or $0.47 per share, in 2001. The Company reported a net loss on discontinued operations of $672 million, or $5.30 per share, for the six months ended June 30, 2002 compared to earnings of $38 million, or $0.30 per share, for the six months ended June 30, 2001. In the first quarter ~~variances~~of by2002, ~~segment:~~the Company recorded, as extraordinary items, gains on the early extinguishment of debt of $2 million after tax, or $0.02 per share. Adjusting the first half of 2001 for the effect of adopting SFAS 142, net earnings from continuing operations for the first half of 2001 would have increased by $35 million, or $0.28 per share.

				Occupant Safety			Automotive			Total Automotive
(In millions)	Chassis Systems			Systems			Electronics			Segments
Volume/Mix	$	(24	)	$	1		$	(6	)	$	(29	)
Price		(6	)		(22	)		(4	)		(32	)
Translation		(6	)		1			(1	)		(6	)
Divestitures		(3	)		–			(2	)		(5	)
Net Cost Reductions		34			19			8			61
All Other – Net		(6	)		(6	)		2			(10	)
Total excluding unusual items		(11	)		(7	)		(3	)		(21	)
Unusual Items		(3	)		52			(2	)		47
Total	$	(14	)	$	45		$	(5	)	$	26

Unusual items for the first six months of 2002 negatively impacted earnings from continuing operations by $12 million, or $0.10 per share. Unusual items in 2002 included after tax charges of $22 million related to the Company’s activities associated with Northrop’s exchange offer, automotive restructuring and asset impairment charges of $7 million, partially offset by after tax gains on the sales of real estate of $12 million and the sale of RF Micro Devices (RFMD) common stock of approximately $5 million. The unusual items for the first half of 2001 included a charge of $58 million after tax for asset impairment and restructuring charges related to Endwave and other charges, primarily automotive restructuring, of approximately $48 million after taxes. These charges were partially offset by after tax gains from asset sales, primarily related to electrical products operations and the aftermarket business in Turkey, of approximately $28 million.

Gross profit of $1,120 million for the first six months of 2002 increased $87 million, or approximately 8 percent from $1,033 million in 2001. Unusual items included in gross profit in the first half of 2002 and 2001 were primarily restructuring charges of $10 million and approximately $30 million, respectively. Excluding the effect of unusual items, gross profit increased $67 million year over year. The increase was primarily due to net cost reductions of $110 million and a net reduction of $30 million in expenses, primarily as a result of a product recall in 2001, partially offset by ~~segment~~price reductions of $58 million and the effect of divestitures of $21 million. Gross profit for the ~~third~~first ~~quarter~~six ~~are~~months asof ~~follows:~~2002 and 2001 included $123 million and $120 million, respectively, of net pension income from an overfunded pension plan. Gross profit margin was 13.8 percent for the first half of 2002 compared to 13.1 percent in 2001.

(In millions)	2001			2000			Change
Chassis Systems	$	(7	)	$	(4	)	$	(3	)
Occupant Safety Systems		(5	)		(57	)		52
Automotive Electronics		(10	)		(8	)		(2	)
Total	$	(22	)	$	(69	)	$	47

Administrative and selling expenses of $426 million for the first half of 2002 decreased $17 million compared to $443 million in 2001. Excluding unusual items in 2002 of $29 million for expenses incurred on behalf of the Northrop exchange offer and in 2001 related to restructuring charges of approximately $30 million, administrative and selling expenses decreased $16 million. The decrease was primarily due to the result of the Company’s corporate and Automotive restructuring actions taken in 2001, and the effect of divestitures of $10 million, offset by higher spending on new programs and initiatives in Space &

Unusual items in 2001 included restructuring costs of $19 million in all segments. Unusual items also included asset impairment charges of approximately $15 million, offset by gains on the sale of assets of

~~$12 million in~~Electronics ~~Chassis.~~and ~~Unusual~~Systems ~~items in 2000 included asset impairment charges~~ of $52 16 million inand ~~Occupant~~increased ~~Safety~~expenditures ~~Systems~~on reimbursable ~~and~~governmental ~~restructuring~~contracts ~~costs~~ of $1714 million ~~in all segments~~.

~~Nine~~Interest ~~months~~expense ~~variances~~of by$205 million ~~segment:~~for the first half of 2002 decreased $46 million from $251 million in 2001, due to lower average debt outstanding and lower short-term interest rates in the United States.

(In millions)	Chassis Systems			Occupant SafetySystems			AutomotiveElectronics			Total AutomotiveSegments
Volume/Mix/Recall	$	(129	)	$	(31	)	$	(30	)	$	(190	)
Price		(31	)		(74	)		(14	)		(119	)
Translation		(16	)		(6	)		(1	)		(23	)
Divestitures		(6	)		–			(10	)		(16	)
Net Cost Reductions		46			45			21			112
All Other – Net		(18	)		(12	)		(4	)		(34	)
Total excluding unusual items		(154	)		(78	)		(38	)		(270	)
Unusual Items		3			82			6			91
Total	$	(151	)	$	4		$	(32	)	$	(179	)

Amortization of intangible assets and goodwill of $8 million for the first six months of 2002 decreased $40 million compared to $48 million in the first six months of 2001, primarily as a result of the Company no longer amortizing goodwill of $41 million.

~~Unusual~~Other ~~items~~(income)expense-net was income of $18 million in the first half of 2002 and expense of $48 million in 2001. Included in 2002 were gains on the sales of real estate and RFMD common stock of $18 million and $9 million, respectively. Included in 2001 were asset impairment and restructuring charges related to the Company’s investment in Endwave of $70 million, offset by ~~segment~~net ~~for~~gains on the ~~nine~~sale ~~months~~of ~~ended~~assets ~~are~~of asapproximately ~~follows:~~$26 million.

(In millions)	2001			2000			Change
Chassis Systems	$	(24	)	$	(27	)	$	3
Occupant Safety Systems		(16	)		(98	)		82
Automotive Electronics		(10	)		(16	)		6
Total	$	(50	)	$	(141	)	$	91

The effective income tax rate from continuing operations was 34 percent for the six months ended June 30, 2002 compared to 59.4 percent in 2001. Excluding unusual items, the effective income tax rate from continuing operations would have been approximately 33.4 percent for the six months ended June 30, 2002 and 36.7 percent for 2001. The effective income tax rate for 2002 was reduced primarily by the adoption of SFAS 142 resulting in the elimination of the amortization of nondeductible goodwill.

~~Unusual~~Results ~~items in 2001 included restructuring costs~~ of ~~$72 million in all~~Segments segments and asset impairment charges of approximately $15 million, partially offset by gains on the sale of non-strategic assets of $37 million, primarily in Chassis. Unusual items in 2000 included restructuring costs of $46 million in all segments, threatened claims and litigation of $35 million and asset impairment charges of $52 million in Occupant Safety Systems and warranty costs of $30 million in Chassis, partially offset by net gains on asset sales of $22 million, mainly in Chassis.

Automotive ~~Restructuring~~

The Company has initiated several restructuring actions within its automotive businesses. Severance costs and plant closing accruals related to these actions were $63 million at December 31, 2000. During the nine months ended September 30, 2001, the Company recorded additional before tax charges of $72 million, primarily for headcount reductions, of which $18 million was recorded in the third quarter. Charges of $38 million were recorded in administrative and selling expenses and $34 million in cost of sales. During the first nine months of 2001, these actions resulted in a permanent reduction of approximately 3,100 automotive positions. The Company used $71 million for severance payments and plant closings. The balance at September 30, 2001 of $64 million is expected to be used by the third quarter of 2002.


	Quarter ended											Six months ended
	June 30											June 30

									Percent											Percent
(In millions)	2002			2001			Change		Inc (Dec)			2002			2001			Change		Inc (Dec)

Sales	$	2,840		$	2,678		$	162		6	%	$	5,411		$	5,307		$	104		2	%
Profit before taxes		174			108			66		60	%		287			206			81		39	%
Unusual items-income(expense ) included in profit before taxes		(6	)		(23	)		17					(12	)		(28	)		16

InSales ~~October~~of ~~2001~~$2,840 million for the ~~Company~~second ~~announced~~quarter ~~further~~of ~~restructuring~~2002 ~~actions,~~increased ~~which~~6 percent ~~includes~~compared ~~consolidating~~to ~~its~~$2,678 million ~~Occupant~~in ~~Safety~~the ~~Systems~~second ~~business~~quarter ~~with~~of ~~Chassis~~2001. The increase ~~Systems~~resulted tofrom ~~form~~higher avolumes, ~~new~~primarily ~~automotive~~from ~~organization~~strengthening toNorth beAmerican ~~called~~build rates ~~TRW~~and ~~Automotive.~~incremental ~~The Company~~sales ~~plans~~from annew ~~additional~~products, ~~reduction~~of in$158 million ~~total~~and ~~automotive~~the favorable ~~employment~~effect of ~~approximately~~ ~~2,400.~~foreign ~~The~~currency ~~majority~~exchange of ~~the~~$82 million, ~~reductions~~offset ~~will~~by ~~occur in~~ the ~~fourth~~ ~~quarter~~effects of ~~this~~divestitures ~~year.~~in ~~The~~2001 ~~Company~~of is$48 million ~~evaluating~~and ~~the~~lower ~~impact~~pricing of ~~these actions,~~$30 ~~which cannot be quantified at this time~~million.

Profit before taxes for the second quarter of 2002 increased $66 million, or 60 percent compared to the second quarter of 2001. Excluding the effect of adopting SFAS 142 of $15 million and a net decrease in unusual items of $17 million, 2002 profit before taxes increased $34 million compared to 2001. Unusual items in the second quarter of 2002, which primarily consisted of restructuring charges, negatively impacted profit before taxes by $6 million. Unusual items for the second quarter of 2001 included restructuring charges of $23 million. The segment’s cost reduction initiatives and the absence of a seat belt recall in 2001 totaling $70 million combined with higher volume, primarily in North America of $14 million, more than offset lower pricing of $30 million, lower European vehicle production and unfavorable product mix of $11 million and the effects of divestitures in 2001 of $7 million.

~~LIQUIDITY~~Sales ~~AND~~of ~~FINANCIAL~~$5,411 million ~~POSITION~~for the six months ended June 30, 2002 increased $104 million, or 2 percent compared to 2001. The increase resulted from higher volume, primarily in North America, of $204 million and the favorable effect of foreign currency exchange of $33 million, partially offset by the effects of divestitures of $76 million and lower pricing of $58 million.

InProfit ~~the~~before ~~nine~~taxes ~~months~~for ~~ended~~the ~~September 30,~~first ~~2001,~~six ~~cash~~months ~~from~~increased ~~operating activities of~~ $~~681~~81 million, ~~and~~or ~~proceeds~~39 percent ~~from~~compared to 2001. Excluding the ~~sale~~effect of ~~nonstrategic~~adopting ~~assets~~SFAS 142 of $~~196 million~~31 ~~were~~million ~~used~~and ~~primarily~~the ~~for~~net ~~capital~~change ~~expenditures~~in unusual items of $~~499~~16 million, ~~debt~~2002 ~~reductions~~profit before oftaxes increased $~~206~~34 million compared to 2001. Unusual items in 2002, ~~dividend~~which consisted ~~payments~~of restructuring charges of $~~132~~9 million and ~~other~~a ~~items~~write-down of ~~$65~~an ~~million.~~investment Asin aan ~~result~~affiliate of $3 million, ~~cash~~negatively ~~and~~impacted ~~cash~~profit ~~equivalents~~before taxes ~~decreased~~by $2512 million. InUnusual items for the ~~nine~~ ~~months~~first ~~ended~~six ~~September 30,~~months ~~2000,~~of ~~cash~~2001 negatively ~~from~~impacted ~~operating~~profit ~~activities~~before oftaxes by $~~793~~ 28 million, ~~proceeds~~and ~~from~~included restructuring ~~divestitures~~charges of $~~1,431~~54 million, offset by gains on asset sales primarily related to electrical products operations and ~~other~~the ~~items~~aftermarket business in Turkey of $22 26 million. ~~were~~The ~~used~~segment’s ~~primarily~~cost ~~for~~reduction ~~debt~~initiatives ~~reductions~~and the absence of a seat belt recall in 2001 totaling $~~1,578~~116 million, ~~capital~~more than offset ~~expenditures~~lower pricing of $~~475~~58 million, ~~and~~the ~~dividend~~effects ~~payments~~of divestitures of $~~123~~10 million., ~~As a~~the ~~result,~~effect ~~cash~~of ~~and~~foreign ~~cash~~currency ~~equivalents~~exchange ~~increased~~of $706 million and lower volume of $5 million.

~~Net~~Severance ~~debt~~costs ~~(short-term~~and ~~debt,~~plant ~~the~~closing ~~current~~accruals ~~portion~~related ofto ~~long-term~~restructuring ~~debt and long-term~~plans ~~debt,~~including ~~less~~reorganizing ~~cash~~ and ~~cash~~downsizing ~~equivalents)~~operations ~~was~~were $~~6.2~~145 ~~billion~~million at ~~September~~December 31, 2001. During the six months ended June 30, ~~2001~~2002, the Company recorded ~~and~~additional before tax charges of $~~6.4~~9 ~~billion~~million, atof ~~December~~which $6 ~~31,~~million ~~2000.~~was ~~The~~recorded in ~~ratio~~the second quarter, in cost of ~~net~~sales, ~~debt~~primarily tofor ~~total~~severance ~~capital~~costs. For ~~(net~~the ~~debt,~~second ~~minority~~quarter ~~interests~~ and ~~shareholders’~~six ~~investment)~~months ~~was~~ended 72June ~~percent~~30, ~~at September~~2002, $22 30million and $51 million, ~~2001~~respectively, was used for severance payments and ~~70 percent~~costs atrelated ~~December 31,~~to ~~2000~~the consolidation of certain facilities. ~~The~~During ~~percentage~~the first six months of 2002, ~~fixed~~these ~~rate~~programs ~~debt~~resulted toin ~~total~~a ~~debt~~reduction ~~was~~of ~~75 percent~~approximately at1,000 ~~September~~employees. The majority of the remaining balance of $103 ~~30,~~million ~~2001~~is ~~compared~~expected to ~~66 percent~~ atbe ~~the~~used by the end of ~~2000~~2002.

~~The Company amended and restated the revolving credit agreement that expired~~Systems ~~January 23, 2001 in an aggregate amount of $1.8 billion with 26 banks to~~ establish a new expiration date of January 22, 2002 with an option to extend the maturity of outstanding borrowings at that time to January 22, 2003. The interest rate under the agreement is either the prime rate or a rate based on LIBOR, at the option of the Company. The Company also canceled a revolving credit agreement for use by the Company’s Brazilian operations.

During the first quarter of 2001, the Company issued $500 million of 7.625% Notes due March 2006, utilizing the universal shelf registration statement.


	Quarter ended									Six months ended
	June 30									June 30

							Percent									Percent
(In millions)	2002		2001		Change		Inc (Dec)			2002		2001		Change		Inc (Dec)

Sales	$	919	$	799	$	120		15	%	$	1,697	$	1,588	$	109		7	%
Profit before taxes		68		53		15		31	%		124		101		23		24	%
Unusual items-income(expense) included in profit before taxes		2		—		2					2		—		2

~~During~~Sales of $919 million for the second quarter of ~~2001,~~2002 ~~the~~increased ~~Company refinanced~~ $~~100~~120 million, ofor ~~commercial~~15 percent, ~~paper~~compared ~~borrowings~~to bythe ~~entering~~second ~~into~~quarter aof ~~debt~~2001 ~~agreement~~ due ~~April~~to ~~2003. The~~higher ~~interest~~volume ~~rate~~from existing ~~under~~programs, including the ~~agreement~~Intercontinental isBallistic aMissile ~~floating~~Prime Integration ~~rate~~(ICBM) program ~~based~~and missile defense, as well as new business, of $163 million, offset by lower volume on ~~three-month~~contracts nearing completion or ~~LIBOR~~completed of $43 million.

AtProfit ~~September 30,~~before ~~2001,~~taxes of $~~400~~68 million offor ~~short-term~~the ~~obligations~~second ~~were~~quarter ~~reclassified~~2002 increased $15 million, or 31 percent, compared to ~~long-term~~the ~~obligations~~second asquarter of 2001. Included in the ~~Company~~second ~~intends~~quarter toof ~~refinance~~2002 profit before taxes was an unusual item of $2 million from the ~~obligations~~gain on sale of real estate. Excluding the effect of adopting aSFAS ~~long-term~~142 ~~basis~~of $5 million and ~~has~~the unusual item in 2002, profit before taxes in the second ~~ability~~quarter toof do2002 soincreased ~~under~~$8 million ~~its~~compared ~~existing~~to ~~credit~~second quarter of 2001. ~~agreements~~The increase was due to higher sales volumes.

AtSales ~~September 30,~~of ~~2001~~$1,697 million for the ~~Company~~six ~~has~~months of 2002 increased $109 million, or 7 percent, compared to $1.2,588 ~~billion~~million ~~available~~in ~~under~~2001. ~~its~~This increase was due to higher ~~universal~~volume ~~shelf~~on ~~registration~~new ~~statement~~and ~~for~~existing ~~issuance~~core ofprograms ~~securities.~~of

At September 30, 2001, the Company had a working capital deficiency of approximately $1.7 billion primarily due to the issuance of debt incurred to purchase LucasVarity. Management believes that sufficient resources from funds generated by operations, dispositions and existing borrowing capacity are available to maintain liquidity.

In October 2001, the Company’s Board of Directors approved a reduction of its quarterly dividend from $0.35 to $0.175 per common share beginning with the December 2001 payment.

NEW ACCOUNTING PRONOUNCEMENTS

~~The Company has~~ approximately $~~3.3~~200 ~~billion of goodwill recorded in its balance sheet as of September 30~~million, ~~2001.~~offset ~~Amortization~~by ~~expense~~lower ~~related~~volume toon ~~goodwill~~contracts ~~for the~~nearing ~~first~~completion ~~nine~~or ~~months~~completed of ~~2001 was approximately~~ $7493 million ~~before taxes, $65 million after taxes~~. ~~Management is currently evaluating the impact of the~~ ~~adoption of these statements. The effect on the Company’s results of~~ ~~operations and financial position during 2002 and any cumulative effect as a result of adopting Statement 142 are not determinable at this time.~~

~~The~~Profit ~~FASB~~before ~~also~~taxes ~~recently~~for ~~issued~~the ~~SFAS~~six ~~No.~~months ended June ~~143~~30, ~~“Accounting~~2002 of $124 million increased $23 million or 24 percent, compared to $101 million for ~~Asset~~the ~~Retirement~~same ~~Obligations”~~period ~~and~~in 2001. Excluding the effect of adopting SFAS ~~No.~~142 of $9 ~~144,~~million ~~“Accounting~~and ~~for~~an unusual item in 2002 related to the ~~Impairment~~gain oron ~~Disposal~~the sale of assets of $2 million, ~~Long-Lived~~profit ~~Assets”~~before taxes increased $12 million in 2002 compared to 2001. The increase was due to higher volume on new programs of $5 million and on existing programs of $9 million, offset by lower volume on contracts nearing completion or completed.

~~Statement~~Space ~~143~~& ~~requires companies to record the fair value of a liability for~~Electronics ~~asset retirement obligations in the period in which they are incurred. The~~ statement applies to a company’s legal obligations associated with the retirement of a tangible long-lived asset that results from the acquisition, construction, and development or through the normal operation of a long-lived asset.

When a liability is initially recorded, the company would capitalize the cost, thereby increasing the carrying amount of the related asset. The capitalized asset retirement cost is depreciated over the life of the respective asset while the liability is accreted to its present value. Upon settlement of the liability, the obligation is settled at its recorded amount or the company incurs a gain or loss. The statement is effective for fiscal years beginning after June 30, 2002.


	Quarter ended											Six months ended
	June 30											June 30

									Percent											Percent
(In millions)	2002		2001			Change			Inc (Dec)			2002		2001			Change			Inc(Dec)

Sales	$	510	$	529		$	(19	)		(4	%)	$	1,011	$	1,013		$	(2	)		—
Profit(loss) before taxes		33		(40	)		73			—			77		(6	)		83			—
Unusual items-income(expense) included in profit before taxes		—		(70	)		70						9		(70	)		79

~~Statement~~Sales ~~144 addresses the accounting and reporting~~ for the ~~impairment~~second ~~or disposal~~quarter of ~~long-lived~~2002 ~~assets.~~of ~~The~~$510 million ~~statement~~decreased ~~provides~~4 percent compared ato ~~single~~the ~~accounting model~~second ~~for~~quarter ~~long-lived~~of ~~assets~~2001 due to bethe ~~disposed~~effect of. ~~New~~contracts ~~criteria~~winding down ~~must~~or bethat ~~met~~were ~~to classify~~discontinued, ~~the~~primarily ~~asset~~Astrolink, asof anapproximately ~~asset~~$70 million, ~~held-for-sale.~~which ~~This~~were ~~statement~~partially ~~also~~offset ~~focuses~~by ~~on reporting~~higher ~~the~~volume ~~effects~~ of aapproximately ~~disposal~~$50 million ofon aexisting ~~segment~~core ofprograms, asuch ~~business.~~as ~~This~~the ~~statement is~~advanced ~~effective~~extremely ~~for~~high frequency ~~fiscal~~(AEHF) satellite, ~~years~~airborne ~~beginning~~laser ~~after~~and ~~December 15~~avionics modules, ~~2001~~and technology contracts.

~~The~~Profit(loss) ~~Company~~before ~~believes~~taxes ~~that~~of $33 million for the ~~adoption~~second quarter of ~~SFAS~~2002 increased ~~No.~~$73 ~~143~~million compared to a loss of $40 million in the second quarter of 2001. Excluding the effect in 2001 of an unusual items charge of $70 million related to the Company’s investment in, and ~~144~~its ~~will~~share ~~not~~of, ~~have~~asset impairment and restructuring charges recorded by Endwave, and the $1 million effect of adopting SFAS 142, profit(loss) before taxes in 2002 increased $2 million from the prior year as a result of higher volume and performance from ~~material~~core ~~impact~~programs onof ~~its~~$23 million, ~~financial~~lower ~~position~~expenses orrelated ~~results~~to commercializing technologies of ~~operations~~$2 million, offset by contracts winding down and the discontinuation of the Astrolink program, of $23 million.

~~OTHER~~Sales ~~MATTERS~~for the six months ended June 30, 2002 of $1,011 million remained essentially unchanged compared to $1,013 million in 2001 as higher volume on new and existing programs, including technology contracts, of approximately $130 million were offset by lower volume from contracts winding down and the discontinuance of Astrolink totaling $133 million.

~~Refer~~Profit(loss) before taxes for the six months ended June 30, 2002 of $77 million increased $83 million from a loss of $6 million in 2001. Unusual items included in profit(loss) before taxes were a $9 million gain on the sale of RFMD common stock and a $70 million charge related to the ~~Contingencies~~Company’s ~~note~~investment in Endwave, in 2002 and 2001, respectively. Excluding the effect of the unusual items and the adoption of SFAS 142, profit(loss) before taxes in 2002 increased $3 million as compared to ~~Financial~~2001, ~~Statements~~as ~~for~~higher ~~discussion~~volume and improved performance from core programs of ~~legal~~$41 million, were partially offset by ~~matters~~contracts winding down and the discontinuance of the Astrolink program, of $37 million.

FORWARD-LOOKING STATEMENTS

Statements in this filing that are not statements of historical fact may be forward-looking statements. In addition, from time to time, the Company and its representatives make statements that may be forward-looking. 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 the Company’s actual results to differ materially from those contained in forward-looking statements made in this filing or otherwise made by, or on behalf of, the Company.

The Company’s consolidated results could be affected by: the ability to obtain new contract awards; pricing pressures from customers; the ability to reduce the level of outstanding debt from cash flow from operations and the proceeds from asset dispositions; the introduction of competing products or technology by competitors; the financial results of companies in which we have made technology investments; the availability of funding for research and development; the economic, regulatory and political domestic and international conditions; fluctuations in currency exchange rates; and the ability to attract and retain skilled employees with high-level technical competencies.

The Company’s aerospace and information systems businesses also could be affected by: the level of defense funding by the government; and the termination of existing government contracts.

~~The~~Corporate ~~Company’s automotive business also could be affected by: changes in consumer debt levels~~ and ~~interest rates; moderation or decline in the~~Other ~~automobile build rate; work stoppages; customer recall and warranty claims;~~ ~~product liability and litigation issues; and changes to the regulatory~~ ~~environment regarding automotive safety.~~

~~The~~Excluding ~~above~~unusual ~~list~~items of ~~important~~$8 million ~~factors~~in isthe ~~not~~second ~~exclusive.~~quarter Weof ~~caution~~2002, ~~that~~corporate expense ~~any~~and other declined $13 million compared to second quarter of 2001, ~~forward-looking~~primarily ~~statement~~as ~~reflects~~a ~~only~~result of reduced headcount and related costs resulting from the 2001 ~~beliefs~~corporate ofrestructuring and the ~~Company~~effect orof ~~its~~a favorable $4 million ~~management~~settlement atwith the ~~time~~U.S. ~~the~~government ~~statement~~concerning isa ~~made~~closed, overfunded pension plan. ~~The~~Unusual ~~Company~~items ~~undertakes~~in ~~no obligation~~the tosecond ~~update~~quarter ~~any~~of ~~forward-looking~~2002 ~~statement~~included before tax charges of $23 million related to ~~reflect~~the ~~events~~Company’s oractivities associated with Northrop’s ~~circumstances~~exchange ~~after~~offer, ~~the~~offset ~~date~~by gains on ~~which~~ the ~~statement~~sale ~~was~~of ~~made~~real estate of $15 million.

Excluding the net change in unusual items of $8 million, corporate expense and other for the first half of 2002 declined $28 million compared to the first half of 2001, primarily as a result of reduced headcount and related costs resulting from the 2001 corporate restructuring. Unusual items in the first half of 2002 included before tax charges of $29 million related to the Company’s activities associated with Northrop’s exchange offer, offset by gains on the sale of real estate of $15 million. Unusual items in the first half of 2001 included $6 million of restructuring charges, primarily for severance.

Net employee benefits income for the second quarter of 2002 of $46 million increased by $12 million compared to the second quarter of 2001, primarily as a result of the updated actuarial plan valuation of the Company’s pension plans, which reflected improved return on plan assets, a reduction in employee headcount and the effect of favorable foreign currency exchange.

Accounting Pronouncements

Effective January 1, 2002, the Company adopted SFAS 141, “Business Combinations,” SFAS 142, “Goodwill and Intangible Assets,” and SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS 141 requires that acquisitions entered into after June 30, 2001 are to be accounted for using the purchase method and establishes criteria to be used in determining whether acquired intangible assets are to be separated from goodwill. As a result of the Company’s analysis, only the value of assembled workforce of approximately $65 million was reclassified from intangible assets to goodwill at January 1, 2002.

SFAS 142 sets forth the accounting for goodwill and intangible assets already recorded. Commencing January 1, 2002, goodwill is no longer being amortized. Goodwill was tested for impairment by comparing the assets’ fair values to their carrying values. Management has completed the valuations of its reporting units and based on the valuations, goodwill for continuing operations was determined not to be impaired. Refer to the Discontinued Operations note to financial statements for the results of the valuation on the assets held for sale. With the adoption of SFAS 142, the Company reassessed the useful lives and residual values of all acquired intangible assets to make any necessary amortization period adjustments, which resulted in no adjustments being made. Amounts in 2001 have not been restated in accordance with the statement.

SFAS 143, “Accounting for Asset Retirement Obligations,” requires the fair value of a liability for asset retirement obligations to be recorded in the period in which it is incurred. The statement applies to a company’s legal or contractual obligation associated with the retirement of a tangible long-lived asset that resulted from the acquisition, construction or development or through the normal operation of a long-lived asset. The statement is effective for the Company beginning January 1, 2003. Management has evaluated the impact of SFAS 143 and believes that its adoption should not have a material effect on the Company’s financial position or results of operations.

SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” addresses the accounting and reporting for the impairment or disposal of long-lived assets. The statement provides a consistent method to value long-lived assets to be disposed of and broadens the presentation of discontinued operations. The adoption of SFAS 144 did not have a material effect on the Company’s financial statements.

In April 2002, the Financial Accounting Standards Board (FASB) issued SFAS 145, “Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” SFAS 145 requires gains and losses on extinguishments of debt to be reclassified as income or loss from continuing operations rather than as extraordinary items as previously required by SFAS 4, “Reporting Gains and Losses from Extinguishment of Debt.” SFAS 145 also amends SFAS 13 requiring certain modifications to capital leases to be treated as sale-leaseback transactions and to subleases when the original lessee remains a secondary obligor, or guarantor.

The provisions of SFAS 145 related to the rescission of SFAS 4 are effective for the Company on January 1, 2003. The extraordinary gains recorded for the extinguishment of debt in the first quarter of 2002 will be reclassified into earnings from continuing operations when the statement is adopted. The remaining provisions of SFAS 145 were effective for transactions and reporting subsequent to May 15, 2002. The adoption of SFAS 145 did not have a material impact to the Company’s financial position or results of operations.

Liquidity and Financial Position

Operating cash flow from continuing operations for the six months ended June 30, 2002 of $383 million and other items of $89 million were used for capital expenditures of $212 million, dividend payments of $45 million and other financing activities of $169 million. As a result, cash and cash equivalents increased $46 million. Operating cash flow from continuing operations for the six months ended June 30, 2001 of $284 million and financing activities of $163 million were used for capital expenditures of $300 million, dividend payments of $87 million and other items of $69 million. As a result, cash and cash equivalents decreased $9 million.

Net debt (short-term debt, the current portion of long-term debt and long-term debt, less cash and cash equivalents) was $5.3 billion at June 30, 2002 and $5.5 billion at December 31, 2001. The ratio of net debt to total capital (net debt, minority interests and shareholders’ investment) was 72 percent at June 30, 2002 and 71 percent at December 31, 2001. The percentage of fixed rate debt to total debt was 81 percent at June 30, 2002 compared to 85 percent at the end of 2001.

At June 30, 2002, short-term debt was $652 million, an increase from $115 million on December 31, 2001. The increase in short-term debt was principally due to the repayment of $700 million of U.S. long-term debt that matured during the first half of 2002. These repayments were funded through the issuance of commercial paper in the U.S.

Commercial paper borrowings outstanding at June 30, 2002 totaled $536 million with an average cost of 2.7 percent and maturities of up to three months. The credit ratings of the Company’s debt continue to be classified as on watch with negative implications by Standard & Poor’s Rating Services and Moody’s Investors Services, Inc. These classifications continue to increase the cost of borrowing and decrease the availability of commercial paper with longer maturities to the Company.

The Company amended and restated the $1.8 billion revolving credit agreement that expired on January 22, 2002 in a reduced aggregate amount of $1.25 billion with 20 banks. This agreement will expire January 21, 2003. The Company has an option to extend the maturity of outstanding borrowings at that time to January 21, 2004. The Company continues to maintain an additional revolving credit agreement in an amount of $1 billion that will expire in January 2005. Both of the revolving credit agreements provide an alternative source of liquidity and backup support for commercial paper and other short-term borrowings. There were no borrowings outstanding under the Company’s revolving credit agreements at June 30, 2002. The Company is in compliance with the covenants contained in these agreements.

At June 30, 2002, the aggregate amount of funds provided by accounts receivables securitized was $350 million, an increase of $23 million since December 31, 2001. This transaction is accounted for as a sale of the receivables and reduces the amount of short-term debt reported by the Company.

Long-term debt (including the current portion of long-term debt) at June 30, 2002 was $4.9 billion, a decrease of $0.7 billion since December 31, 2001. This decrease was principally due to the repayment of $700 million of maturing U.S. long-term debt during the first half of 2002. During the first quarter, the Company refinanced $250 million of commercial paper borrowings by entering into a term loan agreement with 10 banks due January 25, 2005. The interest rate under the agreement is either the prime rate or a rate based on London Interbank Offered Rate (LIBOR), at the option of the Company.

At June 30, 2002, $100 million of short-term obligations were reclassified to long-term obligations as the Company intends to refinance the obligations on a long-term basis and has the ability to do so under its revolving credit agreements. This is a reduction of $250 million since December 31, 2001.

At June 30, 2002, the fair value of the hedge portion of the Company’s share sale agreements was $201 million, an increase of $57 million from December 31, 2001, as a result of changes in the underlying stocks hedged. The fair value of the Company’s foreign currency forward contracts was a gain of $20 million at June 30, 2002, which is an increase of $66 million from December 31, 2001, due primarily to strengthening in the euro and British pound sterling.

The Company has $1.2 billion available under its universal shelf registration statement for issuance of securities.

If the transaction contemplated by the merger agreement with Northrop is consummated, the Company will become a wholly-owned subsidiary of Northrop. The closing of the merger will constitute an event of default under the Company’s revolving credit agreements, $350 million of long-term bank loan agreements and $350 million accounts receivable securitization program. Such an event of default would provide the lenders under the Company’s revolving credit facilities and outstanding term loans the right to accelerate payment of borrowings under and cancel the agreements. Such an event of default would also be cause for termination of the Company’s accounts receivable securitization program. The Company plans to repay or restructure such indebtedness or facilities, negotiate waivers of any such termination events or make alternative arrangements in conjunction with Northrop Grumman to avoid a disruption in the Company’s sources of liquidity. However, there can be no assurance as to the nature or adequacy of any plans or arrangements that may be ultimately implemented.

Under the merger agreement, the Company expects to make a number of payments at or prior to the time of the merger related to outstanding awards under the Company’s long-term incentive plans, the funding of trusts pursuant to the terms of existing employment continuation agreements and the Company’s key executive life insurance plan, annual incentive compensation, agreements with financial advisors and other merger-related expenses. The Company currently estimates that the maximum aggregate amount of such payments will be approximately $820 million.

This figure includes an estimated $175 million maximum amount that may become payable under the cash election alternatives that the Company will provide holders of stock options, restricted stock and restricted stock units unless the Company or Northrop reasonably determines that such an election could be deemed to be a tender offer for TRW common stock by the Company. This estimate is based on the total number of these securities outstanding as of August 12, 2002, and assumes no exercises of stock options or forfeitures of these securities between that date and the closing of the merger. If security holders do not elect such payment or the payment election option is not offered, the amount of cash payments due from the Company would be reduced.

The amount of certain payments included in the amounts set forth above would depend on the price of TRW common stock over a period of time preceding the merger, and the foregoing estimates are based on a stock price of $60 per share. The maximum amount of cash payments would be reduced to the extent the relevant average TRW stock price is below $60 per share.

Management believes that the Company will have adequate funds available to make the foregoing payments and to continue to meet its other cash needs. In the event that the Company consummates its

proposed sale of its Aeronautical Systems business prior to the closing of the merger, the Company expects to use a portion of the proceeds to fund such payments. In the event that the closing of this sale does not occur prior to the closing, management believes it will have adequate sources of financing available through its credit facilities prior to the merger and through other arrangements to be made for the period following the merger. However, the foregoing payment obligations may have a material adverse affect on the Company’s cash flow prior to and following the merger and may adversely affect the Company’s liquidity position.

Including the assets and liabilities of the Aeronautical Systems business that are held for sale, the Company had a working capital deficiency of $165 million at June 30, 2002 due primarily to effective working capital management and debt maturing within one year. Management believes that sufficient resources from funds generated by operations, dispositions and existing borrowing capacity are available to maintain liquidity.

Other Matters

Prior to redemption, holders of Series 1 Preferred Stock have an existing right to convert each of their shares into 8.8 shares of TRW common stock and holders of Series 3 Preferred Stock have an existing right to convert each of their shares into 7.448 shares of TRW common stock. The right to convert shares of Series 1 and Series 3 Preferred Stock into shares of TRW common stock will terminate on the close of business on August 30, 2002. As of July 24, 2002, approximately 77,800 shares of Series 1 and Series 3 Preferred Stock were outstanding. To the extent that all of these shares are converted into TRW common stock, then approximately 617,400 shares of TRW common stock will be issued.

The regular quarterly dividends of $1.10 per share on the Series 1 Preferred Stock and $1.125 per share on the Series 3 Preferred Stock, are payable on September 15, 2002 to holders of record on August 9, 2002.

Refer to the Contingencies note to financial statements for discussion of legal matters.

Forward-Looking Statements

Shareholders should be aware that the preparation of any such forward-looking statements requires the use of estimates of future revenues, expenses, activity levels and economic and market conditions, many of which are outside the Company’s control. Further, the Company’s results could be affected by the ability to obtain new contract awards; the level of defense funding by the government and the termination of existing government contracts; pricing pressures from customers; moderation or decline in the automobile build rate; changes in consumer debt levels; work stoppages; unanticipated downturn in the financial condition of, or business relationships with customers or suppliers; the ability to reduce the level of outstanding debt from cash flow from operations and the proceeds from asset dispositions; a credit rating downgrade; increase in interest rates; customer recall and warranty claims; product liability and litigation issues; changes to the regulatory environment regarding automotive safety; the introduction of competing products or technology by competitors; the ability to attract and retain skilled employees with high-level technical competencies; the financial results of companies in which the Company has 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) regarding the completion of the Company’s proposed merger with Northrop, (ii) regarding the completion of the sale of the Company’s Aeronautical Systems business; (iii) that the necessary government approvals for such transactions will be obtained; (iv) that the Company will be successful in reducing the amount of its indebtedness, or that the methods described for debt reduction will be utilized; (v) regarding the nature or adequacy of any plans or arrangements that may be implemented with respect to events of default that may occur upon the closing of the proposed merger with Northrop under TRW's debt facilities or receivables securitization program; (vi) as to the amount by which debt will be reduced; (vii) that the Company’s strategic plan will deliver any particular level of value to TRW shareholders; (viii) that defense spending will rise and research, development, test and evaluation budgets will increase; (ix) that North American 2002 light vehicle production will increase from 2001 levels; (x) that 2002 earnings per share estimates will be met or exceeded; (xi) with respect to the expected amounts of the Company’s operating cash flows in 2002, that such amounts will be utilized to reduce the amount of the Company’s indebtedness; (xii) with respect to the amounts that will be realized, if any, by the Company from divestitures; (xiii) with respect to the amount of sales, earnings per share or cash flow that will be realized by the Company in 2002; or (iv) that the Company’s costs will decrease in 2002. Other factors and assumptions not identified above are also involved in the preparation of forward-looking statements, and the failure of such other factors and assumptions to be realized may also cause actual results to differ materially from those discussed. The Company assumes no obligation to update such estimates to reflect actual results, changes in assumptions or changes in other factors affecting such estimates other than as required by law. The above list of important factors is not exclusive.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company is subject to inherent risks attributed to operating in a global economy. It is the Company’s policy to utilize derivative financial instruments to manage its interest rate and foreign currency exchange rate risks. When appropriate, the Company uses derivatives to ~~modify~~hedge its exposure to short-term interest rate ~~movements~~changes ~~and~~as toa ~~reduce~~lower ~~borrowing~~cost ~~costs.~~substitute ~~Interest~~for ~~rate swaps hedge interest rates on certain indebtedness and involve~~ the ~~exchange~~issuance of ~~fixed~~ ~~and~~fixed ~~floating~~ rate ~~interest~~debt ~~payment~~and ~~obligations~~as ~~over~~a ~~the~~means ~~life~~ of ~~the~~securing ~~related agreement.~~long-term, floating-rate debt. Also, the Company may use interest rate agreements in the management of interest rate exposure on debt issuances. The Company manages cash flow transactional foreign ~~exchange risk pursuant to a written corporate~~ ~~policy. Forward contracts and, to a lesser extent, options are utilized to protect the Company’s cash flow from adverse movements in exchange rates.~~

exchange risk pursuant to a written corporate policy. Forward contracts and, to a lesser extent, options are utilized to protect the Company’s cash flow from adverse movements in exchange rates.

The Company is exposed to credit loss in the event of nonperformance by the other party to the derivative financial instruments. The Company limits this exposure by entering into agreements with a number of major financial institutions that meet credit standards established by the Company and that are expected to satisfy fully their obligations under the contracts. Derivative financial instruments are viewed by the Company as a risk management tool and are not used for speculative or trading purposes.

Based on the Company’s interest rate exposure on variable rate borrowings at ~~September~~June 30, ~~2001~~2002, a one-percentage-point increase in the average interest rate on the Company’s variable rate borrowings would increase future interest ~~expense~~ expense by approximately $1 million per month.

Based on the Company’s exposure to foreign currency exchange rate risk resulting from derivative foreign currency instruments outstanding at ~~September~~ June 30, ~~2001~~ 2002, a 10 percent uniform strengthening in the value of the U.S. dollar relative to the currencies in which those derivative foreign currency instruments are denominated would result in a $~~124~~123 million loss in fair value.

The Company’s sensitivity analyses of the effects of changes in interest rates and foreign currency exchange rates do not reflect the effect of such changes on the related hedged transactions or on other operating transactions. The Company’s sensitivity analyses of the effects of changes in interest rates and foreign currency exchange rates do not factor in a potential change in the level of variable rate borrowings or derivative instruments outstanding that could take place if these hypothetical conditions prevailed.

Management believes the Company’s current financial position and financing arrangements allow flexibility in worldwide financing activities and permit the Company to respond to changing conditions in credit markets. Management believes that funds generated from operations, divestitures and existing borrowing capacity are adequate to fund debt service requirements, capital expenditures, working capital including tax requirements, company-sponsored research and development programs and dividend payments to shareholders. The Company’s ability to continue to fund these items and continue to reduce debt may be affected by a number of factors, including the effect of general economic conditions on the Company’s business, the ability to dispose of assets and the cost of warranty, recall and litigation claims.

Refer to the Financial Instruments note to ~~Financial~~financial ~~Statements~~statements for further discussion of derivative instruments as of ~~September~~June 30, ~~2001~~2002.

2529

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

Except as described in Part II, Item 1 of TRW’s Form 10-Q filing for the quarter ended March 31, 2002 and except as provided below, there have been no material developments in legal proceedings involving ~~TRW~~the Company or its subsidiaries since those reported in TRW’s Annual Report on Form 10-K for the year ended December 31, ~~2000 (the “2000 Form 10-K”)~~2001.

~~Various~~The ~~claims,~~lawsuit ~~lawsuits~~filed ~~and~~by ~~administrative~~Northrop ~~proceedings are pending or threatened~~ against ~~the Company or its subsidiaries~~TRW, arising from the ordinary course of business with respect to commercial, product liability and environmental matters. Taking into account established reserves, management believes that the ultimate resolution of each of the lawsuits referred to in ~~the~~ ~~Contingencies note to Financial Statements included in~~ Part III, ofItem 1 ~~this~~of ~~report will not have a material effect on the Company~~TRW’s ~~financial~~Form 10-Q ~~condition~~filing ~~or results~~for ofthe ~~operations. The~~quarter ~~resolution~~ended ofMarch 31, ~~one~~2002, orwas ~~more~~been ofdismissed with ~~such~~prejudice ~~claims~~on ~~may~~July 15, ~~have~~2002 aas ~~material~~agreed ~~impact~~by onNorthrop ~~cash flow~~and ~~for~~TRW ~~the period~~ in ~~which~~the ~~such claims are resolved~~Merger Agreement.

~~TRW Vehicle Safety Systems Inc. environmental matter – previously discussed on page 12 of the 2000 Form 10-K and in Part II,~~ Item 14. ofSubmission ~~TRW’s Form 10-Q for the quarter ended March 31, 2001: Sentencing took place during the third quarter~~ of ~~2001,~~Matters ~~at which time VSSI paid $12 million in fines pursuant~~ to ~~the~~a ~~criminal plea~~Vote ~~agreements,~~of ~~which~~Security ~~had been previously entered by the state and federal~~Holders ~~courts.~~

Putative class action regarding alleged damage due to emissions from VSSI plant – previously discussed on page 12 of the 2000 Form 10-K: On September 24, 2001 VSSI and the individual plaintiffs entered into an agreement to settle and dismiss the action. Pursuant to the agreement, which must be approved by the U.S. District Court of Arizona, the individual plaintiffs’ claims would be dismissed with prejudice, the claims brought on behalf of the putative class would be dismissed without prejudice, and VSSI would pay each of the six named plaintiffs $7,500 and reimburse the named plaintiffs’ counsel up to $130,000 in expenses. The court is expected to rule on the joint motion to approve the settlement agreement after public notice and an opportunity for putative class members to object.

(a)		The Company held its 2002 Annual Meeting of Shareholders on April 24, 2002.

		The Company held a Special Meeting of Shareholders on May 3, 2002.

(c)		At the Company’s Annual Meeting of Shareholders held on April 24, 2002:

~~Vinnell~~Martin ~~environmental~~Feldstein ~~matter~~was –elected ~~previously~~a ~~discussed~~Director onof ~~page~~the 13Company with 108,443,289 votes for election, 1,081,691 votes withheld from voting and 0 broker non-votes. Robert M. Gates was elected a Director of the ~~2000~~Company ~~Form 10-K:~~with On108,437,981 ~~August 26~~votes for election, ~~2001~~1,086,999 ~~Vinnell~~votes withheld from voting and ~~the~~0 Ubroker non-votes.S Clive R. ~~Government~~Hollick ~~reached~~was anelected ~~agreement under~~a ~~which~~Director of the UCompany with 108,438,892 votes for election, 1,086,088 votes withheld from voting and 0 broker non-votes.S. ~~Government~~David ~~agreed~~Baker toLewis ~~return~~was toelected ~~Vinnell~~a ~~$319~~Director of the Company with 108,~~750~~426,196 ~~or one~~votes for election, 1,098,784 votes withheld from voting and 0 broker non-~~half~~votes. The shareholders ratified the appointment of Ernst & Young LLP as the ~~penalties~~Company’s ~~previously~~independent ~~released~~auditors ~~from~~for ~~escrow~~the fiscal year ending December 31, 2002 with 103,355,407 votes for, 3,495,471 votes against, 2,673,885 votes abstaining and 0 broker non-votes. The shareholders approved a proposal by ~~Vinnell~~Northrop requesting that TRW’s board of directors provide non-public information regarding TRW to Northrop in order that Northrop may consider if an increase in the ~~Government~~ consideration offered in its then-pending exchange offer is warranted, with 55,226,401 shares for, 45,376,971 against, 2,213,913 votes abstaining and ~~the~~0 ~~Company~~broker ~~withdrew~~non-votes. ~~its~~The ~~appeal~~shareholders ~~challenging~~defeated ~~the~~Northrop’s ~~District Court~~proposal requesting that TRW’s ~~ruling.~~board Inof ~~addition~~directors establish a committee of “independent directors” to evaluate Northrop’s exchange offer and any other proposals received by TRW, ~~the~~with ~~U.S.~~35,416,768 ~~Government~~votes for, 65,212,404 votes against, 2,188,114 votes abstaining and ~~Vinnell~~0 ~~agreed~~broker non-votes. The shareholders defeated Northrop’s proposal requesting that ~~subject~~ TRW take all actions within its authority to ~~certain~~let ~~conditions~~shareholders decide for themselves whether to exchange their TRW shares for Northrop common stock, inwith ~~the~~81,083,692 ~~future~~votes against, ~~penalties~~19,410,984 ~~would~~shares ~~not~~for, be2,322,608 ~~assessed during~~shares aabstaining ~~period~~and of0 ~~court~~broker ~~review~~non-votes. ofThe shareholders defeated a ~~good~~proposal ~~faith~~raised ~~dispute~~by ~~over~~a ~~reimbursement~~shareholder from the floor of ~~oversight~~ ~~costs.~~ the meeting to name the directors who have philanthropic links to the Company and the latest

~~Item 6. Exhibits and Reports on Form 8-K.~~30

(a)	Exhibits
	15	Letter re: Unaudited Financial Information
	99	Computation of Ratio of Earnings to Fixed Charges – Unaudited (Supplement to Exhibit 12 of the following Registration Statements of the Company: No. 333-89133 on Form S-3 and No. 333-48443 on Form S-3)
(b)	Reports on Form 8-K:
	None.


	annual sum with 5,573 votes for, 89,041,421 votes against, 0 votes abstaining, and 0 broker non-votes.

	The shareholders defeated a proposal raised by a shareholder from the floor of the meeting to report which directors who have philanthropic links to the Company serve on the Audit Committee with 5,573 votes for, 89,041,421 votes against, 0 votes abstaining, and 0 broker non-votes.

	The shareholders defeated a proposal raised by a shareholder from the floor of the meeting to name the directors who do not attend the annual shareholders’ meeting with 7,933 votes for, 89,039,061 votes against, 0 votes abstaining, and 0 broker non-votes.

	The shareholders defeated a proposal raised by a shareholder from the floor of the meeting to report whether the Company’s auditors perform audit consulting services and name any other categories of consulting services the Company’s auditors perform and the percentage of their overall fee for each category above 10% of their annual fee with 7,933 votes for, 89,039,061 votes against, 0 votes abstaining, and 0 broker non-votes.

	The shareholders defeated a proposal raised by a shareholder from the floor of the meeting to report the topics of any Rule 14a-8 shareholder proposals that were submitted to the Company with 7,745 votes for, 89,039,061 votes against, 188 votes abstaining, and 0 broker non-votes.

	The shareholders defeated a proposal raised by a shareholder from the floor of the meeting to report the outcome of any Rule 14a-8 shareholder proposal submittals including challenges the Company made to the Securities and Exchange Commission with 7,745 votes for, 89,039,061 votes against, 188 votes abstaining, and 0 broker non-votes.

A Special Meeting of TRW Shareholders held on May 3, 2002 to vote on Northrop’s Control Share Acquisition proposal. At the Special Meeting:


	The holders of 93,901,254 million, or 74.0 percent, of TRW common and preferred stock were represented in person or by proxy and a quorum was present. Under Ohio law, authorization of Northrop’s Control Share Acquisition Proposal required the approval of a majority of the TRW shares represented at the meeting and the approval of a majority of all “disinterested shares” represented at the meeting. “Disinterested shares” generally excludes shares that were: (1) held by any officer of TRW elected or appointed by the Board, (2) held by any employee director of TRW, (3) purchased between February 22, 2002 and March 28, 2002 if the total amount paid for the shares exceeded $250,000, (4) shares held by the “acquiring person” and (5) any shares that were voted without a certification. The proposal was rejected on both counts.

	Of the 93,901,254 shares represented and voting at the meeting, 37,059,656 votes were for the proposal, 56,542,301 votes were against the proposal, 299,297 votes abstained, and there were 0 broker non-votes.

	Of the 60,218,072 TRW “disinterested shares” represented at the meeting 23,768,899 were voted for the proposal, 36,228,746 were voted against the proposal, 220,427 abstained, and there were 0 broker non-votes.

Item 6. Exhibits and Reports on Form 8-K


(a)	Exhibits

	2	Agreement and Plan of Merger, dated as of June 30, 2002, by and among TRW Inc., Northrop Grumman Corporation and Richmond Acquisition Corp. (Exhibit 2.1 to TRW Current Report on Form 8-K filed July 1, 2002, File No. 1-2384, is incorporated herein by reference)

	10(a)	Amendment No. 2, dated as of April 1, 2002 to Receivables Purchase Agreement dated as of November 20, 2001 among TRW Receivables Inc., as Seller, TRW Inc., as Servicer, Charta Corporation, Ciesco, L.P., Corporate Asset Funding Company, Inc., Corporate Receivables Corporation, and WCP Funding, Inc., as the Conduit Purchasers, Citibank, N.A. as Committed Purchaser and Managing Agent, and Citicorp North America, Inc., as Agent for the Conduit Purchasers and the Committed Purchasers.

	10(b)	Retention and Severance Agreement between TRW Inc. and Howard V. Knicely (Exhibit (e)(2) to Amendment No. 15 to Schedule 14D-9 filed by TRW on May 31, 2002, is incorporated herein by reference)

	10(b)	Retention and Severance Agreement between TRW Inc. and Timothy W. Hannemann (Exhibit (e)(7) to Amendment No. 15 to Schedule 14D-9 filed by TRW on May 31, 2002, is incorporated herein by reference)

	10(d)	Master Agreement of Purchase and Sale between Goodrich Corporation and TRW Inc. dated as of June 18, 2002

	10(e)	Employment Continuation Agreement Deferred Compensation Plan dated as of June 21, 2002

	15	Letter re: Unaudited Financial Information

	99(a)	Computation of Ratio of Earnings to Fixed Charges – Unaudited (Supplement to Exhibit 12 of the following Registration Statements of the Company: No. 333-89133 on Form S-3 and No. 333-48443 on Form S-3)

	99(b)	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	99(c)	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	99(d)	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


(b)		Reports on Form 8-K

		Current Report on Form 8-K, dated April 15, 2002, regarding TRW’s announcement advising shareholders to take no action at that time in response to Northrop’s revised $53 per share exchange offer. TRW urged shareholders to await the recommendation of TRW’s directors.

		Current Report on Form 8-K, dated April 17, 2002, regarding TRW’s announcement announcing the recommendation of the Board of Directors with respect to Northrop’s revised exchange offer.

		Current Report on Form 8-K, dated May 17, 2002, regarding a presentation made by TRW Inc. and TRW’s responses to questions at an investor conference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	~~TRW Inc.~~	TRW Inc.
Date: November 7, 2001	By: /s/ W. B. Lawrence
Date: August 13, 2002		By: /s/ W. B. Lawrence W. B. Lawrence Executive Vice President, General Counsel and Secretary
	W. B. Lawrence
		By: /s/ Robert H. Swan Robert H. Swan Executive Vice President and Chief Financial Officer
	Executive Vice President, General Counsel and Secretary
	By: /s/ R.H. Swan
	R. H. Swan
	Executive Vice President
	and Chief Financial Officer

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