##### Table of Contents



FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549


(Mark One)

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

For the quarterly period ended September 30, 2002

OR

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

For the transition period from ______________ to ______________

Commission file number 1-2384

|                                                      
|------------------------------------------------------
|TRW Inc.                                              
|(Exact name of registrant as specified in its charter)

|                                |  |                     |  | 
|------------------------------- |  | ------------------- |  | 
|Ohio                            |  | 34-0575430          |  | 
|                               
|(State or other jurisdiction of |  | (I.R.S. Employer    |  | 
|incorporation or organization)  |  | Identification No.) |  | 

|                                                    
|----------------------------------------------------
|1900 Richmond Road, Cleveland, Ohio 44124           
|(Address of principal executive offices)            
|(Zip Code)                                          
|                                                    
|(216) 291-7000                                      
|(Registrants telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes   X  No


As of November 4, 2002, there
were 129,542,099 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                           
|                                                   | Item 4. Controls and Procedures                                                              
|PART II. OTHER INFORMATION                        
|                                                   | Item 1. Legal Proceedings                                                                    
|                                                   | Item 5. Other Information                                                                    
|                                                   | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                                        
|CERTIFICATIONS                                    
|EX-10(a) Amd #3 to Receivables Purchase Agreement 
|EX-10(b) Form of Am. to Emp. Contin. Agts         
|EX-10(c) Deferred Comp Plan Non-Employee Directors
|EX-10(d) Deferred Compensation Plan               
|EX-10(e) Benefits Equalization Plan               
|EX-10(f) Supplementary Retirement Income Plan     
|EX-10(g) Form of 2001-2002 Incentive Program Grant
|EX-10(h) Form of 2001-2003 Incentive Program Grant
|EX-10(i) Form of 2002-2004 Incentive Program Grant
|EX-15 Letter Re: Unaudited Financial Information  
|EX-99(a) Cert. of Principal Executive Officer     
|EX-99(b) Cert. of Principal Executive Officer     
|EX-99(c) Cert. of Principal Financial Officer     



---



##### Table of Contents






PART I. FINANCIAL INFORMATION




Item 1. Financial Statements

Statements of Operations
(unaudited)TRW Inc. and subsidiaries

|                                                                                      |         |                            |                                                                      |       |                           |       |                               |       |      |       |        |       |      |       |        |       |      |       |  
|------------------------------------------------------------------------------------- | ------- | -------------------------- | -------------------------------------------------------------------- | ----- | ------------------------- | ----- | ----------------------------- | ----- | ---- | ----- | ------ | ----- | ---- | ----- | ------ | ----- | ---- | ----- | -
|                                                                                      |         |                            |                                                                      |       | Quarter
endedSeptember 30 |       | Nine
months endedSeptember 30
|                                                                                      |         |                            |                                                                      |       |                           |       |                              
|(In millions except per share data)                                                   |         | 2002                       |                                                                      | 2001  |                           | 2002  |                               | 2001 
|                                                                                      |         |                            |                                                                      |       |                           |       |                               |      
|Sales                                                                                 |         | $                          | 3,946                                                                |       |                           | $     | 3,593                         |       |      | $     | 12,065 |       |      | $     | 11,501 |      
|Cost of sales                                                                         |         |                            | 3,439                                                                |       |                           |       | 3,091                         |       |      |       | 10,438 |       |      |       | 9,966  |      
|                                                                                      |         |                            |                                                                      |       |                           |       |                               |       |      |       |        |       |      |       |        |      
|Gross profit                                                                          |         |                            | 507                                                                  |       |                           |       | 502                           |       |      |       | 1,627  |       |      |       | 1,535  |      
|                                                                                     
|Administrative and selling expenses                                                   |         |                            | 195                                                                  |       |                           |       | 211                           |       |      |       | 621    |       |      |       | 654    |      
|Research and development expenses                                                     |         |                            | 83                                                                   |       |                           |       | 95                            |       |      |       | 276    |       |      |       | 288    |      
|Interest expense                                                                      |         |                            | 90                                                                   |       |                           |       | 117                           |       |      |       | 295    |       |      |       | 368    |      
|Amortization of intangible assets and
goodwill in 2001                                |         |                            | 4                                                                    |       |                           |       | 36                            |       |      |       | 12     |       |      |       | 84     |      
|Other (income)expense-net                                                             |         |                            | (19                                                                  | )     |                           |       | 178                           |       |      |       | (37    | )     |      |       | 226    |      
|                                                                                      |         |                            |                                                                      |       |                           |       |                               |       |      |       |        |       |      |       |        |      
|Earnings(loss) from continuing operations
before income taxes and extraordinary items |         |                            | 154                                                                  |       |                           |       | (135                          | )     |      |       | 460    |       |      |       | (85    | )    
|Income taxes(benefit)                                                                 |         |                            | 59                                                                   |       |                           |       | (42                           | )     |      |       | 163    |       |      |       | (12    | )    
|                                                                                      |         |                            |                                                                      |       |                           |       |                               |       |      |       |        |       |      |       |        |      
|Earnings(loss) from continuing operations
before extraordinary items                  |         |                            | 95                                                                   |       |                           |       | (93                           | )     |      |       | 297    |       |      |       | (73    | )    
|Discontinued operations, net of income taxes                                          |         |                            | (82                                                                  | )     |                           |       | 13                            |       |      |       | (754   | )     |      |       | 51     |      
|                                                                                      |         |                            |                                                                      |       |                           |       |                               |       |      |       |        |       |      |       |        |      
|Earnings(loss) before extraordinary items                                             |         |                            | 13                                                                   |       |                           |       | (80                           | )     |      |       | (457   | )     |      |       | (22    | )    
|Extraordinary items, net of income taxes                                              |         |                            |                                                                     |       |                           |       |                              |       |      |       | 2      |       |      |       |       |      
|                                                                                      |         |                            |                                                                      |       |                           |       |                               |       |      |       |        |       |      |       |        |      
|Net earnings(loss)                                                                    |         | $                          | 13                                                                   |       |                           | $     | (80                           | )     |      | $     | (455   | )     |      | $     | (22    | )    
|                                                                                      |         |                            |                                                                      |       |                           |       |                               |       |      |       |        |       |      |       |        |      
|Per share of common stock                                                             |         |                            |                                                                      |       |                           |       |                               |       |      |       |        |       |      |       |        |      
|                                                                                      |         | Diluted earnings per share |                                                                      |       |                           |       |                               |       |      |       |        |       |      |       |        |       |      |      
|                                                                                      |         |                            | Earnings(loss) from continuing
operations before extraordinary items |       | $                         | 0.74  |                               |       | $    | (0.75 | )      |       | $    | 2.33  |        |       | $    | (0.58 | )
|                                                                                      |         |                            | Discontinued operations                                              |       |                           | (0.64 | )                             |       |      | 0.10  |        |       |      | (5.92 | )      |       |      | 0.40  |  
|                                                                                      |         |                            | Extraordinary items                                                  |       |                           |      |                               |       |      |      |        |       |      | 0.02  |        |       |      |      |  
|                                                                                      |         |                            |                                                                      |       |                           |       |                               |       |      |       |        |       |      |       |        |      
|                                                                                      |         |                            | Net earnings(loss)                                                   |       | $                         | 0.10  |                               |       | $    | (0.65 | )      |       | $    | (3.57 | )      |       | $    | (0.18 | )
|                                                                                      |         |                            |                                                                      |       |                           |       |                               |       |      |       |        |       |      |       |        |      
|                                                                                      |         | Basic earnings per share   |                                                                      |       |                           |       |                               |       |      |       |        |       |      |       |        |       |      |      
|                                                                                      |         |                            | Earnings(loss) from continuing
operations before extraordinary items |       | $                         | 0.74  |                               |       | $    | (0.75 | )      |       | $    | 2.33  |        |       | $    | (0.58 | )
|                                                                                      |         |                            | Discontinued operations                                              |       |                           | (0.64 | )                             |       |      | 0.10  |        |       |      | (5.92 | )      |       |      | 0.40  |  
|                                                                                      |         |                            | Extraordinary items                                                  |       |                           |      |                               |       |      |      |        |       |      | 0.02  |        |       |      |      |  
|                                                                                      |         |                            |                                                                      |       |                           |       |                               |       |      |       |        |       |      |       |        |      
|                                                                                      |         |                            | Net earnings(loss)                                                   |       | $                         | 0.10  |                               |       | $    | (0.65 | )      |       | $    | (3.57 | )      |       | $    | (0.18 | )
|                                                                                      |         |                            |                                                                      |       |                           |       |                               |       |      |       |        |       |      |       |        |      
|                                                                                     
|                                                                                      |         | Dividends declared         |                                                                      | $     | 0.175                     |       |                               | $     | 0.35 |       |        | $     | 0.35 |       |        | $     | 0.70 |      
|                                                                                     
|Shares used in computing per share amounts                                            |         |                            |                                                                      |       |                           |       |                               |       |      |       |        |       |      |       |        |      
|                                                                                      | Diluted |                            |                                                                      | 129.1 |                           |       |                               | 125.2 |      |       |        | 127.4 |      |       |        | 124.5 |     
|                                                                                      | Basic   |                            |                                                                      | 128.6 |                           |       |                               | 125.2 |      |       |        | 127.4 |      |       |        | 124.5 |     

2



---



##### Table of Contents



Balance Sheets
(unaudited)TRW Inc. and subsidiaries

|                                                   |                                                |      |              |       |             |   |        |       |  
|-------------------------------------------------- | ---------------------------------------------- | ---- | ------------ | ----- | ----------- | - | ------ | ----- | -
|                                                   |                                                |      | September 30 |       | December 31
|(In millions)                                      |                                                | 2002 |              | 2001 
|                                                   |                                                |      |              |      
|Assets                                             |                                                |      |              |       |             |   |        |      
|Current assets                                     |                                                |      |              |       |             |   |        |      
|                                                   | Cash and cash equivalents                      |      | $            | 313   |             |   | $      | 213   |  
|                                                   | Accounts receivable                            |      |              | 1,684 |             |   |        | 1,418 |  
|                                                   | Interest in securitized receivables            |      |              | 214   |             |   |        | 162   |  
|                                                   | Inventories                                    |      |              | 622   |             |   |        | 575   |  
|                                                   | Prepaid expenses                               |      |              | 156   |             |   |        | 160   |  
|                                                   | Deferred income taxes                          |      |              | 312   |             |   |        | 201   |  
|                                                   | Assets of business held for sale               |      |              | 1,650 |             |   |        | 2,018 |  
|                                                   |                                                |      |              |       |             |   |        |      
|Total current assets                               |                                                |      | 4,951        |       |             |   | 4,747  |      
|                                                  
|Property, plant and equipment-on the basis of cost |                                                |      | 8,179        |       |             |   | 7,924  |      
|                                                   | Less accumulated depreciation and amortization |      |              | 5,013 |             |   |        | 4,641 |  
|                                                   |                                                |      |              |       |             |   |        |      
|Total property, plant and equipment-net            |                                                |      | 3,166        |       |             |   | 3,283  |      
|                                                  
|Intangible assets                                  |                                                |      | 543          |       |             |   | 586    |      
|                                                   | Less accumulated amortization                  |      |              | 295   |             |   |        | 272   |  
|                                                   |                                                |      |              |       |             |   |        |      
|Intangible assets-net                              |                                                |      | 248          |       |             |   | 314    |      
|                                                  
|Goodwill                                           |                                                |      | 2,613        |       |             |   | 2,417  |      
|Investments in affiliated companies                |                                                |      | 111          |       |             |   | 243    |      
|Other notes and accounts receivable                |                                                |      | 170          |       |             |   | 204    |      
|Other assets                                       |                                                |      | 280          |       |             |   | 480    |      
|Prepaid pension cost                               |                                                |      | 3,032        |       |             |   | 2,756  |      
|                                                   |                                                |      |              |       |             |   |        |      
|                                                   |                                                | $    | 14,571       |       |             | $ | 14,444 |      
|                                                   |                                                |      |              |       |             |   |        |      
|Liabilities and shareholders investment           |                                                |      |              |       |             |   |        |      
|Current liabilities                                |                                                |      |              |       |             |   |        |      
|                                                   | Short-term debt                                |      | $            | 763   |             |   | $      | 115   |  
|                                                   | Trade accounts payable                         |      |              | 1,709 |             |   |        | 1,575 |  
|                                                   | Current portion of long-term debt              |      |              | 100   |             |   |        | 724   |  
|                                                   | Liabilities of business held for sale          |      |              | 431   |             |   |        | 423   |  
|                                                   | Other current liabilities                      |      |              | 2,023 |             |   |        | 2,029 |  
|                                                   |                                                |      |              |       |             |   |        |      
|Total current liabilities                          |                                                |      | 5,026        |       |             |   | 4,866  |      
|                                                  
|Long-term debt                                     |                                                |      | 4,768        |       |             |   | 4,865  |      
|Long-term liabilities                              |                                                |      | 1,765        |       |             |   | 1,827  |      
|Deferred income taxes                              |                                                |      | 922          |       |             |   | 626    |      
|Minority interests in subsidiaries                 |                                                |      | 87           |       |             |   | 74     |      
|Shareholders investment                           |                                                |      |              |       |             |   |        |      
|                                                   | Capital stock                                  |      |              | 81    |             |   |        | 79    |  
|                                                   | Other capital                                  |      |              | 491   |             |   |        | 480   |  
|                                                   | Retained earnings                              |      |              | 1,954 |             |   |        | 2,468 |  
|                                                   | Treasury shares-cost in excess of par value    |      |              | (234  | )           |   |        | (372  | )
|                                                   | Accumulated other comprehensive income(loss)   |      |              | (289  | )           |   |        | (469  | )
|                                                   |                                                |      |              |       |             |   |        |      
|Total shareholders investment                     |                                                |      | 2,003        |       |             |   | 2,186  |      
|                                                   |                                                |      |              |       |             |   |        |      
|                                                   |                                                | $    | 14,571       |       |             | $ | 14,444 |      
|                                                   |                                                |      |              |       |             |   |        |      

3



---



##### Table of Contents



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

|                                                                                          |                                        |      |                               |      |   |   |      |      |  
|----------------------------------------------------------------------------------------- | -------------------------------------- | ---- | ----------------------------- | ---- | - | - | ---- | ---- | -
|                                                                                          |                                        |      | Nine
months endedSeptember 30
|                                                                                          |                                        |      |                              
|(In millions)                                                                             |                                        | 2002 |                               | 2001
|                                                                                          |                                        |      |                               |     
|Operating activities                                                                      |                                        |      |                               |      |   |   |      |     
|Net earnings(loss)                                                                        |                                        | $    | (455                          | )    |   | $ | (22  | )   
|Adjustments to reconcile net earnings(loss) to net cash provided by operating
activities: |                                        |      |                               |      |   |   |      |     
|                                                                                          | Discontinued operations                |      |                               | 754  |   |   |      | (51  | )
|                                                                                          | Depreciation and amortization          |      |                               | 468  |   |   |      | 506  |  
|                                                                                          | Pension income                         |      |                               | (193 | ) |   |      | (184 | )
|                                                                                          | Net gain on sale of assets             |      |                               | (31  | ) |   |      | (199 | )
|                                                                                          | Asset impairment charges               |      |                               | 31   |   |   |      | 346  |  
|                                                                                          | Pending and threatened litigation      |      |                               |     |   |   |      | 97   |  
|                                                                                          | Deferred income taxes                  |      |                               | 79   |   |   |      | (51  | )
|                                                                                          | Other-net                              |      |                               | 53   |   |   |      | 83   |  
|Changes in assets and liabilities, net of effects of businesses acquired or
divested:     |                                        |      |                               |      |   |   |      |     
|                                                                                          | Accounts receivable, net               |      |                               | (302 | ) |   |      | 36   |  
|                                                                                          | Accounts receivable securitized        |      |                               | 43   |   |   |      |     |  
|                                                                                          | Inventories                            |      |                               | (36  | ) |   |      | 11   |  
|                                                                                          | Trade accounts payable                 |      |                               | 87   |   |   |      | (40  | )
|                                                                                          | Prepaid expenses and other liabilities |      |                               | 7    |   |   |      | (95  | )
|                                                                                          | Other-net                              |      |                               | 109  |   |   |      | 112  |  
|                                                                                          |                                        |      |                               |      |   |   |      |     
|Net cash provided by operating activities of continuing operations                        |                                        |      | 614                           |      |   |   | 549  |     
|                                                                                         
|Investing activities                                                                      |                                        |      |                               |      |   |   |      |     
|Capital expenditures including other intangibles                                          |                                        |      | (350                          | )    |   |   | (440 | )   
|Net proceeds from sales of assets                                                         |                                        |      | 94                            |      |   |   | 169  |     
|Other-net                                                                                 |                                        |      | 17                            |      |   |   | (79  | )   
|                                                                                          |                                        |      |                               |      |   |   |      |     
|Net cash used in investing activities of continuing operations                            |                                        |      | (239                          | )    |   |   | (350 | )   
|                                                                                         
|Financing activities                                                                      |                                        |      |                               |      |   |   |      |     
|Increase(decrease) in short-term debt                                                     |                                        |      | 397                           |      |   |   | (391 | )   
|Proceeds from debt in excess of 90 days                                                   |                                        |      | 478                           |      |   |   | 998  |     
|Principal payments on debt in excess of 90 days                                           |                                        |      | (991                          | )    |   |   | (811 | )   
|Dividends paid                                                                            |                                        |      | (67                           | )    |   |   | (132 | )   
|Other-net                                                                                 |                                        |      | (78                           | )    |   |   | 100  |     
|                                                                                          |                                        |      |                               |      |   |   |      |     
|Net cash used in financing activities of continuing operations                            |                                        |      | (261                          | )    |   |   | (236 | )   
|Effect of exchange rate changes on cash                                                   |                                        |      | 9                             |      |   |   | 10   |     
|Net cash (used in)provided by discontinued operations                                     |                                        |      | (23                           | )    |   |   | 1    |     
|                                                                                          |                                        |      |                               |      |   |   |      |     
|Increase(decrease) in cash and cash equivalents                                           |                                        |      | 100                           |      |   |   | (26  | )   
|Cash and cash equivalents at beginning of period                                          |                                        |      | 213                           |      |   |   | 248  |     
|                                                                                          |                                        |      |                               |      |   |   |      |     
|Cash and cash equivalents at end of period                                                |                                        | $    | 313                           |      |   | $ | 222  |     
|                                                                                          |                                        |      |                               |      |   |   |      |     

4



---



##### Table of Contents



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
fair presentation have been included. Operating results for the three-month
and nine-month periods ended September 30, 2002 are not necessarily indicative
of the results that may be expected for the year ending December 31, 2002.

For further information, refer to the consolidated financial statements and
footnotes thereto included in the Companys Current Report on Form 8-K filed on
September 3, 2002.

Reclassifications

The Companys Aeronautical Systems business is reported as discontinued
operations, net of applicable income taxes in the Statement of Operations for
all periods presented. In addition, the assets and liabilities of the
Aeronautical Systems business have been reclassified as held for sale.

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

TRW and Northrop Grumman Merger Agreement

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. On October 16,
2002, the European Commission announced that it had completed its review and
approved the transaction. The statutory waiting period applicable to the
merger pursuant to the U.S. Hart-Scott-Rodino Act expired on October 15, 2002,
although the Department of Justice is still reviewing the transaction.
Northrop and the Company have agreed that they will notify the Justice
Department of their intent to complete the transaction no sooner than ten
business days prior to the earlier of Northrops stockholders meeting or the
Companys shareholders meeting relating to the merger. The merger requires
approval by the shareholders of the Company and Northrop and both companies
have scheduled special meetings of shareholders for December 11, 2002 to vote
on the proposed merger. 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.

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, long-term bank loan agreements and
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

5



---



##### Table of Contents



or restructure such indebtedness or facilities, negotiate waivers of any such
termination events or make alternative arrangements in conjunction with
Northrop 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.

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 $54 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. During the second quarter, management completed the
valuations of its reporting units and based on the valuations, goodwill was
determined not to be impaired. With the adoption of SFAS 142, the Company also
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. In accordance with SFAS 142, amounts in 2001 have
not been restated.

The following table reflects the reconciliation of reported earnings(loss) from
continuing operations before extraordinary items to adjusted net earnings(loss)
and related per share amounts for the exclusion of goodwill amortization.

|                                                                              |                                                                               |                                             |                                             |       |               |      |                   |       |    |      |      |       |   |   |     |       |    |      | 
|----------------------------------------------------------------------------- | ----------------------------------------------------------------------------- | ------------------------------------------- | ------------------------------------------- | ----- | ------------- | ---- | ----------------- | ----- | -- | ---- | ---- | ----- | - | - | --- | ----- | -- | ---- | 
|                                                                              |                                                                               |                                             |                                             |       | Quarter ended |      | Nine months ended
|                                                                              |                                                                               |                                             |                                             |       | September 30  |      | September 30     
|                                                                              |                                                                               |                                             |                                             |       |               |      |                  
|(In millions except per share data)                                           |                                                                               | 2002                                        |                                             | 2001  |               | 2002 |                   | 2001 
|                                                                              |                                                                               |                                             |                                             |       |               |      |                   |      
|Net earnings(loss)                                                            |                                                                               |                                             |                                             |       |               |      |                   |       |    |      |      |       |   |   |     |      
|Reported earnings(loss) from continuing
operations before extraordinary items |                                                                               | $                                           | 95                                          |       |               | $    | (93               | )     |    | $    | 297  |       |   | $ | (73 | )    
|                                                                              |                                                                               | Add back: Goodwill amortization, net of tax |                                             |       |              |      |                   |       | 18 |      |      |       |  |   |     |       | 53 |     
|                                                                              |                                                                               |                                             |                                             |       |               |      |                   |       |    |      |      |       |   |   |     |      
|Adjusted earnings(loss) from continuing
operations before extraordinary items |                                                                               |                                             | 95                                          |       |               |      | (75               | )     |    |      | 297  |       |   |   | (20 | )    
|Reported discontinued operations, net of tax                                  |                                                                               |                                             | (82                                         | )     |               |      | 13                |       |    |      | (754 | )     |   |   | 51  |      
|                                                                              |                                                                               | Add back: Goodwill amortization, net of tax |                                             |       |              |      |                   |       | 5  |      |      |       |  |   |     |       | 14 |     
|Extraordinary items, net of tax                                               |                                                                               |                                             |                                            |       |               |      |                  |       |    |      | 2    |       |   |   |    |      
|                                                                              |                                                                               |                                             |                                             |       |               |      |                   |       |    |      |      |       |   |   |     |      
|Adjusted net earnings(loss)                                                   |                                                                               | $                                           | 13                                          |       |               | $    | (57               | )     |    | $    | (455 | )     |   | $ | 45  |      
|                                                                              |                                                                               |                                             |                                             |       |               |      |                   |       |    |      |      |       |   |   |     |      
|Per share of common stock                                                     |                                                                               |                                             |                                             |       |               |      |                   |       |    |      |      |       |   |   |     |      
|Diluted and Basic                                                             |                                                                               |                                             |                                             |       |               |      |                   |       |    |      |      |       |   |   |     |      
|                                                                              | Reported earnings(loss) from continuing
operations before extraordinary items |                                             | $                                           | 0.74  |               |      | $                 | (0.75 | )  |      | $    | 2.33  |   |   | $   | (0.58 | ) 
|                                                                              |                                                                               |                                             | Add back: Goodwill amortization, net of tax |       |               |     |                   |       |    | 0.15 |      |       |   |  |     |       |    | 0.42 | 
|                                                                              |                                                                               |                                             |                                             |       |               |      |                   |       |    |      |      |       |   |   |     |      
|                                                                              | Adjusted earnings(loss) from continuing
operations before extraordinary items |                                             |                                             | 0.74  |               |      |                   | (0.60 | )  |      |      | 2.33  |   |   |     | (0.16 | ) 
|                                                                              | Reported discontinued operations, net of tax                                  |                                             |                                             | (0.64 | )             |      |                   | 0.10  |    |      |      | (5.92 | ) |   |     | 0.40  |   
|                                                                              |                                                                               |                                             | Add back: Goodwill amortization, net of tax |       |               |     |                   |       |    | 0.04 |      |       |   |  |     |       |    | 0.12 | 
|                                                                              | Extraordinary items, net of tax                                               |                                             |                                             |      |               |      |                   |      |    |      |      | 0.02  |   |   |     |      |   
|                                                                              |                                                                               |                                             |                                             |       |               |      |                   |       |    |      |      |       |   |   |     |      
|                                                                              | Adjusted net earnings(loss)                                                   |                                             | $                                           | 0.10  |               |      | $                 | (0.46 | )  |      | $    | (3.57 | ) |   | $   | 0.36  |   
|                                                                              |                                                                               |                                             |                                             |       |               |      |                   |       |    |      |      |       |   |   |     |      

6



---



##### Table of Contents



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 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. 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.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities. SFAS 146 requires that a liability for
costs associated with exit or disposal activities be recognized when the
liability is incurred rather than when an entity commits to an exit plan. SFAS
146 also provides that the liability be initially measured at fair value. The
statement is effective for the Company beginning January 1, 2003. Management
will evaluate the impact of SFAS 146 upon adoption.

Other (Income)Expense-Net

|                                    |  |               |     |                   |  |      |      |      |  |   |     |   |  |   |      |  
|----------------------------------- |  | ------------- | --- | ----------------- |  | ---- | ---- | ---- |  | - | --- | - |  | - | ---- | -
|                                    |  | Quarter ended |     | Nine months ended
|                                    |  | September 30  |     | September 30     
|                                    |  |               |     |                  
|(In millions)                       |  | 2002          |     | 2001              |  | 2002 |      | 2001
|                                    |  |               |     |                   |  |      |      |     
|Net gain on sale of assets          |  | $             | (4  | )                 |  | $    | (174 | )    |  | $ | (31 | ) |  | $ | (199 | )
|Asset impairments                   |  |               | 21  |                   |  |      | 257  |      |  |   | 24  |   |  |   | 322  |  
|Pending and threatened litigation   |  |               |    |                   |  |      | 97   |      |  |   |    |   |  |   | 97   |  
|(Earnings)loss of affiliates        |  |               | (5  | )                 |  |      | 5    |      |  |   | (4  | ) |  |   | 26   |  
|Foreign currency exchange           |  |               | 1   |                   |  |      | (1   | )    |  |   | 2   |   |  |   | (4   | )
|Favorable litigation ruling         |  |               | (25 | )                 |  |      |     |      |  |   | (25 | ) |  |   |     |  
|Miscellaneous other (income)expense |  |               | (7  | )                 |  |      | (6   | )    |  |   | (3  | ) |  |   | (16  | )
|                                    |  |               |     |                   |  |      |      |      |  |   |     |   |  |   |      |  
|                                    |  | $             | (19 | )                 |  | $    | 178  |      |  | $ | (37 | ) |  | $ | 226  |  
|                                    |  |               |     |                   |  |      |      |      |  |   |     |   |  |   |      |  

During the third quarter of 2002, the Company recorded asset impairment charges
primarily related to the write-down of investments in affiliates.

7



---



##### Table of Contents



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 of 2001 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.

Operating Segments

As a result of the sale of Aeronautical Systems, the business is reported as
discontinued operations.

|                                                                                      |                     |      |               |       |                   |      |       |       |   |   |        |       |  |   |        |       |  
|------------------------------------------------------------------------------------- | ------------------- | ---- | ------------- | ----- | ----------------- | ---- | ----- | ----- | - | - | ------ | ----- |  | - | ------ | ----- | -
|                                                                                      |                     |      | Quarter ended |       | Nine months ended
|                                                                                      |                     |      | September 30  |       | September 30     
|                                                                                      |                     |      |               |       |                  
|(In millions)                                                                         |                     | 2002 |               | 2001  |                   | 2002 |       | 2001 
|                                                                                      |                     |      |               |       |                   |      |       |      
|Sales                                                                                 |                     |      |               |       |                   |      |       |       |   |   |        |       |  |   |        |      
|                                                                                      | Automotive          |      | $             | 2,545 |                   |      | $     | 2,327 |   |   | $      | 7,956 |  |   | $      | 7,634 |  
|                                                                                      | Systems             |      |               | 905   |                   |      |       | 761   |   |   |        | 2,602 |  |   |        | 2,349 |  
|                                                                                      | Space & Electronics |      |               | 496   |                   |      |       | 505   |   |   |        | 1,507 |  |   |        | 1,518 |  
|                                                                                      |                     |      |               |       |                   |      |       |       |   |   |        |       |  |   |        |      
|Sales                                                                                 |                     | $    | 3,946         |       |                   | $    | 3,593 |       |   | $ | 12,065 |       |  | $ | 11,501 |      
|                                                                                      |                     |      |               |       |                   |      |       |       |   |   |        |       |  |   |        |      
|Profit(loss) before taxes                                                             |                     |      |               |       |                   |      |       |       |   |   |        |       |  |   |        |      
|                                                                                      | Automotive          |      | $             | 120   |                   |      | $     | 92    |   |   | $      | 407   |  |   | $      | 298   |  
|                                                                                      | Systems             |      |               | 62    |                   |      |       | 40    |   |   |        | 186   |  |   |        | 141   |  
|                                                                                      | Space & Electronics |      |               | 26    |                   |      |       | (47   | ) |   |        | 103   |  |   |        | (53   | )
|                                                                                      |                     |      |               |       |                   |      |       |       |   |   |        |       |  |   |        |      
|Profit(loss) before taxes                                                             |                     |      | 208           |       |                   |      | 85    |       |   |   | 696    |       |  |   | 386    |      
|                                                                                     
|Corporate expense and other                                                           |                     |      | (10           | )     |                   |      | (152  | )     |   |   | (59    | )     |  |   | (221   | )    
|Financing costs                                                                       |                     |      | (92           | )     |                   |      | (118  | )     |   |   | (303   | )     |  |   | (371   | )    
|Net employee benefits income                                                          |                     |      | 48            |       |                   |      | 50    |       |   |   | 126    |       |  |   | 121    |      
|                                                                                      |                     |      |               |       |                   |      |       |       |   |   |        |       |  |   |        |      
|Earnings(loss) from continuing
operations before income taxes and
extraordinary items |                     | $    | 154           |       |                   | $    | (135  | )     |   | $ | 460    |       |  | $ | (85    | )    
|                                                                                      |                     |      |               |       |                   |      |       |       |   |   |        |       |  |   |        |      

Goodwill amortization included in each segment for the third quarter and the
nine months ended September 30, 2001, respectively, was $18 million and $49
million for Automotive and $4 million and $13 million for Systems. Goodwill
amortization included in Space & Electronics for the nine months ended
September 30, 2001 was $1 million.

Intersegment sales

|                    |  |               |    |                   |  |      |    |      |  |   |     |  |  |   |     | 
|------------------- |  | ------------- | -- | ----------------- |  | ---- | -- | ---- |  | - | --- |  |  | - | --- | 
|                    |  | Quarter ended |    | Nine months ended
|                    |  | September 30  |    | September 30     
|                    |  |               |    |                  
|(In millions)       |  | 2002          |    | 2001              |  | 2002 |    | 2001
|                    |  |               |    |                   |  |      |    |     
|Automotive          |  | $             | 1  |                   |  | $    |   |      |  | $ | 1   |  |  | $ | 2   | 
|Systems             |  |               | 41 |                   |  |      | 44 |      |  |   | 125 |  |  |   | 139 | 
|Space & Electronics |  |               | 8  |                   |  |      | 15 |      |  |   | 20  |  |  |   | 45  | 

8



---



##### Table of Contents



Inventories

|                                      |  |              |     |             |  |   |     | 
|------------------------------------- |  | ------------ | --- | ----------- |  | - | --- | 
|                                      |  | September 30 |     | December 31
|(In millions)                         |  | 2002         |     | 2001       
|                                      |  |              |     |            
|Finished products and work in process |  | $            | 351 |             |  | $ | 324 | 
|Raw materials and supplies            |  |              | 271 |             |  |   | 251 | 
|                                      |  |              |     |             |  |   |     | 
|                                      |  | $            | 622 |             |  | $ | 575 | 
|                                      |  |              |     |             |  |   |     | 

Supplemental Cash Flow Information

|                                         |  |                   |     |      |  |   |     | 
|---------------------------------------- |  | ----------------- | --- | ---- |  | - | --- | 
|                                         |  | Nine months ended
|                                         |  | September 30     
|                                         |  |                  
|(In millions)                            |  | 2002              |     | 2001
|                                         |  |                   |     |     
|Interest paid, net of amount capitalized |  | $                 | 263 |      |  | $ | 317 | 
|Income taxes paid, net of refunds        |  |                   | 8   |      |  |   | 17  | 

Restructurings

Automotive

Severance costs and plant closing accruals related to restructuring plans,
including reorganizing and downsizing operations, were $145 million at December
31, 2001. During the nine months ended September 30, 2002, additional net
charges of $11 million before tax were recorded primarily in cost of sales, of
which $2 million was recorded in the third quarter. For the third quarter and
nine months ended September 30, 2002, $30 million and $81 million,
respectively, was used for severance payments and costs related to the
consolidation of certain facilities. A gross reduction of over 1,500 employees
as well as the closure of three manufacturing facilities related to these
restructuring programs were achieved during the nine months ended September 30,
2002. The majority of the remaining balance of $75 million is expected to be
used by the end of 2002.

Corporate

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. During the nine
months ended September 30, 2002, $6 million was used primarily for severance
payments, of which $1 million was used in the third quarter. In the third
quarter of 2002, the Company returned to profit $2 million as a result of
changes in circumstances as to the extent of the program. The balance of $2
million is expected to be used by the end of 2002.

Asset Impairments

During the nine months ended September 30, 2002, the Company recorded before
tax asset impairment charges of $19 million, of which $17 million was recorded
during the third quarter. These charges related to the write-down of
investments as a result of declines in market values which were determined by
management to be other than temporary. The charges were primarily recorded in
other (income)expense-net. In addition, before tax asset impairment charges
for the nine months ended September 30, 2002 of $12 million were recorded, of
which $11 million was in the third quarter, related to the write-down of other
assets. These charges were recorded in cost of sales and other
(income)expense-net. The assets were written down to fair value based upon
current market values of the assets.

9



---



##### Table of Contents



Accounts Receivable Securitized

During the fourth quarter of 2001, the Company established a $350 million
accounts receivable securitization program. Under this program, the Company
sells accounts receivable to a wholly-owned, fully consolidated, bankruptcy
remote, special purpose subsidiary, TRW Receivables Inc. In contemplation of
the sale of the Companys Aeronautical Systems business, TRW Receivables Inc.
sold back the accounts receivable of the participating Aeronautical Systems
units. At the same time, the size of the securitization program was reduced
from $350 million to $325 million. The outstanding balance of receivables sold
to the special purpose subsidiary at September 30, 2002 was $522 million
compared to $489 million at December 31, 2001, of which $64 million related to
Aeronautical Systems. The undivided interest in the receivables portfolio sold
to the financial conduits at September 30, 2002 was $308 million compared to
$327 million at December 31, 2001. The loss on sale for the third quarter and
nine months of 2002 was $2 million and $5 million, respectively, and was
recorded in other (income)expense-net.

The table below summarizes certain cash flow information of the special purpose
subsidiary for the nine months ended September 30, 2002:

|                                                                 |   |       | 
|---------------------------------------------------------------- | - | ----- | 
|(In millions)                                                    |  
|                                                                 |   |      
|Average monthly proceeds from receivables securitization         | $ | 315  
|Monthly accumulation of proceeds from receivables securitization |   | 2,831 | 

This transaction is accounted for as a sale of the receivables under the
provisions of SFAS 140, Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities.

Financial Instruments

Foreign currency forward contractsThe Company manufactures and sells its
products in countries throughout the 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. Gains or losses on these instruments, which mature at
various dates through April 2007, are generally recorded in other comprehensive
income(loss) until the underlying transaction is recognized in net earnings.
The earnings impact is reported in the Statements of Operations in the same
account as the underlying transaction. The Company 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 of business held for sale.

In addition, the Company enters into certain foreign currency forward contracts
that are not treated as hedges under SFAS 133, Accounting for Derivative
Instruments and Hedging Activities to hedge recognized foreign currency
transactions. Gains and losses on these contracts are recorded in net earnings
and are substantially offset by the earnings effect of the revaluation of the
underlying foreign currency denominated transaction.

At September 30, 2002, the Company had foreign currency derivative contracts
outstanding with a notional amount of $1.8 billion, denominated principally in
the U.S. dollar, the euro and the British pound, of which $1.2 billion related
to the Aeronautical Systems business. Foreign exchange contracts are placed
with a number of major financial institutions to minimize credit risk. No
collateral is held in relation to the contracts, and the Company anticipates
that these financial institutions will satisfy their obligations under the
contracts. The fair market value of the foreign currency derivative contracts
was a gain of $33 million at September 30, 2002.

10



---



##### Table of Contents



Interest rate swap agreementsThe Company enters into interest rate swaps to
manage the risks and costs associated with its financing activities. The net
payments or receipts under the agreements are recognized as an adjustment to
interest expense. At September 30, 2002, 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 through August 2005. The interest rate
swaps have a fair market value loss of $14 million at September 30, 2002.
These agreements were designated as cash flow hedges.

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 September 30, 2002 was a $207 million gain. These
agreements were designated as cash flow hedges.

The following table represents the movement of amounts reported in other
comprehensive income(loss) of deferred cash flow hedges, net of tax.

|                                                        |  |               |    |                   |  |      |     |      |  |   |     |   |  |   |    |  
|------------------------------------------------------- |  | ------------- | -- | ----------------- |  | ---- | --- | ---- |  | - | --- | - |  | - | -- | -
|                                                        |  | Quarter ended |    | Nine months ended
|                                                        |  | September 30  |    | September 30     
|                                                        |  |               |    |                  
|(In millions)                                           |  | 2002          |    | 2001              |  | 2002 |     | 2001
|                                                        |  |               |    |                   |  |      |     |     
|Beginning balance                                       |  | $             | 79 |                   |  | $    | (57 | )    |  | $ | (2  | ) |  | $ |   |  
|Net change in derivative fair value and other movements |  |               | 21 |                   |  |      | 53  |      |  |   | 100 |   |  |   | (8 | )
|Amounts reclassified to earnings                        |  |               | (7 | )                 |  |      | 2   |      |  |   | (5  | ) |  |   | 6  |  
|                                                        |  |               |    |                   |  |      |     |      |  |   |     |   |  |   |    |  
|Other comprehensive income(loss)                        |  | $             | 93 |                   |  | $    | (2  | )    |  | $ | 93  |   |  | $ | (2 | )
|                                                        |  |               |    |                   |  |      |     |      |  |   |     |   |  |   |    |  

Debt and Credit Agreements

The 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
21, 2004. The Company also 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 agreements is either the prime rate or a
rate based on London Interbank Offered Rate (LIBOR), at the option of the
Company.

The Company repaid $300 million of medium-term notes that matured during the
first quarter of 2002. Interest on the notes was based on three-month LIBOR.
A subsidiary of the Company also completed an unsolicited repurchase of £5.4
million of its 10.875 percent bonds due 2020 during the first quarter of 2002.
The repurchase resulted in an extraordinary gain of $4 million before taxes ($2
million after taxes, or $0.02 per share).

During the second quarter of 2002, the Company repaid $400 million of fixed
rate notes that matured.

Preference Stock Redemption

On August 30, 2002, the Company redeemed all outstanding shares of its
Cumulative Serial Preference Stock II, $4.40 Convertible Series 1 at a
redemption price of $104 per share and all outstanding shares of its Cumulative
Serial Preference Stock II, $4.50 Convertible Series 3 at a redemption price of
$100 per share.

11



---



##### Table of Contents



Earnings Per Share

|                                    |                                                                                                         |                                                                      |   |               |       |                   |   |       |       |   |   |        |       |   |   |       |       |  
|----------------------------------- | ------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------- | - | ------------- | ----- | ----------------- | - | ----- | ----- | - | - | ------ | ----- | - | - | ----- | ----- | -
|                                    |                                                                                                         |                                                                      |   | Quarter ended |       | Nine months ended
|                                    |                                                                                                         |                                                                      |   | September 30  |       | September 30     
|                                    |                                                                                                         |                                                                      |   |               |       |                  
|(In millions except per share data) |                                                                                                         | 2002                                                                 |   | 2001          |       | 2002              |   | 2001 
|                                    |                                                                                                         |                                                                      |   |               |       |                   |   |      
|Numerator                           |                                                                                                         |                                                                      |   |               |       |                   |   |       |       |   |   |        |       |   |   |      
|                                    | Earnings(loss) from continuing operations
before extraordinary items                                    |                                                                      | $ | 95.2          |       |                   | $ | (93.1 | )     |   | $ | 296.9  |       |   | $ | (72.7 | )    
|                                    | Discontinued operations                                                                                 |                                                                      |   | (82.2         | )     |                   |   | 12.3  |       |   |   | (754.2 | )     |   |   | 50.4  |      
|                                    |                                                                                                         |                                                                      |   |               |       |                   |   |       |       |   |   |        |       |   |   |      
|                                    | Earnings(loss) before extraordinary items                                                               |                                                                      |   | 13.0          |       |                   |   | (80.8 | )     |   |   | (457.3 | )     |   |   | (22.3 | )    
|                                    | Extraordinary items                                                                                     |                                                                      |   |              |       |                   |   |      |       |   |   | 2.5    |       |   |   |      |      
|                                    |                                                                                                         |                                                                      |   |               |       |                   |   |       |       |   |   |        |       |   |   |      
|                                    | Net earnings(loss)                                                                                      |                                                                      |   | 13.0          |       |                   |   | (80.8 | )     |   |   | (454.8 | )     |   |   | (22.3 | )    
|                                    | Preferred stock dividends                                                                               |                                                                      |   |              |       |                   |   | (0.1  | )     |   |   | (0.3   | )     |   |   | (0.4  | )    
|                                    |                                                                                                         |                                                                      |   |               |       |                   |   |       |       |   |   |        |       |   |   |      
|                                    | Numerator
for basic earnings per share 
net earnings(loss) available to common
shareholders            |                                                                      |   | 13.0          |       |                   |   | (80.9 | )     |   |   | (455.1 | )     |   |   | (22.7 | )    
|                                    | Effect of dilutive securities                                                                           |                                                                      |   |               |       |                   |   |       |       |   |   |        |       |   |   |       |      
|                                    |                                                                                                         | Preferred stock dividends                                            |   |               |      |                   |   |       | 0.1   |   |   |        | 0.3   |   |   |       | 0.4   |  
|                                    |                                                                                                         |                                                                      |   |               |       |                   |   |       |       |   |   |        |       |   |   |      
|                                    | Numerator for diluted earnings per share
 net earnings(loss) available to common
shareholders          |                                                                      | $ | 13.0          |       |                   | $ | (80.8 | )     |   | $ | (454.8 | )     |   | $ | (22.3 | )    
|                                    |                                                                                                         |                                                                      |   |               |       |                   |   |       |       |   |   |        |       |   |   |      
|Denominator                         |                                                                                                         |                                                                      |   |               |       |                   |   |       |       |   |   |        |       |   |   |      
|                                    | Denominator
for basic earnings per share 
weighted-average common shares                               |                                                                      |   | 128.6         |       |                   |   | 125.2 |       |   |   | 127.4  |       |   |   | 124.5 |      
|                                    | Effect of dilutive securities                                                                           |                                                                      |   |               |       |                   |   |       |       |   |   |        |       |   |   |       |      
|                                    |                                                                                                         | Convertible preferred stock                                          |   |               | (1.3  | )                 |   |       |      |   |   |        |      |   |   |       |      |  
|                                    |                                                                                                         | Employee stock options                                               |   |               | 1.8   |                   |   |       |      |   |   |        |      |   |   |       |      |  
|                                    |                                                                                                         |                                                                      |   |               |       |                   |   |       |       |   |   |        |       |   |   |      
|                                    | Dilutive potential common shares                                                                        |                                                                      |   | 0.5           |       |                   |   |      |       |   |   |       |       |   |   |      |      
|                                    |                                                                                                         |                                                                      |   |               |       |                   |   |       |       |   |   |        |       |   |   |      
|                                    | Denominator for diluted earnings per
share  adjusted weighted-average shares
after
assumed conversions |                                                                      |   | 129.1         |       |                   |   | 125.2 |       |   |   | 127.4  |       |   |   | 124.5 |      
|                                    |                                                                                                         |                                                                      |   |               |       |                   |   |       |       |   |   |        |       |   |   |      
|Earnings Per Share                  |                                                                                                         |                                                                      |   |               |       |                   |   |       |       |   |   |        |       |   |   |      
|                                    | Diluted:                                                                                                |                                                                      |   |               |       |                   |   |       |       |   |   |        |       |   |   |       |      
|                                    |                                                                                                         | Earnings(loss) from continuing
operations before extraordinary items |   | $             | 0.74  |                   |   | $     | (0.75 | ) |   | $      | 2.33  |   |   | $     | (0.58 | )
|                                    |                                                                                                         | Discontinued operations                                              |   |               | (0.64 | )                 |   |       | 0.10  |   |   |        | (5.92 | ) |   |       | 0.40  |  
|                                    |                                                                                                         | Extraordinary items                                                  |   |               |      |                   |   |       |      |   |   |        | 0.02  |   |   |       |      |  
|                                    |                                                                                                         |                                                                      |   |               |       |                   |   |       |       |   |   |        |       |   |   |      
|                                    |                                                                                                         | Net earnings(loss)                                                   |   | $             | 0.10  |                   |   | $     | (0.65 | ) |   | $      | (3.57 | ) |   | $     | (0.18 | )
|                                    |                                                                                                         |                                                                      |   |               |       |                   |   |       |       |   |   |        |       |   |   |      
|                                    | Basic:                                                                                                  |                                                                      |   |               |       |                   |   |       |       |   |   |        |       |   |   |       |      
|                                    |                                                                                                         | Earnings(loss) from continuing
operations before extraordinary items |   | $             | 0.74  |                   |   | $     | (0.75 | ) |   | $      | 2.33  |   |   | $     | (0.58 | )
|                                    |                                                                                                         | Discontinued operations                                              |   |               | (0.64 | )                 |   |       | 0.10  |   |   |        | (5.92 | ) |   |       | 0.40  |  
|                                    |                                                                                                         | Extraordinary items                                                  |   |               |      |                   |   |       |      |   |   |        | 0.02  |   |   |       |      |  
|                                    |                                                                                                         |                                                                      |   |               |       |                   |   |       |       |   |   |        |       |   |   |      
|                                    |                                                                                                         | Net earnings(loss)                                                   |   | $             | 0.10  |                   |   | $     | (0.65 | ) |   | $      | (3.57 | ) |   | $     | (0.18 | )
|                                    |                                                                                                         |                                                                      |   |               |       |                   |   |       |       |   |   |        |       |   |   |      

12



---



##### Table of Contents



Comprehensive Income(Loss)

The components of comprehensive income(loss), net of tax, including components
related to discontinued operations, for the third quarter and nine months of
2002 and 2001 are as follows:

|                                          |  |               |     |                   |  |      |      |      |  |   |      |   |  |   |      |  
|----------------------------------------- |  | ------------- | --- | ----------------- |  | ---- | ---- | ---- |  | - | ---- | - |  | - | ---- | -
|                                          |  | Quarter ended |     | Nine months ended
|                                          |  | September 30  |     | September 30     
|                                          |  |               |     |                  
|(In millions)                             |  | 2002          |     | 2001              |  | 2002 |      | 2001
|                                          |  |               |     |                   |  |      |      |     
|Net earnings(loss)                        |  | $             | 13  |                   |  | $    | (80  | )    |  | $ | (455 | ) |  | $ | (22  | )
|Foreign currency exchange gain(loss)      |  |               | (34 | )                 |  |      | 145  |      |  |   | 153  |   |  |   | (44  | )
|Unrealized loss on securities             |  |               |    |                   |  |      | (228 | )    |  |   | (68  | ) |  |   | (231 | )
|Unrealized gain(loss) on cash flow hedges |  |               | 14  |                   |  |      | 55   |      |  |   | 95   |   |  |   | (2   | )
|Minimum pension liability                 |  |               | (1  | )                 |  |      |     |      |  |   |     |   |  |   |     |  
|                                          |  |               |     |                   |  |      |      |      |  |   |      |   |  |   |      |  
|Comprehensive income(loss)                |  | $             | (8  | )                 |  | $    | (108 | )    |  | $ | (275 | ) |  | $ | (299 | )
|                                          |  |               |     |                   |  |      |      |      |  |   |      |   |  |   |      |  

The components of accumulated other comprehensive income(loss), net of tax,
including components related to discontinued operations, at September 30, 2002
and December 31, 2001 are as follows:

|                                             |  |              |      |             |  |   |      |  
|-------------------------------------------- |  | ------------ | ---- | ----------- |  | - | ---- | -
|                                             |  | September 30 |      | December 31
|(In millions)                                |  | 2002         |      | 2001       
|                                             |  |              |      |            
|Foreign currency exchange loss               |  | $            | (371 | )           |  | $ | (524 | )
|Unrealized gain on securities                |  |              | 50   |             |  |   | 118  |  
|Unrealized gain(loss) on cash flow hedges    |  |              | 93   |             |  |   | (2   | )
|Minimum pension liability adjustments        |  |              | (61  | )           |  |   | (61  | )
|                                             |  |              |      |             |  |   |      |  
|Accumulated other comprehensive income(loss) |  | $            | (289 | )           |  | $ | (469 | )
|                                             |  |              |      |             |  |   |      |  

Contingencies

Various claims, lawsuits and administrative proceedings with respect to
commercial, product liability and environmental matters are pending or
threatened against the Company or its subsidiaries, arising from the ordinary
course of business.

Further, claims may be asserted in the future for events not currently known by
management. Although the ultimate liability from these potential claims cannot
be ascertained at September 30, 2002, management does not anticipate that any
related liability, after consideration of insurance recovery, would have a
material adverse effect on the Companys financial position.

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 currently predict the
outcome of this lawsuit.

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

13



---



##### Table of Contents



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 is unable to predict the outcome of the investigation at this
time.

On May 6, 2002, ArvinMeritor Inc. filed suit against the Company in the United
States District Court for the Eastern District of Michigan, claiming breach of
contract and breach of warranty in connection with certain tie rod ends that
the Company supplied to ArvinMeritor and the voluntary recall of some of these
tie rod ends. ArvinMeritor subsequently recalled all of the tie rod ends, and
claims that it is entitled to reimbursement by the Company for the costs
associated with both the products recalled by the Company and those recalled by
ArvinMeritor on its own. ArvinMeritor 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.

On October 1, 2002, International Truck & Engine Corporation notified the
National Highway Traffic Safety Administration of a program to effect a
voluntary safety recall of hydraulic anti-lock brake systems electronic control
units manufactured by Kelsey-Hayes Company. On October 1, 2002, International
Trucks parent filed a Current Report on Form 8-K (a) disclosing that it seeks
to recover costs associated with its voluntary recall from the manufacturer of
the electronic control units and (b) indicating that it expects to record a
pre-tax charge of approximately $51 million for estimated recall costs. On
October 3, 2002, Kelsey-Hayes Company filed a declaratory judgment action
against International Truck in the Circuit Court for the County of Oakland,
Michigan seeking a judgment declaring that International Truck has no right to
recover any of the costs associated with the voluntary recall. Management
believes the Kelsey-Hayes claim is meritorious and intends to prosecute
vigorously, but cannot predict the outcome of this lawsuit.

The Company and certain of its subsidiaries have been subject in recent years
to some asbestos-related claims. Management believes that such claims will not
have a material adverse effect on the Companys financial condition or results
of operations. In general, these claims seek damages for illnesses alleged to
have resulted from exposure to asbestos used in certain components sold by the
Company and/or its subsidiaries.

The vast majority of these claims name as defendants numerous manufacturers and
suppliers of a wide variety of products allegedly containing asbestos.
Management believes that, to the extent that any of the products sold by the
Companys automotive-related subsidiaries and at issue in these cases contained
asbestos, the asbestos was encapsulated. Based upon several years of
experience with such claims, 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.

14



---



##### Table of Contents



Sale of Aeronautical Systems

On October 1, 2002, the Company completed the sale of its Aeronautical Systems
business that was previously announced in June 2002. In accordance with SFAS
144, Accounting for the Impairment or Disposal of Long-Lived Assets, the
results of operations of this business are reported as discontinued operations,
net of applicable income taxes, for all periods presented. In addition, the
assets and liabilities of the Aeronautical Systems business have been
reclassified as held for sale. As a result of the sale, an updated valuation
of the business under SFAS 142 was conducted in the second quarter of 2002.
The valuation resulted in impairment of goodwill of $483 million in the second
quarter of 2002. In addition, an adjustment to the loss on the sale of $110
million after taxes was recorded in the third quarter of 2002 due primarily to
an additional curtailment loss of the UK pension plan resulting from a further
decline in pension asset values, additional translation losses and expenses.
These adjustments were reflected in the Statement of Operations for the
nine-month period ended September 30, 2002.

The results of Aeronautical Systems were as follows:

|                                            |  |               |     |                   |  |      |     |      |  |   |      |   |  |   |     | 
|------------------------------------------- |  | ------------- | --- | ----------------- |  | ---- | --- | ---- |  | - | ---- | - |  | - | --- | 
|                                            |  | Quarter ended |     | Nine months ended
|                                            |  | September 30  |     | September 30     
|                                            |  |               |     |                  
|(In millions)                               |  | 2002          |     | 2001              |  | 2002 |     | 2001
|                                            |  |               |     |                   |  |      |     |     
|Sales                                       |  | $             | 266 |                   |  | $    | 269 |      |  | $ | 756  |   |  | $ | 804 | 
|                                           
|Earnings(loss) from operations              |  | $             | 41  |                   |  | $    | 19  |      |  | $ | (406 | ) |  | $ | 77  | 
|Loss on sale                                |  |               | (79 | )                 |  |      |    |      |  |   | (261 | ) |  |   |    | 
|                                            |  |               |     |                   |  |      |     |      |  |   |      |   |  |   |     | 
|Earnings(loss) before taxes                 |  |               | (38 | )                 |  |      | 19  |      |  |   | (667 | ) |  |   | 77  | 
|Income taxes                                |  |               | 44  |                   |  |      | 6   |      |  |   | 87   |   |  |   | 26  | 
|                                            |  |               |     |                   |  |      |     |      |  |   |      |   |  |   |     | 
|Earnings(loss) from discontinued operations |  | $             | (82 | )                 |  | $    | 13  |      |  | $ | (754 | ) |  | $ | 51  | 
|                                            |  |               |     |                   |  |      |     |      |  |   |      |   |  |   |     | 

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

|                              |  |              |       |             |  |   |       | 
|----------------------------- |  | ------------ | ----- | ----------- |  | - | ----- | 
|                              |  | September 30 |       | December 31
|(In millions)                 |  | 2002         |       | 2001       
|                              |  |              |       |            
|Accounts receivable           |  | $            | 222   |             |  | $ | 178   | 
|Inventories                   |  |              | 222   |             |  |   | 188   | 
|Intangible assets  net       |  |              | 344   |             |  |   | 336   | 
|Property, plant and equipment |  |              | 308   |             |  |   | 259   | 
|Goodwill                      |  |              | 331   |             |  |   | 744   | 
|Other assets                  |  |              | 223   |             |  |   | 313   | 
|                              |  |              |       |             |  |   |       | 
|Total assets                  |  | $            | 1,650 |             |  | $ | 2,018 | 
|                              |  |              |       |             |  |   |       | 
|Accounts payable              |  | $            | 146   |             |  | $ | 167   | 
|Other liabilities             |  |              | 285   |             |  |   | 256   | 
|                              |  |              |       |             |  |   |       | 
|Total liabilities             |  | $            | 431   |             |  | $ | 423   | 
|                              |  |              |       |             |  |   |       | 

15



---



##### Table of Contents



Independent Accountants Review Report

Audit Committee of the
Board of Directors
TRW Inc.

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

We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, 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 States,
which will be performed for the full year with the objective of expressing an
opinion regarding the financial statements taken as a whole. 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,
2001, 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, 2002 (except for the Discontinued Operations
note, as to which the date is August 27, 2002), we expressed an unqualified
opinion on those financial statements. Those financial statements and our
report on them are included in the Form 8-K of TRW Inc. filed on September 3,
2002. 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
October 16, 2002

16



---



##### Table of Contents






Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

On October 1, 2002, the Company completed the sale of its Aeronautical Systems
business that had been announced in June 2002. The results of operations of
this business are reported as discontinued operations, net of applicable income
taxes, for all periods presented. In addition, the assets and liabilities of
the Aeronautical Systems business have been reclassified as held for sale.
Refer to the Sale of Aeronautical Systems note to financial statements for
further discussion.

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. On October 16,
2002, the European Commission announced that it had completed its review and
approved the transaction. The statutory waiting period applicable to the
merger pursuant to the U.S. Hart-Scott-Rodino Act expired on October 15, 2002,
although the Department of Justice is still reviewing the transaction.
Northrop and the Company have agreed that they will notify the Justice
Department of their intent to complete the transaction no sooner than ten
business days prior to the earlier of Northrops stockholders meeting or the
Companys shareholders meeting relating to the merger. The merger requires
approval by the shareholders of the Company and Northrop and both companies
have scheduled special meetings of shareholders for December 11, 2002 to vote
on the proposed merger. 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.

17



---



##### Table of Contents



Results of Operations

(In millions except per share data)

|                                                                               |                                                  |   |                           |       |                               |   |        |       |           |   |      |       |      |    |         |   |           |       |        |   |     |       |        |  |      |       |     |    |         |  |    |   | 
|------------------------------------------------------------------------------ | ------------------------------------------------ | - | ------------------------- | ----- | ----------------------------- | - | ------ | ----- | --------- | - | ---- | ----- | ---- | -- | ------- | - | --------- | ----- | ------ | - | --- | ----- | ------ |  | ---- | ----- | --- | -- | ------- |  | -- | - | 
|                                                                               |                                                  |   | Quarter endedSeptember 30 |       | Nine months endedSeptember 30
|                                                                               |                                                  |   |                           |       |                              
|                                                                               |                                                  |   |                           |       |                               |   |        |       |           |   |      |       |      |    | Percent |   |           |       |        |   |     |       |        |  |      |       |     |    | Percent
|                                                                               |                                                  |   | 2002                      |       | 2001                          |   | Change |       | Inc (Dec) |   | 2002 |       | 2001 |    | Change  |   | Inc (Dec)
|                                                                               |                                                  |   |                           |       |                               |   |        |       |           |   |      |       |      |    |         |   |          
|Sales                                                                          |                                                  | $ | 3,946                     |       |                               | $ | 3,593  |       |           | $ | 353  |       |      |    | 10      | % |           | $     | 12,065 |   |     | $     | 11,501 |  |      | $     | 564 |    |         |  | 5  | %
|Segment profit from
continuing operations
before taxes and
extraordinary items |                                                  |   | 208                       |       |                               |   | 85     |       |           |   | 123  |       |      |    | 147     | % |           |       | 696    |   |     |       | 386    |  |      |       | 310 |    |         |  | 81 | %
|Earnings(loss) from
continuing operations
before extraordinary
items           |                                                  |   | 95                        |       |                               |   | (93    | )     |           |   | 188  |       |      | nm |         |   | 297       |       |        |   | (73 | )     |        |  | 370  |       |     | nm
|Discontinued operations                                                        |                                                  |   | (82                       | )     |                               |   | 13     |       |           |   | (95  | )     |      | nm |         |   | (754      | )     |        |   | 51  |       |        |  | (805 | )     |     | nm
|Extraordinary items                                                            |                                                  |   |                          |       |                               |   |       |       |           |   |     |       |      | nm |         |   | 2         |       |        |   |    |       |        |  | 2    |       |     | nm
|Net earnings(loss)                                                             |                                                  |   | 13                        |       |                               |   | (80    | )     |           |   | 93   |       |      | nm |         |   | (455      | )     |        |   | (22 | )     |        |  | (433 | )     |     | nm
|Diluted earnings(loss)
per share:                                              |                                                  |   |                           |       |                               |   |        |       |           |   |      |       |      |    |         |   |           |       |        |   |     |       |        |  |      |       |     |    |         |  |    |  
|                                                                               | Continuing operations
before extraordinary
items |   |                           | 0.74  |                               |   |        | (0.75 | )         |   |      | 1.49  |      |    | nm      |   |           | 2.33  |        |   |     | (0.58 | )      |  |      | 2.91  |     |    | nm     
|                                                                               | Discontinued operations                          |   |                           | (0.64 | )                             |   |        | 0.10  |           |   |      | (0.74 | )    |    | nm      |   |           | (5.92 | )      |   |     | 0.40  |        |  |      | (6.32 | )   |    | nm     
|                                                                               | Extraordinary items                              |   |                           |      |                               |   |        |      |           |   |      |      |      |    | nm      |   |           | 0.02  |        |   |     |      |        |  |      | 0.02  |     |    | nm     
|                                                                               | Net earnings(loss)                               |   |                           | 0.10  |                               |   |        | (0.65 | )         |   |      | 0.75  |      |    | nm      |   |           | (3.57 | )      |   |     | (0.18 | )      |  |      | (3.39 | )   |    | nm     
|Effective tax rate from
continuing operations                                  |                                                  |   | 38.4                      | %     |                               |   | 31.2   | %     |           |   |      |       |      |    | 35.5    | % |           |       | 14.6   | % |     |       |        | 

nm  not meaningful

The third quarter 2002 sales of $3,946 million increased 10 percent compared
to $3,593 million in the third quarter of 2001. The increase was the result
of higher automotive production volumes of $178 million, primarily in North
America, a net increase in sales in the defense businesses of approximately
$135 million and the favorable effects of foreign currency exchange of $72
million, partially offset by lower pricing of $27 million.

Earnings from continuing operations before extraordinary items for the third
quarter of 2002 were $95 million, or $0.74 per share, compared to a loss of
$93 million, or $0.75 per share, for the third quarter of 2001. Net earnings
and net earnings per share for the third quarter 2002 were $13 million, or
$0.10 per share, compared to a net loss of $80 million, or $0.65 per share, in
2001. The Company reported a net loss from discontinued operations of $82
million after tax, or $0.64 per share, for the third quarter of 2002, of which
earnings from operations were $28 million after tax, or $0.21 per share,
compared to earnings from operations of $13 million after tax, or $0.10 per
share, in the third quarter of 2001. Adjusting the third quarter of 2001 for
the effect of adopting SFAS 142 on January 1, 2002, third quarter net earnings
from continuing operations for 2001 would have increased by $18 million, or
$0.15 per share.

18



---



##### Table of Contents



Unusual items in the third quarter of 2002 negatively impacted earnings from
continuing operations by $20 million after tax, or $0.15 per share. Unusual
items in 2002 included after tax charges for asset impairments of $22 million,
costs associated with Northrops exchange offer of $14 million and for
restructuring, primarily Automotive, of $3 million, which were offset
partially by a favorable litigation ruling of $16 million after tax and gains
on asset sales of $3 million after tax. For the third quarter 2001, unusual
items negatively impacted earnings from continuing operations by $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.

Gross profit of $507 million in the third quarter of 2002 increased $5 million
from $502 million in 2001. Gross profit in 2002 included unusual items
related to charges for asset impairment and restructuring of $6 million and $5
million, respectively. Gross profit in the third quarter of 2001 was also
negatively impacted by charges for asset impairment of $14 million and
restructuring of $5 million. Excluding the effects of unusual items, gross
profit decreased $3 million. Although sales for the third quarter of 2002
increased from the third quarter of 2001, gross profit decreased due to
unfavorable product mix and product introductions resulting in lower pricing
of $27 million, partially offset by net cost reductions of $12 million,
increased volume of $7 million and higher pension income of $6 million. Gross
profit included $70 million and $64 million of net pension income from an
overfunded pension plan in the third quarters of 2002 and 2001, respectively.
Gross profit margin (gross profit as a percentage of sales) was 12.8 percent
for the third quarter 2002, down from 14.0 percent in the third quarter 2001.
Excluding unusual items, gross profit margin would have been 13.1 percent and
14.5 percent for the third quarters of 2002 and 2001, respectively. This
decrease in gross profit margin is primarily a result of adverse product mix
and costs associated with continued introduction of new product launches in
Automotive.

Administrative and selling expenses of $195 million in the third quarter 2002
decreased $16 million compared to $211 million in the third quarter of 2001.
Administrative and selling expenses included expenses associated with
Northrops exchange offer of $15 million in the third quarter of 2002 and $21
million in restructuring charges in 2001. Without those unusual items,
administrative and selling expenses decreased $10 million due primarily to
reduced headcount and related expenses from the Companys corporate
restructuring actions taken in 2001.

Research and development expenses of $83 million in the third quarter of 2002
decreased $12 million from $95 million in the third quarter of 2001. The
decrease was due to lower spending of $12 million in Space & Electronics
primarily from programs discontinued in 2002.

As a result of lower average debt outstanding, lower short-term interest rates
in the United States and $7 million of interest associated with a tax refund
in the third quarter of 2002, interest expense in the third quarter of 2002
decreased $27 million to $90 million compared to the third quarter of 2001 of
$117 million.

Amortization of intangible assets and goodwill of $4 million in the third
quarter of 2002 decreased $32 million compared to $36 million in the third
quarter of 2001, primarily as a result of the adoption of SFAS 142, January 1,
2002, whereby the Company no longer amortizes goodwill of $22 million and an
impairment charge of $10 million related to intangible assets in 2001.

Other (income)expense-net was income of $19 million in the third quarter of
2002 compared to expense of $178 million in 2001. Included in 2002 was a $25
million gain as a result of a favorable litigation ruling, offset by $21
million related to asset impairments. 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 litigation of $97 million and asset
impairments of $257 million, primarily related to the Companys investment in
Astrolink.

19



---



##### Table of Contents



The effective income tax rate from continuing operations was 38.4 percent in
the third quarter of 2002 compared to 31.2 percent in the third quarter of
2001. Excluding unusual items, the effective income tax rate from continuing
operations would have been 32.3 percent in the third quarter of 2002 and 36.0
percent in the third quarter of 2001. The effective income tax rate for the
third quarter of 2002 was reduced primarily by lower non-U.S. losses and the
elimination of the amortization of nondeductible goodwill.

Sales for the first nine months of 2002 of $12,065 million increased $564
million, or 5 percent, compared to $11,501 million in 2001. The increase in
sales was due to higher Automotive volume, primarily in North America of $382
million, a net increase in the volume on new defense programs and an increase
in customer requirements on existing programs, of $243 million and favorable
foreign currency exchange of $105 million, partially offset by lower pricing
of $84 million and divestitures of $81 million.

Earnings from continuing operations before extraordinary items for the first
nine months of 2002 were $297 million, or $2.33 per share, compared to a loss
of $73 million, or $0.58 per share, in 2001. Net earnings and net earnings
per share for the first nine months of 2002 were a loss of $455 million, or
$3.57 per share, compared to a loss of $22 million, or $0.18 per share, in
2001. The Company reported a net loss from discontinued operations of $754
million, or $5.92 per share, for the nine months ended September 30, 2002, of
which earnings from operations were $56 million after tax, or
$0.44 per share,
compared to earnings of $51 million, or $0.40 per share, for the nine months
ended September 30, 2001. In the first quarter of 2002, 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 nine months of
2001 for the effect of adopting SFAS 142, net earnings from continuing
operations for the first nine months of 2001 would have increased by $53
million, or $0.42 per share.

Unusual items for the first nine months of 2002 negatively impacted earnings
from continuing operations by $32 million, or $0.25 per share. Unusual items
in 2002 included after tax charges of $36 million related to the Companys
activities associated with Northrops exchange offer, restructuring and asset
impairment charges of $33 million, partially offset by after tax gains on
asset sales of $16 million and the sale of RF Micro Devices (RFMD) common
stock of approximately $5 million. For the first nine months of 2001, unusual
items negatively impacted earnings from continuing operations by $233 million
after tax, or $1.87 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 $73 million and
pending and threatened litigation of $63 million. These charges were
partially offset by after tax gains from asset sales of $139 million.

Gross profit of $1,627 million for the first nine months of 2002 increased $92
million from $1,535 million in 2001. Unusual items included in gross profit
in the first nine months of 2002 related to restructuring and asset impairment
charges of $14 million and $7 million, respectively. Gross profit in the
first nine months of 2001 included unusual items for restructuring charges of
$34 million and asset impairment charges of $14 million. Excluding the effect
of unusual items, gross profit increased $65 million year over year. The
increase was primarily due to net cost reductions of $109 million, increased
volume of $14 million and a net reduction of $43 million in expenses,
primarily as a result of a product recall in 2001, and higher pension income
of $9 million, partially offset by price reductions of $84 million, and the
effect of divestitures of $22 million. Gross profit for the first nine months
of 2002 and 2001 included $193 million and $184 million, respectively, of net
pension income from an overfunded pension plan. Gross profit margin was 13.5
percent for the first nine months of 2002 compared to 13.3 percent in 2001.
Excluding unusual items, gross profit margin would have been 13.7 percent and
13.8 percent for the nine months ended September 30, 2002 and 2001,
respectively.

Administrative and selling expenses of $621 million for the first nine months
of 2002 decreased $33 million compared to $654 million in 2001. Excluding
unusual items in 2002 of $44 million for expenses incurred related to the
Northrop exchange offer and in 2001 related to restructuring charges of $52
million, administrative and selling expenses decreased $25 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 &

20



---



##### Table of Contents



Electronics of $12 million and increased expenditures on reimbursable
governmental contracts of $14 million.

Research and development expenses of $276 million for the first nine months of
2002 decreased $12 million from $288 million in 2001. The decrease was due
primarily to a decline in spending of $15 million in 2002 related to programs
in Systems.

Interest expense of $295 million for the first nine months of 2002 decreased
$73 million from $368 million in 2001, primarily due to lower average debt
outstanding, lower short-term interest rates in the United States and $7
million of interest associated with a tax refund in 2002.

Amortization of intangible assets and goodwill of $12 million for the first
nine months of 2002 decreased $72 million compared to $84 million in the first
nine months of 2001, as a result of the Company no longer amortizing goodwill
of $63 million and an impairment charge of $10 million related to intangible
assets in 2001.

Other (income)expense-net was income of $37 million in the first nine months
of 2002 and expense of $226 million in 2001. Included in 2002 were amounts
related to a favorable litigation ruling of $25 million, net gain on asset
sales of $31 million, offset by $24 million related to asset impairment
charges. Included in 2001 were the following items: gains on sales of assets,
primarily sales of shares of RFMD common stock, of $199 million, a charge
related to pending and threatened litigation of $97 million and asset
impairment charges of $322 million, primarily related to the Companys
investment in Astrolink.

The effective income tax rate from continuing operations was 35.5 percent for
the nine months ended September 30, 2002 compared to 14.6 percent in 2001.
Excluding unusual items, the effective income tax rate from continuing
operations would have been approximately 33.0 percent for the nine months ended
September 30, 2002 and 36.4 percent for 2001. The effective income tax rate
for 2002 was reduced primarily by non-U.S. losses and the elimination of the
amortization of nondeductible goodwill.

Results of Segments

Automotive

|                                                              |  |                           |       |                               |  |        |       |           |  |      |     |      |  |         |    |           |     |   |       |  |     |   |       |  |    |   |     |         |  |  |    |  
|------------------------------------------------------------- |  | ------------------------- | ----- | ----------------------------- |  | ------ | ----- | --------- |  | ---- | --- | ---- |  | ------- | -- | --------- | --- | - | ----- |  | --- | - | ----- |  | -- | - | --- | ------- |  |  | -- | -
|                                                              |  | Quarter endedSeptember 30 |       | Nine
months endedSeptember 30
|                                                              |  |                           |       |                              
|                                                              |  |                           |       |                               |  |        |       |           |  |      |     |      |  | Percent |    |           |     |   |       |  |     |   |       |  |    |   |     | Percent
|(In millions)                                                 |  | 2002                      |       | 2001                          |  | Change |       | Inc (Dec) |  | 2002 |     | 2001 |  | Change  |    | Inc (Dec)
|                                                              |  |                           |       |                               |  |        |       |           |  |      |     |      |  |         |    |          
|Sales                                                         |  | $                         | 2,545 |                               |  | $      | 2,327 |           |  | $    | 218 |      |  |         | 9  | %         |     | $ | 7,956 |  |     | $ | 7,634 |  |    | $ | 322 |         |  |  | 4  | %
|Profit before taxes                                           |  |                           | 120   |                               |  |        | 92    |           |  |      | 28  |      |  |         | 32 | %         |     |   | 407   |  |     |   | 298   |  |    |   | 109 |         |  |  | 37 | %
|Unusual
items-income(expense)
included in
profit before taxes |  |                           | (9    | )                             |  |        | (22   | )         |  |      | 13  |      |  |         |    |           | (21 | ) |       |  | (50 | ) |       |  | 29 |   |     |        

Sales of $2,545 million for the third quarter of 2002 increased 9 percent
compared to $2,327 million in the third quarter of 2001. The increase resulted
from higher volumes, primarily from strengthening North American build rates
and sales from new products, of $178 million and the favorable effect of
foreign currency exchange of $72 million, offset by lower pricing of $27
million and the effect of divestitures in 2001 of $5 million.

Profit before taxes for the third quarter of 2002 increased $28 million, or 32
percent, compared to the third quarter of 2001. Unusual items in the third
quarter of 2002, which primarily consisted of restructuring and asset
impairment charges, negatively impacted profit before taxes by $9 million.
Unusual items for the

21



---



##### Table of Contents



third quarter of 2001 included restructuring charges of
$19 million and asset impairment charges of $15 million, offset by gains on the
sale of assets of $12 million. Excluding the effect of adopting SFAS 142 of
$18 million and a net decrease in unusual items of $13 million, 2002 profit
before taxes decreased $3 million compared to 2001. Although sales increased
for the third quarter of 2002 compared to the third quarter of 2001, the
decrease in profit resulted from adverse product mix and costs associated with
new product launches. The decrease in profit before taxes resulted from lower
pricing of $27 million and lower European vehicle production and unfavorable
product mix of $12 million, partially offset by net cost reductions of $18
million combined with higher volume, primarily in North America of $19 million.

Sales of $7,956 million for the nine months ended September 30, 2002 increased
$322 million, or 4 percent, compared to 2001. The increase resulted from
higher volume, primarily in North America, of $382 million and the favorable
effect of foreign currency exchange of $105 million, partially offset by lower
pricing of $84 million and the effect of divestitures of $81 million.

Profit before taxes for the first nine months increased $109 million, or 37
percent, compared to 2001. Excluding the effect of adopting SFAS 142 of $49
million and the net change in unusual items of $29 million, 2002 profit before
taxes increased $31 million compared to 2001. Unusual items in 2002, which
consisted of restructuring charges of approximately $12 million and asset
impairment and other charges of $9 million, negatively impacted profit before
taxes by $21 million. Unusual items for the first nine months of 2001
negatively impacted profit before taxes by $50 million and included
restructuring charges of $72 million and asset impairment charges of $15
million, offset by net gains on asset sales primarily related to Lucas Diesel
Systems and the aftermarket business in India and Turkey of $37 million. The
segments cost reduction initiatives combined with the absence of a seat belt
recall in 2001 totaling $134 million, more than offset lower pricing of $84
million, the effects of divestitures of $11 million and the unfavorable effect
of foreign currency exchange of $4 million.

Severance costs and plant closing accruals related to restructuring plans,
including reorganizing and downsizing operations, were $145 million at December
31, 2001. During the nine months ended September 30, 2002, additional net
charges of $11 million before tax were recorded primarily in cost of sales, of
which $2 million was recorded in the third quarter. For the third quarter and
nine months ended September 30, 2002, $30 million and $81 million,
respectively, was used for severance payments and costs related to the
consolidation of certain facilities. A gross reduction of over 1,500 employees
as well as the closure of three manufacturing facilities related to these
restructuring programs were achieved during the nine months ended September 30,
2002. The majority of the remaining balance of $75 million is expected to be
used by the end of 2002.

Systems

|                                                              |  |                           |     |                               |  |        |     |           |  |      |     |      |  |         |    |           |    |   |       |  |     |   |       |  |    |   |     |         |  |  |    |  
|------------------------------------------------------------- |  | ------------------------- | --- | ----------------------------- |  | ------ | --- | --------- |  | ---- | --- | ---- |  | ------- | -- | --------- | -- | - | ----- |  | --- | - | ----- |  | -- | - | --- | ------- |  |  | -- | -
|                                                              |  | Quarter endedSeptember 30 |     | Nine months endedSeptember 30
|                                                              |  |                           |     |                              
|                                                              |  |                           |     |                               |  |        |     |           |  |      |     |      |  | Percent |    |           |    |   |       |  |     |   |       |  |    |   |     | Percent
|(In millions)                                                 |  | 2002                      |     | 2001                          |  | Change |     | Inc (Dec) |  | 2002 |     | 2001 |  | Change  |    | Inc (Dec)
|                                                              |  |                           |     |                               |  |        |     |           |  |      |     |      |  |         |    |          
|Sales                                                         |  | $                         | 905 |                               |  | $      | 761 |           |  | $    | 144 |      |  |         | 19 | %         |    | $ | 2,602 |  |     | $ | 2,349 |  |    | $ | 253 |         |  |  | 11 | %
|Profit before taxes                                           |  |                           | 62  |                               |  |        | 40  |           |  |      | 22  |      |  |         | 54 | %         |    |   | 186   |  |     |   | 141   |  |    |   | 45  |         |  |  | 32 | %
|Unusual
itemsincome(expense)
included in profit before taxes |  |                           | (5  | )                             |  |        | (13 | )         |  |      | 8   |      |  |         |    |           | (3 | ) |       |  | (13 | ) |       |  | 10 |   |     |        

Sales of $905 million for the third quarter of 2002 increased $144 million, or
19 percent, compared to the third quarter of 2001 due to new business of $75
million and higher volume from existing programs, including the
Intercontinental Ballistic Missile Prime Integration (ICBM) program as well as
defense and

22



---



##### Table of Contents



intelligence programs of $84 million. The higher sales were
partially offset by lower volume on contracts nearing completion or completed
of $15 million.

Profit before taxes of $62 million for the third quarter 2002 increased $22
million, or 54 percent, compared to the third quarter of 2001. Included in the
third quarter of 2002 profit before taxes was a $5 million asset impairment
charge related to the write-down of the assets of a commercial business.
Included in the third quarter of 2001 profit before taxes were asset impairment
charges of $13 million primarily related to the write-down of certain
intangible assets. Excluding the effect of adopting SFAS 142 of $4 million and
the net change in unusual items of $8 million, profit before taxes in the third
quarter of 2002 increased $10 million compared to third quarter of 2001. The
increase was primarily due to higher sales volume.

Sales of $2,602 million for the nine months of 2002 increased $253 million, or
11 percent, compared to $2,349 million in 2001. This increase was due to new
business volume of $192 million and existing core programs, including the ICBM
program as well as defense and intelligence programs of $165 million, which was
partially offset by lower volume on contracts nearing completion or completed
of $104 million.

Profit before taxes for the nine months ended September 30, 2002 of $186
million increased $45 million, or 32 percent, compared to $141 million in 2001.
Included in 2002 was an asset impairment charge of $5 million for the
write-down of assets and a gain on the sale of assets of $2 million. Included
in 2001 were asset impairment charges of $13 million. Excluding the effect of
adopting SFAS 142 of $13 million and the net change in unusual items of $10
million, profit before taxes increased $22 million in 2002 compared to 2001,
reflecting strong program performance and increased sales volume.

Space & Electronics

|                                                              |  |                           |     |                               |  |        |     |           |  |      |    |      |  |         |    |           |     |   |       |  |      |   |       |  |     |   |     |         |  |  |    |   
|------------------------------------------------------------- |  | ------------------------- | --- | ----------------------------- |  | ------ | --- | --------- |  | ---- | -- | ---- |  | ------- | -- | --------- | --- | - | ----- |  | ---- | - | ----- |  | --- | - | --- | ------- |  |  | -- | --
|                                                              |  | Quarter endedSeptember 30 |     | Nine months endedSeptember 30
|                                                              |  |                           |     |                              
|                                                              |  |                           |     |                               |  |        |     |           |  |      |    |      |  | Percent |    |           |     |   |       |  |      |   |       |  |     |   |     | Percent
|(In millions)                                                 |  | 2002                      |     | 2001                          |  | Change |     | Inc (Dec) |  | 2002 |    | 2001 |  | Change  |    | Inc (Dec)
|                                                              |  |                           |     |                               |  |        |     |           |  |      |    |      |  |         |    |          
|Sales                                                         |  | $                         | 496 |                               |  | $      | 505 |           |  | $    | (9 | )    |  |         | (2 | %)        |     | $ | 1,507 |  |      | $ | 1,518 |  |     | $ | (11 | )       |  |  | (1 | %)
|Profit (loss) before taxes                                    |  |                           | 26  |                               |  |        | (47 | )         |  |      | 73 |      |  | nm      |    |           | 103 |   |       |  | (53  | ) |       |  | 156 |   |     | nm     
|Unusual
items-income(expense)
included in profit before
taxes |  |                           | (12 | )                             |  |        | (73 | )         |  |      | 61 |      |  |         |    |           | (3  | ) |       |  | (143 | ) |       |  | 140 |   |     |        

Sales for the third quarter of 2002 of $496 million decreased $9 million
compared to the third quarter of 2001 due to the effect of contracts winding
down or that were discontinued, primarily Astrolink, of $110 million, which
were partially offset by higher volume of approximately $100 million on new and
existing core programs, such as the advanced extremely high frequency (AEHF)
satellite and avionics modules.

Profit before taxes of $26 million for the third quarter of 2002 increased $73
million compared to a loss of $47 million in the third quarter of 2001.
Unusual items in the third quarter of 2002 of $12 million related to asset
impairment charges for the write-down of investments and a loss on the sale of
assets. Unusual items in the third quarter of 2001 included asset impairment
charges of $242 million related to the Companys investment in Astrolink,
offset by net gains of $169 million, primarily from the sales of shares of RFMD
common stock. Excluding the net change in unusual items of $61 million, profit
before taxes in 2002 increased $12 million compared to the prior year. The
increase was a result of higher volume and performance from core programs of
$16 million, lower expenses related to commercializing technologies of $15
million and reduced equity losses of affiliates of $5 million, offset by
contracts winding down and the discontinuation of the Astrolink program, of $23
million.

23



---



##### Table of Contents



Sales for the nine months ended September 30, 2002 of $1,507 million decreased
$11 million compared to $1,518 million in 2001 as lower volume from contracts
winding down and the discontinuance of Astrolink totaling $269 million were
partially offset by higher volume on new and existing programs, including
technology contracts, of $259 million.

Profit before taxes for the nine months ended September 30, 2002 of $103
million increased $156 million from a loss of $53 million in 2001. Unusual
items in 2002 included asset impairment charges related to the write-down of
investments of $10 million, offset by net gains on the sale of assets,
primarily RFMD common stock, of $7 million. Unusual items in 2001 included in
profit before taxes were asset impairment charges of $242 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 $170 million. Excluding the effect of
the unusual items and the adoption of SFAS 142, profit before taxes in 2002
increased $15 million compared to 2001. The increase was a result of higher
volume and improved performance from core programs of $54 million, a net
reduction of equity losses of affiliates and expenses related to
commercializing technologies, of $19 million, partially offset by contracts
winding down and the discontinuance of the Astrolink program, of $58 million.

Corporate and Other

Excluding unusual items of $10 million in the third quarter of 2002, corporate
expense and other declined $8 million compared to third quarter of 2001,
primarily as a result of reduced headcount and related costs resulting from the
2001 corporate restructuring. Unusual items in the third quarter of 2002
included before tax gains of $25 million related to a favorable litigation
ruling, offset by charges for the Companys activities associated with
Northrops exchange offer of $15 million.

Excluding the net change in unusual items of $126 million, corporate expense
and other for the first nine months of 2002 declined $36 million compared to
the first nine months of 2001, primarily as a result of reduced headcount and
related costs resulting from the 2001 corporate restructuring. Unusual items
in the first nine months of 2002 included before tax charges of $44 million
related to the Companys activities associated with Northrops exchange offer,
offset by gains related to a favorable litigation ruling of $25 million and net
gains on the sale of real estate of $15 million. Unusual items in the first
nine months of 2001 included charges for pending and threatened litigation of
$105 million and restructuring and asset impairment charges of $25 million.

Net employee benefits income for the first nine months of 2002 of $126 million
increased $5 million compared to 2001 primarily due to favorable exchange rates
on the Companys UK pension plan.

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 $54 million was reclassified from intangible assets
to goodwill at January 1, 2002.

24



---



##### Table of Contents



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. During the second quarter of 2002, management completed
the valuations of its reporting units and based on the valuations, goodwill was
determined not to be impaired. Refer to the Sale of Aeronautical Systems note
to financial statements for the results of the valuation on the assets held for
sale. With the adoption of SFAS 142, the Company also 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. In accordance with SFAS 142, amounts in 2001 have not been
restated.

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.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities. SFAS 146 requires that a liability for
costs associated with exit or disposal activities be recognized when the
liability is incurred rather than when an entity commits to an exit plan. SFAS
146 also provides that the liability be initially measured at fair value. The
statement is effective for the Company beginning January 1, 2003. Management
will evaluate the impact of SFAS 146 upon adoption.

Liquidity and Financial Position

Operating cash flow from continuing operations for the nine months ended
September 30, 2002 of $614 million, proceeds from the sale of assets of $94
million and other items of $3 million were used for capital expenditures of
$350 million, dividend payments of $67 million and other financing activities
of $194 million. As a result, cash and cash equivalents increased $100
million. Operating cash flow from continuing operations for the nine months
ended September 30, 2001 of $549 million and proceeds from the sale of assets
of $169 million were used for capital expenditures of $440 million, dividend
payments of $132 million, other financing activities of $104 million and other
items of $68 million. As a result, cash and cash equivalents decreased $26
million.

25



---



##### Table of Contents



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 September 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
September 30, 2002 and 71 percent at December 31, 2001. The percentage of
fixed rate debt to total debt was 79 percent at September 30, 2002 compared to
85 percent at the end of 2001.

At September 30, 2002, short-term debt was $763 million, an increase of $648
million since 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 September 30, 2002 totaled $518
million with an average cost of 2.6 percent and maturities of less than one
week. 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 September 30, 2002. The Company is in compliance with the
covenants contained in these agreements.

At September 30, 2002, the aggregate amount of funds provided by accounts
receivable securitized was $308 million, a decrease of $19 million since
December 31, 2001. During the third quarter, the Company reduced the maximum
aggregate amount available under the securitization agreement by $25 million to
$325 million in contemplation of the sale of the Aeronautical Systems business.
The accounts receivable securitized are accounted for as a sale of the
receivables and has the effect of reducing the amount of short-term debt
reported by the Company.

Long-term debt (including the current portion of long-term debt) at September
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 September 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.

As of October 31, 2002, the Company has used a portion of the proceeds from the
sale of the Aeronautical Systems business to repay $605 million in commercial
paper and bank term loans.

At September 30, 2002, the fair value of the hedge portion of the Companys
share sale agreements was $207 million, an increase of $63 million from
December 31, 2001, as a result of changes in the underlying stocks hedged. The
fair value of the Companys foreign currency derivative contracts was a gain of
$33 million at September 30, 2002, which is an increase of $78 million from
December 31, 2001, due primarily to strengthening of the euro and British pound
sterling.

26



---



##### Table of Contents



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, long-term bank loan agreements and
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 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. Additionally, prior to the contemplated merger with
Northrop, the Company anticipates that it may also be required to
restructure, suspend or terminate its accounts receivable
securitization program to facilitate certain contemplated internal
corporate restructuring actions designed to enable the Company to
separate its automotive business and non-automotive businesses. Any
such restructuring, suspension or termination of the accounts
receivable securitization program prior to the contemplated merger
will reduce the Company's sources of liquidity.

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 $775 million. This amount includes an estimated $140 million
maximum amount that may become payable under the cash election alternative
right that the Company expects to provide holders of the Companys stock
options pursuant to the merger agreement with Northrop. This estimate is based
on the total number of these securities outstanding as of October 31, 2002, and
assumes no exercises or terminations of stock options between that date and the
closing of the merger. To the extent options are exercised or terminated or to
the extent option holders do not elect such payment, 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 or increased to
the extent the relevant average TRW stock price is below or above $60 per
share. The Company cannot predict what the relevant average trading price will
be and the use of that assumed price does not imply that the relevant price
will be at or approximate $60.

Management believes that the Company will have adequate funds available to make
the foregoing payments and to continue to meet its other cash needs. The
Company expects to use a portion of the proceeds from the sale of its
Aeronautical Systems business together with funds from alternative sources
arranged in conjunction with Northrop, if needed, to fund such payments.
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
were held for sale, the Company had a working capital deficiency of $49 million
at September 30, 2002 due primarily to effective working capital management and
debt maturing within one year. Subject to the payment obligations referred to
above concerning the merger transaction, management believes that sufficient
resources from funds generated by operations, dispositions and existing
borrowing capacity are available to maintain liquidity.

27



---



##### Table of Contents



If current declines in the equity markets and interest rates continue through
the end of the year, the Company believes that it will be required to record a
significant minimum pension liability adjustment as of December 31, 2002 in
accordance with SFAS No. 87, Employers Accounting for Pensions. The minimum
pension liability would reflect the amount that the pension plans accumulated
benefit obligation exceeds the plans assets in excess of amounts previously
accrued for pension costs. A large portion of the charge would be recorded as
a reduction to shareholders investment, as a component of accumulated other
comprehensive income(loss). If the Company had to record this charge, the
Company will not be in compliance with a covenant under its revolving credit
agreements and long-term bank loan agreements. If not cured or otherwise
waived, such a violation would result in an event of default under those
agreements, which would provide the lenders 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. If the Company had to record such a charge, prior to
recording the charge, the Company plans to repay or restructure such
indebtedness or facilities, negotiate waivers of any such termination events or
make alternative arrangements 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. At September 30,
2002, there were no borrowings outstanding under the Companys revolving credit
agreements.

Other Matters

On August 30, 2002, the Company redeemed all outstanding shares of its
Cumulative Serial Preference Stock II, $4.40 Convertible Series 1 at a
redemption price of $104 per share and all outstanding shares of its Cumulative
Serial Preference Stock II, $4.50 Convertible Series 3 at a redemption price of
$100 per share.

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

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.

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

28



---



##### Table of Contents



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) that the necessary government approvals for such transaction
will be obtained; (iii) that the Company will be successful in reducing the
amount of its indebtedness, or that the methods described for debt reduction
will be utilized; (iv) regarding the nature or adequacy of any plans or
arrangements that may be implemented with respect to events of default or
termination events that may occur upon the closing of the proposed merger with
Northrop under TRWs debt facilities or receivables securitization program; (v)
as to the amount by which debt will be reduced; (vi) that the Companys
strategic plan will deliver any particular level of value to TRW shareholders;
(vii) that defense spending will rise and research, development, test and
evaluation budgets will increase; (viii) that North American 2002 light vehicle
production will increase from 2001 levels; (ix) that 2002 earnings per share
estimates will be met or exceeded; (x) with respect to the expected amounts of
the Companys operating cash flows in 2002, that such amounts will be utilized
to reduce the amount of the Companys indebtedness; (xi) with respect to the
amounts that will be realized, if any, by the Company from divestitures; (xii)
with respect to the amount of sales, earnings per share or cash flow that will
be realized by the Company in 2002; or (xiii) that the Companys costs will
decrease in 2002. Other factors and assumptions not identified above are also
involved in the preparation of forward-looking statements, and the failure of
such other factors and assumptions to be realized may also cause actual results
to differ materially from those discussed. The Company assumes no obligation
to update such estimates to reflect actual results, changes in 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 hedge its exposure to
short-term interest rate changes as a lower cost substitute for the issuance of
fixed rate debt and as a means of securing 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.

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 30, 2002, a one-percentage-point increase in the average interest
rate on the Companys variable rate borrowings would increase future interest
expense by approximately $1 million per month.

29



---



##### Table of Contents



Based on the Companys exposure to foreign currency exchange rate risk
resulting from derivative foreign currency instruments outstanding at September
30, 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 $108 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.

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




Item 4. Controls and Procedures

Within the 90 days prior to the date of this report, the Company carried out an
evaluation, under the supervision and with the participation of the Companys
management, including the President and Chief Executive Officer of the
Companys Space & Electronics business and the President and Chief Executive
Officer of the Companys Automotive business (the Companys principal executive
officers) and the Chief Financial Officer of the Company, of the effectiveness
of the design and operation of the Companys disclosure controls and procedures
pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the
principal executive officers and Chief Financial Officer concluded that the
Companys disclosure controls and procedures are effective in timely alerting
them to material information relating to the Company (including its
consolidated subsidiaries) required to be included in the Companys periodic
SEC filings.

Subsequent to the evaluation, there were no significant changes in internal
controls or other factors that could significantly affect internal controls,
including any corrective actions with regard to significant deficiencies and
material weaknesses.

30



---



##### Table of Contents






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
quarters ended March 31, 2002 and June 30, 2002, there have been no material
developments in legal proceedings involving the Company or its subsidiaries
since those reported in TRWs Annual Report on Form 10-K for the year ended
December 31, 2001.




Item 5. Other Information

During the third quarter of 2002, the Board of Directors determined to award
Kenneth W. Freeman a one-time payment of $100,000 as special compensation for
his services as the Companys lead director, in recognition of the exceptional
time and effort Mr. Freeman has devoted to the Company since February 2002.




Item 6. Exhibits and Reports on Form 8-K

|    |  |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- |  | -------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Exhibits
|   
|    |  | 2(a)     |  | Amendment No. 1, dated as of October 1, 2002, between
Goodrich Corporation and TRW Inc. to the Master Agreement of
Purchase and Sale dated as of June 18, 2002. (Exhibit 2.2 to TRW
Inc. Current Report on Form 8-K filed on October 16, 2002, File No.
1-2384, is incorporated herein by reference)                                                                                                                                                                             
|   
|    |  | 10(a)    |  | Amendment No. 3, dated as of August 19, 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. and
Corporate Receivables Corporation 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)    |  | Form of Amendment to Employment Continuation Agreements with
executive officers.                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|    |  | 10(c)    |  | Deferred Compensation Plan for Non-Employee Directors of TRW
Inc. (as amended and restated effective October 23, 2002)                                                                                                                                                                                                                                                                                                                                                           
|   
|    |  | 10(d)    |  | TRW Inc. Deferred Compensation Plan (as amended and restated
effective October 23, 2002)                                                                                                                                                                                                                                                                                                                                                                                         
|   
|    |  | 10(e)    |  | TRW Benefits Equalization Plan (as amended and restated
effective October 23, 2002)                                                                                                                                                                                                                                                                                                                                                                                              
|   
|    |  | 10(f)    |  | TRW Supplementary Retirement Income Plan (as amended and
restated effective October 23, 2002)                                                                                                                                                                                                                                                                                                                                                                                    
|   
|    |  | 10(g)    |  | Form of 2001-2002 Strategic Incentive Program Grant.                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|    |  | 10(h)    |  | Form of 2001-2003 Strategic Incentive Program Grant.                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|    |  | 10(i)    |  | Form of 2002-2004 Strategic Incentive Program Grant.                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|    |  | 15       |  | Letter re: Unaudited Financial Information                                                                                                                                                                                                                                                                                                                                                                                                                                       

31



---



##### Table of Contents



| |  |       |  |                                                                                                                                                      
| |  | ----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 99(a) |  | Certification of Principal Executive Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
| |  | 99(b) |  | Certification of Principal Executive Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
| |  | 99(c) |  | Certification of
Principal Financial Officer 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, filed July 1, 2002, regarding the signing of
the Agreement and Plan of Merger, dated as of June 30, 2002, by and among
TRW Inc., Northrop Grumman Corporation and Richmond Acquisition Corp.                      
|   
|    |  | Current Report on Form 8-K, filed August 13, 2002, regarding submission
by the principal executive officers and the principal financial officer
of sworn statements to the SEC pursuant to Securities and Exchange
Commission Order No. 4-460.
|   
|    |  | Current Report on Form 8-K, filed September 3, 2002, containing restated
financial information from TRWs most recent Form 10-K, reflecting TRWs
Aeronautical Systems business as discontinued operations.                                   

32



---



##### Table of Contents






SIGNATURES

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

|                       |  |          |  |                                                                                          
|---------------------- |  | -------- |  | -----------------------------------------------------------------------------------------
|                       |  | TRW Inc.
|                      
|Date: November 6, 2002 |  | By:      |  | /s/ W. B. Lawrence
W. B. Lawrence
Executive Vice President, General
Counsel and Secretary
|                      
|                       |  | By:      |  | /s/ R. H.
Swan
R. H. Swan
Executive Vice President
and Chief Financial Officer           

33



---



##### Table of Contents






CERTIFICATIONS

I, Timothy W. Hannemann, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of TRW Inc.;                                                                                                                                                                                                                                                               
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have
identified for the registrants auditors any material weaknesses in
internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                       |  |                                                                                                                                         
|---------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------
|Date: November 6, 2002 |  | /s/ Timothy W. HannemannTimothy W. Hannemann
President and Chief Executive Officer
TRW Space & Electronics
(Principal Executive Officer)



---



##### Table of Contents



CERTIFICATIONS

I, John C. Plant, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of TRW Inc.;                                                                                                                                                                                                                                                               
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have
identified for the registrants auditors any material weaknesses in
internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                       |  |                                                                                                                  
|---------------------- |  | -----------------------------------------------------------------------------------------------------------------
|Date: November 6, 2002 |  | /s/ John C. PlantJohn C. Plant
President and Chief Executive Officer
TRW Automotive
(Principal Executive Officer)



---



##### Table of Contents



CERTIFICATIONS

I, Robert H. Swan, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of TRW Inc.;                                                                                                                                                                                                                                                               
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have
identified for the registrants auditors any material weaknesses in
internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                       |  |                                                                                                                    
|---------------------- |  | -------------------------------------------------------------------------------------------------------------------
|Date: November 6, 2002 |  | /s/ Robert H. SwanRobert H. Swan
Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)