##### Table of Contents



FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

(Mark One)

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

For the quarterly period ended March 31, 2002

OR

|                                                            
|------------------------------------------------------------
|BOX        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 April 30, 2002, there were 127,422,610 shares of
TRW Common Stock, $0.625 par value, outstanding.





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TABLE OF CONTENTS



|                                                  |                                                                                               |  |  |  |  |  |  | 
|------------------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION                    
|                                                  | Item 1. Financial Statements                                                                 
|                                                  | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                  | Item 3. Quantitative and Qualitative Disclosures about Market Risk                           
|PART II. OTHER INFORMATION                       
|                                                  | Item 1. Legal Proceedings                                                                    
|                                                  | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                                       
|EX-10 Letter Agreement between TRW and PA Odeen  
|EX-15 Letter Re: Unaudited Financial Information 
|EX-99 Comput.- Ratio of Earnings to Fixed Charges



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##### Table of Contents






PART I. FINANCIAL INFORMATION




Item 1. Financial
Statements

Statements of Operations (unaudited)
TRW Inc. and subsidiaries

|                                                        |                            |                                     |       |               |       |   |       |       |       | 
|------------------------------------------------------- | -------------------------- | ----------------------------------- | ----- | ------------- | ----- | - | ----- | ----- | ----- | 
|                                                        |                            |                                     |       | Quarter ended
|                                                        |                            |                                     |       | March 31     
|                                                        |                            |                                     |       |              
|(In millions except per share data)                     |                            | 2002                                |       | 2001         
|                                                        |                            |                                     |       |              
|Sales                                                   |                            | $                                   | 4,082 |               |       | $ | 4,167 |      
|                                                       
|                                                       
|                                                       
|                                                       
|Cost of sales                                           |                            |                                     | 3,482 |               |       |   | 3,566 |      
|                                                        |                            |                                     |       |               |       |   |       |      
|Gross profit                                            |                            |                                     | 600   |               |       |   | 601   |      
|                                                       
|Administrative and selling expenses                     |                            |                                     | 257   |               |       |   | 265   |      
|                                                       
|                                                       
|                                                       
|                                                       
|Research and development expenses                       |                            |                                     | 118   |               |       |   | 121   |      
|                                                       
|                                                       
|                                                       
|                                                       
|Interest expense                                        |                            |                                     | 104   |               |       |   | 129   |      
|                                                       
|                                                       
|                                                       
|                                                       
|Amortization of intangible assets, and goodwill in 2001 |                            |                                     | 6     |               |       |   | 32    |      
|                                                       
|                                                       
|                                                       
|                                                       
|Other (income) expense-net                              |                            |                                     | (14   | )             |       |   | (19   | )    
|                                                        |                            |                                     |       |               |       |   |       |      
|Earnings before income taxes and extraordinary items    |                            |                                     | 129   |               |       |   | 73    |      
|                                                       
|                                                       
|                                                       
|                                                       
|Income taxes                                            |                            |                                     | 40    |               |       |   | 18    |      
|                                                        |                            |                                     |       |               |       |   |       |      
|Earnings before extraordinary items                     |                            |                                     | 89    |               |       |   | 55    |      
|                                                       
|                                                       
|                                                       
|                                                       
|Extraordinary items (net of income taxes of $2 million) |                            |                                     | 2     |               |       |   | -     |      
|                                                        |                            |                                     |       |               |       |   |       |      
|Net earnings                                            |                            | $                                   | 91    |               |       | $ | 55    |      
|                                                        |                            |                                     |       |               |       |   |       |      
|Per share of common stock                               |                            |                                     |       |               |       |   |       |      
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Diluted earnings per share |                                    
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                            | Earnings before extraordinary items |       | $             | 0.69  |   |       | $     | 0.44  | 
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                            | Extraordinary items                 |       |               | 0.02  |   |       |       | -     | 
|                                                        |                            |                                     |       |               |       |   |       |      
|                                                        |                            | Net earnings                        |       |               | 0.71  |   |       |       | 0.44  | 
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Basic earnings per share   |                                     |      
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                            | Earnings before extraordinary items |       |               | 0.70  |   |       |       | 0.45  | 
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                            | Extraordinary items                 |       |               | 0.02  |   |       |       | -     | 
|                                                        |                            |                                     |       |               |       |   |       |      
|                                                        |                            | Net earnings                        |       |               | 0.72  |   |       |       | 0.45  | 
|                                                       
|                                                        | Dividends declared         |                                     |       | 0.00          |       |   |       | 0.00  |      
|                                                        |                            |                                     |       |               |       |   |       |      
|Shares used in computing per share amounts              |                           
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Diluted                    |                                     |       |               | 127.6 |   |       |       | 124.9 | 
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Basic                      |                                     |       | 126.2         |       |   |       | 123.8 |      
|                                                        |                            |                                     |       |               |       |   |       |      

2



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##### Table of Contents



Balance Sheets (unaudited)
TRW Inc. and subsidiaries

|                                                   |                                              |                                                |        |          |       |             |        |       |       | 
|-------------------------------------------------- | -------------------------------------------- | ---------------------------------------------- | ------ | -------- | ----- | ----------- | ------ | ----- | ----- | 
|                                                   |                                              |                                                |        | March 31 |       | December 31
|(In millions)                                      |                                              | 2002                                           |        | 2001    
|                                                   |                                              |                                                |        |         
|Assets                                             |                                              |                                                |        |          |       |             |        |      
|                                                  
|                                                  
|                                                  
|                                                  
|Current assets                                     |                                              |                                                |        |          |       |             |        |      
|                                                   |                                              | Cash and cash equivalents                      |        | $        | 270   |             |        | $     | 240   | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                              | Accounts receivable                            |        |          | 1,744 |             |        |       | 1,596 | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                              | Interest in securitized receivables            |        |          | 191   |             |        |       | 162   | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                              | Inventories                                    |        |          | 802   |             |        |       | 763   | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                              | Prepaid expenses                               |        |          | 176   |             |        |       | 170   | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                              | Deferred income taxes                          |        |          | 252   |             |        |       | 231   | 
|                                                   |                                              |                                                |        |          |       |             |        |      
|Total current assets                               |                                              |                                                | 3,435  |          |       |             | 3,162  |      
|                                                  
|Property, plant and equipment-on the basis of cost |                                              |                                                | 8,272  |          |       |             | 8,266  |      
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                              | Less accumulated depreciation and amortization |        |          | 4,811 |             |        |       | 4,724 | 
|                                                   |                                              |                                                |        |          |       |             |        |      
|Total property, plant and equipment-net            |                                              |                                                | 3,461  |          |       |             | 3,542  |      
|                                                  
|Intangible assets                                  |                                              |                                                | 889    |          |       |             | 974    |      
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                              | Less accumulated amortization                  |        |          | 316   |             |        |       | 323   | 
|                                                   |                                              |                                                |        |          |       |             |        |      
|Intangible assets-net                              |                                              |                                                | 573    |          |       |             | 651    |      
|                                                  
|Goodwill                                           |                                              |                                                | 3,352  |          |       |             | 3,160  |      
|                                                  
|                                                  
|                                                  
|                                                  
|Investments in affiliated companies                |                                              |                                                | 192    |          |       |             | 245    |      
|                                                  
|                                                  
|                                                  
|                                                  
|Other notes and accounts receivable                |                                              |                                                | 222    |          |       |             | 223    |      
|                                                  
|                                                  
|                                                  
|                                                  
|Other assets                                       |                                              |                                                | 403    |          |       |             | 590    |      
|                                                  
|                                                  
|                                                  
|                                                  
|Prepaid pension cost                               |                                              |                                                | 2,863  |          |       |             | 2,871  |      
|                                                   |                                              |                                                |        |          |       |             |        |      
|                                                   |                                              | $                                              | 14,501 |          |       | $           | 14,444 |      
|                                                   |                                              |                                                |        |          |       |             |        |      
|Liabilities and shareholders investment           |                                              |                                                |        |          |       |             |        |      
|                                                  
|                                                  
|                                                  
|                                                  
|Current liabilities                                |                                              |                                                |        |          |       |             |        |      
|                                                   |                                              | Short-term debt                                |        | $        | 456   |             |        | $     | 115   | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                              | Trade accounts payable                         |        |          | 1,867 |             |        |       | 1,742 | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                              | Current portion of long-term debt              |        |          | 459   |             |        |       | 724   | 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                              | Other current liabilities                      |        |          | 2,063 |             |        |       | 2,177 | 
|                                                   |                                              |                                                |        |          |       |             |        |      
|Total current liabilities                          |                                              |                                                | 4,845  |          |       |             | 4,758  |      
|                                                  
|Long-term debt                                     |                                              |                                                | 4,817  |          |       |             | 4,870  |      
|                                                  
|                                                  
|                                                  
|                                                  
|Long-term liabilities                              |                                              |                                                | 1,952  |          |       |             | 1,944  |      
|                                                  
|                                                  
|                                                  
|                                                  
|Deferred income taxes                              |                                              |                                                | 566    |          |       |             | 612    |      
|                                                  
|                                                  
|                                                  
|                                                  
|Minority interests in subsidiaries                 |                                              |                                                | 74     |          |       |             | 74     |      
|                                                  
|                                                  
|                                                  
|                                                  
|Shareholders
investment                          
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Capital stock                                |                                                |        | 79       |       |             |        | 79    |      
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Other capital                                |                                                |        | 482      |       |             |        | 480   |      
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Retained earnings                            |                                                |        | 2,553    |       |             |        | 2,468 |      
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Treasury shares-cost in excess of par value  |                                                |        | (337     | )     |             |        | (372  | )    
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Accumulated other comprehensive income(loss) |                                                |        | (530     | )     |             |        | (469  | )    
|                                                   |                                              |                                                |        |          |       |             |        |      
|Total shareholders investment                     |                                              |                                                | 2,247  |          |       |             | 2,186  |      
|                                                   |                                              |                                                |        |          |       |             |        |      
|                                                   |                                              | $                                              | 14,501 |          |       | $           | 14,444 |      
|                                                   |                                              |                                                |        |          |       |             |        |      

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##### Table of Contents









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

|                                                                                            |                                          |      |               |      |   |   |      |      |  
|------------------------------------------------------------------------------------------- | ---------------------------------------- | ---- | ------------- | ---- | - | - | ---- | ---- | -
|                                                                                            |                                          |      | Quarter ended
|                                                                                            |                                          |      | March 31     
|                                                                                            |                                          |      |              
|(In millions)                                                                               |                                          | 2002 |               | 2001
|                                                                                            |                                          |      |               |     
|Operating activities                                                                        |                                          |      |               |      |   |   |      |     
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Net earnings                                                                                |                                          | $    | 91            |      |   | $ | 55   |     
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Adjustments to reconcile net earnings to net cash
provided by(used in) operating activities |                                          |     
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Depreciation and amortization            |      |               | 163  |   |   |      | 200  |  
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Pension income                           |      |               | (59  | ) |   |      | (61  | )
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Net gain on sale of assets               |      |               | (9   | ) |   |      | (30  | )
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Deferred income taxes                    |      |               | -    |   |   |      | 12   |  
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Other-net                                |      |               | 21   |   |   |      | 21   |  
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Changes in assets and liabilities, net of effects of
businesses acquired or divested        |                                         
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Accounts receivable, net                 |      |               | (232 | ) |   |      | (153 | )
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Accounts receivable securitized and sold |      |               | 41   |   |   |      | -    |  
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Inventories                              |      |               | (44  | ) |   |      | 14   |  
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Trade accounts payable                   |      |               | 136  |   |   |      | 9    |  
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Prepaid expenses and other liabilities   |      |               | (58  | ) |   |      | (197 | )
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Other-net                                |      |               | 37   |   |   |      | 118  |  
|                                                                                            |                                          |      |               |      |   |   |      |     
|Net cash provided by(used in) operating activities                                          |                                          |      | 87            |      |   |   | (12  | )   
|                                                                                            |                                          |      |               |      |   |   |      |     
|Investing activities                                                                        |                                          |      |               |      |   |   |      |     
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Capital expenditures including other intangibles                                            |                                          |      | (108          | )    |   |   | (167 | )   
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Net proceeds from sale of assets                                                            |                                          |      | 10            |      |   |   | 66   |     
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Other-net                                                                                   |                                          |      | 15            |      |   |   | (54  | )   
|                                                                                            |                                          |      |               |      |   |   |      |     
|Net cash used in investing activities                                                       |                                          |      | (83           | )    |   |   | (155 | )   
|                                                                                            |                                          |      |               |      |   |   |      |     
|Financing activities                                                                        |                                          |      |               |      |   |   |      |     
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Increase(decrease) in short-term debt                                                       |                                          |      | 312           |      |   |   | (299 | )   
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Proceeds from debt in excess of 90 days                                                     |                                          |      | 263           |      |   |   | 626  |     
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Principal payments on debt in excess of 90 days                                             |                                          |      | (543          | )    |   |   | (125 | )   
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Dividends paid                                                                              |                                          |      | (22           | )    |   |   | (44  | )   
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Other-net                                                                                   |                                          |      | 16            |      |   |   | (3   | )   
|                                                                                            |                                          |      |               |      |   |   |      |     
|Net cash provided by financing activities                                                   |                                          |      | 26            |      |   |   | 155  |     
|                                                                                            |                                          |      |               |      |   |   |      |     
|Effect of exchange rate changes on cash                                                     |                                          |      | -             |      |   |   | 13   |     
|                                                                                            |                                          |      |               |      |   |   |      |     
|Increase in cash and cash equivalents                                                       |                                          |      | 30            |      |   |   | 1    |     
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Cash and cash equivalents at beginning of quarter                                           |                                          |      | 240           |      |   |   | 267  |     
|                                                                                            |                                          |      |               |      |   |   |      |     
|Cash and cash equivalents at end of quarter                                                 |                                          | $    | 270           |      |   | $ | 268  |     
|                                                                                            |                                          |      |               |      |   |   |      |     

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##### 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
period ended March 31, 2002 are not necessarily indicative of the results that
may be expected for the year ended December 31, 2002.

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

Unsolicited Exchange Offer and Value Enhancement Plan

On February 21, 2002, Northrop Grumman Corporation (Northrop) made an
unsolicited proposal to the Company to provide all of its shareholders with $47
in Northrop common stock for each share of TRW common stock to be received in a
tax-free merger. On March 3, 2002, the Company issued a press release
announcing that its Board of Directors, after careful consideration, including
consultation with independent financial and legal advisors, unanimously
determined that the proposal is financially inadequate and rejected the
proposal. On March 4, 2002, Northrop commenced an exchange offer to acquire
all of the Companys outstanding capital stock for $47 per share of Northrop
common stock, subject to a price collar. On March 13, 2002, the Companys
Board of Directors, after careful consideration, including a thorough review of
the offer with independent financial and legal advisors, unanimously determined
that the offer is financially inadequate and not in the best interests of the
Companys shareholders. On March 13, 2002, the Company announced that it
intends to continue to pursue, with a target for completion within six to nine
months, its plan to unlock value in the Company by reducing the amount of the
Companys indebtedness, including through the sale of the Aeronautical Systems
business and then separating the Automotive business in a tax efficient manner.
On April 15, 2002, Northrop revised its offer to provide that each outstanding
share of TRW common stock may be exchanged for $53 of Northrop common stock,
subject to a price collar. The revised offer is on the terms and subject to
the conditions set forth in Northrops amended Schedule TO, dated April 15,
2002, and in the revised letter of transmittal, including a new condition which
expressly conditions the revised offer on Northrop conducting due diligence and
being reasonably satisfied with the outcome. On April 17, 2002, the Companys
Board of Directors, after careful consideration, including a thorough review of
the offer with independent financial and legal advisors, unanimously (with one
director absent) determined that Northrops revised offer is financially
inadequate, highly conditional and not in the best interests of TRW
shareholders. On April 17, 2002, in addition to continuing the execution of
the Companys value enhancement plan described above, the Companys Board of
Directors authorized management and its advisors to initiate a process to
explore all strategic alternatives to create shareholder value at levels above
Northrops revised offer.

Reclassifications

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

5



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##### Table of Contents



Current and Future Accounting Pronouncements

Effective January 1, 2002, the Company adopted Financial Accounting Standards
Board Statement of Accounting Standards (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 be accounted for using the
purchase method and establishes criteria to be used in determining whether
acquired intangible assets are to be separated from goodwill. As a result of
the Companys analysis, only the value of assembled workforce of approximately
$65 million was reclassified from intangible assets to goodwill at January 1,
2002.

SFAS 142 sets forth the accounting for goodwill and intangible assets already
recorded. Commencing January 1, 2002, goodwill is no longer being amortized.
Goodwill will be tested for impairment by comparing the assets fair value to
the carrying value. Management has conducted preliminary valuations of its
reporting units and will finalize the analysis in the second quarter. Based on
the preliminary evaluation, the Company does not expect the final analysis to
indicate a goodwill impairment. With the adoption of SFAS 142, the Company
reassessed the useful lives and residual values of all acquired intangible
assets to make any necessary amortization period adjustments. Amounts in 2001
have not been restated in accordance with the statement.

The following table reflects the reconciliation of reported net earnings and
earnings per share to the amounts adjusted for the exclusion of goodwill
amortization.

|                                             |                                              |      |               |      |  |   |    |      | 
|-------------------------------------------- | -------------------------------------------- | ---- | ------------- | ---- |  | - | -- | ---- | 
|                                             |                                              |      | Quarter ended
|                                             |                                              |      | March 31     
|                                             |                                              |      |              
|(In millions except per share data)          |                                              | 2002 |               | 2001
|                                             |                                              |      |               |     
|Net earnings                                 |                                              |      |               |      |  |   |    |     
|                                            
|                                            
|                                            
|                                            
|Reported earnings before extraordinary items |                                              | $    | 89            |      |  | $ | 55 |     
|                                            
|                                            
|                                            
|                                            
|Add back: Goodwill amortization, net of tax  |                                              |      | -             |      |  |   | 23 |     
|                                            
|                                            
|                                            
|                                            
|Extraordinary items, net of tax              |                                              |      | 2             |      |  |   | -  |     
|                                             |                                              |      |               |      |  |   |    |     
|Adjusted net earnings                        |                                              | $    | 91            |      |  | $ | 78 |     
|                                             |                                              |      |               |      |  |   |    |     
|Per share of common stock                    |                                              |      |               |      |  |   |    |     
|                                            
|                                            
|                                            
|                                            
|Diluted:                                     |                                              |      |               |      |  |   |    |     
|                                            
|                                            
|                                            
|                                            
|                                             | Reported earnings before extraordinary items |      | $             | 0.69 |  |   | $  | 0.44 | 
|                                            
|                                            
|                                            
|                                            
|                                             | Add back: Goodwill amortization, net of tax  |      |               | -    |  |   |    | 0.18 | 
|                                            
|                                            
|                                            
|                                            
|                                             | Extraordinary items, net of tax              |      |               | 0.02 |  |   |    | -    | 
|                                             |                                              |      |               |      |  |   |    |     
|                                             | Adjusted net earnings                        |      | $             | 0.71 |  |   | $  | 0.62 | 
|                                             |                                              |      |               |      |  |   |    |     
|Basic:                                       |                                              |      |               |      |  |   |    |     
|                                            
|                                            
|                                            
|                                            
|                                             | Reported earnings before extraordinary items |      | $             | 0.70 |  |   | $  | 0.45 | 
|                                            
|                                            
|                                            
|                                            
|                                             | Add back: Goodwill amortization, net of tax  |      |               | -    |  |   |    | 0.18 | 
|                                            
|                                            
|                                            
|                                            
|                                             | Extraordinary items, net of tax              |      |               | 0.02 |  |   |    | -    | 
|                                             |                                              |      |               |      |  |   |    |     
|                                             | Adjusted net earnings                        |      | $             | 0.72 |  |   | $  | 0.63 | 
|                                             |                                              |      |               |      |  |   |    |     

Estimated amortization expense for intangible assets as of March 31, 2002 for
each of the five succeeding fiscal years is as follows (all amounts are in
millions): 2002-$26, 2003-$25, 2004-$22, 2005-$21, 2006-$21.

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

6



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##### Table of Contents



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 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 to include more disposal transactions. The adoption of
SFAS 144 did not have a material effect on the Companys financial statements.

Other (Income)Expense-Net

|                                    |  |               |     |      |  |   |     |  
|----------------------------------- |  | ------------- | --- | ---- |  | - | --- | -
|                                    |  | Quarter ended
|                                    |  | March 31     
|                                    |  |              
|(In millions)                       |  | 2002          |     | 2001
|                                    |  |               |     |     
|Net gain on sale of assets          |  | $             | (9  | )    |  | $ | (30 | )
|                                   
|                                   
|                                   
|                                   
|Miscellaneous other (income)expense |  |               | (5  | )    |  |   | 11  |  
|                                    |  |               |     |      |  |   |     |  
|                                    |  | $             | (14 | )    |  | $ | (19 | )
|                                    |  |               |     |      |  |   |     |  

The net gain on sale of assets in 2002 resulted from the sale of RF Micro
Devices, Inc. (RFMD) common stock and in 2001 from the sale of certain non-core
assets.

Operating Segments

|                                                     |                      |      |               |       |  |   |       |       | 
|---------------------------------------------------- | -------------------- | ---- | ------------- | ----- |  | - | ----- | ----- | 
|                                                     |                      |      | Quarter ended
|                                                     |                      |      | March 31     
|                                                     |                      |      |              
|(In millions)                                        |                      | 2002 |               | 2001 
|                                                     |                      |      |               |      
|Sales                                                |                      |      |               |       |  |   |       |      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Automotive           |      | $             | 2,571 |  |   | $     | 2,629 | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Systems              |      |               | 778   |  |   |       | 789   | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Space & Electronics  |      |               | 501   |  |   |       | 484   | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Aeronautical Systems |      |               | 232   |  |   |       | 265   | 
|                                                     |                      |      |               |       |  |   |       |      
|                                                    
|                                                    
|                                                    
|                                                    
|Sales                                                |                      | $    | 4,082         |       |  | $ | 4,167 |      
|                                                     |                      |      |               |       |  |   |       |      
|Profit before taxes                                  |                      |      |               |       |  |   |       |      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Automotive           |      | $             | 113   |  |   | $     | 98    | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Systems              |      |               | 56    |  |   |       | 48    | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Space & Electronics  |      |               | 44    |  |   |       | 34    | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Aeronautical Systems |      |               | 17    |  |   |       | 29    | 
|                                                     |                      |      |               |       |  |   |       |      
|                                                    
|                                                    
|                                                    
|                                                    
|Profit before taxes                                  |                      |      | 230           |       |  |   | 209   |      
|                                                    
|Corporate expense and other                          |                      |      | (26           | )     |  |   | (40   | )    
|                                                    
|                                                    
|                                                    
|                                                    
|Financing cost                                       |                      |      | (106          | )     |  |   | (130  | )    
|                                                    
|                                                    
|                                                    
|                                                    
|Net employee benefits income                         |                      |      | 31            |       |  |   | 34    |      
|                                                     |                      |      |               |       |  |   |       |      
|                                                    
|                                                    
|                                                    
|                                                    
|Earnings before income taxes and extraordinary items |                      | $    | 129           |       |  | $ | 73    |      
|                                                     |                      |      |               |       |  |   |       |      

Goodwill amortization included in each segment in 2001 was $16 million for
Automotive, $4 million for Systems, $1 million for Space & Electronics and $5
million for Aeronautical Systems.

7



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##### Table of Contents



Restructurings

Automotive

Severance costs and plant closing accruals related to restructuring plans
including reorganizing and downsizing operations were $145 million at December
31, 2001. In the first quarter of 2002, additional charges of $3 million
before tax were recorded primarily in cost of sales for severance costs. For
the three months ended March 31, 2002, $29 million was used for severance
payments and costs related to the consolidation of certain facilities. During
the first quarter, a further reduction of 650 employees, relating to these
programs, was achieved. The majority of the remaining balance of $119 million
is expected to be used by the end of 2002.

Aeronautical Systems

The Company is continuing to implement cost reduction measures as a result of
decreased demand for its commercial aviation equipment and services. At
December 31, 2001, restructuring charges of approximately $22 million had been
recorded for severance and other costs. During the first quarter of 2002, $2
million was used to pay severance costs. Employee headcount has been reduced
by over 600 since the start of the program in the fourth quarter of 2001. The
balance of $20 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, of which $4
million was used in the first quarter 2002. The balance of $6 million is
expected to be used by the end of 2002.

Intersegment sales

|                     |  |               |    |      |  |   |    | 
|-------------------- |  | ------------- | -- | ---- |  | - | -- | 
|                     |  | Quarter ended
|                     |  | March 31     
|                     |  |              
|(In millions)        |  | 2002          |    | 2001
|                     |  |               |    |     
|Automotive           |  | $             | -  |      |  | $ | 1  | 
|                    
|                    
|                    
|                    
|Systems              |  |               | 41 |      |  |   | 42 | 
|                    
|                    
|                    
|                    
|Space & Electronics  |  |               | 6  |      |  |   | 15 | 
|                    
|                    
|                    
|                    
|Aeronautical Systems |  |               | -  |      |  |   | -  | 

Inventories

|                                      |  |          |     |             |  |   |     | 
|------------------------------------- |  | -------- | --- | ----------- |  | - | --- | 
|                                      |  | March 31 |     | December 31
|(In millions)                         |  | 2002     |     | 2001       
|                                      |  |          |     |            
|Finished products and work in process |  | $        | 504 |             |  | $ | 479 | 
|                                     
|                                     
|                                     
|                                     
|Raw materials and supplies            |  |          | 298 |             |  |   | 284 | 
|                                      |  |          |     |             |  |   |     | 
|                                      |  | $        | 802 |             |  | $ | 763 | 
|                                      |  |          |     |             |  |   |     | 

Accounts Receivables Securitized and Sold

During the fourth quarter of 2001, the Company established a $350 million
accounts receivable securitization program. Under this program, the Company
sells accounts receivables to a wholly owned, fully consolidated, bankruptcy
remote, special purpose subsidiary, TRW Receivables Inc.

8



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##### Table of Contents



The outstanding balance of receivables sold to the special purpose subsidiary at March 31, 2002
was $514
million compared to $489 million at December 31, 2001. The undivided interest
in the receivables portfolio sold to the financial conduits at March 31, 2002
was $323 million compared to $327 million at December 31, 2001. The loss on
sale for the first quarter of 2002 was $2 million and was recorded in other
(income)expense-net.

The table below summarizes certain cash flows of the special purpose subsidiary
for the three months ended March 31, 2002:

|                                                         |  |   |     | 
|-------------------------------------------------------- |  | - | --- | 
|(In millions)                                            |  |   |     | 
|Average monthly proceeds from receivables securitization |  | $ | 302 | 
|                                                        
|                                                        
|                                                        
|                                                        
|Proceeds from receivables securitization                 |  |   | 907 | 

During the first quarter of 2002, the Company entered into an additional
agreement with a separate financial institution to sell receivables from
certain of its foreign subsidiaries. The Company will continue to service and
collect the receivables on behalf of the financial institution. The balance of
the accounts receivables sold to the financial institution, under this
agreement, amounted to approximately $45 million at March 31, 2002.

These transactions are 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

At March 31, 2002, the Company had hedging relationships designated as cash
flow hedges, which were as follows:

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 either sales, cost of sales, or other
(income)expense-net, to match the underlying transaction.

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 March 31, 2002, the Company had foreign currency forward contracts
outstanding with a notional amount of $1.8 billion, denominated principally in
the U.S. dollar, the euro, and the British pound. 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.

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

9



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##### Table of Contents



agreements are recognized as an adjustment to
interest expense. At March 31, 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 $8 million at March 31, 2002.

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 March 31, 2002 was a $154 million gain.

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. The repurchase resulted in an
extraordinary gain of $2 million after taxes, or $0.02 per share.

10



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##### Table of Contents



Earnings Per Share

|                                    |                                                                                                        |                                     |   |               |      |  |   |       |      | 
|----------------------------------- | ------------------------------------------------------------------------------------------------------ | ----------------------------------- | - | ------------- | ---- |  | - | ----- | ---- | 
|                                    |                                                                                                        |                                     |   | Quarter ended
|                                    |                                                                                                        |                                     |   | March 31     
|                                    |                                                                                                        |                                     |   |              
|(In millions except per share data) |                                                                                                        | 2002                                |   | 2001         
|                                    |                                                                                                        |                                     |   |              
|Numerator                           |                                                                                                        |                                     |   |               |      |  |   |      
|                                   
|                                   
|                                   
|                                   
|                                    | Earnings before extraordinary items                                                                    |                                     | $ | 88.6          |      |  | $ | 55.5  |     
|                                   
|                                   
|                                   
|                                   
|                                    | Extraordinary items                                                                                    |                                     |   | 2.5           |      |  |   | -     |     
|                                    |                                                                                                        |                                     |   |               |      |  |   |      
|                                    | Net earnings                                                                                           |                                     |   | 91.1          |      |  |   | 55.5  |     
|                                   
|                                   
|                                   
|                                   
|                                    | Preferred stock dividends                                                                              |                                     |   | 0.2           |      |  |   | 0.2   |     
|                                    |                                                                                                        |                                     |   |               |      |  |   |      
|                                    | Numerator for basic earnings per sharenet earnings
available to common shareholders                   |                                     |   | 90.9          |      |  |   | 55.3  |     
|                                   
|                                   
|                                   
|                                   
|                                    | Effect of dilutive securities                                                                          |                                     |   |               |      |  |   |       |     
|                                   
|                                   
|                                   
|                                   
|                                   
|                                   
|                                   
|                                   
|                                    |                                                                                                        | Preferred stock dividends           |   |               | 0.2  |  |   |       | 0.2  | 
|                                    |                                                                                                        |                                     |   |               |      |  |   |      
|                                    | Numerator for diluted earnings per sharenet
earnings available to common shareholders                 |                                     | $ | 91.1          |      |  | $ | 55.5  |     
|                                    |                                                                                                        |                                     |   |               |      |  |   |      
|Denominator                         |                                                                                                        |                                     |   |               |      |  |   |      
|                                   
|                                   
|                                   
|                                   
|                                    | Denominator for basic earnings per share
weighted-average common shares                               |                                     |   | 126.2         |      |  |   | 123.8 |     
|                                   
|                                   
|                                   
|                                   
|                                    | Effect of dilutive securities                                                                          |                                     |   |               |      |  |   |       |     
|                                   
|                                   
|                                   
|                                   
|                                    |                                                                                                        | Convertible preferred stock         |   |               | 0.7  |  |   |       | 0.7  | 
|                                   
|                                   
|                                   
|                                   
|                                    |                                                                                                        | Employee stock options              |   |               | 0.7  |  |   |       | 0.4  | 
|                                    |                                                                                                        |                                     |   |               |      |  |   |      
|                                    | Dilutive potential common shares                                                                       |                                     |   | 1.4           |      |  |   | 1.1   |     
|                                    |                                                                                                        |                                     |   |               |      |  |   |      
|                                    | Denominator for diluted earnings per share
adjusted weighted-average shares after
assumed conversions |                                     |   | 127.6         |      |  |   | 124.9 |     
|                                    |                                                                                                        |                                     |   |               |      |  |   |      
|Earnings Per Share                  |                                                                                                        |                                     |   |               |      |  |   |      
|                                   
|                                   
|                                   
|                                   
|                                    | Basic:                                                                                                 |                                     |   |               |      |  |   |       |     
|                                   
|                                   
|                                   
|                                   
|                                    |                                                                                                        | Earnings before extraordinary items |   | $             | 0.70 |  |   | $     | 0.45 | 
|                                   
|                                   
|                                   
|                                   
|                                    |                                                                                                        | Extraordinary items                 |   |               | 0.02 |  |   |       | -    | 
|                                    |                                                                                                        |                                     |   |               |      |  |   |      
|                                    |                                                                                                        | Net earnings                        |   |               | 0.72 |  |   |       | 0.45 | 
|                                    |                                                                                                        |                                     |   |               |      |  |   |      
|                                    | Diluted:                                                                                               |                                     |   |               |      |  |   |       |     
|                                   
|                                   
|                                   
|                                   
|                                    |                                                                                                        | Earnings before extraordinary items |   |               | 0.69 |  |   |       | 0.44 | 
|                                   
|                                   
|                                   
|                                   
|                                    |                                                                                                        | Extraordinary items                 |   |               | 0.02 |  |   |       | -    | 
|                                    |                                                                                                        |                                     |   |               |      |  |   |      
|                                    |                                                                                                        | Net earnings                        |   |               | 0.71 |  |   |       | 0.44 | 
|                                    |                                                                                                        |                                     |   |               |      |  |   |      

Supplemental Cash Flow Information

|                                          |  |      |  |               |     |  |  |  |  |  | 
|----------------------------------------- |  | ---- |  | ------------- | --- |  |  |  |  |  | 
|                                          |  |      |  | Quarter ended
|                                          |  |      |  | March 31     
|                                          |  |      |  |              
|(In millions)                             |  | 2002 |  | 2001         
|                                          |  |      |  |              
|Interest paid (net of amount capitalized) |  | $58  |  |               | $65 | 
|                                         
|                                         
|                                         
|                                         
|Income taxes paid (net of refunds)        |  | 37   |  |               | 16  | 

11



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##### Table of Contents



Comprehensive Income (Loss)

The components of comprehensive income(loss), net of related tax, for the first
quarter of 2002 and 2001 are as follows:

|                                    |  |               |     |      |  |   |      |  
|----------------------------------- |  | ------------- | --- | ---- |  | - | ---- | -
|                                    |  | Quarter ended
|                                    |  | March 31     
|                                    |  |              
|(In millions)                       |  | 2002          |     | 2001
|                                    |  |               |     |     
|Net earnings                        |  | $             | 91  |      |  | $ | 55   |  
|                                   
|                                   
|                                   
|                                   
|Foreign currency exchange loss      |  |               | (32 | )    |  |   | (119 | )
|                                   
|                                   
|                                   
|                                   
|Unrealized loss on securities       |  |               | (29 | )    |  |   | (241 | )
|                                   
|                                   
|                                   
|                                   
|Unrealized loss on cash flow hedges |  |               |    |      |  |   | (31  | )
|                                    |  |               |     |      |  |   |      |  
|Comprehensive income(loss)          |  | $             | 30  |      |  | $ | (336 | )
|                                    |  |               |     |      |  |   |      |  

The components of accumulated other comprehensive income(loss), net of tax, at
March 31, 2002 and December 31, 2001 are as follows:

|                                             |  |          |      |             |  |   |      |  
|-------------------------------------------- |  | -------- | ---- | ----------- |  | - | ---- | -
|                                             |  | March 31 |      | December 31
|(In millions)                                |  | 2002     |      | 2001       
|                                             |  |          |      |            
|Foreign currency exchange loss               |  | $        | (556 | )           |  | $ | (524 | )
|                                            
|                                            
|                                            
|                                            
|Unrealized gain on securities                |  |          | 89   |             |  |   | 118  |  
|                                            
|                                            
|                                            
|                                            
|Unrealized loss on cash flow hedges          |  |          | (2   | )           |  |   | (2   | )
|                                            
|                                            
|                                            
|                                            
|Minimum pension liability adjustments        |  |          | (61  | )           |  |   | (61  | )
|                                             |  |          |      |             |  |   |      |  
|Accumulated other comprehensive income(loss) |  | $        | (530 | )           |  | $ | (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, product liability 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 March 31, 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
possible wrongdoing by Kelsey-Hayes Company and others involving certain loans
made

12



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##### Table of Contents



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.

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.

13



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##### 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 March 31, 2002, and the related unaudited statements of
operations and cash flows for the three-month periods ended March 31, 2002 and
2001, included in the Form 10-Q of TRW Inc. for the quarterly period ended
March 31, 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, we expressed an unqualified opinion on those
financial statements. Those financial statements and our report on them are
included in the Form 10-K of TRW Inc. for the year ended December 31, 2001. In
our opinion, the information set forth in the accompanying balance sheet as of
December 31, 2001 is fairly stated, in all material respects, in relation to
the balance sheet from which it has been derived.

/s/ Ernst & Young LLP

Cleveland, Ohio
April 17, 2002

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

Results of Operations

|                                              |                            |      |               |      |  |        |       |           |  |   |     |      |  |  |         |    |  
|--------------------------------------------- | -------------------------- | ---- | ------------- | ---- |  | ------ | ----- | --------- |  | - | --- | ---- |  |  | ------- | -- | -
|                                              |                            |      | Quarter ended
|                                              |                            |      | March 31     
|                                              |                            |      |              
|                                              |                            |      |               |      |  |        |       |           |  |   |     |      |  |  | Percent
|(In millions except per share data)           |                            | 2002 |               | 2001 |  | Change |       | Inc (Dec)
|                                              |                            |      |               |      |  |        |       |          
|Sales                                         |                            | $    | 4,082         |      |  | $      | 4,167 |           |  | $ | (85 | )    |  |  | (2      | %)
|                                             
|                                             
|                                             
|                                             
|Profit before taxes                           |                            |      | 230           |      |  |        | 209   |           |  |   | 21  |      |  |  | 10      | % 
|                                             
|                                             
|                                             
|                                             
|Earnings before extraordinary items           |                            |      | 89            |      |  |        | 55    |           |  |   | 34  |      |  |  | 60      | % 
|                                             
|                                             
|                                             
|                                             
|Net earnings                                  |                            |      | 91            |      |  |        | 55    |           |  |   | 36  |      |  |  | 64      | % 
|                                             
|                                             
|                                             
|                                             
|Diluted earnings per share:                   |                            |      |               |      |  |        |       |           |  |   |     |      |  |  |         |   
|                                             
|                                             
|                                             
|                                             
|                                              | Before extraordinary items |      |               | 0.69 |  |        |       | 0.44      |  |   |     | 0.25 |  |  |         | 57 | %
|                                             
|                                             
|                                             
|                                             
|                                              | Net earnings               |      |               | 0.71 |  |        |       | 0.44      |  |   |     | 0.27 |  |  |         | 61 | %
|                                             
|                                             
|                                             
|                                             
|Effective tax rate before extraordinary items |                            |      | 31.4          | %    |  |        | 24.0  | %         |  |   |     |      |  |  |         |   

Sales in the first quarter of 2002 decreased 2 percent compared to the first
quarter of 2001. Increased volume in Automotive of $46 million was partially
offset by reduced volume in Aeronautical Systems of $27 million. This
increase in volume was more than offset by the effect of foreign currency
exchange of $55 million, the reduction in sales from divestitures in 2001 of
$29 million and lower pricing of $27 million. Sales in the defense businesses
increased slightly as growth from new programs more than offset the absence of
programs that were completed or nearing completion.

Net earnings and diluted earnings per share for the first quarter of 2002 were
$91 million after tax, or $0.71 per share, compared to $55 million after tax,
or $0.44 per share, in 2001. In 2002, the Company recorded, as extraordinary
items, gains on the early extinguishment of debt of $2 million after tax, or
$0.02 per share. The Company adopted Financial Accounting Standard Board
Statement of Financial Accounting Standards (SFAS) 142 January 1, 2002.
Adjusting first quarter of 2001 for the effect of the adoption would have
increased net earnings for 2001 by $23 million, or $0.18 per share.

Unusual items in the first quarter of 2002 negatively impacted net earnings by
$3 million, or $0.02 per share. Unusual items included an after tax gain on
the sales of RF Micro Devices, Inc. (RFMD) common stock of approximately $5
million, offset by an impairment of an investment and restructuring charges of
$4 million after tax, and a charge related to defense of the unsolicited
exchange offer of $4 million after tax. Unusual items for the first quarter
of 2001 included gains from asset sales of approximately $31 million after
tax, which were partially offset by restructuring charges of $27 million after
tax, for a net increase of $4 million, or $0.03 per share.

Although sales for the first quarter of 2002
declined $85 million from the first
quarter of 2001, gross profit in 2002 of $600 million remained essentially
unchanged, compared to $601 million in 2001. Lower pricing of $27 million,
the effects of decreased volume and unfavorable product mix of $20 million,
foreign currency exchange of $11 million and divestitures of $7 million, were
offset by net cost reductions of $48 million and lower restructuring charges
of $17 million, as compared to the prior year quarter. In addition, net
pension income from an overfunded pension plan added $59 million and $61
million to gross profit in the first quarter of 2002 and 2001, respectively.
Gross profit margin increased to 14.7 percent for the first quarter of 2002,
compared to 14.4 percent in the first quarter of 2001. Excluding unusual
items, gross profit margin would have been 14.8 percent and 14.9 percent for
the first quarters of 2002 and 2001, respectively.

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Administrative and selling expenses of $257 million in the first quarter of
2002 decreased $8 million compared to $265 million for the first quarter of
2001. A reduction in unusual items related to
restructuring charges of $17 million was partially offset by increased
expenditures on reimbursable governmental contracts of $8 million.

Research and development expenses of $118 million in the first quarter of 2002
decreased $3 million compared to the first quarter of 2001. The reduction was
primarily due to a decrease in spending in Automotive of $4 million.

As a result of lower average debt outstanding and lower short-term interest
rates in the United States, interest expense in the first quarter of 2002
decreased $25 million to $104 million compared to the first quarter of 2001 of
$129 million.

Amortization of intangible assets and goodwill of $6 million in the first
quarter of 2002 decreased $26 million compared to $32 million in the first
quarter of 2001 as a result of the adoption of SFAS 142, January 1, 2002,
whereby the Company no longer amortizes goodwill.

Other (income)expense-net was income of $14 million in the first quarter of
2002 compared to $19 million in 2001. Included in 2002 was the gain on sales
of shares of RFMD common stock of $9 million and net gains on certain non-core
assets in 2001 of $30 million.

The effective income tax rate before extraordinary items was 31.4 percent in
the first quarter of 2002 compared to 24 percent in the first quarter of 2001.
Excluding unusual items, the effective income tax rate would have been 31.2
percent and 36 percent in the first quarter of 2002 and 2001, respectively.
The effective income tax rate for first quarter of 2002 was reduced primarily
by the adoption of SFAS 142 resulting in the elimination of the amortization
of nondeductible goodwill.

Results of Segments

Automotive

|                                                               |  |               |       |      |  |        |       |           |  |   |     |   |  |         |    |   
|-------------------------------------------------------------- |  | ------------- | ----- | ---- |  | ------ | ----- | --------- |  | - | --- | - |  | ------- | -- | --
|                                                               |  | Quarter ended
|                                                               |  | March 31     
|                                                               |  |              
|                                                               |  |               |       |      |  |        |       |           |  |   |     |   |  | Percent
|(In millions)                                                  |  | 2002          |       | 2001 |  | Change |       | Inc (Dec)
|                                                               |  |               |       |      |  |        |       |          
|Sales                                                          |  | $             | 2,571 |      |  | $      | 2,629 |           |  | $ | (58 | ) |  |         | (2 | %)
|                                                              
|                                                              
|                                                              
|                                                              
|Profit before taxes                                            |  |               | 113   |      |  |        | 98    |           |  |   | 15  |   |  |         | 16 | % 
|                                                              
|                                                              
|                                                              
|                                                              
|Unusual items-income (expense) included
in profit before taxes |  |               | (6    | )    |  |        | (5    | )         |  |   | (1  | ) |  |         |    |   

Sales of $2,571 million for the first quarter of 2002 decreased 2 percent
compared to $2,629 million in the first quarter of 2001. As a result of higher
production in North America, which was partly offset by decreases in Europe,
volume increased $46 million in 2002 compared to 2001. The increase was more
than offset by the effect of foreign currency exchange of $49 million, the
effects of divestitures of $29 million and lower pricing of $27 million.

Profit before taxes for the first quarter of 2002 increased $15 million, or 16
percent compared to the first quarter of 2001. Excluding the effect of
adopting SFAS 142 and unusual items, 2002 profit before taxes was equal to
2001. Unusual items in the first quarter of 2002, which consisted of
restructuring charges and a write-down of an investment, negatively impacted
profit before taxes by $6 million. Unusual items for the first quarter of 2001
negatively impacted profit before taxes by $5 million and included
restructuring charges of $31 million, offset by gains on asset sales of $26
million. The segments cost reduction initiatives, including restructuring,
resulted in net cost

16



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reductions of $45 million in the first quarter of 2002
compared to the first quarter of 2001. These cost savings were offset in part
by lower pricing of $27 million, the net effect of increased volume and
unfavorable product mix of $8 million and the effect of foreign currency
exchange of $7 million.

Severance costs and plant closing accruals related to restructuring plans
including reorganizing and downsizing operations were $145 million at December
31, 2001. In the first quarter of 2002, additional charges of $3 million
before tax were recorded primarily in cost of sales for severance costs. For
the three months ended March 31, 2002, $29 million was used for severance
payments and costs related to the consolidation of certain facilities. During
the first quarter, a further reduction of 650 employees, relating to these
programs, was achieved. The majority of the remaining balance of $119 million
is expected to be used by the end of 2002.

Systems

|                                                               |  |               |     |      |  |        |     |           |  |   |     |   |  |         |    |   
|-------------------------------------------------------------- |  | ------------- | --- | ---- |  | ------ | --- | --------- |  | - | --- | - |  | ------- | -- | --
|                                                               |  | Quarter ended
|                                                               |  | March 31     
|                                                               |  |              
|                                                               |  |               |     |      |  |        |     |           |  |   |     |   |  | Percent
|(In millions)                                                  |  | 2002          |     | 2001 |  | Change |     | Inc (Dec)
|                                                               |  |               |     |      |  |        |     |          
|Sales                                                          |  | $             | 778 |      |  | $      | 789 |           |  | $ | (11 | ) |  |         | (1 | %)
|                                                              
|                                                              
|                                                              
|                                                              
|Profit before taxes                                            |  |               | 56  |      |  |        | 48  |           |  |   | 8   |   |  |         | 16 | % 
|                                                              
|                                                              
|                                                              
|                                                              
|Unusual items-income (expense)
included in profit before
taxes |  |               |    |      |  |        |    |           |  |   |    |   |  |         |    |   

Sales of $778 million for the first quarter of 2002 decreased $11 million, or 1
percent compared to $789 million in the first quarter of 2001. Higher volume
on new business and from existing programs of $49 million was more than offset
by lower volume on contracts nearing completion or completed of $60 million,
primarily due to the successful completion of the U.S. Census and the TRW
Environmental Safety Systems programs in the first quarter of 2001.

Profit before taxes for the first quarter of 2002 increased $8 million, or 16
percent compared to the first quarter of 2001. Excluding the effect of
adopting SFAS 142, 2002 profit before taxes increased $4 million when compared
to 2001. The $4 million, or 7 percent, increase in profit before taxes
reflects improved program performance.

Space & Electronics

|                                                               |  |               |     |      |  |        |     |           |  |   |    |  |  |         |    |  
|-------------------------------------------------------------- |  | ------------- | --- | ---- |  | ------ | --- | --------- |  | - | -- |  |  | ------- | -- | -
|                                                               |  | Quarter ended
|                                                               |  | March 31     
|                                                               |  |              
|                                                               |  |               |     |      |  |        |     |           |  |   |    |  |  | Percent
|(In millions)                                                  |  | 2002          |     | 2001 |  | Change |     | Inc (Dec)
|                                                               |  |               |     |      |  |        |     |          
|Sales                                                          |  | $             | 501 |      |  | $      | 484 |           |  | $ | 17 |  |  |         | 4  | %
|                                                              
|                                                              
|                                                              
|                                                              
|Profit before taxes                                            |  |               | 44  |      |  |        | 34  |           |  |   | 10 |  |  |         | 28 | %
|                                                              
|                                                              
|                                                              
|                                                              
|Unusual
items-income (expense)
included in profit before
taxes |  |               | 9   |      |  |        |    |           |  |   | 9  |  |  |         |    |  

Sales of $501 million increased $17 million, or 4 percent for the first quarter
of 2002 compared to the first quarter of 2001. This increase was primarily due
to higher volume on existing programs, including the Advanced Extremely High
Frequency (AEHF) program and the F-22 program, of $80 million. This increase
was offset by a decline of approximately $62 million from the effect of
contracts winding down or terminated, primarily Astrolink.

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Profit before taxes for the first quarter of 2002 of $44 million increased $10
million, or 28 percent compared to $34 million in the first quarter of 2001.
Adjusting for the effect of adopting SFAS 142, profit before taxes in 2001
would have been $35 million. Excluding the unusual item of $9 million in the
first quarter of 2002, consisting of gains on the sales of shares of RFMD
common stock, profit
before taxes remained level with the first quarter of 2001. Profit before
taxes in the first quarter of 2002 was positively affected by new and existing
programs of $16 million and reduced equity losses of $9 million, offset by
increased costs associated with the commercialization of defense
technologies of $12 million and lower volumes on contracts winding down or
terminated of $14 million.

Aeronautical Systems

|                                                               |  |               |     |      |  |        |     |           |  |   |     |   |  |         |     |   
|-------------------------------------------------------------- |  | ------------- | --- | ---- |  | ------ | --- | --------- |  | - | --- | - |  | ------- | --- | --
|                                                               |  | Quarter ended
|                                                               |  | March 31     
|                                                               |  |              
|                                                               |  |               |     |      |  |        |     |           |  |   |     |   |  | Percent
|(In millions)                                                  |  | 2002          |     | 2001 |  | Change |     | Inc (Dec)
|                                                               |  |               |     |      |  |        |     |          
|Sales                                                          |  | $             | 232 |      |  | $      | 265 |           |  | $ | (33 | ) |  |         | (12 | %)
|                                                              
|                                                              
|                                                              
|                                                              
|Profit before taxes                                            |  |               | 17  |      |  |        | 29  |           |  |   | (12 | ) |  |         | (43 | %)
|                                                              
|                                                              
|                                                              
|                                                              
|Unusual
items-income (expense)
included in profit before
taxes |  |               |    |      |  |        | 4   |           |  |   | (4  | ) |  |         |     |   

Impacted by a decline in demand within the commercial aircraft industry
following the events of September 11, first quarter of 2002 sales decreased $33
million, or 12 percent compared to the first quarter of 2001. The decrease in
sales resulted from lower volume of $27 million and the effect of foreign
currency exchange of $6 million.

Profit before taxes in the first quarter of 2002 declined $12 million compared
to the first quarter of 2001. Excluding the effect of the adoption of SFAS 142
and an unusual item resulting in a 2001 gain on sale of an asset of $4 million,
profit before taxes declined $13 million, when compared to the prior year. The
decline was driven by lower volume and unfavorable product mix of $13 million.

The Company is continuing to implement cost reduction measures as a result of
decreased demand for its commercial aviation equipment and services. At
December 31, 2001, the segment had restructuring reserves of approximately $22
million for severance and other costs. During the first quarter of 2002, $2
million was used to pay severance costs. Employee headcount has been reduced
by over 600 since the start of the program in the fourth quarter of 2001. The
balance of $20 million is expected to be used by the end of 2002.

Corporate and Other

Costs included in corporate expense and other declined $14 million, primarily
as a result of reduced headcount and related costs resulting from the 2001
corporate restructuring. Unusual items of approximately $6 million related to
defense costs associated with the unsolicited exchange offer in the first
quarter of 2002 and approximately $6 million of restructuring charges,
primarily for severance, in the first quarter of 2001, were recorded.

Liquidity and Financial Position

In the first quarter of 2002, operating activities of $87 million, an increase
in debt of $32 million, other items of $31 million and proceeds from the sale
of assets of $10 million were used primarily for capital expenditures of $108
million and dividend payments of $22 million. As a result, cash and cash
equivalents increased $30 million. In the first quarter of 2001, an increase
in debt of $202

18



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million, proceeds from the sale of assets of $66 million were
used primarily for capital expenditures of $167 million, dividend payments of
$44 million, other items of $44 million and operating activities of $12
million. As a result, cash and cash equivalents increased $1 million.

Net debt (short-term debt, the current portion of long-term debt and long-term
debt, less cash and cash equivalents) was $5.5 billion at March 31, 2002 and at
December 31, 2001. The ratio of net debt to total capital (net debt, minority
interests and shareholders investment) was 70 percent at March 31, 2002 and 71
percent at December 31, 2001. The percentage of fixed rate debt to total debt
was 85 percent at the end of the first quarter 2002 and at December 31, 2001.

At March 31, 2002, short-term debt was $456 million, an increase of $341
million since December 31, 2001. The increase in short-term debt was
principally due to the repayment of $300 million of medium-term notes that
matured during the first quarter. This repayment was funded through the
issuance of commercial paper in the U.S.

Commercial paper borrowings outstanding at March 31, 2002 totaled $375 million
with an average cost of 2.7 percent and maturities within one month. Following
the announcement by Northrop Grumman Corporation of its unsolicited proposal to
acquire all of the common stock of the Company, the credit ratings of the
Companys debt were placed on watch with negative implications by Standard &
Poors Rating Services and Moodys Investors Services, Inc. These actions have
increased the cost of borrowing and decreased the availability of commercial
paper with maturities longer than one month 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 March 31, 2002. The Company is in compliance with the
covenants contained in these agreements.

During the first quarter, the Company supplemented its accounts receivable
securitization activities in the U.S. with the sale of accounts receivable in
certain of its foreign subsidiaries. At March 31, 2002, the aggregate amount
of funds provided by accounts receivables securitized and sold was $368
million, an increase of $41 million since December 31, 2001. These
transactions are accounted for as a sale of the receivables and reduce the
amount of short-term debt reported by the Company.

Long-term debt (including the current portion of long-term debt) at March 31,
2002 was $5.3 billion, a decrease of $0.3 billion since December 31, 2001.
This decrease was principally due to the repayment of $300 million of maturing
medium-term notes in March. 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 March 31, 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.

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

19



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At March 31, 2002, the Company had a working capital deficiency of
approximately $1.4 billion due to effective working capital management and debt
maturing within one year, combined with the sale of accounts receivable and the
accounts receivable securitization programs. Management believes that
sufficient resources from funds generated by operations, dispositions and
existing borrowing capacity are available to maintain liquidity.

Other Matters

See also the Unsolicited Exchange Offer and Value Enhancement Plan and
Contingencies Notes to Financial Statements for discussion of certain other
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
financial condition of, or business relationships with customers or suppliers;
the ability to reduce the level of outstanding debt from cash flow from
operations and the proceeds from asset dispositions; a credit rating downgrade;
increase in interest rates; customer recall and warranty claims; product
liability and litigation issues; changes to the regulatory environment
regarding automotive safety; the introduction of competing products or
technology by competitors; the ability to attract and retain skilled employees
with high-level technical competencies; the financial results of companies in
which we have made technology investments; the availability of funding for
research and development; economic, regulatory and political domestic and
international conditions; fluctuations in currency exchange rates; and the
impact of additional terrorist attacks, which could result in reduced
automotive production, disruptions to the transportation system, or significant
and prolonged disruption to air travel. In addition, there can be no
assurance: (i) that an agreement relating to any investment in the Company, or
relating to any sale or other distribution of all or a part of the Companys
operating businesses will be reached, or that if an agreement is reached, that
the transactions contemplated by such agreement will be consummated; (ii) that
the Company will spin off the Automotive business or that such spin-off will be
complete by the end of the fourth quarter 2002; (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) as to the amount by which
debt will be reduced; (v) that the Companys strategy will deliver any
particular level of value to TRW shareholders; (vi) that defense spending will
rise and research, development, test and evaluation budgets will increase;
(vii) that the commercial aerospace industry will stabilize; (viii) that North
American 2002 light vehicle production will increase from 2001 levels; (ix)
that 2002 earnings per share estimates will be met or exceeded; (x) with
respect to the expected amounts of the Companys operating cash flows in 2002,
that such amounts will be utilized to 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;
and (xiii) that the Companys costs will decrease in 2002. Other factors and
assumptions not identified above are also

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##### Table of Contents



involved in the preparation of
forward-looking statements, and the failure of such other factors and
assumptions to be realized may also cause actual results to differ materially
from those discussed. The Company assumes no obligation to update such
estimates to reflect actual results, changes in assumptions or changes in other
factors affecting such estimates other than as required by law. The above list
of important factors is not exclusive.




Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company is subject to inherent risks attributed to operating in a global
economy. It is the Companys policy to utilize derivative financial
instruments to manage its interest rate and foreign currency exchange rate
risks. When appropriate, the Company uses derivatives to modify its exposure
to interest rate movements and to reduce borrowing costs. Interest rate swaps
hedge interest rates on certain indebtedness and involve the exchange of fixed
and floating rate interest payment obligations over the life of the related
agreement. 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
March 31, 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.

Based on the Companys exposure to foreign currency exchange rate risk
resulting from derivative foreign currency instruments outstanding at March 31,
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 $122 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
analyses also do not factor in a potential change in the level of variable rate
borrowings or derivative instruments outstanding that could take place if these
hypothetical conditions prevailed.

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

Refer to the Financial Instruments Note to Financial Statements for further
discussion of derivative instruments as of March 31, 2002.

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PART II. OTHER INFORMATION




Item 1. Legal Proceedings

Except as described below, there have been no material developments in legal
proceedings involving TRW or its subsidiaries since those reported in TRWs
Annual Report on Form 10-K for the year ended December 31, 2001, as amended.

On March 4, 2002, Northrop filed a lawsuit in the United States District Court
for the Northern District of Ohio against TRW, the Attorney General of Ohio,
and the Director of Ohios Department of Commerce. The lawsuit, which was
filed in conjunction with Northrops exchange offer, challenges the
constitutionality of Ohios Control Share Acquisition Statute, Merger
Moratorium Statute, and Control Bid Statute. The complaint seeks declaratory
and injunctive relief, as well as costs of the suit. Northrop moved for a
preliminary injunction against enforcement and application of the Control Share
Acquisition Statute and the Merger Moratorium Statute, and asked that such
injunction issue before April 22, 2002, the then scheduled date for the Control
Share Acquisition shareholder meeting. The District Court denied Northrops
motion, concluding that there was no need to hold a hearing or decide the issue
before the meeting. On April 23, 2002, Northrop filed an appeal in the United
States Court of Appeals for the Sixth Circuit from the denial of the
preliminary injunction motion. That appeal is currently pending. A hearing on
the merits of the lawsuit has not yet been held.

On February 22 and 25, 2002, respectively, two putative class action lawsuits
were filed against TRW on behalf of a proposed class of TRW shareholders in
Common Pleas Court, Cuyahoga County, Ohio. On March 5, 2002, a putative class
action lawsuit was filed against TRW on behalf of a proposed class of TRW
shareholders in the United States District Court for the Northern District of
Ohio and an amended complaint was filed on March 27, 2002. All three lawsuits
allege that TRWs Board of Directors breached its fiduciary duties by failing
to adequately consider Northrops offer. The lawsuits seek damages, costs, and
injunctive relief requiring the Board of Directors to negotiate with Northrop
and/or seek out and evaluate other value-maximizing alternatives.
Additionally, the suit filed in the United States District Court alleges that
Ohios Control Share Acquisition Statute and Merger Moratorium Statute are
unconstitutional and that their enforcement should be enjoined.

On March 13, 2002, Lucas Western Inc., a wholly owned subsidiary of the
Company, received written notice from the New York State Department of
Environmental Conservation (DEC) that certain alleged violations of the
Environmental Conservation Law of New York State by the Companys Utica
facility had been referred for enforcement action. The alleged violations
include discharge of pollutants to waters of the State without a permit and the
discharge of material to the waters of the State in contravention of
established water quality standards. The DEC is seeking payment of a penalty
as well as a compliance plan for the elimination of such alleged discharges,
including confirmatory sampling and sampling of any sediments and soil
excavated during removal of the discharge. The Company believes the ultimate
resolution of this matter will not have a material effect on the Companys
financial condition or results of operations.




Item 6. Exhibits and Reports on Form 8-K

|    |  |          |    |  |  |                                                                                                                                                                        
|--- |  | -------- | -- |  |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Exhibits |    | 
|   
|   
|   
|   
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|   
|   
|   
|   
|   
|   
|   
|    |  |          | 10 |  |  | Letter agreement dated March 18, 2002 between TRW Inc. and
Philip A. Odeen related to deferral of compensation pursuant to
Consulting Agreement dated February 28, 2002
|   
|    |  |          | 15 |  |  | Letter re: Unaudited Financial Information                                                                                                                             

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

|    |  |                                                                                                                                                                                                                                                                                               
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) |  | Reports on Form 8-K:                                                                                                                                                                                                                                                                          
|   
|   
|   
|   
|   
|   
|   
|   
|   
|   
|   
|   
|    |  | Current Report on Form 8-K, dated January 31, 2002, regarding revised
segment reporting format and the results of operations for the first
three quarters of 2001 based on the Companys revised segment reporting
format.                                                                    
|   
|   
|   
|   
|    |  |                                                                                                                                                                                                                                                                                               
|   
|   
|   
|   
|    |  | Current Report on Form 8-K, dated February 20, 2002, regarding the
resignation of David M. Cote as Chairman, President and Chief Executive
Officer.                                                                                                                                           
|   
|   
|   
|   
|    |  |                                                                                                                                                                                                                                                                                               
|   
|   
|   
|   
|    |  | Current Report on Form 8-K, dated February 22, 2002, regarding receipt
from Northrop Grumman Corporation of an unsolicited proposal of $47 in
Northrop Grumman common stock for each share of TRW common stock.                                                                               
|   
|   
|   
|   
|    |  |                                                                                                                                                                                                                                                                                               
|   
|   
|   
|   
|    |  | Current Report on Form 8-K, dated February 27, 2002, regarding letter
sent to Northrop Grumman Corporation.                                                                                                                                                                                   
|   
|   
|   
|   
|    |  |                                                                                                                                                                                                                                                                                               
|   
|   
|   
|   
|    |  | Current Report on Form 8-K, dated March 4, 2002, regarding TRWs Board of
Directors unanimous determination to reject Northrop Grummans proposal
set forth in its letter dated February 21, 2002 to acquire all of the
outstanding shares of TRW for $47 per share on Northrop common stock.
|   
|   
|   
|   
|    |  |                                                                                                                                                                                                                                                                                               
|   
|   
|   
|   
|    |  | Current Report on Form 8-K, dated March 4, 2002, regarding the
commencement of Northrop Grummans unsolicited exchange offer.                                                                                                                                                                 
|   
|   
|   
|   
|    |  |                                                                                                                                                                                                                                                                                               
|   
|   
|   
|   
|    |  | Current Report on Form 8-K, dated March 13, 2002, regarding
TRWs Board of Directors recommendation with respect to Northrop
Grummans exchange offer and the calling of a special meeting of
shareholders for the purpose of voting on the proposed control share
acquisition.              
|   
|   
|   
|   
|    |  |                                                                                                                                                                                                                                                                                               
|   
|   
|   
|   
|    |  | Current Report on Form 8-K, dated March 13, 2002, regarding a below
market mini tender offer commenced by TRC Capital Corporation for up to
4,250,000 shares of common stock of TRW Inc.                                                                                                    
|   
|   
|   
|   
|    |  |                                                                                                                                                                                                                                                                                               
|   
|   
|   
|   
|    |  | Current Report on Form 8-K, dated March 25, 2002, regarding TRWs Board
of Directors recommendation that TRW shareholders vote against the
shareholder proposals that Northrop Grumman intends to submit for
approval at TRWs Annual Meeting of Shareholders on April 24, 2002.             

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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:    May 3, 2002 |  |  |  |  |  | By:/s/ William B. Lawrence

| | William B. Lawrence
       Executive Vice President, General
       Counsel and Secretary
| | -----------------------------------------------------------------------------------------



| | By:/s/ Robert H. Swan
       Robert H. Swan
       Executive Vice President
       and Chief Financial Officer
| | --------------------------------------------------------------------------------------------------------------

24