Prepared by R.R. Donnelley Financial -- Amendment #4 to Form S-4
Table of Contents
As filed with the Securities and Exchange Commission on July 17, 2002
Registration No. 333-83672

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

AMENDMENT NO. 4 TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

Northrop Grumman Corporation
(Exact name of registrant as specified in its charter)
 
Delaware
 
3812
 
95-4840775
(State or other jurisdiction of
incorporation or organization)
 
(Primary Standard Industrial
Classification Code Number)
 
(I.R.S. Employee
Identification Number)

1840 Century Park East
Los Angeles, California 90067
(310) 553-6262
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
John H. Mullan
Corporate Vice President and Secretary
1840 Century Park East
Los Angeles, California 90067
(310) 553-6262
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies To:
Andrew E. Bogen
Peter F. Ziegler
Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, California 90071-3197
(213) 229-7000
 
Peter Allan Atkins
Eric L. Cochran
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
(212) 735-3000

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this registration statement becomes effective and upon completion of the transactions described in the enclosed prospectus.
If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ¨
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

CALCULATION OF REGISTRATION FEE

Title of Each Class of
Securities to be Registered(1)
  
Amount to be
Registered(2)
    
Proposed Maximum Offering Price Per Unit
  
Proposed Maximum Aggregate Offering Price(3)
  
Amount of
Registration
Fee









Common Stock, par value $1.00 per share (together with the associated rights)
  
76,382,974
    
N/A
  
$
7,575,357,857.76
  
$
696,932.92

(1)
 
This Registration Statement relates to shares of common stock of Northrop Grumman Corporation to be issued in exchange for all of the issued and outstanding shares of common stock, par value $0.625 per share, of TRW Inc., an Ohio corporation, in connection with the merger of Richmond Acquisition Corp., a wholly-owned subsidiary of Northrop Grumman, with and into TRW.
(2)
 
This amount is based upon the maximum number of shares of Northrop Grumman common stock (together with the associated rights to purchase Series A junior participating preferred stock) issuable upon consummation of the merger for shares of TRW common stock and upon exercise of TRW options or in exchange for other TRW securities assumed by Northrop Grumman pursuant to the merger.
(3)
 
Computed solely for purposes of calculating the registration fee. The registration fee has been computed pursuant to Rule 457(f)(1) under the Securities Act of 1933, as amended, based on the average of the high and low prices for shares of TRW common stock as reported on the New York Stock Exchange on July 15, 2002 ($53.13) and the maximum number of such TRW shares (142,581,552) that may be exchanged for the securities being registered minus the maximum cash consideration payable for such TRW shares.

The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.


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LOGO
[                    ], 2002
 
To Northrop Grumman Corporation’s stockholders:
 
Accompanying this letter are proxy materials concerning Northrop Grumman’s proposed acquisition of TRW Inc. In order to complete this transaction, Northrop Grumman stockholders must approve the issuance of the shares of Northrop Grumman common stock pursuant to the merger. A special meeting of Northrop Grumman stockholders will be held on [            ], 2002 at [            ] a.m. local time at the Fairmont Miramar Hotel, 101 Wilshire Boulevard, Santa Monica, California, to vote on the issuance of Northrop Grumman common stock pursuant to the merger.
 
Northrop Grumman’s board of directors (with one director absent) has unanimously approved the proposed merger and recommends that Northrop Grumman stockholders vote FOR the issuance of the shares of Northrop Grumman common stock pursuant to the merger, as described in the accompanying proxy materials.
 
This proposal, as well as information regarding the merger and the Northrop Grumman special meeting, is described in greater detail in the materials accompanying this letter. Your vote is important. Please consider this matter and make sure to vote at Northrop Grumman’s special meeting by completing and returning the enclosed BLUE proxy card today or by voting by telephone or the internet.
 
Sincerely yours,
 
 
LOGO
Kent Kresa
Chairman and Chief Executive Officer


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LOGO
[    ], 2002
 
Dear TRW Shareholder:
 
The board of directors of TRW Inc. (with one director absent) has unanimously agreed to merge with Northrop Grumman Corporation. After undertaking a comprehensive strategic review with the objective of enhancing shareholder value, the board has determined that the merger is in the best interests of TRW shareholders. The merger of these two strong companies will enable the creation of the second largest defense company in the world with expanded opportunities to serve customers.
 
The merger cannot be completed unless TRW shareholders holding two-thirds of the outstanding shares of TRW Inc. common stock vote to adopt the merger agreement. A special meeting of shareholders has been scheduled for [                ], 2002 at 8:30 a.m., Cleveland time, to be held at TRW’s corporate headquarters located at 1900 Richmond Road, Lyndhurst, Ohio.
 
The accompanying notice of meeting and joint proxy statement/prospectus explain the merger and provide specific information concerning the special meeting. Please read these materials carefully.
 
Your vote is very important, regardless of the number of shares you own. To be certain that your shares are voted at the special meeting, please mark, sign, date and return promptly the enclosed proxy card or vote by telephone or over the internet, whether or not you plan to attend the special meeting in person. If you do not vote, it will have the same effect as voting against the merger.
 
TRW’s board strongly supports the merger and is enthusiastic in recommending that you vote in favor of the adoption of the merger agreement.
 
On behalf of your Board of Directors,
 
LOGO
    
LOGO
Philip A. Odeen
    
Kenneth W. Freeman
TRW Chairman
    
Lead Director


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The information in this joint proxy statement/prospectus is not complete and may be changed. Northrop Grumman may not distribute and issue the shares of Northrop Grumman common stock being registered pursuant to this registration statement until the registration statement filed with the Securities and Exchange Commission is effective. This joint proxy statement/prospectus is not an offer to distribute these securities and Northrop Grumman is not soliciting offers to receive these securities in any state where such offer or distribution is not permitted.
 
LOGO
1840 Century Park East
Los Angeles, California 90067
(310) 553-6262
 
LOGO
1900 Richmond Road
Cleveland, Ohio 44124
(216) 291-7000
 
JOINT PROXY STATEMENT/PROSPECTUS
 
Northrop Grumman Corporation, TRW Inc. and Richmond Acquisition Corp. have entered into an agreement and plan of merger (referred to in this joint proxy statement/prospectus as the “merger agreement”) providing for Northrop Grumman’s acquisition of TRW through a merger of Richmond Acquisition Corp., a wholly-owned subsidiary of Northrop Grumman, with and into TRW. In the merger, each share of common stock of TRW will be converted into the right to receive a number of shares of Northrop Grumman common stock equal to the exchange ratio.
 
The exchange ratio will be determined by dividing $60.00 by the average of the closing sale prices for a share of Northrop Grumman common stock on the New York Stock Exchange (trading symbol: NOC) for the five consecutive trading days ending on (and including) the second trading day before the day of the merger. However, in no event will the exchange ratio be greater than 0.5357 ($60.00/$112.00) or less than 0.4348 ($60.00/$138.00).
 
The merger requires the approval by Northrop Grumman stockholders of the issuance of the shares of Northrop Grumman common stock pursuant to the merger and the adoption of the merger agreement by TRW shareholders.
 
The board of directors of Northrop Grumman (with one director absent) has unanimously approved the merger agreement and the board of directors of TRW (with one director absent) has unanimously approved the merger agreement. The board of directors of Northrop Grumman (with one director absent) unanimously recommends that Northrop Grumman stockholders vote FOR the issuance of the shares of Northrop Grumman common stock pursuant to the merger.
 
The board of directors of TRW (with one director absent) unanimously recommends that the TRW shareholders vote FOR the adoption of the merger agreement.
 
The vote of Northrop Grumman stockholders and TRW shareholders is very important. Whether or not you plan to attend a meeting, please take the time to vote by completing and mailing the enclosed proxy card or cast your vote by telephone or the internet.
 
Northrop Grumman stockholders and TRW shareholders should carefully read the section entitled “RISK FACTORS” beginning on page 12 for a discussion of specific risks that should be considered in determining how to vote on the matters described herein.
 
Neither the Securities and Exchange Commission nor any state securities regulator has approved or disapproved the securities to be issued pursuant to the merger or determined if this joint proxy statement/prospectus is accurate or adequate. Any representation to the contrary is a criminal offense.
 
This joint proxy statement/prospectus is first being mailed to Northrop Grumman stockholders and TRW shareholders on or about [                    ], 2002.
 
This joint proxy statement/prospectus incorporates by reference important business and financial information about Northrop Grumman and TRW from documents filed with the SEC which are available without charge from the SEC’s website at www.sec.gov. See “ADDITIONAL INFORMATION” on page 103.
 
Northrop Grumman stockholders may request copies of these documents without charge from Northrop Grumman’s information agent, D. F. King & Co., Inc., at 77 Water Street, New York, New York 10005, or by calling toll-free at  (800) 549-6746. TRW shareholders may request copies of these documents without charge by writing to Financial Services, TRW Inc., 1900 Richmond Road, Lyndhurst, Ohio 44124-3760, or by calling the TRW Literature number at (216) 291-7755.
 
All written requests must be received by the information agents no later than [                    ], 2002 to ensure adequate time for delivery before the special meetings.


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NOTICE OF SPECIAL MEETING  OF  NORTHROP GRUMMAN STOCKHOLDERS  AND  PROXY STATEMENT
 
LOGO
 
To Northrop Grumman Corporation’s stockholders:
 
A special meeting of Northrop Grumman stockholders will be held at the Fairmont Miramar Hotel, 101 Wilshire Boulevard, Santa Monica, California 90401 at [            ] a.m. local time on [            ], 2002.
 
Holders of Northrop Grumman common stock at the close of business on [            ], 2002 are entitled to vote at the meeting. The sole item on the agenda is a proposal to authorize the issuance of shares of Northrop Grumman common stock pursuant to the Agreement and Plan of Merger, dated as of June 30, 2002, by and among Northrop Grumman, TRW and Richmond Acquisition Corp., a wholly owned subsidiary of Northrop Grumman. The Northrop Grumman stock would be issued in connection with the merger of Richmond Acquisition Corp., with and into TRW Inc., as described in greater detail in the accompanying materials.
 
By order of the Board of Directors,
 
 
LOGO
John H. Mullan
Corporate Vice President and Secretary
 
1840 Century Park East
Los Angeles, California 90067
 
[                    ], 2002
 
IMPORTANT
 
Your vote is important. To assure your votes are counted at the Northrop Grumman special meeting, please mark, sign, date and return the enclosed BLUE proxy card in the enclosed return envelope. No postage is required if mailed in the United States.
 
You may also vote by telephone or over the internet. For instructions on telephone or internet voting please see the instructions on the enclosed BLUE proxy card.
 
If your Northrop Grumman shares are not registered in your own name and you would like to attend the meeting, please bring evidence of your Northrop Grumman share ownership with you to the meeting. You should be able to obtain evidence of your Northrop Grumman share ownership from the broker, trustee, bank or other nominee who holds Northrop Grumman shares on your behalf.


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NOTICE OF SPECIAL MEETING  OF  TRW INC. SHAREHOLDERS  AND  PROXY STATEMENT
 
LOGO
 
 
To TRW Inc.’s shareholders:
 
A special meeting of TRW shareholders will be held at TRW’s executive offices located at 1900 Richmond Road, Lyndhurst, Ohio, at 8:30 a.m. local time on [            ], 2002.
 
TRW shareholders of record at the close of business on [            ], 2002 will be entitled to vote at the special meeting. At the special meeting, shareholders will vote on a proposal to adopt the Agreement and Plan of Merger, dated as of June 30, 2002, by and among Northrop Grumman, TRW and Richmond Acquisition Corp., a wholly-owned subsidiary of Northrop Grumman.
 
Sincerely,
LOGO
William B. Lawrence
Secretary
 
1900 Richmond Road
Lyndhurst, Ohio 44124
 
[                    ], 2002
 
IMPORTANT
 
Your vote is important. To assure your votes are counted at the TRW special meeting, please mark, sign, date and return the enclosed YELLOW proxy card in the enclosed return envelope. No postage is required if mailed in the United States.
 
You may also vote by telephone or over the internet. For instructions on telephone or internet voting please see the instructions on the enclosed YELLOW proxy card.
 
If your TRW shares are not registered in your own name and you would like to attend the meeting, please bring evidence of your TRW share ownership with you to the meeting. You should be able to obtain evidence of your TRW share ownership from the broker, trustee, bank or other nominee that holds TRW shares on your behalf.


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QUESTIONS AND ANSWERS ABOUT THE MERGER
 
Q:
 
What will happen if the merger is completed?
 
A:
 
TRW will be acquired by Northrop Grumman through the merger of a wholly-owned subsidiary of Northrop Grumman with and into TRW. After the merger, TRW will continue as a wholly-owned subsidiary of Northrop Grumman.
 
Q:
 
What will TRW shareholders receive in the merger?
 
A:
 
In the merger, each share of common stock of TRW will be converted into the right to receive a number of shares of Northrop Grumman common stock equal to the exchange ratio described below.
 
Q:
 
How is the exchange ratio calculated?
 
A:
 
The exchange ratio for determining the number of shares of Northrop Grumman common stock that will be issued in exchange for each share of TRW common stock is calculated by dividing $60.00 by the average closing sales prices for a share of Northrop Grumman common stock on the New York Stock Exchange during the five consecutive trading days ending on (and including) the second trading day prior to the date the merger is completed. However, the five-day average closing sale price used in calculating the exchange ratio will not be less than $112.00 or greater than $138.00, even if the actual average sale price is lower than $112.00 or higher than $138.00. Therefore, the exchange ratio will not be greater than 0.5357 ($60.00/$112.00) or less than 0.4348 ($60.00/$138.00), even if the actual average sale price per share of Northrop Grumman common stock used to calculate the exchange ratio is less than $112.00 or greater than $138.00.
 
Q:
 
When will the merger be completed?
 
A:
 
The companies believe that the merger can be completed in the fourth quarter of 2002. However, the merger cannot be completed without first receiving the approvals of the Northrop Grumman stockholders and the TRW shareholders described in this joint proxy statement/prospectus, and the merger also must be approved by United States and European antitrust regulatory authorities, among other things. As a result, the merger could be delayed for some time, and if the companies do not receive the necessary stockholder, shareholder and governmental approvals, the companies would not be able to complete the merger.
 
Q:
 
When and where are the special meetings?
 
A:
 
The Northrop Meeting will be held at The Fairmont Miramar Hotel, 101 Wilshire Boulevard, Santa Monica, California 90401 at [_____] a.m. local time on [__________], 2002.
 
The TRW Meeting will be held at TRW’s executive offices at 1900 Richmond Road, Lyndhurst, Ohio 44124 at 8:30 a.m. local time on [_________], 2002.
 
Q:
 
What stockholder or shareholder approvals are required for the merger?
 
A:
 
Assuming a quorum is present at the Northrop Meeting, the holders of a majority of the votes cast at the Northrop Meeting must affirmatively vote to approve the issuance of the shares of Northrop Grumman common stock pursuant to the merger.
 
 
 
The holders of at least two-thirds of the outstanding shares of TRW common stock must affirmatively vote to adopt the merger agreement.
 
Q:
 
How does my board of directors recommend I vote?
 
A:
 
The board of directors of Northrop Grumman recommends that Northrop Grumman stockholders vote FOR the issuance of shares of Northrop Grumman common stock pursuant to the merger.
 
 
 
The board of directors of TRW (with one director absent) unanimously recommends that TRW shareholders vote FOR the adoption of the merger agreement.

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Q:
 
Whom should I contact if I have questions?
 
A:
 
Northrop Grumman stockholders should contact D.F. King & Co., Inc., Northrop Grumman’s proxy solicitor and information agent for the merger, at:
 
D.F. King & Co., Inc.
77 Water Street,
New York, New York 10005
Toll-free at (800) 549-6746
 
 
 
TRW shareholders should contact Georgeson Shareholder Communications Inc., TRW’s proxy solicitor and information agent for the merger, at:
 
Georgeson Shareholder Communications, Inc.
17 State Street, 10th Floor
New York, New York 10004
Toll-free at (866) 649-8030

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SUMMARY
 
This summary does not contain all of the information that may be important to Northrop Grumman stockholders and TRW shareholders and is qualified in its entirety by reference to the information contained elsewhere in, or incorporated by reference into, this joint proxy statement/prospectus. Stockholders are urged to read the entire joint proxy statement/prospectus, including the information set forth in the section entitled “RISK FACTORS” beginning on page 12, and the attached exhibits and annexes. See “ADDITIONAL INFORMATION” on page 103.
 
Overview of the Merger
 
Northrop Grumman, TRW and a wholly-owned subsidiary of Northrop Grumman known as Richmond Acquisition Corp. have entered into a merger agreement providing for Northrop Grumman’s acquisition of TRW through a merger of Richmond Acquisition Corp. with and into TRW. In the merger, each share of common stock of TRW will be converted into the right to receive a number of shares of Northrop Grumman common stock equal to the exchange ratio.
 
The exchange ratio will be determined by dividing $60.00 by the average of the closing sale prices for a share of Northrop Grumman common stock on the New York Stock Exchange for the five consecutive trading days ending on (and including) the second trading day before the day of the merger. However, in no event will the exchange ratio be greater than 0.5357 ($60.00/$112.00) or less than 0.4348 ($60.00/$138.00).
 
Promptly following completion of the merger, Northrop Grumman intends to divest TRW’s Automotive business either by selling that business to a third party or parties or by spinning it off to Northrop Grumman’s stockholders (including the former TRW shareholders), as described in greater detail in the section entitled “NORTHROP GRUMMAN AFTER THE MERGER—Proposed Sale or Spin Off of TRW’s Automotive Business” beginning on page 78.
 
Information About the Companies
 
Northrop Grumman (Page 23)
 
Northrop Grumman provides technologically advanced, innovative products, services and solutions in defense and commercial electronics, information technology, systems integration and nuclear and non-nuclear shipbuilding and systems. Northrop Grumman’s principal executive offices are located at 1840 Century Park East, Los Angeles, California 90067, and its telephone number is (310) 553-6262. As a prime contractor, principal subcontractor, partner or preferred supplier, Northrop Grumman participates in many high-priority defense and commercial technology programs in the United States and abroad. While Northrop Grumman conducts most of its business with the United States government, principally the Department of Defense, domestic and international commercial sales represent a significant portion of its business.
 
Based on the closing price of Northrop Grumman common stock on the New York Stock Exchange on July 12, 2002 ($111.01) and the number of shares of Northrop Grumman common stock outstanding on that date (112,958,926), Northrop Grumman’s market capitalization was approximately $12.54 billion.
 
TRW (Page 24).
 
TRW is a U.S.-based international company that provides advanced technology products and services. TRW’s principal executive offices are located at 1900 Richmond Road, Lyndhurst, Ohio 44124 and its telephone number is (216) 291-7000. The principal businesses of TRW and its subsidiaries are the design, manufacture and sale of products and the performance of systems engineering, research and technical services for industry and the

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United States Government in the automotive, information systems, defense and aerospace markets. TRW currently operates its business in the following four operating segments:
 
 
 
Automotive;
 
 
 
Systems;
 
 
 
Space & Electronics; and
 
 
 
Aeronautical Systems.
 
However, TRW has entered into an agreement to sell its Aeronautical Systems business to Goodrich Corporation, as described below in the section entitled “Sale of Aeronautical Business,” and therefore TRW will no longer operate that segment of its business upon the closing of that sale.
 
Based on the closing price of TRW common stock on the New York Stock Exchange on July 12, 2002, ($54.25), and the number of shares of TRW common stock outstanding on that date (128,263,552), TRW’s market capitalization was approximately $6.96 billion.
 
Richmond Acquisition Corp.
 
Richmond Acquisition Corp. is a newly-formed Ohio corporation that is wholly-owned by Northrop Grumman. Its principal executive offices are located at 1840 Century Park East, Los Angeles, California 90067 and its telephone number is (310) 553-6262. Richmond Acquisition Corp. was incorporated on June 27, 2002 in preparation for the merger described in this joint proxy statement/prospectus and has not conducted any business activities to date.
 
The Special Meetings (Pages 27 and 29)
 
Time, Date and Place
 
The special meeting of Northrop Grumman stockholders (which is referred to as the “Northrop Meeting”) will be held at [        ] a.m., local time, on [                    ], 2002 at:
 
The Fairmont Miramar Hotel  
101 Wilshire Boulevard  
Santa Monica, California 90401
 
The special meeting of TRW shareholders (which is referred to as the “TRW Meeting”) will be held at 8:30 a.m., local time, on [                    ], 2002 at:
 
TRW Inc.
1900 Richmond Road
Lyndhurst, Ohio 44124
 
Matter to be Considered at the Northrop Meeting (Page 27)
 
At the Northrop Meeting, Northrop Grumman stockholders will consider and vote upon a proposal to authorize the issuance of the shares of Northrop Grumman common stock pursuant to the merger (including shares to be issued upon exercise of TRW options deemed assumed by Northrop Grumman, or issued upon conversion of TRW restricted stock or restricted stock units, pursuant to the merger agreement).
 
Matter to be Considered at the TRW Meeting (Page 29)
 
At the TRW Meeting, TRW shareholders will consider and vote upon the adoption of the merger agreement.

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Record Dates, Shares Entitled to Vote and Votes Required
 
Northrop Grumman (Page 27)
 
Northrop Grumman stockholders are entitled to cast one vote for each share of Northrop Grumman common stock held at the close of business on [                    ], 2002, the record date for the Northrop Meeting. On that date, [                    ] shares of Northrop Grumman common stock were outstanding and entitled to vote, of which a total of [                ] shares were held by Northrop Grumman’s directors and executive officers.
 
The affirmative vote of a majority of the votes cast at the Northrop Meeting is required to approve the issuance of the shares of Northrop Grumman common stock pursuant to the merger.
 
TRW (Page 29)
 
TRW shareholders are entitled to cast one vote for each share of TRW common stock held at the close of business on [                    ], 2002, the record date for the TRW Meeting. On that date, [                    ] shares of TRW common stock were outstanding and entitled to vote, of which a total of [            ] shares were held by TRW’s directors and executive officers.
 
The holders of two-thirds of the outstanding shares of TRW common stock must affirmatively vote to adopt the merger agreement.
 
Changing a Vote After a Proxy Card Has Been Sent
 
Northrop Grumman Stockholders (Page 29)
 
Northrop Grumman stockholders may revoke their proxies at any time before they are voted by delivering a written notice of revocation to Northrop Grumman’s Corporate Secretary, by signing and delivering another BLUE proxy with a later date or by submitting a telephone or internet proxy at a date after the date of the previously submitted proxy and before the vote at the meeting. A Northrop Grumman stockholder attending the Northrop Meeting in person may revoke any previously submitted proxy card by giving notice of revocation to an inspector of election at the meeting or by voting at the Northrop Meeting. If any other matters are properly brought before the Northrop Meeting, the enclosed BLUE proxy card gives discretionary authority to the persons named on the card to vote the shares of Northrop Grumman common stock represented by the card in their discretion. Each Northrop Grumman stockholder whose shares are held in the name of a bank, broker or other nominee must follow the directions received from his or her bank, broker or other nominee holder in order to direct the vote of his or her Northrop Grumman shares.
 
TRW Shareholders (Page 29)
 
TRW shareholders may revoke their proxies at any time before they are voted by delivering a written notice of revocation to TRW’s Corporate Secretary, by signing and delivering another YELLOW proxy with a later date or by submitting a telephone or internet proxy at a date after the date of the previously submitted proxy and before the vote at the meeting. A TRW shareholder attending the TRW Meeting in person may revoke any previously submitted proxy by giving notice of revocation to an inspector of election at the meeting or by voting at the TRW Meeting. If any other matters are properly brought before the TRW Meeting, the enclosed YELLOW proxy card gives discretionary authority to the persons named on the card to vote the shares of TRW common stock represented by the card in their discretion. Each TRW shareholder whose shares are held in the name of a bank, broker or other nominee must follow the directions received from his or her bank, broker or other nominee holder in order to direct the vote of his or her TRW shares.
 
Certain TRW shares are held for the benefit of plan participants of The TRW Employee Stock Ownership and Savings Plan, the TRW Canada Stock Savings Plan, and the TRW UK Share Purchase Plan. These plans

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contain pass-through voting provisions for the participants of the Plans, with shares that are allocated to a participant’s account voted in accordance with the instructions of the participant by the trustees of the respective plan responsible for voting. Information relating to voting by participants in these stock-based TRW employee benefit plans is set forth in the section entitled “THE TRW MEETING—TRW Employee Plan Voting” beginning on page 30.
 
Quorum at the Special Meetings (Pages 28 and 31)
 
A quorum must be present in order to transact business at each of the special meetings. If a Northrop Grumman stockholder or a TRW shareholder submits a properly executed proxy card, telephonic proxy or internet proxy, even if that person abstains from voting, his or her shares will be counted for purposes of calculating whether a quorum is present at the Northrop Meeting and the TRW Meeting, as applicable.
 
A quorum at the Northrop Meeting requires a majority of the outstanding shares of Northrop Grumman common stock entitled to vote to be present or represented by proxy at the special meeting.
 
A quorum at the TRW Meeting requires thirty-five percent of the voting power of TRW’s outstanding stock to be present in person or represented by proxy at the TRW Meeting. However, since the merger agreement must be adopted by the holders of at least two-thirds of the outstanding shares of TRW common stock, the presence of a quorum alone might not mean that sufficient shares are present in person or by proxy to adopt the merger agreement.
 
Effect of Abstentions and Broker Non-Votes (Pages 28 and 31)
 
Both abstentions and “broker non-votes” will be counted in determining whether a quorum is present at the Northrop Meeting and the TRW Meeting.
 
Abstentions and “broker non-votes” will have no effect on the outcome of the Northrop Grumman proposal, assuming a quorum is present.
 
Since the vote at the TRW Meeting required to adopt the merger agreement is based upon a percentage of the total outstanding voting power of TRW rather than upon the percentage of the votes cast at the TRW Meeting, abstentions and “broker non-votes” will have the same practical effect as a vote against the adoption of the merger agreement.
 
Information relating to voting by participants in TRW’s stock-based employee benefit plans is set forth under the caption “THE TRW MEETING—TRW Employee Plan Voting” beginning on page 30.
 
It is very important that ALL Northrop Grumman stockholders and ALL TRW shareholders vote their shares, so please complete and return the enclosed proxy card today!
 
Board Recommendations
 
Northrop Grumman’s Board Recommendation (Page 32)
 
Northrop Grumman’s board of directors (with one director absent) has unanimously determined that the terms of the merger are fair to and in the best interests of Northrop Grumman stockholders, has approved the merger agreement and recommends that Northrop Grumman stockholders vote FOR the issuance of the shares of Northrop Grumman common stock pursuant to the merger (including shares to be issued upon exercise of TRW options deemed assumed by Northrop Grumman, or issued upon conversion of TRW restricted stock or restricted stock units, pursuant to the merger agreement).
 
TRW’s Board Recommendation (Page 33)
 
TRW’s board of directors (with one director absent) has unanimously determined that the terms of the merger are fair to and in the best interests of TRW shareholders, has unanimously approved the merger agreement and unanimously recommends that TRW shareholders vote FOR the adoption of the merger agreement.

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The Merger
 
The rights and obligations of the parties to the merger agreement are governed by the specific terms and conditions of the merger agreement and not by any summary or other information in this joint proxy statement/prospectus. Therefore, the information in this joint proxy statement/prospectus regarding the merger agreement and the merger is qualified in its entirety by reference to the merger agreement itself, a copy of which is attached as Annex A to this joint proxy statement/prospectus.
 
TRW Common Stock (Page 66)
 
For each share of TRW common stock, TRW shareholders will receive a number of shares of Northrop Grumman common stock equal to $60.00 divided by the average of the closing sale prices for a share of Northrop Grumman common stock on the New York Stock Exchange for the five consecutive trading days ending immediately prior to (and including) the second trading day before the closing date of the merger. However, in no event will the exchange ratio be more than 0.5357 ($60.00/$112.00) or less than 0.4348 ($60.00/$138.00). If the actual average sale price is less than $112.00, TRW shareholders will receive less than $60.00 in value of Northrop Grumman common stock per share of TRW common stock, and if the actual average sale price is more than $138.00, TRW shareholders will receive more than $60.00 in value of Northrop Grumman common stock per share of TRW common stock. See “RISK FACTORS—The Value of Northrop Grumman Common Stock Exchanged for TRW Common Stock Could Be Different Than $60.00 Per Share” on page 12. As described in the section entitled “Comparison of Rights of Holders of Northrop Grumman Common Stock and TRW Common Stock—Rights Plan,” each share of Northrop Grumman common stock issued pursuant to the merger will be issued together with an associated preferred share purchase right.
 
If the shares of Northrop Grumman common stock proposed to be issued pursuant to the merger were issued on July 17, 2002, then approximately 76,382,974 shares would be issued, based on an exchange ratio calculated using the average closing sales prices of Northrop Grumman common stock between July 10, 2002 and July 16, 2002. However, because this number is based on trading prices of Northrop Grumman common stock that continue to change, more or fewer shares of Northrop Grumman common stock ultimately may be issued in the merger.
 
TRW Employee and Director Stock Options (Page 67)
 
Each holder of options to acquire TRW common stock will be entitled to elect to have such options redeemed by TRW for cash prior to the effective time of the merger, unless either TRW or Northrop Grumman reasonably determines that there is an undue risk that such an election could be deemed to be a tender offer for TRW common stock by TRW. Any TRW options outstanding at the effective time of the merger will be deemed assumed by Northrop Grumman and will be subject to the same terms and conditions as in effect prior to the merger, except that any unvested TRW options will become vested at the effective time of the merger and the assumed options will be exercisable for shares of Northrop Grumman common stock, with the number of shares and exercise price determined pursuant to the merger agreement.
 
Other TRW equity-based awards will be cancelled in connection with the merger and the holders of such awards will receive either lump sum cash payments, shares of Northern Grumman common stock based on the exchange ratio, or have their awards assumed by Northrop Grumman. TRW strategic incentive program grants will be cancelled in exchange for lump sum cash payments calculated on the assumption that maximum performance goals are reached. However, grants under the 2001-2002 strategic incentive program will be cancelled in exchange for payments equal to one-half of the maximum value.
 
Opinions of Financial Advisers
 
Northrop Grumman (Page 40)
 
In connection with Northrop Grumman’s consideration of the merger, Northrop Grumman received financial advice from Salomon Smith Barney and Stephens Financial Group. Each of Salomon Smith Barney and

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Stephens Financial Group has provided separately its opinion to Northrop Grumman’s board of directors, each dated June 30, 2002, that as of that date and subject to the qualifications and limitations and based on the considerations in each respective opinion, the exchange ratio to be used in the merger was fair, from a financial point of view to Northrop Grumman.
 
The opinions of Salomon Smith Barney and Stephens Financial Group are attached as Annexes B and C, respectively, to this joint proxy statement/prospectus.
 
TRW (Page 45)
 
TRW’s board of directors considered the opinion of each of Goldman, Sachs & Co. and Credit Suisse First Boston Corporation, each dated June 30, 2002, to the effect that, as of that date, and based on and subject to the assumptions, qualifications and limitations described in their respective opinions, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to the holders of TRW common stock other than Northrop Grumman and its affiliates. The opinions of Goldman Sachs and Credit Suisse First Boston are attached as Annexes D and E, respectively, to this joint proxy statement/prospectus.
 
Redemption of TRW Preferred Stock (Page 67)
 
Pursuant to the merger agreement, each outstanding share of Cumulative Serial Preference Stock II, $4.40 Convertible Series 1 and each outstanding share of Cumulative Serial Preference Stock II, $4.50 Convertible Series 3, will be redeemed for cash by TRW prior to the record date for the TRW Meeting. Therefore, the holders of such securities will not be entitled to notice of, or to vote at, the TRW Meeting, and the approval of such TRW shareholders is not required to adopt the merger agreement.
 
Conditions to the Merger (Page 72)
 
The completion of the merger is subject to the satisfaction or valid waiver of the following conditions, among others:
 
 
 
Northrop Grumman stockholders must approve the issuance of the shares of Northrop Grumman common stock pursuant to the merger (including shares to be issued upon exercise of TRW options deemed assumed by Northrop Grumman, or issued upon conversion of TRW restricted stock or restricted stock units, pursuant to the merger agreement);
 
 
 
TRW shareholders must adopt the merger agreement;
 
 
 
the waiting periods under the HSR Act must have expired or terminated;
 
 
 
the European Commission must have approved the merger;
 
 
 
there must be no law or court order prohibiting the merger;
 
 
 
Northrop Grumman and TRW must each have performed in all material respects their respective covenants and obligations to be performed at or prior to the effective time of the merger pursuant to the merger agreement; and
 
 
 
the representations and warranties of the respective parties made in the merger agreement must be true and correct.
 
These conditions and other conditions to the merger are more fully described in the section entitled “THE MERGER AGREEMENT—Conditions to the Completion of the Merger” on page 72.
 
Termination of the Merger Agreement (Page 74)
 
Pursuant to the merger agreement, Northrop Grumman and TRW may agree to terminate the merger agreement at any time before the merger is completed.
 
Either Northrop Grumman or TRW may terminate the merger agreement if:
 
 
 
the merger is not consummated by December 31, 2002 (or by March 31, 2003, if the only conditions to the merger that have not been satisfied relate to antitrust or governmental approvals or other legal prohibitions on the merger);

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the Northrop Grumman stockholders do not approve the issuance of the Northrop Grumman common stock pursuant to the merger at the Northrop Meeting;
 
 
 
the TRW shareholders do not adopt the merger agreement at the TRW Meeting;
 
 
 
any law or regulation or legal action prohibits or restricts the consummation of the merger; or
 
 
 
there is a breach of a representation, warranty or covenant in the merger agreement by the other party, as described in greater detail in “THE MERGER AGREEMENT—Termination of the Merger Agreement” on page 74.
 
Northrop Grumman may terminate the merger agreement if:
 
 
 
TRW’s board of directors has changed its recommendation to the TRW shareholders regarding adoption of the merger agreement (whether or not permitted by the merger agreement);
 
 
 
TRW fails to call the TRW Meeting; or
 
 
 
TRW’s board of directors recommends a proposal other than the merger to its shareholders.
 
TRW may terminate the merger agreement if:
 
 
 
Northrop Grumman’s board of directors changes its recommendation to Northrop Grumman stockholders regarding the issuance of Northrop Grumman common stock pursuant to the merger (whether or not permitted by the merger agreement);
 
 
 
Northrop Grumman fails to call the Northrop Meeting; or
 
 
 
TRW’s board of directors has first complied with certain provisions of the non–solicitation covenant in the merger agreement, as described in “THE MERGER AGREEMENT—Termination of the Merger Agreement” on page 74.
 
Termination Fee and Expense Reimbursement
 
Termination Fee (Page 75)
 
TRW must pay Northrop Grumman a termination fee of $275 million if the merger agreement is terminated by Northrop Grumman under certain circumstances described in the section entitled “THE MERGER AGREEMENT—Termination Fee” on page 75.
 
Expense Reimbursement (Page 76)
 
Northrop Grumman must reimburse TRW for up to $50 million of documented expenses if the merger agreement is terminated by TRW because Northrop Grumman’s board of directors changes its recommendation to its stockholders or Northrop Grumman fails to call the Northrop Meeting. See “THE MERGER AGREEMENT—Expense Reimbursement.”
 
No Solicitation (Page 76)
 
The merger agreement contains non-solicitation provisions which prohibit TRW from soliciting or engaging in discussions or negotiations regarding a competing proposal to the merger. There are exceptions to these prohibitions if TRW receives a proposal for a transaction from a third party under circumstances set forth in the merger agreement.
 
Certain Federal Income Tax Consequences of the Merger (Page 59)
 
Consummation of the merger is conditioned upon the receipt by Northrop Grumman and TRW of tax opinions to the effect that, for federal income tax purposes, (a) the merger will constitute a “reorganization”

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within the meaning of Section 368(a) of the Internal Revenue Code and (b) each of Northrop Grumman, Richmond Acquisition Corp., and TRW will be a party to the reorganization within the meaning of Section 368(b) of the Internal Revenue Code. Assuming that the merger qualifies as a reorganization, TRW shareholders will not recognize any gain or loss for United States federal income tax purposes on the exchange of their shares of TRW common stock for shares of Northrop Grumman common stock in the merger, except for any gain or loss attributable to cash received instead of fractional shares of Northrop Grumman common stock. The tax consequences to TRW shareholders of the merger will depend on each shareholder’s particular circumstances. TRW shareholders should consult their tax advisers for a full understanding of the tax consequences of the merger to them.
 
Dividend Policies
 
Northrop Grumman
 
The holders of Northrop Grumman common stock receive dividends if and when declared by Northrop Grumman’s board of directors out of legally available funds. Northrop Grumman has paid a cash dividend of $0.40 per share of common stock in each fiscal quarter beginning with (and including) the fiscal quarter ended March 31, 1993 through (and including) the fiscal quarter ended June 30, 2002.
 
After the merger, Northrop Grumman expects to continue paying quarterly cash dividends on a basis consistent with Northrop Grumman’s past practice. However, the declaration and payment of dividends will depend upon business conditions, operating results, capital and reserve requirements, covenants in its debt instruments and Northrop Grumman’s board of directors’ consideration of other relevant factors. Northrop Grumman can give TRW shareholders no assurance that Northrop Grumman will continue to pay dividends on its common stock in the future.
 
TRW
 
The holders of TRW common stock receive dividends if and when declared by TRW’s board of directors out of legally available funds. For the past three fiscal quarters, with the last quarter ended June 30, 2002, TRW has paid a cash dividend of $0.175 per share of common stock.
 
Should the merger be consummated, TRW will be a wholly-owned subsidiary of Northrop Grumman and will cease to be a public company. From and after the merger, TRW will not declare or pay dividends on TRW’s shares, other than any dividends declared prior to the effective time of the merger with a payment date after the effective time of the merger.
 
Pursuant to the merger agreement, until the effective time of the merger, TRW is permitted to pay regular quarterly cash dividends not in excess of $0.175 per share and dividends on its preferred stock in accordance with the terms of such preferred stock.
 
Material Differences in Rights of Stockholders/Shareholders
 
The governing documents of Northrop Grumman and TRW vary, and therefore TRW shareholders will have different rights once they become Northrop Grumman stockholders. Similarly, the laws of Ohio, TRW’s state of incorporation, differ from those of Delaware, Northrop Grumman’s state of incorporation. These differences are described in more detail under “COMPARISON OF RIGHTS OF HOLDERS OF NORTHROP GRUMMAN COMMON STOCK AND TRW COMMON STOCK” beginning on page 95.
 
Sale of Aeronautical Systems Business
 
On June 18, 2002, TRW entered into a definitive agreement with Goodrich Corporation for the sale of TRW’s Aeronautical Systems business for a gross purchase price of $1.5 billion in cash, subject to adjustment. This

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business includes aircraft engine and flight controls, cargo handling systems, power generation and management, missile actuation, nacelle actuation, hoists and winches, flexible shafts and couplings, and comprehensive aftermarket support and services, including asset management and service-level guarantees for a number of commercial airlines. This sale is subject to the receipt of customary United States and European regulatory approvals. Northrop Grumman intends to complete the sale of TRW’s Aeronautical Systems business pursuant to the Goodrich agreement following completion of the merger (if it has not already been completed). TRW currently expects the sale to close in the fourth quarter of 2002.
 
Dissenters’ Rights (Page 62)
 
If the merger is consummated, TRW shareholders will have certain rights under the Ohio Revised Code to dissent and demand dissenters’ rights and to receive payment of the fair cash value of their TRW shares. TRW shareholders who perfect dissenters’ rights by complying with the procedures set forth in Sections 1701.84 and 1701.85 of the Ohio Revised Code will have the fair cash value of their TRW shares determined by an Ohio trial court and will be entitled to receive a payment equal to the fair cash value of those shares from the corporation surviving the merger. In addition, any dissenting TRW shareholders would be entitled to receive payment of a fair rate of interest, at a rate determined by the trial court, on the amount determined to be the fair cash value of their TRW shares. In determining the fair cash value of the shares, the court is required to take into account all relevant factors, excluding any appreciation or depreciation in market value resulting from the merger. Accordingly, the court’s determination could be based upon considerations other than, or in addition to, the market value of TRW common stock, including, among other things, asset values and earning capacity. The shares of TRW common stock held by any person who wants to dissent but fails to perfect or who effectively withdraws or loses the right to dissent under Section 1701.85 of the Ohio Revised Code will be converted into, as of the effective time of the merger, the right to receive the merger consideration. A copy of Sections 1701.84 and 1701.85 of the Ohio Revised Code is attached as Annex H to this joint proxy statement/prospectus.

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RISK FACTORS
 
Northrop Grumman stockholders and TRW shareholders should read carefully this joint proxy statement/prospectus and the other documents attached to or incorporated by reference into this joint proxy statement/prospectus. Northrop Grumman stockholders and TRW shareholders should, in particular, read and consider the following risk factors, as well as the other risks associated with each of the businesses of Northrop Grumman and TRW, because these risks will also affect the combined businesses should the merger be completed. These other risks associated with the businesses of Northrop Grumman and TRW can be found in Northrop Grumman’s and TRW’s respective Annual Reports on Form 10-K for the year ended December 31, 2001 and Northrop Grumman’s and TRW’s documents filed subsequent thereto with the SEC and incorporated by reference into this document. Additional risks and uncertainties not presently known to Northrop Grumman or TRW also may adversely affect the merger and Northrop Grumman following the merger.
 
Successful Integration of the Companies’ Businesses is Not Assured
 
Integrating and coordinating the operations and personnel of Northrop Grumman and TRW will involve complex technological, operational and personnel-related challenges. This process will be time-consuming and expensive and may disrupt the business of either or both companies. In addition, ongoing elements of integration of Northrop Grumman’s recent past acquisition of Newport News Shipbuilding may require significant management time and attention. While the integration of Newport News is expected to be substantially complete by the time of the merger, the integration of these companies, and the ultimate integration of TRW’s businesses and operations, may not timely result in the full benefits expected by Northrop Grumman. The difficulties, costs and delays that could be encountered may include:
 
 
 
unanticipated issues in integrating the information, communications and other systems;
 
 
 
negative impacts on employee morale and performance as a result of job changes and reassignments;
 
 
 
difficulties attracting and retaining key personnel;
 
 
 
loss of customers;
 
 
 
unanticipated incompatibility of systems, procedures and operating methods;
 
 
 
unanticipated costs of terminating or relocating facilities and operations; and
 
 
 
the effect of complying with any government imposed organizational conflict-of-interest rules.
 
The Value of Northrop Grumman Common Stock Exchanged for TRW Common Stock Could Be Different Than $60.00 Per Share
 
In the merger, Northrop Grumman will issue to TRW shareholders a number of shares of Northrop Grumman common stock designed to have a value of $60.00 for each outstanding share of TRW common stock. However, because of the manner in which the exchange ratio is calculated, the number of shares of Northrop Grumman common stock actually received per share of TRW common stock will have a value of $60.00 per share only if the average closing sales prices of the Northrop Grumman common stock for the five consecutive trading days ending immediately prior to (and including) the second trading day before the closing date of the merger is between $112.00 and $138.00. TRW shareholders will receive less than $60.00 in value per TRW share if the market price of the Northrop Grumman common stock is less than $112.00 at the time the exchange ratio is calculated. Conversely, TRW shareholders will receive more than $60.00 in value per TRW share if the market price of the Northrop Grumman common stock is more than $138.00 at the time the exchange ratio is calculated. In addition, no adjustment will be made to reflect the trading price of Northrop Grumman common stock on the trading day before the closing date of the merger, and TRW shareholders may receive more or less than the amount they would receive if the closing occurred on the day the exchange ratio was calculated.
 
Resales of Northrop Grumman Common Stock Following the Merger May Cause the Market Price to Fall
 
As of July 12, 2002, Northrop Grumman had 112,958,926 shares of common stock outstanding and 5,774,482 shares of common stock subject to outstanding options to purchase Northrop Grumman common

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stock. Northrop Grumman expects that it will issue a maximum of 76,382,974 shares of Northrop Grumman common stock in connection with the merger. The issuance of these new Northrop Grumman shares, and the sale of additional shares of Northrop Grumman common stock that may become eligible for sale in the public market from time to time upon exercise of options or other rights, will increase the total number of shares of Northrop Grumman common stock outstanding. This increase could be very substantial and could have the effect of depressing the market price for Northrop Grumman common stock.
 
The Trading Prices of Northrop Grumman Common Stock and TRW Common Stock May be Affected by Different Factors
 
Upon completion of the merger, holders of TRW common stock will become holders of Northrop Grumman common stock. Northrop Grumman’s business differs from that of TRW, and Northrop Grumman’s results of operations, as well as the trading price of Northrop Grumman common stock, may be affected by factors different from those affecting TRW’s results of operations and the trading price of TRW common stock as a separate company. Therefore, events or circumstances which might not have caused TRW’s shares to decline in value might result in a decline in the value of Northrop Grumman common stock, and events or circumstances that might have caused an increase in the value of TRW common stock might not result in an increase in the value of Northrop Grumman common stock.
 
Northrop Grumman Will Have More Indebtedness After the Merger
 
Northrop Grumman’s indebtedness as of June 30, 2002 was approximately $[            ] billion. Northrop Grumman’s pro forma indebtedness as of December 31, 2001, after giving effect to the merger (as described in “Northrop Grumman Selected Historical and Unaudited Pro Forma Condensed Combined Financial Data”) was approximately $[            ] billion. As a result of the increase in debt, demands on the cash resources of Northrop Grumman will increase after the merger, which could have important effects on an investment in Northrop Grumman common stock. For example, the increased levels of indebtedness could, among other things:
 
 
 
reduce funds available for investment in research and development and capital expenditures;
 
 
 
adversely affect the cost and availability of funds from commercial lenders, debt financing transactions and other sources; and
 
 
 
create competitive disadvantages compared to other companies with lower debt levels.
 
Northrop Grumman expects that a significant portion of the debt assumed in connection with the merger will be reduced or transferred in connection with a sale or spin off of the TRW Automotive business. However, no final decisions have been made as to how much debt would be transferred, and there can be no assurance that a sale, spin off or other transfer of the TRW Automotive business will occur. The pro forma financial information beginning on page 82 assumes a debt reduction of $[            ] billion in the case of a sale of TRW’s Automotive business and the transfer to or assumption of $[        ] billion of debt by TRW Automotive Inc. in the case of a spin off of TRW’s Automotive business.
 
The Purchase Price Allocations of the Newport News Acquisition May Have a Material Effect on the Pro Forma Financial Information
 
The final adjustment of the purchase price of Northrop Grumman’s recent Newport News acquisition has not been determined as of July 15, 2002. There can be no assurance that such adjustments will not have a material impact on the pro forma financial statements. See “UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION” beginning on page 82.
 
Risks from the Pending Sale of the Aeronautical Systems Business
 
The proposed sale of TRW’s Aeronautical Systems business to Goodrich Corporation is subject to the satisfaction of certain conditions, including the receipt of United States and European governmental approvals,

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which may not be satisfied. In addition, the agreement governing this proposed sale provides for a purchase price adjustment which may result in TRW realizing less than the $1.5 billion gross purchase price specified in the agreement. TRW has indicated that the proceeds from the sale of the aeronautical systems business would be used to pay off indebtedness of TRW, and Northrop Grumman currently anticipates applying the proceeds in the same manner to the extent the sale closes after consummation of the merger. Although neither TRW nor Northrop Grumman is aware of any reason that the sale will not close as anticipated, it is possible that the transaction will not close or that the proceeds generated from the sale will be less than currently anticipated as a result of purchase price adjustments. If the transaction does not close, or if the purchase price adjustment reduces the proceeds realized from the sale, TRW and Northrop Grumman (following consummation of the merger), will not fully realize the anticipated benefits of reduction of indebtedness.
 
Risks Associated With the Proposed Sale or Spin Off of TRW’s Automotive Business
 
As described in greater detail in the section entitled “THE MERGER—Plans for TRW After the Merger,” Northrop Grumman currently intends to sell TRW’s Automotive business to a third party or parties or to spin off the business to Northrop Grumman’s stockholders (including the former TRW shareholders) after the merger. However, there can be no assurance as to the value that may be realized from a sale of the Automotive business or as to the market value of its stock in the event of a spin off. There is also no assurance that the various conditions to such a sale or spin off can be satisfied, including receiving required governmental and other approvals, or what the economic proceeds or benefits from the separation of the Automotive business will be.

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FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
 
Certain statements and assumptions in this joint proxy statement/prospectus and in the documents attached or incorporated by reference contain or are based on “forward-looking” information and involve risks and uncertainties. Northrop Grumman and TRW believe that such statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking information includes, among other things, statements as to the impact of the proposed merger on revenues and earnings, and other statements with respect to the financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive positions, growth opportunities, plans and objectives of management, and other matters. Such statements are subject to numerous assumptions and uncertainties, many of which are outside of Northrop Grumman’s and TRW’s control. These include completion of the merger, governmental regulatory processes, Northrop Grumman’s ability to successfully integrate the operations of TRW, achieve a successful transaction or other resolution with respect to TRW’s Automotive business, assumptions with respect to future revenues, expected program performance and cash flows, the outcome of contingencies including, the timing and amounts of tax payments, litigation, environmental remediation, divestitures of businesses, and anticipated costs of capital investments. Northrop Grumman’s and TRW’s respective operations are subject to various additional risks and uncertainties resulting from their positions as suppliers, either directly or as subcontractors or team members, to the United States government and its agencies, as well as to foreign governments and agencies.
 
Actual outcomes are dependent upon many factors. Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, among others:
 
 
 
Northrop Grumman’s and TRW’s dependence on sales to the United States government;
 
 
 
Northrop Grumman’s and TRW’s successful performance of internal plans;
 
 
 
customers’ budgetary restraints;
 
 
 
customer changes in short-range and long-range plans;
 
 
 
domestic and international competition in both the defense and commercial areas;
 
 
 
product performance;
 
 
 
continued development and acceptance of new products;
 
 
 
performance issues with key suppliers and subcontractors;
 
 
 
government import and export policies;
 
 
 
acquisition or termination of government contracts, which may include termination for the convenience of the government;
 
 
 
the outcome of political and legal processes;
 
 
 
legal, financial and governmental risks related to international transactions and global needs for military and commercial aircraft, electronic systems and support, information technologies, naval vessels, space systems and related products and technologies; and
 
 
 
other economic, political and technological risks and uncertainties and other risk factors set out in Northrop Grumman’s and TRW’s filings from time to time with the SEC, including, without limitation, Northrop Grumman’s and TRW’s reports on Form 10-K and Form 10-Q.
 
Words such as “anticipates,” “believes,” “estimates,” “expects,” “hopes,” “targets” or similar expressions are intended to identify forward-looking statements, which speak only as of the date of this joint proxy statement/prospectus, and in the case of documents incorporated by reference, as of the date of those documents. Neither Northrop Grumman nor TRW undertakes any obligation to update or release any revisions to any forward-looking statements or to report any events or circumstances after the date of this joint proxy statement/prospectus or to reflect the occurrence of unanticipated events, except as required by law.

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SELECTED HISTORICAL AND UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL DATA OF NORTHROP GRUMMAN
 
The following table sets forth selected historical consolidated financial data for Northrop Grumman Systems Corporation (formerly Northrop Grumman Corporation and referred to as “Northrop Systems”) for each of the years in the four-year period ended December 31, 2000 and for Northrop Grumman for the period ended December 31, 2001, and selected unaudited pro forma condensed combined financial data of Northrop Grumman, Newport News Shipbuilding (which was acquired by Northrop Grumman in January 2002), and TRW as of June 30, 2002 and for the six months ended June 30, 2002 and the year ended December 31, 2001. Historical consolidated financial data for the years ended December 31, 2000, 1999, 1998 and 1997 have been derived from, and are qualified by reference to, the audited consolidated financial statements and notes thereto filed by Northrop Systems with the SEC. Historical consolidated financial data for the year ended December 31, 2001 have been derived from, and are qualified by reference to, the audited consolidated financial statements and notes thereto filed by Northrop Grumman with the SEC. The selected historical financial data for each of the years in the four-year period ending December 31, 2000 do not give effect to the Newport News acquisitions. The historical operating data for the period ended December 31, 2001 includes nine months of operating results of Litton Industries, Inc. subsequent to its acquisition on April 3, 2001 and one month of Newport News’ operating results subsequent to the acquisition on November 29, 2001.
 
Northrop Grumman stockholders and TRW shareholders should read this summary together with the financial statements referred to below and those incorporated by reference in this joint proxy statement/prospectus, and the accompanying notes and management’s discussion and analysis of operations and financial conditions of Northrop Systems, Northrop Grumman, Litton, Newport News and TRW contained in such reports.
 
The Unaudited Pro Forma Condensed Combined Financial Data is based upon the historical financial statements of Northrop Grumman, Newport News and TRW adjusted to give effect to the Newport News and TRW acquisitions. The pro forma amounts have been developed from (a) the audited consolidated financial statements of Northrop Grumman contained in its Annual Report on Form 10-K for the fiscal year ended December 31, 2001, which is incorporated by reference in this joint proxy statement/prospectus, (b) the unaudited consolidated financial statements contained in Litton’s Quarterly Report on Form 10-Q for the period ended January 31, 2001, (c) the unaudited consolidated financial statements of Newport News contained in its Quarterly Report on Form 10-Q for the period ended September 16, 2001 and (d) the audited consolidated financial statements of TRW contained in its Annual Report on Form 10-K for the year ended December 31, 2001, which is incorporated by reference in this joint proxy statement/prospectus. In the event that the merger is completed, Northrop Grumman has indicated that it would sell or spin off the Automotive operations of TRW. There currently is no agreement for the sale of the Automotive business and there can be no assurance that a sale or spin off will be consummated or with respect to the terms of such sale or spin off. Such a transaction would materially change the pro forma information provided herein.
 
The final determination and allocation of the purchase price paid for the Newport News and TRW acquisitions may differ from the amounts assumed in this Unaudited Pro Forma Condensed Combined Financial Data.
 
The acquisition of Litton, which is valued at approximately $5.2 billion, including the assumption of Litton’s net debt of $1.3 billion, is accounted for using the purchase method of accounting. Under the purchase method of accounting, the purchase price is allocated to the underlying tangible and intangible assets acquired and liabilities assumed based on their respective fair market values, with the excess recorded as goodwill. The Unaudited Pro Forma Condensed Combined Financial Data reflects preliminary estimates of the fair market value of the Litton assets acquired and liabilities assumed and the related allocations of purchase price, and preliminary estimates of adjustments necessary to conform Litton data to Northrop Grumman’s accounting policies. Northrop Grumman is currently reviewing the preliminary estimates of the fair market value of the Litton assets acquired and liabilities assumed, including valuations associated with certain contracts and restructuring activities and preliminary valuation study results for workers’ compensation accruals and retiree

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benefits assets and liabilities. The final determination of the fair market value of the Litton assets acquired and liabilities assumed and the final allocation of the Litton purchase price may differ from the amounts assumed in the Unaudited Pro Forma Condensed Combined Financial Data. Adjustments to the purchase price allocations were finalized by June 30, 2002, and will be reflected in Northrop Grumman’s Quarterly Report on Form 10-Q for the period ended June 30, 2002 and in subsequent filings. There can be no assurance that such adjustments will not be material.
 
The acquisition of Newport News by Northrop Grumman in January 2002, which is valued at approximately $2.6 billion, including the assumption of Newport News’ net debt of $400 million, is accounted for using the purchase method of accounting. Northrop Grumman is in the early stages of the fair market value and accounting conformance evaluation process with respect to the Newport News acquisition. The Unaudited Pro Forma Condensed Combined Financial Data reflects preliminary estimates of the fair market value of the Newport News assets acquired and liabilities assumed and the related allocations of purchase price and preliminary estimates of adjustments to conform Newport News to Northrop Grumman’s accounting policies. Adjustments to the Newport News purchase price allocation are expected to be finalized by June 30, 2002, and will be reflected in future filings. There can be no assurance that such adjustments will not be material.
 
As of the date of this joint proxy statement/prospectus, Northrop Grumman has not performed the valuation studies necessary to estimate the fair market value of TRW assets to be acquired and liabilities to be assumed and the related allocations of purchase price, nor has it identified the adjustments necessary, if any, to conform TRW data to Northrop Grumman’s accounting policies. Accordingly, Northrop Grumman has used the historical book values of the assets and liabilities of TRW and has used the historical revenue recognition policies of TRW to prepare the Unaudited Pro Forma Condensed Combined Financial Data, with the excess of the purchase price over the historical net assets of TRW recorded as goodwill and other purchased intangibles. Once Northrop Grumman has completed the valuation studies necessary to finalize the required TRW purchase price allocations and identified any necessary conforming changes, such pro forma financial data will be subject to adjustment. There can be no assurance that such adjustments will not be material.
 
The Unaudited Pro Forma Condensed Combined Financial Data is provided for illustrative purposes only and does not purport to represent what the actual consolidated results of operations or the consolidated financial position of Northrop Grumman would have been had Northrop Grumman’s acquisition of TRW and the Litton and Newport News acquisitions occurred on the dates assumed, nor is it necessarily indicative of future consolidated results of operations or financial position.
 
The Unaudited Pro Forma Condensed Combined Financial Data does not include the realization of cost savings from operating efficiencies, synergies or other restructurings resulting from the Litton, Newport News and TRW acquisitions.

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The Unaudited Pro Forma Condensed Combined Financial Data should be read in conjunction with the separate historical consolidated financial statements and accompanying notes of Northrop Grumman and TRW that are incorporated by reference in this joint proxy statement/prospectus and the Unaudited Pro Forma Condensed Combined Financial Statements beginning on page 82.
 
      
Northrop
Grumman/
TRW
Pro Forma
Six Months
Ended
June 30,
2002
($ in millions)

    
Northrop Grumman Historical Data
($ in millions)

                        
           
Six
Months
Ended
June 30,
2002

    
Six
Months
Ended
June 30,
2001

  
Northrop Grumman Historical Data
Year Ended December 31,
($ in millions)

                   
2001

  
2000

  
1999

  
1998

  
1997

Operating Data
                                             
Net sales
                                             
Income from continuing operations, net of tax
                                             
Basic earnings per share, from continuing operations
                                             
Diluted earnings per share, from continuing operations
                                             
Cash dividends per common share
                                             
Balance Sheet Data
                                             
Total assets
                                             
Total long term obligations
                                             
Redeemable preferred stock
                                             

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SELECTED HISTORICAL FINANCIAL DATA OF TRW
 
The following is a summary of selected consolidated financial data of TRW for each of the years in the five-year period ended December 31, 2001 and for the six months ended June 30, 2002 and June 30, 2001. This information is derived from the audited consolidated financial statements of TRW contained in its Annual Report on Form 10-K for the fiscal year ended December 31, 2001. This summary should be read together with the financial statements which are incorporated by reference in this joint proxy statement/prospectus and their accompanying notes and management’s discussion and analysis of operations and financial conditions of TRW contained in such reports.
 
      
TRW
($ in millions)

                        
      
Six Month Ended June 30, 2002

    
Six Months Ended June 30, 2001

  
TRW
Year ended December 31
($ in millions)

              
2001

  
2000

  
1999

  
1998

  
1997

Operating Data
                                      
Net sales
                                      
Income (loss) from continuing operations, net of tax
                                      
Gain (loss) from discontinued operations, net of tax
                                      
Basic earnings (loss) per share, from continuing operations
                                      
Diluted earnings (loss) per share, from continuing operations
                                      
Cash dividends per common share
                                      
Balance Sheet Data
                                      
Total assets
                                      
Total long term obligations
                                      

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COMPARATIVE PER SHARE INFORMATION
 
The following table summarizes unaudited per share information for Northrop Grumman and TRW on a historical basis, pro forma combined basis for Northrop Grumman and equivalent pro forma combined basis for TRW. The following information should be read in conjunction with the audited consolidated financial statements of Northrop Grumman and TRW, and the Unaudited Pro Forma Condensed Combined Financial Statements beginning on page 82. The pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if Northrop Grumman’s acquisition of TRW and the Litton and Newport News acquisitions had been completed as of the beginning of the period presented, nor is it necessarily indicative of the future operating results or financial position of the combined companies. The historical book value per share is computed by dividing total stockholders’ equity by the number of common shares outstanding at the end of the period. The pro forma per share earnings from continuing operations are computed by dividing the pro forma income from continuing operations available to holders of common stock by the pro forma weighted average number of shares outstanding. The pro forma combined book value per share is computed by dividing total pro forma stockholders’ equity by the pro forma number of common shares outstanding at the end of the period. TRW equivalent pro forma combined per share amounts are calculated by multiplying Northrop Grumman pro forma combined per share amounts by [    ], the percentage of a share of Northrop Grumman common stock that would be exchanged for each share of TRW common stock pursuant to the merger, based upon a Northrop Grumman common stock price of $[    ] per share, which represents the five-day average of the closing sales prices for a share of Northrop Grumman common stock on the New York Stock Exchange from [            ], 2002 through [            ], 2002. The historical per share information of TRW was derived from TRW’s historical annual financial statements.
 
      
Six Months Ended June 30, 2002

    
Year Ended December 31, 2001

Northrop Grumman—Historical
             
Historical per common share:
             
Income per basic share
             
Income per diluted share
             
Dividends declared—Common
             
Dividends declared—Preferred
             
Book value per share
             
TRW—Historical
             
Historical per common share:
             
Income from continuing operations per basic share
             
Income from continuing operations per diluted share
             
Dividends declared—Common
             
Dividends declared—Preferred
             
Book value per share
             
Unaudited Pro Forma Combined
             
Unaudited pro forma per share of Northrop
Grumman common shares:
             
Income per basic share
             
Income per diluted share
             
Dividends declared—Common
             
Dividends declared—Preferred
             
Book value per share
             
Unaudited Pro Forma TRW Equivalents
             
Unaudited pro forma per share of TRW common shares:
             
Income from continuing operations per basic share
             
Income from continuing operations per diluted share
             
Dividends declared—Common
             
Dividends declared—Preferred
             
Book value per share
             

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COMPARATIVE MARKET DATA
 
Northrop Grumman common stock trades on the New York Stock Exchange and on the Pacific Exchange under the symbol “NOC” and TRW common stock trades on the New York Stock Exchange, the Pacific Exchange, the Chicago Stock Exchange, the Philadelphia Stock Exchange, the London Stock Exchange and the Frankfurt Stock Exchange under the symbol “TRW.” The following table presents trading information for Northrop Grumman and TRW common stock on February 21, 2002, March 1, 2002, June 28, 2002 and July 16, 2002. February 21, 2002 was the last trading day before the public announcement of Northrop Grumman’s proposal for a business combination of Northrop Grumman and TRW, March 1, 2002 was the last trading day before the date of the commencement of Northrop Grumman’s offer to exchange all outstanding shares of TRW common stock, June 28, 2002 was the last trading day before the merger agreement was announced and July 16, 2002 was the last trading day before the date of this joint proxy statement/prospectus. Northrop Grumman stockholders and TRW shareholders should read the information presented below in conjunction with “COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION” on the following page.
 
    
Northrop Grumman
Common Stock

  
TRW
Common Stock

    
High

  
Low

  
Closing

  
High

  
Low

  
Closing

February 21, 2002
  
$
118.89
  
$
114.81
  
$
117.80
  
$
40.05
  
$
38.91
  
$
39.80
March 1, 2002
  
 
108.00
  
 
106.80
  
 
107.75
  
 
50.61
  
 
50.00
  
 
50.05
June 28, 2002
  
 
128.82
  
 
125.00
  
 
125.00
  
 
56.98
  
 
56.21
  
 
56.98
July 16, 2002
  
 
111.20
  
 
106.70
  
 
108.50
  
 
54.15
  
 
52.95
  
 
53.20
 
For illustrative purposes, the following table provides TRW equivalent per share information on each of the relevant dates assuming the highest ($60.00/$112.00) and the lowest ($60.00/$138.00) possible exchange ratios. TRW equivalent per share amounts are calculated by multiplying Northrop Grumman per share amounts by the exchange ratio.
 
   
Northrop Grumman
Common Stock

 
TRW Equivalent per share at Highest Exchange Ratio

 
TRW Equivalent per share at Lowest Exchange Ratio

Date

 
High

 
Low

 
Close

 
High

 
Low

 
Close

 
High

 
Low

 
Close

February 21, 2002
 
$
118.89
 
$
114.81
 
$
117.80
 
$
63.69
 
$
61.51
 
$
63.11
 
$
51.69
 
$
49.92
 
$
51.22
March 1, 2002
 
 
108.00
 
 
106.80
 
 
107.75
 
 
57.86
 
 
57.21
 
 
57.72
 
 
46.96
 
 
46.43
 
 
46.85
June 28, 2002
 
 
128.82
 
 
125.00
 
 
125.00
 
 
69.01
 
 
66.96
 
 
66.96
 
 
56.01
 
 
54.35
 
 
54.35
July 16, 2002
 
 
111.20
 
 
106.70
 
 
108.50
 
 
59.57
 
 
57.16
 
 
58.13
 
 
48.35
 
 
46.39
 
 
47.17

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COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION
 
Northrop Grumman common stock is listed on the New York Stock Exchange and the Pacific Exchange under the symbol “NOC.” TRW common stock is listed on the New York Stock Exchange, the Pacific Exchange, the Chicago Stock Exchange, the Philadelphia Stock Exchange, the London Stock Exchange and the Frankfurt Stock Exchange under the symbol “TRW.” The table below sets forth, for the calendar quarters indicated, the high and low sales prices per share reported on the New York Stock Exchange for such securities and the dividends declared on Northrop Grumman common stock and on TRW common stock for the periods indicated.
 
    
Northrop Grumman
Common Stock

  
Dividends

  
TRW
Common Stock

  
Dividends

    
High

  
Low

     
High

  
Low

  
1999
                                         
March 31, 1999
  
$
73.25
  
$
57.00
  
$
0.40
  
$
58.63
  
$
44.75
  
$
0.33
June 30, 1999
  
 
73.31
  
 
57.75
  
 
0.40
  
 
54.94
  
 
41.94
  
 
0.33
September 30, 1999
  
 
75.69
  
 
59.94
  
 
0.40
  
 
57.19
  
 
48.06
  
 
0.33
December 31, 1999
  
 
62.31
  
 
49.00
  
 
0.40
  
 
53.94
  
 
41.50
  
 
0.33
2000
                                         
March 31, 2000
  
 
55.19
  
 
43.56
  
 
0.40
  
 
64.13
  
 
39.81
  
 
0.33
June 30, 2000
  
 
80.25
  
 
52.44
  
 
0.40
  
 
59.94
  
 
43.19
  
 
0.33
September 30, 2000
  
 
91.81
  
 
65.63
  
 
0.40
  
 
52.13
  
 
40.31
  
 
0.33
December 31, 2000
  
 
92.50
  
 
74.13
  
 
0.40
  
 
42.00
  
 
29.88
  
 
0.35
2001
                                         
March 31, 2001
  
 
97.54
  
 
79.81
  
 
0.40
  
 
40.34
  
 
33.86
  
 
0.35
June 30, 2001
  
 
95.37
  
 
77.60
  
 
0.40
  
 
44.95
  
 
33.48
  
 
0.35
September 30, 2001
  
 
102.97
  
 
77.00
  
 
0.40
  
 
44.35
  
 
28.01
  
 
0.35
December 31, 2001
  
 
108.97
  
 
89.02
  
 
0.40
  
 
40.51
  
 
30.01
  
 
0.18
2002
                                         
March 31, 2002
  
 
117.80
  
 
96.00
  
 
0.40
  
 
51.61
  
 
34.82
  
 
0.18
June 30, 2002
  
 
135.00
  
 
111.30
  
 
0.40
  
 
57.05
  
 
50.81
  
 
0.18
July 16, 2002
  
 
124.35
  
 
104.99
  
 
—  
  
 
57.90
  
 
52.16
  
 
—  
 
On June 28, 2002, the last full trading day prior to the announcement of the merger, the last sale price per share of Northrop Grumman common stock on the New York Stock Exchange was $125.00 and the last sale price per share of TRW common stock was $56.98. On July 16, 2002, the last full trading day prior to the date of this joint proxy statement/prospectus, the last sale price per share of Northrop Grumman common stock on the New York Stock Exchange was $108.50 and the last sale price per share of TRW common stock was $53.20.
 
Stockholders should obtain current market quotations for Northrop Grumman and TRW common stock before making any decision regarding the merger or the other matters described in this joint proxy statement/prospectus.

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INFORMATION ABOUT NORTHROP GRUMMAN AND TRW
 
Northrop Grumman
 
Northrop Grumman provides technologically advanced, innovative products, services and solutions in defense and commercial electronics, military aircraft, information technology, systems integration and nuclear and non-nuclear shipbuilding and systems. As a prime contractor, principal subcontractor, partner, or preferred supplier, Northrop Grumman participates in many high-priority defense and commercial technology programs in the United States and abroad. While Northrop Grumman is subject to the usual vagaries of the marketplace, it is also affected by the unique characteristics of the defense industry and by certain elements peculiar to its own business mix. It is common in this industry for work on major programs to be shared among a number of companies. A company competing to be a prime contractor may, upon ultimate award of the contract, turn out to be a subcontractor. It is not uncommon to compete with customers, and simultaneously on other contracts, to be either a supplier to or a customer of such competitor. The nature of major defense programs, conducted under binding contracts, allows companies that perform well to benefit from a level of program continuity unknown in many industries. While Northrop Grumman conducts most of its business with the United States government, principally the Department of Defense, domestic and international commercial sales still represent a significant portion of Northrop Grumman’s business.
 
Northrop Grumman is aligned into six business sectors as follows:
 
Electronic Systems.    This sector includes the design, development, manufacture and integration of a wide variety of defense electronics and systems, airspace management systems, precision weapons, marine systems, logistics systems, space systems, and automation and information systems. Significant programs include fire control radars for the F-16 and F-22 fighter aircraft and the Longbow Apache helicopter, the AWACS airborne early warning radar, the Joint STARS air-to-ground surveillance radar sensor, the Longbow Hellfire missile and the BAT brilliant anti-armor submunition. This sector also provides tactical military radars and country-wide air defense systems, plus airborne electronic countermeasures systems intended to jam enemy aircraft and weapons systems. The sector includes the advanced electronics businesses, which design, develop and manufacture inertial navigation, guidance and control, IFF (identification friend or foe), and marine electronic systems, and provide electronic warfare systems and integrated avionics systems and shipboard information and communication systems. The United States government is a significant customer.
 
Information Technology.    This sector includes the design, development, operation and support of computer systems for scientific and management information. Information Technology has extensive expertise in command, control, communications, computers, intelligence, surveillance and reconnaissance (C4ISR). It is a key management support element for major weapons systems, such as the U.S. Navy’s AEGIS class destroyer, and also provides mission planning for the U.S. Navy, Air Force and Special Operations Command. Information Technology provides base operations support for NASA’s Kennedy Space Center, Cape Canaveral Air Station and Patrick Air Force Base, among others. In addition, Information Technology provides information technology services to commercial customers and to the other Northrop Grumman sectors. Information Technology includes the information systems businesses, which design, develop, integrate and support computer-based information systems and provide information technology and services, primarily for government customers.
 
Integrated Systems.    This sector includes the design, development and production of airborne early warning, electronic warfare and surveillance and battlefield management systems. Integrated Systems is the prime contractor for the Joint STARS advanced airborne targeting and battle management system, the U.S. Air Force’s B-2 Spirit stealth bomber, unmanned vehicles including the Global Hawk, and the EA-6B Prowler electronic countermeasures aircraft, and is upgrading the E-2C Hawkeye early warning aircraft. Integrated Systems also has a principal role in producing the U.S. Navy’s F/A18 Hornet strike fighter and in the development and future production of the F-35 Joint Strike Fighter.

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Ship Systems.    This sector is engaged in the building of large multimission non-nuclear surface ships for the U.S. Navy as well as for other government and commercial customers worldwide and is a provider of overhaul, repair, modernization, ship design and engineering services. The United States government is a significant customer.
 
Newport News.    Newport News is the largest non-government-owned shipyard in the United States, as measured by each of revenues, size of facilities and number of employees. Its primary business is the design, construction, repair, maintenance, overhaul, life-cycle support and refueling of nuclear-powered aircraft carriers and the design, life-cycle support and construction of nuclear powered submarines for the U.S. Navy.
 
Component Technologies.    This sector includes international suppliers of complex backplanes, connectors, laser crystals, solder materials, specialty products and other electronic components used primarily in the telecommunications, industrial and computer markets.
 
The principal executive offices of Northrop Grumman are located at 1840 Century Park East, Los Angeles, California 90067 and its telephone number is (310) 553-6262.
 
Additional information concerning Northrop Grumman is included in the Northrop Grumman reports periodically filed by Northrop Grumman with the SEC and incorporated by reference in this joint proxy statement/prospectus. See “ADDITIONAL INFORMATION” beginning on page 103.
 
TRW
 
TRW is a United States-based international company that provides advanced technology products and services. The principal businesses of TRW and its subsidiaries are the design, manufacture and sale of products and the performance of systems engineering, research and technical services for industry and the United States government in the Automotive, Information Systems, Defense and Aerospace markets. TRW currently operates its business in the following four operating segments:
 
Automotive.    TRW’s Automotive segment designs, manufactures and sells a broad range of steering, suspension, braking, engine, safety, electronic, engineered fastening and other components and systems for passenger cars, light trucks and commercial vehicles. The principal products are:
 
 
 
inflatable restraint, seat belt and steering wheel systems;
 
 
 
braking systems and related products;
 
 
 
steering and suspension systems and components;
 
 
 
chassis modules and integrated vehicle control systems;
 
 
 
vehicle dynamic control systems and electronics;
 
 
 
access, security and safety electronics systems;
 
 
 
display and heating, ventilating and air conditioning electronics;
 
 
 
engineered and plastic fasteners and precision plastic moldings and assemblies;
 
 
 
engine components and systems;
 
 
 
commercial steering systems and components; and
 
 
 
aftermarket operations, including parts, service and technical and diagnostic support.
 
TRW sells its Automotive products primarily to automotive original equipment manufacturers in North and South America, Europe and the Asia Pacific region. In addition, TRW sells some of its automotive components for use as aftermarket and service parts to automotive original equipment manufacturers and

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others for resale through their own independent distribution networks. TRW’s commercial steering systems and components are sold to heavy-duty vehicle manufacturers in North and South America, Europe and the Asia Pacific region.
 
Systems.    TRW’s Systems segment offers its customers systems engineering, systems integration, software development, modeling and simulation, testing and evaluation, training and information technology for high technology systems, products and services in the fields of:
 
 
 
strategic missiles;
 
 
 
intelligence management and processing;
 
 
 
command, control and communications;
 
 
 
missile and air defense;
 
 
 
airborne reconnaissance;
 
 
 
homeland security;
 
 
 
public safety and transportation;
 
 
 
logistics and training;
 
 
 
health and human services;
 
 
 
integrated supply chain;
 
 
 
tax systems; and
 
 
 
air traffic control.
 
The programs and services offered by TRW’s Systems segment are sold to the United States government and its agencies, state and local government agencies, foreign governments and commercial customers. TRW’s Systems segment also performs diverse testing and general research projects related to many of its products and services under both private and United States government contracts.
 
Space & Electronics.    TRW’s Space & Electronics segment focuses on the design and manufacture of:
 
 
 
spacecraft systems and subsystems;
 
 
 
electronic systems, including communication systems for space and defense;
 
 
 
commercial telecommunications products;
 
 
 
gallium arsenide and indium phosphide advanced semiconductors for satellite and telecommunications applications;
 
 
 
digital broadband space payloads;
 
 
 
space science instruments;
 
 
 
advanced avionics systems;
 
 
 
high energy laser systems; and
 
 
 
spacecraft products, including solar arrays and reflectors.

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TRW’s Space & Electronics segment also offers systems engineering and advanced technology research and development services to its customers. TRW’s Space & Electronics segment sells its products and services primarily to the United States government for both military and civilian applications, as well as to international and commercial customers.
 
Aeronautical Systems.    TRW’s Aeronautical Systems segment designs and manufactures high integrity systems and equipment, and provides services, in the following product areas:
 
 
 
equipment services, including spares and maintenance, repair and overhaul;
 
 
 
flight controls;
 
 
 
engine controls;
 
 
 
cargo systems;
 
 
 
power generation and management;
 
 
 
missile actuation; and
 
 
 
hoists and winches.
 
TRW sells its Aeronautical Systems and services to the world’s major airlines and aircraft producers, as well as to the United States government and international governments and agencies.
 
TRW has entered into an agreement to sell the Aeronautical Systems business to Goodrich Corporation, as described above in the Summary section under the heading “Sale of Aeronautical Business,” and TRW will no longer operate that segment of its business upon the closing of that sale.
 
The principal executive offices of TRW are located at 1900 Richmond Road, Cleveland, Ohio 44124 and its telephone number is (216) 291-7000.
 
Additional information concerning TRW is included in the TRW reports periodically filed by TRW with the SEC and incorporated by reference in this joint proxy statement/prospectus. See “ADDITIONAL INFORMATION” beginning on page 103.

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THE NORTHROP MEETING
 
General Information
 
This joint proxy statement/prospectus is being delivered to Northrop Grumman stockholders in connection with the solicitation of the enclosed BLUE proxy by the board of directors of Northrop Grumman for use at the Northrop Meeting.
 
Matter to be Considered at the Northrop Meeting
 
At the Northrop Meeting, Northrop Grumman stockholders will be asked to consider and vote on a proposal to approve the issuance of the shares of Northrop Grumman common stock pursuant to the merger (including shares to be issued upon exercise of TRW options deemed assumed by Northrop Grumman, or issued upon conversion of TRW restricted stock or restricted stock units, pursuant to the merger agreement).
 
Record Date; Stockholders Entitled to Vote
 
Only Northrop Grumman stockholders of record at the close of business on [                    ], 2002, the record date for the Northrop Meeting, are entitled to notice of, and to vote at, the Northrop Meeting. As of the close of business on the record date, there were [            ] shares of Northrop Grumman common stock outstanding and entitled to vote. Each Northrop Grumman stockholder is entitled to one vote per share of Northrop Grumman common stock held as of the record date.
 
Voting and Revocation of Proxies
 
Northrop Grumman stockholders are requested to complete, date and sign the enclosed BLUE proxy and promptly return it in the accompanying envelope or otherwise mail it to Northrop Grumman. All properly completed proxies received by Northrop Grumman before the Northrop Meeting that are not validly revoked will be voted at the Northrop Meeting in accordance with the instructions indicated on the proxies or, if no instructions are given, proxies will be voted to approve the issuance of the shares of Northrop Grumman common stock pursuant to the merger. Northrop Grumman stockholders also may vote by calling the toll-free telephone number on the BLUE proxy card or vote over the internet by following the instructions on the proxy card. Northrop Grumman stockholders may vote in person at the Northrop Meeting by delivering a completed BLUE proxy card at the meeting or by using the written ballots which will be provided to any Northrop Grumman stockholder who desires to vote in person at the Northrop Meeting.
 
Northrop Grumman stockholders that are beneficial owners of shares held in “street name” through a broker, trustee, bank or other nominee that holds shares of Northrop Grumman common stock on behalf of such stockholder may vote in person at the meeting by obtaining a legal proxy from the nominee holding the Northrop Grumman shares. In addition, Northrop Grumman stockholders may vote by proxy by completing and signing the voting instruction card provided to them by the nominee holding the Northrop Grumman shares.
 
Any proxy given by a Northrop Grumman stockholder may be revoked at any time before it is voted at the Northrop Meeting by doing any of the following:
 
 
 
delivering a written notice bearing a date later than the date of the first proxy to Northrop Grumman’s Corporate Secretary stating that the first proxy is revoked;
 
 
 
signing and delivering a BLUE proxy card relating to the same shares and bearing a later date than the date of the previous proxy;
 
 
 
voting by telephone or over the internet at a later date than the date of the previous proxy; or
 
 
 
attending the Northrop Meeting and voting in person.

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However, any Northrop Grumman stockholder who beneficially owns Northrop Grumman shares through a broker, trustee, bank or other nominee holder will need to check with the broker, trustee, bank or other nominee that holds the shares on his or her behalf to determine how to change a vote.
 
The matter to be considered at the Northrop Meeting is of great importance to Northrop Grumman stockholders. Accordingly, Northrop Grumman stockholders are urged to read and carefully consider the information presented in this joint proxy statement/prospectus and to either complete, date, sign and promptly return the enclosed BLUE proxy card in the enclosed postage-paid envelope or to vote by telephone or over the internet.
 
Proxy Solicitation
 
In addition to this mailing, Northrop Grumman directors, officers, employees and representatives may solicit proxies personally, electronically or by telephone. Northrop Grumman also has retained D.F. King & Co., Inc. as its proxy solicitor and information agent in connection with the Northrop Meeting, for which D.F. King will receive a fee of approximately $20,000.00 plus out-of-pocket expenses.
 
Northrop Grumman has requested banks, brokerage houses and other custodians, nominees and fiduciaries to forward Northrop Grumman’s proxy solicitation materials to the beneficial owners of the Northrop Grumman shares such nominee holders hold of record. Northrop Grumman will reimburse these nominee holders for customary clerical and mailing expenses incurred in forwarding the proxy solicitation materials to their customers.
 
Stockholder Vote Required to Approve the Issuance of Stock
 
The approval of the issuance of the shares of Northrop Grumman common stock pursuant to the merger requires the affirmative vote of a majority of the votes cast at the Northrop Meeting in person or by proxy, assuming a quorum is present.
 
A quorum at the Northrop Meeting requires the presence in person or by proxy of Northrop Grumman stockholders entitled to cast at least a majority of the votes that all Northrop Grumman stockholders are entitled to cast at the Northrop Meeting. Both abstentions and broker non-votes will be counted for purposes of determining the presence of a quorum.
 
Brokers who hold shares of Northrop Grumman common stock for the accounts of their clients may vote such shares either as directed by their clients or in their own discretion, if permitted by the stock exchange or other organization of which the broker is a member. Members of the New York Stock Exchange are permitted to vote their clients’ proxies in their own discretion as to routine matters, such as the election of directors, if the clients have not furnished voting instructions within ten days of the meeting. Certain non-routine matters, such as the proposal to be brought before the Northrop Meeting, are considered “non-discretionary” matters and brokers who have received no instructions from their clients do not have discretion to vote on those items. When a broker is not authorized to vote a client’s shares on a proposal at a meeting and does not receive instructions on how to vote from the client, the missing votes are referred to as “broker non-votes.”
 
Since the required vote of the Northrop Grumman stockholders with respect to the proposed issuance of Northrop Grumman common stock is based upon a percentage of the votes cast at the Northrop Meeting, rather than upon a percentage of the total number of outstanding shares of Northrop Grumman common stock, abstentions and “broker non-votes” will have no effect on the outcome of this proposal, assuming a quorum is present .
 
Representatives of Northrop Grumman’s principal accountants, Deloitte & Touche LLP are not expected to be present at the Northrop Meeting.

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THE TRW MEETING
 
General Information
 
This joint proxy statement/prospectus is being delivered to TRW shareholders in connection with the solicitation of the enclosed YELLOW proxy by TRW’s board of directors for use at the TRW Meeting.
 
Matter to be Considered at the TRW Meeting
 
At the TRW Meeting, TRW shareholders will be asked to consider and vote upon the adoption of the merger agreement.
 
Record Date; Shareholders Entitled to Vote
 
Only TRW shareholders of record at the close of business on [                    ], 2002, the record date for the TRW Meeting, are entitled to notice of, and to vote at, the TRW Meeting. As of the close of business on the record date, there were [                    ] shares of TRW common stock outstanding and entitled to vote. Each TRW shareholder is entitled to one vote for each share of TRW common stock held as of the record date.
 
Voting and Revocation of Proxies
 
TRW shareholders are requested to complete, date and sign the enclosed YELLOW proxy and promptly return it to Corporate Election Services in the accompanying envelope or otherwise mail it to Corporate Election Services, P.O. Box 1150, Pittsburgh, Pennsylvania 15230. All properly completed proxies received by TRW before the TRW Meeting that are not validly revoked will be voted at the TRW Meeting in accordance with the instructions indicated on the proxies or, if no instructions are given, to adopt the merger agreement. TRW shareholders also may vote by calling the toll-free telephone number on the YELLOW proxy card or over the internet by following the instructions on the proxy card. In addition, TRW shareholders may vote in person at the TRW Meeting by delivering a completed YELLOW proxy card at the meeting. TRW will pass out written ballots to any shareholder who desires to vote in person at the TRW Meeting.
 
TRW shareholders that are beneficial owners of shares held in “street name” through a broker, trustee, bank or other nominee that holds the shares on behalf of such shareholder may vote in person at the meeting by obtaining a legal proxy from the nominee holding the TRW shares. In addition to voting in person, TRW shareholders may vote by proxy by completing and signing the voting instruction card provided to them by the nominee holding the TRW shares.
 
Any proxy given by a TRW shareholder may be revoked at any time before it is exercised at the TRW Meeting by doing any of the following:
 
 
 
delivering a written notice bearing a date later than the date of the first proxy to the Secretary of TRW, stating that the first proxy is revoked;
 
 
 
signing and delivering a YELLOW proxy relating to the same shares and bearing a later date than the date of the previous proxy;
 
 
 
submitting a telephone or internet proxy at a later date than the date of the previous proxy; or
 
 
 
attending the TRW Meeting and voting in person.
 
However, any TRW shareholder who beneficially owns TRW shares through a broker, trustee, bank or other nominee holder will need to check with the broker, trustee, bank or other nominee that holds the shares on his or her behalf to determine how to change a vote.
 
Additional information for voting by participants in TRW’s stock-based employee plans is set forth below under the heading “—TRW Employee Plan Voting.”
 
The matter to be considered at the TRW Meeting is of great importance to TRW shareholders. Accordingly, TRW shareholders are urged to read and carefully consider the information presented in this joint proxy statement/prospectus and to either complete, date, sign and promptly return the enclosed YELLOW proxy card in the enclosed postage-paid envelope or to vote by telephone or over the internet.

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TRW shareholders should not send in their TRW stock certificates with their proxy cards. Instead, TRW shareholders should send in their stock certificates with their completed letters of transmittal, which will be distributed in a separate mailing should the merger be completed. For more information regarding the procedures for completing the letters of transmittal and exchanging TRW stock certificates for Northrop Grumman stock certificates, please see the section entitled “THE MERGER AGREEMENT – Procedures for Exchanging TRW Common Stock” on page 67.
 
TRW Employee Plan Voting
 
Certain TRW shares are held for the benefit of plan participants of The TRW Employee Stock Ownership and Savings Plan (the “US Plan”), the TRW Canada Stock Savings Plan (the “Canada Plan”), and the TRW UK Share Purchase Plan (the “UK Plan” and together with the US Plan and the Canada Plan, the “Plans”). The Plans contain pass-through voting provisions for the participants of the Plans, with TRW shares that are allocated to a participant’s account voted in accordance with the instructions of the participant by the trustees of the respective Plan responsible for voting (the “Trustees”).
 
Participants in the Plans can only vote TRW shares held in the Plans on their behalf by instructing the relevant trustee on a trustee’s voting instruction card provided to participants for that purpose.
 
US Plan
 
With respect to TRW shares held in the US Plan, TRW shares allocated to a participant who signs a voting instruction card but does not indicate or give instructions how such shares are to be voted, will be voted by the Trustees of such Plan in accordance with the Trustees’ fiduciary judgment. In the event the Trustees of the US Plan determine, in the exercise of their fiduciary responsibilities under ERISA, they cannot follow a participant’s instructions, or a participant does not return or properly complete the voting instruction card, the Trustees will vote the shares allocated to such participant’s account in accordance with their fiduciary judgment.
 
In order to permit sufficient time to tabulate voting instruction cards, a participant’s instructions must be received no later than [                    ], 2002.
 
Canada Plan
 
With respect to TRW shares held in the Canada Plan, shares allocated to a participant who signs a voting instruction card but does not indicate or give instructions how such shares are to be voted will not be voted by the Trustee of the Canada Plan. In the event a participant does not return or sign a voting instruction card, the shares allocated to such participant’s account will not be voted at the TRW Meeting.
 
In order to permit sufficient time to tabulate voting instruction cards, a participant’s instructions must be received no later than [                    ], 2002.
 
UK Plan
 
With respect to TRW shares held in the UK Plan, shares allocated to a participant who signs a voting instruction card but does not indicate or give instructions how such shares are to be voted will not be voted by the Trustee of the UK Plan. In the event a participant does not return or sign a voting instruction card, the shares allocated to such participant’s account will not be voted at the TRW Meeting.
 
In order to permit sufficient time to tabulate voting instruction cards, a participant’s instructions must be received no later than [                    ], 2002.
 
Proxy Solicitation
 
In addition to this mailing, directors and employees of TRW may solicit proxies personally, electronically or by telephone, none of whom will receive additional compensation for such solicitation.

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TRW has requested banks, brokerage houses and other custodians, nominees and fiduciaries to forward TRW’s proxy solicitation materials to the beneficial owners of the TRW shares they hold of record. TRW will reimburse these record holders for customary clerical and mailing expenses incurred in forwarding these materials to their customers.
 
TRW has retained Georgeson Shareholder Communications, Inc. for proxy solicitation and information agent services in connection with the TRW Meeting. Georgeson will receive a fee of approximately $75,000.00 for its services and reimbursement of out-of-pocket expenses in connection therewith. TRW has agreed to indemnify Georgeson against certain liabilities arising out of or in connection with the engagement. Georgeson will solicit proxies from individuals, brokers, banks, bank nominees and other institutional holders.
 
TRW Shareholder Vote Required to Adopt the Merger Agreement
 
Adoption of the merger agreement requires the affirmative vote of the holders of two-thirds of the total outstanding shares of TRW common stock.
 
A quorum at the TRW Meeting requires the presence in person or by proxy of TRW shareholders holding at least 35% of the voting power of TRW at the TRW Meeting. Both abstentions and broker non-votes will be counted for purposes of determining the presence of a quorum.
 
Brokers who hold shares of TRW common stock for the accounts of their clients may vote such shares either as directed by their clients or in their own discretion, if permitted by the stock exchange or other organization of which they are members. Members of the New York Stock Exchange are permitted to vote their clients’ proxies in their own discretion as to routine matters, such as the election of directors, if the clients have not furnished voting instructions within ten days of the meeting. Certain non-routine matters, such as the proposals to be brought before the TRW Meeting are considered “non-discretionary” and brokers who have received no instructions from their clients do not have discretion to vote on those items. When a broker is not authorized to vote a client’s shares on a proposal at a meeting and does not receive instructions on how to vote from their client, the missing votes are referred to as “broker non-votes.”
 
Since the required vote with respect to the proposed adoption of the merger agreement is based upon a percentage of the total voting power entitled to vote on the proposal rather than upon a percentage of the TRW shares actually present or voted in person or by proxy at the TRW Meeting, abstentions and “broker non-votes” will have the same effect as a vote against adoption of the merger agreement.

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THE MERGER
 
General
 
Northrop Grumman and TRW have entered into a merger agreement, which provides for the merger of Richmond Acquisition Corp., an Ohio corporation and wholly-owned subsidiary of Northrop Grumman, with and into TRW, with TRW surviving the merger as a wholly-owned subsidiary of Northrop Grumman. In the merger, each share of common stock of TRW will be converted into the right to receive a number of shares of Northrop Grumman common stock equal to the exchange ratio. The exchange ratio will be determined by dividing $60.00 by the average of the closing sale prices for a share of Northrop Grumman common stock on the New York Stock Exchange for the five consecutive trading days ending on (and including) the second trading day before the closing date of the merger. However, in no event will the exchange ratio be greater than 0.5357 ($60.00/$112.00) or less than 0.4348 ($60.00/$138.00).
 
Northrop Grumman’s Reasons for the Merger; Recommendation of Northrop Grumman’s Board of Directors
 
Northrop Grumman’s board of directors (with one director absent) has unanimously determined that the merger agreement is fair to and in the best interests of Northrop Grumman’s stockholders. Northrop Grumman’s board of directors believes that the merger represents an opportunity to enhance value for Northrop Grumman stockholders. The decision of Northrop Grumman’s board of directors to enter into the merger agreement and to recommend that Northrop Grumman stockholders approve the issuance of the shares of Northrop Grumman common stock to be issued pursuant to the merger (including shares to be issued upon exercise of TRW options deemed assumed by Northrop Grumman, or issued upon conversion of TRW restricted stock or restricted stock units, pursuant to the merger agreement) was the result of careful consideration by the board of directors of numerous factors, including, without limitation, the following:
 
 
 
Access to New Product Areas.    TRW’s proprietary technology and products will provide Northrop Grumman with technology and products to complement Northrop Grumman’s existing technology and products.
 
 
 
Increased Diversification into New Markets.    The combination of Northrop Grumman and TRW provides the affiliated entities with the opportunity for diversification into new markets and access to new customer elements of the United States Department of Defense and other federal agencies.
 
 
 
Increased Market Presence and Opportunities.    The combination of Northrop Grumman and TRW provides the affiliated entities with increased market presence and opportunities for growth that could allow them to better respond to: the needs of customers, the increased competitiveness of the marketplace and opportunities that changes in the market for their respective products might bring.
 
 
 
Product Mix.    The complementary nature of Northrop Grumman’s and TRW’s products and services will benefit clients of both companies.
 
 
 
Operating Efficiencies.    The combination of Northrop Grumman and TRW provides the opportunity for potential economies of scale and cost savings.
 
Northrop Grumman’s board of directors (with one director absent) has unanimously approved the merger agreement and believes that the exchange ratio is fair, from a financial point of view, to Northrop Grumman stockholders.
 
Accordingly, Northrop Grumman’s board of directors recommends that Northrop Grumman stockholders vote “FOR” the issuance of the shares of Northrop Grumman common stock pursuant to the merger.

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TRW’s Reasons for the Merger; Recommendation of TRW’s Board of Directors
 
TRW’s board of directors (with one director absent) has unanimously determined that the merger agreement with Northrop Grumman is fair to and in the best interests of TRW shareholders. TRW’s board of directors believes that the merger represents an opportunity to enhance value for TRW shareholders. The decision of TRW’s board of directors to approve and enter into the merger agreement and to recommend that TRW shareholders adopt the merger agreement was the result of careful consideration of numerous factors by the board of directors, including, without limitation, the following:
 
 
 
The value to TRW shareholders of the Northrop Grumman offer, including the fairness to shareholders of the financial terms of the offer;
 
 
 
A comparison of the financial terms and the other terms and conditions of the proposed merger agreement with Northrop Grumman and the proposals provided by the other bidders as well as TRW’s value enhancement plan;
 
 
 
The effect of the merger on employees of TRW; and
 
 
 
The operational synergies and other business benefits offered by a transaction with Northrop Grumman.
 
The deliberations of the TRW board included consideration of the following factors which are generally positive:
 
 
 
Exchange Ratio Premium.    The midpoint of the exchange ratio collar ($60.00/$125.00) represents a premium over selected historical exchange ratios of TRW common stock to Northrop Grumman common stock. The implied exchange ratio premium of the Northrop Grumman offer at the midpoint of the exchange ratio collar is 23.1% with respect to the implied historical exchange ratio as of February 15, 2001, the last trading day immediately preceding the announcement of the resignation of TRW’s former chief executive officer, 42.1% with respect to the implied historical exchange ratio as of February 21, 2002, the last trading day immediately preceding the announcement of Northrop Grumman’s initial unsolicited proposal, and 14.1% with respect to the average implied exchange ratio for the twelve-month period ended February 21, 2002.
 
 
 
Collar.    The exchange ratio pursuant to the merger agreement is subject to a “collar,” which provides that if the average reported closing price per share of Northrop Grumman common stock on the New York Stock Exchange for the five consecutive trading days ending on (and including) the second trading day prior to the closing of the merger is at least $112.00 per share but not more than $138.00 per share, the exchange ratio will be calculated to provide $60.00 in value of Northrop Grumman common stock for each share of TRW common stock. In the event that the average reported closing price per share of Northrop Grumman common stock is less than $112.00 or more than $138.00, TRW shareholders will receive 0.5357 or 0.4348 of a share of Northrop Grumman common stock, respectively. TRW shareholders may benefit from this collar because:
 
 
 
TRW shareholders will receive $60.00 in value of Northrop Grumman common stock if the average closing price of a share of Northrop Grumman common stock remains between $112.00 and $138.00 during the relevant pricing period, which would not have been the case had the exchange ratio been fixed at the lowest ratio provided by the collar; and
 
 
 
TRW shareholders benefit from any increase in the average closing price of a share of Northrop Grumman common stock above $138.00 during the relevant pricing period, which would not have been the case had the consideration been based on a fixed value.
 
 
 
Fairness Opinions.    The opinion of each of Goldman Sachs and Credit Suisse First Boston delivered to the TRW board on June 30, 2002, to the effect that, as of that date and based on and subject to the assumptions, qualifications and limitations described in their respective opinions, the exchange ratio pursuant to the merger agreement is fair from a financial point of view to the holders of TRW

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common stock other than Northrop Grumman and its affiliates. Copies of the written opinions of Goldman Sachs and Credit Suisse First Boston, each dated June 30, 2002, which set forth the procedures followed, assumptions made, matters considered and the limitations on the reviews undertaken by each of Goldman Sachs and Credit Suisse First Boston in connection with their respective opinions, are attached as Annexes D and E, respectively, to this joint proxy statement/prospectus and are incorporated herein by reference. TRW shareholders are urged to read the Goldman Sachs and Credit Suisse First Boston opinions in their entirety.
 
 
 
Independence Risks.    The strategic and operational risks associated with TRW remaining independent pursuant to TRW’s value enhancement plan and the range of values TRW shareholders might receive if the value enhancement plan were implemented include:
 
 
 
risks associated with the separation of TRW’s operations, including the risks relating to the costs incurred in connection with the spin off of TRW’s Automotive business, the risk that the spin off could be taxable if certain events occurred and the risks relating to the fluctuation of the stock price of the shares of the Automotive business distributed in the spin off;
 
 
 
risks associated with increased competition in the Space, Defense, Information Systems and Automotive industries; and
 
 
 
risks associated with recruiting a chief executive officer to replace TRW’s former chief executive officer, whose unexpected resignation was announced on February 19, 2002.
 
 
 
Strategic Alternatives.    The consideration, with TRW management and Goldman Sachs and Credit Suisse First Boston, of strategic alternatives, including remaining a stand-alone business and separating its business units.
 
 
 
Process.    The results of the thorough process for seeking business combination proposals conducted by TRW and its independent financial advisers, pursuant to which interested parties signed confidentiality agreements, met with TRW management and reviewed confidential information about TRW and its business, and TRW received proposals for business combinations from certain interested parties.
 
 
 
Proposals.    The overall assessment of each of the proposals submitted by interested parties to TRW as part of its formal solicitation process, taking into account the value and risks associated with each of the proposals.
 
 
 
Due Diligence.    The TRW board’s review of public disclosures by and about the business, financial condition and current business strategy of Northrop Grumman, the due diligence review by TRW management and TRW’s financial, legal and accounting advisers of Northrop Grumman and its businesses and Northrop Grumman’s historical stock price performance.
 
 
 
Opportunities for Shareholders.    The fact that, after giving effect to the sale of TRW’s Aeronautical Systems business, the merger will present an opportunity for TRW shareholders to participate in a company that is the nation’s second largest defense contractor and, as shareholders of the combined business, to benefit from the following:
 
 
 
Any future growth of a combined business that has expertise as a prime or platform contractor in ships, carriers and submarines, piloted and unpiloted aircraft, and satellite systems supporting national security; and
 
 
 
The greater opportunity to participate, as a larger, more capable company following the merger, in the expected increased expenditures for United States defense procurement and research, development, test and evaluation, the budget for which is projected to increase at a 7.2% compound annual growth rate through 2006.
 
 
 
Northrop Grumman’s Experience.    Northrop Grumman’s experience in delivering stockholder value, integrating businesses and successfully executing strategies.

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Terms and Conditions.    The structure of the transaction and the terms and conditions of the proposed combination of Northrop Grumman and TRW, including:
 
 
 
the terms of the merger agreement, including the fact that the merger is intended to qualify as a reorganization under Section 368(a) of the Internal Revenue Code and is therefore not expected to be taxable to the shareholders of TRW (other than with respect to cash received in lieu of fractional shares);
 
 
 
the ability of TRW, prior to the consummation of the merger, to consider and negotiate unsolicited third party business combination proposals, subject to certain conditions;
 
 
 
the right of TRW’s board, prior to the consummation of the merger, to terminate the merger agreement and accept a superior proposal, subject to the satisfaction of certain conditions and the payment of a termination fee to Northrop Grumman;
 
 
 
the ability of TRW, prior to the consummation of the merger, to take further steps to effect the separation of TRW’s Automotive business; and
 
 
 
the ability to consummate the merger within a reasonable period of time, including the likelihood of receiving necessary regulatory approvals in light of the commitments made by Northrop Grumman pursuant to the terms of the merger agreement in seeking such approvals and TRW management’s assessment of the regulatory environment in the United States, Europe and the rest of the world.
 
The TRW board also identified and considered the following potentially negative factors in its deliberations:
 
 
 
Collar.    The “collar” may negatively affect TRW shareholders in the following manner:
 
 
 
TRW shareholders will only receive $60.00 in value of Northrop Grumman common stock if the average closing price of a share of Northrop Grumman common stock is between $112.00 and $138.00 during the relevant pricing period, which would not have been the case had the exchange ratio been fixed at the highest ratio provided by the collar; and
 
 
 
TRW shareholders will be adversely affected by any decrease in the average closing price of a share of Northrop Grumman common stock below $112.00 during the relevant pricing period, which would not have been the case had the consideration been based on a fixed value not subject to a collar.
 
 
 
Disruptions.    The possible disruption to TRW’s businesses that may result from the announcement of the transaction and the resulting distraction of management attention from the day-to-day operations of TRW’s businesses.
 
 
 
Integration Risks.    The difficulty inherent in integrating two businesses and the risk that the cost efficiencies, synergies and other benefits expected to be obtained in the transaction might not be fully realized.
 
 
 
Operating Restrictions.    The restrictions contained in the merger agreement on the operation of TRW’s businesses during the period between the signing of the agreement and the completion of the merger.
 
 
 
Termination Fee.    The $275 million termination fee to be paid to Northrop Grumman if the merger agreement is terminated under circumstances specified in the merger agreement. See “THE MERGER AGREEMENT—Termination Fee on page 75.”
 
 
 
Consummation Risk.    The possibility that the merger might not be completed and the effect of the resulting public announcement of termination of the merger agreement on:
 
 
 
the market price of TRW’s common stock;
 
 
 
TRW’s operating results, particularly in light of the costs incurred in connection with the transaction, including the potential requirement to make a termination payment; and
 
 
 
TRW’s ability to attract and retain key personnel, including a chief executive officer.

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Regulatory.    The possibility of significant costs, delays and non-consummation of the merger resulting from seeking regulatory approvals necessary for the consummation of the merger.
 
In its consideration of the proposed merger, TRW’s board of directors also reviewed information relating to the two companies and the proposed merger, including:
 
 
Historical information concerning Northrop Grumman’s and TRW’s respective businesses, financial performance and condition, operations, technology, management and competitive position;
 
 
TRW’s management’s views as to the financial condition, results of operations and businesses of Northrop Grumman and TRW before and after giving effect to the merger;
 
 
Current financial market conditions and historical market prices, volatility and trading information with respect to Northrop Grumman common stock and TRW common stock; and
 
 
Discussions with TRW’s senior management and financial advisers as to the result of their due diligence review of Northrop Grumman.
 
Although the foregoing discussion sets forth all of the material factors considered by TRW’s board of directors in reaching its recommendation, it may not include all of the factors considered by the board, and each director may have considered different factors. In view of the variety of factors and the amount of information considered, the board of directors did not find it practicable to, and did not, make specific assessments of, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination. The determination was made after consideration of all of the factors as a whole and at numerous meetings.
 
TRW’s board of directors (with one director absent) has unanimously determined that the merger agreement with Northrop Grumman is fair to and in the best interests of TRW’s shareholders and believes that the merger represents an opportunity to enhance value for TRW’s shareholders.
 
Accordingly, TRW’s board of directors (with one director absent) unanimously recommends that the TRW shareholders vote FOR adoption of the merger agreement.
 
In considering the recommendation of the TRW board of directors with respect to the merger agreement, you should be aware that certain directors and officers of TRW have arrangements that cause them to have interests in the transaction that are different from, or are in addition to, the interests of TRW shareholders generally. See “THE MERGER— Interests of Certain Persons in the Merger.”
 
Background of the Merger
 
From time to time, Northrop Grumman and TRW have had informal discussions regarding possible business combination transactions, including in-depth discussions between August and December 1998. No agreement, however, was reached during that time period. Between 1999 and 2001, there were limited contacts between Northrop Grumman and TRW, but no substantive discussions occurred.
 
In early October 2001, Mr. Kent Kresa, the Chief Executive Officer of Northrop Grumman, had one brief meeting and one telephone conversation with Mr. David M. Cote, then the Chairman, President and Chief Executive Officer of TRW, regarding possible discussions for a combination of the two companies. No discussions were pursued at that time.
 
On February 19, 2002, Northrop Grumman learned that Mr. Cote had resigned. Northrop Grumman determined that TRW’s board of directors and shareholders might view favorably a merger or other combination of Northrop Grumman and TRW in view of the leadership issues arising from Mr. Cote’s resignation.

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On February 21, 2002, Northrop Grumman made a proposal to provide all of TRW’s shareholders with $47.00 in Northrop Grumman common stock for each share of TRW common stock, to be received in a tax-free merger transaction. On February 22, 2002, Northrop Grumman publicly disclosed the proposal.
 
On February 22, 2002, TRW’s board of directors met with TRW’s management and TRW’s financial adviser, Goldman Sachs and TRW’s legal adviser, Skadden, Arps, Slate, Meagher & Flom LLP, to discuss Northrop Grumman’s proposal.
 
On February 28, 2002, TRW’s board of directors met with TRW’s management and TRW’s financial advisers, Goldman Sachs and Credit Suisse First Boston, and TRW’s legal adviser to further assess Northrop Grumman’s proposal. The board reviewed, among other things, Northrop Grumman’s proposal, strategic alternatives and business opportunities available to TRW with its management and its financial and legal advisers.
 
On March 3, 2002, TRW’s board of directors met again to consider further and to discuss the response to Northrop Grumman’s proposal. At the meeting, TRW’s board reviewed the strategic alternatives and business opportunities considered at the February 28, 2002 meeting. After careful consideration, including consultation with financial and legal advisers, the board unanimously concluded that Northrop Grumman’s $47.00 per share proposal was financially inadequate.
 
On March 4, 2002, Northrop Grumman commenced an offer to exchange all of the outstanding shares of TRW common stock for $47.00 in value of Northrop Grumman common stock per share of TRW common stock, based on a formula and subject to a collar. Northrop Grumman also offered to exchange Northrop Grumman common stock for shares of TRW convertible preferred stock based on a specified exchange ratio.
 
On March 4, 2002, Northrop Grumman also sent a letter to TRW requesting that TRW call a special meeting of TRW shareholders pursuant to Ohio’s control share acquisition law. Under the Ohio control share acquisition law, Northrop Grumman was prohibited from acquiring 20% or more of TRW’s outstanding capital stock pursuant to the exchange offer without first obtaining the prior approval of TRW’s shareholders at a special meeting called for that purpose. A special meeting of TRW shareholders pursuant to the Ohio control share acquisition law was called by TRW in response to Northrop Grumman’s request and subsequently was held on May 3, 2002, as described below.
 
On March 4, 2002, Northrop Grumman 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 contemporaneously with Northrop Grumman’s commencement of the exchange offer, challenged the constitutionality of Ohio’s anti-takeover statutes. On the same date, TRW filed a lawsuit in the United States District Court for the Southern District of Ohio against Northrop Grumman, the Attorney General of Ohio, the Director of Ohio’s Department of Commerce and the Commissioner of Ohio’s Division of Securities. The lawsuit filed by TRW sought a judgment that Ohio’s anti-takeover statutes are constitutional.
 
On March 8, 2002, TRW’s board of directors met with TRW’s management and TRW’s legal and financial advisers to discuss, among other matters, Northrop Grumman’s offer and Northrop Grumman’s preliminary proxy statement to solicit shareholder approval of Northrop Grumman’s acquisition of TRW’s outstanding capital stock in accordance with Ohio law.
 
On March 11, 2002, Northrop Grumman filed notification with the U.S. Department of Justice and the Federal Trade Commission of its intention to acquire TRW, in compliance with the Premerger Notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976. TRW filed its required forms with the United States Department of Justice and the Federal Trade Commission on March 26, 2002. On April 10, 2002, Northrop Grumman and TRW each received a request for additional information from the United States Department of Justice.

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On March 12, 2002, TRW’s board of directors held a special meeting to review Northrop Grumman’s offer with management and TRW’s legal and financial advisers. After discussion with TRW’s management and its legal and financial advisers, TRW’s board of directors unanimously rejected Northrop Grumman’s offer. Based on the assessment of TRW’s management, after consultation with TRW’s financial advisers, that TRW’s businesses in the aggregate had greater value than the offer, TRW’s board directed management as part of its value enhancement plan to accelerate its plan to reduce TRW’s indebtedness and then separate the Automotive business from TRW’s other businesses. Accordingly, on March 13, 2002, TRW’s board of directors issued a press release announcing the TRW board’s unanimous rejection of Northrop Grumman’s offer to exchange and filed a statement with the SEC recommending that TRW shareholders reject Northrop Grumman’s offer to exchange. The same press release also announced TRW’s value enhancement plan.
 
On March 18, 2002, Northrop Grumman filed a preliminary proxy statement in connection with TRW’s annual shareholder meeting. The Northrop Grumman proxy statement (as filed in definitive form on April 1, 2002) stated that Northrop Grumman intended to propose three shareholder resolutions at TRW’s annual shareholder meeting. The first resolution related to the provision by TRW to Northrop Grumman of non-public information relating to TRW, the second resolution related to a request that TRW establish a committee of “independent directors” to evaluate Northrop Grumman’s offer, and the third resolution related to the TRW shareholders’ ability to decide for themselves whether to exchange their TRW shares in Northrop Grumman’s offer.
 
On March 22, 2002, TRW’s board of directors met with TRW’s management and TRW’s legal and financial advisers to discuss, among other matters, the Northrop Grumman shareholder proposals. After discussion with TRW’s management and its legal and financial advisers, the board of directors unanimously determined that Northrop Grumman’s three shareholder proposals were not consistent with the board of directors’ objective of enhancing shareholder value and were not in the best interests of TRW’s shareholders.
 
On March 29, 2002, Northrop Grumman announced that it was extending its exchange offer until midnight on April 12, 2002.
 
On April 2, 2002, TRW began mailing to its shareholders a supplement to its proxy statement for its annual meeting of shareholders setting forth the recommendation of TRW’s board of directors that TRW’s shareholders vote against Northrop Grumman’s three shareholder proposals and the reasons for such recommendation.
 
On April 5, 2002, TRW’s board of directors held a special meeting at which it discussed, among other matters, pro forma financial information for TRW’s proxy materials.
 
On April 15, 2002, Northrop Grumman amended its offer to exchange by (a) increasing its offer to exchange from $47.00 to $53.00 in value of Northrop Grumman common stock per share of TRW common stock, based on a formula and subject to a collar, (b)  extending the offer to exchange from April 12, 2002 to May 3, 2002 and  (c) adding a new condition to the offer to exchange requiring completion of a due diligence investigation by Northrop Grumman of non-public information of TRW.
 
On April 15, 2002, TRW’s board of directors held a special meeting at which the board, among other matters, began to review the terms of Northrop Grumman’s revised offer with management and TRW’s legal and financial advisers.
 
On April 16, 2002, TRW’s board of directors held another special meeting to review Northrop Grumman’s revised offer with management and TRW’s legal and financial advisers. At the meeting, TRW’s board of directors again considered TRW’s strategic alternatives. After discussion with TRW’s management and its legal and financial advisers, TRW’s board of directors unanimously determined that Northrop Grumman’s revised offer was inadequate.

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On April 17, 2002, TRW issued a press release announcing the board’s rejection of Northrop Grumman’s revised offer. TRW’s board of directors authorized management and its advisers to initiate a process to explore all strategic alternatives to create shareholder value at levels above Northrop Grumman’s revised offer. In addition, TRW’s board of directors authorized management to make certain confidential information relating to TRW available to third parties, including Northrop Grumman, upon the execution by such third parties of a confidentiality agreement satisfactory to TRW.
 
At TRW’s annual shareholders meeting on April 24, 2002, TRW’s shareholders did not approve Northrop Grumman’s proposals that TRW establish a committee of “independent directors” to evaluate Northrop Grumman’s revised offer or Northrop Grumman’s proposal that TRW take all actions within its authority to let shareholders decide for themselves whether to exchange their TRW stock for Northrop Grumman common stock. At this meeting, TRW’s shareholders did approve Northrop Grumman’s non-binding proposal to have TRW provide Northrop Grumman with non-public information about TRW.
 
Beginning in late April 2002, TRW and its financial and legal advisers initiated a formal process to provide information to and discuss proposals from parties interested in acquiring TRW. Between April 22 and May 5, 2002, TRW entered into confidentiality agreements with potential bidders, including Northrop Grumman. Pursuant to these agreements, TRW made available confidential, non-public information to potential bidders, and TRW’s management presented information on TRW’s businesses to assist potential bidders in their due diligence.
 
On April 24, 2002, TRW’s board of directors held a previously scheduled board meeting. At this meeting, TRW management provided the directors with an update of the status of negotiations with Northrop Grumman regarding a confidentiality agreement.
 
On May 3, 2002, TRW held the special meeting of its shareholders pursuant to the Ohio control share acquisition law to consider Northrop Grumman’s proposal that the TRW shareholders authorize Northrop Grumman’s acquisition of TRW shares pursuant to the offer to exchange. TRW’s shareholders did not approve Northrop Grumman’s proposal.
 
During May 2002, Northrop Grumman extended its exchange offer several times with the last extension in May expiring at midnight on June 14, 2002. Beginning on May 5, 2002, Northrop Grumman commenced its due diligence review of TRW.
 
On June 3, 2002, TRW’s board of directors met with TRW’s management and its legal and financial advisers to further discuss TRW’s strategic alternatives and its value enhancement plan. After discussion, TRW’s board of directors instructed management to continue to pursue TRW’s value enhancement plan and to explore strategic alternatives; in particular, the board of directors authorized management to sell TRW’s Aeronautical Systems business and to continue its efforts to effect the separation of TRW’s Automotive business, including the filing of a registration statement with the SEC.
 
On June 10, 2002, Goldman Sachs and Credit Suisse First Boston, financial advisers to TRW, sent a form  of merger agreement and a letter setting forth certain procedures for the submission of a formal bid by potential bidders, including Northrop Grumman, to acquire TRW and requesting that formal bids be submitted on or before June 24, 2002.
 
Between June 13, 2002 and June 24, 2002, TRW and Northrop Grumman had discussions regarding several proposals made by Northrop Grumman to TRW regarding potential acquisition structures and terms. In addition, TRW also had conversations with other interested third parties regarding potential proposals during June 2002. However, TRW was not prepared to enter into negotiations with respect to any of the proposals at that time.
 
On June 14, 2002, Northrop Grumman extended its exchange offer until midnight on June 21, 2002.
 
On June 18, 2002, TRW announced that it had reached a definitive agreement under which Goodrich Corporation would acquire TRW’s Aeronautical Systems business for gross proceeds of $1.5 billion in cash.

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On June 24, 2002, Northrop Grumman sent a new acquisition proposal to TRW to acquire TRW, including proposed revisions to the form of merger agreement sent by TRW on June 10, 2002. TRW also received bids from other interested parties for business combinations either involving TRW as a whole, or TRW following a separation of TRW’s Automotive business.
 
On June 24, 2002, Northrop Grumman extended its exchange offer until midnight on June 28, 2002.
 
On June 25, 2002, TRW’s board of directors met and reviewed with TRW’s management and legal and financial advisers the process for soliciting proposals and each of the proposals TRW had received. At the meeting, TRW’s board of directors also reviewed the status of TRW’s value enhancement initiatives. After careful analysis and discussions, TRW’s board of directors determined to continue discussions with each of the interested parties to determine if the price and other terms of the proposals could be improved.
 
Between June 24, 2002 and June 27, 2002, there were a number of communications between representatives of Northrop Grumman and TRW concerning Northrop Grumman’s acquisition proposals. From June 25th to June 27, 2002, TRW’s management and legal and financial advisers also had further discussions with each of the other interested parties, and certain of the parties improved the terms and conditions of their proposals.
 
On June 27, 2002, TRW’s board of directors met again to discuss the current terms and conditions of the proposals from each of the interested parties. After a discussion regarding the interim developments, the board determined to pursue discussions with only Northrop Grumman.
 
On June 28, 2002, Northrop Grumman’s exchange offer expired in accordance with its terms.
 
Between June 28, 2002 and June 30, 2002, Northrop Grumman and TRW conducted meetings in New York, New York during which the parties negotiated the terms of the definitive merger agreement. During this period, TRW and its legal, financial and accounting advisers updated TRW’s due diligence review of Northrop Grumman, reviewed confidential, non-public information regarding Northrop Grumman and had discussions with Northrop Grumman’s management regarding Northrop Grumman’s businesses.
 
On June 30, 2002, TRW’s board of directors met again with TRW’s management and legal and financial advisers and discussed the terms and conditions of the proposed merger agreement with Northrop Grumman. At the meeting, each of Goldman Sachs and Credit Suisse First Boston rendered its opinion to the board of directors of TRW to the effect that, as of that date and based on and subject to the assumptions, qualifications and limitations described in their respective opinions, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to the holders of TRW common stock other than Northrop Grumman and its affiliates. Such opinions are attached hereto as Annexes D and E, respectively. Following a careful consideration of the proposed merger agreement, and after discussion with its financial and legal advisers, TRW’s board of directors (with one director absent) agreed unanimously that the terms and provisions of the merger agreement negotiated with Northrop Grumman were in the best interests of TRW’s shareholders and approved the merger agreement. In addition, on June 30, 2002, Northrop Grumman’s board of directors (with one director absent) unanimously approved the merger agreement. Thereafter, the merger agreement was executed by Northrop Grumman, TRW and Richmond Acquisition Corp.
 
On July 1, 2002, Northrop Grumman and TRW issued a joint press release announcing the merger agreement.
 
Opinions of Financial Advisers
 
Northrop Grumman’s Advisers
 
In connection with Northrop Grumman’s consideration of the proposed acquisition of TRW, Northrop Grumman received financial advice from Salomon Smith Barney and Stephens Financial Group. Each of Salomon Smith Barney and Stephens Financial Group has provided separately its opinion to Northrop Grumman’s board of directors, each dated June 30, 2002, that as of that date, and subject to the qualifications and

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limitations and based on the considerations in each respective opinion, the exchange ratio to be used in the merger was fair, from a financial point of view, to Northrop Grumman. The opinions of Salomon Smith Barney and Stephens Financial Group are attached as Annexes B and C, respectively, to this joint proxy statement/prospectus and are incorporated herein by this reference.
 
Opinion of Salomon Smith Barney
 
Salomon Smith Barney was retained to act as a financial adviser to Northrop Grumman in connection with the proposed acquisition of TRW. Pursuant to Salomon Smith Barney’s engagement letter with Northrop Grumman, Salomon Smith Barney rendered an oral opinion to Northrop Grumman’s board of directors on June 30, 2002, subsequently confirmed in writing, to the effect that, based upon and subject to the assumptions, considerations and limitations set forth in its opinion, its work described in the opinion, its experience as investment bankers and other factors it deemed relevant, as of that date, the exchange ratio was fair, from a financial point of view, to Northrop Grumman. Except for this opinion, Salomon Smith Barney did not provide to Northrop Grumman or Northrop Grumman’s board of directors any report, opinion or appraisal.
 
The full text of Salomon Smith Barney’s opinion, which sets forth the assumptions made, general procedures followed, matters considered and limitations on the review undertaken by Salomon Smith Barney, is attached to this joint proxy statement/prospectus as Annex B. The summary of Salomon Smith Barney’s opinion set forth below is qualified in its entirety by reference to the full text of the opinion. Stockholders are urged to read Salomon Smith Barney’s opinion carefully and in its entirety. The fairness opinion was provided to Northrop Grumman’s board of directors for its information and is directed only to the fairness from a financial point of view of the exchange ratio pursuant to the merger agreement to Northrop Grumman.
 
Salomon Smith Barney has consented to the inclusion of its opinion and to the inclusion of the summary of its opinion in this joint proxy statement/prospectus. In giving such consent, Salomon Smith Barney does not concede that it comes within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended (the “Securities Act”), or the rules and regulations of the SEC thereunder, nor does it concede that it is an expert within the meaning of the term “expert” as used in the Securities Act or the rules and regulations of the SEC thereunder with respect to any part of the registration statement on Form S-4 of which this joint proxy statement/prospectus forms a part.
 
In connection with rendering its opinion, Salomon Smith Barney, among other things:
 
 
 
reviewed a draft of the merger agreement dated June 29, 2002;
 
 
 
held discussions with certain senior officers, directors and representatives and advisers of Northrop Grumman and certain senior officers and representatives and advisers of TRW concerning the businesses, operations and prospects of Northrop Grumman and TRW;
 
 
 
examined certain publicly available business and financial information relating to Northrop Grumman and TRW;
 
 
 
reviewed certain financial forecasts and other information and data for Northrop Grumman and TRW which were provided to or otherwise discussed with Salomon Smith Barney by the managements of Northrop Grumman and TRW;
 
 
 
reviewed the financial terms of the merger as set forth in the draft merger agreement provided to it in relation to, among other things: current and historical market prices and trading volumes of Northrop Grumman common stock and TRW common stock, the historical and projected earnings and other operating data of Northrop Grumman and TRW, and the capitalization and financial condition of Northrop Grumman and TRW;
 
 
 
considered, to the extent publicly available, the financial terms of certain other similar transactions recently effected that Salomon Smith Barney considered relevant in evaluating the merger; and analyzed certain financial, stock market and other publicly available information relating to the businesses of

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other companies whose operations Salomon Smith Barney considered relevant in evaluating those of Northrop Grumman and TRW;
 
 
 
evaluated the pro forma financial impact of the merger on Northrop Grumman; and
 
 
 
conducted such other analyses and examinations and considered such other information and financial, economic and market criteria as Salomon Smith Barney deemed appropriate in arriving at its opinion.
 
In rendering its opinion, Salomon Smith Barney assumed and relied, without assuming any responsibility for independent verification, upon the accuracy and completeness of all financial and other information and data publicly available or furnished to or otherwise reviewed by or discussed with it and has further relied upon the assurances of managements of Northrop Grumman and TRW that they are not aware of any facts that would make any of such information inaccurate or misleading. With respect to financial forecasts provided to or otherwise reviewed by or discussed with Salomon Smith Barney, Salomon Smith Barney was advised by the managements of Northrop Grumman and TRW that such forecasts had been reasonably prepared on bases reflecting the best then currently available estimates and judgments of Northrop Grumman and TRW managements as to the future financial performance of Northrop Grumman and TRW, as the case may be. Salomon Smith Barney expressed no view with respect to such forecasts or the assumptions on which they were based. Salomon Smith Barney assumed that the merger will be treated as a tax-free reorganization for United States federal income tax purposes. Salomon Smith Barney did not make and was not provided with an independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of Northrop Grumman or TRW, nor did it make any physical inspection of the properties or assets of Northrop Grumman or TRW. Salomon Smith Barney further assumed that the transactions contemplated by the agreement pursuant to which TRW agreed to sell TRW’s Aeronautical Systems business to Goodrich Corporation will be consummated in accordance with the terms of that agreement and that the proceeds from the sale of TRW’s Aeronautical Systems business will be used by TRW to reduce its indebtedness. Northrop Grumman advised Salomon Smith Barney, and Salomon Smith Barney assumed, that the final terms of the merger agreement would not vary materially from those set forth in the draft provided to it. Salomon Smith Barney further assumed that the merger would be consummated in a timely fashion in accordance with the terms of the merger agreement, without waiver of any of the conditions precedent to the merger contained in the merger agreement.
 
Salomon Smith Barney’s opinion relates to the relative values of Northrop Grumman and TRW. It does not express any opinion as to what the value of Northrop Grumman common stock will be when issued pursuant to the merger or the price at which Northrop Grumman common stock will trade or otherwise be transferable subsequent to the merger. Salomon Smith Barney was not requested to consider, and its opinion did not address, the relative merits of the merger as compared to any alternative business strategies that might exist for Northrop Grumman or the effect of any other transaction in which Northrop Grumman might engage. Salomon Smith Barney’s opinion necessarily was based on information available to it and financial, stock market, and other conditions and circumstances as they existed and were disclosed to it as of the date of its opinion.
 
Salomon Smith Barney’s advisory services and its opinion expressed herein were provided for the information of Northrop Grumman’s board of directors in its evaluation of the merger, and Salomon Smith Barney’s opinion is not intended to be and does not constitute a recommendation of the merger to Northrop Grumman’s board of directors, Northrop Grumman or to anyone else, or a recommendation to any stockholder as to how such stockholder should vote on any matters relating to the merger.
 
The Salomon Smith Barney opinion to Northrop Grumman’s board of directors as to the fairness, from a financial point of view, of the exchange ratio to Northrop Grumman, was one of many factors taken into consideration by Northrop Grumman’s board of directors in making its decision to approve the merger agreement. The terms of the merger were determined through negotiations between Northrop Grumman and TRW, and were approved by Northrop Grumman’s board of directors. Although Salomon Smith Barney provided advice to Northrop Grumman during the course of negotiations, the decision to enter into the merger agreement and to agree to the exchange ratio was solely that of Northrop Grumman’s board of directors.

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Salomon Smith Barney is an internationally recognized investment banking firm engaged in, among other things, the valuation of businesses and their securities in connection with mergers and acquisitions, restructurings, leveraged buyouts, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes. Northrop Grumman selected Salomon Smith Barney to act as its financial adviser on the basis of Salomon Smith Barney’s international reputation and Salomon Smith Barney’s familiarity with Northrop Grumman. Salomon Smith Barney and its affiliates (including Citigroup Inc. and its affiliates) have in the past provided and are currently providing financial advisory, investment banking and financing services to Northrop Grumman and TRW unrelated to the merger, for which Salomon Smith Barney and its affiliates have received and will receive customary fees.
 
In the ordinary course of its business, Salomon Smith Barney and its affiliates may actively trade or hold the securities of both Northrop Grumman and TRW for its own account and for the account of customers and, accordingly, may at any time hold a long or short position in those securities. Salomon Smith Barney and its affiliates (including Citigroup Inc. and its affiliates) may maintain relationships with Northrop Grumman and TRW and their respective affiliates.
 
Pursuant to the terms of an engagement letter, Northrop Grumman agreed to pay Salomon Smith Barney an aggregate fee of $22.5 million for its services rendered in connection with the acquisition, $17.5 million of which have been earned and $5 million of which will become payable upon consummation of the merger.
 
Northrop Grumman also has agreed to reimburse Salomon Smith Barney for its reasonable travel and other expenses incurred in connection with its engagement, including the reasonable fees and expenses of its outside counsel, and to indemnify Salomon Smith Barney against specific liabilities and expenses relating to or arising out of its engagement, including liabilities under the federal securities laws.
 
Opinion of Stephens Financial Group
 
Stephens Financial Group (referred to as “SFG”) was engaged to provide financial advisory services to Northrop Grumman in connection with the merger. Pursuant to SFG’s engagement letter with Northrop Grumman, SFG provided an oral opinion to Northrop Grumman’s board of directors on June 30, 2002, subsequently confirmed in writing, to the effect that, based upon and subject to the various assumptions, considerations and limitations set forth in its opinion, its work summarized below, its experience in investment banking and other factors it deemed relevant, as of that date, the exchange ratio was fair, from a financial point of view, to Northrop Grumman. Except for this opinion, SFG did not provide to Northrop Grumman or Northrop Grumman’s board of directors any report, opinion or appraisal with respect to the exchange ratio.
 
The full text of SFG’s opinion, which sets forth the assumptions made, information relied upon, general procedures followed, matters considered and limitations on the review undertaken by SFG, is attached to this joint proxy statement/prospectus as Annex C. The summary of SFG’s opinion set forth below is qualified in its entirety by reference to the full text of the opinion. Stockholders are urged to read SFG’s opinion carefully and in its entirety. The fairness opinion was provided to Northrop Grumman’s board of directors for its information and is directed only to the fairness, from a financial point of view, of the exchange ratio pursuant to the merger agreement to Northrop Grumman.
 
SFG has consented to the inclusion of its opinion and to the inclusion of the summary of its opinion in this joint proxy statement/prospectus. In giving such consent, SFG does not concede that it comes within the category of persons whose consent is required under Section 7 of the Securities Act, or the rules and regulations of the SEC thereunder, nor does it concede that it is an expert within the meaning of the term “expert” as used in the Securities Act or the rules and regulations of the SEC thereunder with respect to any part of the registration statement on Form S-4 of which this joint proxy statement/prospectus forms a part.

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In arriving at its opinion, SFG has, among other things:
 
 
 
reviewed certain publicly available financial statements and other information of Northrop Grumman and TRW, respectively;
 
 
 
reviewed certain internal financial statements and other financial and operating data concerning Northrop Grumman and TRW prepared by the managements of Northrop Grumman and TRW, respectively;
 
 
 
analyzed certain financial projections prepared by the managements of Northrop Grumman and TRW, respectively;
 
 
 
discussed with senior executives of Northrop Grumman and TRW the business, operations and prospects of Northrop Grumman and TRW as well as certain strategic, financial and operational benefits of the merger for the combined company;
 
 
 
analyzed the pro forma impact of the merger on, amongst other things, the combined company’s earnings per share, cash flow, consolidated capitalization and financial ratios;
 
 
 
reviewed the prices and trading activity for Northrop Grumman common stock and TRW common stock and compared them with the securities of certain other publicly-traded companies comparable to Northrop Grumman and TRW;
 
 
 
reviewed the financial terms, to the extent publicly available, of certain comparable merger transactions;
 
 
 
participated in certain discussions and negotiations of Northrop Grumman and TRW and their financial and legal advisers;
 
 
 
reviewed the merger agreement and certain related documents; and
 
 
 
performed such other analyses and considered such other factors as it has deemed appropriate.
 
In rendering its opinion, SFG has assumed and relied, without independent verification, upon the accuracy and completeness of all financial and other information and data reviewed by or discussed with SFG that was publicly available or furnished to SFG by or on behalf of Northrop Grumman and TRW, and has further relied upon the assurances of the management of Northrop Grumman and TRW that they are not aware of any facts that would make any of such information or data inaccurate or misleading. With respect to the financial forecasts provided to SFG which it examined, SFG has, based upon the advice of senior management of TRW and Northrop Grumman, assumed that they have been reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the management of TRW and Northrop Grumman, as the case may be. SFG expresses no view with respect to such forecasts and estimates or the assumptions upon which they were based. SFG has also assumed that the merger will be a tax-free reorganization for United States federal income tax purposes. Northrop Grumman advised SFG, and SFG assumed, that the final terms of the merger agreement would not vary materially from those set forth in the draft provided to SFG. SFG further assumed that the merger would be consummated in a timely fashion in accordance with the terms of the merger agreement provided to SFG, without waiver or modification of any of the conditions precedent to the merger or other material terms contained in the merger agreement. SFG has not made an independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of Northrop Grumman or TRW, nor was it furnished with any such evaluations or appraisals.
 
SFG’s opinion is necessarily based upon financial, economic, market and other conditions existing on the date thereof and does not address the fairness of the exchange ratio to Northrop Grumman as of any other date. SFG also has assumed that all material governmental, regulatory or other consents and approvals necessary for the consummation of the merger contemplated by the merger agreement will be obtained without any adverse effect on Northrop Grumman or TRW or their subsidiaries or on the contemplated benefits of the transactions contemplated by the merger agreement in any respect material to its analysis.

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SFG’s opinion relates to the relative values of Northrop Grumman and TRW. It does not express any opinion as to what the value of Northrop Grumman common stock will be when issued in the merger or the price at which Northrop Grumman common stock will trade or otherwise be transferable subsequent to the merger. SFG’s opinion is for the benefit and use of the board of directors of Northrop Grumman in connection with and for the purpose of its consideration of the merger. Its opinion does not address the merits of Northrop Grumman’s underlying business decision to effect the transactions contemplated by the merger agreement or the merits of the merger relative to any alternative transaction or business strategy that may be available to Northrop Grumman, and does not constitute a recommendation to any stockholder of Northrop Grumman as to whether or not that stockholder should vote to approve the merger and should not be relied upon by any stockholder as such.
 
SFG’s opinion to Northrop Grumman’s board of directors as to the fairness, from a financial point of view, of the exchange ratio to Northrop Grumman, was one of many factors taken into consideration by Northrop Grumman’s board of directors in making its decision to approve the merger agreement. The terms of the merger were determined through negotiations between Northrop Grumman and TRW, and were approved by Northrop Grumman’s board of directors. Although SFG provided advice to Northrop Grumman during the course of negotiations, the decision to enter into the merger agreement and to agree to the exchange ratio was solely that of Northrop Grumman’s board of directors.
 
SFG is an investment banking firm engaged in, among other things, the valuation of businesses and their securities in connection with mergers and acquisitions, restructurings, leveraged buyouts, private placements and valuations for corporate and other purposes. Northrop Grumman selected SFG to act as its financial adviser on the basis of its reputation and SFG’s familiarity with Northrop Grumman. In the ordinary course of business, SFG or its affiliates may trade the equity and debt securities of Northrop Grumman and TRW for their own account and for the accounts of customers and, accordingly, may at any time hold a long or short position in these securities.
 
Pursuant to the terms of an engagement letter, Northrop Grumman agreed to pay SFG an aggregate fee of $4.25 million for its services provided in connection with the merger, $4.0 million of which is contingent upon the consummation of the merger. Northrop Grumman also has agreed to reimburse SFG for its reasonable travel and other expenses incurred in connection with its engagement, including the reasonable fees and expenses of its outside counsel. In addition, Northrop Grumman has agreed to indemnify SFG for certain liabilities and expenses arising out of its engagement, including liabilities under United States federal securities laws.
 
TRW’s Advisers
 
At the meeting of the board of directors of TRW on June 30, 2002, each of Goldman Sachs and Credit Suisse First Boston rendered its opinion to the board of directors of TRW to the effect that, as of that date and based on and subject to the assumptions, qualifications and limitations described in their respective opinions, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to the holders of shares of TRW common stock other than Northrop Grumman and its affiliates.
 
The full text of the written opinions of Goldman Sachs and Credit Suisse First Boston, each dated June 30, 2002, which set forth the procedures followed, assumptions made, matters considered and limitations on the review undertaken by each of Goldman Sachs and Credit Suisse First Boston in connection with their respective opinions, are attached as Annexes D and E, respectively, to this joint proxy statement/prospectus and are incorporated herein by reference. Goldman Sachs and Credit Suisse First Boston provided their respective advisory services and opinions for the information and assistance of the TRW board of directors in connection with its consideration of the merger. Neither the Goldman Sachs opinion nor the Credit Suisse First Boston opinion is a recommendation as to how any holder of shares of TRW common stock should vote at the TRW meeting. Holders of TRW common stock are urged to and should read the opinions in their entirety.

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Opinion of Goldman Sachs
 
In connection with its opinion, Goldman Sachs reviewed, among other things:
 
 
 
the merger agreement;
 
 
 
the annual reports to shareholders and annual reports on Form 10-K of TRW and Northrop Grumman for the five years ended December 31, 2001;
 
 
 
the Schedule 14D-9 of TRW, filed on March 13, 2002, as amended;
 
 
 
a number of interim reports to stockholders and quarterly reports on Form 10-Q of TRW and Northrop Grumman;
 
 
 
a number of other communications from TRW and Northrop Grumman to their respective stockholders; and
 
 
 
a number of internal financial analyses and forecasts for TRW and Northrop Grumman prepared by their respective managements, including cost savings and operating synergies projected by the management of TRW to result from the merger.
 
Goldman Sachs also held discussions with members of the senior managements of TRW and Northrop Grumman regarding their assessment of the strategic rationale for, and the potential benefits of, the merger and the past and current business operations, financial condition and future prospects of their respective companies. In addition, Goldman Sachs reviewed the reported price and trading activity for the TRW common stock and the Northrop Grumman common stock, compared select financial and stock market information for TRW and Northrop Grumman with similar information for several other companies the securities of which are publicly traded, and reviewed the financial terms of several recent business combinations in the automotive and aerospace and defense industries specifically and in other industries generally. Goldman Sachs also performed other studies and analyses that it considered appropriate.
 
For purposes of its analyses, Goldman Sachs assumed that:
 
 
 
the merger would be consummated in accordance with the merger agreement without amendment, modification or waiver of any of the terms of the merger agreement; and
 
 
 
in the course of obtaining the necessary regulatory and third party approvals, consents, waivers and agreements relating to the merger, no modification, condition, restriction, limitation or delay would be imposed that would have an adverse effect on TRW or Northrop Grumman or the contemplated benefits of the merger.
 
Goldman Sachs’ opinion was necessarily based upon information available to it and financial, economic, market and other conditions as they existed and could be evaluated on the date of Goldman Sachs’ opinion. Goldman Sachs’ opinion did not address relative merits of the merger as compared to other business strategies or transactions that might have been available to TRW or the underlying business decision of TRW to engage in the merger. In connection with its engagement, Goldman Sachs approached third parties to solicit indications of interest in a possible acquisition of TRW and its constituent businesses and held preliminary discussions with third parties.
 
Goldman Sachs relied upon the accuracy and completeness of all of the financial, accounting and other information discussed with or reviewed by it and assumed that accuracy and completeness for purposes of rendering its opinion. In addition, Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities of TRW or Northrop Grumman or any of their respective subsidiaries. Goldman Sachs assumed that the internal financial forecasts prepared by the management of TRW were reasonably prepared on a basis reflecting the best currently available estimates and judgments of TRW.

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Goldman Sachs provided its advisory services and its opinion for the information and assistance of the TRW board of directors in connection with its consideration of the merger. The Goldman Sachs opinion is not a recommendation as to how any holders of shares of TRW common stock should vote.
 
Opinion Of Credit Suisse First Boston
 
In arriving at its opinion, Credit Suisse First Boston, among other things:
 
 
 
reviewed the merger agreement;
 
 
 
reviewed business and financial information relating to TRW and Northrop Grumman;
 
 
 
reviewed other information relating to TRW and Northrop Grumman, including financial forecasts and publicly available research estimates provided to or discussed with Credit Suisse First Boston by the managements of TRW and Northrop Grumman and met with the managements of TRW and Northrop Grumman to discuss the businesses and prospects of TRW and Northrop Grumman;
 
 
 
considered financial and stock market data of TRW and Northrop Grumman, and compared those data with similar data for other publicly held companies in businesses similar to TRW and Northrop Grumman;
 
 
 
considered the financial terms of other business combinations and other transactions recently effected; and
 
 
 
considered other information, financial studies, analyses and investigations and financial, economic and market criteria that it deemed relevant.
 
In connection with its review, Credit Suisse First Boston did not assume any responsibility for independent verification of any of the information that it reviewed or considered and relied on that information being complete and accurate in all material respects. Credit Suisse First Boston was advised, and assumed with respect to the financial forecasts and publicly available research estimates reviewed by Credit Suisse First Boston, that (i) the forecasts prepared and provided by TRW were reasonably prepared on bases reflecting the best currently available estimates and judgments of TRW’s management as to the future financial performance of TRW and (ii) the publicly available research estimates with respect to Northrop Grumman discussed with the management of Northrop Grumman represent reasonable estimates as to the future financial performance of Northrop Grumman.
 
Credit Suisse First Boston relied upon the views of management of TRW and Northrop Grumman concerning the business, operational and strategic benefits and implications of the merger, including the cost savings and potential synergies expected to result from the merger.
 
TRW also informed Credit Suisse First Boston, and Credit Suisse First Boston assumed, the merger will be treated as a tax-free reorganization for federal income tax purposes. Credit Suisse First Boston also assumed that the merger will be consummated in accordance with the merger agreement without amendment, modification or waiver of any of the terms of the merger agreement and that in the course of obtaining the necessary regulatory and third party approvals, consents, waivers and agreements relating to the merger, no modification, condition, restriction, limitation or delay would be imposed that would have an adverse effect on TRW or Northrop Grumman or the contemplated benefits of the merger.
 
Credit Suisse First Boston was not requested to make, and did not make, an independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of TRW or Northrop Grumman. Credit Suisse First Boston’s opinion was necessarily based upon information available to it, and financial, economic, market and other conditions as they existed and could be evaluated on the date of Credit Suisse First Boston’s opinion.
 
Credit Suisse First Boston did not express any opinion as to the actual value of the Northrop Grumman common stock when issued or the prices at which Northrop Grumman common stock will trade at any time.

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Credit Suisse First Boston’s opinion did not address the relative merits of the merger as compared to other business strategies or transactions that might have been available to TRW or the underlying business decision of TRW to engage in the merger.
 
In connection with its engagement, Credit Suisse First Boston was requested to approach, and hold preliminary discussions with, third parties to solicit indications of interest in a possible acquisition of TRW or its constituent businesses and held preliminary discussions with certain of those parties prior to the delivery of its opinion. The Credit Suisse First Boston opinion does not constitute a recommendation to any shareholder of TRW as to how any such shareholder should vote or act on any matter related to the merger.
 
Joint Financial Analyses of TRW’s Financial Advisers
 
In preparing their respective opinions to the TRW board of directors, Goldman Sachs and Credit Suisse First Boston performed a variety of financial and comparative analyses, including those described below. The summary of the analyses of Goldman Sachs and Credit Suisse First Boston described below is not a complete description of the analyses underlying their opinions. The preparation of a fairness opinion is a complex process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a fairness opinion is not readily susceptible to partial analysis or summary description. In arriving at their respective opinions, Goldman Sachs and Credit Suisse First Boston made qualitative judgments as to the significance and relevance of each analysis and factor that they considered. Accordingly, Goldman Sachs and Credit Suisse First Boston believe that their analyses must be considered as a whole and that selecting portions of their analyses and factors, or focusing on information presented in tabular format, without considering all analyses and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying their analyses and opinions.
 
In their analyses, Goldman Sachs and Credit Suisse First Boston considered industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of the parties and their advisers. No company, transaction or business used in Goldman Sachs’ and Credit Suisse First Boston’s analyses as a comparison is identical to TRW, Northrop Grumman or the proposed merger. Rather, the analyses involve complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the acquisition, public trading or other values of the companies, business segments or transactions analyzed. The estimates contained in the analyses of Goldman Sachs and Credit Suisse First Boston and the ranges of valuations resulting from any particular analysis are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those suggested by the analyses. In addition, analyses relating to the value of businesses or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold. Accordingly, the analyses and estimates of Goldman Sachs and Credit Suisse First Boston are inherently subject to substantial uncertainty.
 
The opinions of Goldman Sachs and Credit Suisse First Boston were only one of many factors considered by the board of directors of TRW in its evaluation of the proposed merger and should not be viewed as determinative of the views of the board of directors of TRW or management with respect to the merger or the exchange ratio. The following summary is not a complete description of the analyses performed by Goldman Sachs or Credit Suisse First Boston and is qualified in its entirety by reference to the written opinions of Goldman Sachs and Credit Suisse First Boston set forth in Annexes D and E, respectively.
 
The following is a summary of the material financial analyses underlying the opinions of Goldman Sachs and Credit Suisse First Boston delivered to the board of directors of TRW. The financial analyses summarized below include information presented in tabular format. In order to fully understand Goldman Sachs’ and Credit Suisse First Boston’s financial analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering

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the data in the tables below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Goldman Sachs’ and Credit Suisse First Boston’s financial analyses.
 
Value to TRW Shareholders at Various Northrop Grumman Prices
 
At various prices of Northrop Grumman’s common stock, Goldman Sachs and Credit Suisse First Boston calculated:
 
 
 
the value in Northrop Grumman common stock to be received by TRW shareholders for each share of TRW common stock; and
 
 
 
the percentage ownership by TRW shareholders of the common equity on a fully diluted basis of Northrop Grumman after the merger.
 
The results of these analyses are summarized as follows:
 
Northrop Grumman Price

    
Implied Value to TRW Shareholders

    
TRW Pro Forma Ownership

 
$100.00
    
$
53.57
    
38
%
$105.00
    
$
56.25
    
38
%
$110.00
    
$
58.93
    
38
%
$112.00 (bottom of collar)
    
$
60.00
    
38
%
$115.00
    
$
60.00
    
37
%
$120.00
    
$
60.00
    
36
%
$125.00 (June 28, 2002 closing price)
    
$
60.00
    
35
%
$130.00
    
$
60.00
    
34
%
$135.00
    
$
60.00
    
34
%
$138.00 (top of collar)
    
$
60.00
    
33
%
$140.00
    
$
60.87
    
33
%
$145.00
    
$
63.04
    
33
%
$150.00
    
$
65.22
    
33
%
 
Historical TRW Share Price Analysis
 
Goldman Sachs and Credit Suisse First Boston reviewed the historical trading prices for the shares of common stock of TRW. For the five-year period ended February 21, 2002, which was the last trading day immediately preceding Northrop Grumman’s public announcement of its proposal to purchase each share of TRW common stock for Northrop Grumman common stock with a value of $47.00 per TRW share, the price of TRW common stock closed 13 times above $60.00 per share, 617 times between $50.00 to $60.00 per share, and 627 times below $50.00 per share. For the ten-year period ended February 21, 2002, the price of TRW common shares closed 13 times above $60.00 per share, 650 times between $50.00 to $60.00 per share, and 1,859 times below $50.00 per share.
 
Historical Exchange Ratio Analysis
 
Goldman Sachs and Credit Suisse First Boston reviewed the historical trading prices for TRW common stock and Northrop Grumman common stock for the one-year period ended February 21, 2002 in order to compare the Northrop Grumman exchange ratio collar of .4348x to .5357x to the historical exchange ratios of TRW common stock to Northrop Grumman common stock. The analysis indicated the following average historical exchange ratios of TRW common stock to Northrop Grumman common stock and implied exchange

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ratio premiums to the holders of shares of TRW common stock at the high end, midpoint and low end of the collar range:
 
    
Implied Exchange Ratio

    
Implied Premium/(Discount) of Exchange Ratio of Northrop Grumman Offer ($60) at High End, Midpoint and Low End
of Collar Range

 
       
$138 (0.4348x)

    
$125 (0.4800x)

      
$112 (0.5357x)

 
February 21, 2002 (Close Before Northrop Grumman’s Initial Proposal)
  
0.3379
x
  
28.7
%
  
42.1
%
    
58.6
%
February 15, 2002 (Close Before Announcement of Resignation of TRW’s former Chief Executive Officer)
  
0.3900
x
  
11.5
%
  
23.1
%
    
37.4
%
Initial Offer (1)
  
0.4352
x
  
(0.1
%)
  
10.3
%
    
23.1
%
Revised Offer (1)
  
0.4492
x
  
(3.2
%)
  
6.9
%
    
19.3
%
12-Month Average
  
0.4206
x
  
3.4
%
  
14.1
%
    
27.4
%
12-Month High (Aug. 1, 2001)
  
0.5547
x
  
(21.6
%)
  
(13.5
%)
    
(3.4
%)
12-Month Low (Sept. 21, 2001)
  
0.2819
x
  
54.2
%
  
70.3
%
    
90.0
%

(1)
 
Calculated by dividing the price per share of TRW common stock by the respective midpoints of the Northrop Grumman collars; initial offer exchange ratio calculated as $47.00/$108.00; revised offer exchange ratio calculated as $53.00/$118.00.
 
Valuation Overview
 
Using financial forecasts provided by TRW’s management, Goldman Sachs and Credit Suisse First Boston calculated potential, fully-distributed enterprise values for TRW’s Automotive business. Using these implied enterprise values for the Automotive business, Goldman Sachs and Credit Suisse First Boston calculated a range of enterprise values for the remaining Systems, Space and Electronics businesses of TRW based on the Northrop Grumman offer of $60.00 per TRW share.
 
Implied Fully-Distributed Enterprise Values for Automotive.    In calculating the range of fully-distributed enterprise values for Automotive, the financial advisers calculated various trading multiples using the following measures:
 
 
 
estimated fiscal year 2002 and 2003 GAAP earnings before interest, taxes, depreciation and amortization, sometimes referred to as EBITDA;
 
 
 
estimated fiscal year 2002 and 2003 EBITDA before pension and other post-employment benefits income and expenses, sometimes referred to as EBITDAPO; and
 
 
 
estimated fiscal year 2002 and 2003 EBITDA before pension income.
 
The following table presents the results of this analysis:
 
Fully-Distributed Automotive
Enterprise Value
($ in millions)

  
$5,250

    
$5,500

    
$5,750

    
$6,000

    
$6,250

 
GAAP EBITDA
  
FY 2002E
  
4.3
x
  
4.5
x
  
4.7
x
  
4.9
x
  
5.1
x
    
FY 2003E
  
4.2
 
  
4.4
 
  
4.6
 
  
4.8
 
  
5.0
 
EBITDAPO
  
FY 2002E
  
4.8
x
  
5.1
x
  
5.3
x
  
5.5
x
  
5.7
x
    
FY 2003E
  
4.6
 
  
4.8
 
  
5.1
 
  
5.3
 
  
5.5
 
EBITDA (before pension income)
  
FY 2002E
  
5.4
x
  
5.6
x
  
5.9
x
  
6.1
x
  
6.4
x
    
FY 2003E
  
5.1
 
  
5.4
 
  
5.6
 
  
5.9
 
  
6.1
 

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Using selected publicly available research forecasts, Goldman Sachs and Credit Suisse First Boston also calculated current public trading EBITDA multiples for eight peer companies in the automotive industry, including ArvinMeritor, Inc., Autoliv, Inc., BorgWarner Inc., Dana Corporation (excluding Dana Credit Corp.), Delphi Corporation, Lear Corporation, Magna International Inc. and Visteon Corporation. For this group of selected companies, the mean estimated 2002 EBITDA multiple was 5.5x, the median was 5.5x, the high was 7.1x and the low was 3.7x and the mean estimated 2003 EBITDA multiple was 4.8x, the median was 5.0x, the high was 5.6x and the low was 3.1x.
 
In addition, the financial advisers for TRW calculated and compared various financial multiples of business combinations involving companies in the automotive industry since July 1998. The financial advisers compared the transaction value as a multiple of the latest 12 months (or LTM) EBITDA prior to the announcement of such transaction for the following acquisitions:
 
 
 
Collins & Aikman Corporation’s acquisition of Textron Inc.’s auto trim division;
 
 
 
ZF Friedrichshafen AG’s acquisition of Mannesmann Sachs AG;
 
 
 
Heartland Industrial Partners, L.P.’s acquisition of Collins & Aikman;
 
 
 
Heartland Industrial Partners’ acquisition of MascoTech, Inc.;
 
 
 
Faurecia SA’s acquisition of Sommer Allibert SA;
 
 
 
BC Partners Inc.’s acquisition of Mark IV Industries, Inc.;
 
 
 
Robert Bosch GmbH’s and Siemens AG’s acquisition of Atecs Mannesmann AG;
 
 
 
Meritor Automotive, Inc.’s acquisition of Arvin Industries, Inc.;
 
 
 
Lear Corporation’s acquisition of United Technologies Automotive Inc.;
 
 
 
TRW’s acquisition of LucasVarity plc;
 
 
 
Federal-Mogul Corporation’s acquisition of Cooper Automotive; and
 
 
 
Continental AG’s acquisition of ITT Industries, Inc.’s brake & chassis division.
 
The following table presents the results of this analysis:
 
      
Value ($ in millions)

    
LTM EBITDA Multiples

Mean:
    
$
2,634
    
6.7x
Median:
    
$
1,918
    
6.5x
High:
    
$
8,500
    
8.9x
Low:
    
$
1,100
    
4.2x

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Implied Enterprise Values for Systems, Space and Electronics.    Assuming a total equity value of $7.814 billion for TRW (using the $60.00 in Northrop Grumman common stock per TRW share offer price) and net debt of $4.19 billion for TRW, Goldman Sachs and Credit Suisse First Boston implied enterprise values for the Systems, Space and Electronics businesses ranging from $5.754 billion to $6.754 billion. The EBITDA and EBIT multiples calculated from these enterprise values, which were based on financial forecasts provided by TRW’s management, are summarized in the following table:
 
Implied Systems, Space & Electronics
(SS&E) Enterprise Value
($ in millions)

  
$6,754

    
$6,504

    
$6,254

    
$6,004

    
$5,754

 
GAAP EBITDA
  
FY 2002E
  
15.1
x
  
14.5
x
  
14.0
x
  
13.4
x
  
12.9
x
    
FY 2003E
  
12.1
 
  
11.7
 
  
11.2
 
  
10.8
 
  
10.3
 
GAAP pro forma
  
FY 2002E
  
13.9
x
  
13.3
x
  
12.8
x
  
12.3
x
  
11.8
x
EBITDA(1)
                                       
GAAP EBIT
  
FY 2002E
  
20.4
x
  
19.7
x
  
18.9
x
  
18.2
x
  
17.4
x
    
FY 2003E
  
15.8
 
  
15.3
 
  
14.7
 
  
14.1
 
  
13.5
 
GAAP pro forma EBIT(1)
  
FY 2002E
  
18.2
x
  
17.6
x
  
16.9
x
  
16.2
x
  
15.5
x

(1) GAAP EBITDA and EBIT pro forma for fiscal year 2003E Systems, Space and Electronics commercial business expense levels.
 
Using selected publicly available research forecasts, Goldman Sachs and Credit Suisse First Boston also calculated current public trading EBITDA multiples for seven peer companies in the aerospace and defense industry, including BAE Systems plc, The Boeing Company, General Dynamics Corporation, L-3 Communications Holdings, Inc., Lockheed Martin Corporation, Northrop Grumman and Raytheon Company. For this group of selected companies, the mean estimated 2002 EBITDA multiple was 10.9x, the median was 10.9x, the high was 14.0x and the low was 7.9x and the mean estimated 2003 EBITDA multiple was 10.2x, the median was 10.9x, the high was 12.8x and the low was 7.2x.
 
In addition, Goldman Sachs and Credit Suisse First Boston calculated and compared various financial multiples of other business combinations involving companies in the aerospace and defense industry since December 1996. The financial advisers compared the transaction value as a multiple of the latest 12 months EBITDA prior to the announcement of such transaction for the following acquisitions:
 
 
 
Northrop Grumman’s acquisition of Newport News;
 
 
 
Northrop Grumman’s acquisition of Litton;
 
 
 
DaimlerChrysler Aerospace AG’s acquisition of Aerospatiale Matra SA;
 
 
 
Thales SA’s acquisition of Racal Electronics plc;
 
 
 
British Aerospace plc’s acquisition of Marconi Electronic Systems;
 
 
 
Lockheed Martin’s withdrawn acquisition proposal for Northrop Grumman;
 
 
 
Raytheon’s acquisition of Hughes Aircraft Company;
 
 
 
Boeing’s acquisition of McDonnell Douglas Corporation; and
 
 
 
Raytheon’s acquisition of Texas Instruments Incorporated’s defense systems and electronics business.
 
The following table presents the results of this analysis.
 
      
Value ($ in millions)

    
LTM EBITDA Multiples

Mean:
    
$
7,792
    
10.3x
Median:
    
$
6,748
    
10.0x
High:
    
$
15,783
    
14.0x
Low:
    
$
2,531
    
7.8x

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Analysis of TRW Value Enhancement Plan
 
Using financial forecasts provided by TRW’s management, Goldman Sachs and Credit Suisse First Boston analyzed the fully distributed public trading value to TRW shareholders if TRW had completed its value enhancement plan including a sale of the Aeronautical Systems business for an assumed $1.5 billion in gross proceeds to reduce debt and a sponsored spin off of the Automotive business. With respect to the valuation of the separate Automotive business, debt of approximately $2.8 billion to achieve a targeted credit rating of Baa3/BBB- and an equity investment by financial sponsors in the business were assumed. Based on an enterprise value for the Automotive business of $5.5 billion to $6.0 billion and 10.0-12.0x estimated 2002 pro forma EBITDA for the Systems, Space and Electronics businesses, the value ranged from $46.00 to $57.00 per TRW share.
 
Northrop Grumman Performance Analysis
 
Goldman Sachs and Credit Suisse First Boston reviewed the historical trading prices for the shares of common stock of Northrop Grumman. For the five-year period ended June 28, 2002, Northrop Grumman’s stock price increased 41% relative to an increase of 92% in an aerospace and defense composite consisting of Boeing, General Dynamics, L-3 Communications, Lockheed Martin and Raytheon and an increase of 12% in the S&P 500. For the one-year period ended June 28, 2002, Northrop Grumman’s stock price increased 53% relative to an increase of 40% in the aerospace and defense composite and a decrease of 19% in the S&P 500. TRW’s financial advisers also compared Northrop Grumman’s performance against the aerospace and defense composite with L-3 Communications excluded from the composite, and under that scenario, Northrop Grumman’s percentage increase in price of 41% was closer to the increase in the composite of 44% for the five-year period ended June 28, 2002 (the S&P 500 increased 12% during the same period). In addition, Goldman Sachs and Credit Suisse First Boston analyzed the percentage price increases for Northrop Grumman shares compared to the composite for the period commencing on the date of Northrop Grumman’s initial offer to TRW and ending on June 28, 2002. This analysis resulted in price increases of 14% and 11% for Northrop Grumman stock and for the composite, respectively, and a similar 14% price increase for both Northrop Grumman stock and for the composite (excluding L-3 Communications). The S&P 500 decreased 9% during the same period.
 
Goldman Sachs and Credit Suisse First Boston also compared trading multiples for Northrop Grumman against its industry peers, which included BAE Systems, Boeing, General Dynamics, L-3 Communications, Lockheed Martin and Raytheon, based on IBES, Inc. median estimates for GAAP earnings per share and selected publicly available research forecasts for EBITDA projections. TRW’s financial advisers implied an enterprise value to estimated calendar year 2002 EBITDA multiple of 10.5x for Northrop Grumman and an enterprise value to estimated calendar year 2003 EBITDA multiple of 10.0x. The median EBITDA multiple for the selected companies was 10.9x for both calendar years 2002 and 2003. Goldman Sachs and Credit Suisse First Boston derived price to earnings multiples of 20.6x and 18.4x for Northrop Grumman for estimated calendar years 2002 and 2003, respectively. The median price to earnings multiples for the selected companies was 20.4x and 18.4x for 2002 and 2003, respectively.
 
In addition, TRW’s financial advisers reviewed the current earnings estimates for Northrop Grumman from several brokers. Some of these brokers provided price targets, which ranged from $125.00 per share to $160.00 per share.
 
Pro Forma Merger Analysis
 
Using financial forecasts provided by TRW’s management and selected publicly available research forecasts, Goldman Sachs and Credit Suisse First Boston analyzed the pro forma estimated calendar year 2002 revenues and enterprise value for Northrop Grumman (combined with TRW’s systems, space and electronics businesses, based on the $60.00 offer price and an enterprise value for TRW’s Automotive business of $5.75 billion) relative to its industry peers, assuming no synergies from the merger. The financial advisers calculated the total estimated calendar year 2002 revenues to be $23.4 billion, which reflected pro forma figures for Northrop Grumman’s acquisition of Newport News, and the total enterprise value to be $27.4 billion for Northrop Grumman.

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Goldman Sachs and Credit Suisse First Boston also prepared a pro forma analysis of the financial impact of the merger on the earnings per share of Northrop Grumman using financial forecasts provided by TRW’s management and IBES, Inc. estimates for Northrop Grumman. For the estimated calendar year 2003, TRW’s financial advisers analyzed the accretion or dilution to earnings per share of the common stock of Northrop Grumman on a pro forma basis of the offer of $60.00 in Northrop Grumman common stock per TRW share, assuming a $1.9 billion write-up of intangibles to be amortized over 13.5 years and tax deductible for financial accounting purposes. Goldman Sachs and Credit Suisse First Boston performed this analysis based on the low end, midpoint and high end of Northrop Grumman’s collar and under various pre-tax synergies scenarios, ranging from the realization of no pre-tax synergies up to $150 million of pre-tax synergies from the merger. The analysis indicated that the proposed merger, at the midpoint of the collar range with $100 million of pre-tax synergies, would be moderately accretive to Northrop Grumman’s earnings per share in estimated calendar year 2003.
 
Goldman Sachs and Credit Suisse First Boston also analyzed the pro forma impact of the merger based on the offer of $60.00 in Northrop Grumman common stock per TRW share, assuming a split-off of the Automotive business at an enterprise value of $5.75 billion with $2.8 billion in debt and based on the midpoint of Northrop Grumman’s collar of $125.00 per Northrop Grumman share. Goldman Sachs and Credit Suisse First Boston calculated that the merger under the scenario of no change in Northrop Grumman’s 2003 earnings per share performance relative to IBES, Inc. estimates with pre-tax synergies of $100 million would be moderately dilutive.
 
General
 
Each of Goldman Sachs and Credit Suisse First Boston, as part of their respective investment banking businesses, is continually engaged in performing financial analyses with respect to businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities and private placements as well as for estate, corporate and other purposes. TRW selected Goldman Sachs and Credit Suisse First Boston as its financial advisers because they are internationally recognized investment banking firms that have substantial experience in transactions similar to the merger and because of Goldman Sachs’ familiarity with TRW.
 
Goldman Sachs is familiar with TRW, having performed investment banking services for TRW from time to time, including having acted as:
 
 
 
financial adviser in connection with TRW’s recently announced agreement to sell certain assets and liabilities of TRW engaged in the Aeronautical Systems business to Goodrich Corporation;
 
 
 
financial adviser in connection with TRW’s proposed spin off of its Automotive business;
 
 
 
co-manager with respect to an offering of 8.75% notes of TRW due 2006 (aggregate principal amount $400 million) in May 2000 and as lead manager with respect to an offering of 7.63% notes of TRW due 2006 (aggregate principal amount $500 million) in March 2001;
 
 
 
agent with respect to TRW’s commercial paper program in 2002; and
 
 
 
its financial adviser in connection with, and having participated in some of the negotiations leading to, the merger agreement.
 
Goldman Sachs also has provided certain investment banking services to Northrop Grumman from time to time, including having acted as financial adviser with respect to its acquisition of Litton in April 2001, and having acted as co-manager with respect to an offering of 7.25% equity security units of Northrop Grumman (aggregate principal amount $600 million) and of 8 million shares of Northrop Grumman common stock (aggregate amount $708 million) in November 2001.
 
Goldman Sachs may provide investment banking services to TRW and Northrop Grumman in the future. Goldman Sachs provides a full range of financial advisory and securities services and, in the course of its normal trading activities, may from time to time effect transactions and hold positions in securities, including derivative securities, of TRW or Northrop Grumman for its own account and for the accounts of customers.

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Credit Suisse First Boston in the past has provided, is currently providing, and may in the future provide investment banking and financial services to TRW and Northrop Grumman for which Credit Suisse First Boston has received, and expects to receive, compensation.
 
In the ordinary course of its business, Credit Suisse First Boston and its affiliates may actively trade the debt and equity securities of both TRW and Northrop Grumman and in the future may actively trade securities of Northrop Grumman and its affiliates for their own accounts and for the accounts of customers and, accordingly, may at any time hold a long or short position in those securities.
 
TRW retained Goldman Sachs and Credit Suisse First Boston as its independent financial advisers in connection with TRW’s analysis and consideration of, and response to, Northrop Grumman’s acquisition proposal and with respect to the possible purchase of all or a portion of the stock or assets of TRW, a recapitalization of TRW, a sale of TRW or the solicitation of proxies or consents of TRW’s shareholders. TRW has agreed to pay Goldman Sachs and Credit Suisse First Boston transaction fees of .25% and .15%, respectively, of the aggregate value to be paid in the merger. TRW has also agreed to reimburse Goldman Sachs and Credit Suisse First Boston for all reasonable out-of-pocket expenses, including fees of counsel, and to indemnify Goldman Sachs and Credit Suisse First Boston and certain related persons against specified liabilities, including liabilities under the federal securities laws, relating to or arising out of their respective engagements.
 
Interests of TRW Directors and Executive Officers in the Merger
 
Certain members of the board of directors and executive officers of TRW may have interests in the merger that are different from, or are in addition to, the interests of TRW shareholders generally. The TRW board of directors was aware of these interests and considered them, among other matters, in approving the merger agreement. The consummation of the merger will constitute a change of control for purposes of each of the plans and agreements described below.
 
Employment Continuation Agreements
 
TRW has entered into agreements with each of its executive officers (other than Mr. Lunn) designed generally to assure continued management in the event of a change in control of TRW. The agreements provide that, following a change in control, TRW will employ the officer until the earlier of the officer’s death, his or her attaining age 65 (age 70 in the case of Mr. Knicely) or the expiration of the third anniversary of the change in control, which is referred to as the “employment period.” If the officer’s employment were to be terminated by TRW during the employment period for reasons other than disability or cause, or by the officer for reasons relating to changed circumstances or during the 60-day period immediately following the first anniversary of the occurrence of a change in control, the officer would be entitled to receive a severance payment equal to the net present value of:
 
 
 
the salary and incentive pay that the officer would have received under the agreement for the remainder of the employment period or two years, whichever is longer (the “remaining period”) and a pro rata portion of the incentive pay for the year of termination; and
 
 
 
employee benefits (other than employee welfare benefits and stock options and similar compensatory benefits) that the executive would have received for the remaining period, including under TRW’s non-qualified retirement plan, assuming vesting (other than with respect to Mr. Plant, who will be entitled to a payment equal to 15% of his base salary and target incentive pay in lieu of such benefit continuation).
 
TRW will also provide the executive with health insurance and similar welfare benefits for the remaining period. If and to the extent any such employee benefits cannot be provided due to the fact that the executive is no longer employed by TRW or as a result of a termination or amendment of such employee benefit, TRW will itself pay or provide for the payment of such employee benefit. Welfare benefits payable to the executive shall be reduced to the extent comparable welfare benefits are actually received by the executive from another employer during the remaining period.

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If Mr. Plant’s employment is terminated following the change in control and that termination occurs on or before the date on which he becomes eligible for a TRW-requested early retirement under the TRW pension scheme, TRW will pay Mr. Plant a pension equal to the benefit he would have received had he continued to be employed by TRW until the date upon which he would have become eligible for a TRW-requested early retirement. If following a change in control Mr. Plant is terminated, but that termination of employment occurs after he becomes eligible for a TRW-requested early retirement, then Mr. Plant will receive a pension benefit equal to the amount he would then be entitled to receive, assuming that his employment with TRW had continued for the remaining period and that his age was increased by an amount equal to the remaining period.
 
The agreements also provide that, in the event that total payments and distributions to the executive would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, TRW will pay the excise tax and will pay to the officer a gross-up payment such that, after taking into account all taxes under Section 4999 applicable to the officer, the officer retains the same after-tax payment that he or she would have retained if Section 4999 did not apply.
 
TRW has also established a plan under which TRW executives party to employment continuation agreements may elect to defer receipt of payments that would otherwise be payable within five business days of a qualifying termination of employment following a change in control. The executives may elect to defer receipt of payments for up to two years, and may elect to receive their payouts in a lump sum or in annual installments of two to ten years. An executive who elects to defer is able to hypothetically invest the deferred amounts in a range of investment alternatives, and upon payout of the deferred amounts the executive receives the gain or loss on those hypothetical investments while such amounts were deferred.
 
TRW has established a trust related to funding payments that TRW would be required to make under the employment continuation agreements described above upon a change in control. Under the terms of the trust, within 180 days or such later date as determined by TRW’s board of directors following a potential change in control, TRW is required to fund the trust with amounts sufficient to fund 125% of TRW’s obligations under the agreements. The public disclosure by Northrop Grumman on February 22, 2002 of its unsolicited proposal to TRW to provide all of the TRW’s shareholders with $47.00 in Northrop Grumman common stock for each share of TRW common stock constituted a potential change in control. At the present time TRW has not yet funded the trust. The trust is revocable at the option of TRW until a change in control occurs, after which it is irrevocable.
 
TRW estimates that the aggregate maximum amount of cash severance that would become payable to the executive officers as a group under the employment continuation agreements (assuming the employment of all such officers terminates in a manner entitling them to such benefits), not including payments with respect to employee benefits, incentive pay for the portion of the year worked prior to termination, balances in non-qualified defined contribution plans or any excise tax gross up, would be approximately $20.8 million.
 
Retention Agreements
 
TRW entered into retention and severance agreements with its executive officers (other than Mr. Lunn and Mr. Plant) as a result of TRW’s plan to spin off the Automotive business and the other elements of TRW’s value enhancement plan. The agreements with each such officer provides that the officer will be paid a retention bonus of eighteen months of base salary plus incentive bonus at the target level of 60% of base salary, if the officer remains in active status through the “effective date” which is the earlier of:
 
 
 
the elimination of the officer’s position;
 
 
 
three months after the distribution date for the spin off of the Automotive business; and
 
 
 
April 17, 2003, subject to TRW’s right to extend the April 17, 2003 date for an additional three months if the spin off has just been completed or is still in process as of April 17, 2003.
 
The agreements provide that the officer will be paid the retention bonus if his employment is terminated, other than for cause, before the effective date.
 
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accepted or continued employment within TRW or the spun-off Automotive business (or, in the case of Mr. Bush, the buyer of TRW’s Aeronautical Systems business). If the officer qualifies for severance payments, TRW will generally continue the employment relationship from the date the officer ceases to provide active service to TRW until the earliest of:
 
 
 
eighteen months following that date;
 
 
 
the date the officer begins full-time employment outside of TRW;
 
 
 
the date the officer elects to retire from TRW (in the case of retirement-eligible officers); and
 
 
 
the officer’s death,
 
each of which is referred to as the “termination date.” TRW will continue to pay the officer’s salary and incentive bonus payments at target level through the termination date. If the officer begins full-time employment outside of TRW, retires or dies before the end of the eighteen-month severance period, all such compensation that would otherwise be paid over time will be accelerated and paid in a single lump sum within 30 days of the termination date. The officer would also generally receive benefits through the termination date. The benefits payable to retirement-eligible officers under TRW’s pension plan and non-qualified pension plans will be based on service through the earliest of the completion of the 18-month severance period, the officer’s retirement, or the officer’s death. The agreement with Mr. Roman provides that if his termination occurs more than twelve months after he is eligible to receive the retention bonus, he will receive severance in accordance with the terms of his preexisting employment arrangement with TRW.
 
If a change in control, as defined in the executive’s employment continuation agreement, occurs within twelve months of the effective date, the amounts payable under the executive’s employment continuation agreement will be offset and reduced by the retention and severance payments received under the retention and severance agreement.
 
Each of the agreements also contains covenants on the part of the executive with respect to confidentiality, cooperation and the release of claims. It is estimated that the aggregate maximum amount of cash benefit that would become payable to the executive officers as a group under these agreements (assuming such officers qualify for such benefits) would be approximately $15.3 million.
 
Equity Awards
 
Upon completion of the merger, (a) all outstanding stock options will vest, (b) all outstanding shares of restricted stock will vest and all restrictions thereon will immediately lapse and (c) all outstanding restricted stock units will vest and be settled in common shares. Under the terms of the merger agreement, each TRW option outstanding at the effective time of the merger will be deemed assumed by Northrop Grumman and converted into an option to purchase a number of shares of Northrop Grumman common stock based on the exchange ratio, and each TRW share of restricted stock and each TRW restricted stock unit will be converted into shares of Northrop Grumman common stock based on the exchange ratio. Alternatively, each holder of an equity award will be entitled to elect to receive prior to the effective time of the merger, in cancellation of such equity award, a cash payment equal to the average reported closing price per share of TRW common stock on the New York Stock Exchange for the five consecutive trading days ending on and including the second trading day prior to the closing of the merger multiplied by the number of shares subject to such awards minus, in the case of options, the aggregate option exercise price. However, this cash payment election alternative will not be available if either TRW or Northrop Grumman reasonably determines that there is an undue risk that such election could be deemed a tender offer for TRW common stock. See “THE MERGER AGREEMENT—Treatment of TRW Stock Options and Other Equity Awards.”
 
As of July 8, the current directors and executive officers of TRW and all other persons who served as a director or an executive officer of TRW since January 1, 2001 held:
 
 
 
Options to purchase 3,342,614 shares of TRW common stock, with a weighted average exercise price of $46.07 per share. Of these securities, options to purchase 2,587,443 shares of TRW common stock had vested as of such date;

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35,605 unvested restricted stock units; and
 
 
 
96,000 unvested shares of restricted stock.
 
Strategic Incentive Program
 
Each of TRW’s executive officers has been awarded grants under TRW’s strategic incentive program. The terms of each outstanding grant provide that if a change in control occurs prior to the end of the applicable performance period, the officer will be entitled to receive a payment for the full performance period, assuming maximum performance of all performance goals. The cash value of the award is equal to the number of performance units payable multiplied by the average of the high and low sales prices for shares of TRW common stock for each day on which such shares are traded on the New York Stock Exchange during the 30 calendar days preceding the date the change in control occurs. As of July 15, 2002, TRW’s current executive officers and all persons that served as executive officers at any time since January 1, 2001 would receive an aggregate cash payment, as determined above, with respect to 611,000 shares of TRW common stock, as determined above, upon a change of control, pursuant to outstanding performance units under the strategic incentive program.
 
Split-dollar Life Insurance Agreements
 
TRW has entered into split-dollar life insurance agreements with certain key executive officers. Under the split-dollar agreements, TRW owns, and pays the premiums on, the life insurance policies and the officer has the right to designate a beneficiary to receive a fixed portion of the policy death benefit. The balance of the death benefit will be payable to TRW as a recovery of its investment. The plan under which the agreements were entered into provides that upon a change in control, ownership of the policies will transfer to an irrevocable trust, and TRW will be required to fund the trust with sufficient assets to pay future premiums on the policies. TRW currently estimates that the amount necessary to fund the trust with respect to policies covering each person who has been an executive officer of TRW at any time since January 1, 2001 is approximately $9.8 million.
 
Deferred Compensation Arrangements
 
TRW maintains certain non-qualified defined contribution plans. The balance of an executive’s account under these plans will be terminated and payable as a part of any severance payment under the employment continuation agreements described above. As of June 30, 2002, an aggregate amount of $22.2 million was credited under the nonqualified defined contribution plans to the accounts of TRW’s executive officers that are party to employment continuation agreements.
 
Directors Deferred Compensation Plan
 
Under the terms of TRW’s Deferred Compensation Plan for Non-Employee Directors, the balance of the director’s deferred compensation account will be immediately distributed upon a change in control, if the director has specifically stipulated on his or her election form for such distribution. As of June 30, 2002, TRW’s aggregate liability under this plan to all the current directors with respect to the elective deferral portion of director compensation was approximately $1.8 million. TRW has contributed approximately $3.2 million to a trust for the payment of amounts under this plan, which is approximately equal to the current liability to all current and former directors with respect to their elective deferrals under the plan. The trust also holds shares of TRW common stock, which shares were purchased by the trustee with the mandatory deferral portion of directors’ annual retainer.
 
Agreement with Former Executive Officer
 
Under the terms of an agreement entered into between TRW and Carl G. Miller, TRW’s Chief Financial Officer from February 1996 through July 2001, Mr. Miller is entitled to an annual incentive payment with respect to 2002. In the event of a change in control of TRW, the incentive payment that Mr. Miller is entitled to with

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respect to 2002 will be equal to the highest annual incentive payment paid to Mr. Miller in any of the three years preceding the date of the change in control.
 
Governmental and Regulatory Matters
 
United States Antitrust.    Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (sometimes referred to as the “HSR Act”) and the rules that have been promulgated thereunder by the Federal Trade Commission (sometimes referred to as the “FTC”) certain acquisition transactions may not be consummated unless certain information has been furnished to the Antitrust Division of the United States Department of Justice and the FTC and certain waiting period requirements have been satisfied. The merger is subject to these requirements.
 
Pursuant to the requirements of the HSR Act, Northrop Grumman filed the required Notification and Report Forms (the “Forms”) with the Antitrust Division and the FTC on March 11, 2002. TRW filed the Forms on March 26, 2002. On April 10, 2002, Northrop Grumman and TRW each received a request for additional information from the U.S. Department of Justice. The statutory waiting period applicable to the merger will expire at 11:59 P.M., Eastern Time, on the thirtieth day after Northrop Grumman and TRW both have substantially complied with such requests, unless otherwise terminated by the Antitrust Division. If the thirtieth day falls on a weekend or holiday, the waiting period will expire at the close of the next regular business day. Thereafter, such waiting periods can be extended only by court order or by voluntary consent of the parties. The parties are in the process of complying with such requests for additional information.
 
The Antitrust Division and the FTC frequently scrutinize the legality of transactions under the antitrust laws. At any time before or after the consummation of any such transactions, the Antitrust Division or the FTC could, notwithstanding termination of the waiting period, take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the merger or seeking divestiture of TRW’s or Northrop’s assets. Private parties and State Attorneys General may also bring legal actions under the antitrust laws.
 
European Community Merger Control Regulation.    Under Council Regulation (EC) No. 4064/89, the “ECMR”, certain transactions may not be consummated before approval has been obtained from the European Commission. The ECMR prevents merging parties from consummating their merger until the European Commission has approved the transaction or has granted an express derogation from this rule. The European Commission’s initial investigation will last one month from the date a complete notification form has been submitted by Northrop Grumman (a period that is extended to six weeks if remedies are offered to address any concerns raised by the European Commission). After the initial one month/six weeks, the European Commission can either approve the transaction or initiate proceedings, which can last up to an additional four months.
 
Other.    Additional filings may be necessary in countries outside the U.S. and the European Community. In addition, it is possible that any of the governmental entities with which filings are made may seek, as conditions for granting approval of the merger, various regulatory concessions.
 
Certain Federal Income Tax Consequences of the Merger
 
The following discussion is a summary of material United States federal income tax consequences of the merger. This discussion is based on the Internal Revenue Code, its legislative history, the related Treasury regulations, administrative interpretations and court decisions, all of which are subject to change, possibly with retroactive effect. Any such change could affect the accuracy of the statements and the conclusions discussed below and the tax consequences of the merger to TRW shareholders. This discussion applies only to TRW shareholders that hold their shares of TRW common stock, and will hold the shares of Northrop Grumman common stock received in the merger, as capital assets within the meaning of Section 1221 of the Internal Revenue Code. This discussion does not address all federal income tax consequences of the merger that may be

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relevant to particular holders, including holders that are subject to special tax rules. Some examples of holders that are subject to special tax rules are:
 
 
 
dealers in securities;
 
 
 
financial institutions;
 
 
 
insurance companies;
 
 
 
tax-exempt organizations;
 
 
 
holders of shares of TRW stock as part of a position in a “straddle” or as part of a “hedging” or “conversion” transaction;
 
 
 
holders who have a “functional currency” other than the U.S. dollar;
 
 
 
holders who are foreign persons;
 
 
 
holders who own their shares indirectly through partnerships, trusts or other entities that may be subject to special treatment; and
 
 
 
holders who acquired their shares of TRW stock through stock option or stock purchase programs or otherwise as compensation.
 
In addition, this discussion does not address the tax consequences of the merger under the laws of any state, local or foreign jurisdiction or the tax consequences of transactions effectuated prior or subsequent to, or concurrently with, the merger.
 
TRW shareholders are urged to consult their own tax advisers as to specific tax consequences to them of the merger, including the applicability and effect of any state, local or foreign tax laws and of changes in applicable tax laws.
 
The obligations of Northrop Grumman and TRW to complete the merger are conditioned upon the delivery of opinions to Northrop Grumman and TRW by Gibson, Dunn & Crutcher LLP and PricewaterhouseCoopers LLP, respectively, in each case in form and substance reasonably satisfactory to the party to whom such closing tax opinion is addressed, that, for federal income tax purposes, (a) the merger will constitute a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code and (b) each of Northrop Grumman, Richmond Acquisition Corp., and TRW will be a party to the reorganization within the meaning of Section 368(b) of the Internal Revenue Code. These opinions will be given in reliance on customary factual representations contained in certificates executed by officers of TRW and Northrop Grumman at the date of consummation of the merger. These opinions are not binding on the courts or the Internal Revenue Service, nor do they preclude the Internal Revenue Service from adopting a position contrary to that expressed in the opinions. No assurance can be given that contrary positions will not successfully be asserted by the Internal Revenue Service or adopted by a court if the issues are litigated. Neither TRW nor Northrop Grumman intends to obtain a ruling from the Internal Revenue Service with respect to the federal income tax consequences of the merger.
 
Neither Northrop Grumman nor TRW currently intends to waive the condition relating to the receipt of a closing tax opinion. In the unlikely event that either of Northrop Grumman or TRW were to determine to waive such condition, Northrop Grumman or TRW would mail additional information to its stockholders or shareholders describing any changes in the material United States federal income tax consequences that would result from the merger and would resolicit proxies if there were any material adverse changes in the United States federal income tax consequences to its stockholders or shareholders.

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Assuming that the merger qualifies as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code, the following material federal income tax consequences will result from the merger:
 
 
 
TRW shareholders will not recognize any gain or loss upon the exchange of their shares of TRW common stock for shares of Northrop Grumman common stock pursuant to the merger, except with respect to any gain or loss attributable to cash received in lieu of fractional shares of Northrop Grumman common stock;
 
 
 
The aggregate tax basis of the shares of Northrop Grumman common stock received in exchange for shares of TRW common stock pursuant to the merger will be the same as the aggregate tax basis of the shares of TRW common stock surrendered in the merger, except that such holder’s aggregate tax basis in Northrop Grumman common stock will be reduced by the tax basis allocable to any fractional share interest in Northrop Grumman common stock for which such holder will receive cash;
 
 
 
The holding period for shares of Northrop Grumman common stock received in the merger in exchange for shares of TRW common stock will include the holding period for the TRW common stock surrendered;
 
 
 
Cash payments received by TRW shareholders in lieu of a fractional share of Northrop Grumman common stock will be treated as received in exchange for that fractional share interest, and gain or loss will be recognized for federal income tax purposes on receipt of the cash payment, measured by the difference between the amount of cash received and the portion of the basis of the TRW common stock allocable to the fractional share interest. The gain or loss will be long term capital gain or loss if the TRW common stock is considered to have been held for more than one year at the time of the merger;
 
 
 
If a TRW shareholder perfects its dissenter’s rights with respect to its TRW common stock, such holder should generally recognize capital gain or loss at the effective time of the merger in an amount equal to the difference between the “amount realized” and the adjusted tax basis of its TRW common stock. For this purpose, although there is no authority directly on point, the amount realized generally should equal the trading price of TRW common stock at the effective time of the merger. Such holder should also recognize capital gain or loss at the time the appraised fair cash value is received, to the extent such payment exceeds or is less than the amount realized at the effective time of the merger. In addition, a portion of such payment may be characterized as interest income; and
 
 
 
None of Northrop Grumman, Northrop Grumman stockholders, Richmond Acquisition Corp., or TRW will recognize any gain or loss solely as a result of the merger.
 
If the Internal Revenue Service determines successfully that the merger is not a reorganization within the meaning of Section 368(a) of the Internal Revenue Code, TRW shareholders would be required to recognize any gain or loss with respect to each share of TRW common stock surrendered in the merger in an amount equal to the difference between the tax basis in that share of stock and the fair market value on the date of the merger of the Northrop Grumman common stock received in exchange therefor. In such event, a TRW shareholder’s aggregate tax basis in the Northrop Grumman common stock received in the merger would equal its fair market value on the date of the merger, and the shareholder’s holding period for the Northrop Grumman common stock would begin the day after the merger.
 
The above discussion of potential tax consequences may not apply to certain categories of stockholders subject to special treatment under the Internal Revenue Code. TRW shareholders are urged to consult their own tax advisers to determine the specific tax consequences of the merger, including any federal, state, local, foreign or other tax consequences of the merger.
 
Recent Litigation
 
On March 4, 2002, Northrop Grumman filed a lawsuit in the United States District Court for the Northern District of Ohio against TRW and certain other persons, seeking declaratory and injunctive relief with respect to Ohio’s control share acquisition law, business combination law, and control bid law. The lawsuit alleges that such statutes conflict with the United States Constitution and United States laws governing the conduct of tender offers, and thus are unconstitutional.

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On March 4, 2002, TRW filed a lawsuit in the United States District Court for the Southern District of Ohio against Northrop Grumman, the Attorney General of Ohio, the Director of Ohio’s Department of Commerce and the Commissioner of Ohio’s Division of Securities. The lawsuit sought a judgment that the control share acquisition law, business combination law and control bid law are constitutional.
 
Both of these lawsuits have been dismissed with prejudice as agreed by Northrop Grumman and TRW in the merger agreement.
 
Dissenters’ Appraisal Rights of TRW Shareholders
 
In the merger, Richmond Acquisition Corp., an Ohio corporation and a wholly-owned subsidiary of Northrop Grumman, will be merged with and into TRW, with TRW as the corporation surviving the merger. Each outstanding share of TRW common stock (except for treasury shares of TRW and shares beneficially owned directly or indirectly by Northrop Grumman for its own account) will be converted into the right to receive shares of Northrop Grumman common stock based on the exchange ratio, subject to dissenters’ rights under Ohio law.
 
If the merger is completed, TRW shareholders will have certain rights under the Ohio Revised Code to dissent and demand dissenters’ rights and to receive payment in cash of the fair cash value of their TRW shares. TRW shareholders who vote in favor of the merger will not be entitled to relief as dissenting shareholders. In order to qualify for rights as a dissenting shareholder, a TRW shareholder must deliver to TRW a written demand for payment of the fair cash value of the shares for which relief is sought within the time period prescribed by Sections 1701.84 and 1701.85 of the Ohio Revised Code. If TRW then sends a dissenting shareholder a request for the certificates representing the TRW shares for which relief is sought, the dissenting shareholder must return the certificates requested to TRW so that they may be endorsed with a legend stating that a demand for the fair cash value of such TRW shares has been made. A dissenting shareholder’s failure to deliver such certificates within a prescribed time period terminates his or her rights as a dissenting shareholder under Ohio laws. Unless TRW and the dissenting shareholder come to an agreement on the fair cash value per share of the TRW shares for which such dissenting shareholder seeks relief, either the dissenting shareholder or TRW may file a complaint in court. Other dissenting shareholders may join as plaintiffs or defendants in the resulting proceeding at that time.
 
If the shareholder complies with the statutory procedures for exercising or perfecting dissenters’ rights in accordance with Sections 1701.84 and 1701.85 of the Ohio Revised Code, then a judicial determination will be made as to the fair cash value required to be paid to the objecting shareholder for such holder’s TRW shares. Any such judicial determination of the fair cash value will be based on the amount that a willing seller, under no compulsion to sell, would be willing to accept, and a willing buyer, under no compulsion to purchase, would be willing to pay. In determining the fair cash value of the TRW shares, a court is required to take into account all relevant factors, excluding any appreciation or depreciation in market value resulting from the proposal of the merger. Accordingly, such determination could be based upon considerations other than, or in addition to, the market value of the TRW shares, including, among other things, asset values and earning capacity. The value so determined may be more or less than the price per TRW share to be paid in the merger but in no event can the value so determined exceed the amount specified in the demand of a particular shareholder.
 
From the time written demand for payment of the fair cash value is given until either the termination of the rights and obligations arising from such demand or the purchase of the shares related thereto, all rights accruing to the dissenting shareholder, including voting and dividend or distribution rights, will be suspended. If any dividend or distribution is paid in money on TRW shares during the suspension or if any dividend, distribution or interest is paid in money upon any securities issued in extinguishment of or in substitution for such shares, an amount equal to the dividend, distribution or interest that would have been payable on the shares, but for such suspension, shall be paid to the holder of record of the shares as a credit against the fair cash value of the shares. If the right to receive the fair cash value is terminated other than by the purchase of the shares, all rights will be

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restored to the objecting shareholder and any distribution that would have been made to the holder of record of the shares, but for the suspension, will be made at the time of such termination.
 
The foregoing summary of the rights of dissenting shareholders under Ohio law does not purport to be a complete statement of the procedures to be followed by shareholders desiring to exercise any available dissenters’ rights and is qualified in its entirety by reference to the full text of Section 1701.84 and Section 1701.85 of the Ohio Revised Code included herein as Annex H and incorporated herein by this reference. The preservation and exercise of dissenters’ rights are conditioned on strict adherence to the applicable provisions of the Ohio Revised Code.
 
Plans for TRW After the Merger
 
After the merger, Northrop Grumman currently anticipates that TRW will continue its current operations, except that it would cease to be publicly owned and would instead be a wholly-owned subsidiary of Northrop Grumman. Northrop Grumman expects to divest TRW’s Automotive business after the merger either by selling that business to a third party or parties or by spinning it off to Northrop Grumman stockholders (including the former TRW shareholders), or by a combination of a sale and spin off.
 
Certain Relationships with Northrop Grumman or TRW
 
Except as set forth in this joint proxy statement/prospectus, neither Northrop Grumman nor TRW, nor to their respective best knowledge, any of their respective directors, executive officers or other affiliates has any contract, arrangement, understanding or relationship with any other person with respect to any securities of TRW (with respect to Northrop Grumman or its directors, officers or affiliates) or Northrop Grumman (with respect to TRW or its directors, officers or affiliates), including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any securities, joint ventures, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss or the giving or withholding of proxies. Except as described in this joint proxy statement/prospectus, there have been no contacts, negotiations or transactions since January 1, 1999, between Northrop Grumman or, to the best of Northrop Grumman’s knowledge, any of Northrop Grumman’s directors, executive officers or other affiliates on the one hand, and TRW or its affiliates, on the other hand, or between TRW or, the best of TRW’s knowledge, any of TRW’s directors, executive officers or affiliates, on the one hand, and Northrop Grumman, on the other hand, concerning a merger, consolidation or acquisition, a tender offer to exchange or other acquisition of securities, an election of directors, or a sale or other transfer of a material amount of assets. In the normal course of their businesses, Northrop Grumman and TRW are parties to transactions and agreements. Neither Northrop Grumman, nor, to the best of Northrop Grumman’s knowledge, any of its directors, executive officers or other affiliates has since January 1, 1999 had any transaction with TRW or any of its directors, executive officers, or affiliates that would require disclosure under the rules and regulations of the SEC applicable to this joint proxy statement/prospectus. Neither TRW nor, to the best of TRW’s knowledge, any of its directors, executive officers or other affiliates has since January 1, 1999 had any transaction with Northrop Grumman or any of its directors, executive officers or other affiliates that would require disclosure under the rules and regulations of the SEC applicable to this joint proxy statement/prospectus.
 
As of the date of this joint proxy statement/prospectus, Northrop Grumman beneficially owns for its own account four shares of TRW common stock. In addition, Dr. Ronald D. Sugar, President and Chief Operating Officer and a director of Northrop Grumman, owns 21,475 shares of TRW common stock as trustee of Ronald D. Sugar Revocable Trust dated as of October 20, 1995. Dr. Ronald Sugar was employed by TRW through June 2000. In accordance with the terms of his employment with TRW, Dr. Sugar continues to receive annual payments from TRW relating to the TRW nonqualified 401(k) excess plan. To the best of Northrop Grumman’s knowledge, no other officers or directors of Northrop Grumman own TRW capital stock or have interests in TRW.

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Fees and Expenses
 
Northrop Grumman has retained D.F. King & Co., Inc. as its proxy solicitor and information agent in connection with the merger. D.F. King may contact holders of TRW shares by mail, telephone, telex, telegraph and personal interview and may request brokers, dealers and other nominee stockholders to forward material relating to the merger to beneficial owners of TRW shares. Northrop Grumman will pay D.F. King approximately $20,000.00 for these services in addition to reimbursing D.F. King for its reasonable out-of-pocket expenses. Northrop Grumman has agreed to indemnify D.F. King against various liabilities and expenses in connection with the merger, including various liabilities under United States federal securities laws.
 
In addition, Northrop Grumman has retained EquiServe Trust Company as the exchange agent for the merger. Northrop Grumman will pay the exchange agent reasonable and customary compensation for its services in connection with the merger, will reimburse the exchange agent for its reasonable out-of-pocket expenses and will indemnify the exchange agent against various liabilities and expenses, including various liabilities under United States federal securities laws.
 
The fees and expenses payable by Northrop Grumman to its financial advisers Salomon Smith Barney and Stephens Financial Group are described in “THE MERGER—Opinions of Financial Advisers” on pages 41 and 43, respectively.
 
TRW Advisers
 
TRW has retained Georgeson Shareholder Services as its proxy solicitor and information agent in connection with the merger. Georgeson may contact holders of TRW shares by mail, telephone, telex, telegraph and personal interview and may request brokers, dealers and other nominee shareholders to forward material relating to the merger to beneficial owners of TRW shares. TRW will pay Georgeson approximately $75,000.00 for these services, in addition to reimbursing Georgeson for its reasonable out-of-pocket expenses. TRW has agreed to indemnify Georgeson against various liabilities and expenses in connection with the merger, including various liabilities under United States federal securities laws.
 
The fees and expenses payable by TRW to its financial advisers, Goldman Sachs and Credit Suisse First Boston, are described in “THE MERGER—Opinions of Financial Advisors” on page 54.
 
Other Expenses
 
Except as specifically discussed in the preceding paragraphs, all costs and expenses incurred in connection with the solicitation of proxies will be paid by the party incurring such costs or expenses. However, filing fees in connection with the filing of this joint proxy statement/prospectus, all printing, mailing and related expenses incurred in connection with printing and mailing this joint proxy statement/prospectus and all other expenses not directly attributable to any one of the parties will be shared equally by Northrop Grumman and TRW.
 
Accounting Treatment
 
Northrop Grumman will account for the merger under the purchase method of accounting under United States generally accepted accounting principles, which means that TRW’s results of operations will be included with those of Northrop Grumman from the closing date of the merger and the combined companies’ consolidated assets and liabilities will be recorded at their fair values at the same date.

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Delisting and Deregistration of TRW Common Stock
 
TRW common stock currently is listed on the New York Stock Exchange, the Pacific Exchange, the Chicago Stock Exchange, the Philadelphia Stock Exchange, the London Stock Exchange and the Frankfurt Stock Exchange under the symbol “TRW.” Upon the consummation of the merger, TRW common stock will be delisted from those exchanges and deregistered under the Securities Exchange Act of 1934.
 
Listing of Northrop Grumman Common Stock
 
Northrop Grumman common stock currently is listed on the New York Stock Exchange and the Pacific Exchange under the symbol “NOC.” Northrop Grumman has agreed to cause the shares of Northrop Grumman common stock to be issued to TRW shareholders in connection with the merger to be approved for listing on the New York Stock Exchange upon official notice of issuance.

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THE MERGER AGREEMENT
 
The following summary describes some of the material terms and conditions of the merger agreement, but is not intended to be an exhaustive discussion of the merger agreement. The rights and obligations of the parties are governed by the express terms and conditions of the merger agreement, and not this summary or any other information contained in this joint proxy statement/prospectus. This summary is qualified in its entirety by reference to the merger agreement, and Northrop Grumman stockholders and TRW shareholders are encouraged to read the entire merger agreement as well as this joint proxy statement/prospectus before making any decisions regarding the merger or the other transactions described herein. A copy of the merger agreement is attached as Annex A to this joint proxy statement/prospectus and is incorporated herein by this reference.
 
The Merger
 
The merger agreement provides that Richmond Acquisition Corp., a wholly-owned subsidiary of Northrop Grumman, will merge with and into TRW at the time the merger becomes effective. TRW will be the surviving corporation in the merger and will become a wholly-owned subsidiary of Northrop Grumman.
 
Closing of the Merger
 
The closing of the merger will take place (a) as soon as practicable, but in any event within three business days after the day all conditions to the merger set forth in the merger agreement are fulfilled or validly waived or (b) at such other time as Northrop Grumman and TRW may agree in writing. The parties currently expect to complete the merger during the fourth quarter of 2002. A certificate of merger will be filed with the Secretary of State of the State of Ohio as soon as practicable after satisfaction or waiver of all conditions to the merger, at which time the merger will become effective.
 
Consideration to be Received in the Merger
 
At the effective time of the merger, each share of TRW common stock (other than shares held by dissenting shareholders and shares held by Northrop Grumman or TRW) automatically will be converted into the right to receive a number of shares of Northrop Grumman common stock equal to $60.00 divided by the average reported closing sale prices of Northrop Grumman common stock on the New York Stock Exchange as reported in the Wall Street Journal for the five consecutive trading days ending on (and including) the second trading day prior to the closing date of the merger. However, in no event will the exchange ratio be greater than 0.5357 ($60.00/$112.00) or less than 0.4348 ($60.00/$138.00).
 
If the average Northrop Grumman common stock closing sale price, calculated as described above, is greater than $138.00, TRW’s common shareholders will receive 0.4348 shares of Northrop Grumman common stock for each share of TRW common stock. If the average Northrop Grumman common stock closing sale price, calculated as described above, is less than $112.00, TRW’s common shareholders will receive 0.5357 shares of Northrop Grumman common stock for each share of TRW common stock.
 
Holders of TRW common stock will have the right under Ohio law to dissent from the merger and receive the fair value of their shares in cash, as described in “THE MERGER—Dissenters’ Appraisal Rights of TRW Shareholders” on page 62.
 
Treatment of Fractional Shares
 
No fractional shares of Northrop Grumman common stock will be issued pursuant to the merger. Holders of TRW common stock will be paid cash instead of any fractional shares of Northrop Grumman common stock that the holder otherwise would receive in the merger. The amount of cash paid will be equal to the fractional share interest of Northrop Grumman common stock to which the holder otherwise would be entitled (after taking into account all shares of TRW common stock held at the effective time by the holder), multiplied by the average closing sale prices for a share of Northrop Grumman common stock used to calculate the exchange ratio for the merger.

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Preferred Stock of TRW
 
Pursuant to the merger agreement, each outstanding share of Cumulative Serial Preference Stock II, $4.40 Convertible Series 1 and each outstanding share of Cumulative Serial Preference Stock II, $4.50 Convertible Series 3, will be redeemed for cash by TRW prior to the record date for the TRW Meeting. Therefore, the holders of such securities will not be entitled to notice of or to vote at the TRW Meeting, and the approval of such TRW shareholders will not be required to adopt the merger agreement.
 
Procedures for Exchanging TRW Common Stock
 
At or prior to the effective time of the merger, Northrop Grumman will deposit with the exchange agent certificates representing the shares of Northrop Grumman common stock to be issued to TRW’s shareholders in connection with the merger. Each form of letter of transmittal that will be sent to TRW shareholders promptly after closing will include detailed instructions on how TRW shareholders may exchange their TRW common stock for the consideration they are entitled to receive in connection with the merger. After the closing, the exchange agent will send new certificates representing Northrop Grumman common stock to former TRW shareholders who have delivered properly completed letters of transmittal to the exchange agent with their TRW share certificates, and a check for the fractional share interests or dividends or distributions the TRW shareholder is entitled to receive pursuant to the merger agreement. No interest will be paid on any cash paid in connection with the merger, other than as may be required with respect to dissenters’ rights under Ohio law.
 
Any merger consideration that remains unclaimed one year after the effective time of the merger shall be returned to Northrop Grumman. Any TRW shareholder who has not exchanged such holder’s shares of TRW common stock for shares of Northrop Grumman common stock by that date shall thereafter look only to Northrop Grumman for delivery of the merger consideration to which they are entitled.
 
Treatment of TRW Stock Options and Other Equity Awards
 
Pursuant to the merger agreement, each holder of TRW stock options, TRW restricted stock and TRW restricted stock units will be entitled to elect to have those securities redeemed by TRW for cash as described in the merger agreement, unless either Northrop Grumman or TRW reasonably determines that there is an undue risk that such an election could be deemed to be a tender offer for TRW common stock by TRW. To the extent that a holder of such securities does not elect redemption, or if the redemption cannot be effected because either Northrop Grumman or TRW reasonably determines that there is an undue risk that such election could be deemed a tender offer for TRW common stock, at the effective time of the merger:
 
 
 
all unvested TRW stock options will vest at the effective time of the merger and all TRW options will be deemed assumed by Northrop Grumman. The number of shares of Northrop Grumman common stock issuable upon exercise of each assumed TRW options will be equal to (a) the number of shares of TRW common stock issuable upon exercise of the TRW option prior to the effective time of the merger multiplied by (b) the exchange ratio used in exchanging shares of TRW common stock for shares of Northrop Grumman common stock in the merger. The exercise price for such assumed TRW options will be equal to (i) the exercise price in effect for the TRW options prior to the effective time of the merger divided by (ii) the exchange ratio used in exchanging shares of TRW common stock for shares of Northrop Grumman common stock in the merger.
 
 
 
each share of TRW restricted stock and each TRW restricted stock unit award will vest and all restrictions on those securities will lapse as of the effective time of the merger, and the holder thereof will be entitled to receive the same number of shares of Northrop Grumman common stock to which the holder would have been entitled had the holder held unrestricted shares of TRW common stock at the effective time.
 
In addition, at the effective time of the merger:
 
 
 
each outstanding TRW stock appreciation right will accelerate and automatically be converted into the right to receive cash in the amount by which the value of the shares of TRW common stock subject to

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the stock appreciation right, calculated as the average of the closing sale prices for a share of TRW common stock on the New York Stock Exchange for the five consecutive trading days ending on (and including) the second trading day before the closing date of the merger, exceeds the exercise price for the shares of TRW common stock subject to the stock appreciation right;
 
 
 
each outstanding TRW critical skills stock unit grant will be amended or converted into a similar instrument of Northrop Grumman, with such adjustments to the terms and conditions of the agreement as are appropriate to preserve the value inherent in the awards; and
 
 
 
each outstanding TRW strategic incentive program grant will be cancelled in exchange for a lump sum cash payment equal to the value of the grant, assuming maximum performance of all performance goals, except that 2001-2002 strategic incentive program grants will be paid at 50% of the maximum value of such grants, assuming all performance goals had been reached.
 
Any cash amounts paid in cancellation of these TRW securities will be paid by TRW at or prior to the effective time of the merger out of funds provided by TRW and will be net of any amounts required to be withheld for tax withholding obligations.
 
Registration and Listing of Northrop Grumman Common Stock
 
Northrop Grumman and TRW have agreed to use their reasonable best efforts to register the shares of Northrop Grumman common stock to be issued as consideration in the merger under the Securities Act, and Northrop Grumman has agreed to cause those shares to be listed on the New York Stock Exchange, upon official notice of issuance. The registration and listing of the Northrop Grumman common stock are conditions to the obligations of Northrop Grumman and TRW to consummate the merger.
 
Representations and Warranties
 
Northrop Grumman and TRW have made certain customary representations and warranties to each other in the merger agreement, including those as to:
 
•      corporate existence and power;
 
•      litigation matters;
•      corporate authorization;
 
•      tax matters;
•      governmental authorizations;
 
•      employee benefit matters;
•      non-contravention;
 
•      compliance with laws;
•      capitalization;
 
•      environmental matters;
•      subsidiary matters;
 
•      Ohio anti-takeover statutes;
•      financial statements;
 
•      intellectual property and software matters;
•      the absence of certain material changes;
 
•      government contracts; and
•      the absence of undisclosed material liabilities;
 
•      problems with customers and suppliers.
 
Certain of the representations and warranties are qualified by a material adverse effect standard. A material adverse effect, with respect to both Northrop Grumman and TRW, means any event, circumstance or change that:
 
 
 
materially adversely affects the ability of Northrop Grumman and TRW, as the case may be, and their respective subsidiaries, taken as a whole, to perform the obligations set forth in the merger agreement or to consummate the transactions contemplated by the merger agreement; or
 
 
 
is materially adverse to the business, assets, financial condition or results of operations of Northrop Grumman and TRW, as the case may be, and their respective subsidiaries, taken as a whole.

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However, events, circumstances or changes, alone or in combination, that arise out of or result from the following are not deemed to have a material adverse effect:
 
 
 
general legal, regulatory, political, business, economic, capital market or financial market conditions or conditions otherwise generally affecting industries in which Northrop Grumman or TRW and their respective subsidiaries, taken as a whole, generally operates, except to the extent Northrop Grumman or TRW, as the case may be, is materially and adversely affected in a disproportionate manner as compared to other comparable participants in such industries;
 
 
 
the negotiation, execution, announcement or consummation of the merger agreement and the transactions contemplated by the merger agreement, including the impact thereof on relationships, contractual or otherwise, with customers, suppliers, distributors, partners or employees;
 
 
 
the proposed sale of TRW’s Aeronautical Systems business; and
 
 
 
subject to the absence of an objection by Northrop Grumman, any actions required or permitted under the merger agreement to be taken in connection with the spin off of the shares of capital stock of TRW Automotive Inc. or another transaction involving the separation of TRW’s Automotive business substantially in accordance with the documents previously filed by TRW with the Internal Revenue Service and the SEC.
 
The representations and warranties contained in the merger agreement do not survive beyond the effective time of the merger.
 
Conduct of Business Before the Merger
 
TRW has agreed to conduct its businesses, and to cause its subsidiaries to conduct their businesses, from June 30, 2002 to the effective time in the ordinary course consistent with past practice and to use their reasonable best efforts to preserve intact their business organizations and relationships with third parties.
 
Northrop Grumman has agreed that it and its subsidiaries will conduct their business in compliance in all material respects with all applicable laws and regulations and to use their reasonable best efforts to preserve intact their business organizations and relationships with third parties.
 
Each of Northrop Grumman and TRW also has agreed that it will, with certain limited exceptions, among other things:
 
 
 
use its reasonable best efforts to take all actions to consummate and make the merger and the other transactions contemplated by the merger agreement effective as soon as possible;
 
 
 
use its reasonable best efforts to avoid the entry of, or to vacate, any judgment that would prevent or delay the closing of the merger;
 
 
 
use its reasonable best efforts to avoid or eliminate every impediment to the merger under any antitrust law that may be asserted, including:
 
 
 
with respect to Northrop Grumman, taking all actions such as:
 
 
 
proposing, negotiating, committing to and effecting, the sale, divestiture or disposition of assets or businesses of Northrop Grumman or any of its subsidiaries; and
 
 
 
otherwise taking or committing to take actions that limit Northrop Grumman or its subsidiaries’ freedom of action with respect to, or ability to retain, one or more of its or its subsidiaries’ businesses, product lines or assets,
 
in each case as required to avoid the entry of, or to effect the dissolution of, any injunction or order which would prevent or materially delay the merger, unless doing so would, individually or in the aggregate, reasonably be expected to have a material adverse effect on the business, assets, long

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term earning capacity or financial condition of Northrop Grumman and its subsidiaries taken as a whole; and
 
 
 
with respect to TRW, taking such of the foregoing actions as Northrop Grumman may request, provided that any such action by TRW that is not an express condition to the merger may be conditioned on the completion of the merger;
 
 
 
keep each other reasonably apprised of the status of the transactions contemplated by the merger agreement and reasonably cooperate with obtaining all required approvals or consents of any governmental authority;
 
 
 
cooperate in preparing a joint proxy statement/prospectus relating to the merger and use their reasonable best efforts to mail the joint proxy statement/prospectus to Northrop Grumman stockholders TRW shareholders;
 
 
 
call a meeting of Northrop Grumman stockholders and TRW shareholders for the purpose of obtaining any stockholder or shareholder approvals required to consummate the merger;
 
 
 
cooperate in determining whether any action, consent or approval of any governmental authority is required and seeking to obtain any such required actions, consents, approvals or waivers;
 
 
 
provide the other party certain access to offices, properties, books and records and to its counsel, financial advisers, auditors and other authorized representatives;
 
 
 
not take any action which would prevent the merger from qualifying as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code;
 
 
 
notify one another of communications from any third party alleging that a consent is required in connection with transactions contemplated by the merger agreement or from governmental authorities; and
 
 
 
if any anti-takeover or similar statute or regulation is applicable or may become applicable to the merger, use their reasonable best efforts to take all reasonable and legally permissible actions so that the merger may be consummated.
 
Northrop Grumman has agreed, with certain limited exceptions, that it will not:
 
 
 
adopt or propose any changes in its articles of incorporation, bylaws or similar organization or governing documents;
 
 
 
adopt a plan or agreement of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization;
 
 
 
issue, sell, transfer, pledge, dispose of or encumber any shares of its capital stock;
 
 
 
split, combine, subdivide or reclassify its outstanding shares of capital stock or declare, set aside or pay any dividend; and
 
 
 
sell, lease, license or otherwise dispose of any material amount of assets or property.
 
Northrop Grumman also has agreed to, among other things:
 
 
 
take all actions necessary to cause Richmond Acquisition Corp. to perform its obligations under the merger agreement;
 
 
 
indemnify, and cause TRW after the merger to indemnify, the officers and directors of TRW to the fullest extent permitted under applicable law with respect to all acts or omissions made prior to the effective time of the merger;

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cause the articles of incorporation and regulations of TRW after the merger to contain provisions no less favorable with respect to limitation of certain liabilities of directors, officers, employees and agents and indemnification than are set forth as of the date of the merger agreement;
 
 
 
cooperate in the defense of any action involving a TRW indemnitee;
 
 
 
cause TRW after the merger to maintain TRW’s current directors’ and officers’ liability insurance, or an equivalent policy, for six years;
 
 
 
cause the shares of Northrop Grumman common stock to be issued pursuant to the merger (including shares issued upon exercise of TRW options deemed assumed by Northrop Grumman, or issued upon conversion of TRW restricted stock or restricted stock units, pursuant to the merger agreement) to be approved for listing on the New York Stock Exchange;
 
 
 
cause TRW after the merger to honor TRW’s employee plans;
 
 
 
provide each TRW employee as of the effective time, for two years after the merger (provided that the employee remains employed by Northrop Grumman or any of its subsidiaries during that time), benefits which in the aggregate and regardless of the form of such benefits, are at least as favorable as the benefits provided pursuant to TRW’s employee benefit plans or arrangements prior to the merger and not to amend or terminate TRW’s severance policies during that two-year period;
 
 
 
give, or cause TRW after the merger to give, such TRW employees full credit for their service with TRW, solely for purposes of eligibility and vesting under severance benefit, vacation and other employee benefit plans or arrangements maintained by Northrop Grumman or any subsidiary of Northrop Grumman to the same extent recognized by TRW for similar TRW benefit plans or arrangements;
 
 
 
waive or cause to be waived certain preexisting conditions, exclusions and waiting periods with respect to participation and coverage requirements applicable to such TRW employees under any welfare benefit plans of Northrop Grumman; and
 
 
 
not acquire or agree to acquire any person or entity if such acquisition will delay obtaining consents for the merger, increase the risk of a governmental authority prohibiting the consummation of the merger or materially delay the consummation of the merger.
 
TRW has agreed, with certain limited exceptions, not to take any action, nor permit any of its subsidiaries to take any of the following actions, among others:
 
 
 
adopt or propose any changes in its articles of incorporation, regulations or similar organization or governing documents;
 
 
 
adopt a plan or agreement of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization;
 
 
 
issue, sell, transfer, pledge, dispose of or encumber any shares of its capital stock;
 
 
 
split, combine, subdivide or reclassify its outstanding shares of its capital stock or declare, set aside or pay any dividend;
 
 
 
redeem, purchase or acquire any shares of TRW’s capital stock except for repurchases, redemptions or acquisitions required by the terms of a TRW stock plan or in accordance with dividend reinvestment plans in effect as of the date of the merger agreement;
 
 
 
adopt, amend or terminate any bonus, profit sharing, compensation, stock option or similar plan;
 
 
 
grant severance or termination pay or pension benefits to any director, officer or employee; enter into any employment, retention or deferred compensation agreement; enter into any new, or modify the vesting or payment of, benefits payable under any existing severance or termination pay policies or employment or consulting agreements; or modify or amend any compensation, bonus or other benefits payable to directors, officers, employees or consultants;

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acquire a material amount of assets or property in excess of the amounts specified in the capital expenditure budget attached to the merger agreement;
 
 
 
sell, lease, license or otherwise dispose of any material amount of assets or property;
 
 
 
make or rescind any material tax election, change any material methods of reporting income or deductions for tax purposes, compromise any tax liability or issue a waiver to extend the period of limitation for the payment or assessment of tax;
 
 
 
alter, or permit to be altered, through merger, liquidation, reorganization, restructuring or any other fashion the corporate structure or ownership of any of its subsidiaries;
 
 
 
incur or assume debt or issue any debt securities; assume, guarantee, endorse or otherwise become liable or responsible for the obligations of any other person; make any loans, advances or capital contributions; pledge or otherwise encumber shares of capital stock or mortgage or pledge any of its material assets;
 
 
 
change any accounting principles;
 
 
 
revalue in any material respect any of its assets, including writing down the value of inventory or writing-off notes or accounts receivable; and
 
 
 
settle or compromise any pending or threatened suit, action or claim that the settlement or compromise of which could have a material adverse effect on TRW and its subsidiaries, taken as a whole.
 
TRW also has agreed, among other things:
 
 
 
to redeem all outstanding shares of TRW Cumulative Serial Preference Stock II; $4.40 Convertible Series 1 and all shares of TRW Cumulative Serial Preference Stock II, $4.50 Convertible Series 3 prior to the record date for the TRW Meeting;
 
 
 
not to withdraw the ruling request previously submitted by TRW to the Internal Revenue Service with respect to TRW’s previously proposed spin off of its Automotive business or file any amendments or supplements to such ruling;
 
 
 
to reasonably assist Northrop Grumman in preparing for, and make TRW’s officers and employees reasonably available for, presentations to prospective purchasers, investors or other parties regarding any transaction involving or relating to TRW’s Automotive business;
 
 
 
to maintain the existence of TRW Automotive Inc. as a Delaware corporation and wholly-owned subsidiary of TRW; and
 
 
 
to prepare unaudited financial statements for TRW’s Automotive business as may be required by the rules of the SEC, as well as any other financial statements reasonably requested by Northrop Grumman in connection with a proposed transaction involving TRW’s Automotive business.
 
Conditions to the Completion of the Merger
 
The obligations of Northrop Grumman, TRW and Richmond Acquisition Corp. are subject to the satisfaction or valid waiver of the following conditions, among others:
 
 
 
the approval by the Northrop Grumman stockholders of the issuance of the shares of Northrop Grumman common stock in connection with the merger and the adoption by the TRW shareholders of the merger agreement;
 
 
 
the expiration or termination of the waiting periods under the HSR Act;
 
 
 
the approval of the merger by the European Commission;
 
 
 
the absence of any injunction or other legal restraint to the merger agreement or the merger;

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the registration statement of which this joint proxy statement/prospectus is a part being declared effective under the Securities Act, and no stop order suspending its effectiveness being in effect;
 
 
 
the shares of Northrop Grumman common stock to be issued pursuant to the merger (including those issued upon exercise of TRW options deemed assumed by Northrop Grumman, or issued upon conversion of TRW restricted stock or restricted stock units, pursuant to the merger agreement) being approved for listing on the New York Stock Exchange, subject to official notice of issuance; and
 
 
 
all material governmental approvals of the merger being received.
 
The obligations of Northrop Grumman and Richmond Acquisition Corp. are subject to the satisfaction or valid waiver of the following conditions:
 
 
 
TRW having performed in all material respects all of its covenants and obligations under the merger agreement to be performed by it at or prior to the effective time of the merger;
 
 
 
all representations and warranties made by TRW in the merger agreement and in any certificate or other writing delivered by TRW pursuant to the merger agreement:
 
 
 
if subject to any limitations as to “materiality” or “material adverse effect,” (as further described in the section entitled “THE MERGER AGREEMENT—Representations and Warranties”) being true and correct at and as of the effective time of the merger as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such earlier date); and
 
 
 
if not subject to any limitations as to “materiality” or “material adverse effect,” being true and correct at and as of the effective time of the merger as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such earlier date), except where the failure of such representations and warranties to be true and correct would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on TRW; and
 
 
 
Northrop Grumman having received from Gibson, Dunn & Crutcher LLP opinions stating that the merger will be treated for federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code and that each of Northrop Grumman, TRW and Richmond Acquisition Corp. will be a party to the reorganization within the meaning of Section 368(b) of the Internal Revenue Code, and such opinions having not been withdrawn.
 
The obligations of TRW are subject to the satisfaction or valid waiver of the following conditions, among others:
 
 
 
Northrop Grumman having performed in all of material respects all its covenants and obligations under the merger agreement to be performed by it at or prior to the effective time of the merger;
 
 
 
all representations and warranties made by Northrop Grumman and Richmond Acquisition Corp. in the merger agreement and in any certificate or other writing delivered by Northrop Grumman or Richmond Acquisition Corp. pursuant to the merger agreement:
 
 
 
if subject to any limitations as to “materiality” or “material adverse effect” (as further described in the section entitled “THE MERGER AGREEMENT—Representations and Warranties”) being true and correct at and as of the effective time of the merger as if made at and as of such time (except to the extent expressly made as of an earlier date in which case as of such earlier date); and
 
 
 
if not subject to any limitations as to “materiality” or “material adverse effect,” being true and correct as of the effective time of the merger as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such earlier date), except where the failure of such representations and warranties to be true and correct would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on Northrop Grumman; and

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TRW having received from PricewaterhouseCoopers LLP an opinion stating that the merger will be treated for federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code and that each of Northrop Grumman, TRW and Richmond Acquisition Corp. will be a party to the reorganization within the meaning of Section 368(b) of the Internal Revenue Code, and such opinions having not been withdrawn.
 
Termination of the Merger Agreement
 
The merger agreement may be terminated by the mutual written consent of Northrop Grumman and TRW at any time prior to the merger.
 
The merger agreement may be terminated by either Northrop Grumman or TRW if:
 
 
 
the merger is not consummated by December 31, 2002 (or March 31, 2003, if the only unsatisfied conditions relate to antitrust and governmental approvals or the existence of a provision of law or a regulation, judgment, injunction, order or decree making the merger illegal or otherwise prohibiting the consummation of the merger);
 
 
 
the TRW shareholders do not adopt the merger agreement at the TRW Meeting or any adjournment thereof;
 
 
 
the Northrop Grumman stockholders do not approve the issuance of the Northrop Grumman common stock in connection with the merger at the Northrop Meeting or any adjournment thereof;
 
 
 
any law or regulation makes the merger illegal or otherwise prohibits the merger or if any judgment, injunction, order or decree enjoining Northrop Grumman, TRW or Richmond Acquisition Corp. from consummating the merger becomes final and unappealable; or
 
 
 
the other party breaches a representation, warranty, covenant or obligation contained in the merger agreement and the breach:
 
 
 
results in a failure of the condition that the other party was required to perform its obligations under the merger agreement in all material respects or that the other party’s representations and warranties be true and correct unless the failure to be true and correct is not material or would not result in a material adverse effect on the other party and its subsidiaries taken together; and
 
 
 
is not susceptible to cure or is not cured within 30 days after written notice of the breach.
 
The merger agreement may be terminated by Northrop Grumman if:
 
 
 
TRW’s board of directors changes its recommendation to TRW’s shareholders to adopt the merger agreement (whether or not permitted by the merger agreement);
 
 
 
TRW fails to call the TRW Meeting; or
 
 
 
TRW’s board of directors recommends a proposal other than the merger to the TRW shareholders.
 
The merger agreement may be terminated by TRW if:
 
 
 
Northrop Grumman’s board of directors changes its recommendation to Northrop Grumman’s stockholders to approve the issuance of the shares of Northrop Grumman common stock pursuant to the merger (whether or not permitted by the merger agreement);
 
 
 
Northrop Grumman fails to call the Northrop Meeting; or
 
 
 
TRW’s board of directors in good faith determines by a majority vote, after consultation with outside legal counsel, that to fulfill its fiduciary obligations it may be required to withdraw its recommendation

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regarding the merger, or approve or recommend, or cause TRW to enter into an agreement regarding a proposal that TRW’s board of directors believes is more favorable to TRW’s shareholders than the merger, and:
 
 
 
TRW gives notice to Northrop Grumman of the competing proposal, including the material terms of the proposal and the identity of the party making the competing proposal;
 
 
 
Northrop Grumman does not make an offer that TRW’s board of directors by a majority vote determines in good faith (based on the advice of TRW’s financial advisers) is as favorable to TRW’s shareholders as the competing proposal within five days after receiving notice from TRW of the competing proposal; and
 
 
 
prior to or concurrently with signing any agreement regarding the competing proposal, TRW must terminate the merger agreement and pay Northrop Grumman the termination fee described below.
 
Termination Fee
 
TRW must pay Northrop Grumman a termination fee of $275 million if the merger agreement is terminated:
 
 
 
by Northrop Grumman because TRW’s board of directors changes its recommendation to TRW shareholders to adopt the merger agreement (whether or not permitted by the merger agreement);
 
 
 
by Northrop Grumman because TRW fails to call the TRW Meeting as required by the merger agreement;
 
 
 
by Northrop Grumman because TRW’s board of directors recommends a proposal other than the merger to the TRW shareholders;
 
 
 
by TRW, after complying with its obligations under the non-solicitation provisions of the merger agreement referred to below. See “THE MERGER AGREEMENT—No Solicitation” on the following page.
 
TRW also must pay Northrop Grumman the $275 million termination fee if the merger agreement is terminated by Northrop Grumman because:
 
 
 
the TRW shareholders fail to adopt the merger agreement at the TRW Meeting and, at the time of the TRW Meeting, there is outstanding, or TRW is considering, or there has been a public announcement of, a plan or proposal (referred to as an “acquisition proposal”) for the direct or indirect acquisition of 30% or more of either the equity interests in TRW or the assets or business of TRW or its subsidiaries that constitute 30% or more of the net revenues, net income or net assets of TRW and its subsidiaries (taken as a whole) and within twelve months thereafter:
 
 
 
TRW enters into an agreement with respect to such an acquisition proposal; or
 
 
 
a transaction occurs involving the conveyance of 50% or more of either the equity interests in TRW or the assets or business of TRW or its subsidiaries that constitute 50% or more of the net revenues, net income or net assets of TRW and its subsidiaries (taken as a whole), in each case involving any party or affiliate thereof:
 
 
 
with whom TRW or its agents had negotiations regarding an acquisition proposal;
 
 
 
to whom TRW or its agents provided information in connection with an acquisition proposal; or
 
 
 
who had submitted an acquisition proposal to TRW after the date of the merger agreement and before the date the merger agreement is terminated; or
 
 
 
TRW has breached a representation, warranty, covenant or obligation contained in the merger agreement and the breach:
 
 
 
results in a failure of the condition that TRW shall have performed in all material respects its covenants and obligations under the merger agreement, that TRW’s representations and warranties

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shall be true and correct unless the failure to be true and correct is not material or would not result in a material adverse effect on TRW and its subsidiaries taken together; and
 
 
 
is not susceptible to cure or is not cured within 30 days after written notice of the breach and, within twelve months thereafter:
 
 
 
TRW enters into an agreement for the direct or indirect acquisition of 30% or more of either the equity interests in TRW or the assets or business of TRW or its subsidiaries that constitute 30% or more of the net revenues, net income or net assets of TRW and its subsidiaries (taken as a whole); or
 
 
 
a transaction occurs involving the conveyance of 50% or more of either the equity interests in TRW or the assets or business of TRW or its subsidiaries that constitute 50% or more of the net revenues, net income or net assets of TRW and its subsidiaries (taken as a whole), in each case involving any party or affiliate thereof:
 
 
 
with whom TRW or its agents had negotiations regarding an acquisition proposal after the date of the merger agreement and before the date the merger agreement is terminated,
 
 
 
to whom TRW or its agents provided information in connection with an acquisition proposal after the date of the merger agreement and before the date the merger agreement is terminated; or
 
 
 
who had submitted an acquisition proposal to TRW after the date of the merger agreement and before the date the merger agreement is terminated.
 
Expense Reimbursement
 
Northrop Grumman must reimburse TRW for up to $50 million of documented expenses if the merger agreement is terminated by TRW because Northrop Grumman’s board of directors changes its recommendation to Northrop Grumman’s stockholders to authorize the issuance of shares of Northrop Grumman common stock pursuant to the merger or fails to call the Northrop Meeting.
 
No Solicitation
 
The merger agreement contains a non-solicitation covenant which prohibits TRW from continuing discussions or negotiations regarding any acquisition proposal (as defined in the merger agreement) after the date of the merger agreement. However, if an acquisition proposal is received, TRW’s board of directors may make inquiries or conduct discussions to inform itself for the purpose of exercising its fiduciary duties if:
 
 
 
the acquisition proposal could result in a “superior proposal,” as described below; and
 
 
 
the acquisition proposal was not solicited after the date of the merger agreement and did not otherwise result from TRW’s breach of the non-solicitation covenant.
 
If TRW’s board of directors determines that a competing proposal is reasonably likely to lead to a “superior proposal,” TRW and its representatives may conduct additional discussions or provide non-public information to the other party if the third party executes a confidentiality and standstill agreement no less restrictive than the confidentiality agreement between Northrop Grumman and TRW and the confidentiality provisions in the merger agreement.
 
TRW has agreed to inform Northrop Grumman concerning any unsolicited acquisition proposal which it may receive.

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Change of Recommendation
 
TRW’s board of directors has agreed to recommend the adoption of the merger agreement to TRW shareholders. However, TRW’s board of directors is permitted to withdraw or modify its recommendation in a manner adverse to Northrop Grumman, if:
 
 
 
Northrop Grumman changes its recommendation to Northrop Grumman stockholders;
 
 
 
TRW receives an unsolicited competing proposal that TRW’s board of directors believes is a “superior proposal,” as described above, provided:
 
 
 
TRW’s board of directors determines in good faith, after consultation with outside legal counsel, that such withdrawal or modification may be required to satisfy its fiduciary duties;
 
 
 
TRW provides written notice to Northrop Grumman of the “superior proposal” prior to withdrawing or modifying its recommendation; and
 
 
 
Northrop Grumman does not, within five business days of receipt of such notice, make an offer which TRW’s board of directors determines in good faith to be as favorable as the “superior proposal.”
 
However, TRW may not enter into any agreement with respect to a “superior proposal” unless the merger agreement has been or concurrently is terminated and TRW first pays Northrop Grumman the $275 million termination fee described above.
 
A “superior proposal” is defined in the merger agreement as a bona fide written proposal or indication of interest from a third party for:
 
 
 
a direct or indirect acquisition, purchase or conveyance of a business or asset of TRW or any of its subsidiaries that constitutes 30% or more of the net revenues, net income or assets of TRW and its subsidiaries, taken as a whole;
 
 
 
a direct or indirect acquisition, purchase or conveyance of 30% or more of any class of equity securities of TRW or any of its subsidiaries whose business constitutes 30% or more of the net revenues, net income or assets of TRW and its subsidiaries, taken as a whole;
 
 
 
a tender offer or exchange offer that, if consummated, would result in anyone beneficially owning 30% or more of any class of equity securities of TRW, or any of its subsidiaries whose business constitutes 30% or more of the net revenues, net income or assets of TRW and its subsidiaries, taken as a whole; or
 
 
 
a merger, consolidation, business combination or similar transaction involving TRW, including a transaction that contemplates the conveyance or other disposition of a portion of the assets or a business of TRW or any of its subsidiaries to a third party and/or the shareholders of TRW prior to the consummation of such transaction, where such transaction, together with such conveyance or other disposition, if any, constitutes 30% or more of the net revenue, net income or assets of TRW and its subsidiaries, taken as a whole,
 
in each case, which the TRW board of directors determines in its good faith judgment, after consultation with a financial adviser of nationally recognized reputation, is more favorable to TRW shareholders than the merger.
 
Amendment or Waiver of the Merger Agreement
 
The parties may amend or waive any provision of the merger agreement before the effective time of the merger and before TRW shareholders have adopted the merger agreement and Northrop Grumman stockholders have approved the issuance of the shares of Northrop Grumman common stock to be issued pursuant to the merger. After the receipt of either shareholder approval, if any such amendment or waiver shall by law or in accordance with the rules and regulations of any relevant securities exchange require further approval of Northrop Grumman stockholders or TRW shareholders, the effectiveness of the amendment or waiver will be subject to the necessary stockholder or shareholder approval.

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NORTHROP GRUMMAN AFTER THE MERGER
 
Management
 
Directors
 
After the merger, Northrop Grumman will retain its current board of directors. More information about each of the members of Northrop Grumman’s board of directors is included in Annex F to this joint proxy statement/prospectus.
 
Following the merger, the directors of Richmond Acquisition Corp. on the closing date will become the directors of TRW, the corporation surviving the merger. These directors are Albert F. Myers and John H. Mullan. More information about these directors is included in Annex F to this joint proxy statement/prospectus.
 
Executive Officers
 
The composition of Northrop Grumman’s management is not expected to change materially as a result of the merger. More information about each of Northrop Grumman’s executive officers is included in Annex F to this joint proxy statement/prospectus. Northrop Grumman may enter into retention or other arrangements with TRW officers who remain employed by TRW following the merger.
 
Until successors are elected or duly appointed and qualified or until an officer resigns, the officers of TRW at the effective time will be the officers of TRW after the merger. More information about TRW’s executive officers is included in Annex G to this joint proxy statement/prospectus.
 
Proposed Sale or Spin Off of TRW’s Automotive Business
 
General Information
 
Northrop Grumman currently anticipates that TRW will continue its current business and operations after the merger as a wholly-owned subsidiary of Northrop Grumman, except that after completion of the merger Northrop Grumman plans to sell TRW’s Automotive business to a third party or parties or spin off the business to Northrop Grumman stockholders (including the former TRW shareholders). At this time, neither TRW nor Northrop Grumman has entered into any agreement to sell or spin off the Automotive business, although TRW has taken certain actions described below intended to prepare for or facilitate a spin off of the Automotive business.
 
Possible Sale Transaction
 
Northrop Grumman will actively explore the possibility of selling the Automotive business to a third party or parties. Such a transaction could generate substantial proceeds which could be used to retire indebtedness. The desirability and feasibility of such a sale will depend upon whether a buyer or group of buyers can be identified who have the financial capacity and desire to acquire the Automotive business on terms that are attractive to Northrop Grumman and are determined to be reasonably likely to result in the maximum benefit and value to Northrop Grumman’s stockholders. Neither Northrop Grumman nor TRW currently has any agreement, arrangement or understanding with respect to any such sale.
 
Incorporation of TRW Automotive Inc. and Registration of Stock
 
On June 3, 2002, TRW organized a wholly-owned subsidiary named “TRW Automotive Inc.” under the laws of the State of Delaware. On June 4, 2002, this subsidiary filed a registration statement on Form S-1 with

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the SEC to register shares of common stock of the subsidiary to be issued to TRW’s shareholders in connection with the spin off of TRW’s Automotive business to TRW’s shareholders, as described in the subsidiary’s registration statement. The following section describes the general structure proposed by TRW to accomplish the spin off of the Automotive business to TRW’s shareholders, as described in TRW Automotive Inc.’s. registration statement. If Northrop Grumman determines to divest TRW’s Automotive business by a spin off to Northrop Grumman’s stockholders (including the former TRW shareholders) rather than by a sale, Northrop Grumman expects that the transaction will be completed in a manner substantially similar to that contemplated by TRW, as described below, except that any spin off completed after the merger would result in a distribution of the stock of TRW Automotive Inc. to Northrop Grumman’s stockholders (including the former TRW shareholders).
 
Description of Proposed Spin Off
 
Transfer of Assets and Liabilities.    In preparation for a spin off of TRW’s Automotive business, TRW stated that it would engage in a series of restructuring transactions designed to transfer to TRW Automotive Inc. all of the assets and liabilities associated with TRW’s Automotive business and any equity or similar interests held by TRW in subsidiaries and other entities that conduct the Automotive business. In addition, all liabilities associated with the Automotive business would be assumed by TRW Automotive Inc., such that after giving effect to the restructuring transactions, TRW’s Automotive business will reside, directly or indirectly, in TRW Automotive Inc. and its subsidiaries and affiliates. TRW would retain all of the assets and liabilities associated with its non-Automotive businesses after the spin off.
 
Registration and Listing of TRW Automotive Inc. Stock.    The distribution of shares of common stock of TRW Automotive Inc. in the spin off would be registered pursuant to TRW Automotive Inc.’s registration statement filed on June 4, 2002, as amended or supplemented from time to time, and applications would be made to the New York Stock Exchange to list those shares upon official notice of issuance.
 
Third Party Equity Sale.    In preparation for the spin off, TRW stated that shares of convertible preferred stock representing up to 20% of the outstanding shares of common stock of TRW Automotive Inc. (assuming the conversion of such shares of convertible preferred stock) may be sold to a third party investor or investors in a private placement transaction, subject to reasonable and customary terms and conditions.
 
Debt Financing Transaction.    Upon completing the restructuring transactions, TRW anticipates that TRW Automotive Inc. would have approximately $2.8 billion of gross funding (debt plus securitized receivables). This level of gross funding is considered by TRW to be a reasonable amount of debt for TRW Automotive Inc. to carry, while still maintaining an investment grade rating. The debt could be created through the issuance of debt securities by TRW Automotive Inc. or through the assumption of existing TRW indebtedness or through a combination of these approaches.
 
Spin Off of Automotive Business.    If Northrop Grumman elects to do the spin off after the merger, it currently is anticipated that Northrop Grumman’s stockholders (including the former TRW shareholders) would receive a special dividend paid in the form of registered, listed stock of TRW Automotive Inc. As a result of this dividend, Northrop Grumman’s stockholders (including the former TRW shareholders) would own all of the outstanding capital stock of TRW Automotive Inc., other than any portion owned by a third party purchaser of convertible preferred stock as described above. As a result of this special dividend, TRW Automotive Inc. would be a stand-alone corporation, with stock registered under the Securities Act and with shares listed and traded separately on the New York Stock Exchange.
 
Certain Federal Income Tax Consequences of the Disposition of the TRW Automotive Business
 
Subsequent to the acquisition of TRW, Northrop Grumman may either sell or spin off all or part of the Automotive operations of TRW. There currently is no agreement for the sale of the Automotive business and

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there can be no assurance that a sale or spin off will be consummated. A sale of the TRW Automotive business will likely be a taxable transaction to Northrop Grumman. In the event that Northrop Grumman proceeds with a spin off of the TRW Automotive business, Northrop Grumman will attempt to structure the spin off as a transaction that is tax-free to its shareholders (including the former TRW shareholders) under Section 355(a) of the Internal Revenue Code. There can be no assurance, however, that the spin off can be structured, or will qualify, as a tax-free transaction. If the spin off does qualify as a tax-free transaction to the Northrop Grumman stockholders, such stockholders will not recognize any income, gain or loss as a result of the receipt of the stock of the spun off company, except for any gain or loss attributable to the receipt of cash in lieu of a fractional share. In addition, the tax basis of a Northrop Grumman stockholder in the stock of the spun-off company and in the stock of Northrop Grumman will be determined by allocating the stockholder’s basis in its Northrop Grumman stock immediately before the spin off between the Northrop Grumman stock held by the stockholder and the stock of the spun off company that is distributed to the stockholder in proportion to their relative fair market values in accordance with applicable Treasury regulations. If the spin off does not qualify as a tax free transaction to the Northrop Grumman stockholders, each Northrop Grumman stockholder who receives stock of the spun off company will be treated as receiving a taxable dividend distribution in an amount equal to the fair market value of such stock on the date of the spin off. In addition, each such stockholder’s basis in the stock of the spun off company will be equal to the fair market value of that stock on the date of the spin off. Notwithstanding the treatment of the spin off for Northrop Grumman stockholders, the spin off will be taxable to Northrop Grumman as a result of Section 355(e) of the Internal Revenue Code if it is deemed to be undertaken as part of the same plan as a transaction (the merger) in which more than a 50% change in ownership of TRW occurred. However, Northrop Grumman does not expect any tax imposed on Northrop Grumman or its subsidiaries as a result of either a sale or the spin off of the TRW Automotive business to be material.
 
Comparison of Spin Off and Sale Alternatives
 
If a spin off of TRW’s Automotive business were to be completed:
 
 
 
TRW Automotive Inc. would be owned by Northrop Grumman’s stockholders (including the former TRW shareholders) and any purchaser of convertible preferred stock of TRW Automotive Inc.;
 
 
 
TRW Automotive Inc. would be a stand alone corporation, with its own revenues, expenses, liabilities and commitments and would have no connection to TRW’s remaining operations or Northrop Grumman, other than certain contractual arrangements that would be entered into in connection with the spin off of the Automotive business;
 
 
 
TRW Automotive Inc. would receive no financial benefit if Northrop Grumman experienced successes, and generally would bear no liabilities or experience any detriments should Northrop Grumman become unsuccessful;
 
 
 
Northrop Grumman would receive no financial benefit if TRW Automotive Inc. experienced successes, and generally would bear no liabilities or experience any detriments should TRW Automotive Inc. become unsuccessful; and
 
 
 
Northrop Grumman’s level of indebtedness (including any indebtedness attributable to TRW and the merger) would be reduced to the extent that indebtedness is assumed by TRW Automotive Inc. or the proceeds from any debt or equity financing of TRW Automotive Inc. are applied to pay down debt of Northrop Grumman or TRW.
 
If a sale of TRW’s Automotive business were to be completed:
 
 
 
Neither Northrop Grumman’s nor TRW’s former shareholders would have any ownership interest in TRW’s Automotive business after the sale by virtue of their ownership of Northrop Grumman stock;
 
 
 
None of Northrop Grumman’s stockholders (including the former TRW shareholders) would receive any financial benefit or incur any detriment from the operating results of TRW’s Automotive business

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after the sale, although it is possible that any sale transaction will contain customary representations, warranties and indemnities by Northrop Grumman that may survive the closing of the transaction; and
 
 
 
Northrop Grumman’s level of indebtedness (including any indebtedness attributable to TRW and the merger) likely would be reduced to a greater extent than any reduction in indebtedness relating to a spin off, assuming most or all of the net proceeds from a sale were applied to reduce indebtedness.

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
 
The Unaudited Pro Forma Condensed Combined Financial Statements presented below are derived from the historical consolidated financial statements of each of Northrop Grumman, Litton, Newport News and TRW and have been adjusted to give effect to the Litton, Newport News and TRW acquisitions. The Unaudited Pro Forma Condensed Combined Financial Statements are prepared using the purchase method of accounting, with Northrop Grumman treated as the acquirer and as if the Litton, Newport News and TRW acquisitions had been completed on January 1, 2001 (for statement of operations purposes) and on December 31, 2001 (for balance sheet purposes). The pro forma amounts have been developed from (a) the audited consolidated financial statements of Northrop Grumman contained in its Annual Report on Form 10-K for the fiscal year ended December 31, 2001, which is incorporated by reference in this joint proxy statement/prospectus, (b) the unaudited consolidated financial statements contained in Litton’s Quarterly Report on Form 10-Q for the period ended January 31, 2001, (c) the unaudited consolidated financial statements of Newport News contained in its Quarterly Report on Form 10-Q for the period ended September 16, 2001, and (d) the audited consolidated financial statements of TRW contained in its Annual Report on Form 10-K for the year ended December 31, 2001, which is incorporated by reference in this joint proxy statement/prospectus.
 
The acquisition of Litton, on April 3, 2001, which is valued at approximately $5.2 billion, including the assumption of Litton’s net debt of $1.3 billion, is accounted for using the purchase method of accounting. Under the purchase method of accounting, the purchase price is allocated to the underlying tangible and intangible assets acquired and liabilities assumed based on their respective fair market values, with the excess recorded as goodwill. The Unaudited Pro Forma Condensed Combined Financial Statements reflect preliminary estimates of the fair market value of the Litton assets acquired and liabilities assumed and the related allocations of purchase price, and preliminary estimates of adjustments necessary to conform Litton data to Northrop Grumman’s accounting policies. Purchased intangible assets identified and recorded are contract-based intangible assets. The final determination of the fair market value of assets acquired and liabilities assumed and final allocation of the purchase price may differ from the amounts assumed in these Unaudited Pro Forma Condensed Combined Financial Statements. Adjustments to the purchase price allocations will be finalized by [            ], 2002, and will be reflected in Northrop Grumman’s Quarterly Report on Form 10-Q for the period ended June 30, 2002 and in subsequent filings. There can be no assurance that such adjustments will not be material.
 
In November 2001, Northrop Grumman purchased pursuant to an exchange offer approximately 80.7 percent of the outstanding shares of Newport News common stock. In January 2002, Northrop Grumman completed the acquisition of the shares of Newport News common stock not previously purchased, issuing 3.2 million shares of Northrop Grumman common stock and paying cash for the remaining balance of the Newport News shares. For purposes of the Unaudited Pro Forma Condensed Combined Financial Statements, Northrop Grumman has assumed that all shares of Newport News were acquired on January 1, 2001 (for statement of operations purposes) and on December 31, 2001 (for balance sheet purposes) the acquisition of Newport News, which is valued at approximately $2.6 billion, including the assumption of Newport News net debt of $400 million, is accounted for using the purchase method of accounting. Northrop Grumman is currently reviewing the fair market value and accounting conformance evaluation process with respect to the Newport News acquisition. The Unaudited Pro Forma Condensed Combined Financial Statements reflect preliminary estimates of the fair market value of the assets acquired, including contract-based purchased intangible assets, and liabilities assumed and the related allocations of purchase price and preliminary estimates of adjustments necessary to conform Newport News to Northrop Grumman’s accounting policies. Adjustments to the purchase price allocations are expected to be finalized by June 30, 2002, and will be reflected in future filings. There can be no assurance that such adjustments will not be material.
 
As of the date of this joint proxy statement/prospectus, Northrop Grumman has not performed the valuation studies necessary to arrive at the required estimates of the fair market value of the TRW assets to be acquired and the TRW liabilities to be assumed in connection with the merger and the related allocations of purchase price, nor has it identified the adjustments necessary, if any, to conform TRW data to Northrop Grumman’s accounting

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policies. Accordingly, Northrop Grumman has used the historical book values of the assets and liabilities of TRW and has used the historical revenue recognition policies of TRW to prepare the Unaudited Pro Forma Condensed Combined Financial Statements set forth herein, with the excess of the purchase price over the historical net assets of TRW recorded as goodwill and other purchased intangibles. Once Northrop Grumman has determined the final purchase price for TRW and has completed the valuation studies necessary to finalize the required purchase price allocations and identified any necessary conforming changes for TRW, such pro forma financial statements will be subject to adjustment. Such adjustments will likely result in changes to the pro forma statement of financial position to reflect the final allocations of purchase price and the pro forma statements of income, and there can be no assurance that such adjustments will not be material. In the event that the merger is consummated, Northrop Grumman has indicated that it currently anticipates a sale or spin off of the Automotive operations of TRW. There currently is no agreement for the sale or spin off of the Automotive business and there can be no assurance that a sale or spin off will be consummated or with respect to the terms of any such sale or spin off or other transfer. Such a transaction would materially change the pro forma information provided herein.
 
The Unaudited Pro Forma Condensed Combined Financial Statements are provided for illustrative purposes only and do not purport to represent what the actual consolidated results of operations or the consolidated financial position of Northrop Grumman would have been had the Litton, Newport News and TRW acquisitions occurred on the dates assumed, nor are they necessarily indicative of future consolidated results of operations or financial position.
 
The Unaudited Pro Forma Condensed Combined Financial Statements do not include the realization of cost savings from operating efficiencies, synergies or other restructurings resulting from the Litton, Newport News or TRW acquisitions.
 
The Unaudited Pro Forma Condensed Combined Financial Statements should be read in conjunction with the separate historical consolidated financial statements and accompanying notes of Northrop Grumman and TRW that are incorporated by reference in this joint proxy statement/prospectus.
 
TRW expects to file its second quarter 2002 Form 10-Q on a basis that reflects the sale of The Aeronautical Systems Business as discontinued operations. TRW will also be required to file a Form 8-K to reflect this change in accounting in its annual report on Form 10-K as applicable. As a result the The Unaudited Pro Forma Condensed Combined Financial Statements contained herein incorporate only the portion of the income statements of TRW through “income from continuing operations”.
 
The Unaudited Pro Forma Condensed Combined Financial Statements assume the following:
 
 
 
the sale of the Aeronautical Systems business is completed as planned;
 
 
 
the sale of the Automotive business is completed at the book value of the business after the merger; and
 
 
 
the spinoff of the Automotive business results in no gain or loss to Northrop Grumman.
 
Unaudited Pro Forma Condensed Combined Financial Statements presented:
 
 
 
Unaudited Pro Forma Condensed Combined Financial Statements reflecting retention of TRW’s Automotive Business;
 
 
 
Unaudited Pro Forma Condensed Combined Financial Statements reflecting the proposed spin-off of TRW’s Automotive Business; and
 
 
 
Unaudited Pro Forma Condensed Combined Financial Statements reflecting the proposed sale of TRW’s Automotive Business.

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Unaudited Pro Forma Condensed Combined Financial Statements
 
June 30, 2002
($ in millions)
 
   
Northrop
Grumman

 
TRW

 
Pro Forma

 
Auto
Spin Off

 
Pro Forma

 
Auto
Sale

 
Pro Forma

       
Adjustment

   
Combined

   
Adjustment

   
Combined

   
Adjustment

   
Combined

Assets:
                                                                 
Current assets
 
$
                
 
$
        
 
$
                
 
 
 $
                
 
$
             
 
$
             
 
 
$
            
 
$
        
 
$
                
 
 
$
                
Cash and cash equivalents
             
 
                (a
)
                                             
Accounts receivable
             
 
    (a
)
                                             
Interest in securitized receivables
             
 
    (a
)
                                             
Inventoried costs
             
 
    (a
)
                                             
Deferred income taxes
                                                                 
Prepaid expenses and other current assets
             
 
    (a
)
                                             
   

 

 


 

 

 


 

 

 


 

Total current assets
                                                                 
   

 

 


 

 

 


 

 

 


 

Property, plant and equipment
             
 
    (a
)
                                             
Accumulated depreciation
                                                                 
   

 

 


 

 

 


 

 

 


 

Property, plant and equipment, net
             
 
    (a
)
                                             
   

 

 


 

 

 


 

 

 


 

Other assets
                                                                 
Goodwill, net
             
 
    (a
)
             
 
                (a
)
             
 
                (a
)
     
Purchased intangibles, net
                                 
 
    (a
)
             
 
    (a
)
     
Prepaid retiree benefits cost and intangible pension asset
             
 
    (b
)
                                             
Other assets
             
 
    (a
)
                                             
   

 

 


 

 

 


 

 

 


 

   
$
 
 
$
 
 
$
 
 
 
$
 
 
$
 
 
$
 
 
 
$
 
 
$
 
 
$
 
 
 
$
 
   

 

 


 

 

 


 

 

 


 

Liabilities and Shareholders’ Equity
                                                                 
Current liabilities
                                                                 
Notes payable and current portion of long term debt
 
$
 
 
$
 
 
$
 
 
 
$
 
 
$
 
 
$
 
 
 
$
 
 
$
 
 
$
 
 
 
$
 
Accounts payable
                                                                 
Accrued employees’ compensation
             
 
        (a
)
                                             
Contract loss provision
                                                                 
Advances on contracts
                                                                 
Income taxes
                                                                 
Other current liabilities
             
 
        (a
)
                                             
   

 

 


 

 

 


 

 

 


 

Total current liabilities
                                                                 
   

 

 


 

 

 


 

 

 


 

Long-term debt
             
 
        (a
)
                                             
Accrued retiree benefits
             
 
        (b
)
                                             
Minority interest
                                                                 
Deferred tax and other long-term liabilities
             
 
        (a
)
                                             
Redeemable preferred stock
             
 
        (a
)
                                             
Shareholders’ equity
                                                                 
Paid in capital and unearned compensation
             
 
        (a
)
             
 
        (a
)
             
 
        (a
)
     
Retained earnings
             
 
        (a
)
             
 
        (a
)
             
 
        (a
)
     
Accumulated other comprehensive loss
             
 
        (a
)
             
 
        (a
)
             
 
        (a
)
     
Stock Employee Compensation Trust
                                                                 
Treasury Shares—cost in excess of par value
                                                                 
   

 

 


 

 

 


 

 

 


 

                                                                   
   

 

 


 

 

 


 

 

 


 

   
$
 
 
$
 
 
$
 
 
 
$
 
 
$
 
 
$
 
 
 
$
 
 
$
 
 
$
 
 
 
$
 
   

 

 


 

 

 


 

 

 


 

84


Table of Contents
Unaudited Pro Forma Condensed Combined Statement of Income
 
Six Months Ended June 30, 2002
($ in millions, except per share)
 
    
Northrop Grumman

  
TRW

    
Pro Forma

  
Auto Spin Off

    
Pro Forma

 
Auto Sale TRW

    
Pro Forma

            
Adjustments

  
Combined

       
Adjustments

  
Combined

      
Adjustment

  
Combined

Sales and service revenues
  
$
    
  
$
    
    
$
    
  
$
    
  
$
    
    
$
    
  
$
    
 
$
    
    
$
    
  
$
    
Cost of sales
                                                                          
Operating Costs
                                                                          
Administrative and general expenses
                                                                          
    

  

    

  

  

    

  

 

    

  

Operating margin
                                                                          
Interest expense
                                                                          
Other, net
                                                                          
    

  

    

  

  

    

  

 

    

  

Income before income taxes and extraordinary taxes
                                                                          
Federal and foreign income taxes
                                                                          
Income before extraordinary items
                                                                          
    

  

    

  

  

    

  

 

    

  

Extraordinary items, net of income taxes
                                                                          
    

  

    

  

  

    

  

 

    

  

Net Income
                                                                          
    

  

    

  

  

    

  

 

    

  

Less, dividends paid to preferred shareholder’s
                                                                          
    

  

    

  

  

    

  

 

    

  

Income available to common shareholder’s
  
$
 
  
$
 
    
$
 
  
$
 
  
$
 
    
$
 
  
$
 
 
$
 
    
$
 
  
$
 
    

  

    

  

  

    

  

 

    

  

Average shares basic
                                                                          
Average shares diluted
                                                                          
Basic earnings per share
                                                                          
Income before extraordinary items
  
$
 
                  
$
 
                  
$
 
                 
$
 
Extraordinary items
                                                                          
    

                                                               

Net Income
  
$
 
                                                                   
Diluted earnings per share
                                                                          
Income before extraordinary items
  
$
 
                  
$
 
                  
$
 
                 
$
 
Extraordinary items
                                                                          
    

                                                               

Net Income
                                                                          

*
 
Calculated by dividing income available to common shareholders by average shares diluted, which is calculated assuming preferred shares are not converted to common shares, resulting in the most dilutive effect.

85


Table of Contents
Unaudited Pro Forma Condensed Combined Statement of Income
 
Twelve Months Ended December 31, 2001
($ in millions, except per share)
 
    
Northrop Grumman

 
TRW

  
Pro Forma

 
Auto Spin Off

  
Pro Forma

 
Auto Sale

  
Pro Forma

       
Adjustments

      
Combined

    
Adjustments