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<TITLE>TRW AUTOMOTIVE INC.</TITLE>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">As filed with the Securities and Exchange
Commission on June&nbsp;4, 2002</FONT></B>
</DIV>

<DIV align="right">
<B><FONT size="2">Registration
No.&nbsp;333-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B>
</DIV>

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<DIV align="center">
<B><FONT size="4">SECURITIES AND EXCHANGE COMMISSION</FONT></B>
</DIV>

<DIV align="center">
<B>Washington, D.C. 20549</B>
</DIV>

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<P align="center">
<B><FONT size="5">Form S-1</FONT></B>

<DIV align="center">
<B>REGISTRATION STATEMENT</B>
</DIV>

<DIV align="center">
<B>UNDER</B>
</DIV>

<DIV align="center">
<B>THE SECURITIES ACT OF 1933</B>
</DIV>

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<B><FONT size="6">TRW Automotive Inc.</FONT></B>

<DIV align="center">
<I><FONT size="2">(Exact name of Registrant as specified in its
charter)</FONT></I>
</DIV>

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    <TD width="29%"><FONT size="2">&nbsp;</FONT></TD>
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    <B><FONT size="2">Delaware</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <B><FONT size="2">3714</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <B><FONT size="2">03-0450952</FONT></B></TD>
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    <TD align="center" valign="top">
    <I><FONT size="2">(State or other jurisdiction of<BR>
    incorporation or organization)</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <I><FONT size="2">(Primary Standard Industrial<BR>
    Classification Code Number)</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <I><FONT size="2">(I.R.S. Employer<BR>
    Identification Number)</FONT></I></TD>
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<P align="center">
<B><FONT size="2">TRW Automotive Inc.</FONT></B>

<DIV align="center">
<B><FONT size="2">12025 Tech Center Drive</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Livonia, Michigan 48150</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Telephone: (734)&nbsp;266-2600</FONT></B>
</DIV>

<DIV align="center">
<I><FONT size="2">(Address, including zip code, and telephone
number, including area code, of</FONT></I>
</DIV>

<DIV align="center">
<I><FONT size="2">Registrant&#146;s principal executive
offices)</FONT></I>
</DIV>

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<P align="center">
<B><FONT size="2">William B. Lawrence</FONT></B>

<DIV align="center">
<B><FONT size="2">Executive Vice President,</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">General Counsel and Secretary</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">TRW Inc.</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Cleveland, Ohio 44124-2760</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Telephone: (216) 291-7000</FONT></B>
</DIV>

<DIV align="center">
<I><FONT size="2">(Name, address, including zip code, and
telephone number,</FONT></I>
</DIV>

<DIV align="center">
<I><FONT size="2">including area code, of agent for
service)</FONT></I>
</DIV>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Approximate date of commencement of proposed
sale to the public:</FONT></B><FONT size="2"> As soon as
practicable after this Registration Statement becomes effective.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If any of the securities being registered on this
Form are to be offered on a delayed or continuous basis pursuant
to Rule&nbsp;415 under the Securities Act, check the following
box.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If this Form is filed to register additional
securities for an offering pursuant to Rule&nbsp;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.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If this Form is a post-effective amendment filed
pursuant to Rule&nbsp;462(c) 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.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If this Form is a post-effective amendment filed
pursuant to Rule&nbsp;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.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If delivery of the prospectus is expected to be
made pursuant to Rule&nbsp;434, check the following
box.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>
</FONT>

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<B><FONT size="2">CALCULATION OF REGISTRATION FEE</FONT></B>

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    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="33%"><FONT size="2">&nbsp;</FONT></TD>
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    <TD colspan="5"></TD>
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    <TD align="center" nowrap><B><FONT size="1">Title of Each Class of Securities</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Proposed Maximum Aggregate</FONT></B></TD>
    <TD></TD>
    <TD></TD>
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<TR>
    <TD align="center" nowrap><B><FONT size="1">to be Registered</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Offering Price(1)</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Amount of Registration Fee</FONT></B></TD>
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    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Common Stock, $.001 par value per share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">$1,504,000,000
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">$138,368
    </FONT></TD>
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    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Calculated pursuant to Rule&nbsp;457(f)(2)
    promulgated under the Securities Act, based on the book value of
    the Registrant as of March&nbsp;31, 2002.
    </FONT></TD>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">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&nbsp;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&nbsp;8(a), may
determine.</FONT></B>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="1" cellpadding="5"><TR><TD>
<FONT size="2" color="#FF0000">The information in this
prospectus is not complete and may be changed. We may not
distribute these securities until the registration statement
filed with the Securities and Exchange Commission is effective.
This prospectus is not an offer to distribute these securities
and we are not soliciting offers to receive these securities in
any state where the offer or distribution is not permitted.
</FONT>
</TD></TR></TABLE>

<P align="center">
<FONT size="2"> <B>SUBJECT TO COMPLETION, DATED JUNE&nbsp;4,
2002</B>
</FONT>

<P align="left">
<B><FONT size="2">PRELIMINARY PROSPECTUS</FONT></B>

<P align="center">
<B><FONT size="6">TRW Automotive Inc.</FONT></B>

<DIV align="center">
<B><FONT size="4">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares</FONT></B>
</DIV>

<P align="center">
<B><FONT size="4">Common Stock</FONT></B>

<DIV align="center">
<B><FONT size="2">(par value $.001 per share)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are currently a wholly-owned subsidiary of TRW
Inc. In the spin-off described in this prospectus, TRW will
distribute all of the shares of our common stock held by TRW on
a <I>pro rata </I>basis to the holders of TRW common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the spin-off, you will receive one share of
our common stock for each share of TRW common stock that you
held at the close of business on the spin-off record date,
currently expected to be on or
about &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2002. Immediately following the spin-off, we will be an
independent, publicly traded company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are sending you this prospectus to describe
the spin-off. We expect the spin-off to occur on or
about &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2002. On or shortly after the expected spin-off date:
</FONT>
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    <TD width="1%"></TD>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">holders of record of TRW common stock on the
    spin-off record date will have credited to a book-entry account
    established for them by, and maintained at National City Bank
    (our registrar and transfer agent) the number of shares of our
    common stock to which they are entitled in the spin-off; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">beneficial owners of shares of TRW common stock
    on the spin-off record date should have credited to their
    brokerage, custodian or similar account through which they own
    their TRW common stock, the number of shares of our common stock
    to which they are entitled in the spin-off.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This prospectus explains the spin-off in detail
and provides important information regarding TRW Automotive Inc.
We urge you to read it carefully. <B>Please note that approval
of TRW shareholders at an upcoming special meeting of TRW
shareholders is a condition to the spin-off. You should
carefully review the proxy statement of TRW relating to the
special meeting that accompanies this prospectus. </B>There are
other conditions that must also be met for the spin-off to
proceed. These conditions are described in the section entitled
&#147;The Spin-Off&nbsp;&#151; Conditions to Spin-Off;
Termination of Spin-Off.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If TRW shareholders approve the spin-off at the
special meeting, no further shareholder action will be necessary
for you to receive the shares of our common stock to which you
will be entitled in the spin-off. This means that:
</FONT>
<P>

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    <TD width="1%"></TD>
    <TD width="96%"></TD>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">you will not need to pay any consideration to TRW
    or to us; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">you will not need to surrender any shares of TRW
    common stock to receive your shares of our common stock.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We expect shares of our common stock to trade on
the New York Stock Exchange under the ticker symbol
&#147;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>As you review this prospectus, you should carefully consider
the matters described in &#147;Risk Factors&#148; beginning on
page&nbsp;9.</B>

<P align="center">
<HR size="1" width="26%" align="center" noshade>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">The Securities and Exchange Commission and
state securities regulators have not approved or disapproved of
these securities, or determined if this prospectus is truthful
or complete. Any representation to the contrary is a criminal
offense.</FONT></B>

<P align="center">
<HR size="1" width="26%" align="center" noshade>

<P align="center">
<FONT size="2">The date of this prospectus
is &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2002.
</FONT>
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<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
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</TR>
<TR><TD colspan="9"><A HREF="#000">SUMMARY</A></TD></TR>
<TR><TD colspan="9"><A HREF="#001">TRW AUTOMOTIVE</A></TD></TR>
<TR><TD colspan="9"><A HREF="#002">THE SPIN-OFF</A></TD></TR>
<TR><TD colspan="9"><A HREF="#003">SUMMARY COMBINED FINANCIAL DATA</A></TD></TR>
<TR><TD colspan="9"><A HREF="#004">RISK FACTORS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#005">THE SPIN-OFF</A></TD></TR>
<TR><TD colspan="9"><A HREF="#006">DIVIDEND POLICY</A></TD></TR>
<TR><TD colspan="9"><A HREF="#007">PRO FORMA CAPITALIZATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="#008">SELECTED COMBINED FINANCIAL DATA</A></TD></TR>
<TR><TD colspan="9"><A HREF="#009">MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#010">BUSINESS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#011">MANAGEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="#012">RELATIONSHIP WITH TRW</A></TD></TR>
<TR><TD colspan="9"><A HREF="#013">PRINCIPAL STOCKHOLDERS OF TRW AND TRW AUTOMOTIVE</A></TD></TR>
<TR><TD colspan="9"><A HREF="#014">DESCRIPTION OF CAPITAL STOCK</A></TD></TR>
<TR><TD colspan="9"><A HREF="#015">CERTAIN INDEBTEDNESS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#016">SHARES ELIGIBLE FOR FUTURE SALE</A></TD></TR>
<TR><TD colspan="9"><A HREF="#017">LEGAL MATTERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#018">EXPERTS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#019">WHERE YOU CAN FIND MORE INFORMATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="#020">INDEX TO COMBINED FINANCIAL STATEMENTS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#021">SIGNATURES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#022">EXHIBIT INDEX</A></TD></TR>
<TR><TD colspan="9"><A HREF="l94714exv3w1.htm">EX-3.1: CERTIFICATE OF INCORPORATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="l94714exv3w2.htm">EX-3.2: BY-LAWS</A></TD></TR>
<TR><TD colspan="9"><A HREF="l94714exv10w1.htm">EX-10.1: FORM OF MASTER DISTRIBUTION AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="l94714exv10w2.htm">EX-10.2: FORM OF TAX SHARING AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="l94714exv10w3.htm">EX-10.3: FORM OF EMPLOYEE MATTERS AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="l94714exv23w1.htm">EX-23.1: CONSENT OF ERNST & YOUNG LLP</A></TD></TR>
</TABLE>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">TABLE OF CONTENTS</FONT></B>

<CENTER>
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<TR>
    <TD width="90%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Page</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Summary
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Risk Factors
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Special Note About Forward Looking Statements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">The Spin-Off
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dividend Policy
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pro Forma Capitalization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Selected Combined Financial Data
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Management&#146;s Discussion and Analysis of
    Financial Condition and Results of Operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Business
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Management
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Relationship With TRW
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Principal Stockholders of TRW and TRW Automotive
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">72</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Description of Capital Stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">74</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Certain Indebtedness
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Shares Eligible for Future Sale
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">79</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Legal Matters
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">79</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Experts
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">79</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Where You Can Find More Information
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Index to Combined Financial Statements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center">
<HR size="1" width="26%" align="center" noshade>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You should rely only on the information contained
in this prospectus. We have not authorized anyone to provide you
with information different from that contained in this
prospectus.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This prospectus is being filed with respect to
the distribution
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of our common stock to holders of TRW common stock on the
spin-off record date. It does not relate to any distribution of
shares for cash, and neither we nor TRW will receive any
consideration for the shares. The registration fee as set forth
in the registration statement of which this prospectus is a part
was calculated based on our book value and does not reflect any
assessment of the market value or trading price of our common
stock.
</FONT>

<P align="center"><FONT size="2">i
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "SUMMARY" -->
<DIV align="left"><A NAME="000"></A></DIV>

<P align="center">
<B><FONT size="2">SUMMARY</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">This summary highlights information relating
to us and our common stock being distributed in the spin-off.
More detailed discussions of this information are contained in
this prospectus. You should read the entire prospectus,
including the risk factors and our combined financial statements
and accompanying notes appearing elsewhere in this
prospectus.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">All references in this prospectus to &#147;TRW
Automotive,&#148; &#147;we,&#148; &#147;our&#148; and
&#147;us&#148; mean TRW Automotive Inc., the corporation that
will own and operate TRW&#146;s and its consolidated
subsidiaries&#146; automotive business following the spin-off
and whose common stock will be distributed to TRW shareholders
in the spin-off. All references in this prospectus to
&#147;TRW&#148; mean TRW Inc., the corporation that will
continue to own and operate TRW&#146;s non-automotive
businesses, and TRW&#146;s consolidated subsidiaries following
the spin-off.</FONT></I>

<!-- link1 "TRW AUTOMOTIVE" -->
<DIV align="left"><A NAME="001"></A></DIV>

<P align="center">
<B><FONT size="2">TRW AUTOMOTIVE</FONT></B>

<P align="left">
<B><FONT size="2">Our Company</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are among the world&#146;s largest and most
diversified suppliers of automotive systems, modules and
components, with 2001 sales of over $10 billion. We are
primarily a &#147;Tier-1&#148; supplier, providing over
90&nbsp;percent of our products directly to automotive vehicle
manufacturers, commonly known as VMs. We also sell our products
in the worldwide aftermarket for VM service and replacement
parts, which are distributed through independent aftermarket
channels. We have become a leader in the global automotive parts
industry by capitalizing on the strength of our product and
manufacturing systems technologies.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have established a broad global presence, with
a workforce of over 65,000 employees and a network of
manufacturing sites, technical centers, sales offices and joint
ventures located in every major vehicle producing region of the
world. Our combined customer, product and geographic diversity
is among the industry leaders, with approximately
50&nbsp;percent of our 2001 sales generated outside of North
America, and with no single customer accounting for more than
19&nbsp;percent of sales.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Through our experience supplying to more than 40
VMs, including all the world&#146;s major VMs, we have developed
a sophisticated understanding of the design, engineering and
manufacture of automobiles and trucks. We have extensive
technical experience in a broad range of product lines and
strong systems integration skills, which enable us to provide
comprehensive, system-based solutions for our customers. In
particular, among the world&#146;s leading automotive suppliers,
we believe that we are uniquely positioned as a global leader in
the design, manufacture and sale of active (vehicle dynamic
control) and passive (crash sensing and occupant restraint)
safety systems and components.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are one of the leading Tier-1 suppliers in all
of our principal product categories. We operate our business
along the following three major operating segments:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Chassis Systems, which includes active safety
    systems and components in the areas of braking, steering,
    suspension and integrated vehicle control;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Occupant Safety Systems, which includes passive
    safety systems and components in the areas of inflatable
    restraints, seat belts, steering wheels and safety and security
    electronics; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Other Automotive, which includes engine valves
    and components, engineered fasteners and components and body
    control systems.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Within these operating segments, we have
developed or introduced numerous automotive innovations,
including electrically assisted steering systems, four-wheel and
rear-wheel anti-lock brake systems, known as ABS, radar-based
active cruise control systems, complete vehicle occupant
restraint systems, seat belt pretensioning devices, remote
keyless entry systems, direct and indirect tire pressure
monitoring systems, and silicrome and two-piece automotive
engine valves.
</FONT>

<P align="center"><FONT size="2">1
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Our Strategy</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our objective is to increase sales and improve
our profitability and operating cash flow by leveraging our
position as a leading Tier-1 global automotive parts supplier
focused primarily in the areas of active and passive safety
technologies. Key elements of our strategy include the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Expand Our Leading Technology
    Capabilities.</FONT></I><FONT size="2"> Our objective is to
    supply a complete predictive vehicle control system that
    integrates active and passive safety technologies. As the only
    automotive supplier with leading capabilities in both active and
    passive safety systems, we believe we are ideally positioned to
    achieve our goal.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Increase Our Product Content per Vehicle.
    </FONT></I><FONT size="2">Our leading technological position in
    automotive safety systems has placed us at the forefront of
    supplying enhanced safety and electronics products and has
    allowed us to increase our product content per vehicle.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Capitalize on the Continued Trend Toward
    Module and System Supply.</FONT></I><FONT size="2"> We have
    developed significant system and module capabilities in a number
    of key product areas. We serve as the system or module
    integrator on a number of platforms on which we assemble modules
    and systems incorporating a combination of products we
    manufacture and products supplied to us by other manufacturers.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Focus on Operating Efficiency.
    </FONT></I><FONT size="2">We continue to focus on opportunities
    to optimize our resources and reduce manufacturing costs by,
    among other things, shifting production capacity from high wage
    areas to low wage areas, and executing several strategic
    initiatives aimed at improving our operating performance.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Evaluate Joint Ventures, Strategic Alliances
    and Selected Acquisitions and
    Divestitures.</FONT></I><FONT size="2"> Strategic alliances and
    joint ventures represent an important element of our business
    plan and worldwide expansion. We also pursue selected
    acquisitions and have substantial experience completing and
    integrating acquisitions with a focus on realizing cost savings
    and other synergies. Additionally, we consistently evaluate our
    existing portfolio of businesses for operations that are
    non-core and which we may divest given a strategic opportunity.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Our Competitive Strengths</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We intend to leverage our leading product
positions, our global presence, strong customer relationships
and diverse product capabilities to increase our presence in the
global safety systems industry.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Leading Product
    Positions.</FONT></I><FONT size="2"> We are one of the
    world&#146;s largest suppliers of automotive safety and chassis
    components. We believe we hold a number one or number two global
    position in all of our primary products. Our leading supply
    position across a number of product lines increases our
    importance to our VM customers and allows us to compete
    effectively in each of the markets that we serve.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Global Position.</FONT></I><FONT size="2"> Our
    geographically diverse global manufacturing base offers us an
    advantage over many of our competitors in meeting the global
    needs of our VM customers. We also believe that our global
    presence allows us to leverage sales to a customer in one
    location, or for one product, into sales to that customer in
    other locations and for other products.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Strong Relationships with
    Customers.</FONT></I><FONT size="2"> As a result of our focus on
    providing high quality products and service at appropriate
    prices, we maintain long-standing relationships and have an
    excellent reputation with our customers, which include every
    major VM in the world.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Diversified
    Business.</FONT></I><FONT size="2"> We have a diversified
    business that limits our exposure to the risks of any one
    customer, product area or geographic economy. Approximately
    50&nbsp;percent of our sales are derived from sales outside of
    North America and no one customer accounts for more than
    19&nbsp;percent of our sales.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Corporate Information</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our principal executive offices are located at
12025&nbsp;Tech Center Drive, Livonia, MI 48150, and our
telephone number is (734)&nbsp;266-2600. We will maintain an
Internet site at
http://www.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.com.
Our website and the information contained on that site, or
connected to that site, are not incorporated into this
prospectus.
</FONT>

<P align="center"><FONT size="2">2
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "THE SPIN-OFF" -->
<DIV align="left"><A NAME="002"></A></DIV>

<P align="center">
<B><FONT size="2">THE SPIN-OFF</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a brief summary of the terms of
the spin-off.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="28%"></TD>
    <TD width="1%"></TD>
    <TD width="71%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">The Spin-Off</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The spin-off is the method by which TRW will be
    separated into two independent publicly traded companies:
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149;&nbsp;TRW
    Automotive, which will consist of TRW&#146;s automotive business
    and TRW&#146;s subsidiaries and affiliates associated with the
    automotive business; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149;&nbsp;TRW,
    which will consist of TRW&#146;s systems, space and electronics
    businesses, and its subsidiaries and affiliates associated with
    these businesses.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Distributing Company</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">TRW. After the spin-off, neither TRW nor any of
    its subsidiaries will own any shares of our capital stock.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Spun-Off Company</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">TRW Automotive, currently a wholly-owned
    subsidiary of TRW. After the spin-off, we will be an independent
    publicly traded company.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Securities to be Distributed</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Approximately &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
    of our common stock, which is estimated to be all of the shares
    of our common stock held by TRW immediately prior to the
    spin-off. Immediately following the spin-off, we estimate that
    about &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;stockholders
    of record will hold shares of our common stock, although some of
    the shares may be registered in the name of a single stockholder
    who represents a number of stockholders.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Distribution Ratio</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">You will receive one share of our common stock
    for each share of TRW common stock that you hold on the spin-off
    record date.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Spin-Off Record Date</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Expected to
    be &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
    2002 (close of business)
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Spin-Off Date</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Expected to
    be &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
    2002
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Distribution Agent</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">National City Bank, the registrar and transfer
    agent for shares of TRW common stock.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Registrar and Transfer Agent</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">National City Bank, the registrar and transfer
    agent for shares of our common stock.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">New York Stock Exchange Symbol</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&#147;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#148;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Trading Market</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">There is currently no trading market for our
    common stock. If the spin-off is completed, we expect that
    &#147;regular way&#148; trading in our common stock will
    commence
    on &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
    2002. We anticipate that a temporary form of interim trading in
    our common stock, called &#147;when-issued&#148; trading, will
    commence shortly before the spin-off record date.
    &#147;When-issued&#148; trading reflects the value at which the
    market expects our common stock to trade after the spin-off. If
    &#147;when-issued&#148; trading develops, you will be able to
    buy and sell our common stock before the spin-off, but none of
    these trades will settle until after the spin-off and after
    &#147;regular way&#148; trading in our common stock has begun.
    If the spin-off does not occur, all &#147;when-issued&#148;
    trading will be null and void. If &#147;when-issued&#148;
    trading occurs, the listing for our common stock is expected to
    be represented by the trading symbol
    &#147;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#148;
    and
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">3
</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="28%"></TD>
    <TD width="1%"></TD>
    <TD width="71%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">accompanied by the letters &#147;wi&#148; on the
    New York Stock Exchange, Inc., or the NYSE.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Additionally, we expect that
    &#147;ex-distribution&#148; trading in TRW common stock will
    develop shortly before the spin-off record date.
    &#147;Ex-distribution&#148; trading means that you may trade TRW
    common stock before the completion of the spin-off, but on a
    basis that reflects the value at which the market expects TRW
    common stock to trade after the spin-off. If
    &#147;ex-distribution&#148; trading develops, you may buy and
    sell those shares before the spin-off, but none of these trades
    will settle until after the spin-off and after &#147;regular
    way&#148; trading in TRW common stock has begun. If the spin-off
    does not occur, all &#147;ex-distribution&#148; trading will be
    null and void. If &#147;ex-distribution&#148; trading occurs,
    the listing for TRW common stock will be represented by the
    trading symbol &#147;TRW&#148; and accompanied by the letters
    &#147;wi&#148; on the NYSE.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Tax Consequences</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">TRW has advised us that it has requested a ruling
    from the Internal Revenue Service, or the IRS, to the effect
    that the spin-off qualifies as a tax-free distribution for U.S.
    federal income tax purposes. In the event that the IRS has not
    yet issued the private letter ruling on or shortly before the
    spin-off declaration date, TRW has advised us that it expects to
    receive an opinion from tax counsel regarding the material
    federal income tax consequences of the spin-off. You should
    consult with your tax advisor as to the particular tax
    consequences to you of the spin-off. See &#147;The
    Spin-Off&nbsp;&#151; Material U.S. Federal Income Tax
    Consequences&#148; for a more detailed description of the U.S.
    federal income tax consequences of the spin-off.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Book-Entry Shareholding</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">On or shortly after the spin-off date:
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149;&nbsp;holders
    of record of shares of TRW common stock on the spin-off record
    date will have credited to a book-entry account established by,
    and maintained at National City Bank (our registrar and transfer
    agent) the number of shares of our common stock to which they
    are entitled in the spin-off; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149;&nbsp;beneficial
    owners of shares of TRW common stock on the spin-off record date
    should have credited to their brokerage, custodian or similar
    account through which they own their TRW common stock, the
    number of shares of our common stock to which they are entitled
    in the spin-off.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Relationship with TRW after the
    Spin-Off</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">We expect to enter into a master distribution
    agreement with TRW, which will provide for, among other things,
    the separation of our business operations from TRW and the
    spin-off, as well as certain ancillary agreements with TRW,
    which are described in the section entitled &#147;Relationship
    With TRW.&#148;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">No Proceeds from the Spin-Off</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Because this is not an offering for cash, there
    will be no proceeds from the spin-off.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">4
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="28%"></TD>
    <TD width="1%"></TD>
    <TD width="71%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Our Management and Management Compensation
    after the Spin-Off</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">The compensation, awards and other benefits
    payable to selected members of our management after the spin-off
    are described in the section entitled &#147;Management.&#148;
    </FONT></TD>
</TR>

</TABLE>

<P align="center">
<HR size="1" width="26%" align="center" noshade>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">You should carefully read the &#147;Risk
Factors&#148; beginning on page&nbsp;9.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If you have any questions relating to the
spin-off, you should contact National City Bank, our registrar
and transfer agent at:
</FONT>

<P align="center">
<FONT size="2">National City Bank
</FONT>

<DIV align="center">
<FONT size="2">Stock Transfer Operations LOC 5352
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">P.O. Box 92301
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">Cleveland, Ohio 44193-0900
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">Tel: 800-622-6757 (within U.S. and Canada)
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">Tel: (216)&nbsp;257-8663 (outside U.S. and Canada)
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">Fax: 216-257-8508
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">E-mail: shareholderinquiries@nationalcity.com
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">After the spin-off, if you are a TRW Automotive
stockholder and have questions relating to the spin-off, you can
contact us directly. Our contact information is:
</FONT>

<P align="center">
<FONT size="2">TRW Automotive Inc.
</FONT>

<DIV align="center">
<FONT size="2">12025 Tech Center Drive
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">Livonia, MI 48150
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">Tel: (734)&nbsp;266-2600
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">Fax: (734) 266-5702
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">Attention: Investor Relations
</FONT>
</DIV>

<P align="center"><FONT size="2">5
</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "SUMMARY COMBINED FINANCIAL DATA" -->
<DIV align="left"><A NAME="003"></A></DIV>

<P align="center">
<B><FONT size="2">SUMMARY COMBINED FINANCIAL DATA</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The summary combined financial data as of and for
each of the three years ended December&nbsp;31, 2001 have been
derived from our audited financial statements. The summary
combined financial data as of and for the six months ended
June&nbsp;30, 2002 and 2001 have been derived from unaudited
combined financial statements. Our results for 2001 are also
presented on a pro forma basis to give effect to the spin-off
and the terms of our separation from TRW. Comparisons of certain
items below are affected by the acquisition of LucasVarity plc
in 1999 and divestitures during the three-year period. See
&#147;Selected Combined Financial Data,&#148;
&#147;Management&#146;s Discussion and Analysis of Financial
Condition and Results of Operations&#148; and the combined
financial statements and accompanying notes included elsewhere
in this prospectus. The following financial information may not
reflect what our results of operations, financial position and
cash flows would have been had we operated as a separate,
stand-alone entity during the periods presented, or what our
results of operations, financial position and cash flows will be
in the future.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="38%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Six Months Ended</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">June&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center"><B><FONT size="1">(unaudited)</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="7" align="center"><B><FONT size="1">(unaudited)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><B><FONT size="1">(In millions, except per share data)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Statements of Operations Data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sales(2)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,472</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,920</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,091</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,091</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gross profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,648</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Earnings (loss)&nbsp;from continuing
    operations(3)(5)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">68</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">90</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(39</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net earnings (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">122</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">93</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(28</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">81</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Earnings from continuing operations excluding
    unusual items
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">247</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">144</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">253</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Per diluted share of common stock:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Continuing operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net earnings (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Shares used in computing per share
    amounts&nbsp;&#151; diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Statements of Cash Flows Data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash provided by (used in) operating activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">964</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">751</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">828</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">937</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash provided by (used in) investing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,089</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">641</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(409</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(409</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash provided by (used in) financing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,296</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,452</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(464</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(464</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Other Data (unaudited):</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">EBITDA(4)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,202</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,152</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">848</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">889</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">EBITDA&nbsp;&#151; excluding unusual items(5)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,440</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,374</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,128</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,169</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">6
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="41%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">As of December&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">As of June&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center"><B><FONT size="1">(unaudited)</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(unaudited)</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><B><FONT size="1">(In millions, except per share data)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Balance Sheets Data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,610</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,521</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,937</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,937</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,922</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,786</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,577</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,577</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Working capital
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">688</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(265</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(640</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(640</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,638</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,293</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,287</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,287</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,521</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,053</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,597</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Parent company investment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,918</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,015</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,925</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)</FONT></TD>
    <TD align="left">
    <FONT size="2">The unaudited pro forma financial information as
    of and for the year ended December&nbsp;31, 2001 has been
    prepared by adjusting TRW Automotive&#146;s historical combined
    financial statements to give effect to the following
    assumptions: (i)&nbsp;a reduction in total debt to
    $2,800&nbsp;million as of January&nbsp;1, 2001 to reflect the
    total debt of TRW Automotive after the restructuring
    transactions and related transactions described herein are
    consummated using a blended interest rate of 7.1&nbsp;percent,
    and (ii)&nbsp;a reduction in general and administrative
    corporate expense by $41&nbsp;million, representing the
    corporate operating expenses that would not have been incurred
    had TRW Automotive operated on a stand-alone basis. For
    additional information, see &#147;The Spin-off&nbsp;&#151;
    Transactions Prior to or Concurrent With the Spin-off&#148; and
    &#147;Certain Indebtedness.&#148;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)</FONT></TD>
    <TD align="left">
    <FONT size="2">Sales in 2001 decreased 8&nbsp;percent to
    $10.1&nbsp;billion as compared to 2000 sales of
    $10.9&nbsp;billion. The decrease resulted from the effects of a
    decline in vehicle production, primarily in North America, the
    effect of foreign currency exchange, business divestitures and
    lower pricing. Sales in 2000 increased 4&nbsp;percent from sales
    of $10.5&nbsp;billion in 1999. The increase was a result of
    higher volumes, the inclusion of the first quarter of 2000 sales
    of LucasVarity, which was acquired on March&nbsp;25, 1999 and
    the consolidation of an affiliate, partially offset by the
    effects of foreign currency exchange, lower pricing and
    divestitures of several businesses.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)</FONT></TD>
    <TD align="left">
    <FONT size="2">Earnings (loss) from continuing operations for
    2001 was a loss of $39&nbsp;million compared to earnings of
    $90&nbsp;million in 2000 and $68&nbsp;million in 1999. Unusual
    charges were $183&nbsp;million, $157&nbsp;million and $182
    million for 2001, 2000, and 1999, respectively. Excluding
    unusual items, earnings from continuing operations would have
    been $144&nbsp;million in 2001, $247&nbsp;million in 2000 and
    $250&nbsp;million in 1999. The decrease in earnings from
    continuing operations, without unusual items, in 2001 from 2000
    resulted primarily from lower gross profit partially offset by
    lower administrative and selling, research and development and
    interest expense. Gross profit decreased due to lower volume and
    lower margins on new products, lower pricing, increased warranty
    and recall charges, the effects of foreign currency exchange and
    divestitures, partially offset by net cost reductions. The
    decrease in earnings from continuing operations, without unusual
    items, from 1999 to 2000 resulted primarily from higher interest
    expense and lower gross profit, offset by lower administrative
    and selling and research and development expenses and a lower
    effective income tax rate. The decrease in gross profit resulted
    from lower pricing, changes in the mix of automotive products,
    divestitures of several businesses, the effect of foreign
    currency exchange and an increase in warranty charges, partially
    offset by cost reductions and an additional quarter of results
    of operations of LucasVarity.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(4)</FONT></TD>
    <TD align="left">
    <FONT size="2">EBITDA, a measure used by management to measure
    operating performance, represents earnings from continuing
    operations before interest, income taxes, depreciation and
    amortization, including amortization of other intangibles.
    EBITDA is not a recognized term under generally accepted
    accounting principles and does not purport to be an alternative
    to operating income as an indicator of operating performance or
    to cash flows from operating activities as a measure of
    liquidity. Because not all companies calculate EBITDA
    identically, this presentation of EBITDA may not be comparable
    to other similarly titled measures of other companies.
    Additionally, EBITDA is not intended to be a measure of
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">7
</FONT>



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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD align="left">
    <FONT size="2">free cash flow for management&#146;s
    discretionary use, as it does not consider certain cash
    requirements such as interest payments, tax payments and debt
    service requirements.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(5)</FONT></TD>
    <TD align="left">
    <FONT size="2">See &#147;Management&#146;s Discussion and
    Analysis of Financial Condition and Results of Operations&#148;
    and the &#147;Restructuring&#148; and &#147;Asset
    Impairments&#148; notes to financial statements for a discussion
    of unusual items.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">8
</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "RISK FACTORS" -->
<DIV align="left"><A NAME="004"></A></DIV>

<P align="center">
<B><FONT size="2">RISK FACTORS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">You should carefully consider each of the
following risks and all of the other information set forth in
this prospectus. Some of the following risks relate principally
to our separation from TRW. Other risks relate principally to
our business in general and the industry in which we operate.
Finally, other risks relate principally to the securities
markets and ownership of our common stock. The risks and
uncertainties described below are not the only ones that we
face. Additional risks and uncertainties not presently known to
us or that we currently believe to be immaterial may also
adversely affect our business.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">If any of the following risks and
uncertainties develop into actual events, our business,
financial condition or results of operations could be materially
adversely affected. In such case, the trading price of our
common stock could decline, and you may lose all or part of your
investment. This prospectus contains forward-looking statements
that involve risks and uncertainties. Our actual results could
differ materially from those anticipated in these
forward-looking statements as a result of certain factors,
including the risks faced by us described below and elsewhere in
this prospectus.</FONT></I>

<P align="center">
<B><FONT size="2">Risk Factors Relating to Separating from
TRW</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">There are risks relating to our separation
from TRW that you should consider in connection with your
investment in and ownership of our common stock.</FONT></I>

<P align="left">
<B><FONT size="2">Our historical and pro forma financial
information may not be representative of our results as a
separate company</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The historical and pro forma financial
information we have included in this prospectus may not reflect
what our results of operations, financial position and cash
flows would have been had we been a separate, stand-alone entity
during the periods presented, or what our results of operations,
financial position and cash flows will be in the future. This is
because:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">we have made certain adjustments and allocations
    since TRW did not account for us as, and we were not operated
    as, a single, stand-alone business for the periods presented; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the information does not reflect certain changes
    that will occur in our funding and operations as a result of our
    separation from TRW.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Accordingly, we cannot assure you that our
historical results of operations are indicative of our future
operating or financial performance. For additional information,
see &#147;Summary Combined Financial Data&#148;, &#147;Selected
Combined Financial Data&#148; and &#147;Management&#146;s
Discussion and Analysis of Financial Condition and Results of
Operations.&#148;
</FONT>

<P align="left">
<B><FONT size="2">We may incur material costs in connection with
our separation from TRW</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We may incur costs and expenses greater than
those we have planned for in connection with our separation from
TRW. These increased costs and expenses may arise from various
factors, including financing costs greater than those expected,
arising from changes in prevailing interest rates and increased
difficulty in obtaining financing as a stand-alone entity. We
cannot assure you that these costs will not be material to our
business.
</FONT>

<P align="left">
<B><FONT size="2">Pre- or post-spin-off acquisitions of the
stock of TRW or TRW Automotive could render the spin-off taxable
to TRW and, in certain circumstances, its shareholders</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">TRW expects to receive a private letter ruling
from the IRS or an opinion from tax counsel, in either case, to
the effect that the spin-off will qualify for tax-free treatment
under Section&nbsp;355 of the Internal Revenue Code of 1986, as
amended, or the Code. Assuming the spin-off otherwise qualifies
for tax-free treatment under Section&nbsp;355 of the Code, TRW
may nevertheless be subject to tax under Section&nbsp;355(e) of
the Code if 50 percent or more of the capital stock, by vote or
value, of TRW or TRW Automotive is acquired, directly or
indirectly, as part of a plan or series of related transactions
that include the spin-off. If
</FONT>

<P align="center"><FONT size="2">9
</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">Section&nbsp;355(e) of the Code were to apply,
the spin-off would remain tax-free to each holder of our capital
stock, but TRW would be required to pay a corporate tax on the
spin-off, based on the excess of the fair market value of our
shares of common stock distributed in the spin-off over
TRW&#146;s tax basis for such shares. In addition, without
regard to Section&nbsp;355(e), a pre- or post-spin-off
acquisition of TRW or TRW Automotive that is taxable, in whole
or in part, could render the spin-off taxable to TRW and the
shareholders of TRW if the spin-off, when coupled with the
acquisition, is treated as a &#147;device&#148; for the
distribution of earnings and profits under general principles of
Section&nbsp;355.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the tax sharing agreement between us and
TRW, we would be required to indemnify TRW against a portion of
the tax liability resulting under Section&nbsp;355(e), or
Section&nbsp;355 generally, if such taxable gain resulted solely
from our actions, including as a result of an acquisition or
issuance of our capital stock. To this end, pursuant to the tax
sharing agreement, during the two-year period following the
spin-off we are precluded from engaging in certain transactions
unless TRW first obtains a supplemental private letter ruling
from the IRS to the effect that such transaction will not
adversely affect the tax-free status of the spin-off. In
addition, in certain circumstances we and TRW would each be
responsible for 50&nbsp;percent of the tax liability incurred by
reason of the spin-off not qualifying as tax-free under
Section&nbsp;355 of the Code. A more complete discussion of the
relevant provisions of federal income tax law appears in the
section entitled &#147;The Spin-Off&nbsp;&#151; Material
U.S.&nbsp;Federal Income Tax Consequences&#148; on page&nbsp;21
of this prospectus. Also, for additional information on our tax
sharing agreement with TRW, see &#147;Relationship With
TRW&nbsp;&#151; Tax Sharing Agreement.&#148;
</FONT>

<P align="left">
<B><FONT size="2">Our ability to meet our future capital and
liquidity requirements may be affected by our level of
debt</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On the completion of our separation from TRW, we
expect to have approximately $2.8&nbsp;billion of debt
outstanding. We anticipate, based upon advice from our financial
advisors, that this level of debt is appropriate to obtain and
maintain an investment grade rating. However, no assurances can
be given that we will obtain an investment grade rating, or that
if we do obtain an investment grade rating we will be able to
maintain it, or that having an investment grade rating will
result in tangible benefits to us such as lower interest rates
or less restrictive debt securities. Moreover, while this is
less debt than the total debt that has been outstanding at TRW,
it will have to be supported by the cash flows provided by our
operations, which comprise a business smaller than that which
supported the debt of TRW. A substantial portion of our cash
flows from operations will be dedicated to meeting our payment
obligations on our debt. If we fail to realize our expected cash
flows from operations, our liquidity position may be adversely
affected. Our working capital requirements and cash flows from
operations can vary greatly from quarter to quarter, depending
on the volume of production, the payment terms with our
customers and suppliers and the build-up of inventories. We
cannot assure you that we will be able to meet our future
capital requirements in the same manner, and on the same terms,
as we did when we were a part of TRW.
</FONT>

<P align="left">
<B><FONT size="2">The transitional services to be provided to us
by TRW may not be sufficient to meet our needs</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have never operated as a stand-alone company.
While TRW will be contractually obligated to provide us with
certain transitional services, we cannot assure you that these
services will be sustained at the same level as when we were a
part of TRW or that we will obtain the same benefits. Also, we
cannot assure you that, after the expiration of these various
arrangements, we will be able to replace the transitional
services in a timely manner or on terms and conditions,
including cost, as favorable as those we will receive from TRW.
These agreements were made in the context of a parent-subsidiary
relationship and were negotiated in the overall context of our
separation from TRW. The prices charged to us under these
agreements may be higher or lower than the prices that may be
charged by unaffiliated third parties for similar services. For
more information about these arrangements, see
&#147;Relationship With TRW&nbsp;&#151; Transition Services
Agreement.&#148;
</FONT>

<P align="left">
<B><FONT size="2">Some of our directors and executive officers
may have conflicts of interest because they own TRW
stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Some of our directors and executive officers own
substantial amounts of TRW stock because of their relationships
with TRW prior to our separation from TRW. Such ownership could
create, or appear to create, potential conflicts of interest
when directors and officers are faced with decisions that could
have different implications for us and TRW. See
&#147;Management&nbsp;&#151; Stock Ownership of Directors and
Executive Officers.&#148;
</FONT>

<P align="center"><FONT size="2">10
</FONT>
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<P align="center">
<B><FONT size="2">Risk Factors Relating to our
Business</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Our business is subject to risks relating to
the industry in which we operate that you should consider in
connection with your investment in and ownership of our common
stock.</FONT></I>

<P align="left">
<B><FONT size="2">We may be unable to continue to compete
successfully in the highly competitive automotive parts
industry</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The automotive parts and components industry is
highly competitive. Our competitors include independent
suppliers of parts and components, as well as suppliers formed
by spin-offs by our existing VM customers, who are becoming more
aggressive in attempting to sell parts and components to other
VMs. Depending on the particular product, the number of our
competitors varies significantly, and many of the products have
high capital requirements and require high engineering content.
We cannot assure you that we will be able to continue to compete
favorably or that increased competition in our markets will not
have a material adverse effect on our business, results of
operations and financial condition.
</FONT>

<P align="left">
<B><FONT size="2">The cyclicality of automotive production and
sales could adversely affect our business</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Almost all of our business is directly related to
automotive sales and automotive vehicle production by our
customers. Automotive production and sales are highly cyclical
and depend on general economic conditions and other factors,
including consumer spending and preferences. In addition,
automotive production and sales can be affected by labor
relations issues, regulatory requirements, trade agreements and
other factors. Any significant economic decline that results in
a reduction in automotive production and sales by our customers
could have a material adverse effect on our business, results of
operations and financial condition.
</FONT>

<P align="left">
<B><FONT size="2">Continued pricing pressures on automotive
suppliers may adversely affect our business</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pricing pressure from customers has been a
characteristic of the automotive supply industry in recent
years. Virtually all VMs have policies of seeking price
reductions each year. We have taken steps to reduce costs and
resist price reductions; however, price reductions have impacted
our sales and profit margins. If we are not able to offset
continued price pressure through improved operating efficiencies
and reduced expenditures, those pressures may have a material
adverse effect on our business, results of operations and
financial condition.
</FONT>

<P align="left">
<B><FONT size="2">We rely on our significant customers</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For the year ended December&nbsp;31, 2001,
approximately 18&nbsp;percent of our sales were to Ford Motor
Company or its subsidiaries, approximately 17&nbsp;percent of
our sales were to DaimlerChrysler AG or its subsidiaries,
approximately 13&nbsp;percent of our sales were to General
Motors Corporation or its subsidiaries and approximately
13&nbsp;percent of our sales were to Volkswagen AG or its
subsidiaries. Although business with any given customer is
typically split into several contracts, the loss of, or
significant reduction in purchases by, one or more of those
major customers could materially and adversely affect our
business, results of operations and financial condition.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The production volumes of our customers are
dependent upon general economic conditions and the level of
consumer spending. The volume of automotive production in North
America, Europe, South America and Asia has fluctuated from year
to year, and such fluctuations will give rise to fluctuations in
the demand for our products. Worsening economic conditions or
other factors that result in reduced automotive production could
have a material adverse effect on our business, results of
operations and financial condition.
</FONT>

<P align="center"><FONT size="2">11
</FONT>

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<P align="left">
<B><FONT size="2">We are subject to risks associated with our
foreign operations</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have significant manufacturing operations
outside the United States, including joint ventures and other
strategic alliances. Risks are inherent in international
operations, including:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">customary exchange controls and currency
    restrictions;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">currency fluctuations and devaluations;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">changes in local economic conditions;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">unexpected changes in laws and regulations;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">exposure to possible expropriation or other
    government actions; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">unsettled political conditions and possible
    terrorist attacks against American interests.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">We cannot assure you that these and other factors
will not have a material adverse effect on our international
operations or on our business, results of operations and
financial condition.
</FONT>

<P align="left">
<B><FONT size="2">A strengthening United States dollar reduces
our reported results of operations from our international
businesses</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2001, approximately 57&nbsp;percent of our
sales were in foreign currencies. In our combined financial
statements, we translate local currency financial results into
United States dollars based on average exchange rates prevailing
during a reporting period or the exchange rate at the end of
that period. During times of a strengthening United States
dollar, our reported international sales and earnings will be
reduced because the local currency will translate into fewer
United States dollars.
</FONT>

<P align="left">
<B><FONT size="2">We may incur material losses and costs as a
result of product liability and warranty claims that may be
brought against us</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We may be exposed to product liability and
warranty claims in the event that our products actually or
allegedly fail to perform as expected or the use of our products
results, or is alleged to result, in bodily injury and/or
property damage. We cannot assure you that we will not
experience any material warranty or product liability losses in
the future or that we will not incur significant costs to defend
these claims.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, if any of our products are or are
alleged to be defective, we may be required to participate in a
recall involving these products. Automotive suppliers are
becoming more integrally involved in the vehicle design process
and are assuming more of the vehicle system integration
functions. VMs are increasingly looking to their suppliers for
contribution when faced with product liability, warranty and
recall claims. Product liability, warranty and recall costs may
have a material adverse effect on our business, results of
operations and financial condition. Depending on the terms under
which we supply products, a VM may hold us responsible for some
or all of the repair or replacement costs of these products
under new vehicle warranties, when the product supplied did not
perform as represented. Certain VMs have advised us that they
intend to pursue warranty claims to a greater extent than
previously. We cannot assure you that our costs associated with
providing product warranties will not be material.
</FONT>

<P align="left">
<B><FONT size="2">We may be adversely affected by the
environmental and safety regulations to which we are
subject</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are subject to the requirements of federal,
state and local environmental and occupational safety and health
laws and regulations in the United States and other countries.
We cannot assure you that we have been or will be at all times
in complete compliance with all of these requirements, or that
we will not incur material costs or liabilities in connection
with these requirements in excess of amounts we have reserved.
In addition, these requirements are complex, change frequently
and have tended to become more stringent over time, and we
cannot assure you that these requirements will not change in the
future in a manner that could have a material adverse effect on
our business, results of operations and financial condition. We
have made and will continue to make capital and other
expenditures to comply with environmental requirements. For more
</FONT>

<P align="center"><FONT size="2">12
</FONT>

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<DIV align="left">
<FONT size="2">information about our environmental compliance
and potential environmental liabilities, see
&#147;Business&nbsp;&#151; Environmental Matters.&#148;
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Increasing costs for raw materials may
adversely affect our profitability</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We use a broad range of raw materials and
supplies, including metals, castings, chemicals and electronic
components in our products. A significant increase in the price
of raw materials could materially increase our operating costs
and materially adversely affect our profit margins. While we
generally attempt to pass increased raw materials prices through
to our customers in the form of price increases, this cannot
always be accomplished. In addition, we may not be able to
increase our prices sufficiently to cover any significant raw
materials cost increases. We also purchase from suppliers
various types of equipment and component parts that may include
these materials.
</FONT>

<P align="left">
<B><FONT size="2">Non-performance by our suppliers may adversely
affect our operations</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Because we purchase from suppliers various types
of equipment and component parts, we may be materially and
adversely effected by the failure of those suppliers to perform
as expected. This non-performance may consist of delivery delays
caused by financial or production issues or delivery of
non-conforming product. Although we have taken a number of steps
to protect against and to minimize these risks, we cannot assure
you that these measures will be effective.
</FONT>

<P align="left">
<B><FONT size="2">Work stoppages at our customers&#146;
facilities or at our facilities could adversely affect our
operations</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If one or more of our customers experiences a
material work stoppage, that customer may halt or limit the
purchase of our products. This could cause us to shutdown
production facilities relating to those products, that could
have a material adverse effect on our business, results of
operations and financial condition.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2001, approximately 22
percent of our United States hourly workforce and approximately
78&nbsp;percent of our hourly workforce outside of the United
States were represented by 39 unions. It is likely that a
significant portion of our hourly workforce will remain
unionized for the foreseeable future. A work stoppage at one or
more of our plants may have a material adverse effect on our
business, results of operations and financial condition.
</FONT>

<P align="center">
<B><FONT size="2">Risk Factors Relating to Securities
Markets</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">There are risks relating to securities markets
that you should consider in connection with your investment in
and ownership of our common stock.</FONT></I>

<P align="left">
<B><FONT size="2">Our stock price may fluctuate significantly
following the spin-off</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Before the spin-off date, there will be no public
market for our common stock. Shortly before the spin-off record
date, trading of our common stock on a &#147;when-issued&#148;
basis is expected to begin. Our common stock is expected to
trade on the NYSE under the symbol
&#147;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.&#148;
See &#147;The Spin-Off&nbsp;&#151; Listing and Trading of TRW
Automotive Common Stock.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We cannot predict the prices at which our common
stock may trade after the spin-off. We cannot assure you that
the combined trading prices of shares of TRW common stock and
shares of our common stock after the spin-off will be equal to
or greater than the trading price of shares of TRW common stock
prior to the spin-off. The market price of our common stock may
fluctuate significantly due to a number of factors, some of
which may be beyond our control, including:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our business profile may not fit the investment
    objectives of TRW shareholders, causing them to sell our shares
    after the spin-off;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">actual or anticipated fluctuations in our
    operating results;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">changes in earnings estimated by securities
    analysts or our ability to meet those estimates;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">13
</FONT>
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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the operating and stock price performance of
    comparable companies;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">overall market fluctuations;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our dividend policy;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">developments in, and publicity regarding, the
    automotive industry, the automotive parts industry or any of our
    significant customers; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">domestic and foreign economic conditions.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">In particular, the realization of any of the
risks described in these &#147;Risk Factors&#148; could have a
significant and adverse impact on the market price of our common
stock. In addition, the stock market in general has experienced
extreme volatility that has often been unrelated to the
operating performance of particular companies. These broad
market fluctuations may adversely affect the trading price of
our common stock, regardless of our actual performance.
</FONT>

<P align="left">
<B><FONT size="2">Provisions in our charter documents and
Delaware law could delay or prevent a change in control of TRW
Automotive, which could adversely affect the price of our common
stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The existence of some provisions in our charter
documents and Delaware law could delay or prevent a change in
control of TRW Automotive, which could adversely affect the
price of our common stock. Our certificate of incorporation and
bylaws contain some provisions that may make the acquisition of
control of TRW Automotive more difficult. These provisions
include a classified board and other provisions relating to the
nomination, election and removal of directors and limitations on
actions by our stockholders, including provisions relating to
advance notice by stockholders of business to be presented at a
meeting of stockholders. Delaware law also imposes some
restrictions on mergers and other business combinations between
us and any holder of 15&nbsp;percent or more of our outstanding
common stock. For a description of these provisions, see
&#147;Description of Capital Stock.&#148;
</FONT>

<P align="center"><FONT size="2">14
</FONT>

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<P align="center">
<B><FONT size="2">SPECIAL NOTE ABOUT FORWARD LOOKING
STATEMENTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This prospectus contains certain
&#147;forward-looking statements.&#148; You can identify
forward-looking statements by those that are not historical in
nature, particularly those that use terminology such as
&#147;may,&#148; &#147;could,&#148; &#147;will,&#148;
&#147;should,&#148; &#147;likely,&#148; &#147;expects,&#148;
&#147;anticipates,&#148; &#147;contemplates,&#148;
&#147;estimates,&#148; &#147;believes,&#148; &#147;plans,&#148;
&#147;projected,&#148; &#147;predicts,&#148;
&#147;potential&#148; or &#147;continue&#148; or the negative of
these or similar terms. You should be aware that the preparation
of any forward-looking statement requires the use of estimates
of future sales, expenses, activity levels and economic and
market conditions, many of which are outside our control. Our
results could be affected by:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our ability to obtain new contract awards;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">pricing pressures from our customers;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">moderation or decline in the automobile build
    rate;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">changes in consumer debt levels;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">work stoppages;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">unanticipated downturn in the financial condition
    of, or business relationships with, our customers or suppliers;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our ability to reduce the level of our
    outstanding debt with cash flow from operations and the proceeds
    from asset dispositions;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a credit rating downgrade;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">increase in interest rates;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">customer recall and warranty claims;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">product liability and litigation issues;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">changes to the regulatory environment regarding
    automotive safety;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the introduction of competing products or
    technology by our competitors;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our ability to attract and retain skilled
    employees with high-level technical competencies;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">economic, regulatory and political conditions
    domestically and internationally;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">fluctuations in currency exchange rates; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the impact of additional terrorist attacks, which
    could result in reduced automotive production and disruptions to
    the transportation system.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Actual results may differ materially from those
expressed in these forward-looking statements. Other factors and
assumptions not identified above are also involved in the
preparation of forward-looking statements, and the failure of
such other factors and assumptions to be realized may also cause
actual results to differ materially from those discussed. We
assume no obligation to update these forward-looking statements
to reflect actual results, changes in assumptions or changes in
other factors affecting these statements other than as required
by law.
</FONT>

<P align="center"><FONT size="2">15
</FONT>

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<!-- link1 "THE SPIN-OFF" -->
<DIV align="left"><A NAME="005"></A></DIV>

<P align="center">
<B><FONT size="2">THE SPIN-OFF</FONT></B>

<P align="left">
<B><FONT size="2">Our History</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are currently a wholly-owned subsidiary of
TRW. We were incorporated in Delaware on June&nbsp;3, 2002 in
contemplation of the spin-off. The spin-off is the final step in
the separation of TRW&#146;s automotive business and TRW&#146;s
systems, space and electronics businesses into two
&#147;pure-play&#148; independent companies, which TRW first
announced in March 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Historically, our business resulted from the
combination of the legacy TRW automotive business with the
legacy LucasVarity plc automotive business in 1999. We are a
global leader in active safety technologies (steering,
suspension, ABS and other advanced braking systems) and passive
safety technologies (seat belts, inflatable restraints and other
occupant safety products). We are one of the leading Tier-1
suppliers in all of our principal product categories. We operate
our business along the following three major operating segments:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Chassis Systems, which includes active safety
    systems and components in the areas of braking, steering,
    suspension and integrated vehicle control;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Occupant Safety Systems, which includes passive
    safety systems and components in the areas of inflatable
    restraints, seat belts, steering wheels and safety and security
    electronics; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Other Automotive, which includes engine valves
    and components, engineered fasteners and components and body
    control systems.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Benefits of Our Separation From TRW and the
Spin-Off</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that we will realize significant
benefits from our separation from TRW and the spin-off. In the
spin-off, we will become a &#147;pure-play&#148; independent
company devoted to the automotive business and better positioned
to achieve improved growth and returns. In particular, as an
independent company, we expect to benefit from the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Capital Financing
    Flexibility.</FONT></I><FONT size="2"> We believe that our
    separation from TRW and the spin-off will benefit us by
    enhancing our capital financing flexibility. In its conglomerate
    form, TRW&#146;s capital stock may not be as attractive to
    stockholders in target companies in our industry as would be our
    capital stock. We believe that, after the spin-off, we will have
    more flexibility to make appropriate investments required to
    succeed in our industry using our capital stock as currency than
    TRW would have in the absence of the spin-off. In addition, we
    will no longer have to compete with other businesses of TRW for
    funding. However, we expect to enter into agreements and engage
    in certain debt financing transactions in connection with our
    separation from TRW that are anticipated to contain provisions
    that will limit our ability to issue our capital stock and incur
    debt, including in connection with acquisitions. Also, certain
    provisions of the tax sharing agreement may restrict our ability
    to issue stock in order to make acquisitions or raise additional
    capital in the two years subsequent to the spin-off, unless TRW
    receives a supplemental ruling from the IRS. See
    &#147;&#151;&nbsp;Transactions Prior to or Concurrent With the
    Spin-Off&nbsp;&#151; Debt Financing Transactions,&#148;
    &#147;Relationship With TRW&nbsp;&#151; Master Distribution
    Agreement&#148; and &#147;Relationship With TRW&nbsp;&#151; Tax
    Sharing Agreement.&#148;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Corporate Fit and
    Focus.</FONT></I><FONT size="2"> We believe that the spin-off
    will improve the corporate fit and focus of our business, as our
    management will be able to devote more attention to and focus on
    the automotive business than it was able to prior to the
    spin-off. The management of TRW&#146;s automotive business and
    its non-automotive businesses requires different management
    techniques and strategies. The spin-off will permit our
    management to focus on the automotive business, including
    employee incentives, capital expenditures and applicable
    regulations. We believe the spin-off will also simplify our
    organizational and internal reporting structures and expedite
    our decision making.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Management
    Incentive.</FONT></I><FONT size="2"> We believe that the
    spin-off will enhance our ability to attract, retain and provide
    incentives to our management and other employees by using
    stock-based incentive compensation programs relating more
    directly to the business in which they are employed. We believe
    our
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">16
</FONT>
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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">management&#146;s focus will also be strengthened
    by incentive compensation programs tied to the market
    performance of our common stock. See
    &#147;Management&nbsp;&#151; Executive Compensation.&#148;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Focus on Automotive
    Industry.</FONT></I><FONT size="2"> We believe that the spin-off
    will place us in a better position to capitalize on the
    projected growth in light vehicle production because we are one
    of the leaders in the worldwide supply of key automotive
    products, including braking, steering, inflatable restraints,
    steering wheels, seat belts, engine valves and engineered
    fasteners.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">We cannot assure you that these benefits will be
realized by us to the extent we expect.
</FONT>

<P align="left">
<B><FONT size="2">Transactions Prior to or Concurrent With the
Spin-Off</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Sale of TRW Aeronautical Systems
    Business</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">TRW has advised us that it intends to sell to an
unaffiliated third party substantially all of the assets and
liabilities currently associated with TRW&#146;s aeronautical
systems business and the equity or similar interests currently
held by TRW in subsidiaries and other entities that conduct such
business, which we refer to as the ASG sale. TRW expects that
the ASG sale will close in
the &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;quarter
of 2002.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Restructuring Transactions</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The &#147;restructuring transactions&#148; refer
to the series of transactions that will result in the separation
of TRW&#146;s automotive business and TRW&#146;s non-automotive
businesses.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Shortly prior to the spin-off, TRW will transfer
to us all of the assets associated with its automotive business,
and we will assume all of the liabilities associated with the
automotive business (including contingent liabilities). TRW will
retain all of the assets and liabilities associated with its
non-automotive businesses. All assets and liabilities will be
transferred without any representation or warranty on an
&#147;as is, where is&#148; basis.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As part of the restructuring transactions, we
intend to issue to TRW that number of shares of our common stock
to be outstanding on the spin-off record date so as to be able
to effect a one-for-one distribution of such shares in the
spin-off and avoid fractional shares. In addition, we anticipate
issuing shares of our Series&nbsp;A Convertible Preferred Stock
to a subsidiary of TRW, which shares will be subsequently sold
shortly before the spin-off to a third party equity investor
unaffiliated with TRW. See &#147;&#151;&nbsp;Third Party Equity
Sale.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In general, all intercompany balances between TRW
and us will be settled by cancellation or transfer in the
restructuring transactions. Based on the anticipated cash
requirements of TRW and us following the spin-off, the master
distribution agreement governing the spin-off will set a
&#147;restructuring funding target amount&#148; for us and, to
ensure that this target is met, will provide for a cash
adjustment based on the difference between the
&#147;restructuring funding actual amount&#148; and the
&#147;restructuring funding target amount&#148; as of the end of
the fiscal month immediately preceding the spin-off.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Third Party Equity Sale</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We anticipate that the subsidiary of TRW to which
we will issue shares of our Series&nbsp;A Convertible Preferred
Stock in the restructuring transactions will sell all of these
shares to a third party equity investor unaffiliated with TRW
shortly before the spin-off. In addition, we expect to sell new
shares of our Series&nbsp;A Convertible Preferred Stock to the
third party equity investor either prior to, concurrently with
or after the spin-off. The shares of our Series&nbsp;A
Convertible Preferred Stock to be sold by the subsidiary of TRW
and to be sold by us to the third party equity investor are
expected to collectively represent not more than 20&nbsp;percent
of the shares of our common stock outstanding immediately after
the closing of these transactions, assuming conversion of these
shares into shares of our common stock. In this prospectus, we
sometimes refer to these transactions as the &#147;third party
equity sale.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">TRW is expected to use the proceeds from the sale
of our Series&nbsp;A Convertible Preferred Stock by the
subsidiary of TRW in the third party equity sale, anticipated to
be approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
to repay outstanding debt. We will use the proceeds from our
issuance and sale of our Series&nbsp;A Convertible Preferred
Stock in the
</FONT>

<P align="center"><FONT size="2">17
</FONT>

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<DIV align="left">
<FONT size="2">third party equity sale, expected to be
approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
to repay a portion of an intercompany note that will be issued
by us to TRW shortly before the spin-off.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We expect to enter into a preferred stock
purchase agreement with the subsidiary of TRW and the third
party equity investor. The agreement is expected to contain
reasonable and customary indemnification and termination
provisions. The completion of the third party equity sale is
also expected to be subject to a number of reasonable and
customary conditions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The sales and issuances of stock contemplated by
the third party equity sale are expected to be exempt from
registration under the Securities Act of 1933, as amended. In
addition, we expect to enter into a registration rights
agreement with the third party equity investor, pursuant to
which we will grant the third party equity investor customary
registration rights.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Debt Financing Transactions</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon completion of the restructuring
transactions, we expect to have outstanding approximately
$2.8&nbsp;billion of debt, which we believe, on the advice of
our financial advisors, is an appropriate level of debt to
obtain and maintain an investment grade rating. We are
continuing to evaluate alternative plans for creating that debt,
and our initial debt load may be established through the
issuance of new debt or the assumption of existing TRW debt, or
a combination of these approaches. The final terms of that debt
and our approach for incurring it will not be determined until
shortly prior to the declaration by TRW of the dividend
comprising the shares of our common stock that will be
distributed in the spin-off, or the spin-off declaration date.
The unaudited pro forma financial information as of
December&nbsp;31, 2001, and the pro forma capitalization
information as of June&nbsp;30, 2002, each of which appear
elsewhere in this prospectus, assume that we will have
$2.8&nbsp;billion in debt.
</FONT>

<P align="left">
<B><FONT size="2">Manner of Effecting the Spin-Off</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">TRW has advised us that, if the TRW shareholders
approve the spin-off and the other conditions to the spin-off
are satisfied or waived, TRW anticipates that, on or
about &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2002, TRW will formally authorize and declare the spin-off
dividend and set the spin-off record date and the spin-off date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The spin-off record date is presently expected to
be on or
about &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2002. The spin-off date is presently expected to be on or
about &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2002. Prior to the spin-off record date, TRW is expected to
redeem all of its outstanding shares of preferred stock. On the
spin-off date, TRW will distribute to the holders of the
outstanding shares of TRW common stock on the spin-off record
date all of the shares of our common stock held by TRW
(representing &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;percent
of our common stock expected to be outstanding after the
spin-off, assuming conversion of the shares of our Series&nbsp;A
Convertible Preferred Stock to be sold in the third party equity
sale) on the basis of one share of our common stock for each
share of TRW common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On the spin-off date, all of the outstanding
shares of our common stock held by TRW will be delivered by TRW
to National City Bank, the distribution agent for the spin-off.
On or shortly after the spin-off date:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">holders of record of TRW common stock on the
    spin-off record date will have credited to a book-entry account
    established for them by, and maintained at National City Bank
    (our registrar and transfer agent) the number of shares of our
    common stock to which they are entitled; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">beneficial owners of TRW common stock on the
    spin-off record date should have credited to their brokerage,
    custodian or similar account through which they own their TRW
    common stock, the number of shares of our common stock to which
    they are entitled.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">18
</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If TRW shareholders approve the spin-off at the
special meeting described in the accompanying proxy statement,
no further shareholder action will be necessary for you to
receive the shares of our common stock to which you will be
entitled in the spin-off. This means that:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">you will not need to pay any consideration to TRW
    or to us; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">you will not need to surrender any shares of TRW
    common stock to receive your shares of our common stock.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">All shares of our common stock distributed in the
spin-off will be fully paid and non-assessable.
</FONT>

<P align="left">
<B><FONT size="2">Results of the Spin-Off</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">After the spin-off, both TRW Automotive and TRW
will be independent, publicly traded companies. Their respective
management, business fundamentals, growth characteristics and
strategic priorities will be different from those of TRW prior
to the spin-off. TRW will have no equity interest in TRW
Automotive after the spin-off and the third party equity sale,
and we will have no equity interest in TRW after the spin-off.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">After the spin-off:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">we will own and operate TRW&#146;s automotive
    business; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">TRW will continue to own and operate TRW&#146;s
    systems, space and electronics businesses.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Immediately following the spin-off, based on the
anticipated number of outstanding shares of TRW common stock and
the record holders on the spin-off record date, we expect to
have
approximately &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million
shares of our Series&nbsp;A Convertible Preferred Stock
outstanding, held by the third party equity investor,
and &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million
shares of common stock outstanding, held by
approximately &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;record holders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our common stock will be a different security
from TRW common stock and will not trade or be valued alike. We
refer you to the discussion under &#147;Description of Capital
Stock.&#148;
</FONT>

<P align="left">
<B><FONT size="2">Listing and Trading of TRW Automotive Common
Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We intend to apply to the NYSE for the listing of
our common stock. We anticipate that a temporary form of interim
trading in our common stock, called &#147;when-issued&#148;
trading, will commence shortly before the spin-off record date.
&#147;When-issued&#148; trading reflects the value at which the
market expects our common stock to trade after the spin-off. If
&#147;when-issued&#148; trading develops, you will be able to
buy and sell our common stock before the spin-off, but none of
these trades will settle until after the spin-off and after
&#147;regular way&#148; trading in our common stock has begun.
If the spin-off does not occur, all &#147;when-issued&#148;
trading will be null and void. If &#147;when-issued&#148;
trading occurs, the listing for our common stock is expected to
be represented by the trading symbol
&#147;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#148;
and accompanied by the letters &#147;wi&#148; on the NYSE.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Additionally, it is expected that
&#147;ex-distribution&#148; trading in TRW common stock will
develop before the spin-off record date.
&#147;Ex-distribution&#148; trading means that you may trade TRW
common stock before the completion of the spin-off, but on a
basis that reflects the value at which the market expects TRW
common stock to trade after the spin-off. If
&#147;ex-distribution&#148; trading develops, you may buy and
sell those shares before the spin-off, but none of these trades
will settle until after the spin-off and after &#147;regular
way&#148; trading in TRW common stock has begun. If the spin-off
does not occur, all &#147;ex-distribution&#148; trading will be
null and void. If &#147;ex-distribution&#148; trading occurs,
the listing for TRW common stock will be represented by the
trading symbol &#147;TRW&#148; and accompanied by the letters
&#147;wi&#148; on the NYSE.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The NYSE will not approve any trading of our
common stock until the Securities and Exchange Commission, or
SEC, has declared effective our registration statement on
Form&nbsp;S-1 of which this prospectus forms a part.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">There is now no public market for our common
stock. We cannot predict the prices at which our common stock
may trade prior to the spin-off on a &#147;when-issued&#148;
basis or after the spin-off. The prices at which trading in our
common stock occurs may fluctuate significantly. See &#147;Risk
Factors&nbsp;&#151; Risk Factors Relating to
</FONT>

<P align="center"><FONT size="2">19
</FONT>
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<DIV align="left">
<FONT size="2">Securities Markets&nbsp;&#151; Our stock price
may fluctuate significantly following the spin-off.&#148; Market
prices may also be affected by provisions of our certificate of
incorporation and bylaws, which may have an anti-takeover
effect. See &#147;Description of Capital Stock&nbsp;&#151;
Anti-Takeover Effects of Delaware General Corporation Law and
Provisions of our Certificate of Incorporation and Bylaws.&#148;
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Master Distribution Agreement and Ancillary
Agreements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to the spin-off, we expect to enter into
agreements with TRW in connection with our separation from TRW,
the spin-off and related matters. These agreements are expected
to include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a master distribution agreement, providing for,
    among other things, the completion of the restructuring
    transactions and the spin-off, and agreements between us and
    TRW, including those relating to indemnification;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a tax sharing agreement, providing for, among
    other things, the allocation between us and TRW of federal,
    state, local and foreign tax liabilities for periods prior to
    the spin-off and, in some instances, for periods after the
    spin-off;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an employee matters agreement, pursuant to which,
    among other things, some employee-related assets and liabilities
    of TRW will be allocated between us and TRW and some
    arrangements will be made with respect to employee benefit plans
    and compensation arrangements;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an insurance allocation agreement, pursuant to
    which, among other things, certain insurance policies and
    arrangements of TRW and related coverages will be allocated to
    us, and TRW will provide certain administrative insurance
    services to us;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">intellectual property license agreements,
    pursuant to which, among other things, we will license certain
    intellectual property from TRW and TRW will license certain
    intellectual property from us;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a trademark license agreement, pursuant to which
    TRW will license certain names and trademarks to us; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a transition services agreement, pursuant to
    which, among other things, TRW will provide certain services to
    us and we will provide transition services to TRW for a
    transition period following the spin-off.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In this prospectus, we sometimes refer to these
agreements (other than the master distribution agreement) as the
&#147;ancillary agreements.&#148; The master distribution
agreement and the ancillary agreements are expected to be
entered into in the context of a parent-subsidiary relationship
and are expected to be negotiated in the overall context of our
separation from TRW and the spin-off. The terms and conditions
of these agreements may be more or less favorable than those we
could negotiate with unaffiliated third parties.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For more information regarding the separation
arrangements contemplated by these agreements, see
&#147;Relationship With TRW.&#148;
</FONT>

<P align="left">
<B><FONT size="2">Conditions to Spin-Off; Termination of
Spin-Off</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The spin-off will not be effected unless a number
of conditions are satisfied or, if permitted, waived, including,
among others:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">receipt of the requested IRS ruling, in form and
    substance satisfactory to TRW, to the effect that the spin-off
    will constitute a tax-free spin-off for U.S. federal income tax
    purposes for both holders of TRW common stock and TRW, and the
    continued effectiveness of such ruling, or alternatively,
    receipt by TRW of a satisfactory opinion from tax counsel;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the completion in all material respects, to the
    extent required to be completed prior to the spin-off, of the
    restructuring transactions;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the completion in all material respects of the
    ASG sale;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">20
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our level of indebtedness not exceeding certain
    specified levels;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the satisfaction of TRW with the treatment of the
    debt of TRW and its subsidiaries in connection with the
    restructuring transactions and the spin-off, including the
    allocation of such debt between TRW and TRW Automotive;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">receipt of all material governmental and third
    party consents and approvals by governmental entities required
    in connection with the spin-off;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the completion by us of the debt financing
    transactions described elsewhere in this prospectus relating to
    debt to be incurred or assumed by us from one or more financial
    institutions under one or more credit facilities and/or through
    the issuance of our debt securities in one or more public
    offerings or private placements;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the authorization for listing of our common stock
    on the NYSE, subject to official notice of issuance;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the approval of the spin-off at the special
    meeting by the holders of shares of TRW common stock in
    accordance with the Ohio General Corporation Law; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the receipt by the TRW board of directors of a
    satisfactory solvency opinion and the satisfaction of the TRW
    board of directors as to matters relating to the solvency and
    adequacy of capital of TRW and us.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the master distribution agreement, prior to
the spin-off record date, the TRW board of directors will retain
discretion, even if TRW shareholders approve the spin-off and
the other conditions to the spin-off are satisfied, to abandon,
delay or modify the spin-off or any matter contemplated by the
spin-off. See &#147;Relationship With TRW&nbsp;&#151; Master
Distribution Agreement.&#148;
</FONT>

<P align="left">
<B><FONT size="2">Material U.S. Federal Income Tax
Consequences</FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">The
Spin-Off</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">TRW has requested a private letter ruling from
the IRS regarding the material U.S. federal income tax
consequences of the spin-off. In the event that the IRS has not
issued the private letter ruling on or shortly before the
spin-off declaration date, TRW has advised us that it expects to
receive an opinion from tax counsel regarding the material
federal income tax consequences of the spin-off. The following
summarizes the material U.S. federal income tax consequences
that are expected to result from the spin-off assuming the
private letter ruling is issued or an opinion from tax counsel
is received:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the receipt of TRW Automotive common stock in the
    spin-off will qualify as a tax-free distribution under
    Section&nbsp;355 of the Code;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">no income, gain or loss will be recognized by and
    no amount will be included in the income of a holder of TRW
    common stock as a result of the spin-off;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the basis of a holder of TRW common stock in the
    TRW Automotive common stock received on the spin-off date in
    respect of TRW common stock will be determined by allocating the
    holder&#146;s basis in TRW common stock immediately before the
    spin-off between the TRW common stock and the TRW Automotive
    common stock received in proportion to their relative fair
    market values;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the holding period of the TRW Automotive common
    stock received in the spin-off will include the holding period
    of the TRW common stock with respect to which the TRW Automotive
    common stock will be distributed, provided that the TRW common
    stock is held as a capital asset on the spin-off date;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any cash received in lieu of fractional shares of
    TRW Automotive common stock as part of the spin-off will give
    rise to gain or loss equal to the difference between the amount
    of cash received and the tax basis allocable to the fractional
    shares interests, and such gain or loss will be capital gain or
    loss if the TRW common stock with respect to which the spin-off
    is made is held as a capital asset on the spin-off date; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">no income, gain or loss will be recognized by TRW
    solely on account of the spin-off.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">21
</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The IRS private letter ruling or the opinion from
tax counsel, as the case may be, will be based on provisions of
the Code and the regulations promulgated thereunder, and on
current administrative rulings and court decisions, in effect as
of the date of that ruling, all of which are subject to change.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">It is expected that the IRS private letter ruling
or the opinion from tax counsel, as the case may be, will not
cover all U.S. federal income tax consequences that may be
relevant to holders of TRW common stock, particularly holders
that are entitled to special treatment under the Code. We urge
each holder of TRW common stock to consult his or her own tax
advisor as to the particular tax consequences of the spin-off to
that holder, including the application of state, local, and
foreign tax laws, and the effect of possible changes in the tax
law that may affect the tax consequences described above.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Applicability
of IRS Private Letter Ruling</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The IRS private letter ruling, if issued, will be
based on the facts presented and representations made by TRW.
Generally, an IRS private letter ruling will not be revoked or
modified retroactively unless there has been an omission or
misstatement of a material fact or a breach of a material
representation. TRW intends to present all relevant facts and is
not aware of any facts or circumstances that would cause those
representations to be incorrect or incomplete in any material
respect. In addition, TRW and TRW Automotive will agree in the
tax sharing agreement not to take actions, or to fail to take
actions, that are inconsistent with the representations upon
which the IRS private letter ruling will be based. If, however,
in the remote circumstance that those facts or representations
were found to be incorrect or incomplete in any material
respect, TRW could not rely on the IRS private letter ruling and
the spin-off might not qualify as a tax-free distribution under
Section&nbsp;355 of the Code.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the spin-off were found to be a taxable
distribution of TRW Automotive common stock, TRW shareholders
would be treated as receiving a taxable distribution, generally
taxed as a dividend, in an amount equal to the fair market value
of the TRW Automotive common stock received on the spin-off
date. Also, the tax basis of TRW Automotive common stock
received in the spin-off would equal its fair market value on
the spin-off date and the holding period of the stock would
begin with and include the day after the spin-off date. TRW
would recognize a corporate-level tax based on the excess, if
any, of the fair market value of the TRW Automotive common stock
distributed over TRW&#146;s tax basis for such TRW Automotive
common stock. In certain circumstances, TRW Automotive may be
required to reimburse TRW for a portion of the taxes due with
respect to the spin-off pursuant to the tax sharing agreement.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Effect
of Pre- or Post-Spin-Off Acquisitions</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">An acquisition of TRW or TRW Automotive pre- or
post-spin-off could render the spin-off taxable to TRW and, in
certain circumstances, its shareholders. Even if the spin-off
otherwise qualifies for tax-free treatment under
Section&nbsp;355 of the Code, the spin-off may become taxable to
TRW pursuant to Section&nbsp;355(e) of the Code if shares
representing 50 percent or more of either TRW common stock or
TRW Automotive common stock are acquired, directly or
indirectly, as part of a plan or series of related transactions
that include the spin-off. If Section 355(e) were to apply to
cause the spin-off to be taxable to TRW, the spin-off would
remain tax-free to TRW shareholders, but TRW would be required
to pay a corporate tax based on the excess of the fair market
value of the TRW Automotive common stock distributed over
TRW&#146;s tax basis for such TRW Automotive common stock. In
addition, a pre- or post-spin-off acquisition of TRW or TRW
Automotive that is taxable, in whole or in part, could render
the spin-off taxable to TRW and the shareholders of TRW if the
spin-off, when coupled with the acquisition, is treated as a
&#147;device&#148; for the distribution of earnings and profits
under general principles of Section&nbsp;355.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Certain
Federal Income Tax Reporting Requirements</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">United States Treasury regulations require each
holder of TRW common stock that receives TRW Automotive common
stock in the spin-off to attach to the shareholder&#146;s U.S.
federal income tax return for the year in which such stock is
received a detailed statement setting forth such data as may be
appropriate to show
</FONT>

<P align="center"><FONT size="2">22
</FONT>
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<DIV align="left">
<FONT size="2">the applicability of Section&nbsp;355 of the Code
to the spin-off. Subsequent to the spin-off, TRW will provide
its shareholders who received TRW Automotive common stock
pursuant to the spin-off with the information necessary to
comply with such requirement.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">THE FOREGOING SUMMARY OF THE ANTICIPATED
PRINCIPAL FEDERAL INCOME TAX CONSEQUENCES OF THE SPIN-OFF UNDER
CURRENT LAW IS FOR GENERAL INFORMATION ONLY AND DOES NOT PURPORT
TO COVER ALL FEDERAL INCOME TAX CONSEQUENCES, INCLUDING THOSE
THAT MAY APPLY TO PARTICULAR CATEGORIES OF SHAREHOLDERS, OR ANY
TAX CONSEQUENCES THAT MAY ARISE UNDER THE TAX LAWS OF OTHER
JURISDICTIONS. THE SUMMARY DOES NOT COVER ANY STATE, LOCAL OR
FOREIGN INCOME TAX OR OTHER TAX CONSEQUENCES. NEITHER TRW
AUTOMOTIVE NOR TRW HAS REQUESTED ANY RULINGS OR OPINIONS WITH
RESPECT TO THE TAX CONSEQUENCES OF THE SPIN-OFF UNDER THE LAWS
OF ANY STATE, LOCAL OR FOREIGN GOVERNMENT. EACH HOLDER
(INCLUDING EACH CORPORATE HOLDER) OF TRW COMMON STOCK SHOULD
CONSULT HIS, HER OR ITS TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES OF THE SPIN-OFF, INCLUDING APPLICATION OF FEDERAL,
STATE, LOCAL AND FOREIGN TAX LAWS, AND THE EFFECT OF POSSIBLE
CHANGES IN TAX LAWS THAT MAY AFFECT THE TAX CONSEQUENCES
DESCRIBED ABOVE.
</FONT>

<P align="left">
<B><FONT size="2">Regulatory Approvals</FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">U.S.
Antitrust</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the Hart Scott Rodino Antitrust
Improvements Act of 1976, as amended, or the HSR Act, and the
rules that have been promulgated thereunder by the Federal Trade
Commission, or the FTC, certain transactions may not be
completed unless certain information has been furnished to the
Antitrust Division of the United States Department of Justice,
or the Antitrust Division, and the FTC and certain waiting
period requirements have been satisfied. The anticipated sale of
shares of our Series&nbsp;A Convertible Preferred Stock
(assuming conversion of these shares into shares of our common
stock) to an equity investor unaffiliated with TRW in the third
party equity sale may be subject to such requirements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the provisions of the HSR Act, the
anticipated sale of our Series&nbsp;A Convertible Preferred
Stock cannot be completed until 30&nbsp;calendar days (if the
thirtieth day falls on a weekend or holiday, the waiting period
will expire at the close of the next business day) following the
filing by us or TRW and the third party equity investor of
Notification and Report Forms, with respect to the sale of our
Series&nbsp;A Convertible Preferred Stock, unless we or TRW and
the third party equity investor receive a request for additional
information and documentary material from the Antitrust Division
of the Department of Justice or the FTC. If, within the initial
30-day waiting period, either the Antitrust Division or the FTC
requests additional information and documentary material from us
or TRW and the equity investor concerning the third party equity
sale, the waiting period will be extended and will expire at
11:59&nbsp;P.M. Eastern time, on the thirtieth calendar day
after the date of substantial compliance by us or TRW and the
third party equity investor with that request. If the thirtieth
day falls on a weekend or holiday, the waiting period will
expire at 11:59&nbsp;P.M. Eastern time on the next business day.
Thereafter, such waiting periods can be extended only by court
order or by voluntary consent of the parties.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Antitrust Division and the FTC frequently
scrutinize the legality of transactions under the antitrust
laws. At any time before or after the completion of any such
transaction, 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 sale of our Series&nbsp;A Convertible Preferred Stock or
seeking divestiture of the stock so acquired by the third party
equity investor or divestiture of certain of our or the third
party equity investor&#146;s assets. Private parties and State
Attorneys General may also bring legal actions under the
antitrust laws. There can be no assurance that a challenge to
the anticipated sale of our Series&nbsp;A Convertible Preferred
Stock to the third party equity investor will not be made, or if
such a challenge is made, what the result will be.
</FONT>

<P align="center"><FONT size="2">23
</FONT>
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<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Other</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Additional filings may be necessary with
governmental entities outside the U.S. In addition, it is
possible that any of the governmental entities with which
filings are made may seek various regulatory concessions as
conditions for granting approval of the anticipated sale of our
Series&nbsp;A Convertible Preferred Stock to the third party
equity investor. There can be no assurance that:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">we, TRW or the third party equity investor will
    be able to satisfy or comply with those conditions; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the required regulatory approvals will be
    obtained within the time frame contemplated by us on terms and
    conditions that will be satisfactory to us, TRW and the third
    party equity investor.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">24
</FONT>
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<P align="center">
<B><FONT size="2">DIVIDEND POLICY</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our board of directors currently intends to
declare quarterly dividends on our common stock, with the first
quarterly dividend expected to be
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share, or a rate of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share annually, declared and paid in
the &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;quarter
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
Our board is free to change our dividend practices at any time,
including to increase, decrease or eliminate any dividend on our
common stock. Our board will base its decisions on, among other
things, general business conditions, our financial results,
contractual, legal and regulatory restrictions regarding
dividend payments by our subsidiaries and any other factors our
board may consider to be relevant.
</FONT>

<P align="center"><FONT size="2">25
</FONT>

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<!-- link1 "PRO FORMA CAPITALIZATION" -->
<DIV align="left"><A NAME="007"></A></DIV>

<P align="center">
<B><FONT size="2">PRO FORMA CAPITALIZATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth our capitalization
as of June&nbsp;30, 2002. The capitalization is presented on an
actual basis and on a pro forma basis as if the spin-off and the
restructuring transactions had occurred on June&nbsp;30, 2002.
The following pro forma adjustments were made to reflect the
terms related to the spin-off:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">capitalization of TRW&#146;s investment to
    reflect the distribution of our common stock to TRW shareholders
    through a dividend of our common stock by TRW;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">repayment of debt allocated to us from TRW
    through external financing;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">additional short-term and long-term debt we
    expect to incur in order to finance operations separately from
    TRW; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the sale of our Series&nbsp;A Convertible
    Preferred Stock in the third party equity sale.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The pro forma capitalization is for illustrative
purposes and does not purport to be representative of what our
capitalization would have been had the spin-off and the
restructuring transactions taken place on June&nbsp;30, 2002.
The pro forma capitalization table should be read together with
the &#147;Management&#146;s Discussion and Analysis of Financial
Condition and Results of Operations&#148; and the combined
financial statements and accompanying notes, and other financial
and statistical information included in this prospectus.
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="62%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">As of June&nbsp;30, 2002</FONT></B></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Actual</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma</FONT></B></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(unaudited)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Short-term debt (including current portion of
    long-term debt)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Debt allocated from TRW
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Stockholder&#146;s investment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Common stock, par value $.001; 500&nbsp;million
    shares authorized; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares issued
    and outstanding
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Preferred stock, par value $.001; 50&nbsp;million
    shares authorized; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of
    Series&nbsp;A Convertible Preferred Stock issued and outstanding
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other capital
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Parent company investment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated other comprehensive income (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total stockholder&#146;s investment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total capitalization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">26
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "SELECTED COMBINED FINANCIAL DATA" -->
<DIV align="left"><A NAME="008"></A></DIV>

<P align="center">
<B><FONT size="2">SELECTED COMBINED FINANCIAL DATA</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The selected historical combined financial data
as of and for each of the three years ended December&nbsp;31,
2001 have been derived from our audited combined financial
statements. The selected historical combined financial data as
of and for the two years ended December&nbsp;31, 1998 and the
six months ended June&nbsp;30, 2002 and 2001 have been derived
from unaudited combined financial statements, which include all
adjustments, consisting of normal recurring accruals, that
management considers necessary for a fair presentation of the
financial position and results of operations for these periods.
Comparisons of certain items below are affected by the
acquisition of LucasVarity in 1999 and divestitures during the
five-year period. The table should be read in conjunction with
&#147;Management&#146;s Discussion and Analysis of Financial
Condition and Results of Operations&#148; and the combined
financial statements and accompanying notes included elsewhere
in the prospectus. The following financial information may not
reflect what our results of operations, financial position and
cash flows would have been had we operated as a separate,
stand-alone entity during the periods presented, or what our
results of operations, financial position and cash flows will be
in the future.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="29%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Six Months Ended</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">June&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1997</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1998</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(unaudited)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(unaudited)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="27"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="27" align="center" nowrap><B><FONT size="1">(In millions, except per share data)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Statements of Operations Data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sales(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,032</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,201</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,472</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,920</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,091</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gross profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,284</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,048</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,648</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Earnings (loss) from continuing operations(2)(4)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">284</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">233</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">68</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">90</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(39</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net earnings (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">284</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">233</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">122</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">93</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(28</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Earnings from continuing operations excluding
    unusual items
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">284</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">251</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">247</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">144</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Per diluted share of common stock:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Continuing operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net earnings (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Shares used in computing per share
    amounts&nbsp;&#151; diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="6" align="left" valign="top">
    <B><FONT size="2">Statements of Cash Flows Data:</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash provided by (used in) operating activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">964</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">751</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">828</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash provided by (used in) investing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,089</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">641</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(409</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash provided by (used in) financing activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,296</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,452</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(464</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Other Data (unaudited):</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">EBITDA(3)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">871</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">854</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,202</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,152</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">848</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">EBITDA&nbsp;&#151; excluding unusual items(4)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">871</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">878</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,440</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,374</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,128</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">27
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="32%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">As of December 31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">As of June&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1997</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1998</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(unaudited)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(unaudited)&nbsp;</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="27"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="27" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Balance Sheet Data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,687</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,677</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,610</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,521</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,937</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,436</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,503</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,922</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,786</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,577</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Working capital
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">251</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">174</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">688</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(265</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(640</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,502</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,808</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,638</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,293</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,287</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,440</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,737</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,521</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,053</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,597</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Parent company investment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,486</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,449</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,918</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,015</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,925</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Sales in 2001 decreased 8&nbsp;percent to
    $10.1&nbsp;billion as compared to 2000 sales of
    $10.9&nbsp;billion. The decrease resulted from the effects of a
    decline in vehicle production, primarily in North America, the
    effect of foreign currency exchange, business divestitures and
    lower pricing. Sales in 2000 increased 4&nbsp;percent from sales
    of $10.5&nbsp;billion in 1999. The increase was a result of
    higher volumes, the inclusion of the first quarter of 2000 sales
    of LucasVarity, which was acquired on March&nbsp;25, 1999 and
    the consolidation of an affiliate, partially offset by the
    effects of foreign currency exchange, lower pricing and
    divestitures of several businesses.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Earnings (loss) from continuing operations for
    2001 was a loss of $39&nbsp;million compared to earnings of
    $90&nbsp;million in 2000 and $68&nbsp;million in 1999. Unusual
    charges were $183&nbsp;million, $157&nbsp;million and
    $182&nbsp;million for 2001, 2000, and 1999, respectively.
    Excluding unusual items, earnings from continuing operations
    would have been $144&nbsp;million in 2001, $247&nbsp;million in
    2000 and $250&nbsp;million in 1999. The decrease in earnings
    from continuing operations, without unusual items, in 2001 from
    2000 resulted primarily from lower gross profit, partially
    offset by lower administrative and selling, research and
    development and interest expense. Gross profit decreased due to
    lower volume and lower margins on new products, lower pricing,
    increased warranty and recall charges, the effects of foreign
    currency exchange and divestitures, partially offset by net cost
    reductions. The decrease in earnings from continuing operations,
    without unusual items, from 1999 to 2000 resulted primarily from
    higher interest expense and lower gross profit, offset by lower
    administrative and selling and research and development expenses
    and a lower effective income tax rate. The decrease in gross
    profit resulted from lower pricing, changes in the mix of
    automotive products, divestitures of several businesses, the
    effect of foreign currency exchange and an increase in warranty
    charges, partially offset by cost reductions and an additional
    quarter of results of operations of LucasVarity.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">EBITDA, a measure used by management to measure
    operating performance, represents earnings from continuing
    operations before interest, income taxes, depreciation and
    amortization, including amortization of other intangibles.
    EBITDA is not a recognized term under generally accepted
    accounting principles and does not purport to be an alternative
    to operating income as an indicator of operating performance or
    to cash flows from operating activities as a measure of
    liquidity. Because not all companies calculate EBITDA
    identically, this presentation of EBITDA may not be comparable
    to other similarly titled measures of other companies.
    Additionally, EBITDA is not intended to be a measure of free
    cash flow for management&#146;s discretionary use, as it does
    not consider certain cash requirements such as interest
    payments, tax payments and debt service requirements.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(4)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">See &#147;Management&#146;s Discussion and
    Analysis of Financial Condition and Results of Operations&#148;
    and &#147;Restructuring&#148; and &#147;Asset Impairments&#148;
    notes to financial statements for a discussion of unusual items
    in 2001, 2000 and 1999. Unusual items in 1998 included
    $24&nbsp;million for restructuring costs, primarily for
    severance and plant closings. There were no unusual items in
    1997.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">28
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" -->
<DIV align="left"><A NAME="009"></A></DIV>

<P align="center">
<B><FONT size="2">MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND</FONT></B>

<DIV align="center">
<B><FONT size="2">RESULTS OF OPERATIONS</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following discussion and analysis should be
read in conjunction with our historical combined financial
statements and the accompanying notes, which are included in
this prospectus. This prospectus contains forward-looking
statements relating to future events and our future financial
performance. Actual results could be significantly different
from those discussed in this prospectus. Factors that could
cause or contribute to such differences include those set forth
in the section entitled &#147;Risk Factors.&#148;
</FONT>

<P align="left">
<B><FONT size="2">Overview</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Sales in 2001 decreased 8&nbsp;percent to
$10.1&nbsp;billion as compared to 2000 sales of
$10.9&nbsp;billion. The decrease resulted from the effects of a
decline in vehicle production, primarily in North America, the
effect of foreign currency exchange, business divestitures and
lower pricing. Sales in 2000 increased 4 percent from sales of
$10.5&nbsp;billion in 1999. The increase was a result of higher
volumes, the inclusion of the first quarter of 2000 sales of
LucasVarity plc (LucasVarity), which was acquired on
March&nbsp;25, 1999 and the consolidation of an affiliate
partially offset by the effects of foreign currency exchange,
lower pricing and divestitures of several businesses.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Earnings (loss) from continuing operations for
2001 was a loss of $39&nbsp;million compared to earnings of
$90&nbsp;million in 2000 and $68&nbsp;million in 1999. Unusual
charges were $183&nbsp;million, $157&nbsp;million and
$182&nbsp;million for 2001, 2000, and 1999, respectively.
Excluding unusual items, earnings from continuing operations
would have been $144&nbsp;million in 2001, $247&nbsp;million in
2000 and $250&nbsp;million in 1999. The decrease in earnings
from continuing operations, without unusual items, in 2001 from
2000 resulted primarily from lower gross profit partially offset
by lower administrative and selling, research and development
and interest expense. Gross profit decreased due to lower volume
and lower margins on new products, lower pricing, increased
warranty and recall charges, the effects of foreign currency
exchange and divestitures, partially offset by net cost
reductions. The decrease in earnings from continuing operations,
without unusual items, from 1999 to 2000 resulted primarily from
higher interest expense and lower gross profit, offset by lower
administrative and selling and research and development
expenses, and a lower effective income tax rate. The decrease in
gross profit resulted from lower pricing, changes in the mix of
automotive products, divestitures of several businesses, the
effect of foreign currency exchange and an increase in warranty
charges, partially offset by cost reductions and an additional
quarter of results of operations of LucasVarity.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Net earnings (loss) for 2001 was a loss of
$28&nbsp;million and earnings of $93&nbsp;million for 2000 and
earnings of $122&nbsp;million for 1999.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Earnings (loss) from continuing operations in
2001, 2000 and 1999 were negatively impacted by the effects of
unusual items of $183&nbsp;million, $157&nbsp;million, and
$182&nbsp;million, respectively. These unusual items are
summarized as follows (all amounts are after tax):
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">restructuring and other charges including
    severance and plant closings of $160&nbsp;million,
    $73&nbsp;million and $55&nbsp;million in 2001, 2000 and 1999,
    respectively.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">asset impairment charges of $25&nbsp;million and
    $44&nbsp;million for 2001 and 2000, respectively, for the
    write-down of property, plant and equipment and other assets.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">charges for pending and threatened litigation of
    $19&nbsp;million in 2001 and pending and threatened litigation
    and a certain warranty charge of $46&nbsp;million in 2000.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">net gains on asset sales of $21&nbsp;million in
    2001 and $12&nbsp;million in 2000 primarily related to sales of
    certain non-core assets.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">unrealized losses on foreign exchange contracts
    of $6&nbsp;million in 2000 and unrealized losses on foreign
    exchange contracts and expenses related to the acquisition of
    LucasVarity of $60&nbsp;million in 1999.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">noncash charge, with no income tax benefit, of
    $67&nbsp;million related to the write-off of in-process research
    and development (IPR&#38;D) associated with the acquisition of
    LucasVarity in 1999.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">29
</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The unusual items detailed above are included in
Earnings (loss) from continuing operations in the following
table:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="51%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Six Months Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">June 30,</FONT></B></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(unaudited)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="21"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Restructuring and other charges
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(160</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(73</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(55</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Asset impairment charges
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(25</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(44</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pending and threatened litigation, including
    certain warranty in 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(19</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(46</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net gain from the sale of assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unrealized losses on foreign currency hedges and
    expenses related to the acquisition of LucasVarity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(60</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Write-off of purchased in-process research and
    development
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(67</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(183</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(157</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(182</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The unusual items are included in the Statements
of Operations as follows:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="51%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Six Months Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">June 30,</FONT></B></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(unaudited)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="21"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cost of sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">169</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">147</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">88</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Administrative and selling expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">87</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amortization of goodwill and intangible assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchased in-process research and development
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">67</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other (income) expense-net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Earnings (loss) before income taxes from
    continuing operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(281</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(222</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(240</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax benefit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(98</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(65</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(58</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Earnings (loss) from continuing operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(183</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(157</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(182</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Results of Operations</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Sales for 2001 of $10.1&nbsp;billion decreased
approximately $800&nbsp;million from $10.9&nbsp;billion in 2000.
The decrease in sales resulted from the effects of a decline in
vehicle production of $282&nbsp;million, primarily in North
America, the effect of foreign currency exchange of
$211&nbsp;million, business divestitures of $198&nbsp;million
and lower pricing of $150&nbsp;million. Sales for 2000 of $10.9
billion increased approximately $400&nbsp;million from
$10.5&nbsp;billion in 1999 as a result of higher volumes of
$269&nbsp;million, the inclusion of the first quarter of 2000
sales of LucasVarity which was acquired on March&nbsp;25, 1999
of $1,028 million and an increase due to the consolidation of an
affiliate of $94 million, partially offset by the effects of
foreign currency exchange of $545 million, lower pricing of
$239&nbsp;million and divestitures of several businesses of
$174&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2000 we disposed of a substantial portion of
our Lucas Diesel Systems and LucasVarity wiring businesses. In
2001, we completed the disposition of the remaining Lucas Diesel
Systems businesses. The financial statements reflect these
businesses&#146; operating results as discontinued operations
for all periods presented.
</FONT>

<P align="center"><FONT size="2">30
</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Gross profit for 2001 of $1,124&nbsp;million
decreased $376&nbsp;million from $1,500&nbsp;million in 2000.
The decrease was primarily due to lower volume and lower margin
on new products of $207&nbsp;million, lower pricing of
$150&nbsp;million, increased warranty and recall charges of
$29&nbsp;million, the effects of foreign currency exchange of
$39&nbsp;million, divestitures of $58&nbsp;million, and an
increase in unusual items of $22&nbsp;million, partially offset
by net cost reductions of $146&nbsp;million. Gross profit for
2001 and 2000 included net pension income of $240&nbsp;million
and $242&nbsp;million, respectively, from an overfunded pension
plan. Gross profit for 2001 was negatively impacted by unusual
items totaling $169&nbsp;million, consisting of
$126&nbsp;million in restructuring expenses, asset impairment
charges of $38&nbsp;million and other charges of
$5&nbsp;million. Gross profit for 2000 included unusual items
totaling $147&nbsp;million, consisting of restructuring charges
of $43&nbsp;million, charges for the impairment of assets of
$67&nbsp;million and other charges of $37&nbsp;million,
primarily for certain warranty costs. Gross profit margin (gross
profit as a percentage of sales) for 2001 decreased to
11.1&nbsp;percent from 13.7&nbsp;percent in 2000. Excluding
unusual items, the gross profit margin would have been
12.8&nbsp;percent and 15.1&nbsp;percent for 2001 and 2000,
respectively. The gross profit margin, excluding unusual items,
for 2001 declined primarily as a result of lower volumes in
North America compared to 2000, an increase in modules, which
carry a lower margin but higher return on assets, and costs
associated with new product introductions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Gross profit for 2000 of $1,500&nbsp;million
decreased $148&nbsp;million from $1,648&nbsp;million in 1999.
The decrease resulted primarily from lower pricing of
$239&nbsp;million, changes in the mix of automotive products of
$46&nbsp;million, divestitures of several businesses of
$35&nbsp;million, the effect of foreign currency exchange of
$108&nbsp;million, other charges of $24&nbsp;million related to
the write-off of inventory, start up costs and additional bad
debt reserves, and an increase in warranty charges of
$38&nbsp;million and unusual items of $59&nbsp;million,
partially offset by net cost reductions of $194&nbsp;million and
the inclusion of an additional quarter of LucasVarity of
$170&nbsp;million. In addition, net pension income from an
overfunded pension plan added $242&nbsp;million and
$187&nbsp;million to gross profit in 2000 and 1999,
respectively. Unusual items included in gross profit in 1999
were restructuring expenses of $73&nbsp;million and other
charges, primarily inventory adjustments related to LucasVarity,
of $15&nbsp;million. Gross profit margin for 2000 decreased to
13.7&nbsp;percent from 15.7&nbsp;percent in 1999. Excluding
unusual items, gross profit margin would have been
15.1&nbsp;percent and 16.6&nbsp;percent in 2000 and 1999,
respectively. The gross profit margin, excluding unusual items,
declined in 2000 primarily as a result of lower pricing, the
effect of foreign currency exchange and costs associated with
the introduction of new products.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Administrative and selling expenses for 2001 of
$624&nbsp;million decreased $70&nbsp;million from
$694&nbsp;million in 2000, primarily due to the effects of
divestitures of $35&nbsp;million, cost reductions and lower
general and administrative corporate expenses allocated to us of
$61&nbsp;million and the effect of foreign currency exchange of
$10&nbsp;million, which were partially offset by an increase in
restructuring charges of $45&nbsp;million. Administrative and
selling expenses for 2000 of $694&nbsp;million decreased
$10&nbsp;million from $704&nbsp;million in 1999. The decrease in
administrative and selling expenses in 2000, when compared to
1999, resulted primarily from net cost reductions of
$60&nbsp;million, divestitures of $31&nbsp;million and the
effect of foreign currency exchange of $23&nbsp;million,
partially offset by the inclusion of an additional quarter of
LucasVarity administrative and selling expenses of
$65&nbsp;million and an increase in restructuring charges of
$35&nbsp;million. Administrative and selling expenses included
unusual items related to restructuring charges of
$87&nbsp;million in 2001, $42&nbsp;million in 2000 and
$7&nbsp;million in 1999. Excluding the effect of unusual items,
administrative and selling expenses as a percentage of sales
improved to 5.3&nbsp;percent in 2001 from 6.0&nbsp;percent and
6.7&nbsp;percent in 2000 and 1999, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Research and development expenses for 2001 were
$131&nbsp;million and $167&nbsp;million in 2000. Lower spending
on research and development was primarily the result of cost
reductions of $17&nbsp;million and a shift in resources to
applications engineering of $13&nbsp;million. Research and
development expenses in 2000 were lower compared to
$178&nbsp;million in 1999, primarily due to cost reductions of
$13&nbsp;million and the effect of foreign currency exchange of
$11&nbsp;million, partially offset by the inclusion of an
additional quarter in 2000 of research and development costs
associated with LucasVarity of $13&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Interest expense for 2001 of $371&nbsp;million
decreased $15&nbsp;million from $386&nbsp;million in 2000 as a
result of lower short-term interest rates in the United States
and lower average debt balances including debt allocated from
TRW. Interest expense for 2000 of $386&nbsp;million increased
$18&nbsp;million from $368&nbsp;million in 1999,
</FONT>

<P align="center"><FONT size="2">31
</FONT>

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<DIV align="left">
<FONT size="2">primarily due to higher short-term interest rates
in the United States and higher interest expense on fixed rate
debt issuances, partially offset by lower average debt
outstanding in 2000 including debt allocated from TRW.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Amortization of goodwill and intangible assets
was $78&nbsp;million, $76&nbsp;million and $69&nbsp;million in
2001, 2000 and 1999, respectively. The increase of
$7&nbsp;million from 1999 to 2000 primarily resulted from the
inclusion of an additional quarter in 2000 of goodwill and
intangible asset amortization related to LucasVarity.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The write-off of purchased in-process research
and development of $67&nbsp;million in 1999 resulted from the
LucasVarity acquisition.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Other (income) expense-net was income of
$9&nbsp;million and $12&nbsp;million in 2001 and 2000,
respectively, and expense of $58&nbsp;million in 1999. Included
in 2001 were net gains on sales of assets of $18&nbsp;million,
primarily from the disposition of electrical products and
aftermarket businesses in India and Turkey, asset impairment
charges of $11&nbsp;million, pending and threatened litigation
of $29&nbsp;million, earnings of affiliates of $9&nbsp;million
and other income of $23&nbsp;million. Included in 2000 were net
gains on sales of assets of $22&nbsp;million, primarily from the
disposition of Nelson Stud Welding and Australian Steering,
offset by $9&nbsp;million of unrealized losses on foreign
currency hedges and LucasVarity-related expenses, pending and
threatened litigation of $25&nbsp;million, earnings of
affiliates of $7&nbsp;million and other income of
$17&nbsp;million. In 1999, other (income) expense-net included
bank fees for the acquisition of LucasVarity of $39&nbsp;million
and foreign exchange losses relating to LucasVarity of
$37&nbsp;million, partially offset by earnings of affiliates of
$10&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The effective tax rate in 2001 was
45.1&nbsp;percent compared to 52.5&nbsp;percent in 2000 and
66.5&nbsp;percent in 1999. Excluding the unusual items in 2001,
2000 and 1999, the effective tax rates would have been 31.5,
39.9 and 43.6&nbsp;percent, respectively. The unusual items
impacting the effective tax rate related primarily to foreign
restructuring expenses in 2001, non-deductible penalties in
2000, and an in-process research and development charge in 1999,
for which there was no tax benefit. The major changes in the
effective tax rate excluding unusual items in 2001 from 2000
were one-time foreign tax refunds and the effect of
non-deductible reserves. The major change from 1999 to 2000 was
a reduction in foreign losses that were not tax-effected.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Chassis
Systems</FONT></I>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="53%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Six Months Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">June 30,</FONT></B></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December 31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(unaudited)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="21"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,617</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,970</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,264</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Profit before taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">228</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">371</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">407</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unusual items-income&nbsp;(expense) included in
    profit before taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(110</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(101</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(72</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Sales for 2001 of $5,617&nbsp;million decreased
$353&nbsp;million from $5,970 million in 2000. The decrease in
2001 sales resulted primarily from lower volume of
$178&nbsp;million due to lower production in North America
partially offset by higher production in Europe, the effect of
foreign currency exchange of $134&nbsp;million and lower pricing
of $32&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Profit before taxes for 2001 of $228&nbsp;million
decreased $143&nbsp;million from $371&nbsp;million in 2000.
Unusual items in 2001 included several restructuring programs
aggregating $86&nbsp;million, asset impairment charges of
$28&nbsp;million and other charges of $5&nbsp;million, partially
offset by gains on asset sales of $9&nbsp;million. Unusual items
included in profit before taxes in 2000 were $45&nbsp;million
related to restructuring actions, a charge for certain warranty
and other costs of $47&nbsp;million and losses incurred on
business disposals of $9&nbsp;million. Excluding unusual items,
profit before taxes decreased $134&nbsp;million from 2000. The
decrease primarily resulted from lower sales volume and lower
margin on new products totaling $159&nbsp;million, lower pricing
of $32&nbsp;million and the effect of foreign currency exchange
of $17&nbsp;million, which were partially offset by net cost
reductions of $77&nbsp;million.
</FONT>

<P align="center"><FONT size="2">32
</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Sales for 2000 of $5,970&nbsp;million increased
$706&nbsp;million from $5,264&nbsp;million in 1999. The increase
in 2000 resulted primarily from the inclusion of the first
quarter of 2000 sales of LucasVarity of approximately
$900&nbsp;million, higher volume of $36&nbsp;million and
additional sales of $94&nbsp;million from the consolidation of
an affiliate, previously accounted for as an equity investment,
which were partially offset by the effect of foreign currency
exchange and lower pricing of approximately $260&nbsp;million
and $41&nbsp;million, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Profit before taxes for 2000 of $371&nbsp;million
decreased $36&nbsp;million from $407&nbsp;million in 1999.
Unusual items in 1999 included charges for restructuring of
$56&nbsp;million and other charges, primarily inventory
adjustments related to LucasVarity, of $16&nbsp;million.
Excluding unusual items, profit before taxes decreased
$7&nbsp;million from 1999. The decrease was primarily a result
of lower pricing of $41&nbsp;million, the effect of foreign
currency exchange of $21&nbsp;million, increased warranty costs
of $21&nbsp;million, lower volume and unfavorable product mix of
$39&nbsp;million and inventory adjustments and the establishment
of bad debt reserves, primarily for amounts owed by a customer
that filed for bankruptcy, of $14&nbsp;million, which were
partially offset by net cost reductions of $52&nbsp;million and
the inclusion of LucasVarity in the first quarter of 2000 of
$78&nbsp;million.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Occupant
Safety Systems</FONT></I>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="50%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Six Months Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">June&nbsp;30,</FONT></B></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(unaudited)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="21"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,997</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,182</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,486</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Profit before taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">110</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">134</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">276</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unusual items-income (expense) included in profit
    before taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(57</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(105</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Sales for 2001 of $2,997&nbsp;million decreased
$185&nbsp;million from $3,182&nbsp;million in 2000. The decrease
in 2001 sales resulted primarily from lower pricing of
$107&nbsp;million, the effect of foreign currency exchange of
$59&nbsp;million and lower volume of $26&nbsp;million due to
lower production in North America slightly offset by higher
production in Europe.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Profit before taxes for 2001 of $110&nbsp;million
decreased $24&nbsp;million from $134 million in 2000. Unusual
items in 2001 included several restructuring programs
aggregating $47&nbsp;million and asset impairment charges of
$10&nbsp;million. Unusual items included in profit before taxes
in 2000 related to restructuring actions of $17&nbsp;million, an
asset impairment charge of $52&nbsp;million, and claims, pending
litigation and other charges of $36&nbsp;million. Excluding
unusual items, profit before taxes decreased $72&nbsp;million
from 2000. The decrease resulted primarily from lower pricing of
$107&nbsp;million, lower sales volume and lower margin on new
products of $31&nbsp;million, increased charges from the effect
of a seat belt recall of $17&nbsp;million and the effect of
foreign currency exchange of $6&nbsp;million, which were
partially offset by cost reductions of $93&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Sales for 2000 of $3,182&nbsp;million decreased
$304&nbsp;million from $3,486&nbsp;million in 1999. The decrease
resulted from the effect of foreign currency exchange and lower
pricing of $195&nbsp;million and $179&nbsp;million,
respectively, partially offset by higher volume of
$74&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Profit before taxes for 2000 of $134&nbsp;million
decreased $142&nbsp;million from $276&nbsp;million in 1999.
Unusual items in 1999 included charges for restructuring of
$9&nbsp;million. Excluding unusual items, profit before taxes
decreased $46&nbsp;million. The decrease was primarily a result
of lower pricing of $179&nbsp;million, the effect of foreign
currency exchange of $27&nbsp;million, increased warranty costs
of $17&nbsp;million and start-up costs relating to new product
introductions of $10&nbsp;million, which were partially offset
by net cost reductions of $183 million and higher volume of
$15&nbsp;million.
</FONT>

<P align="center"><FONT size="2">33
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Other
Automotive</FONT></I>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="50%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Six Months Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">June&nbsp;30,</FONT></B></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(unaudited)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="21"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,477</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,768</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,722</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Profit before taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">156</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">157</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unusual items-income (expense) included in profit
    before taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(84</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(14</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Sales for 2001 of $1,477&nbsp;million decreased
$291&nbsp;million from $1,768&nbsp;million in 2000. The decrease
in 2001 sales resulted primarily from lower volume of
$78&nbsp;million due to lower production in North America
partially offset by higher production in Europe, divestitures of
several businesses, primarily Lucas TVS, Lucas Indian Services
and Aftermarket Turkey in 2001 and Nelson Stud Welding, Ledex
&#38; Dormeyer, Man-Machine Interface and Schaevitz businesses
in 2000 of $198&nbsp;million, the effect of foreign currency
exchange of $18&nbsp;million and lower pricing of
$11&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Profit before taxes for 2001 of $40&nbsp;million
decreased $116&nbsp;million from $156&nbsp;million in 2000.
Unusual items in 2001 included several restructuring programs
aggregating approximately $80&nbsp;million, asset impairment
charges of $12&nbsp;million and other charges of
$2&nbsp;million, which were partially offset by net gains on the
sale of assets of $10&nbsp;million. Unusual items included in
profit before taxes in 2000 were $23&nbsp;million related to
restructuring actions and $15&nbsp;million for asset impairment
charges, which were partially offset by a gain on sale of a
business of $31&nbsp;million. Excluding unusual items, profit
before taxes decreased $39&nbsp;million from 2000. The decrease
resulted primarily from lower sales volume and lower margin on
new products totaling $17&nbsp;million, the effect of
divestitures of $21&nbsp;million and lower pricing of
$11&nbsp;million, which were partially offset by cost reductions
of $16&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Sales for 2000 of $1,768&nbsp;million increased
$46&nbsp;million from $1,722&nbsp;million in 1999. The increase
in sales resulted primarily from the inclusion of the first
quarter of 2000 sales of LucasVarity of $128&nbsp;million,
higher volume of $159&nbsp;million and $47&nbsp;million arising
from the acquisition of a majority interest in two affiliates,
which was partially offset by the effect of divestitures,
primarily including Nelson Stud Welding, Ledex &#38; Dormeyer,
Man-Machine Interface and Schaevitz businesses in 2000, of
$174&nbsp;million, the effect of foreign currency exchange of
$90&nbsp;million and lower pricing of $19&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Profit before taxes for 2000 of $156&nbsp;million
decreased $1&nbsp;million from $157&nbsp;million in 1999.
Unusual items in 1999 included charges for restructuring of
approximately $10&nbsp;million and inventory adjustments related
to LucasVarity of $4&nbsp;million. Excluding unusual items,
profit before taxes decreased $8&nbsp;million. The decrease was
the result of the net effect of volume and unfavorable product
mix of $22&nbsp;million, the effect of foreign currency exchange
of $19&nbsp;million, lower pricing of $19&nbsp;million and
effect of divestitures of $4&nbsp;million, partially offset by
net cost reductions of $45&nbsp;million and the inclusion of
LucasVarity in the first quarter of 2000 of approximately
$14&nbsp;million.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Discontinued
Operations</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2000, we disposed of a substantial portion of
the Lucas Diesel Systems and the LucasVarity wiring businesses.
In 2001, we completed the disposition of our remaining Lucas
Diesel Systems businesses. The combined financial statements
reflect these businesses&#146; operating results as discontinued
operations for all periods presented. Net proceeds totaled
$29&nbsp;million in 2001 and $853&nbsp;million in 2000. Sales of
the discontinued operations were $20&nbsp;million,
$74&nbsp;million and $858&nbsp;million in 2001, 2000 and 1999,
respectively. Interest has not been allocated to discontinued
operations. No gain or loss resulted from the divestiture of
these businesses.
</FONT>

<P align="center"><FONT size="2">34
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Restructuring</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have taken several actions during the past
three years to reduce overhead costs by shifting production
capacity from high wage areas to low wage areas and by
increasing operating efficiency. We have initiated several
restructuring actions including reorganizing and downsizing our
operations. In 2001, charges of $213&nbsp;million before tax
were recorded for actions that included the consolidation of our
businesses. These actions are expected to result in a reduction
of approximately 6,100 employees, of which approximately 4,900
were terminated by these actions as of December&nbsp;31, 2001.
In 2000, charges of $85&nbsp;million were recorded for actions
that resulted in employee reductions of approximately 3,700, the
closing of two plants and the reorganization and downsizing of
our aftermarket business. In 1999, we recorded $80&nbsp;million
related to closing six plants and employee reductions of more
than 4,800. In 2001, 2000 and 1999, $116&nbsp;million,
$73&nbsp;million and $63 million, respectively, were used for
severance payments and costs related to the consolidation of
certain facilities. We expect the balance of $144&nbsp;million
to be substantially used by the end of 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 1999 and 2000, we initiated restructuring
actions to dispose of several nonstrategic or inefficient
facilities, discontinue production of low-margin products and
relocate certain facilities related to the integration of the
LucasVarity automotive businesses. We recorded approximately
$45&nbsp;million of restructuring costs, primarily severance, as
part of the purchase price allocation. In 2001, 2000 and 1999,
$15&nbsp;million, $15&nbsp;million and $14&nbsp;million,
respectively, were used primarily for severance payments. We
expect the remaining balance of $1&nbsp;million to be used by
the end of 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A movement of the restructuring reserves follows:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="27%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Provision</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">LucasVarity</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Used for</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Beginning</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Administrative</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Cost of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Purchase Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Purposes</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Ending</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Balance</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">and Selling</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Sales</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Allocation</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Intended</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Balance</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">63</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">87</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">126</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(131</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">145</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(88</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">63</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1999
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">73</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(77</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Asset Impairments</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2001, asset impairment charges of
$28&nbsp;million, $10&nbsp;million and $12&nbsp;million were
recorded by Chassis Systems, Occupant Safety Systems and Other
Automotive segments, respectively. These charges, related
primarily to the write-down of property, plant and equipment,
were recorded as $38&nbsp;million in cost of sales,
$11&nbsp;million in other (income) expense-net and
$1&nbsp;million in goodwill amortization. Of these charges,
$49&nbsp;million was a result of the loss of several existing
contracts and expected future sales at certain facilities. In
2000, as the result of a plan to consolidate operations of our
Mesa air bag manufacturing facilities in the Occupant Safety
Systems segment, we recorded an asset impairment charge of
$52&nbsp;million in cost of sales. We expect the consolidation
plan to be completed during the first half of 2002. Property,
plant and equipment were written down to fair value on the basis
of discounted estimated future cash flows and future salvage
value. Also in 2000, the Other Automotive segment recorded an
asset impairment charge of $15&nbsp;million in cost of sales as
a result of the loss of several existing and future contracts at
a facility. Assets were written down to fair value based upon
current market values of the assets.
</FONT>

<P align="left">
<B><FONT size="2">Automotive Environment</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We anticipate that in 2002, passenger car and
light truck production in North America will be 3 to
5&nbsp;percent above 2001 levels while production in Western
Europe is expected to be approximately 3 to 4&nbsp;percent below
2001 levels. We expect modest growth of 3&nbsp;percent in the
emerging markets of Central and Eastern Europe and Asia Pacific.
In addition, we expect commercial truck production in North
America to remain at levels approximating 2001 levels. Strong
pricing pressure, characteristic of the automotive supply
industry, is expected to continue across the business.
</FONT>

<P align="center"><FONT size="2">35
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Vehicle manufacturers continue to operate in a
difficult financial environment. Our goal is to mitigate the
pricing pressure by restructuring the automotive business and by
continuing cost reduction efforts. We positioned our business
for improved competitiveness through consolidating our
businesses and streamlining our management structure. In
addition, we began to implement Six Sigma, a leading quality
improvement program, during the second half of 2001, training
approximately 200 Black Belts and 540 Green Belts as of the end
of 2001, with plans to train additional employees during 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our technology and innovation remain key to
future success as we develop and introduce new products into the
marketplace. We continue to invest in products with significant
potential growth or technological advantage, such as electro
hydraulic braking systems, vehicle stability controls,
electrically assisted steering, advanced restraint systems and
advanced electronic components.
</FONT>

<P align="left">
<B><FONT size="2">LucasVarity Acquisition</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;25, 1999, TRW acquired LucasVarity
for approximately $6.8&nbsp;billion in cash and assumed net
debt. Of that amount, approximately $5&nbsp;billion was related
to our automotive businesses. The transaction was accounted for
as a purchase. Assets and liabilities were recorded based on
their respective fair values. We recorded $2.2&nbsp;billion of
goodwill, which is being amortized on a straight-line basis over
40&nbsp;years. See the &#147;LucasVarity Acquisition&#148; note
to financial statements for further discussion of the
acquisition.
</FONT>

<P align="left">
<B><FONT size="2">International Operations</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">International sales were $6.1&nbsp;billion, or
61&nbsp;percent of our sales in 2001, $6.5&nbsp;billion, or
60&nbsp;percent in 2000, and $5.8&nbsp;billion, or
56&nbsp;percent in 1999. U.S. export sales included in those
amounts were $727&nbsp;million in 2001, $916&nbsp;million in
2000 and $906&nbsp;million in 1999. Most of our non-U.S.
operations are located in Europe, Mexico, Canada, Brazil and the
Asia Pacific region.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our foreign operations are subject to a variety
of risks that may affect them, including:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">customary exchange controls and currency
    restrictions;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">currency fluctuations and devaluations;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">changes in local economic conditions;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">unexpected changes in laws and regulations;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">exposure to possible expropriation or other
    government actions; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">unsettled political conditions and possible
    terrorist attacks against American interests.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">While the impact of these risks is difficult to
predict, any one or more of them could adversely affect our
future operations.
</FONT>

<P align="left">
<B><FONT size="2">Liquidity and Financial Position</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Cash flow from operations in 2001 of
$828&nbsp;million, including $327&nbsp;million of accounts
receivable securitization, and other items of $78&nbsp;million
were used for capital expenditures of $475&nbsp;million and
financing activities of $464&nbsp;million. As a result cash and
cash equivalents decreased $33&nbsp;million. Cash flow from
operations in 2000 of $751&nbsp;million, net proceeds from
divestitures of $1,110&nbsp;million and other items of
$20&nbsp;million were used for capital expenditures of
$501&nbsp;million and financing activities of
$1,452&nbsp;million. As a result, cash and cash equivalents
decreased $72&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Capital expenditures for property, plant and
equipment and other intangible assets, primarily internal-use
software, were $475&nbsp;million in 2001, $501&nbsp;million in
2000 and $665&nbsp;million in 1999. We will maintain a capital
program with estimated capital expenditures for 2002 totaling
approximately $400&nbsp;million. We will continue to focus on
reducing costs and investing in growth businesses including
advanced braking products (such as electro hydraulic braking and
vehicle stability control systems), electrically assisted
steering and advanced restraint systems.
</FONT>

<P align="center"><FONT size="2">36
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2001, our total debt was
$4,597&nbsp;million compared to $5,053&nbsp;million at
December&nbsp;31, 2000. Total debt is comprised of the
historical short-term debt, current portion of long-term debt
and long-term debt of the legal entities included in TRW
Automotive and an allocation of TRW&#146;s remaining debt. The
allocation of debt from TRW is based upon the ratio of our net
assets to TRW&#146;s net assets plus non-automotive debt. The
allocation of debt from TRW was $4,105&nbsp;million at
December&nbsp;31, 2001 and $4,469&nbsp;million at
December&nbsp;31, 2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The percentage of fixed rate debt to total debt,
including debt allocated from TRW, was 85&nbsp;percent and
66&nbsp;percent at December&nbsp;31, 2001 and 2000, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2001, short-term debt was
$177&nbsp;million compared to $227&nbsp;million at
December&nbsp;31, 2000. Our primary source of short-term debt
was bank borrowings in many of the countries where we have
operations. These borrowings are typically done on an
uncommitted basis at market rates from banks with which we
generally have a long-term relationship.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the United States, we currently participate in
a consolidated cash management system operated by TRW. Under
this arrangement, we obtain short-term financing from TRW rather
than from external sources. These arrangements will not be
available following the completion of the spin-off, and we will
need to replace this arrangement with alternative sources of
short-term financing as described under &#147;The
Spin-Off&nbsp;&#151; Transactions Prior to or Concurrent With
the Spin-off&nbsp;&#151; Debt Financing Transactions.&#148; We
intend to establish a committed revolving credit agreement to
supplement existing sources of short-term financing.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In November 2001, TRW entered into a
$350&nbsp;million accounts receivable securitization agreement
with a financial institution and several financial conduits to
diversify its funding sources at a competitive cost. Under this
arrangement, our and certain TRW subsidiaries&#146; trade
accounts receivable were purchased by a wholly-owned,
fully-consolidated, bankruptcy-remote, special purpose
subsidiary which sold an undivided interest in the receivables
to the financial conduits. At December&nbsp;31, 2001, the total
undivided interest in the receivables sold to the financial
conduits amounted to $327&nbsp;million. The amount of funds
available to us and TRW under this agreement varies with changes
in the amount and mix of the applicable accounts receivable and
will decrease if the creditworthiness of the obligors of the
accounts receivable or their payment practices deteriorate. The
transaction is treated as a sale of the receivables, as opposed
to a loan secured by receivables.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the spin-off, we intend to
establish a similar accounts receivable securitization
arrangement and discontinue participation in the arrangement
established by TRW. The terms and conditions of our program may
be substantially different from the existing TRW securitization
program and may be financially less attractive depending on the
debt ratings of our senior unsecured long-term debt.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Long-term debt at December&nbsp;31, 2001 was
$315&nbsp;million compared to $357&nbsp;million at
December&nbsp;31, 2000. The primary sources of our long-term
borrowings are capitalized leases, bank borrowings and bonds
issued in the United Kingdom and the United States. Our ability
to continue to access these sources of capital depends on our
ability to maintain acceptable long-term debt ratings and
demonstrate the financial ability to support and service our
long-term debt. At December&nbsp;31, 2001, $18&nbsp;million of
our long-term debt, including capital lease obligations, had a
scheduled maturity within one year.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The agreements governing our bonds contain
various financial and other covenants. We are in compliance with
these covenants and expect to remain in compliance during the
term of the agreements. The cost to us of borrowings under loan
agreements may increase depending on the debt ratings of our
senior unsecured long-term debt.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are subject to inherent risks attributed to
operating in a global economy. Our practice is to utilize
derivative financial instruments to manage foreign currency
exchange rate risks. We manage cash flow transactional foreign
currency exchange risk pursuant to TRW&#146;s written corporate
policy. Forward contracts and, to a lesser extent, options are
utilized to protect our cash flow from adverse movements in
exchange rates. We intend to adopt our own written policies
regarding the use of derivative financial instruments. These
policies are expected to be similar to those of TRW.
</FONT>

<P align="center"><FONT size="2">37
</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are exposed to credit loss in the event of
nonperformance by the other party to the derivative financial
instruments. We limit this exposure by entering into agreements
either through TRW or directly with a number of major financial
institutions that meet TRW&#146;s credit standards and that are
expected to satisfy fully their obligations under the contracts.
We view derivative financial instruments as a risk management
tool and do not use them for speculative or trading purposes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on our interest rate exposure on variable
rate borrowings, including debt allocated from TRW, at
December&nbsp;31, 2001, a one-percentage-point increase in the
average interest rate on our variable rate borrowings would
increase future interest expense by approximately
$7&nbsp;million per year. Based on our exposure to foreign
currency exchange rate risk resulting from derivative foreign
currency instruments outstanding at December&nbsp;31, 2001, a
10&nbsp;percent uniform strengthening in the value of the United
States dollar relative to the currencies in which those
derivative foreign currency instruments are denominated would
result in a $5&nbsp;million loss in fair value.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our sensitivity analyses of the effects of
changes in interest rates and foreign currency exchange rates do
not reflect the effect of such changes on the related hedged
transactions or on other operating transactions. The analyses
also do not factor in a potential change in the level of
variable rate borrowings or derivative instruments outstanding
that could take place if these hypothetical conditions prevailed.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following tables reflect our contractual
obligations and commercial commitments as of December&nbsp;31,
2001. Commercial commitments include lines of credit, guarantees
and other potential cash outflows resulting from a contingent
event that requires our performance pursuant to a funding
commitment.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">Payments Due by Period</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2005</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2007</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">to</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">to</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">and</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2006</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">beyond</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Contractual Obligations:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">287</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">232</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital lease obligations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Debt allocated from TRW
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,105</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,105</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating leases
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">158</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other long-term obligations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,343</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">152</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">231</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">232</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">728</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,921</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,319</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">324</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">292</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">986</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="54%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">Amount of Commitment Expiration per Period</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2005</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2007</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">to</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">to</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">and</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2006</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">beyond</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Commercial Commitments:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Standby letters of credit/bonds(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Guarantees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other commercial commitments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">90</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">62</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The final maturity of current instruments is
    subject to annual renewal.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Excluded from the foregoing commercial
commitments table are open purchase orders at December&nbsp;31,
2001 for raw materials and supplies used in the normal course of
business, supply contracts with customers, distribution
agreements, joint venture agreements and other contracts without
express funding requirements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon completion of the restructuring
transactions, we expect to have outstanding approximately
$2.8&nbsp;billion of debt, which we believe, on the advice of
our financial advisors, is an appropriate level of debt to
</FONT>

<P align="center"><FONT size="2">38
</FONT>
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<DIV align="left">
<FONT size="2">obtain and maintain an investment grade rating.
We are continuing to evaluate alternative plans for creating
that debt, and our initial debt load may be established through
the issuance of new debt or the assumption of existing TRW debt,
or a combination of these approaches. The final terms of that
debt and our approach for incurring it will not be determined
until shortly prior to the declaration by TRW of the dividend
comprising the shares of our common stock that will be
distributed in the spin-off, or the spin-off declaration date.
The unaudited pro forma financial information as of
December&nbsp;31, 2001, and the pro forma capitalization
information as of June&nbsp;30, 2002, each of which appear
elsewhere in this prospectus, assume that we will have
$2.8&nbsp;billion in debt.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that our current financial position
and financing plans will provide flexibility in worldwide
financing activities and permit us to respond to changing
conditions in credit markets. We also believe that funds
generated from operations, divestitures and planned borrowing
capacity will be adequate to fund debt service requirements,
capital expenditures, working capital including tax
requirements, company-sponsored research and development
programs and dividend payments to stockholders. Our ability to
continue to fund these items and continue to reduce debt may be
affected by a number of factors, including the effect of general
economic conditions on our business, the ability to dispose of
non-core assets and the cost of warranty and recall and
litigation claims.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">See the &#147;Background,&#148; &#147;Basis of
Presentation and Transactions with TRW,&#148; &#147;Summary of
Significant Accounting Policies,&#148; &#147;Financial
Instruments,&#148; &#147;Accounts Receivable
Securitization,&#148; and &#147;Debt and Credit Agreements&#148;
notes to financial statements for further discussion of these
matters.
</FONT>

<P align="left">
<B><FONT size="2">Transactions with Related Parties</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to the spin-off, we will enter into a
transition services agreement with TRW for the provision of
facilities sharing, systems, corporate, risk management,
administrative and other existing shared services to take effect
after the distribution. This agreement will reflect pricing
terms for these services to be mutually agreed upon subject to
all applicable regulatory requirements. The term for the
provision of each service will be determined on a case by case
basis. We intend to develop our internal capabilities in the
future in order to reduce our reliance on TRW for such services.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">TRW has provided corporate staff services,
including legal, internal audit and other services, to us at
cost and may, but will not be obligated to continue to do so
following the spin-off.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Refer to the &#147;Relationship With TRW&#148;
section of this prospectus and to the &#147;Basis of
Presentation and Transactions with TRW&#148; note to financial
statements for a description of these and other intercompany
arrangements and transactions between us and TRW.
</FONT>

<P align="left">
<B><FONT size="2">Critical Accounting Policies</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The critical accounting policies that affect our
financial statements and that use judgments and assumptions are
listed below. In addition, the likelihood that materially
different amounts would be reported under varied conditions and
assumptions are highlighted.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Product
Recalls</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are at risk for product recall costs. Recall
costs are costs incurred when we and the customer decide to
recall a product through a formal campaign to solicit the return
of specific products due to a known or suspected safety concern.
Product recall costs typically include the cost of the product
being replaced, customer cost of the recall and labor to remove
and replace the defective part. When a decision to recall a
product has been made for which we bear some responsibility, we
record the estimated cost to us of the recall as a charge to net
earnings in that period in accordance with Financial Accounting
Standards Board (FASB) Statement of Financial Accounting
Standards (SFAS)&nbsp;5. In making this estimate, judgment is
required as to the number of units to be returned as a result of
the recall, the total cost of the recall campaign, the ultimate
negotiated sharing of the cost between us and the customer and,
in some cases, the extent to which our supplier will share in
the recall cost. As a result, these estimates could change.
</FONT>

<P align="center"><FONT size="2">39
</FONT>
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<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Impairment
of Long-Lived Assets</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Long-lived assets, goodwill and other intangibles
are evaluated for impairment when events and circumstances
indicate that the assets may be impaired and the undiscounted
cash flows to be generated by those assets are less than their
carrying value. If the undiscounted cash flows are less than the
carrying value of the assets, the assets are written down to
their fair value. The determination of undiscounted cash flows
is based on the businesses&#146; strategic plans and long-range
planning forecasts. The revenue growth rates included in the
plans are based on industry specific data. We use external
vehicle build assumptions published by widely used external
sources and market share data by customer based on known and
targeted awards over a five-year period. The profit margin
assumptions included in the plans are projected based on the
current cost structure and anticipated cost reductions. If
different assumptions were used in these plans, the related
undiscounted cash flows used in measuring impairment could be
different and additional impairment of assets might be required
to be recorded.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Employee
Benefit Plans</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Assumptions used in determining projected benefit
obligations and the fair values of plan assets for our pension
plans and post-retirement benefits other than pensions are
evaluated periodically by management in consultation with an
outside actuary. Changes in assumptions are based on relevant
company data, such as the rate of increase in compensation
levels and the long-term rate of return on plan assets. Critical
assumptions such as the discount rate used to measure our
benefit obligations, the expected long-term rate of return on
plan assets and health care cost projections are evaluated and
updated annually. A change in these assumptions, holding all
other assumptions constant, would have the following effect on
costs on an annual basis:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="73%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">One-fourth-</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">percentage-point</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">change</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Increase</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Decrease</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">(Decrease) increase in costs</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Discount rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Expected long-term rate of return
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="73%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">One-percentage-point</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">change</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Increase</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Decrease</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Health care cost trend rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Contingencies</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Various claims, lawsuits and administrative
proceedings with respect to commercial, product liability and
environmental matters are pending or threatened against us or
our subsidiaries, arising from the ordinary course of business.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In October 2000, Kelsey-Hayes Company (formerly
known as Fruehauf Corporation) was served with a grand jury
subpoena relating to a criminal investigation being conducted by
the U.S.&nbsp;Attorney for the Southern District of Illinois.
The U.S.&nbsp;Attorney has informed us that the investigation
relates to possible wrongdoing by Kelsey-Hayes Company and
others involving certain loans made by Kelsey-Hayes
Company&#146;s then parent corporation to Fruehauf Trailer
Corporation, the handling of the trailing liabilities of
Fruehauf Corporation and actions in connection with the 1996
bankruptcy of Fruehauf Trailer Corporation. Kelsey-Hayes Company
became a wholly-owned subsidiary of TRW upon TRW&#146;s
acquisition of LucasVarity in 1999 and will become our
wholly-owned subsidiary prior to the spin-off. We are
cooperating with the investigation and are unable to predict the
outcome of the investigation at this time. We believe that the
ultimate resolution of this matter will not have a material
effect on our financial condition or results of operations.
</FONT>

<P align="center"><FONT size="2">40
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On May&nbsp;6, 2002, ArvinMeritor Inc. filed suit
against TRW in the United States District Court for the Eastern
District of Michigan, claiming breach of contract and breach of
warranty in connection with certain tie rod ends that TRW
supplied to ArvinMeritor and the voluntary recall of some of
these tie rod ends. ArvinMeritor subsequently recalled all of
the tie rod ends, and claims that it is entitled to
reimbursement by TRW for the costs associated with both the
products recalled by TRW and those recalled by ArvinMeritor on
its own. ArvinMeritor is seeking an undisclosed amount of
compensatory and consequential damages. As this suit relates to
TRW&#146;s automotive business, any contingent liabilities
associated with this suit will be transferred to us as part of
the restructuring transactions. Management believes we have
meritorious defenses and we intend to defend vigorously the
claims asserted against us, but we cannot predict the outcome of
this lawsuit.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">While certain of our subsidiaries have been
subject in recent years to some asbestos-related claims,
management believes that such claims will not have a material
adverse effect on our financial condition or results of
operations. In general, these claims seek damages for illnesses
alleged to have resulted from exposure to asbestos used in
certain components sold by our subsidiaries. We believe the
majority of the claimants were assembly workers at the major
U.S.&nbsp;automobile manufacturers. The vast majority of these
claims name as defendants numerous manufacturers and suppliers
of a wide variety of products allegedly containing asbestos. We
believe that, to the extent any of the products sold by our
subsidiaries and at issue in these cases contained asbestos, the
asbestos was encapsulated. Based upon several years of
experience with such claims, we believe that only a small
proportion of the claimants has or will ever develop any
asbestos-related impairment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our average total annual settlement costs in
connection with asbestos claims over the last five years have
been less than $100,000 in the aggregate, and legal fees to
defend these cases have never exceeded $500,000 per year. These
claims are strongly disputed by us and it has been our policy to
defend against them aggressively. We have been successful in
obtaining the dismissal of many cases without any payment
whatsoever. Moreover, there is significant insurance coverage
with solvent carriers with respect to these claims.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Refer to the &#147;Contingencies&#148; note to
financial statements for further discussion of these matters.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Current
Accounting Pronouncements</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The FASB recently issued SFAS&nbsp;141,
&#147;Business Combinations,&#148; SFAS&nbsp;142, &#147;Goodwill
and Intangible Assets,&#148; SFAS&nbsp;143, &#147;Accounting for
Asset Retirement Obligations&#148; and SFAS&nbsp;144,
&#147;Accounting for the Impairment or Disposal of Long-Lived
Assets.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SFAS&nbsp;141 requires that acquisitions entered
into after June&nbsp;30, 2001, be accounted for using the
purchase method and establishes criteria to be used in
determining whether acquired intangible assets are to be
recorded separately from goodwill. SFAS&nbsp;142 sets forth the
accounting for goodwill and intangible assets after the
completion of a business acquisition and for goodwill and
intangible assets already recorded. Goodwill will no longer be
amortized beginning January&nbsp;1, 2002. Rather, goodwill will
be tested for impairment by comparing the asset&#146;s fair
value to its carrying value. Also, the value of workforce of
approximately $15&nbsp;million must be reclassified from
intangible assets to goodwill. We adopted SFAS&nbsp;142 on
January&nbsp;1, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2001 we had recorded
approximately $2.4&nbsp;billion of goodwill, net of accumulated
amortization. Management has conducted preliminary valuations of
our reporting units and has determined that goodwill should not
be impaired. In 2001, we recorded amortization expense for
goodwill and the value of workforce of $64&nbsp;million before
tax, $53&nbsp;million after tax.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SFAS&nbsp;143 requires the fair value of a
liability for asset retirement obligations to be recorded in the
period in which it is incurred. The statement applies to a
company&#146;s legal or contractual obligation associated with
the retirement of a tangible long-lived asset that resulted from
the acquisition, construction or development or through the
normal operation of a long-lived asset. The statement is
effective for us beginning January&nbsp;1, 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SFAS&nbsp;144 addresses the accounting and
reporting for the impairment or disposal of long-lived assets.
The statement provides a consistent method to value long-lived
assets to be disposed of. New criteria must be met
</FONT>

<P align="center"><FONT size="2">41
</FONT>
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<DIV align="left">
<FONT size="2">to classify the asset as an asset held-for-sale.
This statement also changes the rules for reporting the effects
of a disposal of a segment of a business. We adopted
SFAS&nbsp;144 on January&nbsp;1, 2002.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have evaluated the impact of SFAS&nbsp;143 and
144 and believe that the adoption of these statements should not
have a material impact on our financial position or results of
operations.
</FONT>

<P align="center"><FONT size="2">42
</FONT>

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<P align="center">
<B><FONT size="2">BUSINESS</FONT></B>

<P align="left">
<B><FONT size="2">Overview</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are among the world&#146;s largest and most
diversified suppliers of automotive systems, modules and
components, with 2001 sales of over $10 billion. We are
primarily a &#147;Tier-1&#148; supplier, providing over
90&nbsp;percent of our products directly to VMs. We also sell
our products in the worldwide aftermarket for VM service and
replacement parts, which are distributed through independent
aftermarket channels. We have become a leader in the global
automotive parts industry by capitalizing on the strength of our
product and manufacturing systems technologies.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have established a broad global presence, with
a workforce of over 65,000 employees, and a network of
manufacturing sites, technical centers, sales offices and joint
ventures located in every major vehicle producing region of the
world. Our combined customer, product and geographic diversity
is among the industry leaders, with approximately
50&nbsp;percent of our 2001 sales generated outside of North
America, and with no single customer accounting for more than
19&nbsp;percent of sales.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Through our experience supplying to more than 40
VMs, including all the world&#146;s major automobile
manufacturers, we have developed a sophisticated understanding
of the design, engineering and manufacture of automobiles and
trucks. We have extensive technical experience in a broad range
of product lines and strong systems integration skills, which
enable us to provide comprehensive, system-based solutions for
our customers. In particular, among the world&#146;s leading
automotive suppliers, we believe that we are uniquely positioned
as a global leader in the design, manufacture and sale of active
(vehicle dynamic control) and passive (crash sensing and
occupant restraint) safety systems and components.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are one of the leading Tier-1 suppliers in all
of our principal product categories. We operate our business
along the following three major operating segments:
</FONT>
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    <FONT size="2">Chassis Systems, which includes active safety
    systems and components in the areas of braking, steering,
    suspension and integrated vehicle control;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Occupant Safety Systems, which includes passive
    safety systems and components in the areas of inflatable
    restraints, seat belts, steering wheels and safety and security
    electronics; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Other Automotive, which includes engine valves
    and components, engineered fasteners and components and body
    control systems.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Within these operating segments, we have been
responsible for the development or initial high volume
introduction of numerous automotive innovations, including
electrically assisted steering systems, four-wheel and
rear-wheel ABS, radar-based active cruise control systems,
complete vehicle occupant restraint systems, seat belt
pretensioning devices, remote keyless entry systems, direct and
indirect tire pressure monitoring systems, and silicrome and
two-piece automotive engine valves.
</FONT>

<P align="left">
<B><FONT size="2">The Automotive Parts Industry</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We operate in a highly competitive industry. The
automotive parts industry provides systems, modules and
components to VMs for the manufacture of new vehicles, as well
as to the aftermarket for use as replacement and enhancement
parts. Today, suppliers offer their component products to VMs
and also offer those products in a variety of more fully
engineered forms, such as modules and systems:
</FONT>
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    <FONT size="2">Modules are groups of component parts arranged in
    close physical proximity to each other within a vehicle that are
    often assembled by the supplier and shipped to the VM for
    installation in a vehicle as a unit. Cockpit modules, brake
    corner modules and chassis cross-member modules are examples.
    </FONT></TD>
</TR>

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    <TD>&nbsp;</TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Systems are groups of component parts located
    throughout the vehicle that operate together to provide a
    specific vehicle function. Braking systems, steering systems and
    occupant restraint systems are examples.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">43
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Historically, large VMs operated internal
divisions to provide a wide range of component parts for their
vehicles. In recent years, VMs have moved toward a competitive
sourcing process for automotive parts, including increased
purchases from independent suppliers, as they seek lower-priced
and/or higher-technology systems and products. These independent
parts suppliers, which often have lower cost structures than
internal VM component operations, have become an important part
of the automotive parts industry.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We estimate that global automotive parts industry
sales to VMs will be about $500&nbsp;billion in 2002. In
addition to these sales, we estimate that U.S.&nbsp;automotive
aftermarket retail sales will be over $50&nbsp;billion in 2002.
The aftermarket includes replacement parts as well as parts
designed to enhance or personalize vehicles. Demand for
aftermarket products tends to increase when new vehicle sales
decline because vehicle owners retain their vehicles longer;
these vehicles generally have a greater need for repairs.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our industry is generally divided into two tiers:
</FONT>
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    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
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    <FONT size="2">Tier-1 suppliers, including us, sell their
    products principally to VMs directly and often offer a broad
    range of product capabilities, including design, engineering and
    assembly services. Tier-1 suppliers supply systems and modules
    and are increasingly influencing vehicle content, including the
    sourcing of Tier-2 components.
    </FONT></TD>
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    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Tier-2 suppliers sell their products principally
    to Tier-1 suppliers, who then combine these parts into their own
    product offerings.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Contract durations for automotive parts generally
range from one year to the entire life of the vehicle model,
about three to seven years for cars and six to ten years for
trucks. Tier-1 suppliers such as us generally compete for new VM
business at the beginning of the development of new vehicle
models and upon the redesign of existing vehicle models. New
vehicle model development generally begins at least two to five
years before the marketing of such models to consumers. As a
result, a significant portion of a supplier&#146;s annual sales
are generated pursuant to arrangements entered into about two to
five years before the revenues related to such arrangements
begin to be realized.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Tier-1 sourcing process for vehicle programs,
which varies according to VMs, is typically initiated when a VM
seeks requests for quotations from several suppliers at least
three to six years before anticipated vehicle production. Based
on these quotations, VMs in many cases then select and work with
a supplier on specific component design and development projects
related to the new vehicle program. At varying points during
this process, VMs may issue &#147;nomination letters,&#148;
letters of intent or other representations to the supplier that,
based on the supplier&#146;s quotation and subject to a number
of conditions established by the VM, the VM intends to award
specific business relating to the vehicle program to the
supplier. By the time the design and development of the vehicle
program is nearly complete, the VM will typically have evaluated
the supplier&#146;s performance to date and its ability to meet
the VM&#146;s specific production and service requirements. The
VM will then develop a proposed production timetable, including
current vehicle volume and option mix estimates based on its own
assumptions, and then source business with the supplier pursuant
to written contracts, purchase orders or other firm commitments,
provided that the supplier can meet the VM&#146;s designated
conditions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Awarded business generally covers the supply of
all or a portion of a VM&#146;s production and service
requirements of a particular product program rather than the
supply of a specific quantity of products. Accordingly, in
estimating awarded business over the life of a contract or other
commitment, a supplier must make various assumptions as to the
estimated amount of vehicles expected to be produced, the timing
of that production, the mix of options on the vehicles produced
and product pricing.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The realization of sales based on awarded
business is subject in all cases to a number of important risks
and uncertainties, which generally include the following:
</FONT>
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    <FONT size="2">the volume of vehicle models and specific vehicle
    options actually produced by the VM, which, in turn, are subject
    to a number of significant risks outlined below;
    </FONT></TD>
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    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the determination by the VM to delay or cancel a
    particular vehicle program for which it has sourced business
    with the supplier or to change the option mix within the program;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">44
</FONT>

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    <FONT size="2">the VM&#146;s contractual right to replace the
    supplier throughout the duration of the contract for a variety
    of reasons, including if the supplier does not remain
    competitive in terms of quality, service, design, technology
    and, in certain circumstances, price;
    </FONT></TD>
</TR>

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</TR>

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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the VM&#146;s contractual right to terminate the
    contract altogether; although this right varies by contract,
    some contracts, generally shorter-term purchase orders, are
    terminable by the VM at any time for any reason;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the VM&#146;s decision to redesign a vehicle
    model and not to select the supplier to supply any or all of the
    same parts it was providing on the previous vehicle model; and
    </FONT></TD>
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    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">product pricing, including price reductions on
    existing contracts negotiated in connection with the VM&#146;s
    sourcing of new business with the supplier.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The actual production volumes and option mix of
vehicles produced by VMs depend on a number of factors that are
beyond a supplier&#146;s control. These include:
</FONT>
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    <TD align="left">
    <FONT size="2">general economic conditions;
    </FONT></TD>
</TR>

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    <TD>&nbsp;</TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">consumer preferences for particular vehicles or
    vehicle features;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">labor difficulties or work stoppages and other
    interruptions of production; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">capital planning and other factors specific to a
    particular VM.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Industry Trends</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Several key trends have been reshaping the
automotive parts industry over the past several years:
</FONT>
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    <I><FONT size="2">Shift of Engineering to Suppliers; Increased
    Emphasis on Systems and Modules
    Sourcing.</FONT></I><FONT size="2"> Increasingly, VMs are
    focusing their efforts on consumer brand development and overall
    vehicle design, as opposed to the design of vehicle systems. In
    order to simplify the vehicle design and assembly processes and
    reduce their costs, VMs increasingly look to their suppliers to
    provide fully engineered, pre-assembled combinations of
    components rather than individual components. This is especially
    true outside of the United States. By offering sophisticated
    systems and modules rather than individual components, Tier-1
    suppliers have assumed many of the design, engineering, research
    and development and assembly functions traditionally performed
    by VMs. As a result, they are gaining increased access to
    confidential planning information regarding VMs&#146; future
    vehicle designs and manufacturing processes. Systems and modules
    increase the importance of Tier-1 suppliers because they
    increase their percentage of vehicle content and the ability to
    reduce costs. Suppliers with broad product portfolios are well
    positioned to provide the systems and modules VMs demand.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Increasing Electronics Integration and
    Technological Content.</FONT></I><FONT size="2"> The electronic
    content of vehicles has been increasing and will continue to
    increase in the future. This increase in electronic content is
    largely driven by continued, and often increasingly stringent,
    regulatory standards for automotive emissions and safety as well
    as consumer demand for increased vehicle performance and
    functionality at lower cost. Electronics integration, which
    generally refers to replacing mechanical with electronic
    components and integration of mechanical and electrical
    functions within the vehicle, allows VMs to achieve substantial
    reduction in the weight, complexity and cost of vehicles,
    resulting in easier assembly, enhanced fuel economy, improved
    emissions control, increased safety and better vehicle
    performance. As consumers, particularly in more developed
    markets such as North America, Europe and Japan, seek more
    competitively-priced ride and handling performance, safety,
    security, convenience and environment-friendly options in
    vehicles, such as electronic stability control, active cruise
    control, inflatable restraints, keyless entry and tire pressure
    monitoring, it is expected that electronic content per vehicle
    will continue to increase, but at the same time will remain
    subject to technology-driven price declines and pricing
    pressures from VMs.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Increased Emphasis on
    Speed-to-Market.</FONT></I><FONT size="2"> As VMs are under
    increasing pressure to adjust to changing consumer preferences
    and to incorporate technological advances, they are shortening
    product
    </FONT></TD>
</TR>

</TABLE>

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    <FONT size="2">development times. Shorter product development
    times also reduce product development costs. Suppliers that are
    able to deliver new products to VMs to accommodate the VMs&#146;
    needs will be well positioned to succeed in this evolving
    marketplace.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Globalization of
    Suppliers.</FONT></I><FONT size="2"> To serve multiple markets
    more cost effectively, many VMs are turning to global vehicle
    platforms, which typically are designed in one location but
    produced and sold in many different geographic markets around
    the world. With these vehicles, VMs can better serve multiple
    markets and address local consumer preferences while controlling
    design costs and taking advantage of low-cost manufacturing
    locations. Suppliers for a specific global vehicle are often
    required by the VM to provide their products and services in all
    global locations where that vehicle is manufactured. Few
    suppliers are able to provide this global coverage and it is a
    source of significant competitive advantage for those suppliers
    with global reach.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Ongoing Industry
    Consolidation.</FONT></I><FONT size="2"> The worldwide
    automotive parts industry is consolidating as suppliers seek to
    achieve operating synergies through business combinations, shift
    production to locations with more flexible local work rules and
    practices, acquire complementary technologies, build stronger
    customer relationships and follow their customers as they expand
    globally. The need for suppliers to provide VMs with
    single-point sourcing of integrated systems and modules on a
    global basis has helped drive industry consolidation.
    Furthermore, the cost focus of most major VMs has forced
    suppliers to reduce costs and improve productivity on an ongoing
    basis, including by achieving economies of scale through
    consolidation.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Demand for Safety and Environmentally Friendly
    Products.</FONT></I><FONT size="2"> Consumers, and therefore
    VMs, are increasingly focused on, and governments are
    increasingly requiring, improved safety and environmental
    performance in vehicles, e.g., expected European mandates for
    ABS and pedestrian protection systems, and increasing corporate
    average fuel efficiency requirements in the United States.
    Advances in technology have led to a number of new innovations
    such as electric steering systems, electronic vehicle stability
    control systems, tire pressure monitoring systems, occupant
    sensing systems, rollover sensing and curtain air bag systems.
    Further development is expected in the integration and/or
    convergence of these active and passive safety systems in the
    form of predictive vehicle control systems (collision mitigation
    and collision avoidance).
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Our Strategy</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our objective is to increase our sales and
improve our profitability and operating cash flow by leveraging
our position as a leading Tier-1 global automotive parts
supplier focused primarily in the areas of active and passive
safety technologies. Key elements of our strategy include the
following:
</FONT>
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    <TD align="left">
    <I><FONT size="2">Expand Our Leading Technology
    Capabilities.</FONT></I><FONT size="2"> VMs and government
    agencies increasingly expect automotive safety system suppliers
    to improve vehicle safety through new and technologically
    innovative safety products. We continue to provide
    technologically advanced products by regularly updating and
    enhancing our product line and introducing new products, such as
    electrically assisted steering, electronic vehicle stability
    control, and side and curtain inflatable restraint systems. We
    will continue to make significant investments in technology and
    our design capabilities in an effort to develop innovative,
    value-added safety technologies with a focus on development of
    next generation safety systems. Our objective is to supply a
    complete predictive vehicle control system that integrates
    active and passive safety technologies. As the only automotive
    supplier with leading capabilities in both active and passive
    safety systems, we believe we are ideally positioned to achieve
    our goal.
    </FONT></TD>
</TR>

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    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Increase Our Product Content per Vehicle.
    </FONT></I><FONT size="2">Government safety regulations and
    consumer demands for enhanced safety and electronic products
    have helped to drive increases in our automotive content per
    vehicle content through the addition of more inflatable
    restraints and electronic products. Our leading technological
    position in automotive safety systems has placed us at the
    forefront of supplying these new products and has enabled us to
    increase our content per vehicle. In addition, many of the new
    products we have developed, or are in the process of developing,
    such as electric park brakes, active cruise control, active
    control seat belt retractors and tire pressure monitoring
    systems, will add further
    </FONT></TD>
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    <FONT size="2">content to our product offerings. We intend to
    continue to increase our content per vehicle as one of our
    primary means of enhancing revenue growth in excess of growth in
    automotive vehicle production.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Capitalize on the Continued Trend Toward
    Module and System Supply.</FONT></I><FONT size="2"> We believe
    that the trend toward module and system supply will continue as
    VMs seek ways to improve quality and reduce costs. We have
    developed significant system and module capabilities in a number
    of key product areas including inflatable restraint systems,
    seat belt systems, ride and handling systems, electrically
    assisted steering systems and safety electronics systems. We
    serve as the Tier-1 system and/or module integrator on a number
    of platforms, incorporating both our products and products
    supplied to us by other Tier-1 and/or Tier-2 suppliers. We
    intend to focus on manufacturing those components and systems
    where we enjoy a competitive advantage and can add the most
    value, while reducing our participation and capital spending in
    those areas that are non-essential to our growth and
    profitability.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Focus on Operating
    Efficiency.</FONT></I><FONT size="2"> We continue to focus on
    opportunities to optimize our resources and reduce manufacturing
    costs. Over the past few years we have shifted production
    capacity from high wage areas such as North America and Western
    Europe to low wage areas such as Latin America, Eastern Europe
    and certain parts of Asia. We will continue to shift production
    in this manner as opportunities present themselves. In addition,
    we are executing several strategic initiatives aimed at
    improving our operating performance. We recently implemented a
    Six Sigma program throughout TRW Automotive that we believe will
    provide substantial future cost savings. We remain committed to
    further reducing our operating costs through other measures
    including a focus on procurement and cost-effective
    manufacturing.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Evaluate Joint Ventures, Strategic Alliances
    and Selected Acquisitions and
    Divestitures.</FONT></I><FONT size="2"> Strategic alliances and
    joint ventures represent an important element of our business
    plan. These relationships offer opportunities to expand our
    capabilities and geographic and/or customer presence with a
    lower level of investment. Joint ventures have been and will
    continue to be critical to our expansion in emerging markets,
    such as China, Korea, India and Turkey. We also pursue selected
    acquisitions and alliances focused on products and customer
    platforms that are complementary to our core safety and chassis
    businesses. We have substantial experience completing and
    integrating acquisitions with a focus on realizing cost savings
    and other synergies. Additionally, we consistently evaluate our
    existing portfolio of businesses for operations that are
    non-core and which we may divest given a strategic opportunity.
    We are disciplined&nbsp;&#151; financially and
    strategically&nbsp;&#151; in our approach to evaluating
    acquisitions, divestitures and other alliance opportunities.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Our Competitive Strengths</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We intend to leverage our leading product
positions, our global presence, strong customer relationships
and diverse product capabilities to increase our presence in the
global safety systems industry.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Leading Product
    Positions.</FONT></I><FONT size="2"> We are one of the
    world&#146;s largest suppliers of automotive safety and chassis
    components. We believe we hold a number one or number two global
    position in all of our primary products including: brake
    components and systems, steering systems, inflatable restraint
    systems, seat belt systems, engine valves and engineered
    fasteners. We believe that we are also the leading manufacturer
    of anti-lock brakes in North America. Our leading supply
    position across a number of product lines increases our
    importance to our VM customers and allows us to compete
    effectively in each of the markets that we serve.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Global Position.</FONT></I><FONT size="2"> As
    VMs increasingly become more global, they favor suppliers that
    can deliver products with consistent technology and quality for
    vehicles, which are manufactured and sold in markets around the
    world. Our geographically diverse global manufacturing base
    offers us an advantage over many of our competitors in meeting
    the global needs of our VM customers. We also believe that our
    global presence allows us to leverage sales to a customer in one
    location, or for one product, into sales to that customer in
    other locations and for other products. Additionally, our
    presence in markets such as South America, Eastern Europe and
    the Asia/ Pacific Rim region presents a long-term growth
    opportunity as demand for automotive vehicles increases, and
    automotive
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">47
</FONT>
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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">manufacturers expand production, in these
    markets. Our worldwide manufacturing base includes 136
    facilities and 27 joint-venture facilities in 22 countries. In
    2001, we recorded approximately 50&nbsp;percent of our sales
    outside of North America, 42&nbsp;percent in Europe and
    8&nbsp;percent throughout the rest of the world.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Strong Relationships with
    Customers.</FONT></I><FONT size="2"> As a result of our focus on
    providing the highest quality products and service at
    appropriate prices, we maintain long-standing relationships with
    our customers, which include every major automotive VM in the
    world. We maintain an excellent reputation with our customers
    for timely delivery and customer service, and for providing
    world-class components and systems. As a result of our
    exceptional service and performance record, since the beginning
    of 2001, we have won a number of awards from our customers
    including GM&#146;s Supplier of the Year, Ford&#146;s Q1 and Q1
    Plus World Excellence, DaimlerChrysler&#146;s Gold Pentastar,
    Toyota&#146;s Quality Certification Achievement, Fiat&#146;s
    Targa Qualitas and Renault&#146;s Troph&#233;e OPTIMA.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <I><FONT size="2">Diversified
    Business.</FONT></I><FONT size="2"> We have a diversified
    business that limits our exposure to the risks of any one
    customer, product area or geographic economy. Approximately
    50&nbsp;percent of our sales are derived from sales outside
    North America; no one customer accounts for more than
    19&nbsp;percent of our sales and our product offerings, while
    focused in the area of safety technologies, are numerous and
    diverse. In addition to minimizing our risks, we believe that
    our diverse business provides a competitive advantage as this
    diversification supports our growth.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Products</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following discussion describes each of our
segments, as well as the major product groups within each
segment.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Chassis
Systems</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our Chassis Systems segment focuses on the
design, manufacture and sale of braking, steering and suspension
systems and components for VM and replacement part markets.
Chassis Systems accounted for approximately $5.6 billion, or
56&nbsp;percent, of our 2001 total sales.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our Chassis Systems segment is well positioned to
capitalize on growth trends toward increasing active safety
systems, particularly in the areas of electric steering,
electronic vehicle stability control and other advanced braking
systems, and integrated vehicle control systems. We have
demonstrated strong, global full-service design and
manufacturing capabilities, as well as technology development,
leading to significant new business awards at all major VMs.
</FONT>

<P align="center"><FONT size="2">48
</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table describes the principal
products in our Chassis Systems segment:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="60%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Product Line</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Brake Control
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Two-wheel and four-wheel ABS, electronic vehicle
    stability control systems, electro-hydraulic braking systems,
    active cruise control systems, actuation boosters and master
    cylinders, electronically controlled actuation
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Foundation Brakes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Front and rear disc brake calipers, drum brake
    and drum-in-hat parking brake assemblies, rotors, drums
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Steering
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Electrically powered steering systems
    (column-drive, pinion-drive, rack-drive type), electrically
    powered hydraulic steering systems, hydraulic power and manual
    rack and pinion steering gears, hydraulic steering pumps and
    hoses, hydraulic steering systems, fully integral commercial
    steering systems, commercial steering columns and pumps
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Suspension
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Forged steel and aluminum control arms,
    suspension ball joints, rack and pinion linkage assemblies,
    conventional linkages, commercial steering linkages and
    suspension ball joints, active roll control systems
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Modules
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Brake modules, corner modules, pedal box modules,
    strut modules, front cross-member modules, rear axle modules
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Parts &#38; Service
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Braking, steering &#38; suspension replacement
    parts for VM and non-VM customers
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Integrated Vehicle Control
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Integration of advanced braking, steering and
    suspension systems using common sensors and electronic control
    units (including software) to enhance vehicle performance and
    safety
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We sell our Chassis Systems products to VMs and
to Tier-1 suppliers as original equipment. We also sell these
products to VM service organizations and to independent
distributors for the automotive aftermarket.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Occupant
Safety Systems</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our Occupant Safety Systems segment focuses on
the design, manufacture and sale of inflatable restraint, seat
belt, steering wheel and safety and security electronic systems
and components. Occupant Safety Systems accounted for
approximately $3.0&nbsp;billion, or 30&nbsp;percent, of our 2001
total sales.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our Occupant Safety Systems segment is well
positioned to capitalize on growth trends toward increasing
passive safety systems, particularly in the areas of side and
curtain inflatable restraint systems, occupant sensing systems,
active seat belt pretensioning and retractor systems and
integrated occupant restraint systems. We have demonstrated
strong, global full-service design and manufacturing
capabilities, as well as technology development, leading to
significant new business awards at all major VMs.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table describes the principal
products in our Occupant Safety Systems segment:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="60%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Product Line</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inflatable Restraints
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Driver air bag modules, passenger air bag
    modules, side air bag modules, rollover curtain air bag modules,
    single- and dual-stage air bag inflators
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Seat Belts
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Retractor and buckle assemblies, pyrotechnic
    retractor assemblies, pretensioning systems, height adjusters,
    active control retractor systems
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Steering Wheels
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Full range of steering wheels from base designs
    to leather, wood, heated designs, including multifunctional
    switches and integral air bag modules
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Safety Electronics
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Front and side crash sensors, vehicle rollover
    sensors, air bag diagnostic modules, weight sensing and vision
    systems for occupant detection
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Security Electronics
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Remote keyless entry systems, advanced theft
    deterrent systems, direct tire pressure monitoring systems
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We sell our Occupant Safety Systems products to
VMs and to Tier-1 suppliers as original equipment. We also sell
these products to VM service organizations for service parts.
</FONT>

<P align="center"><FONT size="2">49
</FONT>

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<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Other
Automotive</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our Other Automotive segment focuses on the
design, manufacture and sale of engine valves and components,
engineered fasteners and components and body control systems.
Other Automotive accounted for approximately $1.5&nbsp;billion,
or 14&nbsp;percent, of our 2001 total sales.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our Other Automotive segment is well positioned
to capitalize on growth trends toward multi-valve engines and
increasing electronic content per vehicle. We have demonstrated
strong, global full-service design and manufacturing
capabilities, as well as technology development, leading to
significant new business awards at all major VMs.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table describes our principal
products in our Other Automotive segment:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="38%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="59%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Product Line</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Engine Valves
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Engine valves, valve train components,
    electro-magnetic valve actuation
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Engineered Fasteners&nbsp;&#38; Components
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Engineered and plastic fasteners and precision
    plastic moldings and assemblies
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Body Controls
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Display and heating, ventilating and air
    conditioning electronics, controls and actuators; motors; power
    management controls; man/machine interface controls and
    switches, including a wide array of automotive ergonomic
    applications such as steering column and wheel switches, rotary
    connectors, climate controls, seat controls, window lift
    switches, air&nbsp;bag disable switches; rain sensors
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We sell our Other Automotive products to VMs and
to Tier-1 suppliers as original equipment. We also sell these
products to VM service organizations. In addition, we sell some
Engine Valve and Body Control products to independent
distributors for the automotive aftermarket.
</FONT>

<P align="left">
<B><FONT size="2">Foreign and Domestic Operations</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We manufacture products or have principal
facilities in 22 countries throughout the world. Our operations
outside the United States are in Austria, Brazil, Canada, China,
the Czech Republic, France, Germany, India, Italy, Japan,
Malaysia, Mexico, the Netherlands, Poland, Portugal, South
Africa, South Korea, Spain, Thailand, Turkey and the United
Kingdom. We also export products manufactured in the United
States. Such export sales accounted for:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">7&nbsp;percent of net customer sales during 2001,
    or $727&nbsp;million;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">8&nbsp;percent of net customer sales during 2000,
    or $916&nbsp;million; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">9&nbsp;percent of net customer sales during 1999,
    or $906&nbsp;million.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">See also the information relating to the dollar
amounts of sales and property, plant and equipment-net by
geographic area for each of the years 1999 through 2001
presented under the note to financial statements entitled
&#147;Operating Segments&#148; on pages F-14 through F-16 of
this prospectus.
</FONT>

<P align="left">
<B><FONT size="2">Competition</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The automotive parts marketplace is extremely
competitive. VMs rigorously evaluate us and other suppliers
along a myriad of criteria such as quality, price/cost
competitiveness, system and product performance, reliability and
timeliness of delivery, new product and technology development
capability, excellence and flexibility in operations, degree of
global and local presence, effectiveness of customer service and
overall management capability. Within each of our product
segments, we face significant competition.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We enjoy a competitive position, benefiting from
breadth of product and customer mix, scale, global reach,
excellence in lean manufacturing, and systems and engineering
competencies. We are a global leader in most principal product
areas such as braking, steering, inflatable restraint systems,
seat belts, engine valves and engineered fasteners. We believe
that we are very well positioned to participate in several
high-growth
</FONT>

<P align="center"><FONT size="2">50
</FONT>
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<DIV align="left">
<FONT size="2">areas such as electronic vehicle stability
control, electrically assisted steering, driver assist systems,
advanced crash and rollover sensing and curtain air&nbsp;bag
systems, tire pressure monitoring systems and smaller, lighter
and advanced-material engine valves/valve trains.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Customers</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We serve more than 40 VM customers across all the
world&#146;s major vehicle producing regions. Our largest
customers, including sales to their affiliated companies, are
Ford Motor Company, DaimlerChrysler AG, General Motors
Corporation and Volkswagen AG. In 2001, sales to these customers
accounted for over 60&nbsp;percent of our total sales, as shown
below.
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="77%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percentage of</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Customer</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001 Total Sales</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Ford
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">DaimlerChrysler
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">General Motors
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Volkswagen
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to our four largest customers, we do
business with all of the other major VMs worldwide. Our ten
largest customers accounted for 79&nbsp;percent of total sales
in 2001. Among major automotive suppliers, the breadth of our
customer mix is among the industry leaders. These long-standing
relationships have enabled us to understand global customer
needs and business opportunities. We believe that we will
continue to be able to compete effectively for our
customers&#146; business because of the high quality of our
products, our ongoing cost reduction efforts, our strong global
presence and our product and technology innovations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We sell products to the global aftermarket as
replacement parts for current production and older vehicles. In
2001, sales to the aftermarket of approximately
$700&nbsp;million represented 7&nbsp;percent of our total sales.
We currently sell these products through both VM service
organizations and independent distribution networks.
</FONT>

<P align="left">
<B><FONT size="2">Sales and Marketing</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have established a sales and marketing
organization of dedicated customer teams that provide a
consistent interface with our key customers. These teams are
located in all major automotive regions to best represent their
respective customer&#146;s interests within our organization, to
promote customer programs and coordinate global customer
strategies with the goal of enhancing overall customer service
and satisfaction. Our ability to support our customers globally
is further enhanced by our broad global presence in terms of
sales offices, manufacturing facilities and
engineering/technical centers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our sales and marketing organization and
activities are designed to create overall awareness,
consideration and increase purchases of our systems, modules and
components. To further this objective, we participate in
international trade shows in Paris, Frankfurt and Detroit, as
well as international aftermarket-focused events in Las Vegas
and Frankfurt. We also provide on-site technology demonstrations
at our major VM customers on a regular basis. We publish the
quarterly technology journal TRW Advances, and we will offer an
Internet site at
www.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.com
(our website and the information contained therein or connected
thereto shall not be deemed to be incorporated into this
prospectus or the registration statement of which it forms a
part).
</FONT>

<P align="left">
<B><FONT size="2">Customer Support</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our engineering, sales and production facilities
are located all over the world and can service our customers in
any region in which they operate or manufacture their products.
</FONT>

<P align="center"><FONT size="2">51
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Intellectual Property</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We own significant intellectual property,
including a large number of patents, copyrights and trade
secrets, and are involved in numerous licensing arrangements.
Although our intellectual property plays an important role in
maintaining our competitive position in a number of the markets
that we serve, no single patent, copyright, trade secret or
license, or group of related patents, copyrights, trade secrets
or licenses, is, in the opinion of our management, of such value
to us that our business would be materially affected by the
expiration or termination thereof. Our general policy is to
apply for patents on an ongoing basis in the United States,
Germany and appropriate other countries to protect our
patentable developments.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our patent portfolio of nearly 10,000 patents and
pending patent applications reflects our commitment to invest in
technology. These patents cover many aspects of our existing and
proposed products (not only mechanical and electrical aspects,
but also software algorithms), as well as the processes for
making those products. In addition, we have developed a wealth
of manufacturing know-how that we believe provides a significant
competitive advantage in the marketplace.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have entered into several hundred technology
license agreements that either strategically exploit our
intellectual property rights or provide a conduit for us into
third party intellectual property rights useful in our
businesses. In many of these agreements, we license technology
to our suppliers, joint venture companies and other local
manufacturers in support of product production for us and our
customers. In other agreements, we license the technology to
other companies to obtain royalty income.
</FONT>

<P align="left">
<B><FONT size="2">Seasonality</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our business is moderately seasonal because our
largest North American customers typically halt operations for
approximately two weeks in July and one week in December.
Customers in Europe historically shut down vehicle production
during a portion of August as well. In addition, third quarter
automotive production traditionally is lower as new models enter
production. Our third and fourth quarter results may reflect
these trends.
</FONT>

<P align="left">
<B><FONT size="2">Research and Development</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We operate a global network of technical centers
worldwide where we employ thousands of engineers, researchers,
designers and technicians. This global network allows us to
create the latest in automotive active and passive technologies
while improving existing products and systems. We utilize
sophisticated testing and computer simulation equipment,
including computer aided engineering, noise-vibration-harshness,
crash sled, math modeling and vehicle simulation. We have
advanced engineering and research and development programs for
next-generation components and systems in our chassis, occupant
safety and other automotive product areas. We are disciplined in
our approach to research and development, employing a myriad of
tools to improve efficiency and reduce cost, such as Six Sigma,
&#147;follow-the-sun&#148; and other e-Engineering programs and
by outsourcing non-core activities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Customer-funded research and development relating
to the development of new products, services and techniques
totaled:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">$32&nbsp;million in 2001;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">$38&nbsp;million in 2000; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">$28&nbsp;million in 1999.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Company-funded research and development costs
totaled:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">$131&nbsp;million in 2001;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">$167&nbsp;million in 2000; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">$178&nbsp;million in 1999.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">52
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that continued research and
development activities are critical to maintaining our
leadership position in the industry and will provide us with a
competitive advantage as we seek additional business with new
and existing customers.
</FONT>

<P align="left">
<B><FONT size="2">Raw Materials</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We purchase various raw materials for use in our
manufacturing processes. The principal raw materials we purchase
include fabricated metal, aluminum, steel, resins, leather and
wood. All of these raw materials are available from numerous
sources. We have not, in recent years, experienced any
significant shortages of raw materials and normally do not carry
inventories of such raw materials in excess of those reasonably
required to meet our production and shipping schedule.
</FONT>

<P align="left">
<B><FONT size="2">Properties</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our principal executive offices are located in
Livonia, Michigan. Our operations include numerous
manufacturing, research and development and warehousing
facilities. We own or lease principal facilities located in 17
states in the United States and in 20 other countries.
Approximately 45&nbsp;percent of the principal domestic
facilities are used by the Chassis Systems segment,
25&nbsp;percent by the Occupant Safety Systems segment,
28&nbsp;percent by the Other Automotive segment, and
2&nbsp;percent is used at the corporate level. We also own,
lease or operate administrative, marketing, sales and office
facilities throughout the United States and in various parts of
the world.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Of the total number of principal facilities
operated by us, approximately 71&nbsp;percent of such facilities
are owned, 22&nbsp;percent are leased, and 7&nbsp;percent are
held by joint ventures in which we have a majority interest.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A summary of our principal facilities, by
segment, type of facility and geographic region, is set forth in
the following tables. Additionally, where more than one segment
utilizes a single facility, that facility is categorized by the
purposes for which it is primarily used.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Chassis
Systems</FONT></I>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="54%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">North</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Asia</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">America</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Europe</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pacific</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Other</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="left" nowrap><B><FONT size="1">Principal Use of Facility</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Research and Development
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Manufacturing
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">71</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Warehouse
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Office
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">93</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Occupant
Safety Systems</FONT></I>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="54%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">North</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Asia</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">America</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Europe</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pacific</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Other</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="left" nowrap><B><FONT size="1">Principal Use of Facility</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Research and Development
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Manufacturing
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Warehouse
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Office
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">53
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Other
Automotive</FONT></I>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="54%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">North</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Asia</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">America</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Europe</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pacific</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Other</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="left" nowrap><B><FONT size="1">Principal Use of Facility</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Research and Development
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Manufacturing
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">47</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Warehouse
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Office
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to the facilities set forth in the
foregoing tables, we also maintain one facility that we utilize
as office space at the corporate level.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Additional information concerning our long-term
rental obligations under operating leases is set forth in the
note to financial statements entitled &#147;Lease
Commitments&#148; included in this prospectus.
</FONT>

<P align="left">
<B><FONT size="2">Employees</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of March&nbsp;31, 2002, we had approximately
66,000 employees, of whom approximately 28,000 were employed in
North America, approximately 32,000 were employed in Europe,
approximately 4,000 were employed in South America and
approximately 2,000 were employed in Asia. Approximately 16,000
of our employees are salaried and approximately 50,000 are
hourly. As of March&nbsp;31, 2002, approximately 22&nbsp;percent
of our United States hourly workforce and approximately
78&nbsp;percent of our foreign hourly workforce were represented
by 39&nbsp;unions. We consider relations with our employees to
be good.
</FONT>

<P align="left">
<B><FONT size="2">Environmental Matters</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Federal, state and local requirements relating to
the discharge of materials into the environment, or otherwise
relating to the protection of the environment, have had, and
will continue to have, an effect on us and our operations. We
have made and continue to make expenditures for projects
relating to the environment, including pollution control devices
for new and existing facilities. We are conducting a number of
environmental investigations and remedial actions at current and
former locations to comply with various federal, state and local
laws and, along with other companies, have been named a
potentially responsible party for certain waste management
sites. Each of these matters is subject to various
uncertainties, and some of these matters may be resolved
unfavorably to us.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A reserve estimate for each matter is established
using standard engineering cost estimating techniques. In the
determination of such costs, consideration is given to the
professional judgment of our environmental engineers, in
consultation with outside environmental specialists, when
necessary. At multi-party sites, the reserve estimate also
reflects the expected allocation of total project costs among
the various potentially responsible parties. At
December&nbsp;31, 2001, we had reserves for environmental
matters of $111&nbsp;million, including expense of
$2&nbsp;million recorded during the year.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We do not believe that compliance with
environmental protection laws and regulations will have a
material effect upon our capital expenditures, results of
operations or competitive position, and our capital expenditures
for environmental control facilities during 2002 and 2003 are
not expected to be material to us. We believe that any liability
that may result from the resolution of environmental matters for
which sufficient information is available to support cost
estimates will not have a material adverse effect on our
financial position or results of operations. However, we cannot
predict the effect on our financial position of expenditures for
aspects of certain matters for which there is insufficient
information. In addition, we cannot predict the effect of
compliance with environmental laws and regulations with respect
to unknown environmental matters on our financial position or
results of operations or the possible effect of compliance with
environmental requirements imposed in the future.
</FONT>

<P align="center"><FONT size="2">54
</FONT>
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<P align="left">
<B><FONT size="2">Legal Proceedings</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Various claims, lawsuits and administrative
proceedings are pending or threatened against us, arising from
the ordinary course of business with respect to commercial,
product liability and environmental matters.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In October 2000, Kelsey-Hayes Company (formerly
known as Fruehauf Corporation) was served with a grand jury
subpoena relating to a criminal investigation being conducted by
the U.S. Attorney for the Southern District of Illinois. The
U.S. Attorney has informed us that the investigation relates to
possible wrongdoing by Kelsey-Hayes Company and others involving
certain loans made by Kelsey-Hayes Company&#146;s then parent
corporation to Fruehauf Trailer Corporation, the handling of the
trailing liabilities of Fruehauf Corporation and actions in
connection with the 1996 bankruptcy of Fruehauf Trailer
Corporation. Kelsey-Hayes Company became a wholly-owned
subsidiary of TRW upon TRW&#146;s acquisition of LucasVarity in
1999 and will become our wholly-owned subsidiary prior to the
spin-off. We are cooperating with the investigation and are
unable to predict the outcome of the investigation at this time.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our management believes that the ultimate
resolution of the foregoing matters will not have a material
effect on our financial condition or results of operations.
</FONT>

<P align="center"><FONT size="2">55
</FONT>

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<!-- link1 "MANAGEMENT" -->
<DIV align="left"><A NAME="011"></A></DIV>

<P align="center">
<B><FONT size="2">MANAGEMENT</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Set forth below is certain information concerning
the individuals that we anticipate will be serving as our
executive officers at the time of the spin-off. Currently we
have a board of directors consisting of five individuals, all of
whom are officers and/or directors of TRW. We expect that these
directors will resign prior to the spin-off and be replaced by
at least five directors who will constitute our board of
directors at the time of the spin-off.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="53%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Age</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Position*</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">John C. Plant
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">President &#38; Chief Executive Officer
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Steven Lunn
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">53</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Executive Vice President, Operations
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Josef Pickenhahn
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">51</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Vice President, Engineering, Braking
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Aly A. Badawy
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">53</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Vice President, Engineering, Steering &#38;
    Suspension
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Douglas P. Campbell
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Vice President, Engineering, Occupant Safety
    Systems
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">David L. Bialosky
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">44</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Vice President, Law
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Robert A. Alberico
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Vice President, Human Resources
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Peter J. Lake
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Vice President, Sales &#38; Business Development
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Joseph S. Cantie
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Vice President, Finance
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Bryce A. Currie
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Vice President, Six Sigma
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Suketu Patel
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Vice President, Information Systems
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">*&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The above list reflects the names and titles of
    the current management team of TRW&#146;s Automotive business,
    which are subject to change.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">John C. Plant </FONT></I><FONT size="2">is a
member of the TRW Chief Executive Office and has been President
and Chief Executive Officer of TRW&#146;s Automotive business
since 2001. Mr.&nbsp;Plant has been an Executive Vice President
of TRW since TRW&#146;s acquisition of LucasVarity in 1999. He
was President and Chief Executive Officer, TRW Chassis Systems
in 2001; General Manager, TRW Chassis Systems from 1999 to 2001
and General Manager of TRW&#146;s Automotive business in 1999.
Mr.&nbsp;Plant was President, LucasVarity Automotive in 1998 to
1999, and Managing Director, Electrical and Electronic Division,
Lucas Automotive from 1991 until 1998.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Steven Lunn </FONT></I><FONT size="2">has been
Executive Vice President, Automotive Operations of TRW since
2001 and had served prior to that as Senior Vice President,
Operations, of TRW Chassis Systems since August 1999.
Mr.&nbsp;Lunn was Deputy President and Chief Operating Officer
of LucasVarity Automotive from 1997 until August 1999. Prior to
this position, he was Managing Director for LucasVarity&#146;s
Light Vehicle Braking Systems Division.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Josef Pickenhahn </FONT></I><FONT size="2">has
been Vice President, Braking Engineering for TRW&#146;s
Automotive business since August 2001. From October 1996 to
August 2001, he was Technical Director of Actuation for
TRW&#146;s Automotive business engineering unit in Europe.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Aly A. Badawy </FONT></I><FONT size="2">has
been Vice President, Engineering, TRW Steering and Suspension
Systems since July 1999. Prior to that, he was a Director of
Engineering for Delphi since August 1985.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Douglas P. Campbell
</FONT></I><FONT size="2">has been Vice President, Engineering,
TRW Occupant Safety Systems since November 2000. From September
1995 to November 2000, he served as Vice President, Engineering
for TRW Occupant Safety Systems&#146; Inflatable Restraints
business and from June 1999 to November 2000, he also served as
Vice President, Engineering for TRW Occupant Safety
Systems&#146; Steering Wheel Systems business.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">David L. Bialosky
</FONT></I><FONT size="2">has been a Vice President and an
Assistant General Counsel of TRW since 1997. Since November
2001, he has been responsible for the law function at TRW&#146;s
Automotive business. He was Vice President and Assistant General
Counsel of TRW Chassis Systems from October 1999 to November
2001 and of TRW&#146;s Automotive business between January to
October 1999. From April 1997 to December 1998, Mr. Bialosky
served as Vice President and Assistant General Counsel, TRW
Automotive Electronics.
</FONT>

<P align="center"><FONT size="2">56
</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Robert A. Alberico
</FONT></I><FONT size="2">has been Vice President, Human
Resources for TRW&#146;s Automotive business since November
2001. Prior to that, since September 1992, Mr.&nbsp;Alberico
held a number of positions throughout TRW&#146;s Automotive
business units as Vice President, Human Resources, most recently
with TRW Chassis Systems.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Peter J. Lake </FONT></I><FONT size="2">has
been Vice President, Sales and Business Development for
TRW&#146;s Automotive business since February 2002. From
November 2001 to February 2002, Mr.&nbsp;Lake held the position
of Vice President, Business Development and Vice President and
General Manager, Parts and Services for TRW&#146;s Automotive
business. From October 2000 to November 2001, he held the same
position for TRW Chassis Systems. From October 1999 to October
2000, Mr.&nbsp;Lake served as Vice President, Planning and
Business Development for TRW Chassis Systems. From December 1998
to November 1999, Mr.&nbsp;Lake served as Vice President,
Marketing for LucasVarity Automotive. From May to November 1998,
he served as Director, Business Development, LucasVarity
corporate staff. Prior to that, since 1995, he served as
Commercial Director and General Manager for LucasVarity
Aftermarket.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Joseph S. Cantie </FONT></I><FONT size="2">has
served as Vice President, Finance for TRW&#146;s Automotive
business since November 2001. Prior to that, Mr. Cantie served
as Vice President, Investor Relations for TRW from October 1999
to November 2001. From July 1998 to September 1999,
Mr.&nbsp;Cantie served as Vice President and Controller of
LucasVarity. From November 1996 to July 1998, he served as Vice
President, Investor Relations for LucasVarity. Prior to joining
LucasVarity, Mr.&nbsp;Cantie, a certified public accountant,
spent ten years with KPMG Peat Marwick.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Bryce A. Currie </FONT></I><FONT size="2">has
served as Vice President, Six Sigma for TRW&#146;s Automotive
business since November 2001. Mr.&nbsp;Currie has held a number
of positions within TRW Chassis Systems since 1997, including
most recently serving as Vice President, Six Sigma for TRW
Chassis Systems from September to November 2001, Director,
Strategic Program Management and Operations Excellence for TRW
Chassis Systems from February to August 2001 and Director and
General Manager, TRW Chassis Systems&nbsp;&#151; Europe from
November 1999 to February 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Suketu Patel </FONT></I><FONT size="2">has
served as Vice President, Information Systems for TRW&#146;s
Automotive business since June 2001. Prior to that,
Mr.&nbsp;Patel held the position of Vice President, Information
Systems for TRW Chassis Systems from August to October 2001 and
for TRW Automotive Electronics from June to August 2001. From
April 1996 to May 2001, Mr.&nbsp;Patel served as Director,
Enterprise Business Systems for TRW.
</FONT>

<P align="left">
<B><FONT size="2">Composition of the Board of
Directors</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our board of directors is divided into three
classes, each serving staggered three-year terms:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Class&nbsp;I, whose term will expire at our 2003
    annual meeting of stockholders;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Class&nbsp;II, whose term will expire at our 2004
    annual meeting of stockholders; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Class&nbsp;III, whose term will expire at our
    2005 annual meeting of stockholders.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a result, only one class of directors will be
elected at each annual meeting, with the other classes
continuing for the remainder of their respective terms. Prior to
the spin-off, TRW will have the ability to change the size and
composition of our board of directors and committees of our
board of directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each officer serves at the discretion of our
board of directors and holds office until his or her successor
is elected and qualified or until his or her earlier resignation
or removal. There are no family relationships among any of our
directors or executive officers.
</FONT>

<P align="left">
<B><FONT size="2">Committees of the Board of Directors</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our board of directors is expected to appoint
independent directors to a compensation committee of our board
of directors and an audit committee of our board of directors
after such directors are elected. The compensation committee
will assist management and the directors in assessing our
organizational structure and executive compensation philosophy,
determine the compensation of our executive officers, and approve
</FONT>

<P align="center"><FONT size="2">57
</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">compensation and benefit plans that do not
generally apply to all salaried employees and that involve our
executive officers.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The audit committee will assist our directors in
their oversight of our financial reporting process, internal and
independent audit activities and our system of internal
controls. Immediately following the spin-off, our board of
directors will adopt an audit committee charter pursuant to
which it will operate. Our audit committee will hold at least
four regularly scheduled meetings each year. Our board will
establish meeting schedules for any other committees of our
board.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our board of directors may, from time to time,
establish other committees to facilitate our management.
</FONT>

<P align="left">
<B><FONT size="2">Director Compensation</FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">General</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Any of our officers who also serves as a director
will not receive any additional compensation for serving as a
director or as a member or chair of a committee.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Director
Compensation Principles</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We expect that the compensation of our directors
will be based on the following principles:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">that a significant portion of director
    compensation should be aligned with creating and sustaining
    stockholder value;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">that directors should hold a significant number
    of shares of our common stock; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">that total compensation should be structured to
    attract and retain a diverse and superior board of directors.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We expect that the compensation package for
non-employee directors will be comprised of the following
components:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a base annual retainer of
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
    fifty percent of which will be automatically deferred in shares
    of our common stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an additional annual retainer of
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;for
    chairs of the audit and the compensation committees;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an additional annual retainer of
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;for
    chairs of any other committees; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an annual stock option grant to
    purchase &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
    of our common stock, with an exercise price equal to the fair
    market value of our common stock on the date of the grant.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Payment of the automatic deferral portion of a
director&#146;s retainer will not be made until the director
ceases to serve as a director.
</FONT>

<P align="left">
<B><FONT size="2">Stock Ownership of Directors and Executive
Officers</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All of our stock is currently owned by TRW and
thus none of our current or anticipated officers or directors
own any of our common stock. To the extent our directors and
officers own TRW stock at the time of the spin-off, they will
participate in the spin-off on the same terms as other holders
of TRW stock. Beginning in 2003, we expect to award options to
purchase shares of our common stock and/or other equity-based
awards to certain of our officers and employees.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each option to acquire TRW common stock held by
our directors and employees as of the spin-off, which we refer
to as TRW Options, will become a TRW Automotive option, which we
refer to as TRW Automotive Options, to purchase the number of
shares of our common stock determined by multiplying the number
of shares of TRW common stock subject to the TRW Option
immediately before the spin-off by the TRW Automotive Option
Exchange Ratio (as defined below), at a price per share equal to
the exercise price per share of TRW common stock otherwise
purchasable pursuant to the TRW Option divided by the TRW
Automotive Option Exchange Ratio. The TRW Automotive Option will
otherwise have substantially the same
</FONT>

<P align="center"><FONT size="2">58
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">terms and conditions as the corresponding TRW
Option being replaced, except that, for purposes of determining
when any TRW Automotive Option will vest and expire, service
with TRW and its subsidiaries before the spin-off will be
treated as service with us and our subsidiaries at and after the
spin-off. By TRW Automotive Option Exchange Ratio, we mean the
quotient determined by dividing:
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the closing price per share of TRW common stock
    on the New York Stock Exchange Composite Transactions Reporting
    System for the spin-off date (disregarding the spin-off) by
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the fair market value per share of TRW Automotive
    common stock immediately after the spin-off.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Restricted stock held by our directors and
officers as of the spin-off will be converted into our
restricted stock in an amount determined by applying the TRW
Automotive Option Exchange Ratio.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth the TRW share
ownership as
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2002 for each director, each of the executive officers named in
the Summary Compensation Table in the
&#147;&#151;&nbsp;Executive Compensation&#148; section below,
and all of our directors and executive officers as a group.
Unless there is a footnote to the contrary, sole voting and
investment power in the shares owned are held either by the
named individual alone or by the named individual and his or her
spouse.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="46%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Number of Shares of TRW Common Stock</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percent of</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Beneficially</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercisable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Deferred Share</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Owned(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Options(2)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Units(3)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Outstanding</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">John&nbsp;C. Plant
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">[Executive Officer]
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">[Executive Officer]
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">[Executive Officer]
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">[Executive Officer]
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">[Director]
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">[Director]
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">[Director]
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">[Director]
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">[Director]
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">All directors and executive officers as a group
    ([&nbsp;&nbsp;]&nbsp;persons)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">*</FONT></TD>
    <TD align="left">
    <FONT size="2">Less than 1&nbsp;percent.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes shares of TRW common stock held in The
    TRW Employee Stock Ownership and Savings Plan, shares of TRW
    common stock that have been automatically deferred under
    TRW&#146;s deferred compensation plan for non-employee directors
    and shares of restricted stock awarded to certain executive
    officers.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes the number of shares that may be
    acquired within 60&nbsp;days
    of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
    2002, upon exercise of stock options.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">This column shows phantom units of shares of TRW
    common stock that have been credited under deferred compensation
    plans and certain other nonqualified benefit plans maintained by
    TRW. The phantom units are settled in cash and are not included
    for the purpose of calculating the percent of shares outstanding.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">59
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Executive Compensation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table shows some projected
compensation information for the individuals who, at the time of
the spin-off, are expected to be our chief executive officer and
our four other most highly compensated executive officers.
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="69%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Annual Compensation</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Target</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name and Principal Position</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Year</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Salary</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Bonus</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">John C. Plant
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">President &#38; Chief Executive Officer
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">[Executive Officer]
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">[Executive Officer]
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">[Executive Officer]
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">[Executive Officer]
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As an independent company, we will establish
executive compensation practices that will link compensation
with the performance of TRW Automotive as well as our common
stock. We will continually review our executive compensation
programs to ensure that they are competitive.
</FONT>

<P align="left">
<B><FONT size="2">Long-Term Incentive Plan</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We expect to adopt, with the approval of TRW in
its capacity as our sole stockholder, the 2002 TRW Automotive
Long-Term Incentive Plan, or the Plan. The Plan will offer
incentives to attract, retain and reward individuals of the
highest caliber as our employees and directors. We believe that
the Plan also will focus our employees and directors on our
long-term goals, and further align their interests with those of
our stockholders.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">General</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Participants.</FONT></I><FONT size="2"> All of
our employees, or employees of any of our subsidiaries or
affiliates, and all of our directors will be eligible
participants under the Plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Share Limitations.
</FONT></I><FONT size="2">The number of shares of our common
stock that may be issued by us in payment and upon exercise of
grants will not
exceed &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares,
subject to adjustments in the event of certain changes to our
capital structure. The shares delivered under the Plan may be
unissued shares or treasury shares. Shares issued pursuant to a
grant that are forfeited, surrendered, canceled or settled
without the delivery of shares will again be available for grant.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The maximum number of shares underlying options
or stock appreciation rights that may be granted to an
individual participant during any calendar year period
is &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
except that the balance of unused shares in any year will be
added to this limitation in subsequent years. The maximum number
of shares that may be issued upon exercise of incentive stock
options
is &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
In addition, not more
than &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
underlying Other Stock-Based Grants as described below may be
granted to all participants during the term of the Plan, and not
more
than &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
underlying Other Stock-Based Grants may be granted to an
individual participant during any performance period of not more
than five years.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Administration. </FONT></I><FONT size="2">The
Plan will be administered by a committee appointed by our board
of directors from among its members. After completion of the
spin-off, the Plan will be administered by the compensation
committee of the board of directors. The committee&#146;s
decisions and interpretations with respect to the Plan will be
final and conclusive. Grants may be made under the Plan with
terms and conditions, not inconsistent with the Plan, as may be
imposed by the committee administering the Plan. The
compensation committee has wide discretion and flexibility to
administer the Plan in the manner it determines is in the best
interests of TRW Automotive. For example:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">grants may be made in various combinations and
    subject to various conditions, restrictions and limitations;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">60
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the terms and conditions of grants need not be
    the same with respect to each participant;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the compensation committee may provide for the
    effect on grants of a participant&#146;s death, disability,
    retirement or termination of employment; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the compensation committee may provide for the
    acceleration of grants in the event of a change of control in
    TRW Automotive.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">These examples are for illustrative purposes only
and do not purport to constitute an exclusive or comprehensive
identification of the manner in which the compensation committee
may exercise its broad authority in administering the Plan.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Types
of Awards</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Stock Options.</FONT></I><FONT size="2"> We
may grant both tax-qualified incentive stock options and
nonqualified stock options under the Plan. The Plan will require
that the purchase price per share not be less than the fair
market value of a share of our common stock on the date the
option is granted. Options will be exercisable at that time or
times as determined by the compensation committee. Options
granted as incentive stock options must also meet requirements
of the Code.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The compensation committee may provide for the
transfer, without payment of consideration, of an option by an
optionee to a member of the optionee&#146;s immediate family or
to a trust or partnership whose beneficiaries are members of the
optionee&#146;s immediate family. In that case, the option will
be exercisable only by that transferee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Payment of the purchase price of the options may
be made in cash, shares or other securities or other property,
or any combination thereof as determined by the compensation
committee. Options may provide for related stock appreciation
rights. If an option or any portion thereof is exercised, the
shares issued upon exercise will not be available for future
grants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Stock Appreciation
Rights.</FONT></I><FONT size="2"> Stock appreciation rights
related to a stock option, or tandem stock appreciation rights,
may be granted either at the time of the option grant, or during
the term of the option, at an exercise price equal to the fair
market value of a share of our common stock on the date of
grant. In addition, stock appreciation rights may be granted
separate and apart from the grant of an option, or freestanding
stock appreciation rights. Tandem stock appreciation rights
permit a participant, upon exercise of these rights and
surrender of the related option to the extent of an equivalent
number of shares, to receive payment equivalent to the
difference between the fair market value, on the date of
exercise, of the portion of the option so surrendered and the
fair market value of these shares on the date of grant.
Freestanding stock appreciation rights entitle the participant,
upon exercise of these rights, to receive payment equal to the
difference between the fair market value, on the date of
exercise, of all or part of a designated number of shares and
the fair market value of such shares on the date of grant. That
payment may be made in shares, valued on the basis of the fair
market value of the shares on the date of exercise of the stock
appreciation right, or in cash, or partly in cash and partly in
shares, as the compensation committee may determine.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Other Stock-Based Grants.
</FONT></I><FONT size="2">Under the Plan, the compensation
committee may also, at its discretion, make the awards of stock
valued in whole or in part by reference to, or based upon, our
common stock. The terms and conditions of these grants,
including any performance-related criteria or other restrictions
on payout that the compensation committee deems appropriate,
will be determined by the compensation committee in its sole
discretion. These terms may include the right to receive, either
currently or on a deferred basis, interest or dividends with
respect to the number of shares covered by the award.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In making Other Stock-Based Grants, the
compensation committee may or may not base these awards made to
any of our officers on pre-established performance goals and
measures. If the compensation committee chooses to base an award
on the achievement of certain performance goals, the criteria
used in
</FONT>

<P align="center"><FONT size="2">61
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">establishing these performance goals may, at the
discretion of the compensation committee, include one or any
combination of the following:
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">return on equity, assets, capital or investment;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">pre-tax or after-tax profit levels expressed in
    either absolute dollars, earnings per share, or increases of the
    same;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a formula based on return on assets employed less
    the cost of capital multiplied by average assets employed;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">sales;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">stock price;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">cash flow;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">total stockholder return; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">other financial measures.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In establishing these performance goals and
measures, the compensation committee may also include
qualitative or non-financial quantitative criteria, if any, as
it deems appropriate.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The performance criteria will be established by
the compensation committee not later than 90&nbsp;days after
commencement of the performance period relating to a specific
award intended to comply with Section&nbsp;162(m) of the Code.
Performance goals may be identical for all participants or, at
the discretion of the compensation committee, may be different
to reflect more appropriate pre-established measures of
individual performance. The performance goals established by the
compensation committee will include a threshold level of
performance below which no award will be payable and a maximum
award opportunity for each participant. Attainment of the
performance goals will be determined and certified in writing by
the compensation committee prior to payout.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The compensation committee may, in its sole
discretion, reduce the performance results upon which awards are
based under the Plan to offset any unintended result arising
from events not anticipated when the performance goals were
established. In addition, notwithstanding the attainment of
performance goals for TRW Automotive as a whole, awards for an
individual participant may be denied or adjusted downward by the
compensation committee in its sole discretion and judgment,
based on its assessment of the participant&#146;s performance.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The compensation committee may make adjustments
in the method of calculating attainment of the performance goals
in recognition of:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">extraordinary or non-recurring items;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">changes in the tax laws;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">changes in generally-accepted accounting
    principles or accounting policies;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">charges related to restructured or discontinued
    operations;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">restatement of prior period financial results; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any other unusual, non-recurring gain or loss
    that is separately identified and quantified in our financial
    statements.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain Federal
Income Tax Consequences</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Section&nbsp;162(m) of the Code specifies that
compensation paid in excess of $1&nbsp;million annually to
executive officers is not deductible by us for federal income
tax purposes, unless certain exceptions apply. One exception
provides for the deductibility of performance-based
compensation, which has been approved by stockholders. Under a
special transition rule, stockholder approval will not be
required except with respect to
</FONT>

<P align="center"><FONT size="2">62
</FONT>

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<DIV align="left">
<FONT size="2">grants made after the first regularly scheduled
meeting of our stockholders that occurs more than 12&nbsp;months
after the date that we become a separate publicly held
corporation. We intend to seek approval of the Plan at our 2004
annual meeting of stockholders.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the Code, a participant receiving a stock
option does not realize income upon the grant of the option.
However, a participant will realize income at the time of
exercise, except for options that are incentive stock options,
in the amount of the difference between the option price and the
fair market value on the date of exercise. Under the Code, we
are entitled to a deduction equal to the amount of that income,
at the time that income is realized by the participant. In the
case of incentive stock options, although no income is realized
upon exercise and we are not entitled to a deduction, the
difference between the fair market value on the date of exercise
and the exercise price is treated by the participant as an item
of tax preference for alternative minimum tax purposes. If the
participant does not dispose of the shares acquired on the
exercise of an incentive stock option within one year after
their receipt, and within two years after the grant of the
option, gain or loss realized on the subsequent disposition of
the shares will be treated as long-term capital gain or loss. In
the event of an earlier disposition, the participant will
realize ordinary income, and we will be entitled to a deduction,
equal to the amount of that income.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the case of freestanding stock appreciation
rights or tandem stock appreciation rights, the participant will
not realize any income at the time of grant. Upon the exercise
of either a tandem stock appreciation right or a freestanding
stock appreciation right, any cash received and the fair market
value on the exercise date of any shares received will
constitute ordinary income to the participant. We will be
entitled to a deduction in the amount of that income at the time
of exercise.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The participant must recognize ordinary income
equal to the fair market value of the shares received upon
payout of &#147;Other Stock-Based Grants,&#148; less any amount
paid by the participant, at the first time the shares become
transferable or are not subject to substantial risk of
forfeiture, whichever occurs earlier. We will be entitled to a
deduction in the same amount and at the same time as the
participant realizes income.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Grants made under the Plan will be subject to
applicable tax withholding by us, which may, to the extent
permitted by the compensation committee, be satisfied by the
withholding of shares deliverable under the Plan.
</FONT>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amendment</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The compensation committee may amend, suspend or
terminate the Plan at any time, except that no such action by
the compensation committee may:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">be made without stockholder approval, to the
    extent that approval is required by legal or regulatory
    requirements;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">increase the maximum number of shares that may be
    issued under the Plan; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">permit an option to be granted at an exercise
    price less than the fair market value on the date of grant.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Other Compensation Arrangements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the spin-off, we intend to
enter into agreements designed generally to assure continued
management in the event of a change in control of TRW Automotive
with each of our executive officers and some of our other
officers. The agreements will provide that, following a change
in control, we will employ the officer until the earlier of the
officer&#146;s death, his or her attaining age 65 or the
expiration of the third anniversary of the change in control,
which we refer to as the Employment Period. During the
Employment Period, the officer will be entitled to receive an
annual base salary and to continue participation in employee
benefit plans at levels not less than those in effect prior to
the change in control. The incentive portion of the
officer&#146;s compensation will equal the highest incentive
award paid to the officer for any of the three calendar years
preceding the change in control. If the officer&#146;s
employment were to be terminated by us 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
</FONT>

<P align="center"><FONT size="2">63
</FONT>

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<DIV align="left">
<FONT size="2">change in control, the officer would be entitled
to receive a severance payment equal to the net present value of:
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">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, also
    referred to as the Remaining Period, and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the employee benefits, other than employee
    welfare benefits and stock options and similar compensatory
    benefits, that the officer would have received for the Remaining
    Period, including under our retirement plans, assuming vesting.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We would also provide the officer with health
insurance and similar welfare benefits for the Remaining Period,
subject to reduction for comparable welfare benefits received in
subsequent employment. If any payments to the officer are
determined to be &#147;excess parachute payments&#148; under the
Code, the officer would be entitled to receive an additional
payment, net of income taxes, to compensate the officer for the
excise tax imposed by the Code on such payments. It is expected
that the agreements also will provide that we will reimburse the
officer for his or her costs to enforce the agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For purposes of the foregoing agreements, as well
as awards under the Plan, a change in control will be defined as
a change occurring:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">by virtue of certain mergers or consolidations or
    sale or transfer of assets by us to another corporation; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">by virtue of our current directors and their
    approved successors, other than a successor whose initial
    assumption of office is in connection with an actual or
    threatened election contest, ceasing to constitute a majority of
    our directors; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">through the acquisition of shares representing
    20&nbsp;percent or more of the voting power of TRW Automotive
    other than acquisitions by us, any of our subsidiaries or a TRW
    Automotive-sponsored employee benefit plan; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">through any other change in control reported in
    any filing with the SEC.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with his serving as our President
and Chief Executive Officer, prior to the spin-off we anticipate
entering into an employment agreement and an employment
continuation agreement with John&nbsp;C. Plant.
</FONT>

<P align="center"><FONT size="2">64
</FONT>
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<DIV align="left"><A NAME="012"></A></DIV>

<P align="center">
<B><FONT size="2">RELATIONSHIP WITH TRW</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are currently wholly-owned by TRW, and our
results have been included in TRW&#146;s consolidated financial
results. After the spin-off, our results of operations will no
longer be consolidated with TRW and we will be an independent
public company. Furthermore, except as described below, all
contractual relationships existing prior to the spin-off between
us and TRW will be terminated.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to the spin-off, we and TRW expect to enter
into certain agreements providing for our separation from TRW,
the spin-off and related matters. These agreements are expected
to include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a master distribution agreement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a tax sharing agreement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an employee matters agreement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an insurance allocation agreement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">intellectual property license agreements;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a trademark license agreement; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a transition services agreement.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In this prospectus, we sometimes refer to these
agreements (other than the master distribution agreement) as the
&#147;ancillary agreements.&#148; These agreements will be
entered into in the context of a parent-subsidiary relationship
and will be negotiated in the overall context of our separation
from TRW. The terms and conditions of these agreements,
including the prices charged for services may be more or less
favorable than those we could negotiate with unaffiliated third
parties. However, we believe and TRW has advised us that it
believes that these agreements are fair.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Copies of the forms of the material agreements
will be included as exhibits to the registration statement on
Form&nbsp;S-1 (or the amendments thereto) of which this
prospectus forms a part. The following description summarizes
the material terms of these agreements.
</FONT>

<P align="left">
<B><FONT size="2">Master Distribution Agreement</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">TRW and we will enter into a master distribution
agreement shortly before the spin-off, which will be the
principal agreement governing the spin-off, the related
restructuring transactions and certain agreements between TRW
and us that will continue after the spin-off. The agreement will
also contemplate a number of ancillary agreements that we will
enter into with TRW in connection with the spin-off, including a
tax sharing agreement, an employee matters agreement, an
insurance allocation agreement, intellectual property license
agreements, a trademark license agreement and a transition
services agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The restructuring transactions refer to the
series of transactions that will result in the separation of
TRW&#146;s automotive business and TRW&#146;s non-automotive
businesses. To this end, the master distribution agreement will
define what constitutes the &#147;TRW Automotive Business&#148;
(generally, TRW&#146;s automotive business) and what constitutes
the &#147;TRW Remaining Business&#148; (generally, TRW&#146;s
non-automotive businesses).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the terms of the master distribution
agreement, shortly prior to the spin-off, TRW will cause to be
transferred to us all of the assets associated with the TRW
Automotive Business, and we will assume all of the liabilities
associated with the TRW Automotive Business (including
contingent liabilities). TRW will retain all of the assets and
liabilities associated with the TRW Remaining Business. All
assets and liabilities will be transferred without any
representation or warranty on an &#147;as is, where is&#148;
basis.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As part of the restructuring transactions, we
intend to issue to TRW that number of shares of our common stock
to enable TRW to distribute one share of our common stock for
each share of TRW common stock in the spin-off. In addition, we
expect to issue shares of our Series&nbsp;A Convertible
Preferred Stock to a subsidiary of TRW, which shares will be
subsequently sold to a third party equity investor unaffiliated
with
</FONT>

<P align="center"><FONT size="2">65
</FONT>

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<DIV align="left">
<FONT size="2">TRW shortly before the spin-off. See &#147;The
Spin-Off&nbsp;&#151; Transactions Prior to or Concurrent With
the Spin-Off.&#148;
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In general, all intercompany balances between TRW
and us will be settled by cancellation or transfer. Based on the
anticipated cash requirements of TRW and us following the
spin-off, the master distribution agreement will set a
&#147;restructuring funding target amount&#148; for us and will
provide for a cash adjustment based on the difference between
the &#147;restructuring funding target amount&#148; and the
&#147;restructuring funding actual amount&#148; as of the end of
the fiscal month immediately preceding the spin-off.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The master distribution agreement will
contemplate that a number of actions will be taken prior to the
spin-off declaration date, including the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">TRW will cause those individuals who will
    continue to be directors, officers or employees of TRW (but not
    TRW Automotive) following the spin-off to resign, effective as
    of the spin-off, from our boards of directors or offices and
    those of our post-spin-off affiliates;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">we will cause those individuals who will be
    directors, officers or employees of TRW Automotive (but not TRW)
    following the spin-off to resign, effective as of the spin-off,
    from boards of directors or offices of TRW and TRW&#146;s
    post-spin-off affiliates;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our new directors will be appointed to our board
    of directors;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">we and TRW will agree to cooperate in the
    preparation, filing with the SEC and (where applicable) mailing
    to TRW shareholders of the documents required in connection with
    the spin-off and the related transactions, including the
    accompanying proxy statement relating to the special meeting of
    TRW shareholders that will be held in connection with the
    spin-off;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">TRW will redeem all of its preferred stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">we and TRW will cooperate in the preparation and
    filing of an application to list the shares of our common stock
    on the NYSE; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">TRW and we will use our commercially reasonable
    efforts to obtain the requested IRS private letter ruling or an
    opinion from tax counsel, as the case may be, with respect to
    the tax-free nature of the spin-off.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the terms of master distribution agreement,
the TRW board of directors will formally authorize and declare
the spin-off and set the spin-off record date in its sole
discretion, subject to a number of conditions that are to be
satisfied or waived on or prior to the spin-off declaration
date, including the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">receipt of the requested IRS ruling, in form and
    substance satisfactory to TRW, to the effect that the spin-off
    will constitute a tax-free spin-off for U.S. federal income tax
    purposes for both holders of TRW common stock and TRW, and the
    continued effectiveness of such ruling, or alternatively,
    receipt by TRW of a satisfactory opinion from tax counsel;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the completion in all material respects, to the
    extent required to be completed prior to the spin-off, of the
    restructuring transactions;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the completion in all material respects of the
    ASG sale;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our level of indebtedness not exceeding certain
    specified levels;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the satisfaction of TRW with the treatment of the
    debt of TRW and its subsidiaries in connection with the
    restructuring transactions and the spin-off, including the
    allocation of such debt between TRW and TRW Automotive;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">receipt of all material governmental and third
    party consents and approvals by governmental entities required
    in connection with the spin-off;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the completion by us of the debt financing
    transactions described elsewhere in this prospectus relating to
    debt to be incurred or assumed by us from one or more financial
    institutions under one or more
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">66
</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">credit facilities and/or through the issuance of
    our debt securities in one or more public offerings or private
    placements;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the authorization for listing of our common stock
    on the NYSE, subject to official notice of issuance;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the approval of the spin-off at the special
    meeting by the holders of shares of TRW common stock in
    accordance with the Ohio General Corporation Law; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the receipt by the TRW board of directors of a
    satisfactory solvency opinion and the satisfaction of the TRW
    board of directors as to matters relating to the solvency and
    adequacy of capital of TRW and us.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the master distribution agreement, the
foregoing conditions are for the sole benefit of TRW.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to the spin-off declaration date, the TRW
board of directors will retain discretion under the agreement,
even if TRW shareholder approval of the spin-off is obtained and
the other conditions to the spin-off are satisfied, to abandon,
delay or modify the spin-off or any matter contemplated by the
spin-off.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the master distribution agreement,
from and after the spin-off declaration date, we will indemnify
TRW and related parties against liabilities arising out of:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any failure or alleged failure by us to pay,
    perform or otherwise discharge in a timely manner any of the
    liabilities we are to assume pursuant to the master distribution
    agreement or any ancillary agreement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the TRW Automotive Business;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any material breach by us of the master
    distribution agreement or any ancillary agreement; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any material misstatements or omissions by us in
    specified documents filed with the SEC.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the agreement, from and after the
spin-off declaration date, TRW will indemnify us and related
parties against liabilities arising out of:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any failure or alleged failure by TRW to pay,
    perform or otherwise discharge in a timely manner any of the
    liabilities it will retain pursuant to the agreement or any
    ancillary agreement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the TRW Remaining Business;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any material breach by TRW of the master
    distribution agreement or any ancillary agreement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any material misstatements or omissions made by
    TRW in specified documents filed with the SEC.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The foregoing indemnification obligations will be
subject to certain procedural requirements and indemnifiable
losses will be calculated after giving effect to any tax benefit
or insurance proceeds received or to be received.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">TRW and we will release each other, effective as
of the spin-off declaration date, from all debts, claims and
obligations relating to events and conditions prior to the
spin-off declaration date. Following the spin-off declaration
date, the rights to indemnification described above will be the
exclusive remedy of us and TRW with respect to claims relating
to the spin-off and the agreements to be entered into by the
parties in connection therewith.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The master distribution agreement will contain a
number of covenants between TRW and us that will be in effect
following the spin-off, including covenants relating to
restrictions on competition, the use of names and trademarks and
access to books and records following the spin-off.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the master distribution agreement, each
party will be granted reasonable access to the other
party&#146;s books and records following the spin-off, insofar
as such access is reasonably required and subject to appropriate
restrictions for classified and legally-privileged information.
The master distribution agreement will also require the parties
to use commercially reasonable efforts to make its directors,
officers and employees available as witnesses to the extent
reasonably required. Following the spin-off, subject to
applicable law, each party may destroy its books and records in
accordance with TRW&#146;s record retention policy at the date
of the agreement, subject to the right of each party to request
that the other party retain
</FONT>

<P align="center"><FONT size="2">67
</FONT>

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<DIV align="left">
<FONT size="2">specified books and records beyond the applicable
retention period. The master distribution agreement will also
contain mutual confidentiality obligations with respect to books
and records concerning the other party, subject to customary
exceptions.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Any dispute between the parties arising out of or
relating to the master distribution agreement, the ancillary
agreements or the transactions contemplated thereby will be
subject to mandatory negotiation followed by arbitration.
</FONT>

<P align="left">
<B><FONT size="2">Tax Sharing Agreement</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As part of the spin-off, we and TRW will enter
into a tax sharing agreement that defines each party&#146;s
rights and obligations with respect to federal, state, foreign
and other taxes attributable to the taxable periods beginning
prior to and including the spin-off date and, to a limited
extent, periods beyond the spin-off date.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;</FONT></B><I><FONT size="2">Allocation
of Tax Payments</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The tax sharing agreement will be subject to an
&#147;Overriding Principle&#148; providing that any and all tax
benefits arising or resulting from the third party equity sale
and all transactions undertaken to effect the spin-off will be
for the account of TRW. The Overriding Principle is intended to
provide TRW with the tax benefits arising or resulting from the
third party equity sale and the transactions undertaken to
effect the spin-off to allow TRW to use the proceeds received
therefrom to repay debt or satisfy other expenses. To effect
this result, for periods during which we are included in
TRW&#146;s tax returns, we will be required to pay to TRW an
amount of income tax reflecting our contribution to the income
tax liability of the TRW group as a whole as if the third party
equity sale and all other spin-off transactions had never
occurred. When TRW then files the consolidated or combined tax
returns for the TRW group as a whole, which returns will reflect
the third party equity sale and all other spin-off transactions,
and the tax benefits resulting therefrom, TRW will be entitled
to retain these benefits in their entirety. Also, in the event
that under applicable law we are entitled to carryforward a tax
item, such as a foreign tax credit, to a post spin-off date
period, creating a tax benefit to us, which tax benefit should
have been for the account of TRW in accordance with the
Overriding Principle, we will pay to TRW the amount of any such
tax benefit as and when it is realized. For periods during which
TRW is included in our tax returns, TRW will be required to pay
an amount of income tax equal to the amount it would have paid
had it filed such tax return as a separate entity.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;</FONT></B><I><FONT size="2">Filing
of Tax Returns; Indemnity</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Tax Returns.</FONT></I><FONT size="2"> In
general, TRW and we will prepare and file all tax returns for
which either party or any of its affiliates are legally required
to file and each party will pay all taxes with respect to such
returns. TRW and we agree to file all tax returns consistent
with the tax sharing agreement, all rulings and supplemental
rulings issued by the IRS and the Overriding Principle.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Indemnity.</FONT></I><FONT size="2"> The party
responsible for preparing and filing a tax return, or the filing
party, will indemnify the non-filing party for all taxes with
respect to such tax returns, except for taxes properly
attributable to the business operations of the non-filing party,
to the extent included on such tax returns.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;</FONT></B><I><FONT size="2">Conduct
of Tax Audits</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In general, the filing party shall have the
exclusive right to control, contest and represent the interests
of the parties in any dispute, audit or proceeding relating to
such tax return and to resolve, settle or agree to any
deficiency, claim or adjustment proposed, asserted or assessed
in connection with or as a result of any such dispute, audit or
proceeding. TRW and we will agree to cooperate with all
reasonable requests from the other party for information and
materials not otherwise available to the requesting party in
connection with disputes or audits, the preparation and filing
of tax returns, claims for refunds, and other matters covered by
the tax sharing agreement.
</FONT>

<P align="center"><FONT size="2">68
</FONT>

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<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Other
Tax Matters</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Covenants.</FONT></I><FONT size="2"> TRW and
we will agree not to take any action reasonably expected to
result in an increased tax liability or reduction in a tax asset
of the other party. Additionally, TRW and we have agreed to
protect the tax free status of the spin-off pursuant to
Section&nbsp;355 of the Code. To the extent that any action or
inaction by either party causes the spin-off to be taxable, the
party taking such action or inaction will be liable for the
income taxes incurred by reason of the spin-off not so
qualifying as tax-free under Section 355 of the Code. In certain
circumstances TRW and TRW Automotive would each be responsible
for 50&nbsp;percent of the tax liability resulting from the
spin-off not qualifying as tax-free under Section&nbsp;355 of
the Code.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Supplemental Ruling
Requests.</FONT></I><FONT size="2"> Further, we will agree that
during the two year period following the spin-off we will not
enter into any agreement, understanding or arrangement to sell
or transfer all or substantially all of our assets or any of our
affiliates, merge TRW Automotive or any TRW Automotive affiliate
with or into any other entity, or issue our stock or any stock
of our affiliates unless otherwise provided by the tax sharing
agreement, unless we request a supplemental ruling to the effect
that such transaction will not adversely affect the tax-free
status of the spin-off or result in the imposition of taxes on
TRW. TRW agrees that at our reasonable request, TRW will
cooperate with us and use its reasonable best efforts to seek to
obtain a supplemental ruling or other guidance from the IRS on
certain specified matters, unless that supplemental ruling would
adversely effect TRW. If TRW requests a supplemental ruling or
other guidance from the IRS, it will keep us informed of all
material actions, provide us with draft copies of any such
requests and reasonably consider our comments on such drafts.
</FONT>

<P align="left">
<B><FONT size="2">Insurance Allocation Agreement</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We currently maintain insurance coverage under
TRW&#146;s insurance policies, which generally will expire in
May 2003. As part of the spin-off we will enter into an
insurance allocation agreement with TRW, pursuant to which,
among other things, certain insurance policies and arrangements
of TRW and related coverages will be allocated to us and TRW
will provide certain administrative insurance services to us as
necessary.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We anticipate that the insurance allocation
agreement will provide that under certain of TRW&#146;s existing
insurance policies, such as liability insurance, TRW will
continue to maintain the policy to cover both itself and us
until the scheduled expiration. With respect to other insurance
policies that TRW currently maintains, including property,
workers&#146; compensation and directors and officers&#146;
insurance, the agreement will provide that we will no longer be
covered under TRW&#146;s policies. As a result, we intend to
establish separate insurance programs following the spin-off to
replace these policies.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, with respect to insurance policies
maintained by TRW that cover our operations prior to the
spin-off, the insurance allocation agreement will apportion
financial responsibility for such items as deductibles and self
insurance amounts, coverage and administrative responsibilities
between TRW and us based upon relative benefits. To the extent
necessary, following the spin-off TRW will agree to provide us
certain administrative insurance services to assist us
transition the administration of the insurance policies and
other risk management functions historically performed by TRW.
</FONT>

<P align="left">
<B><FONT size="2">Employee Matters Agreement</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As part of the spin-off, we and TRW will enter
into an employee matters agreement that describes how employment
matters and benefit plan assets and liabilities will be
allocated between the two companies in connection with the
spin-off.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Employees</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All individuals who were engaged primarily in our
business immediately prior to the spin-off will remain or become
employed by us following the spin-off. All other individuals who
are employed by TRW immediately prior to the spin-off will
continue to be employed by TRW following the spin-off. Until at
least January&nbsp;1, 2004, we will be required to pay our
employees at the same base salary or hourly rate that was
</FONT>

<P align="center"><FONT size="2">69
</FONT>

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<DIV align="left">
<FONT size="2">applicable to them prior to the spin-off and to
provide employee benefits that are substantially similar in all
material respects to the benefits provided prior to the spin-off.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Tax-Qualified
Pension Plans</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each tax-qualified pension, savings and 401(k)
plan maintained by us prior to the spin-off will continue to be
maintained by us following the spin-off. With respect to each
tax-qualified pension, savings and 401(k) plan maintained by TRW
immediately prior to the spin-off, including the TRW Salaried
Pension Plan and The TRW Employee Stock Ownership and Savings
Plan, all assets and liabilities with respect to our current and
former employees will be transferred into new plans to be
established by us. Our 401(k) plan will continue to provide a
TRW stock fund until the later of January&nbsp;1, 2004 or the
first anniversary of the spin-off, except that participants will
not be permitted to purchase additional shares of TRW stock.
Similarly, the TRW Employee Stock Ownership and Savings Plan
will continue to provide a fund invested in our stock until the
later of January&nbsp;1, 2004 or the first anniversary of the
spin-off, except that participants will not be permitted to
purchase additional shares of our stock through that fund.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Welfare
Benefit Plans</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Following the spin-off, we will retain or assume
all liabilities under all medical, dental, vision, life
insurance, disability, flexible benefits and similar plans
maintained solely for the benefit of our current or former
employees. With respect to medical, dental, vision, life
insurance, disability, flexible benefits and similar plans
maintained by TRW immediately prior to the spin-off, we will
assume all liabilities with respect to our current or former
employees and will establish new plans that are substantially
similar to the TRW plans for the benefit of our employees and
former employees.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Non-Qualified
Plans</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Following the spin-off, we will retain or assume
all liabilities under all non-qualified retirement and deferred
compensation plans and any related rabbi trusts maintained
solely for the benefit of our current or former employees. With
respect to each other non-qualified retirement and deferred
compensation plan maintained by TRW immediately prior to the
spin-off, we will assume all liabilities with respect to our
current or former employees and will establish new plans that
are substantially similar to the TRW plans for the benefit of
our employees and former employees.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Non-U.S.
Plans</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Through its subsidiaries, TRW maintains
retirement and welfare plans for its non-U.S. employees and
retirees. It is expected that as of the spin-off, these plans
will cover only our employees and former employees. As of the
spin-off, we will retain or assume sponsorship of those plans.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Stock
Options</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of the spin-off, each option to acquire TRW
common stock held by our employees as of the spin-off will
become an option to acquire shares of our common stock in the
manner described above under &#147;Stock Ownership of Directors
and Executive Officers.&#148;
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Incentive
Compensation</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of the spin-off, we will assume or retain
liabilities under all incentive arrangements with respect to our
current and former employees, including the TRW Operational
Incentive Plan and the TRW Strategic Incentive Plan, and will
establish incentive compensation plans offering similar
opportunities under such plans.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Long-Term
Restricted Stock and Restricted Stock Units</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Restricted stock units and unvested restricted
stock held by our employees as of the spin-off will be converted
into our restricted stock or restricted stock units in an amount
determined by applying the TRW Automotive Option Exchange Ratio.
</FONT>

<P align="center"><FONT size="2">70
</FONT>

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<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Severance
Pay</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We and TRW have agreed that the spin-off will not
constitute a severance from employment for purposes of any
severance plan or arrangement. As of the spin-off, we will
assume or retain the liability for severance claims made by our
employees and former employees.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Employment
and Consulting Agreements</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of the spin-off, we will assume or retain
liability for employment, consulting and similar agreements
relating to our employees and former employees.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Other
Liabilities</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of the spin-off, we will assume or retain all
other liabilities relating to our employees and former
employees, including all litigation, administrative charges,
workers&#146; compensation claims, grievances, arbitrations and
alternative dispute resolution claims.
</FONT>

<P align="left">
<B><FONT size="2">Intellectual Property License
Agreements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to the spin-off, we and TRW will enter into
intellectual property license agreements, pursuant to which,
among other things, we will license certain intellectual
property from TRW and TRW will license certain intellectual
property from us.
</FONT>

<P align="left">
<B><FONT size="2">Trademark License Agreement</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to the spin-off, we and TRW will enter into
a trademark license agreement, pursuant to which TRW will
license certain names and trademarks to us. In general, the
names and trademarks of TRW and its subsidiaries prior to the
spin-off will be allocated to the TRW Remaining Business or the
TRW Automotive Business, as appropriate. The parties will be
permitted to use the names and trademarks of the other party on
molds, labels, signage and the like for a transition period
following the spin-off.
</FONT>

<P align="left">
<B><FONT size="2">Transition Services Agreement</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">After the spin-off, we will have contractual
arrangements with TRW pursuant to which TRW and its subsidiaries
will provide certain transitional services to us. These services
include, among others:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">financial services, such as financial reporting,
    tax, treasury, accounting, audit and investment management;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">legal services;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">human resources services, including pension and
    benefits support;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">information systems services;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">environmental support; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">other administrative support services
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We intend for these transitional arrangements to
last for only a short period, generally less than one year.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These arrangements were made in the overall
context of our separation from TRW. While the intent is for the
services to be provided at cost, the prices charged to us under
these agreements may be higher or lower than the prices that may
be charged by unaffiliated third parties for similar services or
the cost at which we could provide such services using our own
personnel. We anticipate that most of the transitional services
will be transferred to our own employees or to third party
vendors within the first year after the spin-off.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We also will be providing limited transitional
services, primarily certain payroll and accounting services,
back to TRW. These arrangements generally will last for no more
than one year following the spin-off, and the services will be
provided at cost.
</FONT>

<P align="center"><FONT size="2">71
</FONT>

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<!-- link1 "PRINCIPAL STOCKHOLDERS OF TRW AND TRW AUTOMOTIVE" -->
<DIV align="left"><A NAME="013"></A></DIV>

<P align="center">
<B><FONT size="2">PRINCIPAL STOCKHOLDERS OF TRW AND TRW
AUTOMOTIVE</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">TRW beneficially and of record holds, and will
hold before the spin-off, all of the outstanding shares of our
common stock. Holders of shares of TRW common stock, including
our directors and executive officers will receive one share of
our common stock for each share of TRW common stock. See
&#147;Management&nbsp;&#151; Stock Ownership of Directors and
Executive Officers.&#148; After giving effect to the anticipated
third party equity sale and the spin-off, the third party equity
investor will
own &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of our Series&nbsp;A Convertible Preferred Stock, which is
expected to
be &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;percent
of the shares of our common stock after the spin-off, assuming
conversion of these shares into our common stock. To our
knowledge, except as set forth below, no person beneficially
owns more than five percent of the outstanding shares of TRW
common stock. Except as otherwise noted in the footnotes below,
the following table presents information as of December&nbsp;31,
2001 derived from Statements of Beneficial Interest on
Schedule&nbsp;13G filed with the SEC by persons beneficially
owning more than five percent of the outstanding shares of TRW
common stock:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="60%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">and Nature of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Beneficial</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name of Beneficial Owner</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Ownership (1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percent of Class</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">The TRW Employee Stock Ownership and Savings
    Plan(2)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,687,649(2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital Research and Management Company(3)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,058,300(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">FMR Corp.(4)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,186,623(4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Each beneficial owner listed in the table
    certified in its Statement of Beneficial Interest on
    Schedule&nbsp;13G that, to the best of its knowledge and belief,
    the shares of TRW common stock beneficially owned by it were
    acquired in the ordinary course of business and not for the
    purpose of changing or influencing control of the company.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The address of the TRW Employee Stock Ownership
    and Savings Plan is 1900&nbsp;Richmond Road Cleveland, Ohio
    44124. Putnam Fiduciary Trust Company, One Post Office Square,
    Boston, Massachusetts 02109, serves as trustee of The TRW
    Employee Stock Ownership and Savings Plan. Putnam Fiduciary
    Trust Company disclaims beneficial ownership of the shares, as
    it does not retain discretionary authority to buy, sell or vote
    the securities. The TRW Employee Stock Ownership and Savings
    Plan reported shared voting and dispositive power over all the
    shares beneficially owned. As of May&nbsp;31, 2002, The TRW
    Employee Stock Ownership and Savings Plan beneficially owned
    18,361,080&nbsp;shares, or approximately 14.4&nbsp;percent of
    the outstanding TRW common stock.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The address of Capital Research and Management
    Company is 333 South Hope Street Los Angeles, California 90071.
    Capital Research and Management Company filed Amendment
    No.&nbsp;4 to its Statement of Beneficial Ownership on
    Schedule&nbsp;13G on February&nbsp;11, 2002, reporting
    beneficial ownership of 13,058,300&nbsp;shares of TRW common
    stock. Of these shares, Capital Research and Management Company
    reported that it has sole dispositive power over
    13,058,300&nbsp;shares and voting power over no shares. Capital
    Research and Management Company is deemed to be the beneficial
    owner of these shares as a result of acting as investment
    adviser to various investment companies registered under the
    Investment Company Act of 1940. Capital Research and Management
    Company disclaims beneficial ownership of all these shares.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(4)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The address of FMR Corp. is 82&nbsp;Devonshire
    Street Boston, Massachusetts 02109. FMR Corp., Edward&nbsp;C.
    Johnson&nbsp;3d and Abigail&nbsp;P. Johnson jointly filed
    Amendment No.&nbsp;4 to their Statement of Beneficial Ownership
    on Schedule&nbsp;13G on April&nbsp;5, 2002, reporting beneficial
    ownership of 7,186,623&nbsp;shares of TRW common stock. Of the
    total amount held by FMR Corp., (a)&nbsp;6,668,713 shares are
    beneficially owned by Fidelity Management&nbsp;&#38; Research
    Company as a result of its acting as investment adviser to
    various investment companies registered under the Investment
    Company Act of 1940, (b)&nbsp;300,882 shares are beneficially
    owned by Fidelity Management Trust Company as a result of its
    serving as investment manager of institutional accounts,
    (c)&nbsp;1,728 shares are beneficially owned by Strategic
    Advisers, Inc. as a result of its having sole dispositive power
    over securities held for individuals to which it provides
    investment advisory services as an investment adviser under the
    Investment
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">72
</FONT>
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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD align="left">
    <FONT size="2">Company Act of 1940 and (d)&nbsp;215,300 shares
    are beneficially owned by Fidelity International Limited.
    Fidelity Management &#38; Research Company, Fidelity Management
    Trust Company and Strategic Advisors, Inc. are wholly-owned
    subsidiaries of FMR Corp. A partnership controlled by the
    controlling group of FMR Corp. owns 39.89&nbsp;percent of the
    voting stock of Fidelity International Limited. FMR Corp.
    (through its control of Fidelity Management Trust Company) has
    sole power to vote 222,882&nbsp;shares and sole dispositive
    power over 300,882&nbsp;shares. FMR Corp. has no voting power
    over 78,000&nbsp;shares owned by the institutional accounts
    managed by Fidelity Management Trust Company. FMR Corp. (through
    its control of Fidelity Management&nbsp;&#38; Research Company)
    has sole dispositive power over an additional
    6,668,713&nbsp;shares. The sole voting power of these shares
    resides with the Boards of Trustees of the Fidelity Funds.
    Fidelity International Limited has sole power to vote and the
    sole power to dispose of 215,300&nbsp;shares. Edward&nbsp;C.
    Johnson&nbsp;3d and Abigail&nbsp;P. Johnson are control persons
    of FMR Corp. Robert&nbsp;M. Gates, a TRW director, is a trustee
    of The Fidelity Funds.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">73
</FONT>

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<!-- link1 "DESCRIPTION OF CAPITAL STOCK" -->
<DIV align="left"><A NAME="014"></A></DIV>

<P align="center">
<B><FONT size="2">DESCRIPTION OF CAPITAL STOCK</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our certificate of incorporation authorizes us to
issue up to 500&nbsp;million shares of common stock, par value
$.001&nbsp;per share, and 50&nbsp;million shares of undesignated
preferred stock, par value $.001&nbsp;per share. The following
statements are brief summaries of the material provisions of our
capital stock contained in our certificate of incorporation and
bylaws, copies of which have been filed as exhibits to the
registration statement of which this prospectus is a part. The
following summary is qualified in its entirety by reference to
these exhibits.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Immediately after the spin-off, we expect there
will
be &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of our Series&nbsp;A Preferred Convertible Stock issued and
outstanding which will
represent &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;percent
of the outstanding shares of common stock, assuming conversion
of these shares into shares of our common stock,
and &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of our common stock issued and outstanding. All shares of our
preferred stock and our common stock to be outstanding
immediately after the spin-off will be fully paid and
non-assessable.
</FONT>

<P align="left">
<B><FONT size="2">Common Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each stockholder is entitled to one vote for each
share of our common stock held on all matters submitted to a
vote of stockholders. The vote of the holders of a majority of
the total number of votes of our capital stock will decide any
question, other than the election of directors, brought before
any meeting of the stockholders. For the election of directors,
a plurality of the votes cast at each annual meeting of
stockholders will be necessary. Cumulative voting for the
election of directors will not be provided for in our
certificate of incorporation. Therefore, the holders of a
majority of the shares voting for the election of our board of
directors will be able to elect all the directors standing for
election, if they so choose. Subject to any superior rights of
any holders of our preferred stock that may apply, each
outstanding share of our common stock will be entitled to
dividends at the times and in the amounts as may be determined
by our board of directors out of legally available assets. In
the event of a liquidation, dissolution or winding up, holders
of shares of our common stock will be entitled to share ratably
in any remaining assets available for distribution after
satisfaction of all of our liabilities and the payment of the
liquidation preference of any outstanding shares of our
preferred stock. Holders of our common stock will have no
preemptive rights and no right or obligation to convert or
exchange their shares into any other securities. No redemption
or sinking fund provisions will apply to our common stock.
</FONT>

<P align="left">
<B><FONT size="2">Preferred Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our board of directors will be authorized,
without stockholder approval, to issue up to 50&nbsp;million
shares of preferred stock in one or more classes or series and
to fix the rights, preferences, privileges and restrictions
granted to or imposed upon the preferred stock, including voting
rights, dividend rights, conversion rights, terms of redemption,
liquidation preference, sinking fund terms and the number of
shares constituting any series or the designation of a series.
Our board of directors will be able to issue preferred stock
with voting and conversion rights that could have the effect of
decreasing the market price of our common stock and could
adversely affect the voting power of the holders of our common
stock, without stockholder approval. The issuance of preferred
stock could have the effect of delaying, deferring or preventing
a change in control of our company.
</FONT>

<P align="left">
<B><FONT size="2">Anti-Takeover Effects of Delaware General
Corporation Law and Provisions of our Certificate of
Incorporation and Bylaws</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to the potential anti-takeover
effects of the preferred stock as summarized above, our
certificate of incorporation and bylaws contain several
provisions that may make it more difficult for a third party to
acquire us by means of a tender offer, open market purchase,
proxy fight or otherwise. These provisions are designed to
encourage persons seeking to acquire control of us to negotiate
with our board of directors. We believe that, as a general rule,
the interests of our stockholders will be served best if any
change in control results from negotiations with our board of
directors based upon careful consideration of the proposed
terms, such as the price to be paid to our stockholders, the
form of consideration to be paid and the
</FONT>

<P align="center"><FONT size="2">74
</FONT>

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<DIV align="left">
<FONT size="2">anticipated tax effects of the transaction. These
provisions could, however, have the effect of discouraging a
prospective acquiror from making a tender offer for our shares
or otherwise attempting to obtain control of us. To the extent
that these provisions discourage takeover attempts, they could
deprive stockholders of opportunities to realize takeover
premiums for their shares. Moreover, these provisions could
discourage accumulations of large blocks of our common stock,
thus depriving stockholders of any advantages which large
accumulations of stock might provide.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Classified
Board of Directors</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our board of directors will be divided into three
classes of directors, as nearly equal in number as possible,
serving staggered terms. Approximately one-third of our board
will be elected each year. The provision for a classified board
could prevent a third party that acquires control of a majority
of our outstanding voting stock from obtaining control of our
board until the second annual meeting of stockholders following
the date a third party obtains the controlling stock interest.
As a result, the provision could have the effect of discouraging
a potential acquiror from making a tender offer for our shares
or otherwise attempting to obtain control of us and could
increase the likelihood that our incumbent directors will retain
their positions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that a classified board will help to
assure the continuity and stability of our board and our
business strategies and policies as determined by our board,
because a majority of the directors at any given time will have
prior experience on our board. The classified board provision
should also help to ensure that our board, if confronted with an
unsolicited proposal from a third party that has acquired a
block of our voting stock, will have sufficient time to review
an unsolicited third party proposal and appropriate alternatives
and to seek the best available result for all stockholders.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Number
of Directors; Removal; Vacancies</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The number of directors that serve on our board
of directors will be not fewer than five nor more than sixteen
and will be set by resolution of our board of directors. Subject
to the rights of the holders of any series of preferred stock,
if any, directors may be removed, but only for cause by the
affirmative vote of the holders of two-thirds of our voting
stock. Any vacancy on our board of directors that results from
an increase in the number of directors may be filled by a
majority of our board of directors then in office, provided that
a quorum is present, and any other vacancy occurring on our
board of directors may be filled by a majority of our board of
directors then in office, even if less than a quorum, or by a
sole remaining director. Any director of any class elected to
fill a vacancy resulting from an increase in the number of
directors of such class will hold office for a term that will
coincide with the remaining term of that class. Any director
elected to fill a vacancy not resulting from an increase in the
number of directors will have the same remaining term as that of
his predecessor.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Stockholder
Action; Special Meetings</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our certificate of incorporation provides that
stockholder action can be taken only at an annual or special
meeting of our stockholders and cannot be taken by written
consent in lieu of a meeting. Special meetings of our
stockholders can only be called by the chairman of our board,
the president, or at the request of our board of directors or a
committee of our board.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Advance
Notice Requirements for Stockholder Proposals and Director
Nominations</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our bylaws provide that stockholders seeking to
bring business before an annual meeting of our stockholders, or
to nominate candidates for election as directors at an annual
meeting of our stockholders, must provide timely notice in
writing. To be timely, a stockholder&#146;s notice must be
delivered to or mailed and received at our principal executive
offices not less than 90 nor more than 120&nbsp;days prior to
the anniversary date of the immediately preceding annual meeting
of our stockholders. However, in the event that the annual
meeting is called for a date that is not within 30&nbsp;days
before or after such anniversary date, notice by the stockholder
in order to be timely must be received not later than the close
of business on the 10th day following the date on which notice
of the date of the annual meeting was mailed to stockholders or
made
</FONT>

<P align="center"><FONT size="2">75
</FONT>

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<DIV align="left">
<FONT size="2">public, whichever first occurs. In the case of a
special meeting of our stockholders called for the purpose of
electing directors, notice by the stockholder in order to be
timely must be received not later than the close of business on
the 10th day following the day on which notice of the date of
the special meeting was mailed or public disclosure of the date
of the special meeting was made, whichever first occurs. Our
bylaws also specify requirements as to the form and content of a
stockholder&#146;s notice. These provisions may preclude
stockholders from bringing matters before an annual meeting of
our stockholders or from making nominations for directors at an
annual meeting of our stockholders.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Authorized
but Unissued Shares</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The authorized but unissued shares of our common
stock and preferred stock will be available for future issuance
without stockholder approval. These additional shares may be
utilized for a variety of corporate purposes, including future
public offerings to raise additional capital, corporate
acquisitions and employee benefit plans. The existence of
authorized but unissued shares of our common stock and preferred
stock could render more difficult or discourage an attempt by a
third party to obtain control of us by means of a proxy contest,
tender offer, merger or otherwise.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Amendments;
Supermajority Vote Requirements</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Delaware General Corporation Law, or the
DGCL, provides generally that the affirmative vote of a majority
of the shares entitled to vote on any matter is required to
amend a corporation&#146;s certificate of incorporation or
bylaws, unless either a corporation&#146;s certificate of
incorporation or bylaws require a greater percentage. Our
certificate of incorporation imposes supermajority vote
requirements in connection with the amendment of our bylaws and
amendment of provisions of our certificate of incorporation,
including those provisions relating to the classified board of
directors, action by written consent and the ability of
stockholders to call special meetings. The provisions that
impose supermajority vote requirements may make it more
difficult to change the bylaws for the purpose of gaining
control over us.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Business
Combinations with Interested Stockholders</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a Delaware corporation, we are governed by
Section&nbsp;203 of the DGCL. Section&nbsp;203, subject to some
exceptions, prohibits a Delaware corporation from engaging in
any business combination with any interested stockholder for a
period of three years following the time that such stockholder
became an interested stockholder, unless:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">prior to such time, the board of the corporation
    approved either the business combination or the transaction
    which resulted in the stockholder becoming an interested
    stockholder;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">upon consummation of the transaction that
    resulted in the stockholder becoming an interested stockholder,
    the interested stockholder owned at least 85&nbsp;percent of the
    voting stock of the corporation outstanding at the time the
    transaction commenced, excluding specified shares; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">at or subsequent to such time, the business
    combination is approved by the board and authorized at an annual
    or special meeting of stockholders, and not by written consent,
    by the affirmative vote of at least two-thirds of the
    outstanding voting stock that is not owned by the interested
    stockholder.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In general, Section&nbsp;203 defines
&#147;business combination&#148; to include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any merger or consolidation involving the
    corporation and the interested stockholder;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any sale, lease, exchange, mortgage, pledge,
    transfer or other disposition of assets having an aggregate
    market value equal to 10&nbsp;percent or more of the aggregate
    market value of the corporation&#146;s assets to or with the
    interested stockholder;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">subject to certain exceptions, any transaction
    which results in the issuance or transfer by the corporation of
    any stock of the corporation to the interested stockholder;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">76
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any transaction involving the corporation which
    has the effect of increasing the proportionate share of the
    stock of any class or series of the corporation beneficially
    owned by the interested stockholder; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the receipt by the interested stockholder of the
    benefit of any loans, advances, guarantees, pledges or other
    financial benefits provided by or through the corporation.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In general, Section&nbsp;203 defines an
&#147;interested stockholder&#148; as any person who is:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the owner of 15&nbsp;percent or more of the
    outstanding voting stock of the corporation; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an affiliate or associate of the corporation and
    was the owner of 15&nbsp;percent or more of the outstanding
    voting stock of the corporation at any time within three years
    immediately prior to the relevant date; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an affiliate or associate of either of the above.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Registrar And Transfer Agent</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have appointed National City Bank as the
registrar and transfer agent for our capital stock.
</FONT>

<P align="left">
<B><FONT size="2">Listing</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We will apply to have our common stock listed on
the NYSE under the symbol
&#147;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.&#148;
</FONT>

<P align="center"><FONT size="2">77
</FONT>

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<!-- link1 "CERTAIN INDEBTEDNESS" -->
<DIV align="left"><A NAME="015"></A></DIV>

<P align="center">
<B><FONT size="2">CERTAIN INDEBTEDNESS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon completion of the restructuring
transactions, we expect to have outstanding approximately
$2.8&nbsp;billion of debt, which we believe, on the advice of
our financial advisors, is an appropriate level of debt to
obtain and maintain an investment grade rating. We are
continuing to evaluate alternative plans for creating that debt,
and our initial debt load may be established through the
issuance of new debt or the assumption of existing TRW debt, or
a combination of these approaches. The final terms of that debt
and our approach for incurring it will not be determined until
shortly prior to the declaration by TRW of the dividend
comprising the shares of our common stock that will be
distributed in the spin-off, or the spin-off declaration date.
The unaudited pro forma financial information as of
December&nbsp;31, 2001, and the pro forma capitalization
information as of June&nbsp;30, 2002, each of which appear
elsewhere in this prospectus, assume that we will have
$2.8&nbsp;billion in debt.
</FONT>

<P align="center"><FONT size="2">78
</FONT>
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<!-- link1 "SHARES ELIGIBLE FOR FUTURE SALE" -->
<DIV align="left"><A NAME="016"></A></DIV>

<P align="center">
<B><FONT size="2">SHARES ELIGIBLE FOR FUTURE SALE</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our shares being distributed in the spin-off will
be freely transferable, except for shares held by persons that
are &#147;affiliates&#148; as defined in the Securities Act of
1933. The Securities Act of 1933 generally defines affiliates as
individuals or entities that control, are controlled by, or are
under common control with us and may include our officers,
directors and principal stockholders. Shares held by affiliates
may only be sold pursuant to an effective registration statement
under the Securities Act of 1933 or Rule&nbsp;144 promulgated
thereunder. We cannot predict whether substantial amounts of our
shares will be sold in the open market following the
distribution. Sales of substantial amounts of our shares in the
public market, or the perception that substantial sales may
occur, could adversely affect their market price.
</FONT>

<P align="left">
<B><FONT size="2">Stock Options</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Following the spin-off, we intend to file a
registration statement on Form&nbsp;S-8 under the Securities Act
covering shares of common stock issued or reserved for issuance
under our Plan. The registration statement will become effective
automatically upon filing. Accordingly, shares registered under
the registration statement on Form&nbsp;S-8 will, subject to
vesting provisions and Rule&nbsp;144 volume limitations
applicable to our affiliates, be available for sale in the open
market immediately.
</FONT>

<P align="left">
<B><FONT size="2">Rule&nbsp;144</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In general, under Rule&nbsp;144 as currently in
effect for shares of our common stock received in the spin-off,
beginning 90&nbsp;days after the date of this prospectus, a
person who has beneficially owned restricted shares of our
common stock for at least one year would be entitled to sell in
&#147;broker&#146;s transactions&#148; or to market makers,
within any three-month period, a number of shares that does not
exceed the greater of:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">One percent of the number of shares of our common
    stock then outstanding; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The average weekly trading volume in our common
    stock on the NYSE during the four calendar weeks preceding the
    filing of a notice on Form&nbsp;144 with respect to such sale.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Rule&nbsp;144 permits holders of our common stock
who are also affiliates, and who would therefore be subject to
the restrictions of Rule&nbsp;144 with respect to sales of our
common stock, to include in their holding period under
Rule&nbsp;144 the period of time for which they had held TRW
stock.
</FONT>

<P align="left">
<B><FONT size="2">Rule&nbsp;144(k)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under Rule&nbsp;144(k), a person who is not
deemed to have been our affiliate at any time during the
90&nbsp;days preceding a sale, and who has beneficially owned
the shares proposed to be sold for at least two years, is
entitled to sell such shares without having to comply with the
manner of sale, public information, volume limitation or notice
filing provisions of Rule&nbsp;144. Therefore, unless otherwise
restricted, &#147;144(k) shares&#148; may be sold immediately
upon the completion of the distribution.
</FONT>

<!-- link1 "LEGAL MATTERS" -->
<DIV align="left"><A NAME="017"></A></DIV>

<P align="center">
<B><FONT size="2">LEGAL MATTERS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">William B. Lawrence, Executive Vice President,
General Counsel and Secretary of TRW Inc., will pass on the
validity of our common stock to be distributed in the spin-off.
</FONT>

<!-- link1 "EXPERTS" -->
<DIV align="left"><A NAME="018"></A></DIV>

<P align="center">
<B><FONT size="2">EXPERTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The combined financial statements of TRW
Automotive Inc. at December&nbsp;31, 2001 and 2000, and for each
of the three years in the period ended December&nbsp;31, 2001,
appearing in this prospectus have been audited by
Ernst&nbsp;&#38; Young&nbsp;LLP, independent auditors, as set
forth in their report thereon appearing elsewhere in this
prospectus, and are included in reliance upon such report given
on the authority of such firm as experts in accounting and
auditing.
</FONT>

<P align="center"><FONT size="2">79
</FONT>
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<!-- link1 "WHERE YOU CAN FIND MORE INFORMATION" -->
<DIV align="left"><A NAME="019"></A></DIV>

<P align="center">
<B><FONT size="2">WHERE YOU CAN FIND MORE INFORMATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">After the spin-off, we will file annual,
quarterly and special reports, proxy statements and other
information with the SEC. We intend to furnish our stockholders
with annual reports containing consolidated financial statements
certified by an independent public accounting firm. We have
filed a registration statement on Form&nbsp;S-1 with the SEC
regarding the spin-off. This prospectus, which is part of the
registration statement, does not contain all of the information
included in the registration statement, and you should refer to
the registration statement and its exhibits to read that
information.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">References in this prospectus to any of our
contracts or other documents are not necessarily complete, and
you should refer to the exhibits attached to the registration
statement, the related exhibits and the other material we have
filed with the SEC at the SEC&#146;s public reference room in
Washington,&nbsp;D.C. located at 450&nbsp;Fifth Street, N.W.
Washington,&nbsp;D.C. 20549 and at the SEC&#146;s regional
offices in Chicago, Illinois and New York, New York. You can
also request copies of those documents, upon payment of a
duplicating fee, by writing to the SEC. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the
public reference rooms. The SEC also maintains an Internet site
that contains reports, proxy and information statements and
other information regarding issuers that file with the SEC. The
site&#146;s Internet address is www.sec.gov. You may also
inspect information about us at the offices of the NYSE located
at 20&nbsp;Broad Street, New York, New York 10005.
</FONT>

<P align="center"><FONT size="2">80
</FONT>
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<!-- link1 "INDEX TO COMBINED FINANCIAL STATEMENTS" -->
<DIV align="left"><A NAME="020"></A></DIV>

<P align="center">
<B><FONT size="2">INDEX TO COMBINED FINANCIAL
STATEMENTS</FONT></B>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="93%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Annual Financial Statements</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Report of Independent Auditors
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Statements of Operations for the Years Ended
    December&nbsp;31, 2001, 2000 and 1999
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance Sheets at December&nbsp;31, 2001 and 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Statements of Cash Flows for the Years Ended
    December&nbsp;31, 2001, 2000 and 1999
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Statements of Changes in Stockholder&#146;s
    Investment for the Years Ended December&nbsp;31, 2001, 2000, and
    1999
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Notes to Financial Statements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Interim Financial Statements for the Six Month
    Periods Ended June&nbsp;30, 2002 and 2001 (unaudited)</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance Sheet at June&nbsp;30, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Statements of Operations for the Six Month
    Periods Ended June&nbsp;30, 2002 and 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Statements of Cash Flows for the Six Month
    Periods Ended June&nbsp;30, 2002 and 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Notes to Financial Statements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">F-&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-1
</FONT>
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<P align="center">
<B><FONT size="2">REPORT OF ERNST &#38; YOUNG LLP, INDEPENDENT
AUDITORS</FONT></B>

<P align="left">
<FONT size="2">Stockholder and Directors
</FONT>

<DIV align="left">
<FONT size="2">TRW Automotive Inc.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have audited the accompanying combined balance
sheets of TRW Automotive Inc. and subsidiaries as of
December&nbsp;31, 2001 and 2000, and the related combined
statements of operations, cash flows and changes in
stockholder&#146;s investment for each of the three years in the
period ended December&nbsp;31, 2001. These financial statements
are the responsibility of the Company&#146;s management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We conducted our audits in accordance with
auditing standards generally accepted in the United States.
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In our opinion, the financial statements referred
to above present fairly, in all material respects, the combined
financial position of TRW Automotive Inc. and subsidiaries at
December&nbsp;31, 2001 and 2000, and the combined results of
their operations and their cash flows for each of the three
years in the period ended December&nbsp;31, 2001, in conformity
with accounting principles generally accepted in the United
States.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">/s/ ERNST &#38; YOUNG LLP
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Cleveland, Ohio
</FONT>

<DIV align="left">
<FONT size="2">May&nbsp;15, 2002,
</FONT>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">except for the &#147;Capital Stock&#148; note,
    <BR>
     as to which the date is June&nbsp;3, 2002
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">F-2
</FONT>
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<P align="center">
<B><FONT size="2">TRW AUTOMOTIVE INC.</FONT></B>

<P align="center">
<B><FONT size="2">STATEMENTS OF OPERATIONS</FONT></B>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="68%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December 31</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,091</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,920</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,472</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cost of sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,967</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,420</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,824</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gross profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,648</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Administrative and selling expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">624</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">694</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">704</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Research and development expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">131</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">167</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">178</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">371</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">386</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">368</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amortization of goodwill and intangible assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">69</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchased in-process research and development
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">67</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other (income) expense&nbsp;&#151; net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(12</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">58</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Earnings (loss) before income taxes from
    continuing operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(71</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">189</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">204</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax expense (benefit)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(32</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">136</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Earnings (loss) from continuing operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(39</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">90</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">68</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Discontinued operations (net of taxes)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">54</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net earnings (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(28</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">93</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">122</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">See notes to financial statements.
</FONT>

<P align="center"><FONT size="2">F-3
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">TRW AUTOMOTIVE INC.</FONT></B>

<P align="center">
<B><FONT size="2">BALANCE SHEETS</FONT></B>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="71%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">December 31</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Assets</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">118</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">151</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts receivable (net of allowances of
    $41&nbsp;million in 2001 and in 2000)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">853</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,429</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest in securitized receivables
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">162</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventories
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Finished products and work in-process
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">312</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">372</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Raw materials and supplies
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">240</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">304</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total inventories
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">552</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">676</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prepaid expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">58</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">59</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">194</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">206</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total current assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,937</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,521</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Property, plant and equipment&nbsp;&#151; on the
    basis of cost
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Land
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">75</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Buildings
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,128</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,141</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Machinery and equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,613</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,495</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,817</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,711</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Less accumulated depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,242</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,997</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total property, plant and equipment&nbsp;&#151;
    net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,575</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,714</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Intangible assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Goodwill
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,591</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,613</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other intangible assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">310</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">358</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,901</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,971</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Less accumulated amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">374</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">255</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total intangible assets&nbsp;&#151; net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,527</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,716</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Investments in affiliated companies
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">74</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">86</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other notes and accounts receivable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">153</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">205</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">243</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">357</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prepaid pension cost
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,778</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,694</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,287</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,293</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Liabilities and stockholder&#146;s
    investment</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <FONT size="2">Current liabilities
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Short-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">177</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">227</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Trade accounts payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,252</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,331</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accrued compensation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">218</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">256</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other accruals
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">786</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">801</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">126</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">143</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current portion of long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total current liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,577</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,786</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Debt allocated from TRW
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,105</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,469</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">297</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">329</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Post-retirement benefits other than pensions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">743</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">730</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Long-term liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">455</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">545</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">535</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">598</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interests
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">71</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">120</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Stockholder&#146;s investment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Parent company investment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,925</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,015</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated other comprehensive income (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(421</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(299</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total stockholder&#146;s investment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,504</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,716</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,287</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,293</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">See notes to financial statements.
</FONT>

<P align="center"><FONT size="2">F-4
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">TRW AUTOMOTIVE INC.</FONT></B>

<P align="center">
<B><FONT size="2">STATEMENTS OF CASH FLOWS</FONT></B>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="63%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended December 31</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Operating activities</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net earnings (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(28</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">93</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">122</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Adjustments to reconcile net earnings (loss) to
    net cash provided by operating activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">548</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">577</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">630</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pension income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(240</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(242</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(187</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net gain on sale of assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(18</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(22</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Asset impairment charges
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">67</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pending and threatened litigation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">114</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(22</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Discontinued operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(54</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchased in-process research and development
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">67</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other&nbsp;&#151; net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">81</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Changes in assets and liabilities, net of effects
    of businesses acquired or divested
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts receivable, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(96</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Securitization of accounts receivable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">327</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventories
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">103</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Trade accounts payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(40</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">152</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">108</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prepaid expenses and other liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(87</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(268</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">145</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other&nbsp;&#151; net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">163</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">133</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">134</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash provided by operating activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">828</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">751</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">964</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Investing activities</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital expenditures including other intangibles
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(475</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(501</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(665</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net proceeds from divestitures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,110</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Acquisitions, net of cash acquired
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,404</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other&nbsp;&#151; net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(56</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash (used in) provided by investing
    activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(409</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">641</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,089</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Financing activities</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">(Decrease) increase in short-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(36</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(150</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Proceeds from debt in excess of 90&nbsp;days
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Principal payments on debt in excess of
    90&nbsp;days
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(47</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(85</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(326</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net transfers (to) from parent company
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(386</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,245</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,585</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other&nbsp;&#151; net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(17</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net cash (used in) provided by financing
    activities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(464</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,452</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,296</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Effect of exchange rate changes on cash
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(12</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">(Decrease) increase in cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(33</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(72</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">180</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents at beginning of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">151</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">223</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents at end of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">118</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">151</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">223</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Supplemental Cash Flow Information</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest paid, net of amount capitalized
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">368</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">396</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">352</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income tax refunds, net of taxes paid
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">61</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">167</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">See notes to financial statements.
</FONT>

<P align="center"><FONT size="2">F-5
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">TRW AUTOMOTIVE INC.</FONT></B>

<P align="center">
<B><FONT size="2">STATEMENTS OF CHANGES IN STOCKHOLDER&#146;S
INVESTMENT</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="55%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Accumulated</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Parent</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Other</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Company</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Comprehensive</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Stockholder&#146;s</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Investment</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Income (Loss)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Investment</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Balance at December&nbsp;31, 1998</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,449</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(89</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,360</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net earnings (loss)&nbsp;&#151; 1999
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">122</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#150;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">122</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Foreign exchange loss, net of tax of
    $2&nbsp;million
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(33</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(33</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unrealized gain on securities, net of tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minimum pension liability, net of tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total comprehensive income (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">87</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net transfers (to) from parent company
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">347</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">347</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Balance at December&nbsp;31, 1999</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,918</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(124</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,794</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net earnings (loss)&nbsp;&#151; 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">93</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">93</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Foreign exchange loss, net of tax of
    $69&nbsp;million
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(171</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(171</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minimum pension liability, net of tax of
    $3&nbsp;million
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total comprehensive income (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(82</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net transfers (to) from parent company
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Balance at December&nbsp;31, 2000</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,015</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(299</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,716</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net earnings (loss)&nbsp;&#151; 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(28</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(28</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Foreign exchange loss, net of tax of
    $14&nbsp;million
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(76</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(76</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minimum pension liability, net of tax of
    $25&nbsp;million
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(47</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(47</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred cash flow hedges, net of tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total comprehensive income (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(150</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net transfers (to) from parent company
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(62</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(62</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Balance at December&nbsp;31, 2001</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,925</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(421</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,504</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">See notes to financial statements.
</FONT>

<P align="center"><FONT size="2">F-6
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">TRW AUTOMOTIVE INC.</FONT></B>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL STATEMENTS</FONT></B>

<P align="left">
<B><FONT size="2">Background</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">TRW Automotive Inc. (referred to herein as TRW
Automotive or the Company) is a wholly-owned subsidiary of TRW
Inc. (TRW). TRW Automotive was incorporated in Delaware on
June&nbsp;3, 2002 in contemplation of the spin-off announced by
the TRW Board of Directors in March 2002. The spin-off is the
method by which TRW will be separated into two independent
publicly traded companies:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">TRW Automotive, which will consist of TRW&#146;s
    automotive business and TRW&#146;s subsidiaries and affiliates
    associated with the automotive business; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">TRW, which will consist of TRW&#146;s systems and
    space and electronics and TRW&#146;s subsidiaries and affiliates
    associated with their businesses.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Historically, TRW Automotive&#146;s business
resulted from the combination of the legacy TRW automotive
business with the legacy LucasVarity plc (LucasVarity)
automotive business.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The &#147;restructuring transactions&#148; refer
to the series of transactions that will result in the separation
of TRW&#146;s automotive business and TRW&#146;s non-automotive
businesses.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Shortly before the spin-off, TRW will transfer to
TRW Automotive all of the assets associated with its automotive
business, and TRW Automotive will assume all of the liabilities
associated with the automotive business (including contingent
liabilities). TRW will retain all of the assets and liabilities
associated with its non-automotive businesses. All assets and
liabilities will be transferred without any representation or
warranty on an &#147;as is, where is&#148; basis.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As part of the restructuring transactions, TRW
Automotive intends to issue to TRW that number of shares of TRW
Automotive common stock to be outstanding on the spin-off record
date so as to be able to effect a one-for-one distribution of
such shares in the spin-off and avoid fractional shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In general, all intercompany balances between TRW
and TRW Automotive will be settled by cancellation or transfer
in the restructuring transactions. Based on the anticipated cash
requirements of TRW and TRW Automotive following the spin-off,
the master distribution agreement governing the spin-off will
set a &#147;restructuring funding target amount&#148; for TRW
Automotive and, to ensure that this target is met, will provide
for a cash adjustment based on the difference between the
&#147;restructuring funding actual amount&#148; and the
&#147;restructuring funding target amount&#148; as of the end of
the fiscal month immediately preceding the spin-off.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to the spin-off, TRW Automotive expects to
enter into agreements with TRW in connection with its separation
from TRW, the spin-off and related matters. These agreements are
expected to include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a master distribution agreement, providing for,
    among other things, the completion of the restructuring
    transactions and the spin-off, and agreements between TRW
    Automotive and TRW, including those relating to indemnification;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a tax sharing agreement, providing for, among
    other things, the allocation between TRW Automotive and TRW of
    federal, state, local and foreign tax liabilities for periods
    prior to the spin-off and in some instances for periods after
    the spin-off;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an employee matters agreement, pursuant to which,
    among other things, some employee-related assets and liabilities
    of TRW will be allocated between TRW Automotive and TRW and some
    arrangements will be made with respect to employee benefit plans
    and compensation arrangements;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an insurance allocation agreement, pursuant to
    which, among other things, certain insurance policies and
    arrangements of TRW and related coverages will be allocated to
    TRW Automotive, and TRW will provide certain administrative
    insurance services to TRW Automotive;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">F-7
</FONT>
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<DIV align="center">
<B><FONT size="2">TRW AUTOMOTIVE INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">intellectual property license agreements,
    pursuant to which, among other things, TRW Automotive will
    license certain intellectual property from TRW;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a trademark license agreement, pursuant to which
    TRW will license certain names and trademarks to TRW Automotive;
    and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a transition services agreement, pursuant to
    which, among other things, TRW will provide certain services to
    TRW Automotive and TRW Automotive will provide services to TRW
    for a transition period following the spin- off.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Basis of Presentation and Transactions with
TRW</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The combined financial statements of TRW
Automotive include the assets, liabilities, sales and expenses
of TRW&#146;s automotive businesses to be included in TRW
Automotive after the restructuring transactions. The amounts are
based upon TRW&#146;s historical amounts. Parent Company
Investment represents TRW&#146;s investment in TRW Automotive
including intercompany accounts.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Statements of Operations of TRW Automotive
include expenses recorded by TRW Automotive or directly charged
to TRW Automotive by TRW. In addition, the statements include an
allocation of TRW&#146;s general and administrative corporate
expenses to reflect the services provided to TRW Automotive or
benefits received by TRW Automotive. The allocation was
$81&nbsp;million for 2001, $90&nbsp;million for 2000 and
$82&nbsp;million for 1999 and was reported in administrative and
selling expenses in the Statements of Operations. The allocation
was based upon TRW&#146;s internal allocation methodology, which
is based upon an established percentage of costs applied to the
cost of operations (sales less earnings (loss) before taxes from
continuing operations). Management believes that this is a
reasonable method for allocating the general and administrative
corporate expenses. The allocation is not necessarily
representative of the operating expenses that would have been
incurred had TRW Automotive operated on a stand-alone basis. For
2001, the allocation for TRW Automotive on a stand-alone basis
is estimated to be $40&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Debt, other than debt allocated from TRW,
reported on the Balance Sheets represents the historical third
party obligations of the automotive legal entities to be
included in TRW Automotive. Debt allocated from TRW is included
on TRW Automotive&#146;s Balance Sheets. This allocation
reflects TRW&#146;s historical practice of incurring most of its
indebtedness, including debt incurred to finance the acquisition
of the LucasVarity automotive business, at the parent company
level.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Interest expense from the specific third party
debt obligations attributed to TRW Automotive&#146;s operations
is included in the Statements of Operations. In addition, an
estimate of the remaining interest expense of TRW, attributable
to the debt allocated to TRW Automotive, is also included in the
Statements of Operations. The allocation of debt and interest is
based on a ratio of TRW Automotive&#146;s net assets to
TRW&#146;s net assets plus non-automotive debt. Management
believes that this is a reasonable method of allocating debt and
interest to TRW Automotive. This allocation is not, however,
indicative of the total amount of debt and interest that TRW
Automotive will have upon the completion of the debt realignment
or the debt and interest that may be incurred by TRW Automotive
as a separate entity.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">TRW Automotive, primarily for the United States
operations, participates in TRW&#146;s centralized cash
management system. Under this system, cash receipts are
transferred to TRW and TRW funds cash disbursements. As such,
the amount of cash and cash equivalents does not represent the
amount required or generated by TRW Automotive. The balance of
cash and cash equivalents on the Balance Sheets primarily
relates to cash and cash equivalents at foreign operations that
do not participate in TRW&#146;s cash management program.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">TRW accounts for and pays all United States
income taxes. TRW Automotive&#146;s taxable income (loss)
related to its United States operations and foreign operations
subject to a United States &#147;check-the-box&#148;
</FONT>

<P align="center"><FONT size="2">F-8
</FONT>
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<DIV align="center">
<B><FONT size="2">TRW AUTOMOTIVE INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">
<FONT size="2">election to be taxed in the United States is
included in TRW&#146;s consolidated income tax returns. The
Statements of Operations include an allocation to TRW Automotive
of TRW&#146;s United States income taxes (credits) in amounts
generally equivalent to the provisions that would have resulted
had TRW Automotive filed separate income tax returns for the
years presented. TRW Automotive has also been allocated United
States deferred income taxes based on the estimated differences
between the book and tax basis of its assets and liabilities.
For tax years beginning after the spin-off, TRW Automotive will
assume the liability to pay for income taxes attributable to TRW
Automotive&#146;s operations worldwide.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Most of TRW Automotive&#146;s foreign operations
account for and pay foreign income taxes related to their
operations. For those operations that have not separately
accounted for and paid income taxes related to their operations,
the Statements of Operations include an allocation of TRW&#146;s
foreign income taxes in amounts generally equivalent to the
provisions which would have resulted had TRW Automotive filed
separate income tax returns for the years presented. These
operations have also been allocated foreign deferred income
taxes based on the estimated differences between the book and
tax basis of their assets and liabilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the opinion of management, all adjustments
necessary for a fair presentation of financial position,
operating results and cash flows have been presented. The
financial information included may not necessarily reflect the
results of operations, financial position, changes in
stockholder&#146;s investment in the future or what they would
have been if TRW Automotive had been a separate, stand-alone
company for the periods presented or in the future.
</FONT>

<P align="left">
<B><FONT size="2">Summary of Significant Accounting
Policies</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Principles of
consolidation&nbsp;&#151;</FONT></I></B><FONT size="2"> The
combined financial statements include the accounts of TRW
Automotive, which include all of TRW&#146;s automotive
businesses. Investments in affiliated companies are accounted
for by the equity or cost method. The combined financial
statements reflect the combined results of LucasVarity&#146;s
automotive operations and cash flows subsequent to the date of
acquisition, March&nbsp;25, 1999.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Use of
estimates&nbsp;&#151;</FONT></I></B><FONT size="2"> The
preparation of financial statements in conformity with
accounting principles generally accepted in the United States
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities, and reported
amounts in the Statements of Operations. Actual results could
differ from those estimates.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Revenue recognition&nbsp;&#151;
</FONT></I></B><FONT size="2">The Company recognizes sales in
accordance with accounting principles generally accepted in the
United States including the Securities and Exchange
Commission&#146;s Staff Accounting Bulletin No.&nbsp;101,
&#147;Revenue Recognition in Financial Statements.&#148; The
Company records sales when title is transferred to the customer.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Cash and cash equivalents&nbsp;&#151;
</FONT></I></B><FONT size="2">Cash and cash equivalents include
all highly liquid investments purchased with a maturity of three
months or less.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Accounts receivable&nbsp;&#151;
</FONT></I></B><FONT size="2">In 2001, the Company participated
in an accounts receivable securitization arrangement established
by TRW with a financial institution and several financial
conduits. At December&nbsp;31, 2001, the Company&#146;s retained
interest in securitized receivables amounted to
$162&nbsp;million and is reported as interest in securitized
receivables on the Balance Sheet. See the &#147;Accounts
Receivable Securitization&#148; note to financial statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Inventories&nbsp;&#151;
</FONT></I></B><FONT size="2">Inventories are stated at the
lower of cost or market. At December&nbsp;31, 2001 and 2000,
inventories valued using the last-in, first-out (LIFO) method
were $68&nbsp;million and $87&nbsp;million, respectively.
Inventories not valued by the LIFO method are principally on the
first-in, first-out (FIFO) method. Had the cost of all
inventories been determined by the FIFO method, inventories at
December&nbsp;31, 2001 and 2000 would have been greater by $15
million and $18&nbsp;million, respectively.
</FONT>

<P align="center"><FONT size="2">F-9
</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TRW AUTOMOTIVE INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Depreciation&nbsp;&#151;
</FONT></I></B><FONT size="2">Depreciation is computed over the
assets&#146; estimated useful lives, using the straight-line
method for the majority of the Company&#146;s depreciable
assets, including capital leases. The remaining assets are
depreciated using accelerated methods. The estimated useful
lives of buildings, machinery and equipment, and computers and
other office equipment are between 30 to 40&nbsp;years, eight to
12&nbsp;years and three to five years, respectively.
Depreciation expense was $455&nbsp;million, $486&nbsp;million
and $550&nbsp;million for the years ended December&nbsp;31,
2001, 2000 and 1999, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Product tooling&nbsp;&#151;
</FONT></I></B><FONT size="2">Product tooling is special purpose
tooling that is limited to the manufacture of a specific part or
parts of the same basic design. Product tooling includes dies,
patterns, molds and jigs. Product tooling is capitalized as
property, plant and equipment, and amortized as cost of sales
over its estimated economic life, not exceeding five years.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Intangible assets&nbsp;&#151;
</FONT></I></B><FONT size="2">Intangible assets are stated on
the basis of cost and are being amortized by the straight-line
method over the estimated future periods to be benefited, except
for goodwill acquired prior to 1971, $47 million, which is not
being amortized. Goodwill acquired after 1970 is being amortized
over 40&nbsp;years. Other intangible assets include capitalized
internal-use software, patents and licenses and other
identifiable intangible assets acquired through acquisitions,
including core and developed technology and workforce.
Capitalized internal-use software is being amortized over
periods not to exceed 10&nbsp;years. Other identifiable
intangible assets are being amortized primarily over five to
17&nbsp;years.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Asset impairment&nbsp;&#151;
</FONT></I></B><FONT size="2">The Company records impairment
losses on long-lived and intangible assets when events and
circumstances indicate that the assets may be impaired and the
undiscounted net cash flows estimated to be generated by those
assets are less than their carrying amounts. If the future
undiscounted cash flows are not sufficient to recover the
carrying value of the assets, the assets are adjusted to their
fair values.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Cost basis equity affiliates&nbsp;&#151;
</FONT></I></B><FONT size="2">The Company&#146;s investments in
affiliated companies include equity securities, accounted for
using the cost method, which are classified as
available-for-sale. These securities are stated at estimated
fair value based upon market quotes. Unrealized gains and
losses, net of tax, are reported as a separate component of
accumulated other comprehensive income (loss) in
stockholder&#146;s investment until realized. A decline in the
value of any investment below cost that is deemed other than
temporary is charged to earnings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Environmental costs&nbsp;&#151;
</FONT></I></B><FONT size="2">The Company participates in
environmental assessments and remediation efforts at operating
facilities, previously owned or operated facilities, and
Superfund or other waste sites. Costs related to these locations
are accrued when it is probable that a liability has been
incurred and the amount of that liability can be reasonably
estimated. Estimated costs are recorded at undiscounted amounts,
based on experience and assessments, and are regularly evaluated
as efforts proceed.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Research and development&nbsp;&#151;
</FONT></I></B><FONT size="2">Company-funded research and
development programs include research and development for
commercial products that is expensed as incurred.
Customer-funded research and development expenses, included in
cost of sales, were $32&nbsp;million, $38&nbsp;million and
$28&nbsp;million for 2001, 2000 and 1999, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Shipping and handling&nbsp;&#151;
</FONT></I></B><FONT size="2">Shipping costs include payments to
a third-party shipper to move the product to the customer.
Handling costs include costs from the point the product is
removed from finished goods inventory to when provided to the
shipper. Shipping and handling costs are expensed as incurred as
costs of sales.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Preproduction costs&nbsp;&#151;
</FONT></I></B><FONT size="2">Preproduction design and
development costs for long-term supply arrangements are expensed
as cost of sales as incurred.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Financial instruments&nbsp;&#151;
</FONT></I></B><FONT size="2">The Company adopted Statement of
Financial Accounting Standards (SFAS)&nbsp;133, &#147;Accounting
for Derivative Instruments and Hedging Activities,&#148; as
amended, on January&nbsp;1, 2001. SFAS&nbsp;133 requires
companies to recognize all derivative instruments as either
assets or liabilities at fair
</FONT>

<P align="center"><FONT size="2">F-10
</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TRW AUTOMOTIVE INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">
<FONT size="2">value. The transition adjustment recorded as a
result of the adoption did not have a material impact on the
Company&#146;s financial position or net earnings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under SFAS&nbsp;133, the gain or loss on
derivative instruments that have been designated and qualify as
hedges of the exposure to changes in the fair value of an asset
or a liability, as well as the offsetting gain or loss on the
hedged item, are recognized in net earnings during the period of
the change in fair values. For derivative instruments that have
been designated and qualify as hedges of the exposure to
variability in expected future cash flows, the gain or loss on
the derivative is initially reported as a component of other
comprehensive income (loss) and reclassified to the Statement of
Operations when the hedged transaction affects net earnings. Any
gain or loss on the derivative in excess of the cumulative
change in the present value of future cash flows of the hedged
item is recognized in net earnings during the period of change.
For derivative instruments that are a hedge of a net investment
in a foreign currency, the gain or loss is reported in other
comprehensive income (loss) as part of the cumulative
translation adjustment. Derivatives not designated as hedges are
adjusted to fair value through net earnings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to the adoption of SFAS&nbsp;133, changes
in market value of contracts that hedged firm foreign currency
commitments and intercompany transactions were generally
included in the basis of the transactions and changes in the
market value of the contracts that hedged anticipated
transactions were generally recognized in net earnings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">New accounting pronouncements&nbsp;&#151;
</FONT></I></B><FONT size="2">The Financial Accounting Standards
Board (FASB) recently issued SFAS&nbsp;141, &#147;Business
Combinations,&#148; SFAS&nbsp;142, &#147;Goodwill and Intangible
Assets,&#148; SFAS&nbsp;143, &#147;Accounting for Asset
Retirement Obligations&#148; and SFAS&nbsp;144, &#147;Accounting
for the Impairment or Disposal of Long-Lived Assets.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SFAS&nbsp;141 requires companies to account for
acquisitions entered into after June&nbsp;30, 2001 using the
purchase method and establishes criteria to be used in
determining whether acquired intangible assets are to be
recorded separately from goodwill. SFAS&nbsp;142&nbsp;sets forth
the accounting for goodwill and intangible assets after the
completion of a business acquisition and for goodwill and
intangible assets already recorded. Goodwill will no longer be
amortized beginning January&nbsp;1, 2002. Rather, goodwill will
be tested for impairment by comparing the asset&#146;s fair
value to its carrying value. Also, the value of workforce of
approximately $15&nbsp;million must be reclassified from
intangible assets to goodwill. The Company adopted SFAS&nbsp;142
on January&nbsp;1, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2001 the Company had
recorded $2.4&nbsp;billion of goodwill, net of accumulated
amortization. Management has conducted preliminary valuations of
its reporting units and has determined that goodwill should not
be impaired. In 2001, the Company recorded amortization expense
for goodwill and the value of workforce of $64&nbsp;million
before tax, $53&nbsp;million after tax.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SFAS&nbsp;143 requires the fair value of a
liability for asset retirement obligations to be recorded in the
period in which it is incurred. The statement applies to a
company&#146;s legal or contractual obligation associated with
the retirement of a tangible long-lived asset that resulted from
the acquisition, construction or development or through the
normal operation of a long-lived asset. The statement is
effective for the Company beginning January&nbsp;1, 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SFAS&nbsp;144 addresses the accounting and
reporting for the impairment or disposal of long-lived assets.
The statement provides a consistent method to value long-lived
assets to be disposed of. New criteria must be met to classify
the asset as an asset held-for-sale. This statement also changes
the rules for reporting the effects of a disposal of a segment
of a business. This statement was adopted on January&nbsp;1,
2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has evaluated the impact of
SFAS&nbsp;143 and SFAS&nbsp;144 and believes that the adoption
of these statements should not have a material impact on its
financial position or results of operations.
</FONT>

<P align="center"><FONT size="2">F-11
</FONT>
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<DIV align="center">
<B><FONT size="2">TRW AUTOMOTIVE INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">
<B><FONT size="2">LucasVarity Acquisition</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;25, 1999, TRW acquired LucasVarity
for approximately $6.8&nbsp;billion in cash and assumed net
debt. Of that amount, approximately $5.0&nbsp;billion related to
the automotive businesses. The automotive businesses of
LucasVarity will be included in TRW Automotive as part of its
formation. The acquisition of LucasVarity was accounted for as a
purchase. The purchase price allocation for the automotive
business resulted in a $67&nbsp;million charge to net earnings,
with no income tax benefit, for the fair value of the
Company&#146;s acquired in-process research and development
(IPR&#38;D) that had not reached technological feasibility and
had no future alternative use. Assets and liabilities were
recorded based on their respective fair values. The Company
recorded $2.2 billion of goodwill, which is being amortized on a
straight-line basis over 40 years.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The fair value of IPR&#38;D was determined by an
independent valuation using the income approach under the
proportional method. The following projects were included in the
valuation: next-generation caliper of $26&nbsp;million,
next-generation anti-lock braking systems (ABS)&nbsp;of
$23&nbsp;million, electro hydraulic braking of $12&nbsp;million
and electrical parking brake of $6&nbsp;million. The projects
were in various stages of completion, ranging from approximately
40 to 60&nbsp;percent complete, as of the valuation date. The
stage of completion for each project was estimated by evaluating
the cost to complete, complexity of the technology and time to
market. The projects were anticipated to be completed by 2002.
The estimated cost to complete the projects was $37&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2001, the next-generation
anti-lock braking systems and electro hydraulic braking projects
were each 70&nbsp;percent complete, and the electrical parking
brake program was 95&nbsp;percent complete. In 2000, the
next-generation caliper project was completed. The Company
currently anticipates that the projects will be completed as
budgeted by the fourth quarter of 2003. Any delay or
cancellation of the projects would not have a material adverse
impact on the financial condition or the results of operations
of the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pro forma sales and net earnings from continuing
operations for the Company for the year ended December&nbsp;31,
1999 were $11.5&nbsp;billion and $145 million, respectively. The
pro forma financial information assumes the LucasVarity
acquisition occurred as of the beginning of the year. The pro
forma results have been prepared for informational purposes only
and are not necessarily indicative of the results of operations
which may occur in the future or that would have occurred had
the acquisition of LucasVarity been effected on the date
indicated. The pro forma results do not include the effects of
companies divested subsequent to the date of acquisition.
</FONT>

<P align="left">
<B><FONT size="2">Discontinued Operations</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2000, the Company disposed of a substantial
portion of the Lucas Diesel Systems and the LucasVarity wiring
businesses. In 2001, the Company completed the disposition of
the remaining Lucas Diesel Systems businesses. The combined
financial statements reflect as discontinued operations for all
periods presented these businesses&#146; operating results. The
tax expense included in discontinued operations on the
Statements of Operations for 2001, 2000 and 1999 was
$4&nbsp;million, $2&nbsp;million and $20&nbsp;million,
respectively. Net proceeds totaled $29&nbsp;million in 2001 and
$853&nbsp;million in 2000. Sales of the discontinued operations
were $20&nbsp;million, $74&nbsp;million and $858&nbsp;million in
2001, 2000 and 1999, respectively. Interest has not been
allocated to discontinued operations. No gain or loss resulted
from the divestiture of these businesses.
</FONT>

<P align="left">
<B><FONT size="2">Restructuring</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has initiated several restructuring
actions including reorganizing and downsizing its operations. In
2001, charges of $213&nbsp;million before tax were recorded for
actions that included the consolidation of its businesses. These
actions are expected to result in a reduction of approximately
6,100 employees, of which approximately 4,900 were terminated by
these actions as of December&nbsp;31, 2001. In 2000, charges of
$85&nbsp;million were recorded for actions that resulted in
employee reductions of approximately 3,700,
</FONT>

<P align="center"><FONT size="2">F-12
</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TRW AUTOMOTIVE INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">
<FONT size="2">the closing of two plants and the reorganization
and downsizing of the Company&#146;s aftermarket business. In
1999, the Company recorded charges of $80 million related to the
closure of six manufacturing plants and employee reductions of
more than 4,800. In 2001, 2000 and 1999, $116&nbsp;million, $73
million and $63&nbsp;million, respectively, were used for
severance payments and costs related to the consolidation of
certain facilities. The balance of $144 million is expected to
be substantially used by the end of 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 1999 and 2000, the Company initiated
restructuring actions to dispose of several nonstrategic or
inefficient facilities, discontinue production of low-margin
products and relocate certain facilities related to the
integration of the LucasVarity automotive businesses. The
Company recorded approximately $45&nbsp;million of restructuring
costs, primarily severance, as part of the purchase price
allocation. In 2001, 2000 and 1999, $15&nbsp;million,
$15&nbsp;million and $14&nbsp;million, respectively, were used
primarily for severance payments. The remaining balance of
$1&nbsp;million is expected to be used by the end of 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table illustrates the movement of
the restructuring reserves:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="29%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Provision</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">LucasVarity</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Used&nbsp;for</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Beginning</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Administrative</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Purchase Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Purposes</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Ending</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Balance</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">and Selling</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Cost of Sales</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Allocation</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Intended</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Balance</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">63</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">87</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">126</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(131</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">145</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(88</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">63</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1999
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">73</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(77</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Asset Impairments</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2001, asset impairment charges of
$28&nbsp;million, $10&nbsp;million and $12&nbsp;million were
recorded by Chassis Systems, Occupant Safety Systems and Other
Automotive segments, respectively. These charges, primarily
related to the write-down of property, plant and equipment, were
recorded as $38&nbsp;million in cost of sales, $11&nbsp;million
in other (income)expense-net and $1&nbsp;million in goodwill
amortization. Of these charges, $49&nbsp;million was a result of
the loss of several existing contracts and expected future sales
at certain facilities. In 2000, as the result of a plan to
consolidate operations of its Mesa air bag manufacturing
facilities in the Occupant Safety Systems segment, the Company
recorded an asset impairment charge of approximately
$52&nbsp;million in cost of sales. The Company expects the
consolidation plan to be completed during the first half of
2002. Property, plant and equipment were written down to fair
value on the basis of discounted estimated future cash flows and
future salvage value. Also in 2000, the Other Automotive segment
recorded an asset impairment charge of $15&nbsp;million in cost
of sales as a result of a loss of several existing and future
contracts at a facility. Assets were written down to fair value
based upon current market values of the assets.
</FONT>

<P align="left">
<B><FONT size="2">Other (Income) Expense&nbsp;&#151;
Net</FONT></B>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="73%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net gain on sale of assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(18</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(22</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Asset impairments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pending and threatened litigation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Earnings of affiliates
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(10</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Foreign currency exchange
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unrealized losses on foreign currency hedges and
    LucasVarity related expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Miscellaneous other (income) expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(23</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(12</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">58</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-13
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TRW AUTOMOTIVE INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">
<B><FONT size="2">Operating Segments</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company is a U.S.-based international company
providing advanced technology products and services for the
automotive markets. The Company reports in three operating
segments: Chassis Systems, Occupant Safety Systems and Other
Automotive. The reporting of the automotive business as three
segments is consistent with the manner in which TRW Automotive
is managed and the way resources are allocated by the Chief
Operating Decision Maker.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The principal customers for the Company&#146;s
automotive products are the North and South American, European
and Asian vehicle manufacturers and independent distributors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company designs, manufactures and sells a
broad range of steering, suspension, braking, seat belts,
inflatable restraints, steering wheels, safety electronics,
engine valves, engineered fastening body control systems and
other components and systems for passenger cars, light trucks
and commercial vehicles. A description of the products and
services provided by each of the operating segments follows.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <B><FONT size="2">Chassis
    Systems</FONT></B><FONT size="2">&nbsp;&#151; active safety
    systems and components in the areas of braking, steering,
    suspension and integrated vehicle control;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <B><FONT size="2">Occupant Safety
    Systems</FONT></B><FONT size="2">&nbsp;&#151; passive safety
    systems and components in the areas of inflatable restraints,
    seat belts, steering wheels and safety and security electronics;
    and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <B><FONT size="2">Other
    Automotive</FONT></B><FONT size="2">&nbsp;&#151; engine valves
    and components, engineered fasteners and components and body
    control systems. Stud welding systems and several sensors and
    components businesses were divested during 2000.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The accounting policies of the operating segments
are the same as those described in the &#147;Summary of
Significant Accounting Policies&#148; note to financial
statements. The Company evaluates operating performance based on
profit before taxes and segment assets (total assets net of
segment current operating liabilities).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following income and expense items are not
included in segment profit:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Corporate expense and other, which primarily
    represents costs associated with corporate staff and related
    expenses, including certain litigation. Corporate expense
    includes an allocation of TRW&#146;s cost to reflect the
    services provided to TRW Automotive or benefits received by TRW
    Automotive.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Financing cost, which represents debt-related
    interest, including interest allocated from TRW, and the loss on
    the sale of receivables.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Net employee benefits income, which includes
    pension income related to retirees and terminated vested
    individuals acquired as part of the LucasVarity acquisition, net
    of interest related to other post-retirement employee benefits.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Amortization of goodwill.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Purchased in-process research and development
    which represents the write-off of IPR&#38;D resulting from the
    LucasVarity acquisition in 1999.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prepaid pension cost for corporate and divested
operations, unrealized gains or losses on securities of
affiliate investments accounted for using the cost method,
current deferred income taxes, goodwill and corporate and other
assets are not included in segment assets.
</FONT>

<P align="center"><FONT size="2">F-14
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TRW AUTOMOTIVE INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Financial information for the operating segments
for each of the three years ended December&nbsp;31 is as follows:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="54%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Occupant</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Chassis</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Safety</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Other</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Systems</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Systems</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Automotive</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">2001</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sales to external customers
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,617</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,997</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,477</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,091</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Intersegment sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Profit before taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">228</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">110</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">378</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unusual items-income (expense) included in profit
    before taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(110</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(57</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(84</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(251</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Segment assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,816</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">673</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">520</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,009</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">234</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">454</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital expenditures including other intangibles
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">280</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">120</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">460</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">2000</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sales to external customers
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,970</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,182</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,768</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,920</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Intersegment sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">87</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Profit before taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">371</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">134</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">156</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">661</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unusual items-income (expense) included in profit
    before taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(101</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(105</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(213</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Segment assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,923</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">891</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">706</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,520</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">240</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">163</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">82</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">485</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital expenditures including other intangibles
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">305</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">113</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">63</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">481</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">1999</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sales to external customers
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,264</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,486</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,722</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,472</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Intersegment sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">53</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">108</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">199</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Profit before taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">407</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">276</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">157</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">840</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unusual items-income (expense) included in profit
    before taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(72</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(14</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(95</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Segment assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,072</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,273</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,714</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,059</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">227</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">186</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">136</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">549</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital expenditures including other intangibles
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">284</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">156</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">185</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">625</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company accounts for intersegment sales or
transfers at current market prices.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Aggregate sales to the Company&#146;s four
largest customers, as a percentage of sales, were
61&nbsp;percent, 57&nbsp;percent and 55&nbsp;percent in 2001,
2000 and 1999, respectively. Sales to Ford Motor Company were
$1,865&nbsp;million in 2001, $2,073&nbsp;million in 2000 and
$2,051&nbsp;million in 1999. Sales to DaimlerChrysler AG were
$1,678&nbsp;million, $1,540&nbsp;million and $1,456&nbsp;million
for 2001, 2000 and 1999, respectively. Sales to General Motors
Corporation were $1,325&nbsp;million in 2001,
$1,332&nbsp;million in 2000 and $1,169&nbsp;million in 1999.
Sales to Volkswagen AG were $1,335&nbsp;million,
$1,264&nbsp;million and $1,068&nbsp;million in 2001, 2000 and
1999, respectively.
</FONT>

<P align="center"><FONT size="2">F-15
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TRW AUTOMOTIVE INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Reconciliations of the items reported for the
operating segments to the applicable amounts reported in the
combined financial statements are as follows:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="70%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Profit before taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">378</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">661</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">840</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Corporate expense and other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(183</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(189</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(261</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Financing cost
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(369</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(388</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(413</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net employee benefits income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">166</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">163</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">160</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Goodwill amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(63</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(58</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(55</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Purchased in-process research and development
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(67</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Earnings (loss) before income taxes from
    continuing operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(71</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">189</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">204</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="68%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Segment assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,009</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,520</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,059</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Segment current operating liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,098</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,136</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,937</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current deferred taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">194</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">206</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prepaid pension cost
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,377</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,277</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,656</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Goodwill
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,357</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,441</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,457</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Segment eliminations and adjustments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">89</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">128</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Corporate and other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">163</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">585</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">404</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,287</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,293</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,638</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Information concerning principal geographic areas
as of and for the three years ended December&nbsp;31 is as
follows:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="47%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">United</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">United</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">All</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">States</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Germany</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Kingdom</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Other</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sales to external customers
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,344</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,723</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">729</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,295</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,091</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,947</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,773</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">844</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,356</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,920</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1999
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,825</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,856</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">870</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,921</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,472</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Property, plant and equipment-net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">998</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">413</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">303</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">861</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,575</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,090</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">454</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">301</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">869</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,714</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1999
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,263</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">363</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">878</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,023</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Sales are attributable to geographic areas based
on the location of the assets generating the sales. Inter-area
sales are not significant to the total sales of any geographic
area.
</FONT>

<P align="left">
<B><FONT size="2">Accounts Receivable Securitization</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In November 2001, TRW entered into a
$350&nbsp;million accounts receivable securitization agreement
with a financial institution and several financial conduits. TRW
established a wholly-owned, fully-consolidated,
bankruptcy-remote, special purpose subsidiary, TRW Receivables
Inc., which will be included in TRW Automotive, for the purpose
of purchasing accounts receivable of TRW and the Company,
including
</FONT>

<P align="center"><FONT size="2">F-16
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TRW AUTOMOTIVE INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">
<FONT size="2">receivables purchased by TRW from certain of its
and the Company&#146;s subsidiaries, and selling an undivided
interest in the receivables to the financial conduits. The
agreement provides that collections of receivables are to be
reinvested in new accounts receivable. In accordance with the
agreement, TRW services and collects the receivables on behalf
of the financial conduits. The conduits and the special purpose
subsidiary have no recourse to other assets of the Company or of
TRW for failure of debtors to pay when due.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The securitization transactions are accounted for
as a sale of the receivables under the provisions of
SFAS&nbsp;140, &#147;Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities,&#148; and
are removed from the Balance Sheet. The proceeds received are
included in cash flows from operating activities in the
Statements of Cash Flows. Financing expenses paid to the
conduits are recorded as a loss on the sale of assets and are
charged to other (income) expense-net in the Statements of
Operations. The book value of the Company&#146;s retained
interest in the receivables of $162&nbsp;million approximates
fair market value due to the current nature of the receivables.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2001 receivables aggregating
$489&nbsp;million had been sold to the special purpose
subsidiary including $64&nbsp;million which had been purchased
from TRW businesses other than TRW Automotive. The undivided
interest in the receivables portfolio transferred to the
financial conduits amounted to $327&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The table below summarizes certain cash flows
paid to the special purpose subsidiary for the year ended
December&nbsp;31, 2001:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="79%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Proceeds from initial securitization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">333</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Average monthly proceeds from receivables
    securitization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">330</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Monthly accumulation of proceeds from receivables
    securitization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">660</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Financial Instruments</FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Fair values
of financial instruments&nbsp;&#151; at
December&nbsp;31</I></FONT></B>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="60%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Carrying</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fair</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Carrying</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fair</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">118</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">118</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">151</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">151</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Short-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">177</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">177</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">227</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">227</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Floating rate long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fixed rate long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">289</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">276</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">319</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">314</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Foreign currency forward contracts&nbsp;&#151;
    (liability) asset
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The fair value of long-term debt was estimated
using a discounted cash flow analysis based on the
Company&#146;s current borrowing rates for similar types of
borrowing arrangements. The fair value of the foreign currency
forward contracts was estimated using a discounted cash flow
analysis based on quoted market prices of offsetting contracts.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Foreign currency forward
contracts</FONT></I></B><FONT size="2">&nbsp;&#151; The Company
manufactures and sells its products in countries throughout the
world. As a result, it is exposed to fluctuations in foreign
currency exchange rates. The Company enters into forward
contracts and, to a lesser extent, purchased currency options to
hedge portions of its foreign currency denominated forecasted
revenues, purchases and the subsequent cash flows. The critical
terms of the hedges are the same as the underlying forecasted
transactions, and the hedges are considered to be perfectly
effective to offset the changes in fair value of cash flows from
the hedged transactions. Gains or
</FONT>

<P align="center"><FONT size="2">F-17
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TRW AUTOMOTIVE INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">
<FONT size="2">losses on these instruments, which mature at
various dates through December 2002, are generally recorded in
other comprehensive income (loss) until the underlying
transaction is recognized in net earnings. The earnings impact
is reported in either sales, cost of sales, or other (income)
expense-net, to match the underlying transaction.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The amount of gains and losses reclassified into
net earnings in 2001 as a result of the discontinuation of cash
flow hedges was immaterial. Foreign currency cash flow hedges
with a combined fair value of a $1&nbsp;million gain after tax
at December&nbsp;31, 2001 are expected to be recognized in net
earnings in 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, the Company enters into certain
foreign currency forward contracts that are not treated as
hedges under SFAS&nbsp;133 to hedge recognized foreign currency
transactions. Gains and losses on these contracts are recorded
in net earnings and are substantially offset by the earnings
effect of the revaluation of the underlying foreign currency
denominated transaction.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2001, the Company had
foreign currency forward contracts outstanding with a notional
amount of $515&nbsp;million, denominated principally in the Euro
and the British pound. Foreign exchange contracts are placed
either through TRW, or directly with a number of major financial
institutions to minimize credit risk. No collateral is held in
relation to the contracts, and the Company anticipates that
these financial institutions will satisfy their obligations
under the contracts.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table represents the movement of
amounts reported in other comprehensive income (loss) of
deferred cash flow hedges, net of tax.
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="79%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance at December&nbsp;31, 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net change in derivative fair value and other
    movements during the year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amounts reclassified to earnings during the year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other comprehensive income (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Income Taxes</FONT></B>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="72%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">Earnings (loss) before income taxes from
    continuing operations</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">U.S.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(447</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(161</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(176</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Non-U.S.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">376</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">350</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">380</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(71</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">189</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">204</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-18
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TRW AUTOMOTIVE INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="69%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">Provision for (benefit of) income taxes
    from continuing operations</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">U.S.&nbsp;federal
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(120</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(47</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(237</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Non-U.S
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">U.S. state and local
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(22</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(71</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(26</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(182</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">U.S. federal
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">258</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Non-U.S
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">81</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">U.S. state and local
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(21</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">39</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">125</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">318</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(32</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">136</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="73%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">Effective income tax rate from continuing
    operations</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">U.S. statutory income tax rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Nondeductible expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">U.S. state and local income taxes net of
    U.S.&nbsp;federal tax benefit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Non-U.S. tax rate variances net of foreign tax
    credits
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(48.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Non-U.S. government grants
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prior years&#146; adjustments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Foreign tax refund
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Non-deductible reserve
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">In-process research and development write-off
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">45.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Deferred income taxes reflect the net tax effects
of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts
used for income tax purposes. At December&nbsp;31, 2001 and
2000, the Company had unused tax benefits of $82&nbsp;million
and $121&nbsp;million, respectively, primarily related to
foreign net operating loss carryforwards for income tax
purposes, of which $57&nbsp;million and $80&nbsp;million can be
carried forward indefinitely and the balance expires at various
dates through 2011. A valuation allowance at December&nbsp;31,
2001 and 2000, of $75&nbsp;million and $103&nbsp;million,
respectively, has been recognized to offset the related deferred
tax assets due to the uncertainty of realizing the benefit of
the loss carryforwards.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">It is the Company&#146;s intention to reinvest
undistributed earnings of certain foreign subsidiaries, thereby
indefinitely postponing their remittance. Accordingly, deferred
income taxes have not provided for accumulated undistributed
earnings of $810&nbsp;million at December&nbsp;31, 2001. It is
not practicable to estimate the
</FONT>

<P align="center"><FONT size="2">F-19
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TRW AUTOMOTIVE INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">
<FONT size="2">additional income taxes and applicable
withholding that would be payable on the remittance of such
undistributed earnings.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="66%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Deferred tax</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Deferred tax</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">assets</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">liabilities</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pensions and post-retirement benefits other than
    pensions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">360</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">367</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">972</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">943</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">State and local taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventory
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Reserves and accruals
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">188</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">128</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">85</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">123</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">U.S. net operating loss and credit carryforwards
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Non-U.S. net operating loss carryforwards
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">81</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Available-for-sale equity securities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Foreign currency exchange
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">96</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">58</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">791</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">777</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,057</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,066</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Valuation allowance for deferred tax assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(75</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(103</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">716</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">674</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,057</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,066</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-20
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TRW AUTOMOTIVE INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">
<B><FONT size="2">Pension Plans</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the periods presented, substantially all
of TRW Automotive-designated employees participated in
TRW&#146;s defined benefits plans. The financial statements of
TRW Automotive reflect the pension assets and liabilities
related to the active and retired TRW Automotive-designated
employees in TRW Automotive&#146;s plans or in TRW&#146;s plans.
On or about the distribution date, TRW Automotive intends to
establish separate pension plans for plans shared with TRW with
comparable benefits. The following table provides a
reconciliation of the changes in the plans&#146; benefit
obligations and fair value of assets over the two-year period
ended December&nbsp;31, 2001, and a statement of the funded
status as of December&nbsp;31, 2001 and 2000:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">U.S.</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Non-U.S.</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">U.S.</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Non-U.S.</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Change in benefit obligations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Benefit obligations at January&nbsp;1
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">770</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,628</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">679</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,824</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Service cost
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest cost
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">59</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">207</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">211</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amendments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Actuarial loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">86</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">96</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Foreign currency exchange rate changes and other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(109</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(321</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Acquisitions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Divestitures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Benefits paid
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(77</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(243</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(68</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(225</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Benefit obligations at December 31
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">823</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,554</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">770</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,628</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="18"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Change in plan assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fair value of plan assets at January 1
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">830</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,224</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">899</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,970</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Actual return on plan assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(21</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(359</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(54</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Foreign currency exchange rate changes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(138</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(491</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Divestitures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Company contributions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Plan participant contributions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Benefits paid
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(77</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(243</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(68</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(225</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fair value of plan assets at December 31
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">736</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,512</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">830</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,224</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="18"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Funded status of the plan
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(87</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">958</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,596</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unrecognized actuarial loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,583</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">759</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unrecognized prior service cost
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unrecognized net transition asset
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total recognized
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,552</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">69</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,357</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-21
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TRW AUTOMOTIVE INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table provides the amounts
recognized in the Balance Sheets as of December&nbsp;31, 2001
and 2000:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="60%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">U.S.</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Non-U.S.</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">U.S.</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Non-U.S.</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prepaid benefit cost
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,772</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">83</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,611</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accrued benefit liability
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(220</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(14</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(254</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Additional minimum liability
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(21</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(25</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Intangible asset and other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated other comprehensive loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">91</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total recognized
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,552</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">69</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,357</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The projected benefit obligation, accumulated
benefit obligation and fair value of plan assets for the United
States pension plans for the TRW Automotive-designated employees
and retirees with accumulated benefit obligations in excess of
plan assets were $672&nbsp;million, $605&nbsp;million and
$546&nbsp;million, respectively, as of December&nbsp;31, 2001,
and $132&nbsp;million, $131&nbsp;million and $112&nbsp;million,
respectively, as of December&nbsp;31, 2000. The pension assets
of the largest United States plan experienced investment losses
during 2001, which accounts for the increase in values from the
prior year.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The projected benefit obligation, accumulated
benefit obligation and fair value of plan assets for the
non-United States pension plans for the TRW
Automotive-designated employees and retirees with accumulated
benefit obligations in excess of plan assets were
$263&nbsp;million, $239&nbsp;million and $27&nbsp;million,
respectively, as of December&nbsp;31, 2001, and
$263&nbsp;million, $239&nbsp;million and $16&nbsp;million,
respectively, as of December&nbsp;31, 2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table provides the components of
net pension (income) cost from continuing operations for the
plans for years 2001, 2000 and 1999:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">U.S.</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Non-U.S.</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">U.S.</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Non-U.S.</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">U.S.</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Non-U.S.</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="23"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="23" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Defined benefit plans
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Service cost-benefits earned during the year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest cost on projected benefit obligations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">59</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">207</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">211</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">159</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Expected return on plan assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(80</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(461</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(75</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(466</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(67</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(361</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Curtailment gain
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amortization of recognized loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amortization of prior service cost
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amortization of transition asset
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Defined benefit plans
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(215</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(208</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(164</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Defined contribution plans
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Employee stock ownership and savings plan
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total pension (income) cost
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(214</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(207</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(161</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-22
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TRW AUTOMOTIVE INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The assumptions used in the measurement of the
benefit obligations for the active and retired TRW
Automotive-designated employees are shown in the following table:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="60%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">U.S.</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Non-U.S.</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">U.S.</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Non-U.S.</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Discount rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.25</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.5-6.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.50</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.0- 7.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Rate of increase in compensation levels
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.10</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.0-4.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.10</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.5- 4.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The expected long-term rate of return on plan
assets for United States plans was 9.5&nbsp;percent for 2001 and
2000. For non-United States plans the expected long-term rate of
return ranged from 8 to 8.75&nbsp;percent in 2001 and 2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">TRW sponsors a contributory stock ownership and
savings plan for which a majority of TRW Automotive-designated
United States employees are eligible and under which TRW matches
employee contributions up to three percent of the
participant&#146;s qualified compensation. TRW contributions are
held in an unleveraged employee stock ownership plan. The
Company also sponsors other defined contribution pension plans
covering TRW Automotive-designated employees at some of its
operations.
</FONT>

<P align="left">
<B><FONT size="2">Post-Retirement Benefits Other than
Pensions</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">TRW provides health care and life insurance
benefits for a majority of TRW Automotive-designated retired
employees in the United States and Canada. The health care plans
provide for cost sharing, in the form of employee contributions,
deductibles and coinsurance, between TRW and its retirees. The
post-retirement health care plan covering a majority of
employees who retired since August&nbsp;1, 1988, limits the
annual increase in TRW&#146;s contribution toward the
plan&#146;s cost to a maximum of the lesser of 50&nbsp;percent
of medical inflation or four percent. Life insurance benefits
are generally noncontributory. TRW&#146;s policy is to fund the
cost of post-retirement health care and life insurance benefits
in amounts determined at the discretion of management. Retirees
in certain other countries are provided similar benefits by
plans sponsored by their governments. On or about the date of
distribution, TRW Automotive intends to establish separate other
post-retirement benefit plans with comparable benefits.
</FONT>

<P align="center"><FONT size="2">F-23
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TRW AUTOMOTIVE INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table provides a reconciliation of
the changes in the plans&#146; benefit obligations and fair
value of assets over the two-year period ended December&nbsp;31,
2001, and a statement of the funded status as of
December&nbsp;31, 2001 and 2000 for the active and retired TRW
Automotive-designated employees:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="77%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Benefit obligations at January&nbsp;1
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">797</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">741</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Service cost
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest cost
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">54</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Actuarial loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Divestitures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Foreign currency exchange rate changes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Plan amendments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Plan participant contributions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Benefits paid
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(55</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(57</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Benefit obligations at December&nbsp;31
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">850</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">797</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="10"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fair value of plan assets at January&nbsp;1
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Company contributions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">53</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Plan participant contributions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Benefits paid
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(55</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(57</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fair value of plan assets at December&nbsp;31
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="10"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Funded status of the plan
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(850</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(797</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unrecognized actuarial loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unrecognized prior service cost
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total accrued benefit cost recognized
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(798</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(785</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table provides the components of
net post-retirement benefit cost for the plans for years 2001,
2000 and 1999:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="73%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Service cost
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest cost
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">54</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amortization of recognized income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Curtailment gain
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net post-retirement benefit cost
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">66</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">59</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The weighted-average discount rate used in
determining the accumulated post-retirement benefit obligations
as of December&nbsp;31, 2001 and 2000 was 7.25&nbsp;percent and
7.5&nbsp;percent, respectively. The weighted-average expected
long-term rate of return on plan assets was 9.5&nbsp;percent for
2001 and 2000. A 6.4&nbsp;percent annual rate of increase in the
per capita cost of covered health care benefits was assumed for
2002. The rate was assumed to decrease gradually to
5.1&nbsp;percent in the year 2009 and remain at that level,
thereafter.
</FONT>

<P align="center"><FONT size="2">F-24
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TRW AUTOMOTIVE INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A one-percentage-point change in the assumed
health care cost trend rate would have the following effects:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="73%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">One-percentage-</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">point</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Increase</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Decrease</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Effect on total of service and interest cost
    components
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Effect on post-retirement benefit obligations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">88</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(75</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Debt and Credit Agreements</FONT></B>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="79%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">Short-term debt</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Non-U.S. borrowings
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">177</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">227</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="79%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">Long-term debt</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">7.25% Note due 2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">10.875% Debenture due 2020
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">260</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">273</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capitalized leases
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other borrowings
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">315</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">357</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Less current portion
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">297</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">329</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="9"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><I><FONT size="2">Debt allocated from TRW</FONT></I></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,105</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,469</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has borrowings under uncommitted
credit agreements in many of the countries in which it operates.
These borrowings are primarily in the local foreign currency of
the country or region where the Company&#146;s operations are
located. The borrowings are provided by various domestic and
international banks at quoted market interest rates. Some of
these borrowings are supported by guarantees from TRW. The
weighted-average interest rate on short-term borrowings
outstanding at December&nbsp;31, 2001 and 2000, was
6.3&nbsp;percent and 6.7 percent, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Capital lease arrangements are provided by
several financial institutions, primarily in the United Kingdom,
at rates ranging from 4.5&nbsp;percent to 7.4 percent and expire
at various dates through 2010. Other borrowings bear interest at
rates ranging from 3.5&nbsp;percent to 8.0&nbsp;percent and
mature at various dates through 2008.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The weighted-average interest rate on debt
allocated from TRW at December&nbsp;31, 2001 and 2000, was
8.3&nbsp;percent and 7.7&nbsp;percent, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The maturities of long-term debt are, in
millions: 2002-$18; 2003-$18; 2004-$20; 2005-$14; 2006-$11; and
$234 thereafter.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Compensating balance arrangements and fees were
not material.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">See the &#147;Basis of Presentation and
Transactions with TRW&#148; note to financial statements for a
discussion of debt allocated from TRW.
</FONT>

<P align="center"><FONT size="2">F-25
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TRW AUTOMOTIVE INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">
<B><FONT size="2">Lease Commitments</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company leases certain offices, manufacturing
and research buildings, machinery, automobiles and computer and
other equipment. Such leases, some of which are noncancelable
and in many cases include renewals, expire at various dates. The
Company pays most maintenance, insurance and tax expenses
relating to leased assets. Rental expense for operating leases
was $82&nbsp;million for 2001, $91&nbsp;million for 2000 and
$83&nbsp;million for 1999.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2001, the future minimum
lease payments for noncancelable operating leases totaled
$158&nbsp;million and are payable as follows, in millions:
2002-$44; 2003-$31; 2004-$24; 2005-$19; 2006-$16; and $24
thereafter.
</FONT>

<P align="left">
<B><FONT size="2">Capital Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">TRW Automotive was incorporated in Delaware on
June&nbsp;3, 2002 with a capitalization of 500&nbsp;million
shares of $0.001 par value common stock authorized and one share
of common stock outstanding. In addition, 50&nbsp;million shares
of undesignated preferred stock, par value $0.001 per share,
were authorized, none of which have been issued.
</FONT>

<P align="left">
<B><FONT size="2">Stock Options</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">TRW has granted nonqualified stock options to
certain TRW Automotive-designated employees to purchase common
stock at the market price on the date of grant. Stock options
granted to employees become exercisable to the extent of
one-third of the optioned shares for each full year of
employment following the date of grant and expire 10&nbsp;years
after the date of grant. TRW Automotive applies the provisions
of Accounting Principles Board Opinion (APB)&nbsp;25
&#147;Accounting for Stock Issued to Employees&#148; in
accounting for its employee stock options and, as such, no
compensation expense is recognized as the exercise price equals
the market price of the stock on the date of grant. Prior to the
distribution date, TRW Automotive intends to establish a stock
option plan for eligible TRW Automotive employees. TRW options
held by TRW Automotive employees are expected to be converted
into TRW Automotive stock options at the distribution date. The
number of shares and the exercise price of the TRW options that
convert into TRW Automotive options will be adjusted using a
conversion formula. The conversion of TRW options into TRW
Automotive options will be done in such a manner that
(1)&nbsp;the aggregate intrinsic value of the options
immediately before and after the exchange are the same,
(2)&nbsp;the ratio of the exercise price per option to the
market value per share is not reduced, and (3)&nbsp;the vesting
provisions and option period of the replacement options are the
same as the original vesting terms and option period of the TRW
options.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A summary of TRW stock options held by TRW
Automotive-designated employees follows:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="34%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted-</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted-</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted-</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Thousands</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Thousands</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Thousands</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">of Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">of Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">of Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Price</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Outstanding at beginning of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,195</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">51.18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,046</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">47.79</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,474</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44.57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Granted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">93</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37.83</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,369</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">708</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52.52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Exercised
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">87</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23.36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">86</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33.44</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Canceled, expired or terminated
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56.03</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">134</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50.74</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">51.67</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Outstanding at end of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,158</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">51.49</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,195</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">51.18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,046</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">47.79</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Exercisable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,946</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50.34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,280</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46.16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">938</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42.12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted-average fair value of options granted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15.36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-26
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TRW AUTOMOTIVE INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At December&nbsp;31, 2001, approximately
930&nbsp;TRW Automotive-designated employees were participants
in TRW&#146;s options plans. As of that date, the per share
exercise prices of options outstanding ranged from $27.85 to
$58.88. The following table provides certain information with
respect to TRW stock options held by TRW Automotive-designated
employees outstanding at December&nbsp;31, 2001:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="30%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="13"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="13" align="center" nowrap><B><FONT size="1">Options Outstanding</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Options Exercisable</FONT></B></TD>
</TR>

<TR>
    <TD colspan="13" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="5"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted-</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="5"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Thousands</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Remaining</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted-</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Thousands of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted-</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Range of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">of Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Contractual Life</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Exercise Prices</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Outstanding</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">in&nbsp;Years</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercisable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise Price</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">$27.85&nbsp;&#150; $39.99
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">251</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33.22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">185</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">$40.00&nbsp;&#150; $58.88
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,907</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">53.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,761</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52.21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,158</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,946</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Had the compensation cost for the stock options
granted in 2001, 2000 and 1999 been determined based on the fair
value at the grant date, consistent with the fair value method
of SFAS&nbsp;123 &#147;Accounting for Stock-Based
Compensation&#148; TRW&nbsp;Automotive&#146;s net earnings
(loss) would have been effected by additional costs of
$6&nbsp;million in 2001, $4&nbsp;million in 2000 and
$1&nbsp;million in 1999.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Fair value was estimated at the date of grant
using the Black-Scholes option pricing model using the following
weighted-average assumptions for 2001, 2000 and 1999,
respectively: risk-free interest rate of 4.71&nbsp;percent,
5.83&nbsp;percent and 6.21&nbsp;percent; dividend yield of
2.85&nbsp;percent, 2.61&nbsp;percent and 2.50&nbsp;percent;
expected volatility of 28&nbsp;percent, 27&nbsp;percent and
25&nbsp;percent; and an expected option life of six years for
2001, 2000 and 1999.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, TRW has granted restricted stock to
certain TRW Automotive-designated employees in 2001 and 2000.
Restricted stock is nontransferable and subject to forfeiture
until the stock becomes exercisable. The restricted stock that
was granted becomes exercisable at various future dates, ranging
from two to 12&nbsp;years. The Company applies the provisions of
APB&nbsp;25 in accounting for its restricted stock and, as such,
compensation expense equal to the market price of the stock on
the date of the grant is recognized over the vesting period.
Restricted stock outstanding, the weighted-average fair value of
stock granted and the weighted-average remaining contractual
life of the vesting period of the restricted stock was 53,000
shares, $31.69&nbsp;per share and 5.9&nbsp;years, respectively,
at December&nbsp;31, 2001. Restricted stock outstanding, the
weighted-average fair value of stock granted and the
weighted-average remaining contractual life of vesting period of
the restricted stock was approximately 65,000 shares,
$44.50&nbsp;per share and 6.9&nbsp;years, respectively, at
December&nbsp;31, 2000. Had the compensation cost for the
restricted stock granted in 2001 and 2000 been determined based
on the fair value at the grant date consistent with the fair
value method of SFAS&nbsp;123, the Company&#146;s net earnings
would not be materially different from the amounts reported. The
TRW&nbsp;restricted stock held by TRW Automotive-designated
employees will be converted into TRW&nbsp;Automotive restricted
stock at the distribution date using the conversion formula as
described above.
</FONT>

<P align="center"><FONT size="2">F-27
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TRW AUTOMOTIVE INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">
<B><FONT size="2">Accumulated Other Comprehensive Income
(Loss)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The components of accumulated other comprehensive
income (loss) at December&nbsp;31, 2001 and 2000 are as follows:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="80%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Foreign currency exchange loss<BR>
    (net of tax of $94&nbsp;million in 2001 and $80&nbsp;million in
    2000)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(356</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(280</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unrealized loss on securities<BR>
    (net of tax of $1&nbsp;million in 2001 and $1&nbsp;million in
    2000)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unrealized gain on cash flow hedges<BR>
    (net of tax)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minimum pension liability adjustments<BR>
    (net of tax of $35&nbsp;million in 2001 and $10&nbsp;million in
    2000)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(65</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(18</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(421</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(299</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Contingencies</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Various claims, lawsuits and administrative
proceedings are pending or threatened against the Company or its
subsidiaries, covering a wide range of matters that arise in the
ordinary course of its business activities with respect to
commercial, product liability and environmental matters. In
addition, the Company is conducting a number of environmental
investigations and remedial actions at current and former
Company locations and, along with other companies, has been
named a potentially responsible party for certain waste
management sites. Each of these matters is subject to various
uncertainties, and some of these matters may be resolved
unfavorably with respect to the Company. A reserve estimate for
each environmental matter is established using standard
engineering cost estimating techniques. In the determination of
such costs, consideration is given to the professional judgment
of Company environmental engineers, in consultation with outside
environmental specialists, when necessary. At multi-party sites,
the reserve estimate also reflects the expected allocation of
total project costs among the various potentially responsible
parties. At December&nbsp;31, 2001, the Company had reserves for
environmental matters of $111&nbsp;million, including expense of
$2&nbsp;million recorded during the year. The Company believes
any liability that may result from the resolution of
environmental matters for which sufficient information is
available to support these cost estimates will not have a
material adverse effect on the Company&#146;s financial position
or results of operations. However, the Company cannot predict
the effect on the Company&#146;s financial position of
expenditures for aspects of certain matters for which there is
insufficient information. In addition, the Company cannot
predict the effect of compliance with environmental laws and
regulations with respect to unknown environmental matters on the
Company&#146;s financial position or results of operations or
the possible effect of compliance with environmental
requirements imposed in the future.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Further, product liability claims may be asserted
in the future for events not currently known by management.
Although the ultimate liability from these potential claims
cannot be ascertained at December&nbsp;31, 2001, management does
not anticipate that any related liability, after consideration
of insurance recovery, would have a material adverse effect on
the Company&#146;s financial position.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In October 2000, Kelsey-Hayes Company (formerly
known as Fruehauf Corporation) was served with a grand jury
subpoena relating to a criminal investigation being conducted by
the U.S.&nbsp;Attorney for the Southern District of Illinois.
The U.S.&nbsp;Attorney has informed the Company that the
investigation relates to possible wrongdoing by Kelsey-Hayes
Company and others involving certain loans made by Kelsey-Hayes
Company&#146;s then parent corporation to Fruehauf Trailer
Corporation, the handling of the trailing liabilities of
Fruehauf Corporation and actions in connection with the 1996
bankruptcy of Fruehauf Trailer Corporation.
</FONT>

<P align="center"><FONT size="2">F-28
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TRW AUTOMOTIVE INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">
<FONT size="2">Kelsey-Hayes Company became a wholly-owned
subsidiary of TRW upon TRW&#146;s acquisition of LucasVarity in
1999 and will become TRW Automotive&#146;s wholly-owned
subsidiary prior to the spin-off. The Company is cooperating
with the investigation and is unable to predict the outcome of
the investigation at this time. Management believes that the
ultimate resolution of this matter will not have a material
effect on the Company&#146;s financial condition or results of
operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On May&nbsp;6, 2002, ArvinMeritor Inc. filed suit
against TRW in the United States District Court for the Eastern
District of Michigan, claiming breach of contract and breach of
warranty in connection with certain tie rod ends that TRW
supplied to ArvinMeritor and the voluntary recall of some of
these tie rod ends. ArvinMeritor subsequently recalled all of
the tie rod ends, and claims that it is entitled to
reimbursement by TRW for the costs associated with both the
products recalled by TRW and those recalled by ArvinMeritor on
its own. ArvinMeritor is seeking an undisclosed amount of
compensatory and consequential damages. As this suit relates to
TRW&#146;s automotive business, any contingent liabilities
associated with this suit will be transferred to TRW Automotive
as part of the restructuring transactions. Management believes
that the Company has meritorious defenses and intends to defend
vigorously, the claims asserted against the Company, but cannot
predict the outcome of this lawsuit.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">While certain of the Company&#146;s subsidiaries
have been subject in recent years to some asbestos-related
claims, management believes that such claims will not have a
material adverse effect on the Company&#146;s financial
condition or results of operations. In general, these claims
seek damages for illnesses alleged to have resulted from
exposure to asbestos used in certain components sold by the
Company&#146;s subsidiaries. Management believes that the
majority of the claimants were assembly workers at the major
U.S. automobile manufacturers. The vast majority of these claims
name as defendants numerous manufacturers and suppliers of a
wide variety of products allegedly containing asbestos.
Management believes that, to the extent any of the products sold
by these subsidiaries and at issue in these cases contained
asbestos, the asbestos was encapsulated. Based upon several
years of experience with such claims, management believes that
only a small proportion of the claimants has or will ever
develop any asbestos-related impairment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s average total annual
settlement costs in connection with asbestos claims over the
last five years have been less than $100,000 in the aggregate,
and legal fees to defend these cases have never exceeded
$500,000 per year. These claims are strongly disputed by the
Company and it has been the Company&#146;s policy to defend
against them aggressively. The Company has been successful in
obtaining the dismissal of many cases without any payment
whatsoever. Moreover, there is significant insurance coverage
with solvent carriers with respect to these claims.
</FONT>

<P align="left">
<B><FONT size="2">Quarterly Financial Information
(unaudited)</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="36%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">First</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Second</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Third</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Fourth</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(A)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(B)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(C)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(D)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(E)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(F)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(G)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(H)</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="31"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="31" align="center" nowrap><B><FONT size="1">(In millions)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,619</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,993</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,673</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,882</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,322</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,486</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,477</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,559</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gross profit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">317</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">455</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">328</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">466</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">290</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">286</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">189</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">293</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Earnings (loss) before income taxes from
    continuing operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">93</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">161</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(131</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(59</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Earnings (loss) from continuing operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">96</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(85</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(41</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net earnings (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">97</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(84</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(40</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unusual items-income (expense) after income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(51</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(21</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(40</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(47</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(127</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(51</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">F-29
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">TRW AUTOMOTIVE INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(A)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Earnings (loss) before income taxes from
    continuing operations includes a $23&nbsp;million net gain
    ($28&nbsp;million after tax) related to asset sales and a
    $31&nbsp;million charge ($23&nbsp;million after tax) for
    restructuring actions.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(B)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Earnings (loss) before income taxes from
    continuing operations includes a $22&nbsp;million net gain
    ($13&nbsp;million after tax) related to the sale of assets,
    primarily the Nelson Stud Welding and Australian steering
    businesses, a $65&nbsp;million charge ($49&nbsp;million after
    tax) related to warranty, claims and litigation, a
    $15&nbsp;million charge ($11&nbsp;million after tax) related to
    the automotive restructuring program and a $6&nbsp;million
    charge ($4&nbsp;million after tax) relating to foreign currency
    hedges.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(C)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Earnings (loss) before income taxes from
    continuing operations includes a $23&nbsp;million charge
    ($21&nbsp;million after tax), primarily related to restructuring
    actions.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(D)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Earnings (loss) before income taxes from
    continuing operations includes a $2&nbsp;million gain
    ($1&nbsp;million after tax) related to foreign currency hedges
    and a $14&nbsp;million charge ($9&nbsp;million after tax)
    related to the automotive restructuring program.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(E)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Earnings (loss) before income taxes from
    continuing operations includes a $33&nbsp;million charge
    ($23&nbsp;million after tax) related to asset impairment and
    restructuring actions, a $29&nbsp;million charge
    ($19&nbsp;million after tax) for pending and threatened
    litigation and a $4&nbsp;million gain ($2&nbsp;million after
    tax) related to the sale of assets.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(F)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Earnings (loss) before income taxes from
    continuing operations includes a $69&nbsp;million charge
    ($46&nbsp;million after tax) related to restructuring and an
    asset impairment and a $2&nbsp;million charge ($1&nbsp;million
    after tax) related to foreign currency hedges.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(G)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Earnings (loss) before income taxes from
    continuing operations includes a $149&nbsp;million charge
    ($104&nbsp;million after tax) related to restructuring and other
    charges, a $34&nbsp;million charge ($14&nbsp;million after tax)
    related to asset impairments and a $9&nbsp;million loss
    ($9&nbsp;million after tax) related to the sale of assets.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(H)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Earnings (loss) before income taxes from
    continuing operations includes a $71&nbsp;million charge
    ($48&nbsp;million after tax) primarily related to the automotive
    restructuring programs, asset impairments and other charges and
    a $4&nbsp;million loss ($3&nbsp;million after tax) related to
    foreign currency hedges.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">F-30
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">PART II</FONT></B>

<P align="center">
<B><FONT size="2">INFORMATION NOT REQUIRED IN
PROSPECTUS</FONT></B>

<P align="left">
<B><FONT size="2">Item&nbsp;13.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Other
Expenses of Issuance and Distribution</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth the costs and
expenses payable in connection with the distribution of the
securities being registered. All amounts are estimated except
the Securities and Exchange Commission registration fee.
</FONT>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Item</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Securities and Exchange Commission registration
    fee
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">138,368</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">NYSE original listing fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">250,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Blue sky fees and expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Legal fees and expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounting fees and expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Registrar and transfer agent fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Printing and engraving expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Miscellaneous expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">*&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">To be filed by amendment.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Item&nbsp;14.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Indemnification
of Directors and Officers</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As permitted by Section&nbsp;102 of the Delaware
General Corporation Law, or the DGCL, our certificate of
incorporation includes a provision that eliminates the personal
liability of our directors for monetary damages for breach of
fiduciary duty as a director, except for liability:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">for any breach of the director&#146;s duty of
    loyalty to us or our stockholders;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">for acts or omissions not in good faith or that
    involve intentional misconduct or a knowing violation of law;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">under section&nbsp;174 of the DGCL regarding
    unlawful dividends and stock purchases; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">for any transaction from which the director
    derived an improper personal benefit.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our certificate of incorporation also provides
that:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">we must indemnify (except for expenses) our
    directors and officers to the fullest extent permitted by
    Delaware law;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">we may advance expenses, as incurred, to our
    directors and executive officers in connection with a legal
    proceeding to the fullest extent permitted by Delaware Law; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">we may indemnify our other employees and agents
    to the same extent that we indemnified our officers and
    directors, unless otherwise determined by our board of directors.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to Section&nbsp;145(a) of the DGCL, we
may indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed
action, suit or proceeding (other than an action by or in the
right of the corporation) by reason of the fact that the person
is or was a director, officer, agent or employee of our company
or is or was serving at our request as a director, officer,
agent, or employee of another corporation, partnership, joint
venture, trust or other enterprise, against expenses, including
attorneys&#146; fees, judgment, fines and amounts paid in
settlement actually and reasonably incurred by the person in
connection with such action, suit or proceeding. Pursuant to
Section&nbsp;145(b) of the DGCL, the power to indemnify also
applies to actions brought by or in the right of the corporation
as well, but only to the extent of
</FONT>

<P align="center"><FONT size="2">II-1
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">defense expenses (including attorneys&#146; fees)
actually and reasonably incurred by the person in connection
with the defense or settlement of such action or suit. Pursuant
to Section&nbsp;145(b), we shall not indemnify any person in
respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to us unless and only to
the extent that the Court of Chancery or the court in which such
action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the
Court of Chancery or such other court shall deem proper. The
power to indemnify under Sections&nbsp;145(a) and (b)&nbsp;of
the DGCL applies (i)&nbsp;if such person is successful on the
merits or otherwise in defense of any action, suit or
proceeding, or (ii)&nbsp;if such person acted in good faith and
in a manner he reasonably believed to be in the best interest,
or not opposed to the best interest, of the corporation, and
with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Section&nbsp;174 of the DGCL provides, among
other things, that a director, who willfully or negligently
approves of an unlawful payment of dividends or an unlawful
stock purchase or redemption, may be held liable for such
actions. A director who was either absent when the unlawful
actions were approved or dissented at the time, may avoid
liability by causing his or her dissent to such actions to be
entered in the books containing the minutes of the meetings of
the board of directors at the time such action occurred or
immediately after such absent director receives notice of the
unlawful acts.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indemnification provisions contained in our
certificate of incorporation are not exclusive of any other
rights to which a person may be entitled by law, agreement, vote
of stockholders or disinterested directors or otherwise. In
addition, we will maintain insurance on behalf of our directors
and executive officers insuring them against any liability
asserted against them in their capacities as directors or
officers or arising out of such status.
</FONT>

<P align="left">
<B><FONT size="2">Item&nbsp;15.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Recent
Sales of Unregistered Stock</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with our incorporation and
organization, effective as of June&nbsp;3, 2002, we issued one
share of common stock to TRW Inc. We believe that this issuance
was exempt from registration under Section&nbsp;4(2) of the
Securities Act of 1933 as a transaction not involving a public
offering.
</FONT>

<P align="left">
<B><FONT size="2">Item&nbsp;16.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Exhibits
and Financial Statement Schedules</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(a)&nbsp;Exhibits
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="85%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Certificate of Incorporation.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">By-laws.
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Certificate of TRW Automotive Common
    Stock.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">5.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Opinion of William B. Lawrence regarding legality
    of the securities being registered.*
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Master Distribution Agreement between the
    Registrant and TRW Inc.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Tax Sharing Agreement between the
    Registrant and TRW Inc.
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Employee Matters Agreement between the
    Registrant and TRW Inc.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Intellectual Property License Agreement
    between the Registrant and TRW Inc.*
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Transition Services Agreement between the
    Registrant and TRW Inc.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of TRW Automotive Long-Term Incentive Plan.*
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Trademark License Agreement between the
    Registrant and TRW Inc.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Insurance Allocation Agreement between
    the Registrant and TRW Inc.*
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">21.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Subsidiaries of the Registrant.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">23.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Consent of Ernst &#38; Young LLP.
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">23.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Consent of William B. Lawrence (included in
    Exhibit&nbsp;5.1).*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Powers of Attorney (included in signature page of
    this Registration Statement).
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">II-2
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">*&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">To be filed by amendment.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(b)&nbsp;Financial Statement Schedules.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All Schedules for which provision is made in the
applicable accounting regulations of the Securities and Exchange
Commission are not required under the related instructions or
are not applicable and, therefore, have been omitted.
</FONT>

<P align="left">
<B><FONT size="2">Item&nbsp;17.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Undertakings</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Insofar as the indemnification for liabilities
arising under the Securities Act of 1933 may be permitted as to
directors, officers and controlling persons of the registrant
pursuant to the provisions described in Item&nbsp;14, or
otherwise, the registrant has been advised that in the opinion
of the SEC, such indemnification is against public policy as
expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payments by the
registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue.
</FONT>

<P align="center"><FONT size="2">II-3
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "SIGNATURES" -->
<DIV align="left"><A NAME="021"></A></DIV>

<P align="center">
<B><FONT size="2">SIGNATURES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the requirements of the Securities
Act of 1933, the registrant certifies that it has duly caused
this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of
Lyndhurst, State of Ohio, on June&nbsp;4, 2002.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">TRW AUTOMOTIVE INC.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="4%"></TD>
    <TD width="56%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ WILLIAM B. LAWRENCE
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <FONT size="2">William B. Lawrence
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <I><FONT size="2">Vice President, Secretary and
    Director</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We, the undersigned officers and directors of TRW
Automotive Inc., hereby severally constitute and appoint
Kathleen A. Weigand, David F. Menz and Christopher W. Haffke,
and each of them acting alone, our true and lawful
attorneys-in-fact and agents, with full power of substitution
and resubstitution in each of them for him and in his name,
place and stead, and in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this
registration statement (or any other registration statement for
the same offering that is to be effective upon filing pursuant
to Rule&nbsp;462(b) under the Securities Act of 1933) and to
file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange
Commission and any applicable securities exchange or securities
self-regulatory body, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and
perform each and every act and thing requisite or necessary to
be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of
them or their or his substitute or substitutes may lawfully do
or cause to be done by virtue hereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the requirements of the Securities
Act of 1933, this registration statement has been signed by the
following persons in the capacities indicated on June&nbsp;4,
2002.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="38%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="11%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Signature</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Title</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    &nbsp;&nbsp;<FONT size="2">/s/ PHILIP A. ODEEN<BR>
    <HR size="1" noshade>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Philip
    A. Odeen
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">President and Director<BR>
    (Principal Executive Officer)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top">
    <FONT size="2">June&nbsp;4, 2002
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    &nbsp;&nbsp;<FONT size="2">/s/ ROBERT H. SWAN<BR>
    <HR size="1" noshade>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Robert
    H. Swan
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Vice President, Treasurer and Director<BR>
    (Principal Financial and<BR>
    Accounting Officer)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top">
    <FONT size="2">June&nbsp;4, 2002
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    &nbsp;&nbsp;<FONT size="2">/s/ WILLIAM B. LAWRENCE<BR>
    <HR size="1" noshade>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;William
    B. Lawrence
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Vice President, Secretary and Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top">
    <FONT size="2">June&nbsp;4, 2002
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    &nbsp;&nbsp;<FONT size="2">/s/ HOWARD V. KNICELY<BR>
    <HR size="1" noshade>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Howard
    V. Knicely
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Vice President and Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top">
    <FONT size="2">June&nbsp;4, 2002
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    &nbsp;&nbsp;<FONT size="2">/s/ KATHLEEN A. WEIGAND<BR>
    <HR size="1" noshade>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Kathleen
    A. Weigand
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Vice President and Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top">
    <FONT size="2">June&nbsp;4, 2002
    </FONT></TD>
</TR>

</TABLE>
</CENTER>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "EXHIBIT INDEX" -->
<DIV align="left"><A NAME="022"></A></DIV>

<P align="center">
<B><FONT size="2">EXHIBIT INDEX</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="85%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Certificate of Incorporation.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">By-laws.
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Certificate of TRW Automotive Common
    Stock.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">5.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Opinion of William B. Lawrence regarding legality
    of the securities being registered.*
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Master Distribution Agreement between the
    Registrant and TRW Inc.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Tax Sharing Agreement between the
    Registrant and TRW Inc.
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Employee Matters Agreement between the
    Registrant and TRW Inc.
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Intellectual Property License Agreement
    between the Registrant and TRW Inc.*
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Transition Services Agreement between the
    Registrant and TRW Inc.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of TRW Automotive Long-Term Incentive Plan.*
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Trademark License Agreement between the
    Registrant and TRW Inc.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Insurance Allocation Agreement between
    the Registrant and TRW Inc.*
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">21.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Subsidiaries of the Registrant.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">23.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Consent of Ernst &#38; Young LLP.
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">23.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Consent of William B. Lawrence (included in
    Exhibit&nbsp;5.1).*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Powers of Attorney (included in signature page of
    this Registration Statement).
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">*&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">To be filed by amendment.
    </FONT></TD>
</TR>

</TABLE>
</BODY>
</HTML>
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TRW AUTOMOTIVE INC.
Table of Contents
As filed with the Securities and Exchange
Commission on June 4, 2002
Registration
No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
TRW Automotive Inc.
(Exact name of Registrant as specified in its
charter)
Delaware
3714
03-0450952
(State or other jurisdiction of
incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification Number)
TRW Automotive Inc.
12025 Tech Center Drive
Livonia, Michigan 48150
Telephone: (734) 266-2600
(Address, including zip code, and telephone
number, including area code, of
Registrant's principal executive
offices)
William B. Lawrence
Executive Vice President,
General Counsel and Secretary
TRW Inc.
Cleveland, Ohio 44124-2760
Telephone: (216) 291-7000
(Name, address, including zip code, and
telephone number,
including area code, of agent for
service)
Approximate date of commencement of proposed
sale to the public:
As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this
Form are to be offered on a delayed or continuous basis pursuant
to Rule 415 under the Securities Act, check the following
box.
o
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.
o
If this Form is a post-effective amendment filed
pursuant to Rule 462(c) 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.
o
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.
o
If delivery of the prospectus is expected to be
made pursuant to Rule 434, check the following
box.
o
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities
Proposed Maximum Aggregate
to be Registered
Offering Price(1)
Amount of Registration Fee
Common Stock, $.001 par value per share
$1,504,000,000
$138,368
(1)
Calculated pursuant to Rule 457(f)(2)
    promulgated under the Securities Act, based on the book value of
    the Registrant as of March 31, 2002.
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.
Table of Contents
The information in this
prospectus is not complete and may be changed. We may not
distribute these securities until the registration statement
filed with the Securities and Exchange Commission is effective.
This prospectus is not an offer to distribute these securities
and we are not soliciting offers to receive these securities in
any state where the offer or distribution is not permitted.
SUBJECT TO COMPLETION, DATED JUNE 4,
2002
PRELIMINARY PROSPECTUS
TRW Automotive Inc.
Shares
Common Stock
(par value $.001 per share)
We are currently a wholly-owned subsidiary of TRW
Inc. In the spin-off described in this prospectus, TRW will
distribute all of the shares of our common stock held by TRW on
a
pro rata
basis to the holders of TRW common stock.
In the spin-off, you will receive one share of
our common stock for each share of TRW common stock that you
held at the close of business on the spin-off record date,
currently expected to be on or
about                     ,
2002. Immediately following the spin-off, we will be an
independent, publicly traded company.
We are sending you this prospectus to describe
the spin-off. We expect the spin-off to occur on or
about                     ,
2002. On or shortly after the expected spin-off date:
•
holders of record of TRW common stock on the
    spin-off record date will have credited to a book-entry account
    established for them by, and maintained at National City Bank
    (our registrar and transfer agent) the number of shares of our
    common stock to which they are entitled in the spin-off; and
•
beneficial owners of shares of TRW common stock
    on the spin-off record date should have credited to their
    brokerage, custodian or similar account through which they own
    their TRW common stock, the number of shares of our common stock
    to which they are entitled in the spin-off.
This prospectus explains the spin-off in detail
and provides important information regarding TRW Automotive Inc.
We urge you to read it carefully.
Please note that approval
of TRW shareholders at an upcoming special meeting of TRW
shareholders is a condition to the spin-off. You should
carefully review the proxy statement of TRW relating to the
special meeting that accompanies this prospectus.
There are
other conditions that must also be met for the spin-off to
proceed. These conditions are described in the section entitled
"The Spin-Off — Conditions to Spin-Off;
Termination of Spin-Off."
If TRW shareholders approve the spin-off at the
special meeting, no further shareholder action will be necessary
for you to receive the shares of our common stock to which you
will be entitled in the spin-off. This means that:
•
you will not need to pay any consideration to TRW
    or to us; and
•
you will not need to surrender any shares of TRW
    common stock to receive your shares of our common stock.
We expect shares of our common stock to trade on
the New York Stock Exchange under the ticker symbol
"          ."
As you review this prospectus, you should carefully consider
the matters described in "Risk Factors" beginning on
page 9.
The Securities and Exchange Commission and
state securities regulators have not approved or disapproved of
these securities, or determined if this prospectus is truthful
or complete. Any representation to the contrary is a criminal
offense.
The date of this prospectus
is                     ,
2002.
TABLE OF CONTENTS
SUMMARY
TRW AUTOMOTIVE
THE SPIN-OFF
SUMMARY COMBINED FINANCIAL DATA
RISK FACTORS
THE SPIN-OFF
DIVIDEND POLICY
PRO FORMA CAPITALIZATION
SELECTED COMBINED FINANCIAL DATA
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BUSINESS
MANAGEMENT
RELATIONSHIP WITH TRW
PRINCIPAL STOCKHOLDERS OF TRW AND TRW AUTOMOTIVE
DESCRIPTION OF CAPITAL STOCK
CERTAIN INDEBTEDNESS
SHARES ELIGIBLE FOR FUTURE SALE
LEGAL MATTERS
EXPERTS
WHERE YOU CAN FIND MORE INFORMATION
INDEX TO COMBINED FINANCIAL STATEMENTS
SIGNATURES
EXHIBIT INDEX
EX-3.1: CERTIFICATE OF INCORPORATION
EX-3.2: BY-LAWS
EX-10.1: FORM OF MASTER DISTRIBUTION AGREEMENT
EX-10.2: FORM OF TAX SHARING AGREEMENT
EX-10.3: FORM OF EMPLOYEE MATTERS AGREEMENT
EX-23.1: CONSENT OF ERNST & YOUNG LLP
Table of Contents
TABLE OF CONTENTS
Page
Summary
1
Risk Factors
9
Special Note About Forward Looking Statements
15
The Spin-Off
16
Dividend Policy
25
Pro Forma Capitalization
26
Selected Combined Financial Data
27
Management's Discussion and Analysis of
    Financial Condition and Results of Operations
29
Business
43
Management
56
Relationship With TRW
65
Principal Stockholders of TRW and TRW Automotive
72
Description of Capital Stock
74
Certain Indebtedness
78
Shares Eligible for Future Sale
79
Legal Matters
79
Experts
79
Where You Can Find More Information
80
Index to Combined Financial Statements
F-1
You should rely only on the information contained
in this prospectus. We have not authorized anyone to provide you
with information different from that contained in this
prospectus.
This prospectus is being filed with respect to
the distribution
of            shares
of our common stock to holders of TRW common stock on the
spin-off record date. It does not relate to any distribution of
shares for cash, and neither we nor TRW will receive any
consideration for the shares. The registration fee as set forth
in the registration statement of which this prospectus is a part
was calculated based on our book value and does not reflect any
assessment of the market value or trading price of our common
stock.
i
Table of Contents
SUMMARY
This summary highlights information relating
to us and our common stock being distributed in the spin-off.
More detailed discussions of this information are contained in
this prospectus. You should read the entire prospectus,
including the risk factors and our combined financial statements
and accompanying notes appearing elsewhere in this
prospectus.
All references in this prospectus to "TRW
Automotive," "we," "our" and
"us" mean TRW Automotive Inc., the corporation that
will own and operate TRW's and its consolidated
subsidiaries' automotive business following the spin-off
and whose common stock will be distributed to TRW shareholders
in the spin-off. All references in this prospectus to
"TRW" mean TRW Inc., the corporation that will
continue to own and operate TRW's non-automotive
businesses, and TRW's consolidated subsidiaries following
the spin-off.
TRW AUTOMOTIVE
Our Company
We are among the world's largest and most
diversified suppliers of automotive systems, modules and
components, with 2001 sales of over $10 billion. We are
primarily a "Tier-1" supplier, providing over
90 percent of our products directly to automotive vehicle
manufacturers, commonly known as VMs. We also sell our products
in the worldwide aftermarket for VM service and replacement
parts, which are distributed through independent aftermarket
channels. We have become a leader in the global automotive parts
industry by capitalizing on the strength of our product and
manufacturing systems technologies.
We have established a broad global presence, with
a workforce of over 65,000 employees and a network of
manufacturing sites, technical centers, sales offices and joint
ventures located in every major vehicle producing region of the
world. Our combined customer, product and geographic diversity
is among the industry leaders, with approximately
50 percent of our 2001 sales generated outside of North
America, and with no single customer accounting for more than
19 percent of sales.
Through our experience supplying to more than 40
VMs, including all the world's major VMs, we have developed
a sophisticated understanding of the design, engineering and
manufacture of automobiles and trucks. We have extensive
technical experience in a broad range of product lines and
strong systems integration skills, which enable us to provide
comprehensive, system-based solutions for our customers. In
particular, among the world's leading automotive suppliers,
we believe that we are uniquely positioned as a global leader in
the design, manufacture and sale of active (vehicle dynamic
control) and passive (crash sensing and occupant restraint)
safety systems and components.
We are one of the leading Tier-1 suppliers in all
of our principal product categories. We operate our business
along the following three major operating segments:
•
Chassis Systems, which includes active safety
    systems and components in the areas of braking, steering,
    suspension and integrated vehicle control;
•
Occupant Safety Systems, which includes passive
    safety systems and components in the areas of inflatable
    restraints, seat belts, steering wheels and safety and security
    electronics; and
•
Other Automotive, which includes engine valves
    and components, engineered fasteners and components and body
    control systems.
Within these operating segments, we have
developed or introduced numerous automotive innovations,
including electrically assisted steering systems, four-wheel and
rear-wheel anti-lock brake systems, known as ABS, radar-based
active cruise control systems, complete vehicle occupant
restraint systems, seat belt pretensioning devices, remote
keyless entry systems, direct and indirect tire pressure
monitoring systems, and silicrome and two-piece automotive
engine valves.
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Our Strategy
Our objective is to increase sales and improve
our profitability and operating cash flow by leveraging our
position as a leading Tier-1 global automotive parts supplier
focused primarily in the areas of active and passive safety
technologies. Key elements of our strategy include the following:
•
Expand Our Leading Technology
    Capabilities.
Our objective is to
    supply a complete predictive vehicle control system that
    integrates active and passive safety technologies. As the only
    automotive supplier with leading capabilities in both active and
    passive safety systems, we believe we are ideally positioned to
    achieve our goal.
•
Increase Our Product Content per Vehicle.
Our leading technological position in
    automotive safety systems has placed us at the forefront of
    supplying enhanced safety and electronics products and has
    allowed us to increase our product content per vehicle.
•
Capitalize on the Continued Trend Toward
    Module and System Supply.
We have
    developed significant system and module capabilities in a number
    of key product areas. We serve as the system or module
    integrator on a number of platforms on which we assemble modules
    and systems incorporating a combination of products we
    manufacture and products supplied to us by other manufacturers.
•
Focus on Operating Efficiency.
We continue to focus on opportunities
    to optimize our resources and reduce manufacturing costs by,
    among other things, shifting production capacity from high wage
    areas to low wage areas, and executing several strategic
    initiatives aimed at improving our operating performance.
•
Evaluate Joint Ventures, Strategic Alliances
    and Selected Acquisitions and
    Divestitures.
Strategic alliances and
    joint ventures represent an important element of our business
    plan and worldwide expansion. We also pursue selected
    acquisitions and have substantial experience completing and
    integrating acquisitions with a focus on realizing cost savings
    and other synergies. Additionally, we consistently evaluate our
    existing portfolio of businesses for operations that are
    non-core and which we may divest given a strategic opportunity.
Our Competitive Strengths
We intend to leverage our leading product
positions, our global presence, strong customer relationships
and diverse product capabilities to increase our presence in the
global safety systems industry.
•
Leading Product
    Positions.
We are one of the
    world's largest suppliers of automotive safety and chassis
    components. We believe we hold a number one or number two global
    position in all of our primary products. Our leading supply
    position across a number of product lines increases our
    importance to our VM customers and allows us to compete
    effectively in each of the markets that we serve.
•
Global Position.
Our
    geographically diverse global manufacturing base offers us an
    advantage over many of our competitors in meeting the global
    needs of our VM customers. We also believe that our global
    presence allows us to leverage sales to a customer in one
    location, or for one product, into sales to that customer in
    other locations and for other products.
•
Strong Relationships with
    Customers.
As a result of our focus on
    providing high quality products and service at appropriate
    prices, we maintain long-standing relationships and have an
    excellent reputation with our customers, which include every
    major VM in the world.
•
Diversified
    Business.
We have a diversified
    business that limits our exposure to the risks of any one
    customer, product area or geographic economy. Approximately
    50 percent of our sales are derived from sales outside of
    North America and no one customer accounts for more than
    19 percent of our sales.
Corporate Information
Our principal executive offices are located at
12025 Tech Center Drive, Livonia, MI 48150, and our
telephone number is (734) 266-2600. We will maintain an
Internet site at
http://www.                    .com.
Our website and the information contained on that site, or
connected to that site, are not incorporated into this
prospectus.
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THE SPIN-OFF
The following is a brief summary of the terms of
the spin-off.
The Spin-Off
The spin-off is the method by which TRW will be
    separated into two independent publicly traded companies:
• TRW
    Automotive, which will consist of TRW's automotive business
    and TRW's subsidiaries and affiliates associated with the
    automotive business; and
• TRW,
    which will consist of TRW's systems, space and electronics
    businesses, and its subsidiaries and affiliates associated with
    these businesses.
Distributing Company
TRW. After the spin-off, neither TRW nor any of
    its subsidiaries will own any shares of our capital stock.
Spun-Off Company
TRW Automotive, currently a wholly-owned
    subsidiary of TRW. After the spin-off, we will be an independent
    publicly traded company.
Securities to be Distributed
Approximately                                 shares
    of our common stock, which is estimated to be all of the shares
    of our common stock held by TRW immediately prior to the
    spin-off. Immediately following the spin-off, we estimate that
    about                     stockholders
    of record will hold shares of our common stock, although some of
    the shares may be registered in the name of a single stockholder
    who represents a number of stockholders.
Distribution Ratio
You will receive one share of our common stock
    for each share of TRW common stock that you hold on the spin-off
    record date.
Spin-Off Record Date
Expected to
    be                     ,
    2002 (close of business)
Spin-Off Date
Expected to
    be                     ,
    2002
Distribution Agent
National City Bank, the registrar and transfer
    agent for shares of TRW common stock.
Registrar and Transfer Agent
National City Bank, the registrar and transfer
    agent for shares of our common stock.
New York Stock Exchange Symbol
"          "
Trading Market
There is currently no trading market for our
    common stock. If the spin-off is completed, we expect that
    "regular way" trading in our common stock will
    commence
    on                     ,
    2002. We anticipate that a temporary form of interim trading in
    our common stock, called "when-issued" trading, will
    commence shortly before the spin-off record date.
    "When-issued" trading reflects the value at which the
    market expects our common stock to trade after the spin-off. If
    "when-issued" trading develops, you will be able to
    buy and sell our common stock before the spin-off, but none of
    these trades will settle until after the spin-off and after
    "regular way" trading in our common stock has begun.
    If the spin-off does not occur, all "when-issued"
    trading will be null and void. If "when-issued"
    trading occurs, the listing for our common stock is expected to
    be represented by the trading symbol
    "          "
    and
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accompanied by the letters "wi" on the
    New York Stock Exchange, Inc., or the NYSE.
Additionally, we expect that
    "ex-distribution" trading in TRW common stock will
    develop shortly before the spin-off record date.
    "Ex-distribution" trading means that you may trade TRW
    common stock before the completion of the spin-off, but on a
    basis that reflects the value at which the market expects TRW
    common stock to trade after the spin-off. If
    "ex-distribution" trading develops, you may buy and
    sell those shares before the spin-off, but none of these trades
    will settle until after the spin-off and after "regular
    way" trading in TRW common stock has begun. If the spin-off
    does not occur, all "ex-distribution" trading will be
    null and void. If "ex-distribution" trading occurs,
    the listing for TRW common stock will be represented by the
    trading symbol "TRW" and accompanied by the letters
    "wi" on the NYSE.
Tax Consequences
TRW has advised us that it has requested a ruling
    from the Internal Revenue Service, or the IRS, to the effect
    that the spin-off qualifies as a tax-free distribution for U.S.
    federal income tax purposes. In the event that the IRS has not
    yet issued the private letter ruling on or shortly before the
    spin-off declaration date, TRW has advised us that it expects to
    receive an opinion from tax counsel regarding the material
    federal income tax consequences of the spin-off. You should
    consult with your tax advisor as to the particular tax
    consequences to you of the spin-off. See "The
    Spin-Off — Material U.S. Federal Income Tax
    Consequences" for a more detailed description of the U.S.
    federal income tax consequences of the spin-off.
Book-Entry Shareholding
On or shortly after the spin-off date:
• holders
    of record of shares of TRW common stock on the spin-off record
    date will have credited to a book-entry account established by,
    and maintained at National City Bank (our registrar and transfer
    agent) the number of shares of our common stock to which they
    are entitled in the spin-off; and
• beneficial
    owners of shares of TRW common stock on the spin-off record date
    should have credited to their brokerage, custodian or similar
    account through which they own their TRW common stock, the
    number of shares of our common stock to which they are entitled
    in the spin-off.
Relationship with TRW after the
    Spin-Off
We expect to enter into a master distribution
    agreement with TRW, which will provide for, among other things,
    the separation of our business operations from TRW and the
    spin-off, as well as certain ancillary agreements with TRW,
    which are described in the section entitled "Relationship
    With TRW."
No Proceeds from the Spin-Off
Because this is not an offering for cash, there
    will be no proceeds from the spin-off.
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Our Management and Management Compensation
    after the Spin-Off
The compensation, awards and other benefits
    payable to selected members of our management after the spin-off
    are described in the section entitled "Management."
You should carefully read the "Risk
Factors" beginning on page 9.
If you have any questions relating to the
spin-off, you should contact National City Bank, our registrar
and transfer agent at:
National City Bank
Stock Transfer Operations LOC 5352
P.O. Box 92301
Cleveland, Ohio 44193-0900
Tel: 800-622-6757 (within U.S. and Canada)
Tel: (216) 257-8663 (outside U.S. and Canada)
Fax: 216-257-8508
E-mail: shareholderinquiries@nationalcity.com
After the spin-off, if you are a TRW Automotive
stockholder and have questions relating to the spin-off, you can
contact us directly. Our contact information is:
TRW Automotive Inc.
12025 Tech Center Drive
Livonia, MI 48150
Tel: (734) 266-2600
Fax: (734) 266-5702
Attention: Investor Relations
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SUMMARY COMBINED FINANCIAL DATA
The summary combined financial data as of and for
each of the three years ended December 31, 2001 have been
derived from our audited financial statements. The summary
combined financial data as of and for the six months ended
June 30, 2002 and 2001 have been derived from unaudited
combined financial statements. Our results for 2001 are also
presented on a pro forma basis to give effect to the spin-off
and the terms of our separation from TRW. Comparisons of certain
items below are affected by the acquisition of LucasVarity plc
in 1999 and divestitures during the three-year period. See
"Selected Combined Financial Data,"
"Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the combined
financial statements and accompanying notes included elsewhere
in this prospectus. The following financial information may not
reflect what our results of operations, financial position and
cash flows would have been had we operated as a separate,
stand-alone entity during the periods presented, or what our
results of operations, financial position and cash flows will be
in the future.
Six Months Ended
Years Ended December 31,
June 30,
Pro Forma
1999
2000
2001
2001(1)
2001
2002
(unaudited)
(unaudited)
(In millions, except per share data)
Statements of Operations Data:
Sales(2)
$
10,472
$
10,920
$
10,091
$
10,091
Gross profit
1,648
1,500
1,124
1,124
Earnings (loss) from continuing
    operations(3)(5)
68
90
(39
)
70
Net earnings (loss)
122
93
(28
)
81
Earnings from continuing operations excluding
    unusual items
250
247
144
253
Per diluted share of common stock:
Continuing operations
Net earnings (loss)
Shares used in computing per share
    amounts — diluted
Statements of Cash Flows Data:
Cash provided by (used in) operating activities
964
751
828
937
Cash provided by (used in) investing activities
(5,089
)
641
(409
)
(409
)
Cash provided by (used in) financing activities
4,296
(1,452
)
(464
)
(464
)
Other Data (unaudited):
EBITDA(4)
1,202
1,152
848
889
EBITDA — excluding unusual items(5)
1,440
1,374
1,128
1,169
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As of December 31,
As of June 30,
Pro Forma
1999
2000
2001
2001(1)
2001
2002
(unaudited)
(unaudited)
(In millions, except per share data)
Balance Sheets Data:
Current assets
$
3,610
$
2,521
$
1,937
$
1,937
Current liabilities
2,922
2,786
2,577
2,577
Working capital
688
(265
)
(640
)
(640
)
Total assets
12,638
11,293
10,287
10,287
Total debt
6,521
5,053
4,597
2,800
Parent company investment
1,918
2,015
1,925
N/A
(1)
The unaudited pro forma financial information as
    of and for the year ended December 31, 2001 has been
    prepared by adjusting TRW Automotive's historical combined
    financial statements to give effect to the following
    assumptions: (i) a reduction in total debt to
    $2,800 million as of January 1, 2001 to reflect the
    total debt of TRW Automotive after the restructuring
    transactions and related transactions described herein are
    consummated using a blended interest rate of 7.1 percent,
    and (ii) a reduction in general and administrative
    corporate expense by $41 million, representing the
    corporate operating expenses that would not have been incurred
    had TRW Automotive operated on a stand-alone basis. For
    additional information, see "The Spin-off —
    Transactions Prior to or Concurrent With the Spin-off" and
    "Certain Indebtedness."
(2)
Sales in 2001 decreased 8 percent to
    $10.1 billion as compared to 2000 sales of
    $10.9 billion. The decrease resulted from the effects of a
    decline in vehicle production, primarily in North America, the
    effect of foreign currency exchange, business divestitures and
    lower pricing. Sales in 2000 increased 4 percent from sales
    of $10.5 billion in 1999. The increase was a result of
    higher volumes, the inclusion of the first quarter of 2000 sales
    of LucasVarity, which was acquired on March 25, 1999 and
    the consolidation of an affiliate, partially offset by the
    effects of foreign currency exchange, lower pricing and
    divestitures of several businesses.
(3)
Earnings (loss) from continuing operations for
    2001 was a loss of $39 million compared to earnings of
    $90 million in 2000 and $68 million in 1999. Unusual
    charges were $183 million, $157 million and $182
    million for 2001, 2000, and 1999, respectively. Excluding
    unusual items, earnings from continuing operations would have
    been $144 million in 2001, $247 million in 2000 and
    $250 million in 1999. The decrease in earnings from
    continuing operations, without unusual items, in 2001 from 2000
    resulted primarily from lower gross profit partially offset by
    lower administrative and selling, research and development and
    interest expense. Gross profit decreased due to lower volume and
    lower margins on new products, lower pricing, increased warranty
    and recall charges, the effects of foreign currency exchange and
    divestitures, partially offset by net cost reductions. The
    decrease in earnings from continuing operations, without unusual
    items, from 1999 to 2000 resulted primarily from higher interest
    expense and lower gross profit, offset by lower administrative
    and selling and research and development expenses and a lower
    effective income tax rate. The decrease in gross profit resulted
    from lower pricing, changes in the mix of automotive products,
    divestitures of several businesses, the effect of foreign
    currency exchange and an increase in warranty charges, partially
    offset by cost reductions and an additional quarter of results
    of operations of LucasVarity.
(4)
EBITDA, a measure used by management to measure
    operating performance, represents earnings from continuing
    operations before interest, income taxes, depreciation and
    amortization, including amortization of other intangibles.
    EBITDA is not a recognized term under generally accepted
    accounting principles and does not purport to be an alternative
    to operating income as an indicator of operating performance or
    to cash flows from operating activities as a measure of
    liquidity. Because not all companies calculate EBITDA
    identically, this presentation of EBITDA may not be comparable
    to other similarly titled measures of other companies.
    Additionally, EBITDA is not intended to be a measure of
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free cash flow for management's
    discretionary use, as it does not consider certain cash
    requirements such as interest payments, tax payments and debt
    service requirements.
(5)
See "Management's Discussion and
    Analysis of Financial Condition and Results of Operations"
    and the "Restructuring" and "Asset
    Impairments" notes to financial statements for a discussion
    of unusual items.
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RISK FACTORS
You should carefully consider each of the
following risks and all of the other information set forth in
this prospectus. Some of the following risks relate principally
to our separation from TRW. Other risks relate principally to
our business in general and the industry in which we operate.
Finally, other risks relate principally to the securities
markets and ownership of our common stock. The risks and
uncertainties described below are not the only ones that we
face. Additional risks and uncertainties not presently known to
us or that we currently believe to be immaterial may also
adversely affect our business.
If any of the following risks and
uncertainties develop into actual events, our business,
financial condition or results of operations could be materially
adversely affected. In such case, the trading price of our
common stock could decline, and you may lose all or part of your
investment. This prospectus contains forward-looking statements
that involve risks and uncertainties. Our actual results could
differ materially from those anticipated in these
forward-looking statements as a result of certain factors,
including the risks faced by us described below and elsewhere in
this prospectus.
Risk Factors Relating to Separating from
TRW
There are risks relating to our separation
from TRW that you should consider in connection with your
investment in and ownership of our common stock.
Our historical and pro forma financial
information may not be representative of our results as a
separate company
The historical and pro forma financial
information we have included in this prospectus may not reflect
what our results of operations, financial position and cash
flows would have been had we been a separate, stand-alone entity
during the periods presented, or what our results of operations,
financial position and cash flows will be in the future. This is
because:
•
we have made certain adjustments and allocations
    since TRW did not account for us as, and we were not operated
    as, a single, stand-alone business for the periods presented; and
•
the information does not reflect certain changes
    that will occur in our funding and operations as a result of our
    separation from TRW.
Accordingly, we cannot assure you that our
historical results of operations are indicative of our future
operating or financial performance. For additional information,
see "Summary Combined Financial Data", "Selected
Combined Financial Data" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations."
We may incur material costs in connection with
our separation from TRW
We may incur costs and expenses greater than
those we have planned for in connection with our separation from
TRW. These increased costs and expenses may arise from various
factors, including financing costs greater than those expected,
arising from changes in prevailing interest rates and increased
difficulty in obtaining financing as a stand-alone entity. We
cannot assure you that these costs will not be material to our
business.
Pre- or post-spin-off acquisitions of the
stock of TRW or TRW Automotive could render the spin-off taxable
to TRW and, in certain circumstances, its shareholders
TRW expects to receive a private letter ruling
from the IRS or an opinion from tax counsel, in either case, to
the effect that the spin-off will qualify for tax-free treatment
under Section 355 of the Internal Revenue Code of 1986, as
amended, or the Code. Assuming the spin-off otherwise qualifies
for tax-free treatment under Section 355 of the Code, TRW
may nevertheless be subject to tax under Section 355(e) of
the Code if 50 percent or more of the capital stock, by vote or
value, of TRW or TRW Automotive is acquired, directly or
indirectly, as part of a plan or series of related transactions
that include the spin-off. If
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Section 355(e) of the Code were to apply,
the spin-off would remain tax-free to each holder of our capital
stock, but TRW would be required to pay a corporate tax on the
spin-off, based on the excess of the fair market value of our
shares of common stock distributed in the spin-off over
TRW's tax basis for such shares. In addition, without
regard to Section 355(e), a pre- or post-spin-off
acquisition of TRW or TRW Automotive that is taxable, in whole
or in part, could render the spin-off taxable to TRW and the
shareholders of TRW if the spin-off, when coupled with the
acquisition, is treated as a "device" for the
distribution of earnings and profits under general principles of
Section 355.
Under the tax sharing agreement between us and
TRW, we would be required to indemnify TRW against a portion of
the tax liability resulting under Section 355(e), or
Section 355 generally, if such taxable gain resulted solely
from our actions, including as a result of an acquisition or
issuance of our capital stock. To this end, pursuant to the tax
sharing agreement, during the two-year period following the
spin-off we are precluded from engaging in certain transactions
unless TRW first obtains a supplemental private letter ruling
from the IRS to the effect that such transaction will not
adversely affect the tax-free status of the spin-off. In
addition, in certain circumstances we and TRW would each be
responsible for 50 percent of the tax liability incurred by
reason of the spin-off not qualifying as tax-free under
Section 355 of the Code. A more complete discussion of the
relevant provisions of federal income tax law appears in the
section entitled "The Spin-Off — Material
U.S. Federal Income Tax Consequences" on page 21
of this prospectus. Also, for additional information on our tax
sharing agreement with TRW, see "Relationship With
TRW — Tax Sharing Agreement."
Our ability to meet our future capital and
liquidity requirements may be affected by our level of
debt
On the completion of our separation from TRW, we
expect to have approximately $2.8 billion of debt
outstanding. We anticipate, based upon advice from our financial
advisors, that this level of debt is appropriate to obtain and
maintain an investment grade rating. However, no assurances can
be given that we will obtain an investment grade rating, or that
if we do obtain an investment grade rating we will be able to
maintain it, or that having an investment grade rating will
result in tangible benefits to us such as lower interest rates
or less restrictive debt securities. Moreover, while this is
less debt than the total debt that has been outstanding at TRW,
it will have to be supported by the cash flows provided by our
operations, which comprise a business smaller than that which
supported the debt of TRW. A substantial portion of our cash
flows from operations will be dedicated to meeting our payment
obligations on our debt. If we fail to realize our expected cash
flows from operations, our liquidity position may be adversely
affected. Our working capital requirements and cash flows from
operations can vary greatly from quarter to quarter, depending
on the volume of production, the payment terms with our
customers and suppliers and the build-up of inventories. We
cannot assure you that we will be able to meet our future
capital requirements in the same manner, and on the same terms,
as we did when we were a part of TRW.
The transitional services to be provided to us
by TRW may not be sufficient to meet our needs
We have never operated as a stand-alone company.
While TRW will be contractually obligated to provide us with
certain transitional services, we cannot assure you that these
services will be sustained at the same level as when we were a
part of TRW or that we will obtain the same benefits. Also, we
cannot assure you that, after the expiration of these various
arrangements, we will be able to replace the transitional
services in a timely manner or on terms and conditions,
including cost, as favorable as those we will receive from TRW.
These agreements were made in the context of a parent-subsidiary
relationship and were negotiated in the overall context of our
separation from TRW. The prices charged to us under these
agreements may be higher or lower than the prices that may be
charged by unaffiliated third parties for similar services. For
more information about these arrangements, see
"Relationship With TRW — Transition Services
Agreement."
Some of our directors and executive officers
may have conflicts of interest because they own TRW
stock
Some of our directors and executive officers own
substantial amounts of TRW stock because of their relationships
with TRW prior to our separation from TRW. Such ownership could
create, or appear to create, potential conflicts of interest
when directors and officers are faced with decisions that could
have different implications for us and TRW. See
"Management — Stock Ownership of Directors and
Executive Officers."
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Risk Factors Relating to our
Business
Our business is subject to risks relating to
the industry in which we operate that you should consider in
connection with your investment in and ownership of our common
stock.
We may be unable to continue to compete
successfully in the highly competitive automotive parts
industry
The automotive parts and components industry is
highly competitive. Our competitors include independent
suppliers of parts and components, as well as suppliers formed
by spin-offs by our existing VM customers, who are becoming more
aggressive in attempting to sell parts and components to other
VMs. Depending on the particular product, the number of our
competitors varies significantly, and many of the products have
high capital requirements and require high engineering content.
We cannot assure you that we will be able to continue to compete
favorably or that increased competition in our markets will not
have a material adverse effect on our business, results of
operations and financial condition.
The cyclicality of automotive production and
sales could adversely affect our business
Almost all of our business is directly related to
automotive sales and automotive vehicle production by our
customers. Automotive production and sales are highly cyclical
and depend on general economic conditions and other factors,
including consumer spending and preferences. In addition,
automotive production and sales can be affected by labor
relations issues, regulatory requirements, trade agreements and
other factors. Any significant economic decline that results in
a reduction in automotive production and sales by our customers
could have a material adverse effect on our business, results of
operations and financial condition.
Continued pricing pressures on automotive
suppliers may adversely affect our business
Pricing pressure from customers has been a
characteristic of the automotive supply industry in recent
years. Virtually all VMs have policies of seeking price
reductions each year. We have taken steps to reduce costs and
resist price reductions; however, price reductions have impacted
our sales and profit margins. If we are not able to offset
continued price pressure through improved operating efficiencies
and reduced expenditures, those pressures may have a material
adverse effect on our business, results of operations and
financial condition.
We rely on our significant customers
For the year ended December 31, 2001,
approximately 18 percent of our sales were to Ford Motor
Company or its subsidiaries, approximately 17 percent of
our sales were to DaimlerChrysler AG or its subsidiaries,
approximately 13 percent of our sales were to General
Motors Corporation or its subsidiaries and approximately
13 percent of our sales were to Volkswagen AG or its
subsidiaries. Although business with any given customer is
typically split into several contracts, the loss of, or
significant reduction in purchases by, one or more of those
major customers could materially and adversely affect our
business, results of operations and financial condition.
The production volumes of our customers are
dependent upon general economic conditions and the level of
consumer spending. The volume of automotive production in North
America, Europe, South America and Asia has fluctuated from year
to year, and such fluctuations will give rise to fluctuations in
the demand for our products. Worsening economic conditions or
other factors that result in reduced automotive production could
have a material adverse effect on our business, results of
operations and financial condition.
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We are subject to risks associated with our
foreign operations
We have significant manufacturing operations
outside the United States, including joint ventures and other
strategic alliances. Risks are inherent in international
operations, including:
•
customary exchange controls and currency
    restrictions;
•
currency fluctuations and devaluations;
•
changes in local economic conditions;
•
unexpected changes in laws and regulations;
•
exposure to possible expropriation or other
    government actions; and
•
unsettled political conditions and possible
    terrorist attacks against American interests.
We cannot assure you that these and other factors
will not have a material adverse effect on our international
operations or on our business, results of operations and
financial condition.
A strengthening United States dollar reduces
our reported results of operations from our international
businesses
In 2001, approximately 57 percent of our
sales were in foreign currencies. In our combined financial
statements, we translate local currency financial results into
United States dollars based on average exchange rates prevailing
during a reporting period or the exchange rate at the end of
that period. During times of a strengthening United States
dollar, our reported international sales and earnings will be
reduced because the local currency will translate into fewer
United States dollars.
We may incur material losses and costs as a
result of product liability and warranty claims that may be
brought against us
We may be exposed to product liability and
warranty claims in the event that our products actually or
allegedly fail to perform as expected or the use of our products
results, or is alleged to result, in bodily injury and/or
property damage. We cannot assure you that we will not
experience any material warranty or product liability losses in
the future or that we will not incur significant costs to defend
these claims.
In addition, if any of our products are or are
alleged to be defective, we may be required to participate in a
recall involving these products. Automotive suppliers are
becoming more integrally involved in the vehicle design process
and are assuming more of the vehicle system integration
functions. VMs are increasingly looking to their suppliers for
contribution when faced with product liability, warranty and
recall claims. Product liability, warranty and recall costs may
have a material adverse effect on our business, results of
operations and financial condition. Depending on the terms under
which we supply products, a VM may hold us responsible for some
or all of the repair or replacement costs of these products
under new vehicle warranties, when the product supplied did not
perform as represented. Certain VMs have advised us that they
intend to pursue warranty claims to a greater extent than
previously. We cannot assure you that our costs associated with
providing product warranties will not be material.
We may be adversely affected by the
environmental and safety regulations to which we are
subject
We are subject to the requirements of federal,
state and local environmental and occupational safety and health
laws and regulations in the United States and other countries.
We cannot assure you that we have been or will be at all times
in complete compliance with all of these requirements, or that
we will not incur material costs or liabilities in connection
with these requirements in excess of amounts we have reserved.
In addition, these requirements are complex, change frequently
and have tended to become more stringent over time, and we
cannot assure you that these requirements will not change in the
future in a manner that could have a material adverse effect on
our business, results of operations and financial condition. We
have made and will continue to make capital and other
expenditures to comply with environmental requirements. For more
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information about our environmental compliance
and potential environmental liabilities, see
"Business — Environmental Matters."
Increasing costs for raw materials may
adversely affect our profitability
We use a broad range of raw materials and
supplies, including metals, castings, chemicals and electronic
components in our products. A significant increase in the price
of raw materials could materially increase our operating costs
and materially adversely affect our profit margins. While we
generally attempt to pass increased raw materials prices through
to our customers in the form of price increases, this cannot
always be accomplished. In addition, we may not be able to
increase our prices sufficiently to cover any significant raw
materials cost increases. We also purchase from suppliers
various types of equipment and component parts that may include
these materials.
Non-performance by our suppliers may adversely
affect our operations
Because we purchase from suppliers various types
of equipment and component parts, we may be materially and
adversely effected by the failure of those suppliers to perform
as expected. This non-performance may consist of delivery delays
caused by financial or production issues or delivery of
non-conforming product. Although we have taken a number of steps
to protect against and to minimize these risks, we cannot assure
you that these measures will be effective.
Work stoppages at our customers'
facilities or at our facilities could adversely affect our
operations
If one or more of our customers experiences a
material work stoppage, that customer may halt or limit the
purchase of our products. This could cause us to shutdown
production facilities relating to those products, that could
have a material adverse effect on our business, results of
operations and financial condition.
As of December 31, 2001, approximately 22
percent of our United States hourly workforce and approximately
78 percent of our hourly workforce outside of the United
States were represented by 39 unions. It is likely that a
significant portion of our hourly workforce will remain
unionized for the foreseeable future. A work stoppage at one or
more of our plants may have a material adverse effect on our
business, results of operations and financial condition.
Risk Factors Relating to Securities
Markets
There are risks relating to securities markets
that you should consider in connection with your investment in
and ownership of our common stock.
Our stock price may fluctuate significantly
following the spin-off
Before the spin-off date, there will be no public
market for our common stock. Shortly before the spin-off record
date, trading of our common stock on a "when-issued"
basis is expected to begin. Our common stock is expected to
trade on the NYSE under the symbol
"          ."
See "The Spin-Off — Listing and Trading of TRW
Automotive Common Stock."
We cannot predict the prices at which our common
stock may trade after the spin-off. We cannot assure you that
the combined trading prices of shares of TRW common stock and
shares of our common stock after the spin-off will be equal to
or greater than the trading price of shares of TRW common stock
prior to the spin-off. The market price of our common stock may
fluctuate significantly due to a number of factors, some of
which may be beyond our control, including:
•
our business profile may not fit the investment
    objectives of TRW shareholders, causing them to sell our shares
    after the spin-off;
•
actual or anticipated fluctuations in our
    operating results;
•
changes in earnings estimated by securities
    analysts or our ability to meet those estimates;
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•
the operating and stock price performance of
    comparable companies;
•
overall market fluctuations;
•
our dividend policy;
•
developments in, and publicity regarding, the
    automotive industry, the automotive parts industry or any of our
    significant customers; and
•
domestic and foreign economic conditions.
In particular, the realization of any of the
risks described in these "Risk Factors" could have a
significant and adverse impact on the market price of our common
stock. In addition, the stock market in general has experienced
extreme volatility that has often been unrelated to the
operating performance of particular companies. These broad
market fluctuations may adversely affect the trading price of
our common stock, regardless of our actual performance.
Provisions in our charter documents and
Delaware law could delay or prevent a change in control of TRW
Automotive, which could adversely affect the price of our common
stock
The existence of some provisions in our charter
documents and Delaware law could delay or prevent a change in
control of TRW Automotive, which could adversely affect the
price of our common stock. Our certificate of incorporation and
bylaws contain some provisions that may make the acquisition of
control of TRW Automotive more difficult. These provisions
include a classified board and other provisions relating to the
nomination, election and removal of directors and limitations on
actions by our stockholders, including provisions relating to
advance notice by stockholders of business to be presented at a
meeting of stockholders. Delaware law also imposes some
restrictions on mergers and other business combinations between
us and any holder of 15 percent or more of our outstanding
common stock. For a description of these provisions, see
"Description of Capital Stock."
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SPECIAL NOTE ABOUT FORWARD LOOKING
STATEMENTS
This prospectus contains certain
"forward-looking statements." You can identify
forward-looking statements by those that are not historical in
nature, particularly those that use terminology such as
"may," "could," "will,"
"should," "likely," "expects,"
"anticipates," "contemplates,"
"estimates," "believes," "plans,"
"projected," "predicts,"
"potential" or "continue" or the negative of
these or similar terms. You should be aware that the preparation
of any forward-looking statement requires the use of estimates
of future sales, expenses, activity levels and economic and
market conditions, many of which are outside our control. Our
results could be affected by:
•
our ability to obtain new contract awards;
•
pricing pressures from our customers;
•
moderation or decline in the automobile build
    rate;
•
changes in consumer debt levels;
•
work stoppages;
•
unanticipated downturn in the financial condition
    of, or business relationships with, our customers or suppliers;
•
our ability to reduce the level of our
    outstanding debt with cash flow from operations and the proceeds
    from asset dispositions;
•
a credit rating downgrade;
•
increase in interest rates;
•
customer recall and warranty claims;
•
product liability and litigation issues;
•
changes to the regulatory environment regarding
    automotive safety;
•
the introduction of competing products or
    technology by our competitors;
•
our ability to attract and retain skilled
    employees with high-level technical competencies;
•
economic, regulatory and political conditions
    domestically and internationally;
•
fluctuations in currency exchange rates; and
•
the impact of additional terrorist attacks, which
    could result in reduced automotive production and disruptions to
    the transportation system.
Actual results may differ materially from those
expressed in these forward-looking statements. Other factors and
assumptions not identified above are also involved in the
preparation of forward-looking statements, and the failure of
such other factors and assumptions to be realized may also cause
actual results to differ materially from those discussed. We
assume no obligation to update these forward-looking statements
to reflect actual results, changes in assumptions or changes in
other factors affecting these statements other than as required
by law.
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THE SPIN-OFF
Our History
We are currently a wholly-owned subsidiary of
TRW. We were incorporated in Delaware on June 3, 2002 in
contemplation of the spin-off. The spin-off is the final step in
the separation of TRW's automotive business and TRW's
systems, space and electronics businesses into two
"pure-play" independent companies, which TRW first
announced in March 2002.
Historically, our business resulted from the
combination of the legacy TRW automotive business with the
legacy LucasVarity plc automotive business in 1999. We are a
global leader in active safety technologies (steering,
suspension, ABS and other advanced braking systems) and passive
safety technologies (seat belts, inflatable restraints and other
occupant safety products). We are one of the leading Tier-1
suppliers in all of our principal product categories. We operate
our business along the following three major operating segments:
•
Chassis Systems, which includes active safety
    systems and components in the areas of braking, steering,
    suspension and integrated vehicle control;
•
Occupant Safety Systems, which includes passive
    safety systems and components in the areas of inflatable
    restraints, seat belts, steering wheels and safety and security
    electronics; and
•
Other Automotive, which includes engine valves
    and components, engineered fasteners and components and body
    control systems.
Benefits of Our Separation From TRW and the
Spin-Off
We believe that we will realize significant
benefits from our separation from TRW and the spin-off. In the
spin-off, we will become a "pure-play" independent
company devoted to the automotive business and better positioned
to achieve improved growth and returns. In particular, as an
independent company, we expect to benefit from the following:
•
Capital Financing
    Flexibility.
We believe that our
    separation from TRW and the spin-off will benefit us by
    enhancing our capital financing flexibility. In its conglomerate
    form, TRW's capital stock may not be as attractive to
    stockholders in target companies in our industry as would be our
    capital stock. We believe that, after the spin-off, we will have
    more flexibility to make appropriate investments required to
    succeed in our industry using our capital stock as currency than
    TRW would have in the absence of the spin-off. In addition, we
    will no longer have to compete with other businesses of TRW for
    funding. However, we expect to enter into agreements and engage
    in certain debt financing transactions in connection with our
    separation from TRW that are anticipated to contain provisions
    that will limit our ability to issue our capital stock and incur
    debt, including in connection with acquisitions. Also, certain
    provisions of the tax sharing agreement may restrict our ability
    to issue stock in order to make acquisitions or raise additional
    capital in the two years subsequent to the spin-off, unless TRW
    receives a supplemental ruling from the IRS. See
    "— Transactions Prior to or Concurrent With the
    Spin-Off — Debt Financing Transactions,"
    "Relationship With TRW — Master Distribution
    Agreement" and "Relationship With TRW — Tax
    Sharing Agreement."
•
Corporate Fit and
    Focus.
We believe that the spin-off
    will improve the corporate fit and focus of our business, as our
    management will be able to devote more attention to and focus on
    the automotive business than it was able to prior to the
    spin-off. The management of TRW's automotive business and
    its non-automotive businesses requires different management
    techniques and strategies. The spin-off will permit our
    management to focus on the automotive business, including
    employee incentives, capital expenditures and applicable
    regulations. We believe the spin-off will also simplify our
    organizational and internal reporting structures and expedite
    our decision making.
•
Management
    Incentive.
We believe that the
    spin-off will enhance our ability to attract, retain and provide
    incentives to our management and other employees by using
    stock-based incentive compensation programs relating more
    directly to the business in which they are employed. We believe
    our
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management's focus will also be strengthened
    by incentive compensation programs tied to the market
    performance of our common stock. See
    "Management — Executive Compensation."
•
Focus on Automotive
    Industry.
We believe that the spin-off
    will place us in a better position to capitalize on the
    projected growth in light vehicle production because we are one
    of the leaders in the worldwide supply of key automotive
    products, including braking, steering, inflatable restraints,
    steering wheels, seat belts, engine valves and engineered
    fasteners.
We cannot assure you that these benefits will be
realized by us to the extent we expect.
Transactions Prior to or Concurrent With the
Spin-Off
Sale of TRW Aeronautical Systems
    Business
TRW has advised us that it intends to sell to an
unaffiliated third party substantially all of the assets and
liabilities currently associated with TRW's aeronautical
systems business and the equity or similar interests currently
held by TRW in subsidiaries and other entities that conduct such
business, which we refer to as the ASG sale. TRW expects that
the ASG sale will close in
the                               quarter
of 2002.
Restructuring Transactions
The "restructuring transactions" refer
to the series of transactions that will result in the separation
of TRW's automotive business and TRW's non-automotive
businesses.
Shortly prior to the spin-off, TRW will transfer
to us all of the assets associated with its automotive business,
and we will assume all of the liabilities associated with the
automotive business (including contingent liabilities). TRW will
retain all of the assets and liabilities associated with its
non-automotive businesses. All assets and liabilities will be
transferred without any representation or warranty on an
"as is, where is" basis.
As part of the restructuring transactions, we
intend to issue to TRW that number of shares of our common stock
to be outstanding on the spin-off record date so as to be able
to effect a one-for-one distribution of such shares in the
spin-off and avoid fractional shares. In addition, we anticipate
issuing shares of our Series A Convertible Preferred Stock
to a subsidiary of TRW, which shares will be subsequently sold
shortly before the spin-off to a third party equity investor
unaffiliated with TRW. See "— Third Party Equity
Sale."
In general, all intercompany balances between TRW
and us will be settled by cancellation or transfer in the
restructuring transactions. Based on the anticipated cash
requirements of TRW and us following the spin-off, the master
distribution agreement governing the spin-off will set a
"restructuring funding target amount" for us and, to
ensure that this target is met, will provide for a cash
adjustment based on the difference between the
"restructuring funding actual amount" and the
"restructuring funding target amount" as of the end of
the fiscal month immediately preceding the spin-off.
Third Party Equity Sale
We anticipate that the subsidiary of TRW to which
we will issue shares of our Series A Convertible Preferred
Stock in the restructuring transactions will sell all of these
shares to a third party equity investor unaffiliated with TRW
shortly before the spin-off. In addition, we expect to sell new
shares of our Series A Convertible Preferred Stock to the
third party equity investor either prior to, concurrently with
or after the spin-off. The shares of our Series A
Convertible Preferred Stock to be sold by the subsidiary of TRW
and to be sold by us to the third party equity investor are
expected to collectively represent not more than 20 percent
of the shares of our common stock outstanding immediately after
the closing of these transactions, assuming conversion of these
shares into shares of our common stock. In this prospectus, we
sometimes refer to these transactions as the "third party
equity sale."
TRW is expected to use the proceeds from the sale
of our Series A Convertible Preferred Stock by the
subsidiary of TRW in the third party equity sale, anticipated to
be approximately
$          ,
to repay outstanding debt. We will use the proceeds from our
issuance and sale of our Series A Convertible Preferred
Stock in the
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third party equity sale, expected to be
approximately
$          ,
to repay a portion of an intercompany note that will be issued
by us to TRW shortly before the spin-off.
We expect to enter into a preferred stock
purchase agreement with the subsidiary of TRW and the third
party equity investor. The agreement is expected to contain
reasonable and customary indemnification and termination
provisions. The completion of the third party equity sale is
also expected to be subject to a number of reasonable and
customary conditions.
The sales and issuances of stock contemplated by
the third party equity sale are expected to be exempt from
registration under the Securities Act of 1933, as amended. In
addition, we expect to enter into a registration rights
agreement with the third party equity investor, pursuant to
which we will grant the third party equity investor customary
registration rights.
Debt Financing Transactions
Upon completion of the restructuring
transactions, we expect to have outstanding approximately
$2.8 billion of debt, which we believe, on the advice of
our financial advisors, is an appropriate level of debt to
obtain and maintain an investment grade rating. We are
continuing to evaluate alternative plans for creating that debt,
and our initial debt load may be established through the
issuance of new debt or the assumption of existing TRW debt, or
a combination of these approaches. The final terms of that debt
and our approach for incurring it will not be determined until
shortly prior to the declaration by TRW of the dividend
comprising the shares of our common stock that will be
distributed in the spin-off, or the spin-off declaration date.
The unaudited pro forma financial information as of
December 31, 2001, and the pro forma capitalization
information as of June 30, 2002, each of which appear
elsewhere in this prospectus, assume that we will have
$2.8 billion in debt.
Manner of Effecting the Spin-Off
TRW has advised us that, if the TRW shareholders
approve the spin-off and the other conditions to the spin-off
are satisfied or waived, TRW anticipates that, on or
about                     ,
2002, TRW will formally authorize and declare the spin-off
dividend and set the spin-off record date and the spin-off date.
The spin-off record date is presently expected to
be on or
about                     ,
2002. The spin-off date is presently expected to be on or
about                     ,
2002. Prior to the spin-off record date, TRW is expected to
redeem all of its outstanding shares of preferred stock. On the
spin-off date, TRW will distribute to the holders of the
outstanding shares of TRW common stock on the spin-off record
date all of the shares of our common stock held by TRW
(representing           percent
of our common stock expected to be outstanding after the
spin-off, assuming conversion of the shares of our Series A
Convertible Preferred Stock to be sold in the third party equity
sale) on the basis of one share of our common stock for each
share of TRW common stock.
On the spin-off date, all of the outstanding
shares of our common stock held by TRW will be delivered by TRW
to National City Bank, the distribution agent for the spin-off.
On or shortly after the spin-off date:
•
holders of record of TRW common stock on the
    spin-off record date will have credited to a book-entry account
    established for them by, and maintained at National City Bank
    (our registrar and transfer agent) the number of shares of our
    common stock to which they are entitled; and
•
beneficial owners of TRW common stock on the
    spin-off record date should have credited to their brokerage,
    custodian or similar account through which they own their TRW
    common stock, the number of shares of our common stock to which
    they are entitled.
18
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If TRW shareholders approve the spin-off at the
special meeting described in the accompanying proxy statement,
no further shareholder action will be necessary for you to
receive the shares of our common stock to which you will be
entitled in the spin-off. This means that:
•
you will not need to pay any consideration to TRW
    or to us; and
•
you will not need to surrender any shares of TRW
    common stock to receive your shares of our common stock.
All shares of our common stock distributed in the
spin-off will be fully paid and non-assessable.
Results of the Spin-Off
After the spin-off, both TRW Automotive and TRW
will be independent, publicly traded companies. Their respective
management, business fundamentals, growth characteristics and
strategic priorities will be different from those of TRW prior
to the spin-off. TRW will have no equity interest in TRW
Automotive after the spin-off and the third party equity sale,
and we will have no equity interest in TRW after the spin-off.
After the spin-off:
•
we will own and operate TRW's automotive
    business; and
•
TRW will continue to own and operate TRW's
    systems, space and electronics businesses.
Immediately following the spin-off, based on the
anticipated number of outstanding shares of TRW common stock and
the record holders on the spin-off record date, we expect to
have
approximately            million
shares of our Series A Convertible Preferred Stock
outstanding, held by the third party equity investor,
and            million
shares of common stock outstanding, held by
approximately       record holders.
Our common stock will be a different security
from TRW common stock and will not trade or be valued alike. We
refer you to the discussion under "Description of Capital
Stock."
Listing and Trading of TRW Automotive Common
Stock
We intend to apply to the NYSE for the listing of
our common stock. We anticipate that a temporary form of interim
trading in our common stock, called "when-issued"
trading, will commence shortly before the spin-off record date.
"When-issued" trading reflects the value at which the
market expects our common stock to trade after the spin-off. If
"when-issued" trading develops, you will be able to
buy and sell our common stock before the spin-off, but none of
these trades will settle until after the spin-off and after
"regular way" trading in our common stock has begun.
If the spin-off does not occur, all "when-issued"
trading will be null and void. If "when-issued"
trading occurs, the listing for our common stock is expected to
be represented by the trading symbol
"          "
and accompanied by the letters "wi" on the NYSE.
Additionally, it is expected that
"ex-distribution" trading in TRW common stock will
develop before the spin-off record date.
"Ex-distribution" trading means that you may trade TRW
common stock before the completion of the spin-off, but on a
basis that reflects the value at which the market expects TRW
common stock to trade after the spin-off. If
"ex-distribution" trading develops, you may buy and
sell those shares before the spin-off, but none of these trades
will settle until after the spin-off and after "regular
way" trading in TRW common stock has begun. If the spin-off
does not occur, all "ex-distribution" trading will be
null and void. If "ex-distribution" trading occurs,
the listing for TRW common stock will be represented by the
trading symbol "TRW" and accompanied by the letters
"wi" on the NYSE.
The NYSE will not approve any trading of our
common stock until the Securities and Exchange Commission, or
SEC, has declared effective our registration statement on
Form S-1 of which this prospectus forms a part.
There is now no public market for our common
stock. We cannot predict the prices at which our common stock
may trade prior to the spin-off on a "when-issued"
basis or after the spin-off. The prices at which trading in our
common stock occurs may fluctuate significantly. See "Risk
Factors — Risk Factors Relating to
19
Table of Contents
Securities Markets — Our stock price
may fluctuate significantly following the spin-off." Market
prices may also be affected by provisions of our certificate of
incorporation and bylaws, which may have an anti-takeover
effect. See "Description of Capital Stock —
Anti-Takeover Effects of Delaware General Corporation Law and
Provisions of our Certificate of Incorporation and Bylaws."
Master Distribution Agreement and Ancillary
Agreements
Prior to the spin-off, we expect to enter into
agreements with TRW in connection with our separation from TRW,
the spin-off and related matters. These agreements are expected
to include:
•
a master distribution agreement, providing for,
    among other things, the completion of the restructuring
    transactions and the spin-off, and agreements between us and
    TRW, including those relating to indemnification;
•
a tax sharing agreement, providing for, among
    other things, the allocation between us and TRW of federal,
    state, local and foreign tax liabilities for periods prior to
    the spin-off and, in some instances, for periods after the
    spin-off;
•
an employee matters agreement, pursuant to which,
    among other things, some employee-related assets and liabilities
    of TRW will be allocated between us and TRW and some
    arrangements will be made with respect to employee benefit plans
    and compensation arrangements;
•
an insurance allocation agreement, pursuant to
    which, among other things, certain insurance policies and
    arrangements of TRW and related coverages will be allocated to
    us, and TRW will provide certain administrative insurance
    services to us;
•
intellectual property license agreements,
    pursuant to which, among other things, we will license certain
    intellectual property from TRW and TRW will license certain
    intellectual property from us;
•
a trademark license agreement, pursuant to which
    TRW will license certain names and trademarks to us; and
•
a transition services agreement, pursuant to
    which, among other things, TRW will provide certain services to
    us and we will provide transition services to TRW for a
    transition period following the spin-off.
In this prospectus, we sometimes refer to these
agreements (other than the master distribution agreement) as the
"ancillary agreements." The master distribution
agreement and the ancillary agreements are expected to be
entered into in the context of a parent-subsidiary relationship
and are expected to be negotiated in the overall context of our
separation from TRW and the spin-off. The terms and conditions
of these agreements may be more or less favorable than those we
could negotiate with unaffiliated third parties.
For more information regarding the separation
arrangements contemplated by these agreements, see
"Relationship With TRW."
Conditions to Spin-Off; Termination of
Spin-Off
The spin-off will not be effected unless a number
of conditions are satisfied or, if permitted, waived, including,
among others:
•
receipt of the requested IRS ruling, in form and
    substance satisfactory to TRW, to the effect that the spin-off
    will constitute a tax-free spin-off for U.S. federal income tax
    purposes for both holders of TRW common stock and TRW, and the
    continued effectiveness of such ruling, or alternatively,
    receipt by TRW of a satisfactory opinion from tax counsel;
•
the completion in all material respects, to the
    extent required to be completed prior to the spin-off, of the
    restructuring transactions;
•
the completion in all material respects of the
    ASG sale;
20
Table of Contents
•
our level of indebtedness not exceeding certain
    specified levels;
•
the satisfaction of TRW with the treatment of the
    debt of TRW and its subsidiaries in connection with the
    restructuring transactions and the spin-off, including the
    allocation of such debt between TRW and TRW Automotive;
•
receipt of all material governmental and third
    party consents and approvals by governmental entities required
    in connection with the spin-off;
•
the completion by us of the debt financing
    transactions described elsewhere in this prospectus relating to
    debt to be incurred or assumed by us from one or more financial
    institutions under one or more credit facilities and/or through
    the issuance of our debt securities in one or more public
    offerings or private placements;
•
the authorization for listing of our common stock
    on the NYSE, subject to official notice of issuance;
•
the approval of the spin-off at the special
    meeting by the holders of shares of TRW common stock in
    accordance with the Ohio General Corporation Law; and
•
the receipt by the TRW board of directors of a
    satisfactory solvency opinion and the satisfaction of the TRW
    board of directors as to matters relating to the solvency and
    adequacy of capital of TRW and us.
Under the master distribution agreement, prior to
the spin-off record date, the TRW board of directors will retain
discretion, even if TRW shareholders approve the spin-off and
the other conditions to the spin-off are satisfied, to abandon,
delay or modify the spin-off or any matter contemplated by the
spin-off. See "Relationship With TRW — Master
Distribution Agreement."
Material U.S. Federal Income Tax
Consequences
The
Spin-Off
TRW has requested a private letter ruling from
the IRS regarding the material U.S. federal income tax
consequences of the spin-off. In the event that the IRS has not
issued the private letter ruling on or shortly before the
spin-off declaration date, TRW has advised us that it expects to
receive an opinion from tax counsel regarding the material
federal income tax consequences of the spin-off. The following
summarizes the material U.S. federal income tax consequences
that are expected to result from the spin-off assuming the
private letter ruling is issued or an opinion from tax counsel
is received:
•
the receipt of TRW Automotive common stock in the
    spin-off will qualify as a tax-free distribution under
    Section 355 of the Code;
•
no income, gain or loss will be recognized by and
    no amount will be included in the income of a holder of TRW
    common stock as a result of the spin-off;
•
the basis of a holder of TRW common stock in the
    TRW Automotive common stock received on the spin-off date in
    respect of TRW common stock will be determined by allocating the
    holder's basis in TRW common stock immediately before the
    spin-off between the TRW common stock and the TRW Automotive
    common stock received in proportion to their relative fair
    market values;
•
the holding period of the TRW Automotive common
    stock received in the spin-off will include the holding period
    of the TRW common stock with respect to which the TRW Automotive
    common stock will be distributed, provided that the TRW common
    stock is held as a capital asset on the spin-off date;
•
any cash received in lieu of fractional shares of
    TRW Automotive common stock as part of the spin-off will give
    rise to gain or loss equal to the difference between the amount
    of cash received and the tax basis allocable to the fractional
    shares interests, and such gain or loss will be capital gain or
    loss if the TRW common stock with respect to which the spin-off
    is made is held as a capital asset on the spin-off date; and
•
no income, gain or loss will be recognized by TRW
    solely on account of the spin-off.
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The IRS private letter ruling or the opinion from
tax counsel, as the case may be, will be based on provisions of
the Code and the regulations promulgated thereunder, and on
current administrative rulings and court decisions, in effect as
of the date of that ruling, all of which are subject to change.
It is expected that the IRS private letter ruling
or the opinion from tax counsel, as the case may be, will not
cover all U.S. federal income tax consequences that may be
relevant to holders of TRW common stock, particularly holders
that are entitled to special treatment under the Code. We urge
each holder of TRW common stock to consult his or her own tax
advisor as to the particular tax consequences of the spin-off to
that holder, including the application of state, local, and
foreign tax laws, and the effect of possible changes in the tax
law that may affect the tax consequences described above.
Applicability
of IRS Private Letter Ruling
The IRS private letter ruling, if issued, will be
based on the facts presented and representations made by TRW.
Generally, an IRS private letter ruling will not be revoked or
modified retroactively unless there has been an omission or
misstatement of a material fact or a breach of a material
representation. TRW intends to present all relevant facts and is
not aware of any facts or circumstances that would cause those
representations to be incorrect or incomplete in any material
respect. In addition, TRW and TRW Automotive will agree in the
tax sharing agreement not to take actions, or to fail to take
actions, that are inconsistent with the representations upon
which the IRS private letter ruling will be based. If, however,
in the remote circumstance that those facts or representations
were found to be incorrect or incomplete in any material
respect, TRW could not rely on the IRS private letter ruling and
the spin-off might not qualify as a tax-free distribution under
Section 355 of the Code.
If the spin-off were found to be a taxable
distribution of TRW Automotive common stock, TRW shareholders
would be treated as receiving a taxable distribution, generally
taxed as a dividend, in an amount equal to the fair market value
of the TRW Automotive common stock received on the spin-off
date. Also, the tax basis of TRW Automotive common stock
received in the spin-off would equal its fair market value on
the spin-off date and the holding period of the stock would
begin with and include the day after the spin-off date. TRW
would recognize a corporate-level tax based on the excess, if
any, of the fair market value of the TRW Automotive common stock
distributed over TRW's tax basis for such TRW Automotive
common stock. In certain circumstances, TRW Automotive may be
required to reimburse TRW for a portion of the taxes due with
respect to the spin-off pursuant to the tax sharing agreement.
Effect
of Pre- or Post-Spin-Off Acquisitions
An acquisition of TRW or TRW Automotive pre- or
post-spin-off could render the spin-off taxable to TRW and, in
certain circumstances, its shareholders. Even if the spin-off
otherwise qualifies for tax-free treatment under
Section 355 of the Code, the spin-off may become taxable to
TRW pursuant to Section 355(e) of the Code if shares
representing 50 percent or more of either TRW common stock or
TRW Automotive common stock are acquired, directly or
indirectly, as part of a plan or series of related transactions
that include the spin-off. If Section 355(e) were to apply to
cause the spin-off to be taxable to TRW, the spin-off would
remain tax-free to TRW shareholders, but TRW would be required
to pay a corporate tax based on the excess of the fair market
value of the TRW Automotive common stock distributed over
TRW's tax basis for such TRW Automotive common stock. In
addition, a pre- or post-spin-off acquisition of TRW or TRW
Automotive that is taxable, in whole or in part, could render
the spin-off taxable to TRW and the shareholders of TRW if the
spin-off, when coupled with the acquisition, is treated as a
"device" for the distribution of earnings and profits
under general principles of Section 355.
Certain
Federal Income Tax Reporting Requirements
United States Treasury regulations require each
holder of TRW common stock that receives TRW Automotive common
stock in the spin-off to attach to the shareholder's U.S.
federal income tax return for the year in which such stock is
received a detailed statement setting forth such data as may be
appropriate to show
22
Table of Contents
the applicability of Section 355 of the Code
to the spin-off. Subsequent to the spin-off, TRW will provide
its shareholders who received TRW Automotive common stock
pursuant to the spin-off with the information necessary to
comply with such requirement.
THE FOREGOING SUMMARY OF THE ANTICIPATED
PRINCIPAL FEDERAL INCOME TAX CONSEQUENCES OF THE SPIN-OFF UNDER
CURRENT LAW IS FOR GENERAL INFORMATION ONLY AND DOES NOT PURPORT
TO COVER ALL FEDERAL INCOME TAX CONSEQUENCES, INCLUDING THOSE
THAT MAY APPLY TO PARTICULAR CATEGORIES OF SHAREHOLDERS, OR ANY
TAX CONSEQUENCES THAT MAY ARISE UNDER THE TAX LAWS OF OTHER
JURISDICTIONS. THE SUMMARY DOES NOT COVER ANY STATE, LOCAL OR
FOREIGN INCOME TAX OR OTHER TAX CONSEQUENCES. NEITHER TRW
AUTOMOTIVE NOR TRW HAS REQUESTED ANY RULINGS OR OPINIONS WITH
RESPECT TO THE TAX CONSEQUENCES OF THE SPIN-OFF UNDER THE LAWS
OF ANY STATE, LOCAL OR FOREIGN GOVERNMENT. EACH HOLDER
(INCLUDING EACH CORPORATE HOLDER) OF TRW COMMON STOCK SHOULD
CONSULT HIS, HER OR ITS TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES OF THE SPIN-OFF, INCLUDING APPLICATION OF FEDERAL,
STATE, LOCAL AND FOREIGN TAX LAWS, AND THE EFFECT OF POSSIBLE
CHANGES IN TAX LAWS THAT MAY AFFECT THE TAX CONSEQUENCES
DESCRIBED ABOVE.
Regulatory Approvals
U.S.
Antitrust
Under the Hart Scott Rodino Antitrust
Improvements Act of 1976, as amended, or the HSR Act, and the
rules that have been promulgated thereunder by the Federal Trade
Commission, or the FTC, certain transactions may not be
completed unless certain information has been furnished to the
Antitrust Division of the United States Department of Justice,
or the Antitrust Division, and the FTC and certain waiting
period requirements have been satisfied. The anticipated sale of
shares of our Series A Convertible Preferred Stock
(assuming conversion of these shares into shares of our common
stock) to an equity investor unaffiliated with TRW in the third
party equity sale may be subject to such requirements.
Under the provisions of the HSR Act, the
anticipated sale of our Series A Convertible Preferred
Stock cannot be completed until 30 calendar days (if the
thirtieth day falls on a weekend or holiday, the waiting period
will expire at the close of the next business day) following the
filing by us or TRW and the third party equity investor of
Notification and Report Forms, with respect to the sale of our
Series A Convertible Preferred Stock, unless we or TRW and
the third party equity investor receive a request for additional
information and documentary material from the Antitrust Division
of the Department of Justice or the FTC. If, within the initial
30-day waiting period, either the Antitrust Division or the FTC
requests additional information and documentary material from us
or TRW and the equity investor concerning the third party equity
sale, the waiting period will be extended and will expire at
11:59 P.M. Eastern time, on the thirtieth calendar day
after the date of substantial compliance by us or TRW and the
third party equity investor with that request. If the thirtieth
day falls on a weekend or holiday, the waiting period will
expire at 11:59 P.M. Eastern time on the next business day.
Thereafter, such waiting periods can be extended only by court
order or by voluntary consent of the parties.
The Antitrust Division and the FTC frequently
scrutinize the legality of transactions under the antitrust
laws. At any time before or after the completion of any such
transaction, 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 sale of our Series A Convertible Preferred Stock or
seeking divestiture of the stock so acquired by the third party
equity investor or divestiture of certain of our or the third
party equity investor's assets. Private parties and State
Attorneys General may also bring legal actions under the
antitrust laws. There can be no assurance that a challenge to
the anticipated sale of our Series A Convertible Preferred
Stock to the third party equity investor will not be made, or if
such a challenge is made, what the result will be.
23
Table of Contents
Other
Additional filings may be necessary with
governmental entities outside the U.S. In addition, it is
possible that any of the governmental entities with which
filings are made may seek various regulatory concessions as
conditions for granting approval of the anticipated sale of our
Series A Convertible Preferred Stock to the third party
equity investor. There can be no assurance that:
•
we, TRW or the third party equity investor will
    be able to satisfy or comply with those conditions; or
•
the required regulatory approvals will be
    obtained within the time frame contemplated by us on terms and
    conditions that will be satisfactory to us, TRW and the third
    party equity investor.
24
Table of Contents
DIVIDEND POLICY
Our board of directors currently intends to
declare quarterly dividends on our common stock, with the first
quarterly dividend expected to be
$           per
share, or a rate of
$           per
share annually, declared and paid in
the           quarter
of           .
Our board is free to change our dividend practices at any time,
including to increase, decrease or eliminate any dividend on our
common stock. Our board will base its decisions on, among other
things, general business conditions, our financial results,
contractual, legal and regulatory restrictions regarding
dividend payments by our subsidiaries and any other factors our
board may consider to be relevant.
25
Table of Contents
PRO FORMA CAPITALIZATION
The following table sets forth our capitalization
as of June 30, 2002. The capitalization is presented on an
actual basis and on a pro forma basis as if the spin-off and the
restructuring transactions had occurred on June 30, 2002.
The following pro forma adjustments were made to reflect the
terms related to the spin-off:
•
capitalization of TRW's investment to
    reflect the distribution of our common stock to TRW shareholders
    through a dividend of our common stock by TRW;
•
repayment of debt allocated to us from TRW
    through external financing;
•
additional short-term and long-term debt we
    expect to incur in order to finance operations separately from
    TRW; and
•
the sale of our Series A Convertible
    Preferred Stock in the third party equity sale.
The pro forma capitalization is for illustrative
purposes and does not purport to be representative of what our
capitalization would have been had the spin-off and the
restructuring transactions taken place on June 30, 2002.
The pro forma capitalization table should be read together with
the "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the combined
financial statements and accompanying notes, and other financial
and statistical information included in this prospectus.
As of June 30, 2002
Actual
Pro Forma
(unaudited)
(In millions)
Short-term debt (including current portion of
    long-term debt)
$
$
Long-term debt
Debt allocated from TRW
Total debt
$
$
Minority interest
$
$
Stockholder's investment
Common stock, par value $.001; 500 million
    shares authorized;      shares issued
    and outstanding
$
$
Preferred stock, par value $.001; 50 million
    shares authorized;      shares of
    Series A Convertible Preferred Stock issued and outstanding
Other capital
Parent company investment
Accumulated other comprehensive income (loss)
Total stockholder's investment
$
$
Total capitalization
$
$
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Table of Contents
SELECTED COMBINED FINANCIAL DATA
The selected historical combined financial data
as of and for each of the three years ended December 31,
2001 have been derived from our audited combined financial
statements. The selected historical combined financial data as
of and for the two years ended December 31, 1998 and the
six months ended June 30, 2002 and 2001 have been derived
from unaudited combined financial statements, which include all
adjustments, consisting of normal recurring accruals, that
management considers necessary for a fair presentation of the
financial position and results of operations for these periods.
Comparisons of certain items below are affected by the
acquisition of LucasVarity in 1999 and divestitures during the
five-year period. The table should be read in conjunction with
"Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the combined
financial statements and accompanying notes included elsewhere
in the prospectus. The following financial information may not
reflect what our results of operations, financial position and
cash flows would have been had we operated as a separate,
stand-alone entity during the periods presented, or what our
results of operations, financial position and cash flows will be
in the future.
Six Months Ended
Years Ended December 31,
June 30,
1997
1998
1999
2000
2001
2001
2002
(unaudited)
(unaudited)
(In millions, except per share data)
Statements of Operations Data:
Sales(1)
$
7,032
$
7,201
$
10,472
$
10,920
$
10,091
Gross profit
1,284
1,048
1,648
1,500
1,124
Earnings (loss) from continuing operations(2)(4)
284
233
68
90
(39
)
Net earnings (loss)
284
233
122
93
(28
)
Earnings from continuing operations excluding
    unusual items
284
251
250
247
144
Per diluted share of common stock:
Continuing operations
Net earnings (loss)
$
$
$
$
$
Shares used in computing per share
    amounts — diluted
Statements of Cash Flows Data:
Cash provided by (used in) operating activities
$
N/A
$
N/A
$
964
$
751
$
828
Cash provided by (used in) investing activities
N/A
N/A
(5,089
)
641
(409
)
Cash provided by (used in) financing activities
N/A
N/A
4,296
(1,452
)
(464
)
Other Data (unaudited):
EBITDA(3)
871
854
1,202
1,152
848
EBITDA — excluding unusual items(4)
871
878
1,440
1,374
1,128
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As of December 31,
As of June 30,
1997
1998
1999
2000
2001
2001
2002
(unaudited)
(unaudited)
(In millions)
Balance Sheet Data:
Current assets
$
1,687
$
1,677
$
3,610
$
2,521
$
1,937
Current liabilities
1,436
1,503
2,922
2,786
2,577
Working capital
251
174
688
(265
)
(640
)
Total assets
4,502
4,808
12,638
11,293
10,287
Total debt
1,440
1,737
6,521
5,053
4,597
Parent company investment
1,486
1,449
1,918
2,015
1,925
(1)
Sales in 2001 decreased 8 percent to
    $10.1 billion as compared to 2000 sales of
    $10.9 billion. The decrease resulted from the effects of a
    decline in vehicle production, primarily in North America, the
    effect of foreign currency exchange, business divestitures and
    lower pricing. Sales in 2000 increased 4 percent from sales
    of $10.5 billion in 1999. The increase was a result of
    higher volumes, the inclusion of the first quarter of 2000 sales
    of LucasVarity, which was acquired on March 25, 1999 and
    the consolidation of an affiliate, partially offset by the
    effects of foreign currency exchange, lower pricing and
    divestitures of several businesses.
(2)
Earnings (loss) from continuing operations for
    2001 was a loss of $39 million compared to earnings of
    $90 million in 2000 and $68 million in 1999. Unusual
    charges were $183 million, $157 million and
    $182 million for 2001, 2000, and 1999, respectively.
    Excluding unusual items, earnings from continuing operations
    would have been $144 million in 2001, $247 million in
    2000 and $250 million in 1999. The decrease in earnings
    from continuing operations, without unusual items, in 2001 from
    2000 resulted primarily from lower gross profit, partially
    offset by lower administrative and selling, research and
    development and interest expense. Gross profit decreased due to
    lower volume and lower margins on new products, lower pricing,
    increased warranty and recall charges, the effects of foreign
    currency exchange and divestitures, partially offset by net cost
    reductions. The decrease in earnings from continuing operations,
    without unusual items, from 1999 to 2000 resulted primarily from
    higher interest expense and lower gross profit, offset by lower
    administrative and selling and research and development expenses
    and a lower effective income tax rate. The decrease in gross
    profit resulted from lower pricing, changes in the mix of
    automotive products, divestitures of several businesses, the
    effect of foreign currency exchange and an increase in warranty
    charges, partially offset by cost reductions and an additional
    quarter of results of operations of LucasVarity.
(3)
EBITDA, a measure used by management to measure
    operating performance, represents earnings from continuing
    operations before interest, income taxes, depreciation and
    amortization, including amortization of other intangibles.
    EBITDA is not a recognized term under generally accepted
    accounting principles and does not purport to be an alternative
    to operating income as an indicator of operating performance or
    to cash flows from operating activities as a measure of
    liquidity. Because not all companies calculate EBITDA
    identically, this presentation of EBITDA may not be comparable
    to other similarly titled measures of other companies.
    Additionally, EBITDA is not intended to be a measure of free
    cash flow for management's discretionary use, as it does
    not consider certain cash requirements such as interest
    payments, tax payments and debt service requirements.
(4)
See "Management's Discussion and
    Analysis of Financial Condition and Results of Operations"
    and "Restructuring" and "Asset Impairments"
    notes to financial statements for a discussion of unusual items
    in 2001, 2000 and 1999. Unusual items in 1998 included
    $24 million for restructuring costs, primarily for
    severance and plant closings. There were no unusual items in
    1997.
28
Table of Contents
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis should be
read in conjunction with our historical combined financial
statements and the accompanying notes, which are included in
this prospectus. This prospectus contains forward-looking
statements relating to future events and our future financial
performance. Actual results could be significantly different
from those discussed in this prospectus. Factors that could
cause or contribute to such differences include those set forth
in the section entitled "Risk Factors."
Overview
Sales in 2001 decreased 8 percent to
$10.1 billion as compared to 2000 sales of
$10.9 billion. The decrease resulted from the effects of a
decline in vehicle production, primarily in North America, the
effect of foreign currency exchange, business divestitures and
lower pricing. Sales in 2000 increased 4 percent from sales of
$10.5 billion in 1999. The increase was a result of higher
volumes, the inclusion of the first quarter of 2000 sales of
LucasVarity plc (LucasVarity), which was acquired on
March 25, 1999 and the consolidation of an affiliate
partially offset by the effects of foreign currency exchange,
lower pricing and divestitures of several businesses.
Earnings (loss) from continuing operations for
2001 was a loss of $39 million compared to earnings of
$90 million in 2000 and $68 million in 1999. Unusual
charges were $183 million, $157 million and
$182 million for 2001, 2000, and 1999, respectively.
Excluding unusual items, earnings from continuing operations
would have been $144 million in 2001, $247 million in
2000 and $250 million in 1999. The decrease in earnings
from continuing operations, without unusual items, in 2001 from
2000 resulted primarily from lower gross profit partially offset
by lower administrative and selling, research and development
and interest expense. Gross profit decreased due to lower volume
and lower margins on new products, lower pricing, increased
warranty and recall charges, the effects of foreign currency
exchange and divestitures, partially offset by net cost
reductions. The decrease in earnings from continuing operations,
without unusual items, from 1999 to 2000 resulted primarily from
higher interest expense and lower gross profit, offset by lower
administrative and selling and research and development
expenses, and a lower effective income tax rate. The decrease in
gross profit resulted from lower pricing, changes in the mix of
automotive products, divestitures of several businesses, the
effect of foreign currency exchange and an increase in warranty
charges, partially offset by cost reductions and an additional
quarter of results of operations of LucasVarity.
Net earnings (loss) for 2001 was a loss of
$28 million and earnings of $93 million for 2000 and
earnings of $122 million for 1999.
Earnings (loss) from continuing operations in
2001, 2000 and 1999 were negatively impacted by the effects of
unusual items of $183 million, $157 million, and
$182 million, respectively. These unusual items are
summarized as follows (all amounts are after tax):
•
restructuring and other charges including
    severance and plant closings of $160 million,
    $73 million and $55 million in 2001, 2000 and 1999,
    respectively.
•
asset impairment charges of $25 million and
    $44 million for 2001 and 2000, respectively, for the
    write-down of property, plant and equipment and other assets.
•
charges for pending and threatened litigation of
    $19 million in 2001 and pending and threatened litigation
    and a certain warranty charge of $46 million in 2000.
•
net gains on asset sales of $21 million in
    2001 and $12 million in 2000 primarily related to sales of
    certain non-core assets.
•
unrealized losses on foreign exchange contracts
    of $6 million in 2000 and unrealized losses on foreign
    exchange contracts and expenses related to the acquisition of
    LucasVarity of $60 million in 1999.
•
noncash charge, with no income tax benefit, of
    $67 million related to the write-off of in-process research
    and development (IPR&D) associated with the acquisition of
    LucasVarity in 1999.
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Table of Contents
The unusual items detailed above are included in
Earnings (loss) from continuing operations in the following
table:
Six Months Ended
June 30,
Years Ended December 31,
2002
2001
2001
2000
1999
(unaudited)
(In millions)
Restructuring and other charges
$
(160
)
$
(73
)
$
(55
)
Asset impairment charges
(25
)
(44
)
—
Pending and threatened litigation, including
    certain warranty in 2000
(19
)
(46
)
—
Net gain from the sale of assets
21
12
—
Unrealized losses on foreign currency hedges and
    expenses related to the acquisition of LucasVarity
—
(6
)
(60
)
Write-off of purchased in-process research and
    development
—
—
(67
)
$
(183
)
$
(157
)
$
(182
)
The unusual items are included in the Statements
of Operations as follows:
Six Months Ended
June 30,
Years Ended December 31,
2002
2001
2001
2000
1999
(unaudited)
(In millions)
Cost of sales
$
169
$
147
$
88
Administrative and selling expenses
87
42
7
Interest expense
—
—
2
Amortization of goodwill and intangible assets
1
—
—
Purchased in-process research and development
—
—
67
Other (income) expense-net
24
33
76
Earnings (loss) before income taxes from
    continuing operations
(281
)
(222
)
(240
)
Income tax benefit
(98
)
(65
)
(58
)
Earnings (loss) from continuing operations
$
(183
)
$
(157
)
$
(182
)
Results of Operations
Sales for 2001 of $10.1 billion decreased
approximately $800 million from $10.9 billion in 2000.
The decrease in sales resulted from the effects of a decline in
vehicle production of $282 million, primarily in North
America, the effect of foreign currency exchange of
$211 million, business divestitures of $198 million
and lower pricing of $150 million. Sales for 2000 of $10.9
billion increased approximately $400 million from
$10.5 billion in 1999 as a result of higher volumes of
$269 million, the inclusion of the first quarter of 2000
sales of LucasVarity which was acquired on March 25, 1999
of $1,028 million and an increase due to the consolidation of an
affiliate of $94 million, partially offset by the effects of
foreign currency exchange of $545 million, lower pricing of
$239 million and divestitures of several businesses of
$174 million.
In 2000 we disposed of a substantial portion of
our Lucas Diesel Systems and LucasVarity wiring businesses. In
2001, we completed the disposition of the remaining Lucas Diesel
Systems businesses. The financial statements reflect these
businesses' operating results as discontinued operations
for all periods presented.
30
Table of Contents
Gross profit for 2001 of $1,124 million
decreased $376 million from $1,500 million in 2000.
The decrease was primarily due to lower volume and lower margin
on new products of $207 million, lower pricing of
$150 million, increased warranty and recall charges of
$29 million, the effects of foreign currency exchange of
$39 million, divestitures of $58 million, and an
increase in unusual items of $22 million, partially offset
by net cost reductions of $146 million. Gross profit for
2001 and 2000 included net pension income of $240 million
and $242 million, respectively, from an overfunded pension
plan. Gross profit for 2001 was negatively impacted by unusual
items totaling $169 million, consisting of
$126 million in restructuring expenses, asset impairment
charges of $38 million and other charges of
$5 million. Gross profit for 2000 included unusual items
totaling $147 million, consisting of restructuring charges
of $43 million, charges for the impairment of assets of
$67 million and other charges of $37 million,
primarily for certain warranty costs. Gross profit margin (gross
profit as a percentage of sales) for 2001 decreased to
11.1 percent from 13.7 percent in 2000. Excluding
unusual items, the gross profit margin would have been
12.8 percent and 15.1 percent for 2001 and 2000,
respectively. The gross profit margin, excluding unusual items,
for 2001 declined primarily as a result of lower volumes in
North America compared to 2000, an increase in modules, which
carry a lower margin but higher return on assets, and costs
associated with new product introductions.
Gross profit for 2000 of $1,500 million
decreased $148 million from $1,648 million in 1999.
The decrease resulted primarily from lower pricing of
$239 million, changes in the mix of automotive products of
$46 million, divestitures of several businesses of
$35 million, the effect of foreign currency exchange of
$108 million, other charges of $24 million related to
the write-off of inventory, start up costs and additional bad
debt reserves, and an increase in warranty charges of
$38 million and unusual items of $59 million,
partially offset by net cost reductions of $194 million and
the inclusion of an additional quarter of LucasVarity of
$170 million. In addition, net pension income from an
overfunded pension plan added $242 million and
$187 million to gross profit in 2000 and 1999,
respectively. Unusual items included in gross profit in 1999
were restructuring expenses of $73 million and other
charges, primarily inventory adjustments related to LucasVarity,
of $15 million. Gross profit margin for 2000 decreased to
13.7 percent from 15.7 percent in 1999. Excluding
unusual items, gross profit margin would have been
15.1 percent and 16.6 percent in 2000 and 1999,
respectively. The gross profit margin, excluding unusual items,
declined in 2000 primarily as a result of lower pricing, the
effect of foreign currency exchange and costs associated with
the introduction of new products.
Administrative and selling expenses for 2001 of
$624 million decreased $70 million from
$694 million in 2000, primarily due to the effects of
divestitures of $35 million, cost reductions and lower
general and administrative corporate expenses allocated to us of
$61 million and the effect of foreign currency exchange of
$10 million, which were partially offset by an increase in
restructuring charges of $45 million. Administrative and
selling expenses for 2000 of $694 million decreased
$10 million from $704 million in 1999. The decrease in
administrative and selling expenses in 2000, when compared to
1999, resulted primarily from net cost reductions of
$60 million, divestitures of $31 million and the
effect of foreign currency exchange of $23 million,
partially offset by the inclusion of an additional quarter of
LucasVarity administrative and selling expenses of
$65 million and an increase in restructuring charges of
$35 million. Administrative and selling expenses included
unusual items related to restructuring charges of
$87 million in 2001, $42 million in 2000 and
$7 million in 1999. Excluding the effect of unusual items,
administrative and selling expenses as a percentage of sales
improved to 5.3 percent in 2001 from 6.0 percent and
6.7 percent in 2000 and 1999, respectively.
Research and development expenses for 2001 were
$131 million and $167 million in 2000. Lower spending
on research and development was primarily the result of cost
reductions of $17 million and a shift in resources to
applications engineering of $13 million. Research and
development expenses in 2000 were lower compared to
$178 million in 1999, primarily due to cost reductions of
$13 million and the effect of foreign currency exchange of
$11 million, partially offset by the inclusion of an
additional quarter in 2000 of research and development costs
associated with LucasVarity of $13 million.
Interest expense for 2001 of $371 million
decreased $15 million from $386 million in 2000 as a
result of lower short-term interest rates in the United States
and lower average debt balances including debt allocated from
TRW. Interest expense for 2000 of $386 million increased
$18 million from $368 million in 1999,
31
Table of Contents
primarily due to higher short-term interest rates
in the United States and higher interest expense on fixed rate
debt issuances, partially offset by lower average debt
outstanding in 2000 including debt allocated from TRW.
Amortization of goodwill and intangible assets
was $78 million, $76 million and $69 million in
2001, 2000 and 1999, respectively. The increase of
$7 million from 1999 to 2000 primarily resulted from the
inclusion of an additional quarter in 2000 of goodwill and
intangible asset amortization related to LucasVarity.
The write-off of purchased in-process research
and development of $67 million in 1999 resulted from the
LucasVarity acquisition.
Other (income) expense-net was income of
$9 million and $12 million in 2001 and 2000,
respectively, and expense of $58 million in 1999. Included
in 2001 were net gains on sales of assets of $18 million,
primarily from the disposition of electrical products and
aftermarket businesses in India and Turkey, asset impairment
charges of $11 million, pending and threatened litigation
of $29 million, earnings of affiliates of $9 million
and other income of $23 million. Included in 2000 were net
gains on sales of assets of $22 million, primarily from the
disposition of Nelson Stud Welding and Australian Steering,
offset by $9 million of unrealized losses on foreign
currency hedges and LucasVarity-related expenses, pending and
threatened litigation of $25 million, earnings of
affiliates of $7 million and other income of
$17 million. In 1999, other (income) expense-net included
bank fees for the acquisition of LucasVarity of $39 million
and foreign exchange losses relating to LucasVarity of
$37 million, partially offset by earnings of affiliates of
$10 million.
The effective tax rate in 2001 was
45.1 percent compared to 52.5 percent in 2000 and
66.5 percent in 1999. Excluding the unusual items in 2001,
2000 and 1999, the effective tax rates would have been 31.5,
39.9 and 43.6 percent, respectively. The unusual items
impacting the effective tax rate related primarily to foreign
restructuring expenses in 2001, non-deductible penalties in
2000, and an in-process research and development charge in 1999,
for which there was no tax benefit. The major changes in the
effective tax rate excluding unusual items in 2001 from 2000
were one-time foreign tax refunds and the effect of
non-deductible reserves. The major change from 1999 to 2000 was
a reduction in foreign losses that were not tax-effected.
Chassis
Systems
Six Months Ended
June 30,
Years Ended December 31,
2002
2001
2001
2000
1999
(unaudited)
(In millions)
Sales
$
5,617
$
5,970
$
5,264
Profit before taxes
228
371
407
Unusual items-income (expense) included in
    profit before taxes
(110
)
(101
)
(72
)
Sales for 2001 of $5,617 million decreased
$353 million from $5,970 million in 2000. The decrease in
2001 sales resulted primarily from lower volume of
$178 million due to lower production in North America
partially offset by higher production in Europe, the effect of
foreign currency exchange of $134 million and lower pricing
of $32 million.
Profit before taxes for 2001 of $228 million
decreased $143 million from $371 million in 2000.
Unusual items in 2001 included several restructuring programs
aggregating $86 million, asset impairment charges of
$28 million and other charges of $5 million, partially
offset by gains on asset sales of $9 million. Unusual items
included in profit before taxes in 2000 were $45 million
related to restructuring actions, a charge for certain warranty
and other costs of $47 million and losses incurred on
business disposals of $9 million. Excluding unusual items,
profit before taxes decreased $134 million from 2000. The
decrease primarily resulted from lower sales volume and lower
margin on new products totaling $159 million, lower pricing
of $32 million and the effect of foreign currency exchange
of $17 million, which were partially offset by net cost
reductions of $77 million.
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Table of Contents
Sales for 2000 of $5,970 million increased
$706 million from $5,264 million in 1999. The increase
in 2000 resulted primarily from the inclusion of the first
quarter of 2000 sales of LucasVarity of approximately
$900 million, higher volume of $36 million and
additional sales of $94 million from the consolidation of
an affiliate, previously accounted for as an equity investment,
which were partially offset by the effect of foreign currency
exchange and lower pricing of approximately $260 million
and $41 million, respectively.
Profit before taxes for 2000 of $371 million
decreased $36 million from $407 million in 1999.
Unusual items in 1999 included charges for restructuring of
$56 million and other charges, primarily inventory
adjustments related to LucasVarity, of $16 million.
Excluding unusual items, profit before taxes decreased
$7 million from 1999. The decrease was primarily a result
of lower pricing of $41 million, the effect of foreign
currency exchange of $21 million, increased warranty costs
of $21 million, lower volume and unfavorable product mix of
$39 million and inventory adjustments and the establishment
of bad debt reserves, primarily for amounts owed by a customer
that filed for bankruptcy, of $14 million, which were
partially offset by net cost reductions of $52 million and
the inclusion of LucasVarity in the first quarter of 2000 of
$78 million.
Occupant
Safety Systems
Six Months Ended
June 30,
Years Ended December 31,
2002
2001
2001
2000
1999
(unaudited)
(In millions)
Sales
$
2,997
$
3,182
$
3,486
Profit before taxes
110
134
276
Unusual items-income (expense) included in profit
    before taxes
(57
)
(105
)
(9
)
Sales for 2001 of $2,997 million decreased
$185 million from $3,182 million in 2000. The decrease
in 2001 sales resulted primarily from lower pricing of
$107 million, the effect of foreign currency exchange of
$59 million and lower volume of $26 million due to
lower production in North America slightly offset by higher
production in Europe.
Profit before taxes for 2001 of $110 million
decreased $24 million from $134 million in 2000. Unusual
items in 2001 included several restructuring programs
aggregating $47 million and asset impairment charges of
$10 million. Unusual items included in profit before taxes
in 2000 related to restructuring actions of $17 million, an
asset impairment charge of $52 million, and claims, pending
litigation and other charges of $36 million. Excluding
unusual items, profit before taxes decreased $72 million
from 2000. The decrease resulted primarily from lower pricing of
$107 million, lower sales volume and lower margin on new
products of $31 million, increased charges from the effect
of a seat belt recall of $17 million and the effect of
foreign currency exchange of $6 million, which were
partially offset by cost reductions of $93 million.
Sales for 2000 of $3,182 million decreased
$304 million from $3,486 million in 1999. The decrease
resulted from the effect of foreign currency exchange and lower
pricing of $195 million and $179 million,
respectively, partially offset by higher volume of
$74 million.
Profit before taxes for 2000 of $134 million
decreased $142 million from $276 million in 1999.
Unusual items in 1999 included charges for restructuring of
$9 million. Excluding unusual items, profit before taxes
decreased $46 million. The decrease was primarily a result
of lower pricing of $179 million, the effect of foreign
currency exchange of $27 million, increased warranty costs
of $17 million and start-up costs relating to new product
introductions of $10 million, which were partially offset
by net cost reductions of $183 million and higher volume of
$15 million.
33
Table of Contents
Other
Automotive
Six Months Ended
June 30,
Years Ended December 31,
2002
2001
2001
2000
1999
(unaudited)
(In millions)
Sales
$
1,477
$
1,768
$
1,722
Profit before taxes
40
156
157
Unusual items-income (expense) included in profit
    before taxes
(84
)
(7
)
(14
)
Sales for 2001 of $1,477 million decreased
$291 million from $1,768 million in 2000. The decrease
in 2001 sales resulted primarily from lower volume of
$78 million due to lower production in North America
partially offset by higher production in Europe, divestitures of
several businesses, primarily Lucas TVS, Lucas Indian Services
and Aftermarket Turkey in 2001 and Nelson Stud Welding, Ledex
& Dormeyer, Man-Machine Interface and Schaevitz businesses
in 2000 of $198 million, the effect of foreign currency
exchange of $18 million and lower pricing of
$11 million.
Profit before taxes for 2001 of $40 million
decreased $116 million from $156 million in 2000.
Unusual items in 2001 included several restructuring programs
aggregating approximately $80 million, asset impairment
charges of $12 million and other charges of
$2 million, which were partially offset by net gains on the
sale of assets of $10 million. Unusual items included in
profit before taxes in 2000 were $23 million related to
restructuring actions and $15 million for asset impairment
charges, which were partially offset by a gain on sale of a
business of $31 million. Excluding unusual items, profit
before taxes decreased $39 million from 2000. The decrease
resulted primarily from lower sales volume and lower margin on
new products totaling $17 million, the effect of
divestitures of $21 million and lower pricing of
$11 million, which were partially offset by cost reductions
of $16 million.
Sales for 2000 of $1,768 million increased
$46 million from $1,722 million in 1999. The increase
in sales resulted primarily from the inclusion of the first
quarter of 2000 sales of LucasVarity of $128 million,
higher volume of $159 million and $47 million arising
from the acquisition of a majority interest in two affiliates,
which was partially offset by the effect of divestitures,
primarily including Nelson Stud Welding, Ledex & Dormeyer,
Man-Machine Interface and Schaevitz businesses in 2000, of
$174 million, the effect of foreign currency exchange of
$90 million and lower pricing of $19 million.
Profit before taxes for 2000 of $156 million
decreased $1 million from $157 million in 1999.
Unusual items in 1999 included charges for restructuring of
approximately $10 million and inventory adjustments related
to LucasVarity of $4 million. Excluding unusual items,
profit before taxes decreased $8 million. The decrease was
the result of the net effect of volume and unfavorable product
mix of $22 million, the effect of foreign currency exchange
of $19 million, lower pricing of $19 million and
effect of divestitures of $4 million, partially offset by
net cost reductions of $45 million and the inclusion of
LucasVarity in the first quarter of 2000 of approximately
$14 million.
Discontinued
Operations
In 2000, we disposed of a substantial portion of
the Lucas Diesel Systems and the LucasVarity wiring businesses.
In 2001, we completed the disposition of our remaining Lucas
Diesel Systems businesses. The combined financial statements
reflect these businesses' operating results as discontinued
operations for all periods presented. Net proceeds totaled
$29 million in 2001 and $853 million in 2000. Sales of
the discontinued operations were $20 million,
$74 million and $858 million in 2001, 2000 and 1999,
respectively. Interest has not been allocated to discontinued
operations. No gain or loss resulted from the divestiture of
these businesses.
34
Table of Contents
Restructuring
We have taken several actions during the past
three years to reduce overhead costs by shifting production
capacity from high wage areas to low wage areas and by
increasing operating efficiency. We have initiated several
restructuring actions including reorganizing and downsizing our
operations. In 2001, charges of $213 million before tax
were recorded for actions that included the consolidation of our
businesses. These actions are expected to result in a reduction
of approximately 6,100 employees, of which approximately 4,900
were terminated by these actions as of December 31, 2001.
In 2000, charges of $85 million were recorded for actions
that resulted in employee reductions of approximately 3,700, the
closing of two plants and the reorganization and downsizing of
our aftermarket business. In 1999, we recorded $80 million
related to closing six plants and employee reductions of more
than 4,800. In 2001, 2000 and 1999, $116 million,
$73 million and $63 million, respectively, were used for
severance payments and costs related to the consolidation of
certain facilities. We expect the balance of $144 million
to be substantially used by the end of 2002.
In 1999 and 2000, we initiated restructuring
actions to dispose of several nonstrategic or inefficient
facilities, discontinue production of low-margin products and
relocate certain facilities related to the integration of the
LucasVarity automotive businesses. We recorded approximately
$45 million of restructuring costs, primarily severance, as
part of the purchase price allocation. In 2001, 2000 and 1999,
$15 million, $15 million and $14 million,
respectively, were used primarily for severance payments. We
expect the remaining balance of $1 million to be used by
the end of 2002.
A movement of the restructuring reserves follows:
Provision
LucasVarity
Used for
Beginning
Administrative
Cost of
Purchase Price
Purposes
Ending
Balance
and Selling
Sales
Allocation
Intended
Balance
(In millions)
2001
$
63
$
87
$
126
$
—
$
(131
)
$
145
2000
48
42
43
18
(88
)
63
1999
18
7
73
27
(77
)
48
Asset Impairments
In 2001, asset impairment charges of
$28 million, $10 million and $12 million were
recorded by Chassis Systems, Occupant Safety Systems and Other
Automotive segments, respectively. These charges, related
primarily to the write-down of property, plant and equipment,
were recorded as $38 million in cost of sales,
$11 million in other (income) expense-net and
$1 million in goodwill amortization. Of these charges,
$49 million was a result of the loss of several existing
contracts and expected future sales at certain facilities. In
2000, as the result of a plan to consolidate operations of our
Mesa air bag manufacturing facilities in the Occupant Safety
Systems segment, we recorded an asset impairment charge of
$52 million in cost of sales. We expect the consolidation
plan to be completed during the first half of 2002. Property,
plant and equipment were written down to fair value on the basis
of discounted estimated future cash flows and future salvage
value. Also in 2000, the Other Automotive segment recorded an
asset impairment charge of $15 million in cost of sales as
a result of the loss of several existing and future contracts at
a facility. Assets were written down to fair value based upon
current market values of the assets.
Automotive Environment
We anticipate that in 2002, passenger car and
light truck production in North America will be 3 to
5 percent above 2001 levels while production in Western
Europe is expected to be approximately 3 to 4 percent below
2001 levels. We expect modest growth of 3 percent in the
emerging markets of Central and Eastern Europe and Asia Pacific.
In addition, we expect commercial truck production in North
America to remain at levels approximating 2001 levels. Strong
pricing pressure, characteristic of the automotive supply
industry, is expected to continue across the business.
35
Table of Contents
Vehicle manufacturers continue to operate in a
difficult financial environment. Our goal is to mitigate the
pricing pressure by restructuring the automotive business and by
continuing cost reduction efforts. We positioned our business
for improved competitiveness through consolidating our
businesses and streamlining our management structure. In
addition, we began to implement Six Sigma, a leading quality
improvement program, during the second half of 2001, training
approximately 200 Black Belts and 540 Green Belts as of the end
of 2001, with plans to train additional employees during 2002.
Our technology and innovation remain key to
future success as we develop and introduce new products into the
marketplace. We continue to invest in products with significant
potential growth or technological advantage, such as electro
hydraulic braking systems, vehicle stability controls,
electrically assisted steering, advanced restraint systems and
advanced electronic components.
LucasVarity Acquisition
On March 25, 1999, TRW acquired LucasVarity
for approximately $6.8 billion in cash and assumed net
debt. Of that amount, approximately $5 billion was related
to our automotive businesses. The transaction was accounted for
as a purchase. Assets and liabilities were recorded based on
their respective fair values. We recorded $2.2 billion of
goodwill, which is being amortized on a straight-line basis over
40 years. See the "LucasVarity Acquisition" note
to financial statements for further discussion of the
acquisition.
International Operations
International sales were $6.1 billion, or
61 percent of our sales in 2001, $6.5 billion, or
60 percent in 2000, and $5.8 billion, or
56 percent in 1999. U.S. export sales included in those
amounts were $727 million in 2001, $916 million in
2000 and $906 million in 1999. Most of our non-U.S.
operations are located in Europe, Mexico, Canada, Brazil and the
Asia Pacific region.
Our foreign operations are subject to a variety
of risks that may affect them, including:
•
customary exchange controls and currency
    restrictions;
•
currency fluctuations and devaluations;
•
changes in local economic conditions;
•
unexpected changes in laws and regulations;
•
exposure to possible expropriation or other
    government actions; and
•
unsettled political conditions and possible
    terrorist attacks against American interests.
While the impact of these risks is difficult to
predict, any one or more of them could adversely affect our
future operations.
Liquidity and Financial Position
Cash flow from operations in 2001 of
$828 million, including $327 million of accounts
receivable securitization, and other items of $78 million
were used for capital expenditures of $475 million and
financing activities of $464 million. As a result cash and
cash equivalents decreased $33 million. Cash flow from
operations in 2000 of $751 million, net proceeds from
divestitures of $1,110 million and other items of
$20 million were used for capital expenditures of
$501 million and financing activities of
$1,452 million. As a result, cash and cash equivalents
decreased $72 million.
Capital expenditures for property, plant and
equipment and other intangible assets, primarily internal-use
software, were $475 million in 2001, $501 million in
2000 and $665 million in 1999. We will maintain a capital
program with estimated capital expenditures for 2002 totaling
approximately $400 million. We will continue to focus on
reducing costs and investing in growth businesses including
advanced braking products (such as electro hydraulic braking and
vehicle stability control systems), electrically assisted
steering and advanced restraint systems.
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At December 31, 2001, our total debt was
$4,597 million compared to $5,053 million at
December 31, 2000. Total debt is comprised of the
historical short-term debt, current portion of long-term debt
and long-term debt of the legal entities included in TRW
Automotive and an allocation of TRW's remaining debt. The
allocation of debt from TRW is based upon the ratio of our net
assets to TRW's net assets plus non-automotive debt. The
allocation of debt from TRW was $4,105 million at
December 31, 2001 and $4,469 million at
December 31, 2000.
The percentage of fixed rate debt to total debt,
including debt allocated from TRW, was 85 percent and
66 percent at December 31, 2001 and 2000, respectively.
At December 31, 2001, short-term debt was
$177 million compared to $227 million at
December 31, 2000. Our primary source of short-term debt
was bank borrowings in many of the countries where we have
operations. These borrowings are typically done on an
uncommitted basis at market rates from banks with which we
generally have a long-term relationship.
In the United States, we currently participate in
a consolidated cash management system operated by TRW. Under
this arrangement, we obtain short-term financing from TRW rather
than from external sources. These arrangements will not be
available following the completion of the spin-off, and we will
need to replace this arrangement with alternative sources of
short-term financing as described under "The
Spin-Off — Transactions Prior to or Concurrent With
the Spin-off — Debt Financing Transactions." We
intend to establish a committed revolving credit agreement to
supplement existing sources of short-term financing.
In November 2001, TRW entered into a
$350 million accounts receivable securitization agreement
with a financial institution and several financial conduits to
diversify its funding sources at a competitive cost. Under this
arrangement, our and certain TRW subsidiaries' trade
accounts receivable were purchased by a wholly-owned,
fully-consolidated, bankruptcy-remote, special purpose
subsidiary which sold an undivided interest in the receivables
to the financial conduits. At December 31, 2001, the total
undivided interest in the receivables sold to the financial
conduits amounted to $327 million. The amount of funds
available to us and TRW under this agreement varies with changes
in the amount and mix of the applicable accounts receivable and
will decrease if the creditworthiness of the obligors of the
accounts receivable or their payment practices deteriorate. The
transaction is treated as a sale of the receivables, as opposed
to a loan secured by receivables.
In connection with the spin-off, we intend to
establish a similar accounts receivable securitization
arrangement and discontinue participation in the arrangement
established by TRW. The terms and conditions of our program may
be substantially different from the existing TRW securitization
program and may be financially less attractive depending on the
debt ratings of our senior unsecured long-term debt.
Long-term debt at December 31, 2001 was
$315 million compared to $357 million at
December 31, 2000. The primary sources of our long-term
borrowings are capitalized leases, bank borrowings and bonds
issued in the United Kingdom and the United States. Our ability
to continue to access these sources of capital depends on our
ability to maintain acceptable long-term debt ratings and
demonstrate the financial ability to support and service our
long-term debt. At December 31, 2001, $18 million of
our long-term debt, including capital lease obligations, had a
scheduled maturity within one year.
The agreements governing our bonds contain
various financial and other covenants. We are in compliance with
these covenants and expect to remain in compliance during the
term of the agreements. The cost to us of borrowings under loan
agreements may increase depending on the debt ratings of our
senior unsecured long-term debt.
We are subject to inherent risks attributed to
operating in a global economy. Our practice is to utilize
derivative financial instruments to manage foreign currency
exchange rate risks. We manage cash flow transactional foreign
currency exchange risk pursuant to TRW's written corporate
policy. Forward contracts and, to a lesser extent, options are
utilized to protect our cash flow from adverse movements in
exchange rates. We intend to adopt our own written policies
regarding the use of derivative financial instruments. These
policies are expected to be similar to those of TRW.
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We are exposed to credit loss in the event of
nonperformance by the other party to the derivative financial
instruments. We limit this exposure by entering into agreements
either through TRW or directly with a number of major financial
institutions that meet TRW's credit standards and that are
expected to satisfy fully their obligations under the contracts.
We view derivative financial instruments as a risk management
tool and do not use them for speculative or trading purposes.
Based on our interest rate exposure on variable
rate borrowings, including debt allocated from TRW, at
December 31, 2001, a one-percentage-point increase in the
average interest rate on our variable rate borrowings would
increase future interest expense by approximately
$7 million per year. Based on our exposure to foreign
currency exchange rate risk resulting from derivative foreign
currency instruments outstanding at December 31, 2001, a
10 percent uniform strengthening in the value of the United
States dollar relative to the currencies in which those
derivative foreign currency instruments are denominated would
result in a $5 million loss in fair value.
Our sensitivity analyses of the effects of
changes in interest rates and foreign currency exchange rates do
not reflect the effect of such changes on the related hedged
transactions or on other operating transactions. The analyses
also do not factor in a potential change in the level of
variable rate borrowings or derivative instruments outstanding
that could take place if these hypothetical conditions prevailed.
The following tables reflect our contractual
obligations and commercial commitments as of December 31,
2001. Commercial commitments include lines of credit, guarantees
and other potential cash outflows resulting from a contingent
event that requires our performance pursuant to a funding
commitment.
Payments Due by Period
2003
2005
2007
to
to
and
Total
2002
2004
2006
beyond
(In millions)
Contractual Obligations:
Long-term debt
$
287
$
14
$
23
$
18
$
232
Capital lease obligations
28
4
15
7
2
Debt allocated from TRW
4,105
4,105
—
—
—
Operating leases
158
44
55
35
24
Other long-term obligations
1,343
152
231
232
728
$
5,921
$
4,319
$
324
$
292
$
986
Amount of Commitment Expiration per Period
2003
2005
2007
to
to
and
Total
2002
2004
2006
beyond
(In millions)
Commercial Commitments:
Standby letters of credit/bonds(1)
$
29
$
9
$
20
$
—
$
—
Guarantees
18
4
4
—
10
Other commercial commitments
43
1
38
4
—
$
90
$
14
$
62
$
4
$
10
(1)
The final maturity of current instruments is
    subject to annual renewal.
Excluded from the foregoing commercial
commitments table are open purchase orders at December 31,
2001 for raw materials and supplies used in the normal course of
business, supply contracts with customers, distribution
agreements, joint venture agreements and other contracts without
express funding requirements.
Upon completion of the restructuring
transactions, we expect to have outstanding approximately
$2.8 billion of debt, which we believe, on the advice of
our financial advisors, is an appropriate level of debt to
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obtain and maintain an investment grade rating.
We are continuing to evaluate alternative plans for creating
that debt, and our initial debt load may be established through
the issuance of new debt or the assumption of existing TRW debt,
or a combination of these approaches. The final terms of that
debt and our approach for incurring it will not be determined
until shortly prior to the declaration by TRW of the dividend
comprising the shares of our common stock that will be
distributed in the spin-off, or the spin-off declaration date.
The unaudited pro forma financial information as of
December 31, 2001, and the pro forma capitalization
information as of June 30, 2002, each of which appear
elsewhere in this prospectus, assume that we will have
$2.8 billion in debt.
We believe that our current financial position
and financing plans will provide flexibility in worldwide
financing activities and permit us to respond to changing
conditions in credit markets. We also believe that funds
generated from operations, divestitures and planned borrowing
capacity will be adequate to fund debt service requirements,
capital expenditures, working capital including tax
requirements, company-sponsored research and development
programs and dividend payments to stockholders. Our ability to
continue to fund these items and continue to reduce debt may be
affected by a number of factors, including the effect of general
economic conditions on our business, the ability to dispose of
non-core assets and the cost of warranty and recall and
litigation claims.
See the "Background," "Basis of
Presentation and Transactions with TRW," "Summary of
Significant Accounting Policies," "Financial
Instruments," "Accounts Receivable
Securitization," and "Debt and Credit Agreements"
notes to financial statements for further discussion of these
matters.
Transactions with Related Parties
Prior to the spin-off, we will enter into a
transition services agreement with TRW for the provision of
facilities sharing, systems, corporate, risk management,
administrative and other existing shared services to take effect
after the distribution. This agreement will reflect pricing
terms for these services to be mutually agreed upon subject to
all applicable regulatory requirements. The term for the
provision of each service will be determined on a case by case
basis. We intend to develop our internal capabilities in the
future in order to reduce our reliance on TRW for such services.
TRW has provided corporate staff services,
including legal, internal audit and other services, to us at
cost and may, but will not be obligated to continue to do so
following the spin-off.
Refer to the "Relationship With TRW"
section of this prospectus and to the "Basis of
Presentation and Transactions with TRW" note to financial
statements for a description of these and other intercompany
arrangements and transactions between us and TRW.
Critical Accounting Policies
The critical accounting policies that affect our
financial statements and that use judgments and assumptions are
listed below. In addition, the likelihood that materially
different amounts would be reported under varied conditions and
assumptions are highlighted.
Product
Recalls
We are at risk for product recall costs. Recall
costs are costs incurred when we and the customer decide to
recall a product through a formal campaign to solicit the return
of specific products due to a known or suspected safety concern.
Product recall costs typically include the cost of the product
being replaced, customer cost of the recall and labor to remove
and replace the defective part. When a decision to recall a
product has been made for which we bear some responsibility, we
record the estimated cost to us of the recall as a charge to net
earnings in that period in accordance with Financial Accounting
Standards Board (FASB) Statement of Financial Accounting
Standards (SFAS) 5. In making this estimate, judgment is
required as to the number of units to be returned as a result of
the recall, the total cost of the recall campaign, the ultimate
negotiated sharing of the cost between us and the customer and,
in some cases, the extent to which our supplier will share in
the recall cost. As a result, these estimates could change.
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Impairment
of Long-Lived Assets
Long-lived assets, goodwill and other intangibles
are evaluated for impairment when events and circumstances
indicate that the assets may be impaired and the undiscounted
cash flows to be generated by those assets are less than their
carrying value. If the undiscounted cash flows are less than the
carrying value of the assets, the assets are written down to
their fair value. The determination of undiscounted cash flows
is based on the businesses' strategic plans and long-range
planning forecasts. The revenue growth rates included in the
plans are based on industry specific data. We use external
vehicle build assumptions published by widely used external
sources and market share data by customer based on known and
targeted awards over a five-year period. The profit margin
assumptions included in the plans are projected based on the
current cost structure and anticipated cost reductions. If
different assumptions were used in these plans, the related
undiscounted cash flows used in measuring impairment could be
different and additional impairment of assets might be required
to be recorded.
Employee
Benefit Plans
Assumptions used in determining projected benefit
obligations and the fair values of plan assets for our pension
plans and post-retirement benefits other than pensions are
evaluated periodically by management in consultation with an
outside actuary. Changes in assumptions are based on relevant
company data, such as the rate of increase in compensation
levels and the long-term rate of return on plan assets. Critical
assumptions such as the discount rate used to measure our
benefit obligations, the expected long-term rate of return on
plan assets and health care cost projections are evaluated and
updated annually. A change in these assumptions, holding all
other assumptions constant, would have the following effect on
costs on an annual basis:
One-fourth-
percentage-point
change
Increase
Decrease
(In millions)
(Decrease) increase in costs
Discount rate
$
(5
)
$
5
Expected long-term rate of return
(13
)
13
One-percentage-point
change
Increase
Decrease
(In millions)
Health care cost trend rate
$
8
$
(7
)
Contingencies
Various claims, lawsuits and administrative
proceedings with respect to commercial, product liability and
environmental matters are pending or threatened against us or
our subsidiaries, arising from the ordinary course of business.
In October 2000, Kelsey-Hayes Company (formerly
known as Fruehauf Corporation) was served with a grand jury
subpoena relating to a criminal investigation being conducted by
the U.S. Attorney for the Southern District of Illinois.
The U.S. Attorney has informed us that the investigation
relates to possible wrongdoing by Kelsey-Hayes Company and
others involving certain loans made by Kelsey-Hayes
Company's then parent corporation to Fruehauf Trailer
Corporation, the handling of the trailing liabilities of
Fruehauf Corporation and actions in connection with the 1996
bankruptcy of Fruehauf Trailer Corporation. Kelsey-Hayes Company
became a wholly-owned subsidiary of TRW upon TRW's
acquisition of LucasVarity in 1999 and will become our
wholly-owned subsidiary prior to the spin-off. We are
cooperating with the investigation and are unable to predict the
outcome of the investigation at this time. We believe that the
ultimate resolution of this matter will not have a material
effect on our financial condition or results of operations.
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On May 6, 2002, ArvinMeritor Inc. filed suit
against TRW in the United States District Court for the Eastern
District of Michigan, claiming breach of contract and breach of
warranty in connection with certain tie rod ends that TRW
supplied to ArvinMeritor and the voluntary recall of some of
these tie rod ends. ArvinMeritor subsequently recalled all of
the tie rod ends, and claims that it is entitled to
reimbursement by TRW for the costs associated with both the
products recalled by TRW and those recalled by ArvinMeritor on
its own. ArvinMeritor is seeking an undisclosed amount of
compensatory and consequential damages. As this suit relates to
TRW's automotive business, any contingent liabilities
associated with this suit will be transferred to us as part of
the restructuring transactions. Management believes we have
meritorious defenses and we intend to defend vigorously the
claims asserted against us, but we cannot predict the outcome of
this lawsuit.
While certain of our subsidiaries have been
subject in recent years to some asbestos-related claims,
management believes that such claims will not have a material
adverse effect on our financial condition or results of
operations. In general, these claims seek damages for illnesses
alleged to have resulted from exposure to asbestos used in
certain components sold by our subsidiaries. We believe the
majority of the claimants were assembly workers at the major
U.S. automobile manufacturers. The vast majority of these
claims name as defendants numerous manufacturers and suppliers
of a wide variety of products allegedly containing asbestos. We
believe that, to the extent any of the products sold by our
subsidiaries and at issue in these cases contained asbestos, the
asbestos was encapsulated. Based upon several years of
experience with such claims, we believe that only a small
proportion of the claimants has or will ever develop any
asbestos-related impairment.
Our average total annual settlement costs in
connection with asbestos claims over the last five years have
been less than $100,000 in the aggregate, and legal fees to
defend these cases have never exceeded $500,000 per year. These
claims are strongly disputed by us and it has been our policy to
defend against them aggressively. We have been successful in
obtaining the dismissal of many cases without any payment
whatsoever. Moreover, there is significant insurance coverage
with solvent carriers with respect to these claims.
Refer to the "Contingencies" note to
financial statements for further discussion of these matters.
Current
Accounting Pronouncements
The FASB recently issued SFAS 141,
"Business Combinations," SFAS 142, "Goodwill
and Intangible Assets," SFAS 143, "Accounting for
Asset Retirement Obligations" and SFAS 144,
"Accounting for the Impairment or Disposal of Long-Lived
Assets."
SFAS 141 requires that acquisitions entered
into after June 30, 2001, be accounted for using the
purchase method and establishes criteria to be used in
determining whether acquired intangible assets are to be
recorded separately from goodwill. SFAS 142 sets forth the
accounting for goodwill and intangible assets after the
completion of a business acquisition and for goodwill and
intangible assets already recorded. Goodwill will no longer be
amortized beginning January 1, 2002. Rather, goodwill will
be tested for impairment by comparing the asset's fair
value to its carrying value. Also, the value of workforce of
approximately $15 million must be reclassified from
intangible assets to goodwill. We adopted SFAS 142 on
January 1, 2002.
At December 31, 2001 we had recorded
approximately $2.4 billion of goodwill, net of accumulated
amortization. Management has conducted preliminary valuations of
our reporting units and has determined that goodwill should not
be impaired. In 2001, we recorded amortization expense for
goodwill and the value of workforce of $64 million before
tax, $53 million after tax.
SFAS 143 requires the fair value of a
liability for asset retirement obligations to be recorded in the
period in which it is incurred. The statement applies to a
company's legal or contractual obligation associated with
the retirement of a tangible long-lived asset that resulted from
the acquisition, construction or development or through the
normal operation of a long-lived asset. The statement is
effective for us beginning January 1, 2003.
SFAS 144 addresses the accounting and
reporting for the impairment or disposal of long-lived assets.
The statement provides a consistent method to value long-lived
assets to be disposed of. New criteria must be met
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to classify the asset as an asset held-for-sale.
This statement also changes the rules for reporting the effects
of a disposal of a segment of a business. We adopted
SFAS 144 on January 1, 2002.
We have evaluated the impact of SFAS 143 and
144 and believe that the adoption of these statements should not
have a material impact on our financial position or results of
operations.
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BUSINESS
Overview
We are among the world's largest and most
diversified suppliers of automotive systems, modules and
components, with 2001 sales of over $10 billion. We are
primarily a "Tier-1" supplier, providing over
90 percent of our products directly to VMs. We also sell
our products in the worldwide aftermarket for VM service and
replacement parts, which are distributed through independent
aftermarket channels. We have become a leader in the global
automotive parts industry by capitalizing on the strength of our
product and manufacturing systems technologies.
We have established a broad global presence, with
a workforce of over 65,000 employees, and a network of
manufacturing sites, technical centers, sales offices and joint
ventures located in every major vehicle producing region of the
world. Our combined customer, product and geographic diversity
is among the industry leaders, with approximately
50 percent of our 2001 sales generated outside of North
America, and with no single customer accounting for more than
19 percent of sales.
Through our experience supplying to more than 40
VMs, including all the world's major automobile
manufacturers, we have developed a sophisticated understanding
of the design, engineering and manufacture of automobiles and
trucks. We have extensive technical experience in a broad range
of product lines and strong systems integration skills, which
enable us to provide comprehensive, system-based solutions for
our customers. In particular, among the world's leading
automotive suppliers, we believe that we are uniquely positioned
as a global leader in the design, manufacture and sale of active
(vehicle dynamic control) and passive (crash sensing and
occupant restraint) safety systems and components.
We are one of the leading Tier-1 suppliers in all
of our principal product categories. We operate our business
along the following three major operating segments:
•
Chassis Systems, which includes active safety
    systems and components in the areas of braking, steering,
    suspension and integrated vehicle control;
•
Occupant Safety Systems, which includes passive
    safety systems and components in the areas of inflatable
    restraints, seat belts, steering wheels and safety and security
    electronics; and
•
Other Automotive, which includes engine valves
    and components, engineered fasteners and components and body
    control systems.
Within these operating segments, we have been
responsible for the development or initial high volume
introduction of numerous automotive innovations, including
electrically assisted steering systems, four-wheel and
rear-wheel ABS, radar-based active cruise control systems,
complete vehicle occupant restraint systems, seat belt
pretensioning devices, remote keyless entry systems, direct and
indirect tire pressure monitoring systems, and silicrome and
two-piece automotive engine valves.
The Automotive Parts Industry
We operate in a highly competitive industry. The
automotive parts industry provides systems, modules and
components to VMs for the manufacture of new vehicles, as well
as to the aftermarket for use as replacement and enhancement
parts. Today, suppliers offer their component products to VMs
and also offer those products in a variety of more fully
engineered forms, such as modules and systems:
•
Modules are groups of component parts arranged in
    close physical proximity to each other within a vehicle that are
    often assembled by the supplier and shipped to the VM for
    installation in a vehicle as a unit. Cockpit modules, brake
    corner modules and chassis cross-member modules are examples.
•
Systems are groups of component parts located
    throughout the vehicle that operate together to provide a
    specific vehicle function. Braking systems, steering systems and
    occupant restraint systems are examples.
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Historically, large VMs operated internal
divisions to provide a wide range of component parts for their
vehicles. In recent years, VMs have moved toward a competitive
sourcing process for automotive parts, including increased
purchases from independent suppliers, as they seek lower-priced
and/or higher-technology systems and products. These independent
parts suppliers, which often have lower cost structures than
internal VM component operations, have become an important part
of the automotive parts industry.
We estimate that global automotive parts industry
sales to VMs will be about $500 billion in 2002. In
addition to these sales, we estimate that U.S. automotive
aftermarket retail sales will be over $50 billion in 2002.
The aftermarket includes replacement parts as well as parts
designed to enhance or personalize vehicles. Demand for
aftermarket products tends to increase when new vehicle sales
decline because vehicle owners retain their vehicles longer;
these vehicles generally have a greater need for repairs.
Our industry is generally divided into two tiers:
•
Tier-1 suppliers, including us, sell their
    products principally to VMs directly and often offer a broad
    range of product capabilities, including design, engineering and
    assembly services. Tier-1 suppliers supply systems and modules
    and are increasingly influencing vehicle content, including the
    sourcing of Tier-2 components.
•
Tier-2 suppliers sell their products principally
    to Tier-1 suppliers, who then combine these parts into their own
    product offerings.
Contract durations for automotive parts generally
range from one year to the entire life of the vehicle model,
about three to seven years for cars and six to ten years for
trucks. Tier-1 suppliers such as us generally compete for new VM
business at the beginning of the development of new vehicle
models and upon the redesign of existing vehicle models. New
vehicle model development generally begins at least two to five
years before the marketing of such models to consumers. As a
result, a significant portion of a supplier's annual sales
are generated pursuant to arrangements entered into about two to
five years before the revenues related to such arrangements
begin to be realized.
The Tier-1 sourcing process for vehicle programs,
which varies according to VMs, is typically initiated when a VM
seeks requests for quotations from several suppliers at least
three to six years before anticipated vehicle production. Based
on these quotations, VMs in many cases then select and work with
a supplier on specific component design and development projects
related to the new vehicle program. At varying points during
this process, VMs may issue "nomination letters,"
letters of intent or other representations to the supplier that,
based on the supplier's quotation and subject to a number
of conditions established by the VM, the VM intends to award
specific business relating to the vehicle program to the
supplier. By the time the design and development of the vehicle
program is nearly complete, the VM will typically have evaluated
the supplier's performance to date and its ability to meet
the VM's specific production and service requirements. The
VM will then develop a proposed production timetable, including
current vehicle volume and option mix estimates based on its own
assumptions, and then source business with the supplier pursuant
to written contracts, purchase orders or other firm commitments,
provided that the supplier can meet the VM's designated
conditions.
Awarded business generally covers the supply of
all or a portion of a VM's production and service
requirements of a particular product program rather than the
supply of a specific quantity of products. Accordingly, in
estimating awarded business over the life of a contract or other
commitment, a supplier must make various assumptions as to the
estimated amount of vehicles expected to be produced, the timing
of that production, the mix of options on the vehicles produced
and product pricing.
The realization of sales based on awarded
business is subject in all cases to a number of important risks
and uncertainties, which generally include the following:
•
the volume of vehicle models and specific vehicle
    options actually produced by the VM, which, in turn, are subject
    to a number of significant risks outlined below;
•
the determination by the VM to delay or cancel a
    particular vehicle program for which it has sourced business
    with the supplier or to change the option mix within the program;
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•
the VM's contractual right to replace the
    supplier throughout the duration of the contract for a variety
    of reasons, including if the supplier does not remain
    competitive in terms of quality, service, design, technology
    and, in certain circumstances, price;
•
the VM's contractual right to terminate the
    contract altogether; although this right varies by contract,
    some contracts, generally shorter-term purchase orders, are
    terminable by the VM at any time for any reason;
•
the VM's decision to redesign a vehicle
    model and not to select the supplier to supply any or all of the
    same parts it was providing on the previous vehicle model; and
•
product pricing, including price reductions on
    existing contracts negotiated in connection with the VM's
    sourcing of new business with the supplier.
The actual production volumes and option mix of
vehicles produced by VMs depend on a number of factors that are
beyond a supplier's control. These include:
•
general economic conditions;
•
consumer preferences for particular vehicles or
    vehicle features;
•
labor difficulties or work stoppages and other
    interruptions of production; and
•
capital planning and other factors specific to a
    particular VM.
Industry Trends
Several key trends have been reshaping the
automotive parts industry over the past several years:
•
Shift of Engineering to Suppliers; Increased
    Emphasis on Systems and Modules
    Sourcing.
Increasingly, VMs are
    focusing their efforts on consumer brand development and overall
    vehicle design, as opposed to the design of vehicle systems. In
    order to simplify the vehicle design and assembly processes and
    reduce their costs, VMs increasingly look to their suppliers to
    provide fully engineered, pre-assembled combinations of
    components rather than individual components. This is especially
    true outside of the United States. By offering sophisticated
    systems and modules rather than individual components, Tier-1
    suppliers have assumed many of the design, engineering, research
    and development and assembly functions traditionally performed
    by VMs. As a result, they are gaining increased access to
    confidential planning information regarding VMs' future
    vehicle designs and manufacturing processes. Systems and modules
    increase the importance of Tier-1 suppliers because they
    increase their percentage of vehicle content and the ability to
    reduce costs. Suppliers with broad product portfolios are well
    positioned to provide the systems and modules VMs demand.
•
Increasing Electronics Integration and
    Technological Content.
The electronic
    content of vehicles has been increasing and will continue to
    increase in the future. This increase in electronic content is
    largely driven by continued, and often increasingly stringent,
    regulatory standards for automotive emissions and safety as well
    as consumer demand for increased vehicle performance and
    functionality at lower cost. Electronics integration, which
    generally refers to replacing mechanical with electronic
    components and integration of mechanical and electrical
    functions within the vehicle, allows VMs to achieve substantial
    reduction in the weight, complexity and cost of vehicles,
    resulting in easier assembly, enhanced fuel economy, improved
    emissions control, increased safety and better vehicle
    performance. As consumers, particularly in more developed
    markets such as North America, Europe and Japan, seek more
    competitively-priced ride and handling performance, safety,
    security, convenience and environment-friendly options in
    vehicles, such as electronic stability control, active cruise
    control, inflatable restraints, keyless entry and tire pressure
    monitoring, it is expected that electronic content per vehicle
    will continue to increase, but at the same time will remain
    subject to technology-driven price declines and pricing
    pressures from VMs.
•
Increased Emphasis on
    Speed-to-Market.
As VMs are under
    increasing pressure to adjust to changing consumer preferences
    and to incorporate technological advances, they are shortening
    product
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development times. Shorter product development
    times also reduce product development costs. Suppliers that are
    able to deliver new products to VMs to accommodate the VMs'
    needs will be well positioned to succeed in this evolving
    marketplace.
•
Globalization of
    Suppliers.
To serve multiple markets
    more cost effectively, many VMs are turning to global vehicle
    platforms, which typically are designed in one location but
    produced and sold in many different geographic markets around
    the world. With these vehicles, VMs can better serve multiple
    markets and address local consumer preferences while controlling
    design costs and taking advantage of low-cost manufacturing
    locations. Suppliers for a specific global vehicle are often
    required by the VM to provide their products and services in all
    global locations where that vehicle is manufactured. Few
    suppliers are able to provide this global coverage and it is a
    source of significant competitive advantage for those suppliers
    with global reach.
•
Ongoing Industry
    Consolidation.
The worldwide
    automotive parts industry is consolidating as suppliers seek to
    achieve operating synergies through business combinations, shift
    production to locations with more flexible local work rules and
    practices, acquire complementary technologies, build stronger
    customer relationships and follow their customers as they expand
    globally. The need for suppliers to provide VMs with
    single-point sourcing of integrated systems and modules on a
    global basis has helped drive industry consolidation.
    Furthermore, the cost focus of most major VMs has forced
    suppliers to reduce costs and improve productivity on an ongoing
    basis, including by achieving economies of scale through
    consolidation.
•
Demand for Safety and Environmentally Friendly
    Products.
Consumers, and therefore
    VMs, are increasingly focused on, and governments are
    increasingly requiring, improved safety and environmental
    performance in vehicles, e.g., expected European mandates for
    ABS and pedestrian protection systems, and increasing corporate
    average fuel efficiency requirements in the United States.
    Advances in technology have led to a number of new innovations
    such as electric steering systems, electronic vehicle stability
    control systems, tire pressure monitoring systems, occupant
    sensing systems, rollover sensing and curtain air bag systems.
    Further development is expected in the integration and/or
    convergence of these active and passive safety systems in the
    form of predictive vehicle control systems (collision mitigation
    and collision avoidance).
Our Strategy
Our objective is to increase our sales and
improve our profitability and operating cash flow by leveraging
our position as a leading Tier-1 global automotive parts
supplier focused primarily in the areas of active and passive
safety technologies. Key elements of our strategy include the
following:
•
Expand Our Leading Technology
    Capabilities.
VMs and government
    agencies increasingly expect automotive safety system suppliers
    to improve vehicle safety through new and technologically
    innovative safety products. We continue to provide
    technologically advanced products by regularly updating and
    enhancing our product line and introducing new products, such as
    electrically assisted steering, electronic vehicle stability
    control, and side and curtain inflatable restraint systems. We
    will continue to make significant investments in technology and
    our design capabilities in an effort to develop innovative,
    value-added safety technologies with a focus on development of
    next generation safety systems. Our objective is to supply a
    complete predictive vehicle control system that integrates
    active and passive safety technologies. As the only automotive
    supplier with leading capabilities in both active and passive
    safety systems, we believe we are ideally positioned to achieve
    our goal.
•
Increase Our Product Content per Vehicle.
Government safety regulations and
    consumer demands for enhanced safety and electronic products
    have helped to drive increases in our automotive content per
    vehicle content through the addition of more inflatable
    restraints and electronic products. Our leading technological
    position in automotive safety systems has placed us at the
    forefront of supplying these new products and has enabled us to
    increase our content per vehicle. In addition, many of the new
    products we have developed, or are in the process of developing,
    such as electric park brakes, active cruise control, active
    control seat belt retractors and tire pressure monitoring
    systems, will add further
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content to our product offerings. We intend to
    continue to increase our content per vehicle as one of our
    primary means of enhancing revenue growth in excess of growth in
    automotive vehicle production.
•
Capitalize on the Continued Trend Toward
    Module and System Supply.
We believe
    that the trend toward module and system supply will continue as
    VMs seek ways to improve quality and reduce costs. We have
    developed significant system and module capabilities in a number
    of key product areas including inflatable restraint systems,
    seat belt systems, ride and handling systems, electrically
    assisted steering systems and safety electronics systems. We
    serve as the Tier-1 system and/or module integrator on a number
    of platforms, incorporating both our products and products
    supplied to us by other Tier-1 and/or Tier-2 suppliers. We
    intend to focus on manufacturing those components and systems
    where we enjoy a competitive advantage and can add the most
    value, while reducing our participation and capital spending in
    those areas that are non-essential to our growth and
    profitability.
•
Focus on Operating
    Efficiency.
We continue to focus on
    opportunities to optimize our resources and reduce manufacturing
    costs. Over the past few years we have shifted production
    capacity from high wage areas such as North America and Western
    Europe to low wage areas such as Latin America, Eastern Europe
    and certain parts of Asia. We will continue to shift production
    in this manner as opportunities present themselves. In addition,
    we are executing several strategic initiatives aimed at
    improving our operating performance. We recently implemented a
    Six Sigma program throughout TRW Automotive that we believe will
    provide substantial future cost savings. We remain committed to
    further reducing our operating costs through other measures
    including a focus on procurement and cost-effective
    manufacturing.
•
Evaluate Joint Ventures, Strategic Alliances
    and Selected Acquisitions and
    Divestitures.
Strategic alliances and
    joint ventures represent an important element of our business
    plan. These relationships offer opportunities to expand our
    capabilities and geographic and/or customer presence with a
    lower level of investment. Joint ventures have been and will
    continue to be critical to our expansion in emerging markets,
    such as China, Korea, India and Turkey. We also pursue selected
    acquisitions and alliances focused on products and customer
    platforms that are complementary to our core safety and chassis
    businesses. We have substantial experience completing and
    integrating acquisitions with a focus on realizing cost savings
    and other synergies. Additionally, we consistently evaluate our
    existing portfolio of businesses for operations that are
    non-core and which we may divest given a strategic opportunity.
    We are disciplined — financially and
    strategically — in our approach to evaluating
    acquisitions, divestitures and other alliance opportunities.
Our Competitive Strengths
We intend to leverage our leading product
positions, our global presence, strong customer relationships
and diverse product capabilities to increase our presence in the
global safety systems industry.
•
Leading Product
    Positions.
We are one of the
    world's largest suppliers of automotive safety and chassis
    components. We believe we hold a number one or number two global
    position in all of our primary products including: brake
    components and systems, steering systems, inflatable restraint
    systems, seat belt systems, engine valves and engineered
    fasteners. We believe that we are also the leading manufacturer
    of anti-lock brakes in North America. Our leading supply
    position across a number of product lines increases our
    importance to our VM customers and allows us to compete
    effectively in each of the markets that we serve.
•
Global Position.
As
    VMs increasingly become more global, they favor suppliers that
    can deliver products with consistent technology and quality for
    vehicles, which are manufactured and sold in markets around the
    world. Our geographically diverse global manufacturing base
    offers us an advantage over many of our competitors in meeting
    the global needs of our VM customers. We also believe that our
    global presence allows us to leverage sales to a customer in one
    location, or for one product, into sales to that customer in
    other locations and for other products. Additionally, our
    presence in markets such as South America, Eastern Europe and
    the Asia/ Pacific Rim region presents a long-term growth
    opportunity as demand for automotive vehicles increases, and
    automotive
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manufacturers expand production, in these
    markets. Our worldwide manufacturing base includes 136
    facilities and 27 joint-venture facilities in 22 countries. In
    2001, we recorded approximately 50 percent of our sales
    outside of North America, 42 percent in Europe and
    8 percent throughout the rest of the world.
•
Strong Relationships with
    Customers.
As a result of our focus on
    providing the highest quality products and service at
    appropriate prices, we maintain long-standing relationships with
    our customers, which include every major automotive VM in the
    world. We maintain an excellent reputation with our customers
    for timely delivery and customer service, and for providing
    world-class components and systems. As a result of our
    exceptional service and performance record, since the beginning
    of 2001, we have won a number of awards from our customers
    including GM's Supplier of the Year, Ford's Q1 and Q1
    Plus World Excellence, DaimlerChrysler's Gold Pentastar,
    Toyota's Quality Certification Achievement, Fiat's
    Targa Qualitas and Renault's Trophée OPTIMA.
•
Diversified
    Business.
We have a diversified
    business that limits our exposure to the risks of any one
    customer, product area or geographic economy. Approximately
    50 percent of our sales are derived from sales outside
    North America; no one customer accounts for more than
    19 percent of our sales and our product offerings, while
    focused in the area of safety technologies, are numerous and
    diverse. In addition to minimizing our risks, we believe that
    our diverse business provides a competitive advantage as this
    diversification supports our growth.
Products
The following discussion describes each of our
segments, as well as the major product groups within each
segment.
Chassis
Systems
Our Chassis Systems segment focuses on the
design, manufacture and sale of braking, steering and suspension
systems and components for VM and replacement part markets.
Chassis Systems accounted for approximately $5.6 billion, or
56 percent, of our 2001 total sales.
Our Chassis Systems segment is well positioned to
capitalize on growth trends toward increasing active safety
systems, particularly in the areas of electric steering,
electronic vehicle stability control and other advanced braking
systems, and integrated vehicle control systems. We have
demonstrated strong, global full-service design and
manufacturing capabilities, as well as technology development,
leading to significant new business awards at all major VMs.
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The following table describes the principal
products in our Chassis Systems segment:
Product Line
Description
Brake Control
Two-wheel and four-wheel ABS, electronic vehicle
    stability control systems, electro-hydraulic braking systems,
    active cruise control systems, actuation boosters and master
    cylinders, electronically controlled actuation
Foundation Brakes
Front and rear disc brake calipers, drum brake
    and drum-in-hat parking brake assemblies, rotors, drums
Steering
Electrically powered steering systems
    (column-drive, pinion-drive, rack-drive type), electrically
    powered hydraulic steering systems, hydraulic power and manual
    rack and pinion steering gears, hydraulic steering pumps and
    hoses, hydraulic steering systems, fully integral commercial
    steering systems, commercial steering columns and pumps
Suspension
Forged steel and aluminum control arms,
    suspension ball joints, rack and pinion linkage assemblies,
    conventional linkages, commercial steering linkages and
    suspension ball joints, active roll control systems
Modules
Brake modules, corner modules, pedal box modules,
    strut modules, front cross-member modules, rear axle modules
Parts & Service
Braking, steering & suspension replacement
    parts for VM and non-VM customers
Integrated Vehicle Control
Integration of advanced braking, steering and
    suspension systems using common sensors and electronic control
    units (including software) to enhance vehicle performance and
    safety
We sell our Chassis Systems products to VMs and
to Tier-1 suppliers as original equipment. We also sell these
products to VM service organizations and to independent
distributors for the automotive aftermarket.
Occupant
Safety Systems
Our Occupant Safety Systems segment focuses on
the design, manufacture and sale of inflatable restraint, seat
belt, steering wheel and safety and security electronic systems
and components. Occupant Safety Systems accounted for
approximately $3.0 billion, or 30 percent, of our 2001
total sales.
Our Occupant Safety Systems segment is well
positioned to capitalize on growth trends toward increasing
passive safety systems, particularly in the areas of side and
curtain inflatable restraint systems, occupant sensing systems,
active seat belt pretensioning and retractor systems and
integrated occupant restraint systems. We have demonstrated
strong, global full-service design and manufacturing
capabilities, as well as technology development, leading to
significant new business awards at all major VMs.
The following table describes the principal
products in our Occupant Safety Systems segment:
Product Line
Description
Inflatable Restraints
Driver air bag modules, passenger air bag
    modules, side air bag modules, rollover curtain air bag modules,
    single- and dual-stage air bag inflators
Seat Belts
Retractor and buckle assemblies, pyrotechnic
    retractor assemblies, pretensioning systems, height adjusters,
    active control retractor systems
Steering Wheels
Full range of steering wheels from base designs
    to leather, wood, heated designs, including multifunctional
    switches and integral air bag modules
Safety Electronics
Front and side crash sensors, vehicle rollover
    sensors, air bag diagnostic modules, weight sensing and vision
    systems for occupant detection
Security Electronics
Remote keyless entry systems, advanced theft
    deterrent systems, direct tire pressure monitoring systems
We sell our Occupant Safety Systems products to
VMs and to Tier-1 suppliers as original equipment. We also sell
these products to VM service organizations for service parts.
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Other
Automotive
Our Other Automotive segment focuses on the
design, manufacture and sale of engine valves and components,
engineered fasteners and components and body control systems.
Other Automotive accounted for approximately $1.5 billion,
or 14 percent, of our 2001 total sales.
Our Other Automotive segment is well positioned
to capitalize on growth trends toward multi-valve engines and
increasing electronic content per vehicle. We have demonstrated
strong, global full-service design and manufacturing
capabilities, as well as technology development, leading to
significant new business awards at all major VMs.
The following table describes our principal
products in our Other Automotive segment:
Product Line
Description
Engine Valves
Engine valves, valve train components,
    electro-magnetic valve actuation
Engineered Fasteners & Components
Engineered and plastic fasteners and precision
    plastic moldings and assemblies
Body Controls
Display and heating, ventilating and air
    conditioning electronics, controls and actuators; motors; power
    management controls; man/machine interface controls and
    switches, including a wide array of automotive ergonomic
    applications such as steering column and wheel switches, rotary
    connectors, climate controls, seat controls, window lift
    switches, air bag disable switches; rain sensors
We sell our Other Automotive products to VMs and
to Tier-1 suppliers as original equipment. We also sell these
products to VM service organizations. In addition, we sell some
Engine Valve and Body Control products to independent
distributors for the automotive aftermarket.
Foreign and Domestic Operations
We manufacture products or have principal
facilities in 22 countries throughout the world. Our operations
outside the United States are in Austria, Brazil, Canada, China,
the Czech Republic, France, Germany, India, Italy, Japan,
Malaysia, Mexico, the Netherlands, Poland, Portugal, South
Africa, South Korea, Spain, Thailand, Turkey and the United
Kingdom. We also export products manufactured in the United
States. Such export sales accounted for:
•
7 percent of net customer sales during 2001,
    or $727 million;
•
8 percent of net customer sales during 2000,
    or $916 million; and
•
9 percent of net customer sales during 1999,
    or $906 million.
See also the information relating to the dollar
amounts of sales and property, plant and equipment-net by
geographic area for each of the years 1999 through 2001
presented under the note to financial statements entitled
"Operating Segments" on pages F-14 through F-16 of
this prospectus.
Competition
The automotive parts marketplace is extremely
competitive. VMs rigorously evaluate us and other suppliers
along a myriad of criteria such as quality, price/cost
competitiveness, system and product performance, reliability and
timeliness of delivery, new product and technology development
capability, excellence and flexibility in operations, degree of
global and local presence, effectiveness of customer service and
overall management capability. Within each of our product
segments, we face significant competition.
We enjoy a competitive position, benefiting from
breadth of product and customer mix, scale, global reach,
excellence in lean manufacturing, and systems and engineering
competencies. We are a global leader in most principal product
areas such as braking, steering, inflatable restraint systems,
seat belts, engine valves and engineered fasteners. We believe
that we are very well positioned to participate in several
high-growth
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areas such as electronic vehicle stability
control, electrically assisted steering, driver assist systems,
advanced crash and rollover sensing and curtain air bag
systems, tire pressure monitoring systems and smaller, lighter
and advanced-material engine valves/valve trains.
Customers
We serve more than 40 VM customers across all the
world's major vehicle producing regions. Our largest
customers, including sales to their affiliated companies, are
Ford Motor Company, DaimlerChrysler AG, General Motors
Corporation and Volkswagen AG. In 2001, sales to these customers
accounted for over 60 percent of our total sales, as shown
below.
Percentage of
Customer
2001 Total Sales
Ford
18
DaimlerChrysler
17
General Motors
13
Volkswagen
13
In addition to our four largest customers, we do
business with all of the other major VMs worldwide. Our ten
largest customers accounted for 79 percent of total sales
in 2001. Among major automotive suppliers, the breadth of our
customer mix is among the industry leaders. These long-standing
relationships have enabled us to understand global customer
needs and business opportunities. We believe that we will
continue to be able to compete effectively for our
customers' business because of the high quality of our
products, our ongoing cost reduction efforts, our strong global
presence and our product and technology innovations.
We sell products to the global aftermarket as
replacement parts for current production and older vehicles. In
2001, sales to the aftermarket of approximately
$700 million represented 7 percent of our total sales.
We currently sell these products through both VM service
organizations and independent distribution networks.
Sales and Marketing
We have established a sales and marketing
organization of dedicated customer teams that provide a
consistent interface with our key customers. These teams are
located in all major automotive regions to best represent their
respective customer's interests within our organization, to
promote customer programs and coordinate global customer
strategies with the goal of enhancing overall customer service
and satisfaction. Our ability to support our customers globally
is further enhanced by our broad global presence in terms of
sales offices, manufacturing facilities and
engineering/technical centers.
Our sales and marketing organization and
activities are designed to create overall awareness,
consideration and increase purchases of our systems, modules and
components. To further this objective, we participate in
international trade shows in Paris, Frankfurt and Detroit, as
well as international aftermarket-focused events in Las Vegas
and Frankfurt. We also provide on-site technology demonstrations
at our major VM customers on a regular basis. We publish the
quarterly technology journal TRW Advances, and we will offer an
Internet site at
www.          .com
(our website and the information contained therein or connected
thereto shall not be deemed to be incorporated into this
prospectus or the registration statement of which it forms a
part).
Customer Support
Our engineering, sales and production facilities
are located all over the world and can service our customers in
any region in which they operate or manufacture their products.
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Intellectual Property
We own significant intellectual property,
including a large number of patents, copyrights and trade
secrets, and are involved in numerous licensing arrangements.
Although our intellectual property plays an important role in
maintaining our competitive position in a number of the markets
that we serve, no single patent, copyright, trade secret or
license, or group of related patents, copyrights, trade secrets
or licenses, is, in the opinion of our management, of such value
to us that our business would be materially affected by the
expiration or termination thereof. Our general policy is to
apply for patents on an ongoing basis in the United States,
Germany and appropriate other countries to protect our
patentable developments.
Our patent portfolio of nearly 10,000 patents and
pending patent applications reflects our commitment to invest in
technology. These patents cover many aspects of our existing and
proposed products (not only mechanical and electrical aspects,
but also software algorithms), as well as the processes for
making those products. In addition, we have developed a wealth
of manufacturing know-how that we believe provides a significant
competitive advantage in the marketplace.
We have entered into several hundred technology
license agreements that either strategically exploit our
intellectual property rights or provide a conduit for us into
third party intellectual property rights useful in our
businesses. In many of these agreements, we license technology
to our suppliers, joint venture companies and other local
manufacturers in support of product production for us and our
customers. In other agreements, we license the technology to
other companies to obtain royalty income.
Seasonality
Our business is moderately seasonal because our
largest North American customers typically halt operations for
approximately two weeks in July and one week in December.
Customers in Europe historically shut down vehicle production
during a portion of August as well. In addition, third quarter
automotive production traditionally is lower as new models enter
production. Our third and fourth quarter results may reflect
these trends.
Research and Development
We operate a global network of technical centers
worldwide where we employ thousands of engineers, researchers,
designers and technicians. This global network allows us to
create the latest in automotive active and passive technologies
while improving existing products and systems. We utilize
sophisticated testing and computer simulation equipment,
including computer aided engineering, noise-vibration-harshness,
crash sled, math modeling and vehicle simulation. We have
advanced engineering and research and development programs for
next-generation components and systems in our chassis, occupant
safety and other automotive product areas. We are disciplined in
our approach to research and development, employing a myriad of
tools to improve efficiency and reduce cost, such as Six Sigma,
"follow-the-sun" and other e-Engineering programs and
by outsourcing non-core activities.
Customer-funded research and development relating
to the development of new products, services and techniques
totaled:
•
$32 million in 2001;
•
$38 million in 2000; and
•
$28 million in 1999.
Company-funded research and development costs
totaled:
•
$131 million in 2001;
•
$167 million in 2000; and
•
$178 million in 1999.
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We believe that continued research and
development activities are critical to maintaining our
leadership position in the industry and will provide us with a
competitive advantage as we seek additional business with new
and existing customers.
Raw Materials
We purchase various raw materials for use in our
manufacturing processes. The principal raw materials we purchase
include fabricated metal, aluminum, steel, resins, leather and
wood. All of these raw materials are available from numerous
sources. We have not, in recent years, experienced any
significant shortages of raw materials and normally do not carry
inventories of such raw materials in excess of those reasonably
required to meet our production and shipping schedule.
Properties
Our principal executive offices are located in
Livonia, Michigan. Our operations include numerous
manufacturing, research and development and warehousing
facilities. We own or lease principal facilities located in 17
states in the United States and in 20 other countries.
Approximately 45 percent of the principal domestic
facilities are used by the Chassis Systems segment,
25 percent by the Occupant Safety Systems segment,
28 percent by the Other Automotive segment, and
2 percent is used at the corporate level. We also own,
lease or operate administrative, marketing, sales and office
facilities throughout the United States and in various parts of
the world.
Of the total number of principal facilities
operated by us, approximately 71 percent of such facilities
are owned, 22 percent are leased, and 7 percent are
held by joint ventures in which we have a majority interest.
A summary of our principal facilities, by
segment, type of facility and geographic region, is set forth in
the following tables. Additionally, where more than one segment
utilizes a single facility, that facility is categorized by the
purposes for which it is primarily used.
Chassis
Systems
North
Asia
America
Europe
Pacific
Other
Total
Principal Use of Facility
Research and Development
2
2
0
0
4
Manufacturing
25
29
11
6
71
Warehouse
4
7
1
0
12
Office
0
6
0
0
6
Total
31
44
12
6
93
Occupant
Safety Systems
North
Asia
America
Europe
Pacific
Other
Total
Principal Use of Facility
Research and Development
3
2
0
0
5
Manufacturing
14
18
0
2
34
Warehouse
1
4
0
0
5
Office
3
1
0
0
4
Total
21
25
0
2
48
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Other
Automotive
North
Asia
America
Europe
Pacific
Other
Total
Principal Use of Facility
Research and Development
1
3
0
0
4
Manufacturing
13
24
7
3
47
Warehouse
1
0
0
0
1
Office
2
1
0
0
3
Total
17
28
7
3
55
In addition to the facilities set forth in the
foregoing tables, we also maintain one facility that we utilize
as office space at the corporate level.
Additional information concerning our long-term
rental obligations under operating leases is set forth in the
note to financial statements entitled "Lease
Commitments" included in this prospectus.
Employees
As of March 31, 2002, we had approximately
66,000 employees, of whom approximately 28,000 were employed in
North America, approximately 32,000 were employed in Europe,
approximately 4,000 were employed in South America and
approximately 2,000 were employed in Asia. Approximately 16,000
of our employees are salaried and approximately 50,000 are
hourly. As of March 31, 2002, approximately 22 percent
of our United States hourly workforce and approximately
78 percent of our foreign hourly workforce were represented
by 39 unions. We consider relations with our employees to
be good.
Environmental Matters
Federal, state and local requirements relating to
the discharge of materials into the environment, or otherwise
relating to the protection of the environment, have had, and
will continue to have, an effect on us and our operations. We
have made and continue to make expenditures for projects
relating to the environment, including pollution control devices
for new and existing facilities. We are conducting a number of
environmental investigations and remedial actions at current and
former locations to comply with various federal, state and local
laws and, along with other companies, have been named a
potentially responsible party for certain waste management
sites. Each of these matters is subject to various
uncertainties, and some of these matters may be resolved
unfavorably to us.
A reserve estimate for each matter is established
using standard engineering cost estimating techniques. In the
determination of such costs, consideration is given to the
professional judgment of our environmental engineers, in
consultation with outside environmental specialists, when
necessary. At multi-party sites, the reserve estimate also
reflects the expected allocation of total project costs among
the various potentially responsible parties. At
December 31, 2001, we had reserves for environmental
matters of $111 million, including expense of
$2 million recorded during the year.
We do not believe that compliance with
environmental protection laws and regulations will have a
material effect upon our capital expenditures, results of
operations or competitive position, and our capital expenditures
for environmental control facilities during 2002 and 2003 are
not expected to be material to us. We believe that any liability
that may result from the resolution of environmental matters for
which sufficient information is available to support cost
estimates will not have a material adverse effect on our
financial position or results of operations. However, we cannot
predict the effect on our financial position of expenditures for
aspects of certain matters for which there is insufficient
information. In addition, we cannot predict the effect of
compliance with environmental laws and regulations with respect
to unknown environmental matters on our financial position or
results of operations or the possible effect of compliance with
environmental requirements imposed in the future.
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Legal Proceedings
Various claims, lawsuits and administrative
proceedings are pending or threatened against us, arising from
the ordinary course of business with respect to commercial,
product liability and environmental matters.
In October 2000, Kelsey-Hayes Company (formerly
known as Fruehauf Corporation) was served with a grand jury
subpoena relating to a criminal investigation being conducted by
the U.S. Attorney for the Southern District of Illinois. The
U.S. Attorney has informed us that the investigation relates to
possible wrongdoing by Kelsey-Hayes Company and others involving
certain loans made by Kelsey-Hayes Company's then parent
corporation to Fruehauf Trailer Corporation, the handling of the
trailing liabilities of Fruehauf Corporation and actions in
connection with the 1996 bankruptcy of Fruehauf Trailer
Corporation. Kelsey-Hayes Company became a wholly-owned
subsidiary of TRW upon TRW's acquisition of LucasVarity in
1999 and will become our wholly-owned subsidiary prior to the
spin-off. We are cooperating with the investigation and are
unable to predict the outcome of the investigation at this time.
Our management believes that the ultimate
resolution of the foregoing matters will not have a material
effect on our financial condition or results of operations.
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MANAGEMENT
Set forth below is certain information concerning
the individuals that we anticipate will be serving as our
executive officers at the time of the spin-off. Currently we
have a board of directors consisting of five individuals, all of
whom are officers and/or directors of TRW. We expect that these
directors will resign prior to the spin-off and be replaced by
at least five directors who will constitute our board of
directors at the time of the spin-off.
Name
Age
Position*
John C. Plant
48
President & Chief Executive Officer
Steven Lunn
53
Executive Vice President, Operations
Josef Pickenhahn
51
Vice President, Engineering, Braking
Aly A. Badawy
53
Vice President, Engineering, Steering &
    Suspension
Douglas P. Campbell
50
Vice President, Engineering, Occupant Safety
    Systems
David L. Bialosky
44
Vice President, Law
Robert A. Alberico
52
Vice President, Human Resources
Peter J. Lake
46
Vice President, Sales & Business Development
Joseph S. Cantie
38
Vice President, Finance
Bryce A. Currie
35
Vice President, Six Sigma
Suketu Patel
43
Vice President, Information Systems
*
The above list reflects the names and titles of
    the current management team of TRW's Automotive business,
    which are subject to change.
John C. Plant
is a
member of the TRW Chief Executive Office and has been President
and Chief Executive Officer of TRW's Automotive business
since 2001. Mr. Plant has been an Executive Vice President
of TRW since TRW's acquisition of LucasVarity in 1999. He
was President and Chief Executive Officer, TRW Chassis Systems
in 2001; General Manager, TRW Chassis Systems from 1999 to 2001
and General Manager of TRW's Automotive business in 1999.
Mr. Plant was President, LucasVarity Automotive in 1998 to
1999, and Managing Director, Electrical and Electronic Division,
Lucas Automotive from 1991 until 1998.
Steven Lunn
has been
Executive Vice President, Automotive Operations of TRW since
2001 and had served prior to that as Senior Vice President,
Operations, of TRW Chassis Systems since August 1999.
Mr. Lunn was Deputy President and Chief Operating Officer
of LucasVarity Automotive from 1997 until August 1999. Prior to
this position, he was Managing Director for LucasVarity's
Light Vehicle Braking Systems Division.
Josef Pickenhahn
has
been Vice President, Braking Engineering for TRW's
Automotive business since August 2001. From October 1996 to
August 2001, he was Technical Director of Actuation for
TRW's Automotive business engineering unit in Europe.
Aly A. Badawy
has
been Vice President, Engineering, TRW Steering and Suspension
Systems since July 1999. Prior to that, he was a Director of
Engineering for Delphi since August 1985.
Douglas P. Campbell
has been Vice President, Engineering,
TRW Occupant Safety Systems since November 2000. From September
1995 to November 2000, he served as Vice President, Engineering
for TRW Occupant Safety Systems' Inflatable Restraints
business and from June 1999 to November 2000, he also served as
Vice President, Engineering for TRW Occupant Safety
Systems' Steering Wheel Systems business.
David L. Bialosky
has been a Vice President and an
Assistant General Counsel of TRW since 1997. Since November
2001, he has been responsible for the law function at TRW's
Automotive business. He was Vice President and Assistant General
Counsel of TRW Chassis Systems from October 1999 to November
2001 and of TRW's Automotive business between January to
October 1999. From April 1997 to December 1998, Mr. Bialosky
served as Vice President and Assistant General Counsel, TRW
Automotive Electronics.
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Robert A. Alberico
has been Vice President, Human
Resources for TRW's Automotive business since November
2001. Prior to that, since September 1992, Mr. Alberico
held a number of positions throughout TRW's Automotive
business units as Vice President, Human Resources, most recently
with TRW Chassis Systems.
Peter J. Lake
has
been Vice President, Sales and Business Development for
TRW's Automotive business since February 2002. From
November 2001 to February 2002, Mr. Lake held the position
of Vice President, Business Development and Vice President and
General Manager, Parts and Services for TRW's Automotive
business. From October 2000 to November 2001, he held the same
position for TRW Chassis Systems. From October 1999 to October
2000, Mr. Lake served as Vice President, Planning and
Business Development for TRW Chassis Systems. From December 1998
to November 1999, Mr. Lake served as Vice President,
Marketing for LucasVarity Automotive. From May to November 1998,
he served as Director, Business Development, LucasVarity
corporate staff. Prior to that, since 1995, he served as
Commercial Director and General Manager for LucasVarity
Aftermarket.
Joseph S. Cantie
has
served as Vice President, Finance for TRW's Automotive
business since November 2001. Prior to that, Mr. Cantie served
as Vice President, Investor Relations for TRW from October 1999
to November 2001. From July 1998 to September 1999,
Mr. Cantie served as Vice President and Controller of
LucasVarity. From November 1996 to July 1998, he served as Vice
President, Investor Relations for LucasVarity. Prior to joining
LucasVarity, Mr. Cantie, a certified public accountant,
spent ten years with KPMG Peat Marwick.
Bryce A. Currie
has
served as Vice President, Six Sigma for TRW's Automotive
business since November 2001. Mr. Currie has held a number
of positions within TRW Chassis Systems since 1997, including
most recently serving as Vice President, Six Sigma for TRW
Chassis Systems from September to November 2001, Director,
Strategic Program Management and Operations Excellence for TRW
Chassis Systems from February to August 2001 and Director and
General Manager, TRW Chassis Systems — Europe from
November 1999 to February 2001.
Suketu Patel
has
served as Vice President, Information Systems for TRW's
Automotive business since June 2001. Prior to that,
Mr. Patel held the position of Vice President, Information
Systems for TRW Chassis Systems from August to October 2001 and
for TRW Automotive Electronics from June to August 2001. From
April 1996 to May 2001, Mr. Patel served as Director,
Enterprise Business Systems for TRW.
Composition of the Board of
Directors
Our board of directors is divided into three
classes, each serving staggered three-year terms:
•
Class I, whose term will expire at our 2003
    annual meeting of stockholders;
•
Class II, whose term will expire at our 2004
    annual meeting of stockholders; and
•
Class III, whose term will expire at our
    2005 annual meeting of stockholders.
As a result, only one class of directors will be
elected at each annual meeting, with the other classes
continuing for the remainder of their respective terms. Prior to
the spin-off, TRW will have the ability to change the size and
composition of our board of directors and committees of our
board of directors.
Each officer serves at the discretion of our
board of directors and holds office until his or her successor
is elected and qualified or until his or her earlier resignation
or removal. There are no family relationships among any of our
directors or executive officers.
Committees of the Board of Directors
Our board of directors is expected to appoint
independent directors to a compensation committee of our board
of directors and an audit committee of our board of directors
after such directors are elected. The compensation committee
will assist management and the directors in assessing our
organizational structure and executive compensation philosophy,
determine the compensation of our executive officers, and approve
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compensation and benefit plans that do not
generally apply to all salaried employees and that involve our
executive officers.
The audit committee will assist our directors in
their oversight of our financial reporting process, internal and
independent audit activities and our system of internal
controls. Immediately following the spin-off, our board of
directors will adopt an audit committee charter pursuant to
which it will operate. Our audit committee will hold at least
four regularly scheduled meetings each year. Our board will
establish meeting schedules for any other committees of our
board.
Our board of directors may, from time to time,
establish other committees to facilitate our management.
Director Compensation
General
Any of our officers who also serves as a director
will not receive any additional compensation for serving as a
director or as a member or chair of a committee.
Director
Compensation Principles
We expect that the compensation of our directors
will be based on the following principles:
•
that a significant portion of director
    compensation should be aligned with creating and sustaining
    stockholder value;
•
that directors should hold a significant number
    of shares of our common stock; and
•
that total compensation should be structured to
    attract and retain a diverse and superior board of directors.
We expect that the compensation package for
non-employee directors will be comprised of the following
components:
•
a base annual retainer of
    $          ,
    fifty percent of which will be automatically deferred in shares
    of our common stock;
•
an additional annual retainer of
    $          for
    chairs of the audit and the compensation committees;
•
an additional annual retainer of
    $          for
    chairs of any other committees; and
•
an annual stock option grant to
    purchase           shares
    of our common stock, with an exercise price equal to the fair
    market value of our common stock on the date of the grant.
Payment of the automatic deferral portion of a
director's retainer will not be made until the director
ceases to serve as a director.
Stock Ownership of Directors and Executive
Officers
All of our stock is currently owned by TRW and
thus none of our current or anticipated officers or directors
own any of our common stock. To the extent our directors and
officers own TRW stock at the time of the spin-off, they will
participate in the spin-off on the same terms as other holders
of TRW stock. Beginning in 2003, we expect to award options to
purchase shares of our common stock and/or other equity-based
awards to certain of our officers and employees.
Each option to acquire TRW common stock held by
our directors and employees as of the spin-off, which we refer
to as TRW Options, will become a TRW Automotive option, which we
refer to as TRW Automotive Options, to purchase the number of
shares of our common stock determined by multiplying the number
of shares of TRW common stock subject to the TRW Option
immediately before the spin-off by the TRW Automotive Option
Exchange Ratio (as defined below), at a price per share equal to
the exercise price per share of TRW common stock otherwise
purchasable pursuant to the TRW Option divided by the TRW
Automotive Option Exchange Ratio. The TRW Automotive Option will
otherwise have substantially the same
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terms and conditions as the corresponding TRW
Option being replaced, except that, for purposes of determining
when any TRW Automotive Option will vest and expire, service
with TRW and its subsidiaries before the spin-off will be
treated as service with us and our subsidiaries at and after the
spin-off. By TRW Automotive Option Exchange Ratio, we mean the
quotient determined by dividing:
•
the closing price per share of TRW common stock
    on the New York Stock Exchange Composite Transactions Reporting
    System for the spin-off date (disregarding the spin-off) by
•
the fair market value per share of TRW Automotive
    common stock immediately after the spin-off.
Restricted stock held by our directors and
officers as of the spin-off will be converted into our
restricted stock in an amount determined by applying the TRW
Automotive Option Exchange Ratio.
The following table sets forth the TRW share
ownership as
of                     ,
2002 for each director, each of the executive officers named in
the Summary Compensation Table in the
"— Executive Compensation" section below,
and all of our directors and executive officers as a group.
Unless there is a footnote to the contrary, sole voting and
investment power in the shares owned are held either by the
named individual alone or by the named individual and his or her
spouse.
Number of Shares of TRW Common Stock
Shares
Percent of
Beneficially
Exercisable
Deferred Share
Shares
Name
Owned(1)
Options(2)
Units(3)
Outstanding
John C. Plant
[Executive Officer]
[Executive Officer]
[Executive Officer]
[Executive Officer]
[Director]
[Director]
[Director]
[Director]
[Director]
All directors and executive officers as a group
    ([  ] persons)
*
Less than 1 percent.
(1)
Includes shares of TRW common stock held in The
    TRW Employee Stock Ownership and Savings Plan, shares of TRW
    common stock that have been automatically deferred under
    TRW's deferred compensation plan for non-employee directors
    and shares of restricted stock awarded to certain executive
    officers.
(2)
Includes the number of shares that may be
    acquired within 60 days
    of                     ,
    2002, upon exercise of stock options.
(3)
This column shows phantom units of shares of TRW
    common stock that have been credited under deferred compensation
    plans and certain other nonqualified benefit plans maintained by
    TRW. The phantom units are settled in cash and are not included
    for the purpose of calculating the percent of shares outstanding.
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Executive Compensation
The following table shows some projected
compensation information for the individuals who, at the time of
the spin-off, are expected to be our chief executive officer and
our four other most highly compensated executive officers.
Annual Compensation
Target
Name and Principal Position
Year
Salary
Bonus
John C. Plant
President & Chief Executive Officer
2002
[Executive Officer]
2002
[Executive Officer]
2002
[Executive Officer]
2002
[Executive Officer]
2002
As an independent company, we will establish
executive compensation practices that will link compensation
with the performance of TRW Automotive as well as our common
stock. We will continually review our executive compensation
programs to ensure that they are competitive.
Long-Term Incentive Plan
We expect to adopt, with the approval of TRW in
its capacity as our sole stockholder, the 2002 TRW Automotive
Long-Term Incentive Plan, or the Plan. The Plan will offer
incentives to attract, retain and reward individuals of the
highest caliber as our employees and directors. We believe that
the Plan also will focus our employees and directors on our
long-term goals, and further align their interests with those of
our stockholders.
General
Participants.
All of
our employees, or employees of any of our subsidiaries or
affiliates, and all of our directors will be eligible
participants under the Plan.
Share Limitations.
The number of shares of our common
stock that may be issued by us in payment and upon exercise of
grants will not
exceed           shares,
subject to adjustments in the event of certain changes to our
capital structure. The shares delivered under the Plan may be
unissued shares or treasury shares. Shares issued pursuant to a
grant that are forfeited, surrendered, canceled or settled
without the delivery of shares will again be available for grant.
The maximum number of shares underlying options
or stock appreciation rights that may be granted to an
individual participant during any calendar year period
is           ,
except that the balance of unused shares in any year will be
added to this limitation in subsequent years. The maximum number
of shares that may be issued upon exercise of incentive stock
options
is           .
In addition, not more
than           shares
underlying Other Stock-Based Grants as described below may be
granted to all participants during the term of the Plan, and not
more
than           shares
underlying Other Stock-Based Grants may be granted to an
individual participant during any performance period of not more
than five years.
Administration.
The
Plan will be administered by a committee appointed by our board
of directors from among its members. After completion of the
spin-off, the Plan will be administered by the compensation
committee of the board of directors. The committee's
decisions and interpretations with respect to the Plan will be
final and conclusive. Grants may be made under the Plan with
terms and conditions, not inconsistent with the Plan, as may be
imposed by the committee administering the Plan. The
compensation committee has wide discretion and flexibility to
administer the Plan in the manner it determines is in the best
interests of TRW Automotive. For example:
•
grants may be made in various combinations and
    subject to various conditions, restrictions and limitations;
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•
the terms and conditions of grants need not be
    the same with respect to each participant;
•
the compensation committee may provide for the
    effect on grants of a participant's death, disability,
    retirement or termination of employment; and
•
the compensation committee may provide for the
    acceleration of grants in the event of a change of control in
    TRW Automotive.
These examples are for illustrative purposes only
and do not purport to constitute an exclusive or comprehensive
identification of the manner in which the compensation committee
may exercise its broad authority in administering the Plan.
Types
of Awards
Stock Options.
We
may grant both tax-qualified incentive stock options and
nonqualified stock options under the Plan. The Plan will require
that the purchase price per share not be less than the fair
market value of a share of our common stock on the date the
option is granted. Options will be exercisable at that time or
times as determined by the compensation committee. Options
granted as incentive stock options must also meet requirements
of the Code.
The compensation committee may provide for the
transfer, without payment of consideration, of an option by an
optionee to a member of the optionee's immediate family or
to a trust or partnership whose beneficiaries are members of the
optionee's immediate family. In that case, the option will
be exercisable only by that transferee.
Payment of the purchase price of the options may
be made in cash, shares or other securities or other property,
or any combination thereof as determined by the compensation
committee. Options may provide for related stock appreciation
rights. If an option or any portion thereof is exercised, the
shares issued upon exercise will not be available for future
grants.
Stock Appreciation
Rights.
Stock appreciation rights
related to a stock option, or tandem stock appreciation rights,
may be granted either at the time of the option grant, or during
the term of the option, at an exercise price equal to the fair
market value of a share of our common stock on the date of
grant. In addition, stock appreciation rights may be granted
separate and apart from the grant of an option, or freestanding
stock appreciation rights. Tandem stock appreciation rights
permit a participant, upon exercise of these rights and
surrender of the related option to the extent of an equivalent
number of shares, to receive payment equivalent to the
difference between the fair market value, on the date of
exercise, of the portion of the option so surrendered and the
fair market value of these shares on the date of grant.
Freestanding stock appreciation rights entitle the participant,
upon exercise of these rights, to receive payment equal to the
difference between the fair market value, on the date of
exercise, of all or part of a designated number of shares and
the fair market value of such shares on the date of grant. That
payment may be made in shares, valued on the basis of the fair
market value of the shares on the date of exercise of the stock
appreciation right, or in cash, or partly in cash and partly in
shares, as the compensation committee may determine.
Other Stock-Based Grants.
Under the Plan, the compensation
committee may also, at its discretion, make the awards of stock
valued in whole or in part by reference to, or based upon, our
common stock. The terms and conditions of these grants,
including any performance-related criteria or other restrictions
on payout that the compensation committee deems appropriate,
will be determined by the compensation committee in its sole
discretion. These terms may include the right to receive, either
currently or on a deferred basis, interest or dividends with
respect to the number of shares covered by the award.
In making Other Stock-Based Grants, the
compensation committee may or may not base these awards made to
any of our officers on pre-established performance goals and
measures. If the compensation committee chooses to base an award
on the achievement of certain performance goals, the criteria
used in
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establishing these performance goals may, at the
discretion of the compensation committee, include one or any
combination of the following:
•
return on equity, assets, capital or investment;
•
pre-tax or after-tax profit levels expressed in
    either absolute dollars, earnings per share, or increases of the
    same;
•
a formula based on return on assets employed less
    the cost of capital multiplied by average assets employed;
•
sales;
•
stock price;
•
cash flow;
•
total stockholder return; or
•
other financial measures.
In establishing these performance goals and
measures, the compensation committee may also include
qualitative or non-financial quantitative criteria, if any, as
it deems appropriate.
The performance criteria will be established by
the compensation committee not later than 90 days after
commencement of the performance period relating to a specific
award intended to comply with Section 162(m) of the Code.
Performance goals may be identical for all participants or, at
the discretion of the compensation committee, may be different
to reflect more appropriate pre-established measures of
individual performance. The performance goals established by the
compensation committee will include a threshold level of
performance below which no award will be payable and a maximum
award opportunity for each participant. Attainment of the
performance goals will be determined and certified in writing by
the compensation committee prior to payout.
The compensation committee may, in its sole
discretion, reduce the performance results upon which awards are
based under the Plan to offset any unintended result arising
from events not anticipated when the performance goals were
established. In addition, notwithstanding the attainment of
performance goals for TRW Automotive as a whole, awards for an
individual participant may be denied or adjusted downward by the
compensation committee in its sole discretion and judgment,
based on its assessment of the participant's performance.
The compensation committee may make adjustments
in the method of calculating attainment of the performance goals
in recognition of:
•
extraordinary or non-recurring items;
•
changes in the tax laws;
•
changes in generally-accepted accounting
    principles or accounting policies;
•
charges related to restructured or discontinued
    operations;
•
restatement of prior period financial results; and
•
any other unusual, non-recurring gain or loss
    that is separately identified and quantified in our financial
    statements.
Certain Federal
Income Tax Consequences
Section 162(m) of the Code specifies that
compensation paid in excess of $1 million annually to
executive officers is not deductible by us for federal income
tax purposes, unless certain exceptions apply. One exception
provides for the deductibility of performance-based
compensation, which has been approved by stockholders. Under a
special transition rule, stockholder approval will not be
required except with respect to
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grants made after the first regularly scheduled
meeting of our stockholders that occurs more than 12 months
after the date that we become a separate publicly held
corporation. We intend to seek approval of the Plan at our 2004
annual meeting of stockholders.
Under the Code, a participant receiving a stock
option does not realize income upon the grant of the option.
However, a participant will realize income at the time of
exercise, except for options that are incentive stock options,
in the amount of the difference between the option price and the
fair market value on the date of exercise. Under the Code, we
are entitled to a deduction equal to the amount of that income,
at the time that income is realized by the participant. In the
case of incentive stock options, although no income is realized
upon exercise and we are not entitled to a deduction, the
difference between the fair market value on the date of exercise
and the exercise price is treated by the participant as an item
of tax preference for alternative minimum tax purposes. If the
participant does not dispose of the shares acquired on the
exercise of an incentive stock option within one year after
their receipt, and within two years after the grant of the
option, gain or loss realized on the subsequent disposition of
the shares will be treated as long-term capital gain or loss. In
the event of an earlier disposition, the participant will
realize ordinary income, and we will be entitled to a deduction,
equal to the amount of that income.
In the case of freestanding stock appreciation
rights or tandem stock appreciation rights, the participant will
not realize any income at the time of grant. Upon the exercise
of either a tandem stock appreciation right or a freestanding
stock appreciation right, any cash received and the fair market
value on the exercise date of any shares received will
constitute ordinary income to the participant. We will be
entitled to a deduction in the amount of that income at the time
of exercise.
The participant must recognize ordinary income
equal to the fair market value of the shares received upon
payout of "Other Stock-Based Grants," less any amount
paid by the participant, at the first time the shares become
transferable or are not subject to substantial risk of
forfeiture, whichever occurs earlier. We will be entitled to a
deduction in the same amount and at the same time as the
participant realizes income.
Grants made under the Plan will be subject to
applicable tax withholding by us, which may, to the extent
permitted by the compensation committee, be satisfied by the
withholding of shares deliverable under the Plan.
Amendment
The compensation committee may amend, suspend or
terminate the Plan at any time, except that no such action by
the compensation committee may:
•
be made without stockholder approval, to the
    extent that approval is required by legal or regulatory
    requirements;
•
increase the maximum number of shares that may be
    issued under the Plan; or
•
permit an option to be granted at an exercise
    price less than the fair market value on the date of grant.
Other Compensation Arrangements
In connection with the spin-off, we intend to
enter into agreements designed generally to assure continued
management in the event of a change in control of TRW Automotive
with each of our executive officers and some of our other
officers. The agreements will provide that, following a change
in control, we will employ the officer until the earlier of the
officer's death, his or her attaining age 65 or the
expiration of the third anniversary of the change in control,
which we refer to as the Employment Period. During the
Employment Period, the officer will be entitled to receive an
annual base salary and to continue participation in employee
benefit plans at levels not less than those in effect prior to
the change in control. The incentive portion of the
officer's compensation will equal the highest incentive
award paid to the officer for any of the three calendar years
preceding the change in control. If the officer's
employment were to be terminated by us 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
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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, also
    referred to as the Remaining Period, and
•
the employee benefits, other than employee
    welfare benefits and stock options and similar compensatory
    benefits, that the officer would have received for the Remaining
    Period, including under our retirement plans, assuming vesting.
We would also provide the officer with health
insurance and similar welfare benefits for the Remaining Period,
subject to reduction for comparable welfare benefits received in
subsequent employment. If any payments to the officer are
determined to be "excess parachute payments" under the
Code, the officer would be entitled to receive an additional
payment, net of income taxes, to compensate the officer for the
excise tax imposed by the Code on such payments. It is expected
that the agreements also will provide that we will reimburse the
officer for his or her costs to enforce the agreement.
For purposes of the foregoing agreements, as well
as awards under the Plan, a change in control will be defined as
a change occurring:
•
by virtue of certain mergers or consolidations or
    sale or transfer of assets by us to another corporation; or
•
by virtue of our current directors and their
    approved successors, other than a successor whose initial
    assumption of office is in connection with an actual or
    threatened election contest, ceasing to constitute a majority of
    our directors; or
•
through the acquisition of shares representing
    20 percent or more of the voting power of TRW Automotive
    other than acquisitions by us, any of our subsidiaries or a TRW
    Automotive-sponsored employee benefit plan; or
•
through any other change in control reported in
    any filing with the SEC.
In connection with his serving as our President
and Chief Executive Officer, prior to the spin-off we anticipate
entering into an employment agreement and an employment
continuation agreement with John C. Plant.
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RELATIONSHIP WITH TRW
We are currently wholly-owned by TRW, and our
results have been included in TRW's consolidated financial
results. After the spin-off, our results of operations will no
longer be consolidated with TRW and we will be an independent
public company. Furthermore, except as described below, all
contractual relationships existing prior to the spin-off between
us and TRW will be terminated.
Prior to the spin-off, we and TRW expect to enter
into certain agreements providing for our separation from TRW,
the spin-off and related matters. These agreements are expected
to include:
•
a master distribution agreement;
•
a tax sharing agreement;
•
an employee matters agreement;
•
an insurance allocation agreement;
•
intellectual property license agreements;
•
a trademark license agreement; and
•
a transition services agreement.
In this prospectus, we sometimes refer to these
agreements (other than the master distribution agreement) as the
"ancillary agreements." These agreements will be
entered into in the context of a parent-subsidiary relationship
and will be negotiated in the overall context of our separation
from TRW. The terms and conditions of these agreements,
including the prices charged for services may be more or less
favorable than those we could negotiate with unaffiliated third
parties. However, we believe and TRW has advised us that it
believes that these agreements are fair.
Copies of the forms of the material agreements
will be included as exhibits to the registration statement on
Form S-1 (or the amendments thereto) of which this
prospectus forms a part. The following description summarizes
the material terms of these agreements.
Master Distribution Agreement
TRW and we will enter into a master distribution
agreement shortly before the spin-off, which will be the
principal agreement governing the spin-off, the related
restructuring transactions and certain agreements between TRW
and us that will continue after the spin-off. The agreement will
also contemplate a number of ancillary agreements that we will
enter into with TRW in connection with the spin-off, including a
tax sharing agreement, an employee matters agreement, an
insurance allocation agreement, intellectual property license
agreements, a trademark license agreement and a transition
services agreement.
The restructuring transactions refer to the
series of transactions that will result in the separation of
TRW's automotive business and TRW's non-automotive
businesses. To this end, the master distribution agreement will
define what constitutes the "TRW Automotive Business"
(generally, TRW's automotive business) and what constitutes
the "TRW Remaining Business" (generally, TRW's
non-automotive businesses).
Pursuant to the terms of the master distribution
agreement, shortly prior to the spin-off, TRW will cause to be
transferred to us all of the assets associated with the TRW
Automotive Business, and we will assume all of the liabilities
associated with the TRW Automotive Business (including
contingent liabilities). TRW will retain all of the assets and
liabilities associated with the TRW Remaining Business. All
assets and liabilities will be transferred without any
representation or warranty on an "as is, where is"
basis.
As part of the restructuring transactions, we
intend to issue to TRW that number of shares of our common stock
to enable TRW to distribute one share of our common stock for
each share of TRW common stock in the spin-off. In addition, we
expect to issue shares of our Series A Convertible
Preferred Stock to a subsidiary of TRW, which shares will be
subsequently sold to a third party equity investor unaffiliated
with
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TRW shortly before the spin-off. See "The
Spin-Off — Transactions Prior to or Concurrent With
the Spin-Off."
In general, all intercompany balances between TRW
and us will be settled by cancellation or transfer. Based on the
anticipated cash requirements of TRW and us following the
spin-off, the master distribution agreement will set a
"restructuring funding target amount" for us and will
provide for a cash adjustment based on the difference between
the "restructuring funding target amount" and the
"restructuring funding actual amount" as of the end of
the fiscal month immediately preceding the spin-off.
The master distribution agreement will
contemplate that a number of actions will be taken prior to the
spin-off declaration date, including the following:
•
TRW will cause those individuals who will
    continue to be directors, officers or employees of TRW (but not
    TRW Automotive) following the spin-off to resign, effective as
    of the spin-off, from our boards of directors or offices and
    those of our post-spin-off affiliates;
•
we will cause those individuals who will be
    directors, officers or employees of TRW Automotive (but not TRW)
    following the spin-off to resign, effective as of the spin-off,
    from boards of directors or offices of TRW and TRW's
    post-spin-off affiliates;
•
our new directors will be appointed to our board
    of directors;
•
we and TRW will agree to cooperate in the
    preparation, filing with the SEC and (where applicable) mailing
    to TRW shareholders of the documents required in connection with
    the spin-off and the related transactions, including the
    accompanying proxy statement relating to the special meeting of
    TRW shareholders that will be held in connection with the
    spin-off;
•
TRW will redeem all of its preferred stock;
•
we and TRW will cooperate in the preparation and
    filing of an application to list the shares of our common stock
    on the NYSE; and
•
TRW and we will use our commercially reasonable
    efforts to obtain the requested IRS private letter ruling or an
    opinion from tax counsel, as the case may be, with respect to
    the tax-free nature of the spin-off.
Under the terms of master distribution agreement,
the TRW board of directors will formally authorize and declare
the spin-off and set the spin-off record date in its sole
discretion, subject to a number of conditions that are to be
satisfied or waived on or prior to the spin-off declaration
date, including the following:
•
receipt of the requested IRS ruling, in form and
    substance satisfactory to TRW, to the effect that the spin-off
    will constitute a tax-free spin-off for U.S. federal income tax
    purposes for both holders of TRW common stock and TRW, and the
    continued effectiveness of such ruling, or alternatively,
    receipt by TRW of a satisfactory opinion from tax counsel;
•
the completion in all material respects, to the
    extent required to be completed prior to the spin-off, of the
    restructuring transactions;
•
the completion in all material respects of the
    ASG sale;
•
our level of indebtedness not exceeding certain
    specified levels;
•
the satisfaction of TRW with the treatment of the
    debt of TRW and its subsidiaries in connection with the
    restructuring transactions and the spin-off, including the
    allocation of such debt between TRW and TRW Automotive;
•
receipt of all material governmental and third
    party consents and approvals by governmental entities required
    in connection with the spin-off;
•
the completion by us of the debt financing
    transactions described elsewhere in this prospectus relating to
    debt to be incurred or assumed by us from one or more financial
    institutions under one or more
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credit facilities and/or through the issuance of
    our debt securities in one or more public offerings or private
    placements;
•
the authorization for listing of our common stock
    on the NYSE, subject to official notice of issuance;
•
the approval of the spin-off at the special
    meeting by the holders of shares of TRW common stock in
    accordance with the Ohio General Corporation Law; and
•
the receipt by the TRW board of directors of a
    satisfactory solvency opinion and the satisfaction of the TRW
    board of directors as to matters relating to the solvency and
    adequacy of capital of TRW and us.
Under the master distribution agreement, the
foregoing conditions are for the sole benefit of TRW.
Prior to the spin-off declaration date, the TRW
board of directors will retain discretion under the agreement,
even if TRW shareholder approval of the spin-off is obtained and
the other conditions to the spin-off are satisfied, to abandon,
delay or modify the spin-off or any matter contemplated by the
spin-off.
Pursuant to the master distribution agreement,
from and after the spin-off declaration date, we will indemnify
TRW and related parties against liabilities arising out of:
•
any failure or alleged failure by us to pay,
    perform or otherwise discharge in a timely manner any of the
    liabilities we are to assume pursuant to the master distribution
    agreement or any ancillary agreement;
•
the TRW Automotive Business;
•
any material breach by us of the master
    distribution agreement or any ancillary agreement; and
•
any material misstatements or omissions by us in
    specified documents filed with the SEC.
Pursuant to the agreement, from and after the
spin-off declaration date, TRW will indemnify us and related
parties against liabilities arising out of:
•
any failure or alleged failure by TRW to pay,
    perform or otherwise discharge in a timely manner any of the
    liabilities it will retain pursuant to the agreement or any
    ancillary agreement;
•
the TRW Remaining Business;
•
any material breach by TRW of the master
    distribution agreement or any ancillary agreement;
•
any material misstatements or omissions made by
    TRW in specified documents filed with the SEC.
The foregoing indemnification obligations will be
subject to certain procedural requirements and indemnifiable
losses will be calculated after giving effect to any tax benefit
or insurance proceeds received or to be received.
TRW and we will release each other, effective as
of the spin-off declaration date, from all debts, claims and
obligations relating to events and conditions prior to the
spin-off declaration date. Following the spin-off declaration
date, the rights to indemnification described above will be the
exclusive remedy of us and TRW with respect to claims relating
to the spin-off and the agreements to be entered into by the
parties in connection therewith.
The master distribution agreement will contain a
number of covenants between TRW and us that will be in effect
following the spin-off, including covenants relating to
restrictions on competition, the use of names and trademarks and
access to books and records following the spin-off.
Under the master distribution agreement, each
party will be granted reasonable access to the other
party's books and records following the spin-off, insofar
as such access is reasonably required and subject to appropriate
restrictions for classified and legally-privileged information.
The master distribution agreement will also require the parties
to use commercially reasonable efforts to make its directors,
officers and employees available as witnesses to the extent
reasonably required. Following the spin-off, subject to
applicable law, each party may destroy its books and records in
accordance with TRW's record retention policy at the date
of the agreement, subject to the right of each party to request
that the other party retain
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specified books and records beyond the applicable
retention period. The master distribution agreement will also
contain mutual confidentiality obligations with respect to books
and records concerning the other party, subject to customary
exceptions.
Any dispute between the parties arising out of or
relating to the master distribution agreement, the ancillary
agreements or the transactions contemplated thereby will be
subject to mandatory negotiation followed by arbitration.
Tax Sharing Agreement
As part of the spin-off, we and TRW will enter
into a tax sharing agreement that defines each party's
rights and obligations with respect to federal, state, foreign
and other taxes attributable to the taxable periods beginning
prior to and including the spin-off date and, to a limited
extent, periods beyond the spin-off date.
Allocation
of Tax Payments
The tax sharing agreement will be subject to an
"Overriding Principle" providing that any and all tax
benefits arising or resulting from the third party equity sale
and all transactions undertaken to effect the spin-off will be
for the account of TRW. The Overriding Principle is intended to
provide TRW with the tax benefits arising or resulting from the
third party equity sale and the transactions undertaken to
effect the spin-off to allow TRW to use the proceeds received
therefrom to repay debt or satisfy other expenses. To effect
this result, for periods during which we are included in
TRW's tax returns, we will be required to pay to TRW an
amount of income tax reflecting our contribution to the income
tax liability of the TRW group as a whole as if the third party
equity sale and all other spin-off transactions had never
occurred. When TRW then files the consolidated or combined tax
returns for the TRW group as a whole, which returns will reflect
the third party equity sale and all other spin-off transactions,
and the tax benefits resulting therefrom, TRW will be entitled
to retain these benefits in their entirety. Also, in the event
that under applicable law we are entitled to carryforward a tax
item, such as a foreign tax credit, to a post spin-off date
period, creating a tax benefit to us, which tax benefit should
have been for the account of TRW in accordance with the
Overriding Principle, we will pay to TRW the amount of any such
tax benefit as and when it is realized. For periods during which
TRW is included in our tax returns, TRW will be required to pay
an amount of income tax equal to the amount it would have paid
had it filed such tax return as a separate entity.
Filing
of Tax Returns; Indemnity
Tax Returns.
In
general, TRW and we will prepare and file all tax returns for
which either party or any of its affiliates are legally required
to file and each party will pay all taxes with respect to such
returns. TRW and we agree to file all tax returns consistent
with the tax sharing agreement, all rulings and supplemental
rulings issued by the IRS and the Overriding Principle.
Indemnity.
The party
responsible for preparing and filing a tax return, or the filing
party, will indemnify the non-filing party for all taxes with
respect to such tax returns, except for taxes properly
attributable to the business operations of the non-filing party,
to the extent included on such tax returns.
Conduct
of Tax Audits
In general, the filing party shall have the
exclusive right to control, contest and represent the interests
of the parties in any dispute, audit or proceeding relating to
such tax return and to resolve, settle or agree to any
deficiency, claim or adjustment proposed, asserted or assessed
in connection with or as a result of any such dispute, audit or
proceeding. TRW and we will agree to cooperate with all
reasonable requests from the other party for information and
materials not otherwise available to the requesting party in
connection with disputes or audits, the preparation and filing
of tax returns, claims for refunds, and other matters covered by
the tax sharing agreement.
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Other
Tax Matters
Covenants.
TRW and
we will agree not to take any action reasonably expected to
result in an increased tax liability or reduction in a tax asset
of the other party. Additionally, TRW and we have agreed to
protect the tax free status of the spin-off pursuant to
Section 355 of the Code. To the extent that any action or
inaction by either party causes the spin-off to be taxable, the
party taking such action or inaction will be liable for the
income taxes incurred by reason of the spin-off not so
qualifying as tax-free under Section 355 of the Code. In certain
circumstances TRW and TRW Automotive would each be responsible
for 50 percent of the tax liability resulting from the
spin-off not qualifying as tax-free under Section 355 of
the Code.
Supplemental Ruling
Requests.
Further, we will agree that
during the two year period following the spin-off we will not
enter into any agreement, understanding or arrangement to sell
or transfer all or substantially all of our assets or any of our
affiliates, merge TRW Automotive or any TRW Automotive affiliate
with or into any other entity, or issue our stock or any stock
of our affiliates unless otherwise provided by the tax sharing
agreement, unless we request a supplemental ruling to the effect
that such transaction will not adversely affect the tax-free
status of the spin-off or result in the imposition of taxes on
TRW. TRW agrees that at our reasonable request, TRW will
cooperate with us and use its reasonable best efforts to seek to
obtain a supplemental ruling or other guidance from the IRS on
certain specified matters, unless that supplemental ruling would
adversely effect TRW. If TRW requests a supplemental ruling or
other guidance from the IRS, it will keep us informed of all
material actions, provide us with draft copies of any such
requests and reasonably consider our comments on such drafts.
Insurance Allocation Agreement
We currently maintain insurance coverage under
TRW's insurance policies, which generally will expire in
May 2003. As part of the spin-off we will enter into an
insurance allocation agreement with TRW, pursuant to which,
among other things, certain insurance policies and arrangements
of TRW and related coverages will be allocated to us and TRW
will provide certain administrative insurance services to us as
necessary.
We anticipate that the insurance allocation
agreement will provide that under certain of TRW's existing
insurance policies, such as liability insurance, TRW will
continue to maintain the policy to cover both itself and us
until the scheduled expiration. With respect to other insurance
policies that TRW currently maintains, including property,
workers' compensation and directors and officers'
insurance, the agreement will provide that we will no longer be
covered under TRW's policies. As a result, we intend to
establish separate insurance programs following the spin-off to
replace these policies.
In addition, with respect to insurance policies
maintained by TRW that cover our operations prior to the
spin-off, the insurance allocation agreement will apportion
financial responsibility for such items as deductibles and self
insurance amounts, coverage and administrative responsibilities
between TRW and us based upon relative benefits. To the extent
necessary, following the spin-off TRW will agree to provide us
certain administrative insurance services to assist us
transition the administration of the insurance policies and
other risk management functions historically performed by TRW.
Employee Matters Agreement
As part of the spin-off, we and TRW will enter
into an employee matters agreement that describes how employment
matters and benefit plan assets and liabilities will be
allocated between the two companies in connection with the
spin-off.
Employees
All individuals who were engaged primarily in our
business immediately prior to the spin-off will remain or become
employed by us following the spin-off. All other individuals who
are employed by TRW immediately prior to the spin-off will
continue to be employed by TRW following the spin-off. Until at
least January 1, 2004, we will be required to pay our
employees at the same base salary or hourly rate that was
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applicable to them prior to the spin-off and to
provide employee benefits that are substantially similar in all
material respects to the benefits provided prior to the spin-off.
Tax-Qualified
Pension Plans
Each tax-qualified pension, savings and 401(k)
plan maintained by us prior to the spin-off will continue to be
maintained by us following the spin-off. With respect to each
tax-qualified pension, savings and 401(k) plan maintained by TRW
immediately prior to the spin-off, including the TRW Salaried
Pension Plan and The TRW Employee Stock Ownership and Savings
Plan, all assets and liabilities with respect to our current and
former employees will be transferred into new plans to be
established by us. Our 401(k) plan will continue to provide a
TRW stock fund until the later of January 1, 2004 or the
first anniversary of the spin-off, except that participants will
not be permitted to purchase additional shares of TRW stock.
Similarly, the TRW Employee Stock Ownership and Savings Plan
will continue to provide a fund invested in our stock until the
later of January 1, 2004 or the first anniversary of the
spin-off, except that participants will not be permitted to
purchase additional shares of our stock through that fund.
Welfare
Benefit Plans
Following the spin-off, we will retain or assume
all liabilities under all medical, dental, vision, life
insurance, disability, flexible benefits and similar plans
maintained solely for the benefit of our current or former
employees. With respect to medical, dental, vision, life
insurance, disability, flexible benefits and similar plans
maintained by TRW immediately prior to the spin-off, we will
assume all liabilities with respect to our current or former
employees and will establish new plans that are substantially
similar to the TRW plans for the benefit of our employees and
former employees.
Non-Qualified
Plans
Following the spin-off, we will retain or assume
all liabilities under all non-qualified retirement and deferred
compensation plans and any related rabbi trusts maintained
solely for the benefit of our current or former employees. With
respect to each other non-qualified retirement and deferred
compensation plan maintained by TRW immediately prior to the
spin-off, we will assume all liabilities with respect to our
current or former employees and will establish new plans that
are substantially similar to the TRW plans for the benefit of
our employees and former employees.
Non-U.S.
Plans
Through its subsidiaries, TRW maintains
retirement and welfare plans for its non-U.S. employees and
retirees. It is expected that as of the spin-off, these plans
will cover only our employees and former employees. As of the
spin-off, we will retain or assume sponsorship of those plans.
Stock
Options
As of the spin-off, each option to acquire TRW
common stock held by our employees as of the spin-off will
become an option to acquire shares of our common stock in the
manner described above under "Stock Ownership of Directors
and Executive Officers."
Incentive
Compensation
As of the spin-off, we will assume or retain
liabilities under all incentive arrangements with respect to our
current and former employees, including the TRW Operational
Incentive Plan and the TRW Strategic Incentive Plan, and will
establish incentive compensation plans offering similar
opportunities under such plans.
Long-Term
Restricted Stock and Restricted Stock Units
Restricted stock units and unvested restricted
stock held by our employees as of the spin-off will be converted
into our restricted stock or restricted stock units in an amount
determined by applying the TRW Automotive Option Exchange Ratio.
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Severance
Pay
We and TRW have agreed that the spin-off will not
constitute a severance from employment for purposes of any
severance plan or arrangement. As of the spin-off, we will
assume or retain the liability for severance claims made by our
employees and former employees.
Employment
and Consulting Agreements
As of the spin-off, we will assume or retain
liability for employment, consulting and similar agreements
relating to our employees and former employees.
Other
Liabilities
As of the spin-off, we will assume or retain all
other liabilities relating to our employees and former
employees, including all litigation, administrative charges,
workers' compensation claims, grievances, arbitrations and
alternative dispute resolution claims.
Intellectual Property License
Agreements
Prior to the spin-off, we and TRW will enter into
intellectual property license agreements, pursuant to which,
among other things, we will license certain intellectual
property from TRW and TRW will license certain intellectual
property from us.
Trademark License Agreement
Prior to the spin-off, we and TRW will enter into
a trademark license agreement, pursuant to which TRW will
license certain names and trademarks to us. In general, the
names and trademarks of TRW and its subsidiaries prior to the
spin-off will be allocated to the TRW Remaining Business or the
TRW Automotive Business, as appropriate. The parties will be
permitted to use the names and trademarks of the other party on
molds, labels, signage and the like for a transition period
following the spin-off.
Transition Services Agreement
After the spin-off, we will have contractual
arrangements with TRW pursuant to which TRW and its subsidiaries
will provide certain transitional services to us. These services
include, among others:
•
financial services, such as financial reporting,
    tax, treasury, accounting, audit and investment management;
•
legal services;
•
human resources services, including pension and
    benefits support;
•
information systems services;
•
environmental support; and
•
other administrative support services
We intend for these transitional arrangements to
last for only a short period, generally less than one year.
These arrangements were made in the overall
context of our separation from TRW. While the intent is for the
services to be provided at cost, the prices charged to us under
these agreements may be higher or lower than the prices that may
be charged by unaffiliated third parties for similar services or
the cost at which we could provide such services using our own
personnel. We anticipate that most of the transitional services
will be transferred to our own employees or to third party
vendors within the first year after the spin-off.
We also will be providing limited transitional
services, primarily certain payroll and accounting services,
back to TRW. These arrangements generally will last for no more
than one year following the spin-off, and the services will be
provided at cost.
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PRINCIPAL STOCKHOLDERS OF TRW AND TRW
AUTOMOTIVE
TRW beneficially and of record holds, and will
hold before the spin-off, all of the outstanding shares of our
common stock. Holders of shares of TRW common stock, including
our directors and executive officers will receive one share of
our common stock for each share of TRW common stock. See
"Management — Stock Ownership of Directors and
Executive Officers." After giving effect to the anticipated
third party equity sale and the spin-off, the third party equity
investor will
own                     shares
of our Series A Convertible Preferred Stock, which is
expected to
be           percent
of the shares of our common stock after the spin-off, assuming
conversion of these shares into our common stock. To our
knowledge, except as set forth below, no person beneficially
owns more than five percent of the outstanding shares of TRW
common stock. Except as otherwise noted in the footnotes below,
the following table presents information as of December 31,
2001 derived from Statements of Beneficial Interest on
Schedule 13G filed with the SEC by persons beneficially
owning more than five percent of the outstanding shares of TRW
common stock:
Number of Shares
and Nature of
Beneficial
Name of Beneficial Owner
Ownership (1)
Percent of Class
The TRW Employee Stock Ownership and Savings
    Plan(2)
21,687,649(2
)
17.1
%
Capital Research and Management Company(3)
13,058,300(3
)
10.3
%
FMR Corp.(4)
7,186,623(4
)
5.7
%
(1)
Each beneficial owner listed in the table
    certified in its Statement of Beneficial Interest on
    Schedule 13G that, to the best of its knowledge and belief,
    the shares of TRW common stock beneficially owned by it were
    acquired in the ordinary course of business and not for the
    purpose of changing or influencing control of the company.
(2)
The address of the TRW Employee Stock Ownership
    and Savings Plan is 1900 Richmond Road Cleveland, Ohio
    44124. Putnam Fiduciary Trust Company, One Post Office Square,
    Boston, Massachusetts 02109, serves as trustee of The TRW
    Employee Stock Ownership and Savings Plan. Putnam Fiduciary
    Trust Company disclaims beneficial ownership of the shares, as
    it does not retain discretionary authority to buy, sell or vote
    the securities. The TRW Employee Stock Ownership and Savings
    Plan reported shared voting and dispositive power over all the
    shares beneficially owned. As of May 31, 2002, The TRW
    Employee Stock Ownership and Savings Plan beneficially owned
    18,361,080 shares, or approximately 14.4 percent of
    the outstanding TRW common stock.
(3)
The address of Capital Research and Management
    Company is 333 South Hope Street Los Angeles, California 90071.
    Capital Research and Management Company filed Amendment
    No. 4 to its Statement of Beneficial Ownership on
    Schedule 13G on February 11, 2002, reporting
    beneficial ownership of 13,058,300 shares of TRW common
    stock. Of these shares, Capital Research and Management Company
    reported that it has sole dispositive power over
    13,058,300 shares and voting power over no shares. Capital
    Research and Management Company is deemed to be the beneficial
    owner of these shares as a result of acting as investment
    adviser to various investment companies registered under the
    Investment Company Act of 1940. Capital Research and Management
    Company disclaims beneficial ownership of all these shares.
(4)
The address of FMR Corp. is 82 Devonshire
    Street Boston, Massachusetts 02109. FMR Corp., Edward C.
    Johnson 3d and Abigail P. Johnson jointly filed
    Amendment No. 4 to their Statement of Beneficial Ownership
    on Schedule 13G on April 5, 2002, reporting beneficial
    ownership of 7,186,623 shares of TRW common stock. Of the
    total amount held by FMR Corp., (a) 6,668,713 shares are
    beneficially owned by Fidelity Management & Research
    Company as a result of its acting as investment adviser to
    various investment companies registered under the Investment
    Company Act of 1940, (b) 300,882 shares are beneficially
    owned by Fidelity Management Trust Company as a result of its
    serving as investment manager of institutional accounts,
    (c) 1,728 shares are beneficially owned by Strategic
    Advisers, Inc. as a result of its having sole dispositive power
    over securities held for individuals to which it provides
    investment advisory services as an investment adviser under the
    Investment
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Company Act of 1940 and (d) 215,300 shares
    are beneficially owned by Fidelity International Limited.
    Fidelity Management & Research Company, Fidelity Management
    Trust Company and Strategic Advisors, Inc. are wholly-owned
    subsidiaries of FMR Corp. A partnership controlled by the
    controlling group of FMR Corp. owns 39.89 percent of the
    voting stock of Fidelity International Limited. FMR Corp.
    (through its control of Fidelity Management Trust Company) has
    sole power to vote 222,882 shares and sole dispositive
    power over 300,882 shares. FMR Corp. has no voting power
    over 78,000 shares owned by the institutional accounts
    managed by Fidelity Management Trust Company. FMR Corp. (through
    its control of Fidelity Management & Research Company)
    has sole dispositive power over an additional
    6,668,713 shares. The sole voting power of these shares
    resides with the Boards of Trustees of the Fidelity Funds.
    Fidelity International Limited has sole power to vote and the
    sole power to dispose of 215,300 shares. Edward C.
    Johnson 3d and Abigail P. Johnson are control persons
    of FMR Corp. Robert M. Gates, a TRW director, is a trustee
    of The Fidelity Funds.
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DESCRIPTION OF CAPITAL STOCK
Our certificate of incorporation authorizes us to
issue up to 500 million shares of common stock, par value
$.001 per share, and 50 million shares of undesignated
preferred stock, par value $.001 per share. The following
statements are brief summaries of the material provisions of our
capital stock contained in our certificate of incorporation and
bylaws, copies of which have been filed as exhibits to the
registration statement of which this prospectus is a part. The
following summary is qualified in its entirety by reference to
these exhibits.
Immediately after the spin-off, we expect there
will
be                     shares
of our Series A Preferred Convertible Stock issued and
outstanding which will
represent           percent
of the outstanding shares of common stock, assuming conversion
of these shares into shares of our common stock,
and                     shares
of our common stock issued and outstanding. All shares of our
preferred stock and our common stock to be outstanding
immediately after the spin-off will be fully paid and
non-assessable.
Common Stock
Each stockholder is entitled to one vote for each
share of our common stock held on all matters submitted to a
vote of stockholders. The vote of the holders of a majority of
the total number of votes of our capital stock will decide any
question, other than the election of directors, brought before
any meeting of the stockholders. For the election of directors,
a plurality of the votes cast at each annual meeting of
stockholders will be necessary. Cumulative voting for the
election of directors will not be provided for in our
certificate of incorporation. Therefore, the holders of a
majority of the shares voting for the election of our board of
directors will be able to elect all the directors standing for
election, if they so choose. Subject to any superior rights of
any holders of our preferred stock that may apply, each
outstanding share of our common stock will be entitled to
dividends at the times and in the amounts as may be determined
by our board of directors out of legally available assets. In
the event of a liquidation, dissolution or winding up, holders
of shares of our common stock will be entitled to share ratably
in any remaining assets available for distribution after
satisfaction of all of our liabilities and the payment of the
liquidation preference of any outstanding shares of our
preferred stock. Holders of our common stock will have no
preemptive rights and no right or obligation to convert or
exchange their shares into any other securities. No redemption
or sinking fund provisions will apply to our common stock.
Preferred Stock
Our board of directors will be authorized,
without stockholder approval, to issue up to 50 million
shares of preferred stock in one or more classes or series and
to fix the rights, preferences, privileges and restrictions
granted to or imposed upon the preferred stock, including voting
rights, dividend rights, conversion rights, terms of redemption,
liquidation preference, sinking fund terms and the number of
shares constituting any series or the designation of a series.
Our board of directors will be able to issue preferred stock
with voting and conversion rights that could have the effect of
decreasing the market price of our common stock and could
adversely affect the voting power of the holders of our common
stock, without stockholder approval. The issuance of preferred
stock could have the effect of delaying, deferring or preventing
a change in control of our company.
Anti-Takeover Effects of Delaware General
Corporation Law and Provisions of our Certificate of
Incorporation and Bylaws
In addition to the potential anti-takeover
effects of the preferred stock as summarized above, our
certificate of incorporation and bylaws contain several
provisions that may make it more difficult for a third party to
acquire us by means of a tender offer, open market purchase,
proxy fight or otherwise. These provisions are designed to
encourage persons seeking to acquire control of us to negotiate
with our board of directors. We believe that, as a general rule,
the interests of our stockholders will be served best if any
change in control results from negotiations with our board of
directors based upon careful consideration of the proposed
terms, such as the price to be paid to our stockholders, the
form of consideration to be paid and the
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anticipated tax effects of the transaction. These
provisions could, however, have the effect of discouraging a
prospective acquiror from making a tender offer for our shares
or otherwise attempting to obtain control of us. To the extent
that these provisions discourage takeover attempts, they could
deprive stockholders of opportunities to realize takeover
premiums for their shares. Moreover, these provisions could
discourage accumulations of large blocks of our common stock,
thus depriving stockholders of any advantages which large
accumulations of stock might provide.
Classified
Board of Directors
Our board of directors will be divided into three
classes of directors, as nearly equal in number as possible,
serving staggered terms. Approximately one-third of our board
will be elected each year. The provision for a classified board
could prevent a third party that acquires control of a majority
of our outstanding voting stock from obtaining control of our
board until the second annual meeting of stockholders following
the date a third party obtains the controlling stock interest.
As a result, the provision could have the effect of discouraging
a potential acquiror from making a tender offer for our shares
or otherwise attempting to obtain control of us and could
increase the likelihood that our incumbent directors will retain
their positions.
We believe that a classified board will help to
assure the continuity and stability of our board and our
business strategies and policies as determined by our board,
because a majority of the directors at any given time will have
prior experience on our board. The classified board provision
should also help to ensure that our board, if confronted with an
unsolicited proposal from a third party that has acquired a
block of our voting stock, will have sufficient time to review
an unsolicited third party proposal and appropriate alternatives
and to seek the best available result for all stockholders.
Number
of Directors; Removal; Vacancies
The number of directors that serve on our board
of directors will be not fewer than five nor more than sixteen
and will be set by resolution of our board of directors. Subject
to the rights of the holders of any series of preferred stock,
if any, directors may be removed, but only for cause by the
affirmative vote of the holders of two-thirds of our voting
stock. Any vacancy on our board of directors that results from
an increase in the number of directors may be filled by a
majority of our board of directors then in office, provided that
a quorum is present, and any other vacancy occurring on our
board of directors may be filled by a majority of our board of
directors then in office, even if less than a quorum, or by a
sole remaining director. Any director of any class elected to
fill a vacancy resulting from an increase in the number of
directors of such class will hold office for a term that will
coincide with the remaining term of that class. Any director
elected to fill a vacancy not resulting from an increase in the
number of directors will have the same remaining term as that of
his predecessor.
Stockholder
Action; Special Meetings
Our certificate of incorporation provides that
stockholder action can be taken only at an annual or special
meeting of our stockholders and cannot be taken by written
consent in lieu of a meeting. Special meetings of our
stockholders can only be called by the chairman of our board,
the president, or at the request of our board of directors or a
committee of our board.
Advance
Notice Requirements for Stockholder Proposals and Director
Nominations
Our bylaws provide that stockholders seeking to
bring business before an annual meeting of our stockholders, or
to nominate candidates for election as directors at an annual
meeting of our stockholders, must provide timely notice in
writing. To be timely, a stockholder's notice must be
delivered to or mailed and received at our principal executive
offices not less than 90 nor more than 120 days prior to
the anniversary date of the immediately preceding annual meeting
of our stockholders. However, in the event that the annual
meeting is called for a date that is not within 30 days
before or after such anniversary date, notice by the stockholder
in order to be timely must be received not later than the close
of business on the 10th day following the date on which notice
of the date of the annual meeting was mailed to stockholders or
made
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public, whichever first occurs. In the case of a
special meeting of our stockholders called for the purpose of
electing directors, notice by the stockholder in order to be
timely must be received not later than the close of business on
the 10th day following the day on which notice of the date of
the special meeting was mailed or public disclosure of the date
of the special meeting was made, whichever first occurs. Our
bylaws also specify requirements as to the form and content of a
stockholder's notice. These provisions may preclude
stockholders from bringing matters before an annual meeting of
our stockholders or from making nominations for directors at an
annual meeting of our stockholders.
Authorized
but Unissued Shares
The authorized but unissued shares of our common
stock and preferred stock will be available for future issuance
without stockholder approval. These additional shares may be
utilized for a variety of corporate purposes, including future
public offerings to raise additional capital, corporate
acquisitions and employee benefit plans. The existence of
authorized but unissued shares of our common stock and preferred
stock could render more difficult or discourage an attempt by a
third party to obtain control of us by means of a proxy contest,
tender offer, merger or otherwise.
Amendments;
Supermajority Vote Requirements
The Delaware General Corporation Law, or the
DGCL, provides generally that the affirmative vote of a majority
of the shares entitled to vote on any matter is required to
amend a corporation's certificate of incorporation or
bylaws, unless either a corporation's certificate of
incorporation or bylaws require a greater percentage. Our
certificate of incorporation imposes supermajority vote
requirements in connection with the amendment of our bylaws and
amendment of provisions of our certificate of incorporation,
including those provisions relating to the classified board of
directors, action by written consent and the ability of
stockholders to call special meetings. The provisions that
impose supermajority vote requirements may make it more
difficult to change the bylaws for the purpose of gaining
control over us.
Business
Combinations with Interested Stockholders
As a Delaware corporation, we are governed by
Section 203 of the DGCL. Section 203, subject to some
exceptions, prohibits a Delaware corporation from engaging in
any business combination with any interested stockholder for a
period of three years following the time that such stockholder
became an interested stockholder, unless:
•
prior to such time, the board of the corporation
    approved either the business combination or the transaction
    which resulted in the stockholder becoming an interested
    stockholder;
•
upon consummation of the transaction that
    resulted in the stockholder becoming an interested stockholder,
    the interested stockholder owned at least 85 percent of the
    voting stock of the corporation outstanding at the time the
    transaction commenced, excluding specified shares; or
•
at or subsequent to such time, the business
    combination is approved by the board and authorized at an annual
    or special meeting of stockholders, and not by written consent,
    by the affirmative vote of at least two-thirds of the
    outstanding voting stock that is not owned by the interested
    stockholder.
In general, Section 203 defines
"business combination" to include:
•
any merger or consolidation involving the
    corporation and the interested stockholder;
•
any sale, lease, exchange, mortgage, pledge,
    transfer or other disposition of assets having an aggregate
    market value equal to 10 percent or more of the aggregate
    market value of the corporation's assets to or with the
    interested stockholder;
•
subject to certain exceptions, any transaction
    which results in the issuance or transfer by the corporation of
    any stock of the corporation to the interested stockholder;
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•
any transaction involving the corporation which
    has the effect of increasing the proportionate share of the
    stock of any class or series of the corporation beneficially
    owned by the interested stockholder; or
•
the receipt by the interested stockholder of the
    benefit of any loans, advances, guarantees, pledges or other
    financial benefits provided by or through the corporation.
In general, Section 203 defines an
"interested stockholder" as any person who is:
•
the owner of 15 percent or more of the
    outstanding voting stock of the corporation; or
•
an affiliate or associate of the corporation and
    was the owner of 15 percent or more of the outstanding
    voting stock of the corporation at any time within three years
    immediately prior to the relevant date; or
•
an affiliate or associate of either of the above.
Registrar And Transfer Agent
We have appointed National City Bank as the
registrar and transfer agent for our capital stock.
Listing
We will apply to have our common stock listed on
the NYSE under the symbol
"       ."
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CERTAIN INDEBTEDNESS
Upon completion of the restructuring
transactions, we expect to have outstanding approximately
$2.8 billion of debt, which we believe, on the advice of
our financial advisors, is an appropriate level of debt to
obtain and maintain an investment grade rating. We are
continuing to evaluate alternative plans for creating that debt,
and our initial debt load may be established through the
issuance of new debt or the assumption of existing TRW debt, or
a combination of these approaches. The final terms of that debt
and our approach for incurring it will not be determined until
shortly prior to the declaration by TRW of the dividend
comprising the shares of our common stock that will be
distributed in the spin-off, or the spin-off declaration date.
The unaudited pro forma financial information as of
December 31, 2001, and the pro forma capitalization
information as of June 30, 2002, each of which appear
elsewhere in this prospectus, assume that we will have
$2.8 billion in debt.
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SHARES ELIGIBLE FOR FUTURE SALE
Our shares being distributed in the spin-off will
be freely transferable, except for shares held by persons that
are "affiliates" as defined in the Securities Act of
1933. The Securities Act of 1933 generally defines affiliates as
individuals or entities that control, are controlled by, or are
under common control with us and may include our officers,
directors and principal stockholders. Shares held by affiliates
may only be sold pursuant to an effective registration statement
under the Securities Act of 1933 or Rule 144 promulgated
thereunder. We cannot predict whether substantial amounts of our
shares will be sold in the open market following the
distribution. Sales of substantial amounts of our shares in the
public market, or the perception that substantial sales may
occur, could adversely affect their market price.
Stock Options
Following the spin-off, we intend to file a
registration statement on Form S-8 under the Securities Act
covering shares of common stock issued or reserved for issuance
under our Plan. The registration statement will become effective
automatically upon filing. Accordingly, shares registered under
the registration statement on Form S-8 will, subject to
vesting provisions and Rule 144 volume limitations
applicable to our affiliates, be available for sale in the open
market immediately.
Rule 144
In general, under Rule 144 as currently in
effect for shares of our common stock received in the spin-off,
beginning 90 days after the date of this prospectus, a
person who has beneficially owned restricted shares of our
common stock for at least one year would be entitled to sell in
"broker's transactions" or to market makers,
within any three-month period, a number of shares that does not
exceed the greater of:
•
One percent of the number of shares of our common
    stock then outstanding; or
•
The average weekly trading volume in our common
    stock on the NYSE during the four calendar weeks preceding the
    filing of a notice on Form 144 with respect to such sale.
Rule 144 permits holders of our common stock
who are also affiliates, and who would therefore be subject to
the restrictions of Rule 144 with respect to sales of our
common stock, to include in their holding period under
Rule 144 the period of time for which they had held TRW
stock.
Rule 144(k)
Under Rule 144(k), a person who is not
deemed to have been our affiliate at any time during the
90 days preceding a sale, and who has beneficially owned
the shares proposed to be sold for at least two years, is
entitled to sell such shares without having to comply with the
manner of sale, public information, volume limitation or notice
filing provisions of Rule 144. Therefore, unless otherwise
restricted, "144(k) shares" may be sold immediately
upon the completion of the distribution.
LEGAL MATTERS
William B. Lawrence, Executive Vice President,
General Counsel and Secretary of TRW Inc., will pass on the
validity of our common stock to be distributed in the spin-off.
EXPERTS
The combined financial statements of TRW
Automotive Inc. at December 31, 2001 and 2000, and for each
of the three years in the period ended December 31, 2001,
appearing in this prospectus have been audited by
Ernst & Young LLP, independent auditors, as set
forth in their report thereon appearing elsewhere in this
prospectus, and are included in reliance upon such report given
on the authority of such firm as experts in accounting and
auditing.
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Table of Contents
WHERE YOU CAN FIND MORE INFORMATION
After the spin-off, we will file annual,
quarterly and special reports, proxy statements and other
information with the SEC. We intend to furnish our stockholders
with annual reports containing consolidated financial statements
certified by an independent public accounting firm. We have
filed a registration statement on Form S-1 with the SEC
regarding the spin-off. This prospectus, which is part of the
registration statement, does not contain all of the information
included in the registration statement, and you should refer to
the registration statement and its exhibits to read that
information.
References in this prospectus to any of our
contracts or other documents are not necessarily complete, and
you should refer to the exhibits attached to the registration
statement, the related exhibits and the other material we have
filed with the SEC at the SEC's public reference room in
Washington, D.C. located at 450 Fifth Street, N.W.
Washington, D.C. 20549 and at the SEC's regional
offices in Chicago, Illinois and New York, New York. You can
also request copies of those documents, upon payment of a
duplicating fee, by writing to the SEC. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the
public reference rooms. The SEC also maintains an Internet site
that contains reports, proxy and information statements and
other information regarding issuers that file with the SEC. The
site's Internet address is www.sec.gov. You may also
inspect information about us at the offices of the NYSE located
at 20 Broad Street, New York, New York 10005.
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INDEX TO COMBINED FINANCIAL
STATEMENTS
Annual Financial Statements
Report of Independent Auditors
F-2
Statements of Operations for the Years Ended
    December 31, 2001, 2000 and 1999
F-3
Balance Sheets at December 31, 2001 and 2000
F-4
Statements of Cash Flows for the Years Ended
    December 31, 2001, 2000 and 1999
F-5
Statements of Changes in Stockholder's
    Investment for the Years Ended December 31, 2001, 2000, and
    1999
F-6
Notes to Financial Statements
F-7
Interim Financial Statements for the Six Month
    Periods Ended June 30, 2002 and 2001 (unaudited)
Balance Sheet at June 30, 2002
F-
Statements of Operations for the Six Month
    Periods Ended June 30, 2002 and 2001
F-
Statements of Cash Flows for the Six Month
    Periods Ended June 30, 2002 and 2001
F-
Notes to Financial Statements
F-
F-1
Table of Contents
REPORT OF ERNST & YOUNG LLP, INDEPENDENT
AUDITORS
Stockholder and Directors
TRW Automotive Inc.
We have audited the accompanying combined balance
sheets of TRW Automotive Inc. and subsidiaries as of
December 31, 2001 and 2000, and the related combined
statements of operations, cash flows and changes in
stockholder's investment for each of the three years in the
period ended December 31, 2001. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with
auditing standards generally accepted in the United States.
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred
to above present fairly, in all material respects, the combined
financial position of TRW Automotive Inc. and subsidiaries at
December 31, 2001 and 2000, and the combined results of
their operations and their cash flows for each of the three
years in the period ended December 31, 2001, in conformity
with accounting principles generally accepted in the United
States.
/s/ ERNST & YOUNG LLP
Cleveland, Ohio
May 15, 2002,
except for the "Capital Stock" note,
as to which the date is June 3, 2002
F-2
Table of Contents
TRW AUTOMOTIVE INC.
STATEMENTS OF OPERATIONS
Years Ended December 31
2001
2000
1999
(In millions)
Sales
$
10,091
$
10,920
$
10,472
Cost of sales
8,967
9,420
8,824
Gross profit
1,124
1,500
1,648
Administrative and selling expenses
624
694
704
Research and development expenses
131
167
178
Interest expense
371
386
368
Amortization of goodwill and intangible assets
78
76
69
Purchased in-process research and development
—
—
67
Other (income) expense — net
(9
)
(12
)
58
Earnings (loss) before income taxes from
    continuing operations
(71
)
189
204
Income tax expense (benefit)
(32
)
99
136
Earnings (loss) from continuing operations
(39
)
90
68
Discontinued operations (net of taxes)
11
3
54
Net earnings (loss)
$
(28
)
$
93
$
122
See notes to financial statements.
F-3
Table of Contents
TRW AUTOMOTIVE INC.
BALANCE SHEETS
December 31
2001
2000
(In millions)
Assets
Current assets
Cash and cash equivalents
$
118
$
151
Accounts receivable (net of allowances of
    $41 million in 2001 and in 2000)
853
1,429
Interest in securitized receivables
162
—
Inventories
Finished products and work in-process
312
372
Raw materials and supplies
240
304
Total inventories
552
676
Prepaid expenses
58
59
Deferred income taxes
194
206
Total current assets
1,937
2,521
Property, plant and equipment — on the
    basis of cost
Land
76
75
Buildings
1,128
1,141
Machinery and equipment
4,613
4,495
5,817
5,711
Less accumulated depreciation and amortization
3,242
2,997
Total property, plant and equipment —
    net
2,575
2,714
Intangible assets
Goodwill
2,591
2,613
Other intangible assets
310
358
2,901
2,971
Less accumulated amortization
374
255
Total intangible assets — net
2,527
2,716
Investments in affiliated companies
74
86
Other notes and accounts receivable
153
205
Other assets
243
357
Prepaid pension cost
2,778
2,694
$
10,287
$
11,293
Liabilities and stockholder's
    investment
Current liabilities
Short-term debt
$
177
$
227
Trade accounts payable
1,252
1,331
Accrued compensation
218
256
Other accruals
786
801
Income taxes
126
143
Current portion of long-term debt
18
28
Total current liabilities
2,577
2,786
Debt allocated from TRW
4,105
4,469
Long-term debt
297
329
Post-retirement benefits other than pensions
743
730
Long-term liabilities
455
545
Deferred income taxes
535
598
Minority interests
71
120
Stockholder's investment
Parent company investment
1,925
2,015
Accumulated other comprehensive income (loss)
(421
)
(299
)
Total stockholder's investment
1,504
1,716
$
10,287
$
11,293
See notes to financial statements.
F-4
Table of Contents
TRW AUTOMOTIVE INC.
STATEMENTS OF CASH FLOWS
Years Ended December 31
2001
2000
1999
(In millions)
Operating activities
Net earnings (loss)
$
(28
)
$
93
$
122
Adjustments to reconcile net earnings (loss) to
    net cash provided by operating activities
Depreciation and amortization
548
577
630
Pension income
(240
)
(242
)
(187
)
Net gain on sale of assets
(18
)
(22
)
—
Asset impairment charges
50
67
—
Pending and threatened litigation
29
25
—
Deferred income taxes
19
114
(22
)
Discontinued operations
(11
)
(3
)
(54
)
Purchased in-process research and development
—
—
67
Other — net
6
(2
)
81
Changes in assets and liabilities, net of effects
    of businesses acquired or divested
Accounts receivable, net
7
70
(96
)
Securitization of accounts receivable
327
—
—
Inventories
103
57
36
Trade accounts payable
(40
)
152
108
Prepaid expenses and other liabilities
(87
)
(268
)
145
Other — net
163
133
134
Net cash provided by operating activities
828
751
964
Investing activities
Capital expenditures including other intangibles
(475
)
(501
)
(665
)
Net proceeds from divestitures
46
1,110
36
Acquisitions, net of cash acquired
1
—
(4,404
)
Other — net
19
32
(56
)
Net cash (used in) provided by investing
    activities
(409
)
641
(5,089
)
Financing activities
(Decrease) increase in short-term debt
(36
)
(150
)
8
Proceeds from debt in excess of 90 days
10
34
46
Principal payments on debt in excess of
    90 days
(47
)
(85
)
(326
)
Net transfers (to) from parent company
(386
)
(1,245
)
4,585
Other — net
(5
)
(6
)
(17
)
Net cash (used in) provided by financing
    activities
(464
)
(1,452
)
4,296
Effect of exchange rate changes on cash
12
(12
)
9
(Decrease) increase in cash and cash equivalents
(33
)
(72
)
180
Cash and cash equivalents at beginning of year
151
223
43
Cash and cash equivalents at end of year
$
118
$
151
$
223
Supplemental Cash Flow Information
Interest paid, net of amount capitalized
$
368
$
396
$
352
Income tax refunds, net of taxes paid
61
12
167
See notes to financial statements.
F-5
Table of Contents
TRW AUTOMOTIVE INC.
STATEMENTS OF CHANGES IN STOCKHOLDER'S
INVESTMENT
Accumulated
Parent
Other
Total
Company
Comprehensive
Stockholder's
Investment
Income (Loss)
Investment
(In millions)
Balance at December 31, 1998
$
1,449
$
(89
)
$
1,360
Net earnings (loss) — 1999
122
–
122
Foreign exchange loss, net of tax of
    $2 million
—
(33
)
(33
)
Unrealized gain on securities, net of tax
—
(1
)
(1
)
Minimum pension liability, net of tax
—
(1
)
(1
)
Total comprehensive income (loss)
87
Net transfers (to) from parent company
347
—
347
Balance at December 31, 1999
1,918
(124
)
1,794
Net earnings (loss) — 2000
93
—
93
Foreign exchange loss, net of tax of
    $69 million
—
(171
)
(171
)
Minimum pension liability, net of tax of
    $3 million
—
(4
)
(4
)
Total comprehensive income (loss)
(82
)
Net transfers (to) from parent company
4
—
4
Balance at December 31, 2000
2,015
(299
)
1,716
Net earnings (loss) — 2001
(28
)
—
(28
)
Foreign exchange loss, net of tax of
    $14 million
—
(76
)
(76
)
Minimum pension liability, net of tax of
    $25 million
—
(47
)
(47
)
Deferred cash flow hedges, net of tax
—
1
1
Total comprehensive income (loss)
(150
)
Net transfers (to) from parent company
(62
)
—
(62
)
Balance at December 31, 2001
$
1,925
$
(421
)
$
1,504
See notes to financial statements.
F-6
Table of Contents
TRW AUTOMOTIVE INC.
NOTES TO FINANCIAL STATEMENTS
Background
TRW Automotive Inc. (referred to herein as TRW
Automotive or the Company) is a wholly-owned subsidiary of TRW
Inc. (TRW). TRW Automotive was incorporated in Delaware on
June 3, 2002 in contemplation of the spin-off announced by
the TRW Board of Directors in March 2002. The spin-off is the
method by which TRW will be separated into two independent
publicly traded companies:
•
TRW Automotive, which will consist of TRW's
    automotive business and TRW's subsidiaries and affiliates
    associated with the automotive business; and
•
TRW, which will consist of TRW's systems and
    space and electronics and TRW's subsidiaries and affiliates
    associated with their businesses.
Historically, TRW Automotive's business
resulted from the combination of the legacy TRW automotive
business with the legacy LucasVarity plc (LucasVarity)
automotive business.
The "restructuring transactions" refer
to the series of transactions that will result in the separation
of TRW's automotive business and TRW's non-automotive
businesses.
Shortly before the spin-off, TRW will transfer to
TRW Automotive all of the assets associated with its automotive
business, and TRW Automotive will assume all of the liabilities
associated with the automotive business (including contingent
liabilities). TRW will retain all of the assets and liabilities
associated with its non-automotive businesses. All assets and
liabilities will be transferred without any representation or
warranty on an "as is, where is" basis.
As part of the restructuring transactions, TRW
Automotive intends to issue to TRW that number of shares of TRW
Automotive common stock to be outstanding on the spin-off record
date so as to be able to effect a one-for-one distribution of
such shares in the spin-off and avoid fractional shares.
In general, all intercompany balances between TRW
and TRW Automotive will be settled by cancellation or transfer
in the restructuring transactions. Based on the anticipated cash
requirements of TRW and TRW Automotive following the spin-off,
the master distribution agreement governing the spin-off will
set a "restructuring funding target amount" for TRW
Automotive and, to ensure that this target is met, will provide
for a cash adjustment based on the difference between the
"restructuring funding actual amount" and the
"restructuring funding target amount" as of the end of
the fiscal month immediately preceding the spin-off.
Prior to the spin-off, TRW Automotive expects to
enter into agreements with TRW in connection with its separation
from TRW, the spin-off and related matters. These agreements are
expected to include:
•
a master distribution agreement, providing for,
    among other things, the completion of the restructuring
    transactions and the spin-off, and agreements between TRW
    Automotive and TRW, including those relating to indemnification;
•
a tax sharing agreement, providing for, among
    other things, the allocation between TRW Automotive and TRW of
    federal, state, local and foreign tax liabilities for periods
    prior to the spin-off and in some instances for periods after
    the spin-off;
•
an employee matters agreement, pursuant to which,
    among other things, some employee-related assets and liabilities
    of TRW will be allocated between TRW Automotive and TRW and some
    arrangements will be made with respect to employee benefit plans
    and compensation arrangements;
•
an insurance allocation agreement, pursuant to
    which, among other things, certain insurance policies and
    arrangements of TRW and related coverages will be allocated to
    TRW Automotive, and TRW will provide certain administrative
    insurance services to TRW Automotive;
F-7
Table of Contents
TRW AUTOMOTIVE INC.
NOTES TO FINANCIAL
STATEMENTS — (Continued)
•
intellectual property license agreements,
    pursuant to which, among other things, TRW Automotive will
    license certain intellectual property from TRW;
•
a trademark license agreement, pursuant to which
    TRW will license certain names and trademarks to TRW Automotive;
    and
•
a transition services agreement, pursuant to
    which, among other things, TRW will provide certain services to
    TRW Automotive and TRW Automotive will provide services to TRW
    for a transition period following the spin- off.
Basis of Presentation and Transactions with
TRW
The combined financial statements of TRW
Automotive include the assets, liabilities, sales and expenses
of TRW's automotive businesses to be included in TRW
Automotive after the restructuring transactions. The amounts are
based upon TRW's historical amounts. Parent Company
Investment represents TRW's investment in TRW Automotive
including intercompany accounts.
The Statements of Operations of TRW Automotive
include expenses recorded by TRW Automotive or directly charged
to TRW Automotive by TRW. In addition, the statements include an
allocation of TRW's general and administrative corporate
expenses to reflect the services provided to TRW Automotive or
benefits received by TRW Automotive. The allocation was
$81 million for 2001, $90 million for 2000 and
$82 million for 1999 and was reported in administrative and
selling expenses in the Statements of Operations. The allocation
was based upon TRW's internal allocation methodology, which
is based upon an established percentage of costs applied to the
cost of operations (sales less earnings (loss) before taxes from
continuing operations). Management believes that this is a
reasonable method for allocating the general and administrative
corporate expenses. The allocation is not necessarily
representative of the operating expenses that would have been
incurred had TRW Automotive operated on a stand-alone basis. For
2001, the allocation for TRW Automotive on a stand-alone basis
is estimated to be $40 million.
Debt, other than debt allocated from TRW,
reported on the Balance Sheets represents the historical third
party obligations of the automotive legal entities to be
included in TRW Automotive. Debt allocated from TRW is included
on TRW Automotive's Balance Sheets. This allocation
reflects TRW's historical practice of incurring most of its
indebtedness, including debt incurred to finance the acquisition
of the LucasVarity automotive business, at the parent company
level.
Interest expense from the specific third party
debt obligations attributed to TRW Automotive's operations
is included in the Statements of Operations. In addition, an
estimate of the remaining interest expense of TRW, attributable
to the debt allocated to TRW Automotive, is also included in the
Statements of Operations. The allocation of debt and interest is
based on a ratio of TRW Automotive's net assets to
TRW's net assets plus non-automotive debt. Management
believes that this is a reasonable method of allocating debt and
interest to TRW Automotive. This allocation is not, however,
indicative of the total amount of debt and interest that TRW
Automotive will have upon the completion of the debt realignment
or the debt and interest that may be incurred by TRW Automotive
as a separate entity.
TRW Automotive, primarily for the United States
operations, participates in TRW's centralized cash
management system. Under this system, cash receipts are
transferred to TRW and TRW funds cash disbursements. As such,
the amount of cash and cash equivalents does not represent the
amount required or generated by TRW Automotive. The balance of
cash and cash equivalents on the Balance Sheets primarily
relates to cash and cash equivalents at foreign operations that
do not participate in TRW's cash management program.
TRW accounts for and pays all United States
income taxes. TRW Automotive's taxable income (loss)
related to its United States operations and foreign operations
subject to a United States "check-the-box"
F-8
Table of Contents
TRW AUTOMOTIVE INC.
NOTES TO FINANCIAL
STATEMENTS — (Continued)
election to be taxed in the United States is
included in TRW's consolidated income tax returns. The
Statements of Operations include an allocation to TRW Automotive
of TRW's United States income taxes (credits) in amounts
generally equivalent to the provisions that would have resulted
had TRW Automotive filed separate income tax returns for the
years presented. TRW Automotive has also been allocated United
States deferred income taxes based on the estimated differences
between the book and tax basis of its assets and liabilities.
For tax years beginning after the spin-off, TRW Automotive will
assume the liability to pay for income taxes attributable to TRW
Automotive's operations worldwide.
Most of TRW Automotive's foreign operations
account for and pay foreign income taxes related to their
operations. For those operations that have not separately
accounted for and paid income taxes related to their operations,
the Statements of Operations include an allocation of TRW's
foreign income taxes in amounts generally equivalent to the
provisions which would have resulted had TRW Automotive filed
separate income tax returns for the years presented. These
operations have also been allocated foreign deferred income
taxes based on the estimated differences between the book and
tax basis of their assets and liabilities.
In the opinion of management, all adjustments
necessary for a fair presentation of financial position,
operating results and cash flows have been presented. The
financial information included may not necessarily reflect the
results of operations, financial position, changes in
stockholder's investment in the future or what they would
have been if TRW Automotive had been a separate, stand-alone
company for the periods presented or in the future.
Summary of Significant Accounting
Policies
Principles of
consolidation —
The
combined financial statements include the accounts of TRW
Automotive, which include all of TRW's automotive
businesses. Investments in affiliated companies are accounted
for by the equity or cost method. The combined financial
statements reflect the combined results of LucasVarity's
automotive operations and cash flows subsequent to the date of
acquisition, March 25, 1999.
Use of
estimates —
The
preparation of financial statements in conformity with
accounting principles generally accepted in the United States
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities, and reported
amounts in the Statements of Operations. Actual results could
differ from those estimates.
Revenue recognition —
The Company recognizes sales in
accordance with accounting principles generally accepted in the
United States including the Securities and Exchange
Commission's Staff Accounting Bulletin No. 101,
"Revenue Recognition in Financial Statements." The
Company records sales when title is transferred to the customer.
Cash and cash equivalents —
Cash and cash equivalents include
all highly liquid investments purchased with a maturity of three
months or less.
Accounts receivable —
In 2001, the Company participated
in an accounts receivable securitization arrangement established
by TRW with a financial institution and several financial
conduits. At December 31, 2001, the Company's retained
interest in securitized receivables amounted to
$162 million and is reported as interest in securitized
receivables on the Balance Sheet. See the "Accounts
Receivable Securitization" note to financial statements.
Inventories —
Inventories are stated at the
lower of cost or market. At December 31, 2001 and 2000,
inventories valued using the last-in, first-out (LIFO) method
were $68 million and $87 million, respectively.
Inventories not valued by the LIFO method are principally on the
first-in, first-out (FIFO) method. Had the cost of all
inventories been determined by the FIFO method, inventories at
December 31, 2001 and 2000 would have been greater by $15
million and $18 million, respectively.
F-9
Table of Contents
TRW AUTOMOTIVE INC.
NOTES TO FINANCIAL
STATEMENTS — (Continued)
Depreciation —
Depreciation is computed over the
assets' estimated useful lives, using the straight-line
method for the majority of the Company's depreciable
assets, including capital leases. The remaining assets are
depreciated using accelerated methods. The estimated useful
lives of buildings, machinery and equipment, and computers and
other office equipment are between 30 to 40 years, eight to
12 years and three to five years, respectively.
Depreciation expense was $455 million, $486 million
and $550 million for the years ended December 31,
2001, 2000 and 1999, respectively.
Product tooling —
Product tooling is special purpose
tooling that is limited to the manufacture of a specific part or
parts of the same basic design. Product tooling includes dies,
patterns, molds and jigs. Product tooling is capitalized as
property, plant and equipment, and amortized as cost of sales
over its estimated economic life, not exceeding five years.
Intangible assets —
Intangible assets are stated on
the basis of cost and are being amortized by the straight-line
method over the estimated future periods to be benefited, except
for goodwill acquired prior to 1971, $47 million, which is not
being amortized. Goodwill acquired after 1970 is being amortized
over 40 years. Other intangible assets include capitalized
internal-use software, patents and licenses and other
identifiable intangible assets acquired through acquisitions,
including core and developed technology and workforce.
Capitalized internal-use software is being amortized over
periods not to exceed 10 years. Other identifiable
intangible assets are being amortized primarily over five to
17 years.
Asset impairment —
The Company records impairment
losses on long-lived and intangible assets when events and
circumstances indicate that the assets may be impaired and the
undiscounted net cash flows estimated to be generated by those
assets are less than their carrying amounts. If the future
undiscounted cash flows are not sufficient to recover the
carrying value of the assets, the assets are adjusted to their
fair values.
Cost basis equity affiliates —
The Company's investments in
affiliated companies include equity securities, accounted for
using the cost method, which are classified as
available-for-sale. These securities are stated at estimated
fair value based upon market quotes. Unrealized gains and
losses, net of tax, are reported as a separate component of
accumulated other comprehensive income (loss) in
stockholder's investment until realized. A decline in the
value of any investment below cost that is deemed other than
temporary is charged to earnings.
Environmental costs —
The Company participates in
environmental assessments and remediation efforts at operating
facilities, previously owned or operated facilities, and
Superfund or other waste sites. Costs related to these locations
are accrued when it is probable that a liability has been
incurred and the amount of that liability can be reasonably
estimated. Estimated costs are recorded at undiscounted amounts,
based on experience and assessments, and are regularly evaluated
as efforts proceed.
Research and development —
Company-funded research and
development programs include research and development for
commercial products that is expensed as incurred.
Customer-funded research and development expenses, included in
cost of sales, were $32 million, $38 million and
$28 million for 2001, 2000 and 1999, respectively.
Shipping and handling —
Shipping costs include payments to
a third-party shipper to move the product to the customer.
Handling costs include costs from the point the product is
removed from finished goods inventory to when provided to the
shipper. Shipping and handling costs are expensed as incurred as
costs of sales.
Preproduction costs —
Preproduction design and
development costs for long-term supply arrangements are expensed
as cost of sales as incurred.
Financial instruments —
The Company adopted Statement of
Financial Accounting Standards (SFAS) 133, "Accounting
for Derivative Instruments and Hedging Activities," as
amended, on January 1, 2001. SFAS 133 requires
companies to recognize all derivative instruments as either
assets or liabilities at fair
F-10
Table of Contents
TRW AUTOMOTIVE INC.
NOTES TO FINANCIAL
STATEMENTS — (Continued)
value. The transition adjustment recorded as a
result of the adoption did not have a material impact on the
Company's financial position or net earnings.
Under SFAS 133, the gain or loss on
derivative instruments that have been designated and qualify as
hedges of the exposure to changes in the fair value of an asset
or a liability, as well as the offsetting gain or loss on the
hedged item, are recognized in net earnings during the period of
the change in fair values. For derivative instruments that have
been designated and qualify as hedges of the exposure to
variability in expected future cash flows, the gain or loss on
the derivative is initially reported as a component of other
comprehensive income (loss) and reclassified to the Statement of
Operations when the hedged transaction affects net earnings. Any
gain or loss on the derivative in excess of the cumulative
change in the present value of future cash flows of the hedged
item is recognized in net earnings during the period of change.
For derivative instruments that are a hedge of a net investment
in a foreign currency, the gain or loss is reported in other
comprehensive income (loss) as part of the cumulative
translation adjustment. Derivatives not designated as hedges are
adjusted to fair value through net earnings.
Prior to the adoption of SFAS 133, changes
in market value of contracts that hedged firm foreign currency
commitments and intercompany transactions were generally
included in the basis of the transactions and changes in the
market value of the contracts that hedged anticipated
transactions were generally recognized in net earnings.
New accounting pronouncements —
The Financial Accounting Standards
Board (FASB) recently issued SFAS 141, "Business
Combinations," SFAS 142, "Goodwill and Intangible
Assets," SFAS 143, "Accounting for Asset
Retirement Obligations" and SFAS 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets."
SFAS 141 requires companies to account for
acquisitions entered into after June 30, 2001 using the
purchase method and establishes criteria to be used in
determining whether acquired intangible assets are to be
recorded separately from goodwill. SFAS 142 sets forth
the accounting for goodwill and intangible assets after the
completion of a business acquisition and for goodwill and
intangible assets already recorded. Goodwill will no longer be
amortized beginning January 1, 2002. Rather, goodwill will
be tested for impairment by comparing the asset's fair
value to its carrying value. Also, the value of workforce of
approximately $15 million must be reclassified from
intangible assets to goodwill. The Company adopted SFAS 142
on January 1, 2002.
At December 31, 2001 the Company had
recorded $2.4 billion of goodwill, net of accumulated
amortization. Management has conducted preliminary valuations of
its reporting units and has determined that goodwill should not
be impaired. In 2001, the Company recorded amortization expense
for goodwill and the value of workforce of $64 million
before tax, $53 million after tax.
SFAS 143 requires the fair value of a
liability for asset retirement obligations to be recorded in the
period in which it is incurred. The statement applies to a
company's legal or contractual obligation associated with
the retirement of a tangible long-lived asset that resulted from
the acquisition, construction or development or through the
normal operation of a long-lived asset. The statement is
effective for the Company beginning January 1, 2003.
SFAS 144 addresses the accounting and
reporting for the impairment or disposal of long-lived assets.
The statement provides a consistent method to value long-lived
assets to be disposed of. New criteria must be met to classify
the asset as an asset held-for-sale. This statement also changes
the rules for reporting the effects of a disposal of a segment
of a business. This statement was adopted on January 1,
2002.
The Company has evaluated the impact of
SFAS 143 and SFAS 144 and believes that the adoption
of these statements should not have a material impact on its
financial position or results of operations.
F-11
Table of Contents
TRW AUTOMOTIVE INC.
NOTES TO FINANCIAL
STATEMENTS — (Continued)
LucasVarity Acquisition
On March 25, 1999, TRW acquired LucasVarity
for approximately $6.8 billion in cash and assumed net
debt. Of that amount, approximately $5.0 billion related to
the automotive businesses. The automotive businesses of
LucasVarity will be included in TRW Automotive as part of its
formation. The acquisition of LucasVarity was accounted for as a
purchase. The purchase price allocation for the automotive
business resulted in a $67 million charge to net earnings,
with no income tax benefit, for the fair value of the
Company's acquired in-process research and development
(IPR&D) that had not reached technological feasibility and
had no future alternative use. Assets and liabilities were
recorded based on their respective fair values. The Company
recorded $2.2 billion of goodwill, which is being amortized on a
straight-line basis over 40 years.
The fair value of IPR&D was determined by an
independent valuation using the income approach under the
proportional method. The following projects were included in the
valuation: next-generation caliper of $26 million,
next-generation anti-lock braking systems (ABS) of
$23 million, electro hydraulic braking of $12 million
and electrical parking brake of $6 million. The projects
were in various stages of completion, ranging from approximately
40 to 60 percent complete, as of the valuation date. The
stage of completion for each project was estimated by evaluating
the cost to complete, complexity of the technology and time to
market. The projects were anticipated to be completed by 2002.
The estimated cost to complete the projects was $37 million.
As of December 31, 2001, the next-generation
anti-lock braking systems and electro hydraulic braking projects
were each 70 percent complete, and the electrical parking
brake program was 95 percent complete. In 2000, the
next-generation caliper project was completed. The Company
currently anticipates that the projects will be completed as
budgeted by the fourth quarter of 2003. Any delay or
cancellation of the projects would not have a material adverse
impact on the financial condition or the results of operations
of the Company.
Pro forma sales and net earnings from continuing
operations for the Company for the year ended December 31,
1999 were $11.5 billion and $145 million, respectively. The
pro forma financial information assumes the LucasVarity
acquisition occurred as of the beginning of the year. The pro
forma results have been prepared for informational purposes only
and are not necessarily indicative of the results of operations
which may occur in the future or that would have occurred had
the acquisition of LucasVarity been effected on the date
indicated. The pro forma results do not include the effects of
companies divested subsequent to the date of acquisition.
Discontinued Operations
In 2000, the Company disposed of a substantial
portion of the Lucas Diesel Systems and the LucasVarity wiring
businesses. In 2001, the Company completed the disposition of
the remaining Lucas Diesel Systems businesses. The combined
financial statements reflect as discontinued operations for all
periods presented these businesses' operating results. The
tax expense included in discontinued operations on the
Statements of Operations for 2001, 2000 and 1999 was
$4 million, $2 million and $20 million,
respectively. Net proceeds totaled $29 million in 2001 and
$853 million in 2000. Sales of the discontinued operations
were $20 million, $74 million and $858 million in
2001, 2000 and 1999, respectively. Interest has not been
allocated to discontinued operations. No gain or loss resulted
from the divestiture of these businesses.
Restructuring
The Company has initiated several restructuring
actions including reorganizing and downsizing its operations. In
2001, charges of $213 million before tax were recorded for
actions that included the consolidation of its businesses. These
actions are expected to result in a reduction of approximately
6,100 employees, of which approximately 4,900 were terminated by
these actions as of December 31, 2001. In 2000, charges of
$85 million were recorded for actions that resulted in
employee reductions of approximately 3,700,
F-12
Table of Contents
TRW AUTOMOTIVE INC.
NOTES TO FINANCIAL
STATEMENTS — (Continued)
the closing of two plants and the reorganization
and downsizing of the Company's aftermarket business. In
1999, the Company recorded charges of $80 million related to the
closure of six manufacturing plants and employee reductions of
more than 4,800. In 2001, 2000 and 1999, $116 million, $73
million and $63 million, respectively, were used for
severance payments and costs related to the consolidation of
certain facilities. The balance of $144 million is expected to
be substantially used by the end of 2002.
In 1999 and 2000, the Company initiated
restructuring actions to dispose of several nonstrategic or
inefficient facilities, discontinue production of low-margin
products and relocate certain facilities related to the
integration of the LucasVarity automotive businesses. The
Company recorded approximately $45 million of restructuring
costs, primarily severance, as part of the purchase price
allocation. In 2001, 2000 and 1999, $15 million,
$15 million and $14 million, respectively, were used
primarily for severance payments. The remaining balance of
$1 million is expected to be used by the end of 2002.
The following table illustrates the movement of
the restructuring reserves:
Provision
LucasVarity
Used for
Beginning
Administrative
Purchase Price
Purposes
Ending
Balance
and Selling
Cost of Sales
Allocation
Intended
Balance
(In millions)
2001
$
63
$
87
$
126
$
—
$
(131
)
$
145
2000
48
42
43
18
(88
)
63
1999
18
7
73
27
(77
)
48
Asset Impairments
In 2001, asset impairment charges of
$28 million, $10 million and $12 million were
recorded by Chassis Systems, Occupant Safety Systems and Other
Automotive segments, respectively. These charges, primarily
related to the write-down of property, plant and equipment, were
recorded as $38 million in cost of sales, $11 million
in other (income)expense-net and $1 million in goodwill
amortization. Of these charges, $49 million was a result of
the loss of several existing contracts and expected future sales
at certain facilities. In 2000, as the result of a plan to
consolidate operations of its Mesa air bag manufacturing
facilities in the Occupant Safety Systems segment, the Company
recorded an asset impairment charge of approximately
$52 million in cost of sales. The Company expects the
consolidation plan to be completed during the first half of
2002. Property, plant and equipment were written down to fair
value on the basis of discounted estimated future cash flows and
future salvage value. Also in 2000, the Other Automotive segment
recorded an asset impairment charge of $15 million in cost
of sales as a result of a loss of several existing and future
contracts at a facility. Assets were written down to fair value
based upon current market values of the assets.
Other (Income) Expense —
Net
2001
2000
1999
(In millions)
Net gain on sale of assets
$
(18
)
$
(22
)
$
—
Asset impairments
11
—
—
Pending and threatened litigation
29
25
—
Earnings of affiliates
(9
)
(7
)
(10
)
Foreign currency exchange
1
(4
)
3
Unrealized losses on foreign currency hedges and
    LucasVarity related expenses
—
9
76
Miscellaneous other (income) expense
(23
)
(13
)
(11
)
$
(9
)
$
(12
)
$
58
F-13
Table of Contents
TRW AUTOMOTIVE INC.
NOTES TO FINANCIAL
STATEMENTS — (Continued)
Operating Segments
The Company is a U.S.-based international company
providing advanced technology products and services for the
automotive markets. The Company reports in three operating
segments: Chassis Systems, Occupant Safety Systems and Other
Automotive. The reporting of the automotive business as three
segments is consistent with the manner in which TRW Automotive
is managed and the way resources are allocated by the Chief
Operating Decision Maker.
The principal customers for the Company's
automotive products are the North and South American, European
and Asian vehicle manufacturers and independent distributors.
The Company designs, manufactures and sells a
broad range of steering, suspension, braking, seat belts,
inflatable restraints, steering wheels, safety electronics,
engine valves, engineered fastening body control systems and
other components and systems for passenger cars, light trucks
and commercial vehicles. A description of the products and
services provided by each of the operating segments follows.
Chassis
    Systems
— active safety
    systems and components in the areas of braking, steering,
    suspension and integrated vehicle control;
Occupant Safety
    Systems
— passive safety
    systems and components in the areas of inflatable restraints,
    seat belts, steering wheels and safety and security electronics;
    and
Other
    Automotive
— engine valves
    and components, engineered fasteners and components and body
    control systems. Stud welding systems and several sensors and
    components businesses were divested during 2000.
The accounting policies of the operating segments
are the same as those described in the "Summary of
Significant Accounting Policies" note to financial
statements. The Company evaluates operating performance based on
profit before taxes and segment assets (total assets net of
segment current operating liabilities).
The following income and expense items are not
included in segment profit:
•
Corporate expense and other, which primarily
    represents costs associated with corporate staff and related
    expenses, including certain litigation. Corporate expense
    includes an allocation of TRW's cost to reflect the
    services provided to TRW Automotive or benefits received by TRW
    Automotive.
•
Financing cost, which represents debt-related
    interest, including interest allocated from TRW, and the loss on
    the sale of receivables.
•
Net employee benefits income, which includes
    pension income related to retirees and terminated vested
    individuals acquired as part of the LucasVarity acquisition, net
    of interest related to other post-retirement employee benefits.
•
Amortization of goodwill.
•
Purchased in-process research and development
    which represents the write-off of IPR&D resulting from the
    LucasVarity acquisition in 1999.
Prepaid pension cost for corporate and divested
operations, unrealized gains or losses on securities of
affiliate investments accounted for using the cost method,
current deferred income taxes, goodwill and corporate and other
assets are not included in segment assets.
F-14
Table of Contents
TRW AUTOMOTIVE INC.
NOTES TO FINANCIAL
STATEMENTS — (Continued)
Financial information for the operating segments
for each of the three years ended December 31 is as follows:
Occupant
Chassis
Safety
Other
Systems
Systems
Automotive
Total
(In millions)
2001
Sales to external customers
$
5,617
$
2,997
$
1,477
$
10,091
Intersegment sales
23
3
34
60
Profit before taxes
228
110
40
378
Unusual items-income (expense) included in profit
    before taxes
(110
)
(57
)
(84
)
(251
)
Segment assets
1,816
673
520
3,009
Depreciation and amortization
234
150
70
454
Capital expenditures including other intangibles
280
120
60
460
2000
Sales to external customers
$
5,970
$
3,182
$
1,768
$
10,920
Intersegment sales
24
18
45
87
Profit before taxes
371
134
156
661
Unusual items-income (expense) included in profit
    before taxes
(101
)
(105
)
(7
)
(213
)
Segment assets
1,923
891
706
3,520
Depreciation and amortization
240
163
82
485
Capital expenditures including other intangibles
305
113
63
481
1999
Sales to external customers
$
5,264
$
3,486
$
1,722
$
10,472
Intersegment sales
53
38
108
199
Profit before taxes
407
276
157
840
Unusual items-income (expense) included in profit
    before taxes
(72
)
(9
)
(14
)
(95
)
Segment assets
2,072
1,273
1,714
5,059
Depreciation and amortization
227
186
136
549
Capital expenditures including other intangibles
284
156
185
625
The Company accounts for intersegment sales or
transfers at current market prices.
Aggregate sales to the Company's four
largest customers, as a percentage of sales, were
61 percent, 57 percent and 55 percent in 2001,
2000 and 1999, respectively. Sales to Ford Motor Company were
$1,865 million in 2001, $2,073 million in 2000 and
$2,051 million in 1999. Sales to DaimlerChrysler AG were
$1,678 million, $1,540 million and $1,456 million
for 2001, 2000 and 1999, respectively. Sales to General Motors
Corporation were $1,325 million in 2001,
$1,332 million in 2000 and $1,169 million in 1999.
Sales to Volkswagen AG were $1,335 million,
$1,264 million and $1,068 million in 2001, 2000 and
1999, respectively.
F-15
Table of Contents
TRW AUTOMOTIVE INC.
NOTES TO FINANCIAL
STATEMENTS — (Continued)
Reconciliations of the items reported for the
operating segments to the applicable amounts reported in the
combined financial statements are as follows:
2001
2000
1999
(In millions)
Profit before taxes
$
378
$
661
$
840
Corporate expense and other
(183
)
(189
)
(261
)
Financing cost
(369
)
(388
)
(413
)
Net employee benefits income
166
163
160
Goodwill amortization
(63
)
(58
)
(55
)
Purchased in-process research and development
—
—
(67
)
Earnings (loss) before income taxes from
    continuing operations
$
(71
)
$
189
$
204
2001
2000
1999
(In millions)
Segment assets
$
3,009
$
3,520
$
5,059
Segment current operating liabilities
2,098
2,136
1,937
Current deferred taxes
194
206
45
Prepaid pension cost
2,377
2,277
2,656
Goodwill
2,357
2,441
2,457
Segment eliminations and adjustments
89
128
80
Corporate and other
163
585
404
Total assets
$
10,287
$
11,293
$
12,638
Information concerning principal geographic areas
as of and for the three years ended December 31 is as
follows:
United
United
All
States
Germany
Kingdom
Other
Total
(In millions)
Sales to external customers
2001
$
4,344
$
1,723
$
729
$
3,295
$
10,091
2000
4,947
1,773
844
3,356
10,920
1999
4,825
1,856
870
2,921
10,472
Property, plant and equipment-net
2001
998
413
303
861
2,575
2000
1,090
454
301
869
2,714
1999
1,263
519
363
878
3,023
Sales are attributable to geographic areas based
on the location of the assets generating the sales. Inter-area
sales are not significant to the total sales of any geographic
area.
Accounts Receivable Securitization
In November 2001, TRW entered into a
$350 million accounts receivable securitization agreement
with a financial institution and several financial conduits. TRW
established a wholly-owned, fully-consolidated,
bankruptcy-remote, special purpose subsidiary, TRW Receivables
Inc., which will be included in TRW Automotive, for the purpose
of purchasing accounts receivable of TRW and the Company,
including
F-16
Table of Contents
TRW AUTOMOTIVE INC.
NOTES TO FINANCIAL
STATEMENTS — (Continued)
receivables purchased by TRW from certain of its
and the Company's subsidiaries, and selling an undivided
interest in the receivables to the financial conduits. The
agreement provides that collections of receivables are to be
reinvested in new accounts receivable. In accordance with the
agreement, TRW services and collects the receivables on behalf
of the financial conduits. The conduits and the special purpose
subsidiary have no recourse to other assets of the Company or of
TRW for failure of debtors to pay when due.
The securitization transactions are accounted for
as a sale of the receivables under the provisions of
SFAS 140, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities," and
are removed from the Balance Sheet. The proceeds received are
included in cash flows from operating activities in the
Statements of Cash Flows. Financing expenses paid to the
conduits are recorded as a loss on the sale of assets and are
charged to other (income) expense-net in the Statements of
Operations. The book value of the Company's retained
interest in the receivables of $162 million approximates
fair market value due to the current nature of the receivables.
At December 31, 2001 receivables aggregating
$489 million had been sold to the special purpose
subsidiary including $64 million which had been purchased
from TRW businesses other than TRW Automotive. The undivided
interest in the receivables portfolio transferred to the
financial conduits amounted to $327 million.
The table below summarizes certain cash flows
paid to the special purpose subsidiary for the year ended
December 31, 2001:
2001
(In millions)
Proceeds from initial securitization
$
333
Average monthly proceeds from receivables
    securitization
330
Monthly accumulation of proceeds from receivables
    securitization
660
Financial Instruments
Fair values
of financial instruments — at
December 31
2001
2000
Carrying
Fair
Carrying
Fair
Value
Value
Value
Value
(In millions)
Cash and cash equivalents
$
118
$
118
$
151
$
151
Short-term debt
177
177
227
227
Floating rate long-term debt
26
26
38
37
Fixed rate long-term debt
289
276
319
314
Foreign currency forward contracts —
    (liability) asset
(6
)
(6
)
5
5
The fair value of long-term debt was estimated
using a discounted cash flow analysis based on the
Company's current borrowing rates for similar types of
borrowing arrangements. The fair value of the foreign currency
forward contracts was estimated using a discounted cash flow
analysis based on quoted market prices of offsetting contracts.
Foreign currency forward
contracts
— The Company
manufactures and sells its products in countries throughout the
world. As a result, it is exposed to fluctuations in foreign
currency exchange rates. The Company enters into forward
contracts and, to a lesser extent, purchased currency options to
hedge portions of its foreign currency denominated forecasted
revenues, purchases and the subsequent cash flows. The critical
terms of the hedges are the same as the underlying forecasted
transactions, and the hedges are considered to be perfectly
effective to offset the changes in fair value of cash flows from
the hedged transactions. Gains or
F-17
Table of Contents
TRW AUTOMOTIVE INC.
NOTES TO FINANCIAL
STATEMENTS — (Continued)
losses on these instruments, which mature at
various dates through December 2002, are generally recorded in
other comprehensive income (loss) until the underlying
transaction is recognized in net earnings. The earnings impact
is reported in either sales, cost of sales, or other (income)
expense-net, to match the underlying transaction.
The amount of gains and losses reclassified into
net earnings in 2001 as a result of the discontinuation of cash
flow hedges was immaterial. Foreign currency cash flow hedges
with a combined fair value of a $1 million gain after tax
at December 31, 2001 are expected to be recognized in net
earnings in 2002.
In addition, the Company enters into certain
foreign currency forward contracts that are not treated as
hedges under SFAS 133 to hedge recognized foreign currency
transactions. Gains and losses on these contracts are recorded
in net earnings and are substantially offset by the earnings
effect of the revaluation of the underlying foreign currency
denominated transaction.
At December 31, 2001, the Company had
foreign currency forward contracts outstanding with a notional
amount of $515 million, denominated principally in the Euro
and the British pound. Foreign exchange contracts are placed
either through TRW, or directly with a number of major financial
institutions to minimize credit risk. No collateral is held in
relation to the contracts, and the Company anticipates that
these financial institutions will satisfy their obligations
under the contracts.
The following table represents the movement of
amounts reported in other comprehensive income (loss) of
deferred cash flow hedges, net of tax.
2001
(In millions)
Balance at December 31, 2000
$
—
Net change in derivative fair value and other
    movements during the year
(1
)
Amounts reclassified to earnings during the year
2
Other comprehensive income (loss)
$
1
Income Taxes
2001
2000
1999
(In millions)
Earnings (loss) before income taxes from
    continuing operations
U.S.
$
(447
)
$
(161
)
$
(176
)
Non-U.S.
376
350
380
$
(71
)
$
189
$
204
F-18
Table of Contents
TRW AUTOMOTIVE INC.
NOTES TO FINANCIAL
STATEMENTS — (Continued)
2001
2000
1999
(In millions)
Provision for (benefit of) income taxes
    from continuing operations
Current
U.S. federal
$
(120
)
$
(47
)
$
(237
)
Non-U.S
56
43
26
U.S. state and local
(7
)
(22
)
29
(71
)
(26
)
(182
)
Deferred
U.S. federal
17
56
258
Non-U.S
23
44
81
U.S. state and local
(1
)
25
(21
)
39
125
318
$
(32
)
$
99
$
136
2001
2000
1999
Effective income tax rate from continuing
    operations
U.S. statutory income tax rate
35.0
%
35.0
%
35.0
%
Nondeductible expenses
(2.7
)
4.6
0.7
U.S. state and local income taxes net of
    U.S. federal tax benefit
7.2
0.9
2.7
Non-U.S. tax rate variances net of foreign tax
    credits
(48.2
)
13.5
30.3
Non-U.S. government grants
13.4
(4.5
)
—
Prior years' adjustments
(0.6
)
1.6
(9.2
)
Foreign tax refund
18.4
—
—
Non-deductible reserve
26.8
—
—
In-process research and development write-off
—
—
11.5
Other
(4.2
)
1.4
(4.5
)
45.1
%
52.5
%
66.5
%
Deferred income taxes reflect the net tax effects
of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts
used for income tax purposes. At December 31, 2001 and
2000, the Company had unused tax benefits of $82 million
and $121 million, respectively, primarily related to
foreign net operating loss carryforwards for income tax
purposes, of which $57 million and $80 million can be
carried forward indefinitely and the balance expires at various
dates through 2011. A valuation allowance at December 31,
2001 and 2000, of $75 million and $103 million,
respectively, has been recognized to offset the related deferred
tax assets due to the uncertainty of realizing the benefit of
the loss carryforwards.
It is the Company's intention to reinvest
undistributed earnings of certain foreign subsidiaries, thereby
indefinitely postponing their remittance. Accordingly, deferred
income taxes have not provided for accumulated undistributed
earnings of $810 million at December 31, 2001. It is
not practicable to estimate the
F-19
Table of Contents
TRW AUTOMOTIVE INC.
NOTES TO FINANCIAL
STATEMENTS — (Continued)
additional income taxes and applicable
withholding that would be payable on the remittance of such
undistributed earnings.
Deferred tax
Deferred tax
assets
liabilities
2001
2000
2001
2000
(In millions)
Pensions and post-retirement benefits other than
    pensions
$
360
$
367
$
972
$
943
State and local taxes
10
10
—
—
Inventory
19
12
—
—
Reserves and accruals
188
128
—
—
Depreciation and amortization
—
—
85
123
U.S. net operating loss and credit carryforwards
1
26
—
—
Non-U.S. net operating loss carryforwards
81
95
—
—
Available-for-sale equity securities
1
1
—
—
Foreign currency exchange
96
80
—
—
Other
35
58
—
—
791
777
1,057
1,066
Valuation allowance for deferred tax assets
(75
)
(103
)
—
—
$
716
$
674
$
1,057
$
1,066
F-20
Table of Contents
TRW AUTOMOTIVE INC.
NOTES TO FINANCIAL
STATEMENTS — (Continued)
Pension Plans
During the periods presented, substantially all
of TRW Automotive-designated employees participated in
TRW's defined benefits plans. The financial statements of
TRW Automotive reflect the pension assets and liabilities
related to the active and retired TRW Automotive-designated
employees in TRW Automotive's plans or in TRW's plans.
On or about the distribution date, TRW Automotive intends to
establish separate pension plans for plans shared with TRW with
comparable benefits. The following table provides a
reconciliation of the changes in the plans' benefit
obligations and fair value of assets over the two-year period
ended December 31, 2001, and a statement of the funded
status as of December 31, 2001 and 2000:
2001
2000
U.S.
Non-U.S.
U.S.
Non-U.S.
(In millions)
Change in benefit obligations
Benefit obligations at January 1
$
770
$
3,628
$
679
$
3,824
Service cost
26
37
23
46
Interest cost
59
207
55
211
Amendments
—
2
1
—
Actuarial loss
44
32
86
96
Foreign currency exchange rate changes and other
—
(109
)
—
(321
)
Acquisitions
1
—
—
—
Divestitures
—
—
(6
)
(3
)
Benefits paid
(77
)
(243
)
(68
)
(225
)
Benefit obligations at December 31
823
3,554
770
3,628
Change in plan assets
Fair value of plan assets at January 1
830
5,224
899
5,970
Actual return on plan assets
(21
)
(359
)
3
(54
)
Foreign currency exchange rate changes
—
(138
)
—
(491
)
Divestitures
—
—
(8
)
(1
)
Company contributions
4
23
4
18
Plan participant contributions
—
5
—
7
Benefits paid
(77
)
(243
)
(68
)
(225
)
Fair value of plan assets at December 31
736
4,512
830
5,224
Funded status of the plan
(87
)
958
60
1,596
Unrecognized actuarial loss
150
1,583
3
759
Unrecognized prior service cost
3
16
7
8
Unrecognized net transition asset
(1
)
(5
)
(1
)
(6
)
Total recognized
$
65
$
2,552
$
69
$
2,357
F-21
Table of Contents
TRW AUTOMOTIVE INC.
NOTES TO FINANCIAL
STATEMENTS — (Continued)
The following table provides the amounts
recognized in the Balance Sheets as of December 31, 2001
and 2000:
2001
2000
U.S.
Non-U.S.
U.S.
Non-U.S.
(In millions)
Prepaid benefit cost
$
6
$
2,772
$
83
$
2,611
Accrued benefit liability
(13
)
(220
)
(14
)
(254
)
Additional minimum liability
(21
)
(13
)
(8
)
(25
)
Intangible asset and other
2
4
2
3
Accumulated other comprehensive loss
91
9
6
22
Total recognized
$
65
$
2,552
$
69
$
2,357
The projected benefit obligation, accumulated
benefit obligation and fair value of plan assets for the United
States pension plans for the TRW Automotive-designated employees
and retirees with accumulated benefit obligations in excess of
plan assets were $672 million, $605 million and
$546 million, respectively, as of December 31, 2001,
and $132 million, $131 million and $112 million,
respectively, as of December 31, 2000. The pension assets
of the largest United States plan experienced investment losses
during 2001, which accounts for the increase in values from the
prior year.
The projected benefit obligation, accumulated
benefit obligation and fair value of plan assets for the
non-United States pension plans for the TRW
Automotive-designated employees and retirees with accumulated
benefit obligations in excess of plan assets were
$263 million, $239 million and $27 million,
respectively, as of December 31, 2001, and
$263 million, $239 million and $16 million,
respectively, as of December 31, 2000.
The following table provides the components of
net pension (income) cost from continuing operations for the
plans for years 2001, 2000 and 1999:
2001
2000
1999
U.S.
Non-U.S.
U.S.
Non-U.S.
U.S.
Non-U.S.
(In millions)
Defined benefit plans
Service cost-benefits earned during the year
$
26
$
37
$
23
$
46
$
22
$
37
Interest cost on projected benefit obligations
59
207
55
211
49
159
Expected return on plan assets
(80
)
(461
)
(75
)
(466
)
(67
)
(361
)
Curtailment gain
(1
)
—
—
—
—
—
Amortization of recognized loss
(2
)
—
(3
)
—
(1
)
—
Amortization of prior service cost
4
3
3
2
4
2
Amortization of transition asset
—
(1
)
—
(1
)
(1
)
(1
)
Defined benefit plans
6
(215
)
3
(208
)
6
(164
)
Defined contribution plans
1
1
5
1
9
3
Employee stock ownership and savings plan
15
—
11
—
11
—
Total pension (income) cost
$
22
$
(214
)
$
19
$
(207
)
$
26
$
(161
)
F-22
Table of Contents
TRW AUTOMOTIVE INC.
NOTES TO FINANCIAL
STATEMENTS — (Continued)
The assumptions used in the measurement of the
benefit obligations for the active and retired TRW
Automotive-designated employees are shown in the following table:
2001
2000
U.S.
Non-U.S.
U.S.
Non-U.S.
Discount rate
7.25
%
5.5-6.5
%
7.50
%
6.0- 7.0
%
Rate of increase in compensation levels
4.10
%
2.0-4.0
%
4.10
%
3.5- 4.5
%
The expected long-term rate of return on plan
assets for United States plans was 9.5 percent for 2001 and
2000. For non-United States plans the expected long-term rate of
return ranged from 8 to 8.75 percent in 2001 and 2000.
TRW sponsors a contributory stock ownership and
savings plan for which a majority of TRW Automotive-designated
United States employees are eligible and under which TRW matches
employee contributions up to three percent of the
participant's qualified compensation. TRW contributions are
held in an unleveraged employee stock ownership plan. The
Company also sponsors other defined contribution pension plans
covering TRW Automotive-designated employees at some of its
operations.
Post-Retirement Benefits Other than
Pensions
TRW provides health care and life insurance
benefits for a majority of TRW Automotive-designated retired
employees in the United States and Canada. The health care plans
provide for cost sharing, in the form of employee contributions,
deductibles and coinsurance, between TRW and its retirees. The
post-retirement health care plan covering a majority of
employees who retired since August 1, 1988, limits the
annual increase in TRW's contribution toward the
plan's cost to a maximum of the lesser of 50 percent
of medical inflation or four percent. Life insurance benefits
are generally noncontributory. TRW's policy is to fund the
cost of post-retirement health care and life insurance benefits
in amounts determined at the discretion of management. Retirees
in certain other countries are provided similar benefits by
plans sponsored by their governments. On or about the date of
distribution, TRW Automotive intends to establish separate other
post-retirement benefit plans with comparable benefits.
F-23
Table of Contents
TRW AUTOMOTIVE INC.
NOTES TO FINANCIAL
STATEMENTS — (Continued)
The following table provides a reconciliation of
the changes in the plans' benefit obligations and fair
value of assets over the two-year period ended December 31,
2001, and a statement of the funded status as of
December 31, 2001 and 2000 for the active and retired TRW
Automotive-designated employees:
2001
2000
(In millions)
Benefit obligations at January 1
$
797
$
741
Service cost
10
10
Interest cost
56
54
Actuarial loss
49
56
Divestitures
(8
)
(4
)
Foreign currency exchange rate changes
(5
)
(4
)
Plan amendments
—
(3
)
Plan participant contributions
6
4
Benefits paid
(55
)
(57
)
Benefit obligations at December 31
850
797
Fair value of plan assets at January 1
—
—
Company contributions
49
53
Plan participant contributions
6
4
Benefits paid
(55
)
(57
)
Fair value of plan assets at December 31
—
—
Funded status of the plan
(850
)
(797
)
Unrecognized actuarial loss
55
15
Unrecognized prior service cost
(3
)
(3
)
Total accrued benefit cost recognized
$
(798
)
$
(785
)
The following table provides the components of
net post-retirement benefit cost for the plans for years 2001,
2000 and 1999:
2001
2000
1999
(In millions)
Service cost
$
10
$
10
$
10
Interest cost
56
54
45
Amortization of recognized income
—
(1
)
—
Curtailment gain
—
(4
)
—
Net post-retirement benefit cost
$
66
$
59
$
55
The weighted-average discount rate used in
determining the accumulated post-retirement benefit obligations
as of December 31, 2001 and 2000 was 7.25 percent and
7.5 percent, respectively. The weighted-average expected
long-term rate of return on plan assets was 9.5 percent for
2001 and 2000. A 6.4 percent annual rate of increase in the
per capita cost of covered health care benefits was assumed for
2002. The rate was assumed to decrease gradually to
5.1 percent in the year 2009 and remain at that level,
thereafter.
F-24
Table of Contents
TRW AUTOMOTIVE INC.
NOTES TO FINANCIAL
STATEMENTS — (Continued)
A one-percentage-point change in the assumed
health care cost trend rate would have the following effects:
One-percentage-
point
Increase
Decrease
(In millions)
Effect on total of service and interest cost
    components
$
8
$
(7
)
Effect on post-retirement benefit obligations
88
(75
)
Debt and Credit Agreements
2001
2000
(In millions)
Short-term debt
Non-U.S. borrowings
$
177
$
227
Long-term debt
7.25% Note due 2004
$
6
$
6
10.875% Debenture due 2020
260
273
Capitalized leases
28
42
Other borrowings
21
36
Total long-term debt
315
357
Less current portion
18
28
$
297
$
329
Debt allocated from TRW
$
4,105
$
4,469
The Company has borrowings under uncommitted
credit agreements in many of the countries in which it operates.
These borrowings are primarily in the local foreign currency of
the country or region where the Company's operations are
located. The borrowings are provided by various domestic and
international banks at quoted market interest rates. Some of
these borrowings are supported by guarantees from TRW. The
weighted-average interest rate on short-term borrowings
outstanding at December 31, 2001 and 2000, was
6.3 percent and 6.7 percent, respectively.
Capital lease arrangements are provided by
several financial institutions, primarily in the United Kingdom,
at rates ranging from 4.5 percent to 7.4 percent and expire
at various dates through 2010. Other borrowings bear interest at
rates ranging from 3.5 percent to 8.0 percent and
mature at various dates through 2008.
The weighted-average interest rate on debt
allocated from TRW at December 31, 2001 and 2000, was
8.3 percent and 7.7 percent, respectively.
The maturities of long-term debt are, in
millions: 2002-$18; 2003-$18; 2004-$20; 2005-$14; 2006-$11; and
$234 thereafter.
Compensating balance arrangements and fees were
not material.
See the "Basis of Presentation and
Transactions with TRW" note to financial statements for a
discussion of debt allocated from TRW.
F-25
Table of Contents
TRW AUTOMOTIVE INC.
NOTES TO FINANCIAL
STATEMENTS — (Continued)
Lease Commitments
The Company leases certain offices, manufacturing
and research buildings, machinery, automobiles and computer and
other equipment. Such leases, some of which are noncancelable
and in many cases include renewals, expire at various dates. The
Company pays most maintenance, insurance and tax expenses
relating to leased assets. Rental expense for operating leases
was $82 million for 2001, $91 million for 2000 and
$83 million for 1999.
At December 31, 2001, the future minimum
lease payments for noncancelable operating leases totaled
$158 million and are payable as follows, in millions:
2002-$44; 2003-$31; 2004-$24; 2005-$19; 2006-$16; and $24
thereafter.
Capital Stock
TRW Automotive was incorporated in Delaware on
June 3, 2002 with a capitalization of 500 million
shares of $0.001 par value common stock authorized and one share
of common stock outstanding. In addition, 50 million shares
of undesignated preferred stock, par value $0.001 per share,
were authorized, none of which have been issued.
Stock Options
TRW has granted nonqualified stock options to
certain TRW Automotive-designated employees to purchase common
stock at the market price on the date of grant. Stock options
granted to employees become exercisable to the extent of
one-third of the optioned shares for each full year of
employment following the date of grant and expire 10 years
after the date of grant. TRW Automotive applies the provisions
of Accounting Principles Board Opinion (APB) 25
"Accounting for Stock Issued to Employees" in
accounting for its employee stock options and, as such, no
compensation expense is recognized as the exercise price equals
the market price of the stock on the date of grant. Prior to the
distribution date, TRW Automotive intends to establish a stock
option plan for eligible TRW Automotive employees. TRW options
held by TRW Automotive employees are expected to be converted
into TRW Automotive stock options at the distribution date. The
number of shares and the exercise price of the TRW options that
convert into TRW Automotive options will be adjusted using a
conversion formula. The conversion of TRW options into TRW
Automotive options will be done in such a manner that
(1) the aggregate intrinsic value of the options
immediately before and after the exchange are the same,
(2) the ratio of the exercise price per option to the
market value per share is not reduced, and (3) the vesting
provisions and option period of the replacement options are the
same as the original vesting terms and option period of the TRW
options.
A summary of TRW stock options held by TRW
Automotive-designated employees follows:
2001
2000
1999
Weighted-
Weighted-
Weighted-
Average
Average
Average
Thousands
Exercise
Thousands
Exercise
Thousands
Exercise
of Shares
Price
of Shares
Price
of Shares
Price
Outstanding at beginning of year
3,195
$
51.18
2,046
$
47.79
1,474
$
44.57
Granted
93
37.83
1,369
55.10
708
52.52
Exercised
87
23.36
86
33.44
95
31.25
Canceled, expired or terminated
43
56.03
134
50.74
41
51.67
Outstanding at end of year
3,158
51.49
3,195
51.18
2,046
47.79
Exercisable
1,946
50.34
1,280
46.16
938
42.12
Weighted-average fair value of options granted
9.70
15.36
14.56
F-26
Table of Contents
TRW AUTOMOTIVE INC.
NOTES TO FINANCIAL
STATEMENTS — (Continued)
At December 31, 2001, approximately
930 TRW Automotive-designated employees were participants
in TRW's options plans. As of that date, the per share
exercise prices of options outstanding ranged from $27.85 to
$58.88. The following table provides certain information with
respect to TRW stock options held by TRW Automotive-designated
employees outstanding at December 31, 2001:
Options Outstanding
Options Exercisable
Weighted-
Average
Thousands
Remaining
Weighted-
Thousands of
Weighted-
Range of
of Shares
Contractual Life
Average
Shares
Average
Exercise Prices
Outstanding
in Years
Exercise Price
Exercisable
Exercise Price
$27.85 – $39.99
251
4.6
$
33.22
185
$
32.50
$40.00 – $58.88
2,907
7.1
53.07
1,761
52.21
3,158
1,946
Had the compensation cost for the stock options
granted in 2001, 2000 and 1999 been determined based on the fair
value at the grant date, consistent with the fair value method
of SFAS 123 "Accounting for Stock-Based
Compensation" TRW Automotive's net earnings
(loss) would have been effected by additional costs of
$6 million in 2001, $4 million in 2000 and
$1 million in 1999.
Fair value was estimated at the date of grant
using the Black-Scholes option pricing model using the following
weighted-average assumptions for 2001, 2000 and 1999,
respectively: risk-free interest rate of 4.71 percent,
5.83 percent and 6.21 percent; dividend yield of
2.85 percent, 2.61 percent and 2.50 percent;
expected volatility of 28 percent, 27 percent and
25 percent; and an expected option life of six years for
2001, 2000 and 1999.
In addition, TRW has granted restricted stock to
certain TRW Automotive-designated employees in 2001 and 2000.
Restricted stock is nontransferable and subject to forfeiture
until the stock becomes exercisable. The restricted stock that
was granted becomes exercisable at various future dates, ranging
from two to 12 years. The Company applies the provisions of
APB 25 in accounting for its restricted stock and, as such,
compensation expense equal to the market price of the stock on
the date of the grant is recognized over the vesting period.
Restricted stock outstanding, the weighted-average fair value of
stock granted and the weighted-average remaining contractual
life of the vesting period of the restricted stock was 53,000
shares, $31.69 per share and 5.9 years, respectively,
at December 31, 2001. Restricted stock outstanding, the
weighted-average fair value of stock granted and the
weighted-average remaining contractual life of vesting period of
the restricted stock was approximately 65,000 shares,
$44.50 per share and 6.9 years, respectively, at
December 31, 2000. Had the compensation cost for the
restricted stock granted in 2001 and 2000 been determined based
on the fair value at the grant date consistent with the fair
value method of SFAS 123, the Company's net earnings
would not be materially different from the amounts reported. The
TRW restricted stock held by TRW Automotive-designated
employees will be converted into TRW Automotive restricted
stock at the distribution date using the conversion formula as
described above.
F-27
Table of Contents
TRW AUTOMOTIVE INC.
NOTES TO FINANCIAL
STATEMENTS — (Continued)
Accumulated Other Comprehensive Income
(Loss)
The components of accumulated other comprehensive
income (loss) at December 31, 2001 and 2000 are as follows:
2001
2000
(In millions)
Foreign currency exchange loss
(net of tax of $94 million in 2001 and $80 million in
    2000)
$
(356
)
$
(280
)
Unrealized loss on securities
(net of tax of $1 million in 2001 and $1 million in
    2000)
(1
)
(1
)
Unrealized gain on cash flow hedges
(net of tax)
1
—
Minimum pension liability adjustments
(net of tax of $35 million in 2001 and $10 million in
    2000)
(65
)
(18
)
$
(421
)
$
(299
)
Contingencies
Various claims, lawsuits and administrative
proceedings are pending or threatened against the Company or its
subsidiaries, covering a wide range of matters that arise in the
ordinary course of its business activities with respect to
commercial, product liability and environmental matters. In
addition, the Company is conducting a number of environmental
investigations and remedial actions at current and former
Company locations and, along with other companies, has been
named a potentially responsible party for certain waste
management sites. Each of these matters is subject to various
uncertainties, and some of these matters may be resolved
unfavorably with respect to the Company. A reserve estimate for
each environmental matter is established using standard
engineering cost estimating techniques. In the determination of
such costs, consideration is given to the professional judgment
of Company environmental engineers, in consultation with outside
environmental specialists, when necessary. At multi-party sites,
the reserve estimate also reflects the expected allocation of
total project costs among the various potentially responsible
parties. At December 31, 2001, the Company had reserves for
environmental matters of $111 million, including expense of
$2 million recorded during the year. The Company believes
any liability that may result from the resolution of
environmental matters for which sufficient information is
available to support these cost estimates will not have a
material adverse effect on the Company's financial position
or results of operations. However, the Company cannot predict
the effect on the Company's financial position of
expenditures for aspects of certain matters for which there is
insufficient information. In addition, the Company cannot
predict the effect of compliance with environmental laws and
regulations with respect to unknown environmental matters on the
Company's financial position or results of operations or
the possible effect of compliance with environmental
requirements imposed in the future.
Further, product liability claims may be asserted
in the future for events not currently known by management.
Although the ultimate liability from these potential claims
cannot be ascertained at December 31, 2001, management does
not anticipate that any related liability, after consideration
of insurance recovery, would have a material adverse effect on
the Company's financial position.
In October 2000, Kelsey-Hayes Company (formerly
known as Fruehauf Corporation) was served with a grand jury
subpoena relating to a criminal investigation being conducted by
the U.S. Attorney for the Southern District of Illinois.
The U.S. Attorney has informed the Company that the
investigation relates to possible wrongdoing by Kelsey-Hayes
Company and others involving certain loans made by Kelsey-Hayes
Company's then parent corporation to Fruehauf Trailer
Corporation, the handling of the trailing liabilities of
Fruehauf Corporation and actions in connection with the 1996
bankruptcy of Fruehauf Trailer Corporation.
F-28
Table of Contents
TRW AUTOMOTIVE INC.
NOTES TO FINANCIAL
STATEMENTS — (Continued)
Kelsey-Hayes Company became a wholly-owned
subsidiary of TRW upon TRW's acquisition of LucasVarity in
1999 and will become TRW Automotive's wholly-owned
subsidiary prior to the spin-off. The Company is cooperating
with the investigation and is unable to predict the outcome of
the investigation at this time. Management believes that the
ultimate resolution of this matter will not have a material
effect on the Company's financial condition or results of
operations.
On May 6, 2002, ArvinMeritor Inc. filed suit
against TRW in the United States District Court for the Eastern
District of Michigan, claiming breach of contract and breach of
warranty in connection with certain tie rod ends that TRW
supplied to ArvinMeritor and the voluntary recall of some of
these tie rod ends. ArvinMeritor subsequently recalled all of
the tie rod ends, and claims that it is entitled to
reimbursement by TRW for the costs associated with both the
products recalled by TRW and those recalled by ArvinMeritor on
its own. ArvinMeritor is seeking an undisclosed amount of
compensatory and consequential damages. As this suit relates to
TRW's automotive business, any contingent liabilities
associated with this suit will be transferred to TRW Automotive
as part of the restructuring transactions. Management believes
that the Company has meritorious defenses and intends to defend
vigorously, the claims asserted against the Company, but cannot
predict the outcome of this lawsuit.
While certain of the Company's subsidiaries
have been subject in recent years to some asbestos-related
claims, management believes that such claims will not have a
material adverse effect on the Company's financial
condition or results of operations. In general, these claims
seek damages for illnesses alleged to have resulted from
exposure to asbestos used in certain components sold by the
Company's subsidiaries. Management believes that the
majority of the claimants were assembly workers at the major
U.S. automobile manufacturers. The vast majority of these claims
name as defendants numerous manufacturers and suppliers of a
wide variety of products allegedly containing asbestos.
Management believes that, to the extent any of the products sold
by these subsidiaries and at issue in these cases contained
asbestos, the asbestos was encapsulated. Based upon several
years of experience with such claims, management believes that
only a small proportion of the claimants has or will ever
develop any asbestos-related impairment.
The Company's average total annual
settlement costs in connection with asbestos claims over the
last five years have been less than $100,000 in the aggregate,
and legal fees to defend these cases have never exceeded
$500,000 per year. These claims are strongly disputed by the
Company and it has been the Company's policy to defend
against them aggressively. The Company has been successful in
obtaining the dismissal of many cases without any payment
whatsoever. Moreover, there is significant insurance coverage
with solvent carriers with respect to these claims.
Quarterly Financial Information
(unaudited)
First
Second
Third
Fourth
2001
2000
2001
2000
2001
2000
2001
2000
(A)
(B)
(C)
(D)
(E)
(F)
(G)
(H)
(In millions)
Sales
$
2,619
$
2,993
$
2,673
$
2,882
$
2,322
$
2,486
$
2,477
$
2,559
Gross profit
317
455
328
466
290
286
189
293
Earnings (loss) before income taxes from
    continuing operations
24
93
36
161
—
(6
)
(131
)
(59
)
Earnings (loss) from continuing operations
27
43
20
96
(1
)
(8
)
(85
)
(41
)
Net earnings (loss)
29
43
20
97
7
(7
)
(84
)
(40
)
Unusual items-income (expense) after income taxes
5
(51
)
(21
)
(8
)
(40
)
(47
)
(127
)
(51
)
F-29
Table of Contents
TRW AUTOMOTIVE INC.
NOTES TO FINANCIAL
STATEMENTS — (Continued)
(A)
Earnings (loss) before income taxes from
    continuing operations includes a $23 million net gain
    ($28 million after tax) related to asset sales and a
    $31 million charge ($23 million after tax) for
    restructuring actions.
(B)
Earnings (loss) before income taxes from
    continuing operations includes a $22 million net gain
    ($13 million after tax) related to the sale of assets,
    primarily the Nelson Stud Welding and Australian steering
    businesses, a $65 million charge ($49 million after
    tax) related to warranty, claims and litigation, a
    $15 million charge ($11 million after tax) related to
    the automotive restructuring program and a $6 million
    charge ($4 million after tax) relating to foreign currency
    hedges.
(C)
Earnings (loss) before income taxes from
    continuing operations includes a $23 million charge
    ($21 million after tax), primarily related to restructuring
    actions.
(D)
Earnings (loss) before income taxes from
    continuing operations includes a $2 million gain
    ($1 million after tax) related to foreign currency hedges
    and a $14 million charge ($9 million after tax)
    related to the automotive restructuring program.
(E)
Earnings (loss) before income taxes from
    continuing operations includes a $33 million charge
    ($23 million after tax) related to asset impairment and
    restructuring actions, a $29 million charge
    ($19 million after tax) for pending and threatened
    litigation and a $4 million gain ($2 million after
    tax) related to the sale of assets.
(F)
Earnings (loss) before income taxes from
    continuing operations includes a $69 million charge
    ($46 million after tax) related to restructuring and an
    asset impairment and a $2 million charge ($1 million
    after tax) related to foreign currency hedges.
(G)
Earnings (loss) before income taxes from
    continuing operations includes a $149 million charge
    ($104 million after tax) related to restructuring and other
    charges, a $34 million charge ($14 million after tax)
    related to asset impairments and a $9 million loss
    ($9 million after tax) related to the sale of assets.
(H)
Earnings (loss) before income taxes from
    continuing operations includes a $71 million charge
    ($48 million after tax) primarily related to the automotive
    restructuring programs, asset impairments and other charges and
    a $4 million loss ($3 million after tax) related to
    foreign currency hedges.
F-30
Table of Contents
PART II
INFORMATION NOT REQUIRED IN
PROSPECTUS
Item 13.
Other
Expenses of Issuance and Distribution
The following table sets forth the costs and
expenses payable in connection with the distribution of the
securities being registered. All amounts are estimated except
the Securities and Exchange Commission registration fee.
Item
Amount
Securities and Exchange Commission registration
    fee
$
138,368
NYSE original listing fees
250,000
Blue sky fees and expenses
*
Legal fees and expenses
*
Accounting fees and expenses
*
Registrar and transfer agent fees
*
Printing and engraving expenses
*
Miscellaneous expenses
*
Total
*
*
To be filed by amendment.
Item 14.
Indemnification
of Directors and Officers
As permitted by Section 102 of the Delaware
General Corporation Law, or the DGCL, our certificate of
incorporation includes a provision that eliminates the personal
liability of our directors for monetary damages for breach of
fiduciary duty as a director, except for liability:
•
for any breach of the director's duty of
    loyalty to us or our stockholders;
•
for acts or omissions not in good faith or that
    involve intentional misconduct or a knowing violation of law;
•
under section 174 of the DGCL regarding
    unlawful dividends and stock purchases; or
•
for any transaction from which the director
    derived an improper personal benefit.
Our certificate of incorporation also provides
that:
•
we must indemnify (except for expenses) our
    directors and officers to the fullest extent permitted by
    Delaware law;
•
we may advance expenses, as incurred, to our
    directors and executive officers in connection with a legal
    proceeding to the fullest extent permitted by Delaware Law; and
•
we may indemnify our other employees and agents
    to the same extent that we indemnified our officers and
    directors, unless otherwise determined by our board of directors.
Pursuant to Section 145(a) of the DGCL, we
may indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed
action, suit or proceeding (other than an action by or in the
right of the corporation) by reason of the fact that the person
is or was a director, officer, agent or employee of our company
or is or was serving at our request as a director, officer,
agent, or employee of another corporation, partnership, joint
venture, trust or other enterprise, against expenses, including
attorneys' fees, judgment, fines and amounts paid in
settlement actually and reasonably incurred by the person in
connection with such action, suit or proceeding. Pursuant to
Section 145(b) of the DGCL, the power to indemnify also
applies to actions brought by or in the right of the corporation
as well, but only to the extent of
II-1
Table of Contents
defense expenses (including attorneys' fees)
actually and reasonably incurred by the person in connection
with the defense or settlement of such action or suit. Pursuant
to Section 145(b), we shall not indemnify any person in
respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to us unless and only to
the extent that the Court of Chancery or the court in which such
action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the
Court of Chancery or such other court shall deem proper. The
power to indemnify under Sections 145(a) and (b) of
the DGCL applies (i) if such person is successful on the
merits or otherwise in defense of any action, suit or
proceeding, or (ii) if such person acted in good faith and
in a manner he reasonably believed to be in the best interest,
or not opposed to the best interest, of the corporation, and
with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Section 174 of the DGCL provides, among
other things, that a director, who willfully or negligently
approves of an unlawful payment of dividends or an unlawful
stock purchase or redemption, may be held liable for such
actions. A director who was either absent when the unlawful
actions were approved or dissented at the time, may avoid
liability by causing his or her dissent to such actions to be
entered in the books containing the minutes of the meetings of
the board of directors at the time such action occurred or
immediately after such absent director receives notice of the
unlawful acts.
The indemnification provisions contained in our
certificate of incorporation are not exclusive of any other
rights to which a person may be entitled by law, agreement, vote
of stockholders or disinterested directors or otherwise. In
addition, we will maintain insurance on behalf of our directors
and executive officers insuring them against any liability
asserted against them in their capacities as directors or
officers or arising out of such status.
Item 15.
Recent
Sales of Unregistered Stock
In connection with our incorporation and
organization, effective as of June 3, 2002, we issued one
share of common stock to TRW Inc. We believe that this issuance
was exempt from registration under Section 4(2) of the
Securities Act of 1933 as a transaction not involving a public
offering.
Item 16.
Exhibits
and Financial Statement Schedules
(a) Exhibits
Exhibit
Number
Description
3.1
Certificate of Incorporation.
3.2
By-laws.
4.1
Form of Certificate of TRW Automotive Common
    Stock.*
5.1
Opinion of William B. Lawrence regarding legality
    of the securities being registered.*
10.1
Form of Master Distribution Agreement between the
    Registrant and TRW Inc.
10.2
Form of Tax Sharing Agreement between the
    Registrant and TRW Inc.
10.3
Form of Employee Matters Agreement between the
    Registrant and TRW Inc.
10.4
Form of Intellectual Property License Agreement
    between the Registrant and TRW Inc.*
10.5
Form of Transition Services Agreement between the
    Registrant and TRW Inc.*
10.6
Form of TRW Automotive Long-Term Incentive Plan.*
10.7
Form of Trademark License Agreement between the
    Registrant and TRW Inc.*
10.8
Form of Insurance Allocation Agreement between
    the Registrant and TRW Inc.*
21.1
Subsidiaries of the Registrant.*
23.1
Consent of Ernst & Young LLP.
23.2
Consent of William B. Lawrence (included in
    Exhibit 5.1).*
24
Powers of Attorney (included in signature page of
    this Registration Statement).
II-2
Table of Contents
*
To be filed by amendment.
(b) Financial Statement Schedules.
All Schedules for which provision is made in the
applicable accounting regulations of the Securities and Exchange
Commission are not required under the related instructions or
are not applicable and, therefore, have been omitted.
Item 17.
Undertakings
Insofar as the indemnification for liabilities
arising under the Securities Act of 1933 may be permitted as to
directors, officers and controlling persons of the registrant
pursuant to the provisions described in Item 14, or
otherwise, the registrant has been advised that in the opinion
of the SEC, such indemnification is against public policy as
expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payments by the
registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue.
II-3
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities
Act of 1933, the registrant certifies that it has duly caused
this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of
Lyndhurst, State of Ohio, on June 4, 2002.
TRW AUTOMOTIVE INC.
By:
/s/ WILLIAM B. LAWRENCE
William B. Lawrence
Vice President, Secretary and
    Director
We, the undersigned officers and directors of TRW
Automotive Inc., hereby severally constitute and appoint
Kathleen A. Weigand, David F. Menz and Christopher W. Haffke,
and each of them acting alone, our true and lawful
attorneys-in-fact and agents, with full power of substitution
and resubstitution in each of them for him and in his name,
place and stead, and in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this
registration statement (or any other registration statement for
the same offering that is to be effective upon filing pursuant
to Rule 462(b) under the Securities Act of 1933) and to
file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange
Commission and any applicable securities exchange or securities
self-regulatory body, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and
perform each and every act and thing requisite or necessary to
be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of
them or their or his substitute or substitutes may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities
Act of 1933, this registration statement has been signed by the
following persons in the capacities indicated on June 4,
2002.
Signature
Title
Date
/s/ PHILIP A. ODEEN
Philip
    A. Odeen
President and Director
(Principal Executive Officer)
June 4, 2002
/s/ ROBERT H. SWAN
Robert
    H. Swan
Vice President, Treasurer and Director
(Principal Financial and
Accounting Officer)
June 4, 2002
/s/ WILLIAM B. LAWRENCE
William
    B. Lawrence
Vice President, Secretary and Director
June 4, 2002
/s/ HOWARD V. KNICELY
Howard
    V. Knicely
Vice President and Director
June 4, 2002
/s/ KATHLEEN A. WEIGAND
Kathleen
    A. Weigand
Vice President and Director
June 4, 2002
Table of Contents
EXHIBIT INDEX
Exhibit
Number
Description
3.1
Certificate of Incorporation.
3.2
By-laws.
4.1
Form of Certificate of TRW Automotive Common
    Stock.*
5.1
Opinion of William B. Lawrence regarding legality
    of the securities being registered.*
10.1
Form of Master Distribution Agreement between the
    Registrant and TRW Inc.
10.2
Form of Tax Sharing Agreement between the
    Registrant and TRW Inc.
10.3
Form of Employee Matters Agreement between the
    Registrant and TRW Inc.
10.4
Form of Intellectual Property License Agreement
    between the Registrant and TRW Inc.*
10.5
Form of Transition Services Agreement between the
    Registrant and TRW Inc.*
10.6
Form of TRW Automotive Long-Term Incentive Plan.*
10.7
Form of Trademark License Agreement between the
    Registrant and TRW Inc.*
10.8
Form of Insurance Allocation Agreement between
    the Registrant and TRW Inc.*
21.1
Subsidiaries of the Registrant.*
23.1
Consent of Ernst & Young LLP.
23.2
Consent of William B. Lawrence (included in
    Exhibit 5.1).*
24
Powers of Attorney (included in signature page of
    this Registration Statement).
*
To be filed by amendment.