Third quarter 2001 sales were $3.9 billion, compared with $4.1 billion in the prior year. Including unusual items, net earnings were $0.61 per share, compared with $0.26 per share in the prior year quarter.

For the second consecutive quarter, net debt was reduced by approximately $200 million during the quarter resulting from a combination of cash flow from operations and asset sales.

"TRW met its earnings per share commitment for the third quarter and generated $200 million of cash flow, in spite of a weakened environment," David M. Cote, Chairman, President and Chief Executive Officer said.

"The cost reductions and productivity improvements initiated during the course of the year enabled us to largely offset the adverse effects of the nation's recent tragic events and the slowing economy."

To reduce costs, the company is focusing aggressively on employment reductions in both the automotive and aerospace businesses, a rapid response to unexpected market changes.

Meanwhile, the Systems and the Space and Electronics businesses should continue to experience profitable growth, as these units are called upon increasingly to support the nation's important homeland defense initiatives.

Two contracts awarded during the quarter point to TRW's expanding importance to key Department of Defense programs. Demonstrating TRW's continued growth and expertise in command and control systems, the company received a seven-year, $564 million follow-on contract for battle management command, control and communications products for a U.S. ground-based missile defense program.

In a separate award, TRW's recognized systems expertise and its experience supporting the nation's Joint Warfighting Center earned the company a contract with a potential value of $262 million to apply TRW's extensive modeling and simulation capabilities to support the country's military forces' training activities.

"Since the events of September 11, we have announced actions to reduce employment company-wide by over 3,000 salaried positions. The emphasis on productivity improvement will be intensified as we integrate principles of the Six Sigma program throughout all of the company's businesses," Mr. Cote said.

"TRW's ongoing strength is in its diverse portfolio of businesses. In this uncertain environment, strong performances in our Systems and Space and Electronics businesses should enable the company to better weather cyclical downturns."

TRW reduced its net debt position to $6.2 billion by generating for the second consecutive quarter $200 million in cash. This reduction was driven by cash flow from both asset sales and operations, including a reduction of working capital in the quarter.

For the nine months ended September 30, 2001, the company's net debt position was reduced by approximately $200 million, after paying approximately $130 million of dividends and servicing the company's debt. Cash generation will continue to receive the highest priority attention.

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