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TRW Inc. Ratings Affirmed by S&P After Acquisition Announcement

21 November 1997

TRW Inc. Ratings Affirmed by S&P After Acquisition Announcement

    NEW YORK, Nov. 21 -- Standard & Poor's today affirmed TRW
Inc.'s ratings (see list below), following the company's announcement that it
is acquiring BDM International, Inc. for close to $1 billion.
    BDM is a provider of advanced information technology services and
technical assistance to governmental and commercial clients.  It serves both
U.S. and non-U.S. markets.  The acquisition will enhance TRW's space and
defense segment by providing it with businesses that complement its own and
new customer relationships.  Although the acquisition will cause debt leverage
to increase to almost 50%, debt to capital is expected to decline to 40% over
the next year or two.  TRW has indicated that it remains committed to
maintaining a moderate capital structure, with debt leverage in the 35%-40%
range.
    TRW's ratings reflect its strong competitive positions in its two
business segments: automotive parts, and space and defense.  The company's
strong business positions and good cost controls enable it to generate
substantial funds from operations.  Although cash generation will be hurt by
increased interest expense and a large tax payment next year, the company is
expected to restore funds from operations to debt to at least 50% over the
next two years.  Last year TRW generated $1 billion in cash proceeds from the
sale of the information services business.  It has been using these funds for
acquisitions and share repurchases.  With the increase in debt leverage
resulting from this acquisition, TRW is expected to substantially curtail its
share buyback program until debt leverage declines to more moderate levels.
    OUTLOOK: STABLE
    TRW's leading market positions, favorable overall business prospects, and
efficient operations should limit downside risk.  Upside potential is limited
by competitive market conditions. -- CreditWire

    RATINGS AFFIRMED

    TRW Inc.
      Corporate credit rating               A
      Senior unsecured debt                 A
      Preference stock                      A
      Commercial paper                      A-1

SOURCE  Standard & Poor's CreditWire