Framatome Connectors USA, Inc. - Page 17




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               Burndy-US first claimed Burndy-Japan as a CFC on its 1987              
          return.  Burndy-US and Burndy-Japan prepared consolidated                   
          financial statements beginning in September 1993 and thereafter.            
          D.   Withholding Tax Issue                                                  
               1.   Purchase of TRW Daut & Reitz by Burndy-US                         
               In 1992, TRW, Inc. (TRW), a large U.S. multinational                   
          company, manufactured automotive components.  TRW had a U.S.                
          subsidiary, two German affiliates, and one Austrian affiliate               
          (collectively, TRW Daut & Reitz).  The U.S. subsidiary                      
          manufactured and sold automotive electronic connectors for the              
          U.S. market.  The German and Austrian affiliates did so for the             
          German market.                                                              
               TRW sold TRW Daut & Reitz in 1992 to help finance its                  
          expansion into the air bag business.  FCI paid TRW $67,201,317              
          for TRW Daut & Reitz.  TRW owned patents and had two U.S. patent            
          applications related to air bag connectors pending in 1992.  FCI            
          wanted to buy the rights to those patents to prevent TRW from               
          competing with FCI.  TRW agreed to license the use of its                   
          patents.  TRW also agreed not to compete in the air bag market.             
          One noncompetition agreement covered the United States and                  
          Europe.  The second covered Germany, and the third covered                  
          Austria.                                                                    










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