Northrop Grumman 2009 Annual Report Download - page 60

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Opportunity Zone Industrial Development Revenue Bonds (see Note 13 to the consolidated financial statements
in Part II, Item 8) of which $60 million remained restricted as of December 31, 2007. This was partially offset by
$11 million new restrictions related to the Xinetics purchase.
Capital expenditures in 2007 were $681 million, including $118 million to replace property damaged by
Hurricane Katrina and $47 million of capitalized software costs.
Financing Activities
2009 – Cash used in financing activities in 2009 was $1.2 billion compared with $2 billion in 2008. The
$815 million decrease in cash used is primarily due to the $843 million in net proceeds from issuance of debt.
In July 2009, we issued $350 million of 5-year and $500 million of 10-year unsecured senior obligations. Interest
on the notes is payable semi-annually in arrears at fixed rates of 3.70 percent and 5.05 percent per annum. The
notes will mature on August 1, 2014, and August 1, 2019, respectively. These senior notes are subject to
redemption at our discretion at any time prior to maturity in whole or in part at the principal amount plus any
make-whole premium and accrued and unpaid interest. The net proceeds from these notes are being used for
general corporate purposes including debt repayment, acquisitions, share repurchases, pension plan funding, and
working capital. A portion of the net proceeds was used to retire $400 million of 8 percent senior debt that
matured in the third quarter of 2009.
2008 – Cash used in financing activities in 2008 was $2 billion compared to $1.5 billion in 2007. The
$532 million increase is primarily due to $380 million more for common stock purchases and $171 million lower
proceeds from stock option exercises. See Note 7 to the consolidated financial statements in Part II, Item 8 for a
discussion concerning our common stock repurchases.
2007 – Cash used in financing activities in 2007 was $1.5 billion compared to $1.7 billion in 2006. The
$233 million decrease is primarily due to $922 million lower net repayments of long-term debt, partially offset
by $350 million more common stock repurchases, $119 million lower proceeds from stock option exercises,
$113 million higher net payments under lines of credits, and $102 million for higher dividends paid.
Share Repurchases – We repurchased 23.1 million, 21.4 million, and 15.4 million shares in 2009, 2008, and 2007,
respectively. See Note 7 to the consolidated financial statements in Part II, Item 8.
Credit Ratings
The long term senior unsecured debt credit ratings at December 31, 2009, are summarized below:
Fitch Moody’s Standard & Poors
Northrop Grumman Corporation BBB+ Baa2 BBB
Northrop Grumman Systems Corporation BBB+ Baa1 BBB+
On December 31, 2009, Northrop Grumman Space & Mission Systems Corp. (NGS&MSC) (formerly TRW
Inc.) was merged into Northrop Grumman Systems Corporation (NGSC) and NGSC became the
successor-in-interest to NGS&MSC with respect to the debt previously issued by TRW Inc.
Credit Facility
We have a revolving credit agreement which provides for a five-year revolving credit facility in an aggregate
principal amount of $2 billion and a maturity date of August 10, 2012. The credit facility permits us to request
additional lending commitments from the lenders under the agreement or other eligible lenders under certain
circumstances, and thereby increase the aggregate principal amount of the lending commitments under the
agreement by up to an additional $500 million. Our credit agreement contains a financial covenant relating to a
maximum debt to capitalization ratio, and certain restrictions on additional asset liens, unless permitted by the
agreement. As of December 31, 2009, we were in compliance with all covenants.
There were no borrowings during 2009 and a maximum of $300 million borrowed under this facility during
2008. There was no balance outstanding under this facility at December 31, 2009, and 2008.
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NORTHROP GRUMMAN CORPORATION
eBP - v54508-i003_a.pdf - Page 54 of 124 - March 11, 2010 - 20:02:39