Northrop Grumman 2009 Annual Report Download - page 95

Tax Carryforwards – During 2009, the company utilized all of its remaining capital loss carryforwards in
connection with the sale of ASD.
13. NOTES PAYABLE TO BANKS AND LONG-TERM DEBT
Lines of Credit – The company has available uncommitted short-term credit lines in the form of money market
facilities with several banks. The amount and conditions for borrowing under these credit lines depend on the
availability and terms prevailing in the marketplace. No fees or compensating balances are required for these
credit facilities.
Credit Facility – The company has a revolving credit facility in an aggregate principal amount of $2 billion that
matures on August 10, 2012. The credit facility permits the company to request additional lending commitments
of up to $500 million from the lenders under the agreement or other eligible lenders under certain
circumstances. The agreement provides for swingline loans and letters of credit as sub-facilities for the credit
facilities provided for in the agreement. Borrowings under the credit facility bear interest at various rates,
including the London Interbank Offered Rate, adjusted based on the company’s credit rating, or an alternate base
rate plus an incremental margin. The credit facility also requires a facility fee based on the daily aggregate
amount of commitments (whether or not utilized) and the company’s credit rating level, and contains a financial
covenant relating to a maximum debt to capitalization ratio, and certain restrictions on additional asset liens.
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. As of
December 31, 2009, the company was in compliance with all covenants.
Gulf Opportunity Zone Industrial Development Revenue Bonds – As of December 31, 2009 and 2008, Shipbuilding
had $200 million outstanding from the issuance of Gulf Opportunity Zone Industrial Development Revenue
Bonds issued by the Mississippi Business Finance Corporation. These bonds accrue interest at a fixed rate of
4.55 percent per annum (payable semi-annually), and repayment of principal and interest is guaranteed by the
company. In accordance with the terms of the bonds, the proceeds have been used to finance the construction,
reconstruction, and renovation of the company’s interest in certain ship manufacturing and repair facilities, or
portions thereof, located in the state of Mississippi.
Debt Issuance – In July 2009, the company 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, and the notes will mature on August 1, 2014, and August 1, 2019, respectively. These
senior notes are subject to redemption at the company’s 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. On October 15, 2009, a portion of the net proceeds was
used to retire $400 million of 8 percent senior debt that had matured.
Long-term debt consisted of the following:
$ in millions 2009 2008
December 31
Notes and debentures due 2010 to 2036, rates from 3.7% to 9.375% $3,964 $3,600
Other indebtedness due 2010 to 2028, rates from 4.55% to 8.5% 318 320
Total long-term debt 4,282 3,920
Less current portion 91 477
Long-term debt, net of current portion $4,191 $3,443
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NORTHROP GRUMMAN CORPORATION
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