Northrop Grumman 2012 Annual Report Download - page 45

NORTHROP GRUMMAN CORPORATION
-35-
Operating Activities
2012 – Cash provided by continuing operations in 2012 increased $293 million, as compared to 2011, primarily due
to lower pension contributions, partially offset by higher income taxes paid. In 2012, we contributed $367 million to
our pension plans, of which $300 million was voluntarily pre-funded, as compared with $1.1 billion in 2011, of
which $1.0 billion was voluntarily pre-funded.
2011 – Cash provided by continuing operations in 2011 increased $291 million, as compared to 2010, primarily due
to lower tax payments and changes in trade working capital, partially offset by higher pension plan contributions. In
2011, pension plan contributions totaled $1.1 billion, of which $1 billion was voluntarily pre-funded. In 2010,
pension plan contributions totaled $789 million, of which $728 million was voluntarily pre-funded.
Investing Activities
2012 – Cash used in investing activities from continuing operations in 2012 decreased $827 million, as compared to
the cash provided by investing activities in 2011, reflecting a $1.4 billion contribution received from the spin-off of
Shipbuilding business in 2011, partially offset by $250 million in proceeds from the maturity of short-term
investments in 2012 that were purchased in 2011.
2011 – Cash provided by investing activities from continuing operations increased $1.3 billion as compared to 2010,
reflecting a $1.4 billion contribution received from the spin-off of Shipbuilding business, partially offset by $250
million net purchases of a short-term investment in 2011.
Financing Activities
2012 – Net cash used in financing activities from continuing operations in 2012 decreased $1.8 billion, as compared
to 2011, reflecting approximately $980 million lower repurchases of common stock and $768 of debt repayments in
2011 that did not recur in 2012.
2011 – Net cash used in financing activities from continuing operations in 2011 increased $2.4 billion, as compared
to 2010, reflecting approximately $1.1 billion higher repurchases of common stock and $1.5 billion of debt proceeds
in 2010.
Credit Facilities
In September 2011, the company entered into two senior unsecured credit facilities (the Credit Agreements) in an
aggregate principal amount of $2 billion. The first Credit Agreement is for $1.5 billion with a maturity date of
September 2016. The second Credit Agreement was a 364-day revolving credit facility in an aggregate principal
amount of $500 million. In September 2012, the company entered into a new 364-day revolving credit facility in an
aggregate principal amount of $500 million, replacing the previous $500 million 364-day revolving credit facility.
The Credit Agreements contain covenants which restrict the company’s ability to sell all or substantially all of its
assets, merge or consolidate with another entity or undertake other fundamental changes and incur liens. The
company also cannot permit the ratio of its consolidated debt to capitalization (as set forth in the Credit Agreements)
to exceed 65 percent. The company is in compliance with all covenants under the Credit Agreements. At
December 31, 2012, there was no balance outstanding under either of these credit facilities.
Other Sources and Uses of Capital
Additional Capital – We believe we can obtain additional capital, if necessary for long-term liquidity, from such
sources as the public or private capital markets, the sale of assets, sale and leaseback of operating assets, and leasing
rather than purchasing new assets. We have an effective shelf registration statement on file with the SEC, which
allows us to access capital in a timely manner.
Financial Arrangements – In the ordinary course of business, the company uses standby letters of credit and
guarantees issued by commercial banks and surety bonds issued principally by insurance companies to guarantee the
performance on certain obligations. At December 31, 2012, there were $193 million of stand-by letters of credit,
$295 million of bank guarantees, and $168 million of surety bonds outstanding.