Northrop Grumman 2009 Annual Report Download - page 39

Prime contracts with various agencies of the U.S. Government and subcontracts with other prime contractors are
subject to numerous procurement regulations, including the False Claims Act and the International Traffic in
Arms Regulations promulgated under the Arms Export Control Act. Noncompliance found by any one agency
may result in fines, penalties, debarment, or suspension from receiving additional contracts with all
U.S. Government agencies. We could experience material adverse effects on our business and results of
operations if we were suspended or debarred from additional contracts.
We could be affected by future laws or regulations, including those enacted in response to climate change
concerns and other actions known as “green initiatives.” We recently established a goal of reducing our
greenhouse gas emissions during the next five years. To comply with current and future environmental laws and
regulations and to meet this goal, we expect to incur capital and operating costs, but at this time we do not expect
that such costs will have a material adverse effect upon our financial position, results of operations or cash flows.
See Risk Factors located in Part I, Item 1A for a more complete description of risks faced by us and the defense
industry.
BUSINESS ACQUISITIONS
2009 – We acquired Sonoma Photonics, Inc., as well as assets from Swift Engineering’s Killer Bee Unmanned Air
Systems product line in April 2009 for an aggregate amount of approximately $33 million. The operating results
from the date of acquisition are reported in the Aerospace Systems segment.
2008 – We acquired 3001 International, Inc. (3001 Inc.) in October 2008 for approximately $92 million in cash.
3001 Inc. provides geospatial data production and analysis, including airborne imaging, surveying, mapping and
geographic information systems for U.S. and international government intelligence, defense and civilian customers.
The operating results of 3001 Inc. are reported in the Information Systems segment from the date of acquisition.
2007 – We acquired Xinetics Inc. and the remaining 61 percent of Scaled Composites, LLC, both of which are
reported in the Aerospace Systems segment, during the third quarter of 2007, for an aggregate amount of
approximately $100 million in cash.
In July 2007, we reorganized the AMSEC, LLC joint venture (AMSEC) with our partner, Science Applications
International Corporation (SAIC), by dividing AMSEC along customer and product lines. AMSEC is a full-
service supplier that provides engineering, logistics and technical support services primarily to U.S. Navy ship
and aviation programs. Under the reorganization plan, we retained the ship engineering, logistics and technical
service businesses under the AMSEC name (the AMSEC Businesses) and, in exchange, SAIC received the
aviation, combat systems and strike force integration services businesses (the Divested Businesses). We treated this
reorganization as a step acquisition for the acquisition of SAIC’s interests in the AMSEC Businesses, and
recognized a pre-tax gain of $23 million for the effective sale of our interests in the Divested Businesses. From
the date of this reorganization, the operating results of the AMSEC Businesses and transaction gain have been
consolidated in the Shipbuilding segment. Prior to the reorganization, we accounted for the part of AMSEC,
LLC that we did not already own under the equity method.
In January 2007, we acquired Essex Corporation (Essex) for approximately $590 million in cash, including the
assumption of debt totaling $23 million. Essex provides signal processing services and products, and advanced
optoelectronic imaging for U.S. government intelligence and defense customers. We report operating results of
Essex in the Information Systems segment.
BUSINESS DISPOSITIONS
2009 – We sold ASD in December 2009, for $1.65 billion in cash to an investor group led by General Atlantic,
LLC and affiliates of Kohlberg Kravis Roberts & Co. L.P., and recognized a gain of $15 million, net of taxes.
ASD was a business unit comprised of the assets and liabilities of TASC, Inc., its wholly-owned subsidiary TASC
Services Corporation, and certain contracts carved out from other businesses also in Information Systems that
provide systems engineering technical assistance (SETA) and other analysis and advisory services. Sales for ASD in
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NORTHROP GRUMMAN CORPORATION
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