Northrop Grumman 2009 Annual Report Download - page 90

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certain Electronic Systems businesses were transferred to Information Systems during the first quarter of 2008,
along with goodwill of $47 million. During the second quarter of 2008, the company transferred certain
programs and assets, including goodwill of $505 million, from the missiles business in the Information Systems
segment to the Aerospace Systems segment.
Goodwill totaling $1 billion related to ASD has been included in assets of discontinued operations at
December 31, 2008 and excluded from the goodwill balance of Information Systems for all periods presented
(see Note 5).
Fair Value Adjustments to Net Assets Acquired – For 2008, the fair value adjustments were primarily due to the final
settlement of the Internal Revenue Service (IRS) examination of the 1999-2002 TRW income tax returns (see
Note 12) and purchase price allocation related to the 3001 Inc. acquisition (see Note 4).
Purchased Intangible Assets
The table below summarizes the company’s aggregate purchased intangible assets:
$ in millions
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
December 31, 2009 December 31, 2008
Contract and program
intangibles $2,644 $(1,793) $851 $2,614 $(1,692) $922
Other purchased
intangibles 100 (78) 22 100 (75) 25
Total $2,744 $(1,871) $873 $2,714 $(1,767) $947
The company’s purchased intangible assets are subject to amortization and are being amortized on a straight-line
basis over an aggregate weighted-average period of 28 years. Aggregate amortization expense for 2009, 2008, and
2007, was $104 million, $136 million, and $132 million, respectively. The 2008 amount includes a $19 million
impairment of purchased intangibles recorded in the first quarter of 2008 associated with the LHD 8 and other
Gulf Coast shipbuilding programs.
The table below shows expected amortization for purchased intangibles as of December 31, 2009, for each of the
next five years:
$ in millions
Year ending December 31
2010 $92
2011 56
2012 56
2013 48
2014 36
11. FAIR VALUE OF FINANCIAL INSTRUMENTS
Investments in Marketable Securities – The company holds a portfolio of marketable securities, primarily consisting
of equity securities that are classified as either trading or available-for-sale and can be liquidated without
restriction. These assets are recorded at fair value, substantially all of which are based upon quoted market prices
for identical instruments in active markets and thus considered Level 1 inputs. As of December 31, 2009, and
December 31, 2008, respectively, there were marketable equity securities of $58 million and $44 million included
in prepaid expenses and other current assets and $233 million and $180 million of marketable equity securities
included in miscellaneous other assets.
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NORTHROP GRUMMAN CORPORATION
eBP - v54508-i003_a.pdf - Page 84 of 124 - March 11, 2010 - 20:02:40