Northrop Grumman 2011 Annual Report Download - page 39

NORTHROP GRUMMAN CORPORATION
Cybersecurity
Our industry and the broader national security community are subject to various cybersecurity threats including,
but not limited to, attempts to gain unauthorized access to sensitive information. We proactively work to assess
and mitigate the evolving risks. In addition, we have partnered with various industry and government participants,
including the DoD, to collaborate around increased awareness and enhanced protections against cybersecurity
threats. See Risk Factors located in Part I, Item 1A for a more complete description of the risks that we face due to
security threats, including cybersecurity threats.
Green Initiatives
We could be affected by future laws or regulations, including but not limited to, those enacted in response to
climate change concerns and other actions known as “green initiatives.” In 2009, we established a goal of reducing
our greenhouse gas emissions over a five-year period through December 31, 2014. In 2010, we established goals
for water usage and solid waste generation. To comply with laws, regulations, and green initiatives, including our
goals, we have incurred and expect to incur capital and operating costs, but at this time, such costs have not had,
and we do not expect that such costs will have, a material adverse effect on the company’s consolidated financial
position, results of operations or cash flows.
BUSINESS DISPOSITIONS
2011 – We completed the spin-off to our shareholders of HII effective March 31, 2011. HII operates the business
that was previously the Shipbuilding segment (Shipbuilding) of the company prior to the spin-off. The spin-off
was the culmination of the company’s decision to explore strategic alternatives for Shipbuilding as it was
determined to be in the best interests of shareholders, customers, and employees to allow both the company and
Shipbuilding to pursue more effectively their respective opportunities to maximize value. We made a pro rata
distribution to our shareholders of one share of HII common stock for every six shares of our common stock held
on the record date of March 30, 2011, or 48.8 million shares of HII common stock. There was no gain or loss
recognized by the company as a result of the spin-off transaction. In connection with the spin-off, HII issued
senior notes and entered into a credit facility with third-party lenders, and HII used a portion of the proceeds of
the notes and credit facility to fund a $1.4 billion cash contribution to us. Sales for Shipbuilding for the three
months ended March 31, 2011, were $1.6 billion and sales for the years ended December 31, 2010 and 2009,
were $6.7 billion and $6.2 billion, respectively. The assets, liabilities and operating results of this business unit are
reported as discontinued operations in the consolidated financial statements for all periods presented.
2009 – We sold our Advisory Services Division (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 the year ended December 31, 2009 was approximately $1.5 billion.
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