Northrop Grumman 2011 Annual Report Download - page 92

NORTHROP GRUMMAN CORPORATION
13. 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 – 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 amended the company’s
$2 billion five-year credit facility dated August 10, 2007, by reducing the aggregate principal amount available
under the facility by $500 million to $1.5 billion and extending the maturity date to September 2016. The second
Credit Agreement is a new 364-day revolving credit facility in an aggregate principal amount of $500 million. The
credit facilities permit the company to request additional lending commitments of up to $500 million from the
lenders under the agreement or through other eligible lenders under certain circumstances. Borrowings under the
credit facilities bear interest at various rates, including the LIBOR (or an alternate base rate), plus an incremental
margin based on the company’s credit ratings and credit default swap spread. The credit facilities also require a
commitment fee based on the daily aggregate unused amount of commitments and the company’s credit ratings,
and contain a financial covenant relating to a maximum debt to capitalization ratio, and certain restrictions on
additional asset liens. There were no borrowings under the facilities in the years ended December 31, 2011 and
2010 and no balances outstanding under the credit facilities at December 31, 2011 and 2010. As of December 31,
2011, the company was in compliance with all covenants under these Credit Agreements.
Debt Tender Offers – In November 2010, the company made a tender offer for $1.9 billion of debt securities issued
by its subsidiary Northrop Grumman Systems Corporation and maturing in 2016 to 2036 with interest rates
ranging from 6.98 percent to 7.875 percent. Approximately $682 million in aggregate principal amount was
purchased for a total price of $919 million (including accrued and unpaid interest on the securities). The company
recorded a pre-tax charge of $229 million principally related to the premiums paid on the debt tendered.
Debt Issuance – In November 2010, the company issued $500 million of 5-year, $700 million of 10-year, and $300
million of 30-year unsecured senior obligations. Interest on the notes is payable semi-annually in arrears at fixed
rates of 1.85 percent, 3.50 percent, and 5.05 percent per annum, and the notes will mature on November 15,
2015, March 15, 2021 and November 15, 2040, 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.
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.
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