Northrop Grumman 2012 Annual Report Download - page 64

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NORTHROP GRUMMAN CORPORATION
-54-
Share repurchases take place under pre-established programs, depending on market conditions in the open market or
in privately negotiated transactions. The company retires its common stock upon repurchase and has not made any
purchases of common stock other than in connection with these publicly announced repurchase program
authorizations.
In connection with the spin-off of the former shipbuilding business (see Note 3), the company obtained a Private
Letter Ruling from the Internal Revenue Service (IRS) that generally limits our share repurchases to approximately
88 million shares within two years of the spin-off. The limitation expires on March 31, 2013. Since the spin-off we
have repurchased approximately 61 million shares of our common stock, and as of December 31, 2012, the company
may repurchase approximately 27 million shares under the Private Letter Ruling limitation. Cash available from
unusual transactions, such as the disposition of significant assets, should they arise, can be used to repurchase
additional shares.
Dividends on Common Stock
In May 2012, the company increased the quarterly common stock dividend to $0.55 per share; an increase from the
previous amount of 0.50 per share.
In May 2011, the company increased the quarterly common stock dividend to $0.50 per share from the previous
amount of 0.47 per share.
In May 2010, the company increased the quarterly common stock dividend to $0.47 per share from the previous
amount of 0.43 per share.
3. BUSINESS DISPOSITIONS
There were no material dispositions in 2012.
Huntington Ingalls Industries, Inc. (HII)
Effective March 31, 2011, the company completed the spin-off to its shareholders of HII. HII was formed to operate
the company's former shipbuilding business. The company made a pro rata distribution to its shareholders of one
share of HII common stock for every six shares of the company’s common stock held on the record date of
March 30, 2011, or 48.8 million shares of HII common stock. HII paid a $1.4 billion cash contribution to the
company. There was no gain or loss recognized as a result of the spin-off transaction.
Prior to the completion of the spin-off, the company and HII entered into a Separation and Distribution Agreement
dated March 29, 2011, and several other agreements that govern the post-separation relationship. These agreements
generally provide that each party is responsible for its respective assets, liabilities and obligations following the
spin-off, including employee benefits, intellectual property, information technology, insurance, and tax-related assets
and liabilities.
In connection with the spin-off, the company incurred $28 million of non-deductible transaction costs for each of the
years ended December 31, 2011 and 2010, which were included in discontinued operations.
National Security Technologies Deconsolidation
Effective January 1, 2011, the company reduced its participation in the National Security Technologies joint venture
(NSTec). As a result of the reduced participation in the joint venture, the company no longer consolidates NSTec’s
results in the consolidated financial statements. NSTec’s sales that were included in the company’s total sales for the
year ended December 31, 2010, were $579 million.