Northrop Grumman 2012 Annual Report Download - page 71

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NORTHROP GRUMMAN CORPORATION
-61-
The changes in the carrying amounts of goodwill for the years ended December 31, 2012 and 2011, were as follows:
$ in millions Aerospace
Systems Electronic
Systems Information
Systems Technical
Services Total
Balance as of December 31, 2010 $3,801 $2,402 $5,248 $925 $12,376
Businesses sold —(2)— — (2)
Balance as of December 31, 2011 $3,801 $2,400 $5,248 $925 $12,374
Businesses acquired, sold and other (43) 10 39 51 57
Balance as of December 31, 2012 $3,758 $2,410 $5,287 $976 $12,431
Segment Realignments
On January 1, 2012, the company transferred its missile business (principally the ICBM program), from Aerospace
Systems to Technical Services. In connection with this realignment, $51 million of goodwill was transferred from
Aerospace Systems to Technical Services and is reflected in the amounts above for all years presented.
Purchased Intangible Assets
As of December 31, 2012 and 2011, gross contract, program, and other intangible assets were $1.8 billion and
accumulated amortization was $1.7 billion. Net contract, program, and other intangible assets were $137 million, at
December 31, 2012, and $155 million at December 31, 2011.
Amortization expense for 2012, 2011, and 2010, was $36 million, $37 million, and $71 million, respectively. The
company’s purchased intangible assets are being amortized on a straight-line basis over an aggregate weighted-
average period of 17 years and are included in other non-current assets in the consolidated statements of financial
position. As of December 31, 2012, the expected future amortization of purchased intangibles for each of the next
five years is $30 million in 2013, $18 million in 2014, $17 million in 2015, $11 million in 2016, and $10 million in
2017.
9. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table presents the fair value information for those assets and liabilities measured at fair value on a
recurring basis:
December 31, 2012 December 31, 2011
$ in millions Carrying
Value Fair
Value Carrying
Value Fair
Value
Financial Assets (Liabilities)
Marketable Securities
Trading $ 259 $ 259 $ 219 $ 219
Available-for-sale 3 3 4 4
Held-to-maturity time deposits — — 250 250
Derivatives (1)(1)7 7
Long-term debt, including current portion (3,935)(4,834)(3,940)(4,675)
There were no transfers of financial instruments between the three levels of fair value hierarchy during the years
ended December 31, 2012 and 2011.
The carrying value of cash and cash equivalents approximate fair value.
Investments in Marketable Securities
The company holds a portfolio of marketable securities to partially fund long-term deferred compensation programs,
consisting of equity securities that are classified as either trading or available-for-sale, which can be liquidated
without restriction. These assets are recorded at fair value and are valued using Level 1 inputs (quoted market
prices). In addition, the company occasionally holds short-term investments classified as held-to-maturity that are
recorded at cost. As of December 31, 2012, marketable securities of $261 million were included in other non-current
assets in the consolidated statements of financial position. As of December 31, 2011, marketable securities of $250
million were included in prepaid expenses and other current assets and $223 million were included in other non-
current assets in the consolidated statements of financial position.