e424b5
As filed
pursuant to Rule 424(b)(5)
Registration
No. 333-152596
CALCULATION
OF REGISTRATION FEE
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Proposed
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Amount
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Proposed
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Maximum
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Amount of
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Title of Each Class of
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to be
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Maximum
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Aggregate
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Registration
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Securities to be Registered
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Registered
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Offering Price
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Offering Price
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Fee(1)
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3.70% Senior Notes due 2014
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$350,000,000
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99.814%
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$349,349,000
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$19,493.67
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5.05% Senior Notes due 2019
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$500,000,000
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99.837%
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$499,185,000
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$27,854.52
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Total
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$850,000,000
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$848,534,000
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$47,348.19
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(1) |
Calculated in accordance with Rule 457(r) of the Securities
Act of 1933, as amended.
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PROSPECTUS SUPPLEMENT
(To Prospectus dated July 29, 2008)
Northrop
Grumman Corporation
$850,000,000
$350,000,000
3.70% Senior Notes due 2014
$500,000,000
5.05% Senior Notes due 2019
We are offering $350,000,000 of our 3.70% Senior Notes due
2014, or the 2014 notes, and $500,000,000 of our 5.05% Senior
Notes due 2019, or the 2019 notes. We refer to the 2014 notes
and 2019 notes, together, as the notes. The 2014 notes will
mature on August 1, 2014 and the 2019 notes will mature on
August 1, 2019, in each case unless redeemed earlier. We
will pay interest on the notes semi-annually in arrears on
February 1 and August 1 of each year, beginning
February 1, 2010. Interest on the notes will accrue from
July 30, 2009.
We may redeem either series of notes at any time prior to
maturity, in whole or in part, upon at least 30 days but no
more than 60 days notice, at a redemption price equal to
the sum of the principal amount of the notes to be redeemed plus
a make-whole premium, if any, together with accrued and unpaid
interest on the notes to, but not including, the redemption
date. The redemption provisions are more fully described in this
prospectus supplement in the section titled Description of
Notes Optional Redemption. The notes will not
be listed or quoted on any securities exchange or automated
quotation system. Currently there is no public market for the
notes.
The notes will be unsecured senior obligations of Northrop
Grumman Corporation, which we refer to as Northrop Grumman. The
notes will rank equally and ratably in right of payment with all
Northrop Grummans existing and future unsecured and
unsubordinated indebtedness and senior in right of payment to
any future indebtedness of Northrop Grumman that is subordinated
to the notes.
Investing in the notes involves risks. See the section
entitled Risk Factors beginning on
page S-9
of this prospectus supplement, in Exhibit 99.2 to our Current
Form on
Form 8-K
filed with the SEC on April 22, 2009, in our Annual Report
on
Form 10-K
for our fiscal year ended December 31, 2008, and in other
documents incorporated by reference herein.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this
supplement or the accompanying prospectus. Any representation to
the contrary is a criminal offense.
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2014 Notes
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Total
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2019 Notes
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Total
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Public offering price(1)
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99.814
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%
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$
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349,349,000
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99.837
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%
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$
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499,185,000
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Underwriting discounts and commissions
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0.600
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%
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$
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2,100,000
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0.650
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%
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$
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3,250,000
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Proceeds to Northrop Grumman Corporation, before expenses
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99.214
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%
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$
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347,249,000
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99.187
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%
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$
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495,935,000
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(1) Plus
accrued interest, if any, from July 30, 2009, if settlement
occurs after that date.
We urge you to carefully read this prospectus supplement and the
accompanying prospectus which will describe the terms of the
offering before you make your investment decision.
The underwriters expect to deliver the notes to purchasers in
book-entry form only, through the facilities of The Depository
Trust Company for the accounts of its participants,
including Clearstream Banking, société anonyme,
and the Euroclear Bank, S.A./N.V., against payment on or about
July 30, 2009.
Joint Book Running Managers
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Credit Suisse
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Deutsche Bank Securities
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J.P. Morgan
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Senior Co-Managers
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BNP PARIBAS
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Wells Fargo Securities
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Co-Managers
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Banca
IMI |
Goldman,
Sachs & Co. |
Mitsubishi UFJ Securities |
SunTrust
Robinson Humphrey |
The date of this prospectus supplement is July 27, 2009
TABLE OF
CONTENTS
Prospectus
Supplement
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Page
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S-3
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S-3
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S-4
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S-6
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S-9
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S-10
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S-11
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S-12
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S-13
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S-14
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S-21
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S-24
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S-25
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Prospectus
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14
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14
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15
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15
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In making your investment decision, you should rely only on the
information contained in or incorporated by reference in this
prospectus supplement, the accompanying prospectus, and any free
writing prospectus relating to this offering that Northrop
Grumman may provide to you. Neither Northrop Grumman nor the
underwriters have authorized anyone to provide you with
different information. If anyone provides you with different or
inconsistent information, you should not rely on it. Neither
Northrop Grumman nor the underwriters are making an offer to
sell these securities in any jurisdiction where the offer or
sale is not permitted.
S-2
ABOUT
THIS PROSPECTUS SUPPLEMENT
Unless otherwise stated or the context otherwise requires,
references in this prospectus supplement or the accompanying
prospectus to Northrop Grumman are to Northrop
Grumman Corporation, and references to we,
our, us or similar references are to
Northrop Grumman and its consolidated subsidiaries.
This document consists of two parts. The first part is this
prospectus supplement, which describes the specific terms of
this offering and other matters relating to us and our financial
condition. The second part is the accompanying prospectus, which
gives more general information about securities we may offer
from time to time, some of which may not apply to this offering.
This prospectus supplement and the accompanying prospectus are
part of a shelf registration statement that we filed
with the Securities and Exchange Commission (or the SEC) using
the SECs shelf registration rules.
You should read both this prospectus supplement and the
accompanying prospectus together with additional information
described in this prospectus supplement in the section titled
Where You Can Find More Information. If there is any
inconsistency between the information in this prospectus
supplement and the accompanying prospectus, you should rely on
the information contained in this prospectus supplement.
Any statement made in this prospectus supplement, in the
accompanying prospectus or in any document incorporated or
deemed to be incorporated by reference in this prospectus
supplement or the accompanying prospectus will be deemed to be
modified or superseded for purposes of this prospectus
supplement to the extent that a statement contained in this
prospectus supplement or in any other subsequently filed
document that is also incorporated or deemed to be incorporated
by reference in this prospectus supplement or the accompanying
prospectus modifies or supersedes that statement. Any statement
so modified or superseded will not be deemed, except as so
modified or superseded, to constitute a part of this prospectus
supplement or the accompanying prospectus.
The information in this prospectus supplement is accurate as of
the date on the front cover. You should not assume that the
information contained in this prospectus supplement, in the
accompanying prospectus or in any free writing prospectus is
accurate as of any date other than the date on the front of the
applicable document, or that information incorporated by
reference is accurate as of any date other than the date of the
document incorporated by reference. Our business, financial
condition, results of operations and prospects or other
important facts or circumstances may have changed since those
dates.
WHERE YOU
CAN FIND MORE INFORMATION
Northrop Grumman files annual, quarterly and current reports,
proxy statements and other information with the SEC. You may
read and copy any document we file with the SEC (including
exhibits to such documents) at the SECs Public Reference
Room at 100 F Street, N.E., Room 1580,
Washington, D.C. 20549. You may obtain additional
information about the Public Reference Room by calling the SEC
at
1-800-SEC-0330.
In addition, the SEC maintains a site on the internet at
http://www.sec.gov/
that contains reports, proxy statements and other information
that we file electronically with the SEC. You may also read such
reports, proxy statements and other documents at the offices of
the New York Stock Exchange at 20 Broad Street, New York,
New York 10005.
We are incorporating by reference information into
this prospectus supplement. This means that we are disclosing
important information to you by referring you to another
document that has been filed separately with the SEC. The
information incorporated by reference is considered to be part
of this prospectus supplement, and information that we file
later with the SEC will automatically update and supersede the
information contained in documents filed earlier with the SEC or
contained in this prospectus supplement. We incorporate by
reference in this prospectus supplement the documents listed
below and any future filings made by us with the SEC under
Section 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934 after the initial filing of this prospectus
supplement and prior to the time that we or the underwriters
sell all of the securities offered by this prospectus
S-3
supplement and the accompanying prospectus (except in each case
the information contained in such documents to the extent
furnished and not filed):
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our Annual Report on
Form 10-K
for the year ended December 31, 2008 (updated by our
Current Report on
Form 8-K
filed on April 22, 2009);
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our Quarterly Reports on
Form 10-Q
for the quarters ended March 31, 2009 and June 30,
2009; and
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our Current Reports on
Form 8-K
filed on February 23, 2009, March 12, 2009,
April 3, 2009, April 22, 2009 (recasting the
presentation of our consolidated financial statements for the
year ended December 31, 2008), May 6, 2009, and
May 26, 2009.
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You may obtain copies, without charge, of documents incorporated
by reference in this prospectus supplement, by requesting them
in writing or by telephone from us as follows:
Joseph F.
Coyne, Jr.
Corporate Vice President, Deputy General Counsel and
Secretary
1840 Century Park East
Los Angeles, California 90067
(310) 553-6262
Exhibits to the filings will not be sent, unless those exhibits
have been specifically incorporated by reference in this
prospectus supplement.
On April 22, 2009, we filed a current report on
Form 8-K
which recast the presentation of our consolidated financial
statements that we initially filed with the SEC in our annual
report on
Form 10-K
for the year ended December 31, 2008 to reflect the
reduction in the number of our operating segments from seven to
five and other changes in our organizational structure and
reporting segments, as more fully described in that current
report.
FORWARD-LOOKING
STATEMENTS AND IMPORTANT FACTORS
The Private Securities Litigation Reform Act of 1995 provides a
safe harbor for forward-looking statements. This prospectus
supplement, the accompanying prospectus, and the documents
incorporated herein or therein by reference contain
forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and
Section 21E of the Exchange Act. Additionally, we or our
representatives may, from time to time, make other written or
verbal forward-looking statements. In this prospectus
supplement, and the documents incorporated by reference herein,
we discuss plans, expectations and objectives regarding our
business, financial condition and results of operations. Without
limiting the foregoing, statements that are in the future tense,
and all statements accompanied by terms such as
believe, project, expect,
trend, estimate, forecast,
assume, intend, plan,
target, anticipate, outlook,
preliminary, will likely result,
will continue, and variations thereof and similar
terms are intended to be forward-looking statements
as defined by federal securities laws. We caution you not to
place undue reliance on forward-looking statements, which are
based upon assumptions, expectations, plans and projections.
Forward-looking statements are subject to risks and
uncertainties, including those identified in the Risk
Factors included in this prospectus supplement and in the
documents incorporated by reference herein, that may cause
actual results to differ materially from those expressed or
implied in the forward-looking statements. Forward-looking
statements speak only as of the date when they are made. Except
as required by applicable law, we do not undertake any
obligation to update forward-looking statements to reflect
events, circumstances, changes in expectations, or the
occurrence of unanticipated events after the date of those
statements.
We intend that all forward-looking statements made will be
subject to safe harbor protection of the federal securities laws
pursuant to Section 27A of the Securities Act and
Section 21E of the Exchange Act.
S-4
Forward-looking statements are based upon, among other things,
the companys assumptions with respect to:
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impact of domestic and global economic uncertainties on
financial markets, access to capital, value of goodwill or other
assets;
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changes in government funding, including with respect to the
2010 budget of the U.S. Government;
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changes in statutes and regulations impacting our eligibility to
perform work that might give rise to organizational conflicts of
interest;
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future revenues;
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expected program performance and cash flows;
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compliance with regulatory, technical, operational, and quality
requirements;
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returns or losses on pension plan assets and variability of
pension actuarial and related assumptions and regulatory
requirements;
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the outcome of litigation, claims, appeals, bid protests, and
investigations;
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hurricane-related insurance recoveries;
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environmental remediation;
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acquisitions and divestitures of businesses;
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performance issues with, and financial viability of, joint
ventures, and other business arrangements;
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performance issues with, and financial viability of, key
suppliers and subcontractors;
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product performance and the successful execution of internal
plans;
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successful negotiation of contracts with labor unions;
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the availability and retention of skilled labor;
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allowability and allocability of costs under
U.S. Government contracts;
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effective tax rates and timing and amounts of tax payments;
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the results of any audit or appeal process with the Internal
Revenue Service; and
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anticipated costs of capital investments.
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You should consider the limitations on, and risks associated
with, forward-looking statements and not unduly rely on the
accuracy of predictions contained in such forward-looking
statements. As noted above, these forward-looking statements
speak only as of the date when they are made. Moreover, in the
future, we may make forward-looking statements through our
senior management that involve the risk factors and other
matters described in our most recent Annual Report on
Form 10-K
and in this prospectus supplement, as well as other risk factors
subsequently identified, including, among others, those
identified in our filings with the SEC in our Quarterly Reports
on
Form 10-Q
and our Current Reports on
Form 8-K.
S-5
The following summary is provided solely for your
convenience. It is not intended to be complete. You should read
carefully this entire prospectus supplement, the accompanying
prospectus and all the information included or incorporated by
reference herein or therein carefully, especially the risks
discussed in the section titled Risk Factors
beginning on
page S-9
of this prospectus supplement and in the documents incorporated
by reference herein.
Northrop
Grumman Corporation
We are an integrated enterprise consisting of many formerly
separate businesses that cover the entire defense spectrum, from
undersea to outer space and into cyberspace. The companies that
have become part of Northrop Grumman achieved historic
accomplishments, from transporting Charles Lindbergh across the
Atlantic to carrying astronauts to the moons surface and
back.
The acquisitions of these businesses have shaped our company
into its present position as a premier provider of
technologically advanced, innovative products, services and
solutions in information and services, aerospace, electronics
and shipbuilding. As prime contractor, principal subcontractor,
partner, or preferred supplier, we participate in many
high-priority defense and commercial technology programs in the
U.S. and abroad. We conduct most of our business with the
U.S. Government, principally the Department of Defense. We
also conduct business with local, state and foreign governments
and domestic and international commercial customers.
The principal executive offices of Northrop Grumman are located
at 1840 Century Park East, Los Angeles, California 90067 and our
telephone number is
(310) 553-6262.
We maintain an internet site at
http://www.northropgrumman.com/.
The information contained at our internet site is not
incorporated by reference in this prospectus supplement or the
accompanying prospectus, and you should not consider it a part
of this prospectus supplement or the accompanying prospectus.
The information above concerning Northrop Grumman is only a
summary and does not purport to be comprehensive. For additional
information about Northrop Grumman, you should refer to the
information described in Where You Can Find More
Information in this prospectus supplement.
S-6
The
Offering
The following summary contains basic information about this
offering. For a more complete understanding of this offering, we
encourage you to read this entire prospectus supplement and the
accompanying prospectus.
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Issuer: |
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Northrop Grumman Corporation |
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Securities Offered: |
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$850,000,000 aggregate principal amount of notes, consisting of |
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$350,000,000 aggregate principal amount of
3.70% Senior Notes due 2014, and
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$500,000,000 aggregate principal amount of 5.05%
Senior Notes due 2019.
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The notes will be issued as global notes to be deposited with
The Depository Trust Company and delivered to purchasers in
book-entry form. |
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Maturity Date: |
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The 2014 notes will mature on August 1, 2014 and the 2019
notes will mature on August 1, 2019, in each case unless
redeemed earlier. |
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Interest Rate: |
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The 2014 notes will bear interest from July 30, 2009 at the
rate of 3.70% per annum, and the 2019 notes will bear interest
from July 30, 2009 at the rate of 5.05% per annum. |
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Interest Payment Dates: |
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Interest on the notes is payable semi-annually in arrears on
February 1 and August 1 of each year, beginning on
February 1, 2010. Interest on the notes will accrue from
July 30, 2009. |
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Use of Proceeds: |
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We expect the net proceeds from this offering to be
approximately $841 million, after deducting the
underwriting discount and our estimated expenses of this
offering. We expect to use these net proceeds for our corporate
purposes, including debt repayment, acquisitions, share
repurchases, pension plan funding, and working capital. The debt
repayment may include the repayment of up to $400 million
of our 8% senior notes that mature on October 15, 2009
and the replacement of funds used to repay $71 million of
our
71/8% notes
that matured on June 1, 2009. Pending their application, we
may invest the net proceeds in short-term investments. |
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Expected Ratings: |
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The notes are expected to be rated Baa2 by Moodys
Investors Service, BBB by Standard & Poors
Ratings Services, and BBB+ by Fitch Ratings, in each case with a
stable outlook. A rating is not a recommendation to purchase,
sell or hold a financial obligation, and does not address market
price or suitability for a particular investor. Ratings may be
changed, suspended, or withdrawn as a result of changes in, or
unavailability of, information about the issuer, or based on
other circumstances. An explanation of the significance of a
rating may be obtained from the issuing agency. |
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Optional Redemption: |
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We may at our option redeem the notes, in whole or in part, at
any time and from time to time. Upon redemption, we will pay a
redemption price equal to the greater of: |
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100% of the principal amount of the notes being
redeemed; and
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the sum of the present values of the remaining
scheduled payments of principal and interest on the notes being
redeemed (not including any portion of any payments of interest
accrued to the redemption date), discounted to the redemption
date on a semi-
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S-7
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annual basis at a rate equal to the sum of the Adjusted Treasury
Rate (as defined herein), plus 20 basis points in respect of the
2014 notes or 25 basis points in respect of the 2019 notes,
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in each case, together with accrued and unpaid interest to, but
not including, the date of redemption. See Description of
Notes Optional Redemption in this prospectus
supplement. |
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Ranking: |
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The notes will be unsecured senior obligations of Northrop
Grumman. The notes will rank equally in right of payment with
all Northrop Grummans existing and future unsecured and
unsubordinated indebtedness and will rank senior in right of
payment to any future indebtedness that is subordinated to the
notes. The notes will be effectively subordinated to
(i) all of Northrop Grummans existing and future
secured indebtedness to the extent of the assets securing that
indebtedness, and (ii) all indebtedness and liabilities of
Northrop Grummans subsidiaries, including any of our
future indebtedness guaranteed by our subsidiaries. |
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Certain Covenants: |
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The indenture governing the notes limits our ability and the
ability of our subsidiaries, among other things, to: |
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create liens without equally and ratably securing
the notes, unless an exception applies; and
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engage in certain sale and leaseback transactions.
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The indenture also limits our ability to engage in mergers,
consolidations and certain sales of assets. These covenants are
subject to important exceptions and qualifications, as described
in Description of Senior Debt Securities
Obligations Under the Indentures and Description of
Senior Debt Securities Consolidation, Merger or
Sale in the accompanying prospectus. |
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Additional Notes: |
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We may, without notice to or consent of the holders of any
notes, create and issue additional notes in a separate offering.
If these additional notes have substantially the same terms as
either series of notes offered hereby, we may consolidate these
additional notes with that series of notes to form a single
series under the indenture. See Description of
Notes Issuing Additional Notes in this
prospectus supplement. |
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No Listing: |
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We do not intend to list the notes on any securities exchange or
automated quotation system. The notes will be new securities for
which there currently is no public market. See Risk
Factors Risks Related to the Offering
You may not be able to sell your notes if an active trading
market for the notes does not develop in this prospectus
supplement. |
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Trustee: |
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The Bank of New York Mellon. |
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Governing Law: |
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The notes will be governed by New York law. |
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Risk Factors: |
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Investing in the notes involves risks. See the section titled
Risk Factors beginning on
page S-9
of this prospectus supplement and in the documents incorporated
by reference herein and other information included in the
accompanying prospectus and the documents incorporated by
reference therein for a discussion of factors you should
carefully consider before deciding to invest in the notes. |
S-8
RISK
FACTORS
Your investment in the notes is subject to certain risks.
This prospectus supplement does not describe all of the risks of
an investment in the notes. You should consult your own
financial and legal advisors about the risks entailed by an
investment in the notes and the suitability of your investment
in the notes in light of your particular circumstances. For a
discussion of the factors you should carefully consider before
deciding to purchase any notes that may be offered, please read
Risk Factors in the documents incorporated by
reference herein, as well as those risk factors included below.
Additional risks and uncertainties not currently known to us or
that we currently deem immaterial may also adversely affect our
business and operations. If any of the matters described in the
risk factors were to occur, our business, financial condition,
results of operations, cash flows or prospects could be
materially adversely affected. In such case, you could lose all
or a portion of your investment.
Risks
Related to the Offering
The
indenture does not limit the amount of indebtedness that we may
incur.
The indenture under which the notes will be issued does not
limit the amount of indebtedness that we may incur. The
indenture does not contain any financial covenants or other
provisions that would afford the holders of the notes any
substantial protection in the event we participate in a highly
leveraged transaction.
The
notes are obligations of Northrop Grumman and not of its
subsidiaries, and will be effectively subordinated to the claims
of the lenders, trade creditors and others who now or in the
future have claims against those subsidiaries.
Northrop Grumman is the sole obligor on the notes. Northrop
Grumman is a holding company which conducts substantially all of
its operations through its subsidiaries, which are separate and
distinct legal entities. None of these subsidiaries is obligated
to repay the notes or to make funds available for any payments
due on the notes. Northrop Grumman depends on the distribution
of earnings, repayments of inter-company loans or other payments
from its subsidiaries to generate cash flow. As a result, its
cash flow and its ability to service its debt, including the
notes, depends upon the assets, liabilities, earnings and
results of operations of its subsidiaries and their ability to
distribute or otherwise transfer assets to Northrop Grumman.
The subsidiaries generally have no obligation to provide
Northrop Grumman with funds to meet its payment obligations
under the notes, whether by dividends, distributions, loans or
other payments. Payments of dividends and similar distributions
by these subsidiaries to its stockholders are subject to
statutory restrictions and may be subject to additional
contractual restrictions or business constraints. The extension
of loans or advances by those subsidiaries to Northrop Grumman
could also be subject to statutory or contractual restrictions
or business constraints. Failure by any subsidiary to abide by
these restrictions could require Northrop Grumman to return any
payments made by that subsidiary.
Northrop Grummans right to receive any assets upon the
liquidation or reorganization of any of its subsidiaries, and
therefore the right of the holders of the notes to participate
in those assets, will be effectively subordinated to the claims
of that subsidiarys current and future creditors,
including debenture and note holders (whether senior or
subordinated, and including holders of our future indebtedness
guaranteed by a subsidiary), banks, and trade creditors. In
addition, even if Northrop Grumman were a creditor of any of its
subsidiaries, its rights as a creditor would be subordinate to
any creditor holding a security interest in the assets of that
subsidiary or holding any indebtedness of that subsidiary senior
to that held by Northrop Grumman. Northrop Grumman may also
elect to issue debt which is guaranteed by one or more of its
subsidiaries, in which case the notes would be effectively
structurally subordinated to the new debt.
Consequently, the notes will be effectively subordinated to all
liabilities from time to time of its current and future
subsidiaries. As of June 30, 2009, Northrop Grummans
subsidiaries had approximately $3.9 billion of indebtedness.
Negative
covenants in the indenture will have a limited
effect.
The indenture governing the notes contains only limited negative
covenants that apply to us. These covenants do not limit the
amount of additional debt that we may incur and do not require
us to maintain any financial ratios or specific levels of net
worth, revenues, income, cash flows or liquidity. Accordingly,
the indenture does not
S-9
protect holders of the notes in the event we experience
significant adverse changes in our financial condition or
results of operations. See Description of Senior Debt
Securities Obligations Under the Indenture in
the accompanying prospectus. In light of the limited negative
covenants applicable to the notes, holders of the notes may be
structurally or contractually subordinated to new lenders.
You
may not be able to sell your notes if an active trading market
for the notes does not develop.
The notes are a new issue of securities for which there
currently is no public trading market. We do not intend to apply
for listing or quotation of the notes on any securities exchange
or automated quotation system. As a result, we cannot provide
any assurance that a market will develop for the notes or that
you will be able to sell your notes. If the notes are traded
after their initial issuance, they may trade at a discount from
their initial offering price. Future trading prices of the notes
will depend on many factors, including prevailing interest
rates, the market for similar securities, general economic
conditions and our financial condition, performance and
prospects. Accordingly, you may be required to bear the
financial risk of an investment in the notes for an indefinite
period of time. Any trading markets that might develop would be
affected by many factors independent of and in addition to the
foregoing, including:
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time remaining to the maturity of the notes;
|
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outstanding amount of the notes;
|
|
|
the terms related to optional redemption of the notes; and
|
|
|
the level, direction and volatility of market interest rates
generally.
|
Changes
in our credit rating may adversely affect your investment in the
notes.
Actual or anticipated changes or downgrades in our credit
ratings, including any announcement that our ratings are under
further review for a downgrade, could increase our corporate
borrowing costs and affect the market value of the notes. Also,
our credit ratings may not reflect the potential impact of risks
related to structure, market or other factors related to the
value of the notes.
The notes are expected to be rated Baa2 by Moodys
Investors Service, BBB by Standard & Poors
Ratings Services, and BBB+ by Fitch Ratings, in each case with a
stable outlook. A rating is not a recommendation to purchase,
sell or hold a financial obligation, and does not address market
price or suitability for a particular investor. Ratings are
limited in scope, and do not address all material risks relating
to an investment in the notes. Ratings may be changed,
suspended, or withdrawn as a result of changes in, or
unavailability of, information about the issuer, or based on
other circumstances. An explanation of the significance of a
rating may be obtained from the issuing agency.
USE OF
PROCEEDS
We expect the net proceeds from this offering to be
approximately $841 million, after deducting the
underwriting discount and our estimated expenses of this
offering totaling approximately $1.7 million. We expect to
use these net proceeds for our corporate purposes, including
debt repayment, acquisitions, share repurchases, pension plan
funding, and working capital. The debt repayment may include the
repayment of up to $400 million of our 8% senior notes
that mature on October 15, 2009 and the replacement of
funds used to repay $71 million of our
71/8% notes
that matured on June 1, 2009. Pending their application, we
may invest the net proceeds in short-term investments.
S-10
RATIO OF
EARNINGS TO FIXED CHARGES
The following table sets forth our ratios of earnings to fixed
charges for the periods indicated:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
Six Months Ended June 30,
|
2008 (1)
|
|
2007
|
|
2006
|
|
2005
|
|
2004
|
|
2009
|
|
2008
|
|
|
|
|
|
6.1
|
|
|
|
5.4
|
|
|
|
4.7
|
|
|
|
3.7
|
|
|
|
6.0
|
|
|
|
5.6
|
|
|
|
|
|
(1)
|
|
For the year ended
December 31, 2008, our earnings were insufficient to cover
fixed charges by $368 million. This loss was entirely due
to the non-cash goodwill impairment charge of $3.1 billion
recorded during the fourth quarter at Shipbuilding and Aerospace
Systems.
|
For purposes of computing the ratios of earnings to fixed
charges, earnings represent earnings from continuing operations
before income taxes and fixed charges, and fixed charges consist
of interest expense, the portion of rental expense calculated to
be representative of the interest factor, and amortization of
debt premiums. The ratios, and the note to the above table,
should be read in conjunction with the financial statements and
other financial data incorporated by reference in this
prospectus supplement and the accompanying prospectus. See
Where You Can Find More Information in this
prospectus supplement.
S-11
SELECTED
HISTORICAL FINANCIAL INFORMATION
The following table presents our selected historical financial
information as of the dates and for the periods indicated. The
financial information set forth below for the completed fiscal
years is derived from our audited consolidated financial
statements, which have been audited by Deloitte &
Touche LLP, an independent registered public accounting firm.
The financial information set forth below at June 30 and for the
six month periods ended June 30 is derived from our unaudited
consolidated financial statements, but includes all adjustments
of normal recurring nature considered necessary by management
for a fair presentation of our condensed consolidated financial
position, results of operations, and cash flows. This financial
information is not necessarily indicative of results that may be
expected for the entire year. This financial information is only
a summary and should be read in conjunction with, and is
qualified by reference to, our historical consolidated financial
statements and related notes, and Managements
Discussion and Analysis of Financial Condition and Results of
Operations, contained in our annual, quarterly and current
reports filed with the SEC and incorporated in this prospectus
supplement and the accompanying prospectus by reference. See
Where You Can Find More Information in this
prospectus supplement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
Year Ended December 31,
|
$ in millions except per
share
|
|
2009
|
|
2008
|
|
2008
|
|
2007
|
|
2006
|
|
2005
|
|
2004
|
|
Sales and Service Revenues
|
|
$
|
17,277
|
|
|
$
|
16,352
|
|
|
$
|
33,887
|
|
|
$
|
31,828
|
|
|
$
|
29,991
|
|
|
$
|
29,864
|
|
|
$
|
28,764
|
|
Goodwill Impairment
|
|
|
|
|
|
|
|
|
|
|
(3,060
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
$
|
1,308
|
|
|
$
|
1,270
|
|
|
$
|
(111
|
)
|
|
$
|
3,018
|
|
|
$
|
2,494
|
|
|
$
|
2,227
|
|
|
$
|
1,987
|
|
Earnings (loss) from continuing operations
|
|
$
|
783
|
|
|
$
|
746
|
|
|
$
|
(1,281
|
)
|
|
$
|
1,811
|
|
|
$
|
1,593
|
|
|
$
|
1,413
|
|
|
$
|
1,080
|
|
Basic earnings (loss) per share, from continuing operations
|
|
$
|
2.41
|
|
|
$
|
2.20
|
|
|
$
|
(3.83
|
)
|
|
$
|
5.30
|
|
|
$
|
4.61
|
|
|
$
|
3.96
|
|
|
$
|
3.00
|
|
Diluted earnings (loss) per share, from continuing operations
|
|
$
|
2.38
|
|
|
$
|
2.15
|
|
|
$
|
(3.83
|
)
|
|
$
|
5.18
|
|
|
$
|
4.51
|
|
|
$
|
3.89
|
|
|
$
|
2.96
|
|
Cash dividends declared per common share
|
|
$
|
0.83
|
|
|
$
|
0.77
|
|
|
$
|
1.57
|
|
|
$
|
1.48
|
|
|
$
|
1.16
|
|
|
$
|
1.01
|
|
|
$
|
0.89
|
|
Financial Position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
30,148
|
|
|
$
|
33,467
|
|
|
$
|
30,197
|
|
|
$
|
33,373
|
|
|
$
|
32,009
|
|
|
$
|
34,214
|
|
|
$
|
33,303
|
|
Notes payable to banks and long-term debt
|
|
$
|
3,868
|
|
|
$
|
3,941
|
|
|
$
|
3,944
|
|
|
$
|
4,055
|
|
|
$
|
4,162
|
|
|
$
|
5,145
|
|
|
$
|
5,158
|
|
Total long-term obligations and preferred stock
|
|
$
|
10,716
|
|
|
$
|
9,013
|
|
|
$
|
10,853
|
|
|
$
|
9,254
|
|
|
$
|
8,641
|
|
|
$
|
9,412
|
|
|
$
|
10,438
|
|
Financial Metrics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow (1)
|
|
$
|
324
|
|
|
$
|
447
|
|
|
$
|
2,420
|
|
|
$
|
2,071
|
|
|
$
|
947
|
|
|
$
|
1,811
|
|
|
$
|
1,266
|
|
Net working capital (deficit)
|
|
$
|
13
|
|
|
$
|
503
|
|
|
$
|
(235
|
)
|
|
$
|
365
|
|
|
$
|
(4
|
)
|
|
$
|
(397
|
)
|
|
$
|
707
|
|
Current ratio
|
|
|
1.00 to 1
|
|
|
|
1.08 to 1
|
|
|
|
0.97 to 1
|
|
|
|
1.06 to 1
|
|
|
|
1.00 to 1
|
|
|
|
0.95 to 1
|
|
|
|
1.11 to 1
|
|
Notes payable to banks and long-term debt as a percentage of
shareholders equity
|
|
|
31.7
|
%
|
|
|
22.1
|
%
|
|
|
33.1
|
%
|
|
|
22.9
|
%
|
|
|
25.0
|
%
|
|
|
30.6
|
%
|
|
|
30.9
|
%
|
Other Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of employees at period-end
|
|
|
125,400
|
|
|
|
122,400
|
|
|
|
123,600
|
|
|
|
121,700
|
|
|
|
121,400
|
|
|
|
122,800
|
|
|
|
124,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Free cash flow represents cash from
operating activities less capital expenditures and outsourcing
contract and related software costs. We believe free cash flow
is a useful measure for investors as it reflects our ability to
grow by funding strategic business acquisitions and return value
to shareholders through repurchasing our shares and paying
dividends. Free cash flow is not a measure of financial
performance under U.S. GAAP, and may not be defined and
calculated by other companies in the same manner. This measure
should not be considered in isolation or as an alternative to
operating results presented in accordance with U.S. GAAP as
indicators of performance. The table below reconciles net cash
provided by operating activities to free cash flow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
June 30,
|
|
Year Ended December 31,
|
$ in millions
|
|
2009
|
|
2008
|
|
2008
|
|
2007
|
|
2006
|
|
2005
|
|
2004
|
|
Net cash provided by operating activities
|
|
$
|
658
|
|
|
$
|
801
|
|
|
$
|
3,211
|
|
|
$
|
2,890
|
|
|
$
|
1,756
|
|
|
$
|
2,627
|
|
|
$
|
1,936
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures
|
|
|
(297
|
)
|
|
|
(277
|
)
|
|
|
(681
|
)
|
|
|
(682
|
)
|
|
|
(732
|
)
|
|
|
(816
|
)
|
|
|
(670
|
)
|
Outsourcing contract & related software costs
|
|
|
(37
|
)
|
|
|
(77
|
)
|
|
|
(110
|
)
|
|
|
(137
|
)
|
|
|
(77
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow from operations
|
|
$
|
324
|
|
|
$
|
447
|
|
|
$
|
2,420
|
|
|
$
|
2,071
|
|
|
$
|
947
|
|
|
$
|
1,811
|
|
|
$
|
1,266
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-12
CAPITALIZATION
The following table sets forth our unaudited summary
capitalization on a consolidated basis as of June 30, 2009,
and our pro forma capitalization on a consolidated basis
as of that date, adjusted to reflect the issuance of the notes
and the application of all the net proceeds to cash and cash
equivalents. This information is only a summary and should be
read in conjunction with, and is qualified by reference to, our
historical consolidated financial statements and related notes
contained in our annual, quarterly and current reports filed
with the SEC and incorporated in this prospectus supplement and
the accompanying prospectus by reference. See Where You
Can Find More Information in this prospectus supplement.
|
|
|
|
|
|
|
|
|
|
|
June 30, 2009
|
$ in millions
|
|
Actual
|
|
As Adjusted
|
|
Cash and cash equivalents
|
|
$
|
1,056
|
|
|
$
|
1,897
|
|
|
|
|
|
|
|
|
|
|
Notes payable to banks
|
|
|
27
|
|
|
|
27
|
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt (1)
|
|
|
493
|
|
|
|
493
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, net of current portion:
|
|
|
|
|
|
|
|
|
3.70% Senior Notes due 2014 offered hereby
|
|
|
|
|
|
|
350
|
|
5.05% Senior Notes due 2019 offered hereby
|
|
|
|
|
|
|
500
|
|
Other (1)
|
|
|
3,348
|
|
|
|
3,348
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt
|
|
|
3,348
|
|
|
|
4,198
|
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
$
|
3,868
|
|
|
$
|
4,718
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity:
|
|
|
|
|
|
|
|
|
Common stock, $1 par value
800,000,000 shares authorized, 319,156,206 shares
issued and outstanding
|
|
|
319
|
|
|
|
319
|
|
Paid-in capital
|
|
|
9,243
|
|
|
|
9,243
|
|
Retained earnings
|
|
|
6,104
|
|
|
|
6,104
|
|
Accumulated other comprehensive loss
|
|
|
(3,477
|
)
|
|
|
(3,477
|
)
|
|
|
|
|
|
|
|
|
|
Total shareholders equity
|
|
$
|
12,189
|
|
|
$
|
12,189
|
|
|
|
|
|
|
|
|
|
|
Total capitalization
|
|
$
|
16,057
|
|
|
$
|
16,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes capital leases and
premium/discounts.
|
S-13
DESCRIPTION
OF NOTES
The following description of the notes offered by this
prospectus supplement is intended to supplement, and to the
extent inconsistent to replace, the more general terms and
provisions of the senior debt securities described in the
accompanying prospectus, to which we refer you. The notes
constitute a separate series of debt securities. This
description of the notes is only a summary and may not include
all the information that is important to you. You should read
the indenture we refer to below and the notes for more details
regarding our obligations and your rights with respect to the
notes.
For purposes of this section entitled Description of
Notes, references to we, our,
us or similar references are to Northrop Grumman
only, and not to any of its subsidiaries.
General
We will issue our 3.70% Senior Notes due 2014 and our 5.05%
Senior Notes due 2019 under the indenture, dated as of
November 21, 2001, between Northrop Grumman and The Bank of
New York Mellon, as successor to JPMorgan Chase Bank, as
trustee, as supplemented by a supplemental indenture to be
entered into between Northrop Grumman and the trustee. For a
description of the modifications to the indenture we intend to
make by virtue of the supplemental indenture, see
Modifications to the Indenture below.
The notes will be issued in two separate series in an initial
aggregate principal amount of $850,000,000, consisting of an
initial aggregate principal amount of $350,000,000 of the 2014
notes and an initial aggregate principal amount of $500,000,000
of the 2019 notes.
Payment of the full principal amount of the 2014 notes will be
due on August 1, 2014, and payment of the full principal
amount of the 2019 notes will be due on August 1, 2019, in
each case unless the notes are redeemed in whole or in part as
described below under Optional
Redemption.
The 2014 notes will bear interest from July 30, 2009 at the
rate of 3.70% per annum, and the 2019 notes will bear interest
from July 30, 2009 at the rate of 5.05% per annum. We will
pay interest semi-annually in arrears on February 1 and
August 1 of each year, beginning February 1, 2010,
until the principal is paid or made available for payment, to
the persons in whose names the notes are registered at the close
of business on the January 15 or July 15, as the case may
be (in each case, whether or not a business day), immediately
preceding the corresponding interest payment date. The amount of
interest payable for any period will be computed on the basis of
a 360-day
year of twelve
30-day
months.
The notes will be issued in denominations of $2,000 and integral
multiples of $1,000.
The notes will not be subject to a sinking fund and you will not
be permitted to require us to redeem or repurchase the notes at
your option.
Issuing
Additional Notes
We may create and issue additional notes in an unlimited
aggregate principal amount at any time and from time to time
under the same indenture, without notice to or the consent of
the holders or beneficial owners of the notes. These additional
notes may have substantially the same terms as either series of
notes (except in some cases for the issue date, the issue price,
the initial interest payment date and corresponding record date,
and the initial interest accrual date) so that these additional
notes may be consolidated and form a single series with that
series of notes under the indenture. Any additional notes so
consolidated will constitute a single series of securities with
that series of notes for all purposes under the Indenture,
including voting, waivers, amendments and redemptions.
Optional
Redemption
We may redeem either series of notes at our option, as a whole
or in part, at any time or from time to time, on at least
30 days, but not more than 60 days, prior notice to
the registered holders. The redemption price for the notes will
be equal to the greater of the following amounts:
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100% of principal amount of the notes being redeemed; and
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the sum of the present values of the remaining scheduled
payments of principal and interest on the notes being redeemed
(not including any portion of any payments of interest accrued
to the redemption date),
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discounted to the redemption date on a semi-annual basis
(assuming a
360-day year
consisting of twelve
30-day
months) at a rate equal to the sum of the Adjusted Treasury Rate
(as defined below), as determined by the Independent Investment
Banker (as defined below), plus 20 basis points in respect of
the 2014 notes or 25 basis points in respect of the 2019 notes,
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plus, in either case, accrued and unpaid interest on the
principal amount of the notes to be redeemed to, but not
including, the redemption date.
Notwithstanding the foregoing, installments of interest on notes
that are due and payable on interest payment dates falling on or
prior to a redemption date will be payable on the interest
payment date to the registered holders as of the close of
business on the corresponding record date according to the notes
and the indenture.
Adjusted Treasury Rate means, with respect to any
redemption date, the rate per annum equal to the semiannual
equivalent yield to maturity of the Comparable Treasury Issue,
assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date.
Comparable Treasury Issue means the United States
Treasury security selected by the Independent Investment Banker
as having a maturity comparable to the remaining term of the
notes to be redeemed that would be utilized, at the time of
selection and in accordance with customary financial practice,
in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of such notes.
Comparable Treasury Price means, with respect to any
redemption date, (A) the average of the Reference Treasury
Dealer Quotations for such redemption date or (B) if only
one Reference Treasury Dealer Quotation is received, such
quotation.
Independent Investment Banker means one of the
Reference Treasury Dealers appointed by us to act as the
Independent Investment Banker.
Reference Treasury Dealer means (A) Credit
Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., and
J.P. Morgan Securities Inc. (or their respective affiliates
which are primary U.S. Government securities dealers in the
United States (or Primary Treasury Dealers)), and their
respective successors, except if any of the foregoing ceases to
be a Primary Treasury Dealer, we will substitute another Primary
Treasury Dealer; and (B) any other Primary Treasury
Dealer(s) selected by us.
Reference Treasury Dealer Quotation means, with
respect to each Reference Treasury Dealer and any redemption
date, the average, as determined by us, of the bid and asked
prices for the applicable Comparable Treasury Issue (expressed
in each case as a percentage of its principal amount) quoted in
writing to us by such Reference Treasury Dealer at
3:30 p.m. (New York City time) on the third business day
preceding such redemption date.
We will mail notice of any redemption at least 30 days but
not more than 60 days before the redemption date to each
registered holder of the notes to be redeemed. Once notice of
redemption is mailed, the notes called for redemption will
become due and payable on the redemption date at the applicable
redemption price, plus accrued and unpaid interest to the
redemption date. If we elect to redeem all or a portion of the
notes, that redemption will not be conditional upon receipt by
the paying agent or the trustee of monies sufficient to pay the
redemption price.
Unless we default in payment of the redemption price, on and
after the redemption date interest will cease to accrue on the
notes or portions thereof called for redemption.
If less than all of the notes of either series offered hereby
are to be redeemed, the trustee will select the notes of that
series to be redeemed by a method the trustee deems fair and
appropriate.
Except as described above, the notes will not be redeemable. The
notes will not be entitled to the benefit of any sinking fund or
mandatory redemption provisions.
S-15
Ranking
The notes will be unsecured senior obligations of Northrop
Grumman. The notes will rank equally and ratably in right of
payment with all Northrop Grummans existing and future
unsecured and unsubordinated indebtedness and will rank senior
in right of payment to any future indebtedness of Northrop
Grumman that is subordinated to the notes. The notes will be
effectively subordinated to (i) all of Northrop
Grummans existing and future secured indebtedness to the
extent of the assets securing such indebtedness, and
(ii) all indebtedness and liabilities of Northrop
Grummans subsidiaries, including any of our future
indebtedness guaranteed by our subsidiaries.
The indenture does not limit the amount of additional
indebtedness that Northrop Grumman or any of its subsidiaries
may incur. Northrop Grumman, the sole obligor on the notes, is a
holding company which conducts substantially all of its
operations through its subsidiaries, which are separate and
distinct legal entities. None of these subsidiaries is obligated
to repay the notes or to make funds available to make payments
due on the notes. Northrop Grumman depends on the distribution
of earnings, repayments of inter-company loans or other payments
from its subsidiaries to generate cash flow. As a result, its
cash flow and its ability to service its debt, including the
notes, depends upon the assets, liabilities, earnings and
results of operations of its subsidiaries and their ability to
distribute or otherwise transfer assets to Northrop Grumman.
Payments of dividends and similar distributions by these
subsidiaries to its stockholders are subject to statutory
restrictions and may be subject to additional contractual
restrictions or business constraints. The extension of loans or
advances by those subsidiaries to Northrop Grumman could also be
subject to statutory or contractual restrictions or business
constraints. Failure by any subsidiary to abide by these
restrictions could require Northrop Grumman to return any
payments made by that subsidiary.
Northrop Grummans right to receive any assets upon the
liquidation or reorganization of any of its subsidiaries, and
therefore the right of the holders of the notes to participate
in those assets, will be effectively subordinated to the claims
of that subsidiarys current and future creditors,
including debenture and note holders, banks, and trade
creditors. In addition, even if Northrop Grumman were a creditor
of any of its subsidiaries, its rights as a creditor would be
subordinated to any creditor holding a security interest in the
assets of that subsidiary or holding any indebtedness of that
subsidiary senior to that held by Northrop Grumman. Northrop
Grumman may also elect to issue debt which is guaranteed by one
or more of its subsidiaries, in which case the notes would be
effectively structurally subordinated to the new debt.
Certain
Covenants
The indenture governing the notes limits our ability and the
ability of our subsidiaries, among other things, to:
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create liens without equally and ratably securing the notes,
unless an exception applies; and
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engage in certain sale and leaseback transactions.
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The indenture also limits our ability to engage in mergers,
consolidations and certain sales of assets. These covenants are
subject to important exceptions and qualifications, as described
in the sections titled Description of Senior Debt
Securities Obligations Under the Indentures
and Description of Senior Debt Securities
Consolidation, Merger or Sale in the accompanying
prospectus.
Information
Concerning the Trustee
The Bank of New York Mellon has its principal corporate trust
office at 101 Barclay Street, New York, New York 10286. The
indenture limits the right of the trustee, if it becomes our
creditor, to obtain payment of claims or secure its claims. The
trustee is permitted to engage in certain other transactions. If
the trustee acquires any conflicting interest for purposes of
the Trust Indenture Act of 1939, however, and there is a
default under the debt securities of any series under the
indenture for which it is trustee, the trustee must eliminate
the conflict or resign.,
In the ordinary course of its business, The Bank of New York
Mellon and its affiliates have engaged and may in the future
engage in commercial and investment banking transactions with us
or our subsidiaries.
We have designated the trustee as our sole initial paying agent
and as the initial custodian and registrar for the notes.
Governing
Law
The notes will be governed by the law of the state of New York.
S-16
Unclaimed
Funds
Subject to any applicable abandoned property laws, any money
deposited with the trustee or any paying agent, or then held by
us, in trust for the payment of the principal of or any premium
or interest on any note and remaining unclaimed for two years
after the principal, premium or interest has become due and
payable will be paid to us at our written request in accordance
with the indenture, or (if then held by us) will be discharged
from the trust. After that time, the holder of the note may, as
an unsecured general creditor, look only to us for payment of
the unclaimed amounts, and all liability of the trustee or the
paying agent with respect to that amount, and all our liability
as trustee thereof, will cease. The trustee or the paying agent,
before being required to pay the funds to us, may at our expense
cause to be published a notice that the funds remain unclaimed
and that, after a date specified in the notice, which will not
be less than 30 days from the date of the publication, any
unclaimed balance of the money then remaining will be repaid to
us.
Form and
Denomination
The notes will be issued:
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only in fully registered form,
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without interest coupons, and
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in denominations of $2,000 and integral multiples of $1,000.
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Global
Notes
The notes of each series offered hereby will initially be
evidenced by one or more global notes, which will be deposited
with the trustee as custodian for The Depository
Trust Company, or DTC, and registered in the name of
Cede & Co., or Cede, as nominee of DTC. As long as DTC
is the depositary for the notes, you may hold your interests in
the global notes through participants in DTC, including through
Clearstream Banking, société anonyme, or
Clearstream, or Euroclear Bank S.A./N.V., as operator of the
Euroclear System, or Euroclear, either as a participant in those
systems or indirectly through organizations which are
participants in those systems. Clearstream and Euroclear will
hold interests in the global notes on behalf of their respective
participants through customers securities accounts in
Clearstreams and Euroclears names on the books of
their respective depositaries, which in turn will hold interests
in customers securities accounts in the depositaries
names on the books of DTC. At the present time, Citibank, N.A.
acts as U.S. depositary for Clearstream and JPMorgan Chase
Bank, N.A. acts as U.S. depositary for Euroclear.
Except as set forth below, record ownership of the global notes
may be transferred, in whole or in part, to DTC, to another
nominee of DTC, or to a successor of DTC or its nominee.
So long as DTC or its nominee is the registered owner of a
global note, DTC or that nominee will be considered the sole
owner and holder of the rights represented by that global note
for all purposes under the indenture and under the notes. As a
result:
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You will not be able to obtain a note registered in your name.
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You cannot receive certificated (physical) notes in exchange for
your beneficial interest in a global note.
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You will not be considered to be the owner or holder of a global
note or any notes it represents under the indenture or under the
notes for any purpose, including with respect to the giving of
any direction, instruction or approval to the trustee.
Accordingly, you must rely on the procedures of DTC and, if you
are not a direct or indirect participant in DTC, on the
procedures of the participant through which you own your
interest, to exercise any rights of a holder of notes under the
indenture or a global note.
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All payments on a global note will be made to DTC or its
nominee, and all notices to holders of notes, including any
redemption notices, will be delivered to DTC or its nominee.
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The laws of some jurisdictions may require that specified
purchasers of securities take physical delivery of those
securities in definitive (i.e., certificated) form. Accordingly,
your ability to transfer your beneficial interests in a global
note to those persons may be limited. In addition, because DTC
can act only on behalf of its participants, who in turn act on
behalf of persons who hold interests through participants, the
ability of an investor holding
S-17
an interest in notes represented by a global note to pledge or
transfer those interests to persons or entities that do not
participate in DTCs system, or otherwise to take actions
in respect of their interest, may be affected by the lack of a
physical definitive security evidencing their interest.
Investors will be able to make and receive payments, deliveries,
transfers, exchanges, notices and other transactions involving
any securities held through Euroclear and Clearstream only on
days when those systems are open for business. Those systems may
not be open for business on days when banks, brokers and other
institutions are open for business in the United States.
In addition, because of time-zone differences,
U.S. investors who wish to transfer their beneficial
interests in the global notes held through Clearstream or
Euroclear, or to receive or make a payment or delivery or
exercise any other right with respect to those interests, on a
particular day may find that the transaction will not be
effected until the next business day in Luxembourg or Brussels,
as applicable. Thus, these investors may need to exercise rights
that expire on a particular day before the expiration date. In
addition, investors who hold their interests through both DTC
and Euroclear or Clearstream may need to make special
arrangements to finance any purchases or sales of their
interests between the DTC and Euroclear or Clearstream, and
those transactions may settle later than transactions effected
within one clearing system.
Secondary trading in bonds and notes of corporate issuers is
generally settled in clearing-house (that is,
next-day)
funds. In contrast, beneficial interests in a global note
usually trade in DTCs
same-day
funds settlement system, and settle in immediately available
funds. We make no representations as to the effect that
settlement in immediately available funds will have on trading
activity in those beneficial interests. Because of time-zone
differences, credits of interests in notes held through
Clearstream or Euroclear as a result of a transaction with a DTC
participant will be made during subsequent securities settlement
processing and dated the business day following the DTC
settlement date. These credits, or any transactions in those
notes settled during such processing will be reported to the
relevant Clearstream or Euroclear participants on that business
day. Cash received in Clearstream or Euroclear as a result of
sales of notes by or through a Clearstream participant or a
Euroclear participant to a DTC participant will be received with
value on the DTC settlement date, but will be available in the
relevant Clearstream or Euroclear cash account only as of the
business day following settlement in DTC.
Although DTC, Clearstream and Euroclear have agreed to the
foregoing procedures in order to facilitate transfers of notes
among participants of DTC, Clearstream and Euroclear, they are
under no obligation to perform or continue to perform those
procedures, and may discontinue those procedures at any time.
Book-Entry
Procedures
Ownership of beneficial interests in a global note will appear,
and transfer of those interests can be made, only on the records
kept by DTC (for their participants interests) and the
records kept by those participants (for interests of persons
held by participants on their behalf). Only institutions (such
as a securities broker or dealer) that have accounts with DTC or
its nominee, whom we refer to as participants, and persons that
may directly or indirectly hold beneficial interests through
participants can own a beneficial interest in a global note.
DTC has advised us as follows:
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With respect to any distributions of principal of or any
interest or premium on a global note, DTCs practice is to
credit direct participants accounts upon DTCs
receipt of funds with payments in amounts proportionate to their
respective beneficial interests in the global note as shown on
DTCs records. Payments by these participants to the
beneficial owners of the notes will be governed by standing
instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or
registered in street name, and will be the
responsibility of each participant and not of DTC, the paying
agent, or us, subject to applicable statutory or regulatory
requirements.
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Purchases of interests in a global note must be made by or
through direct participants, which will receive a credit for
their interests on DTCs records. Your ownership interest
in a global note is in turn to be recorded on the direct and
indirect participants records. You will not receive
written confirmation from DTC of your purchase, though you are
expected to receive written confirmations providing details of
the transaction, as well as periodic statements of your
holdings, from the participant through which you entered into
the
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transaction. Transfers of ownership interests in a global note
are to be accomplished by entries made on the books of direct
and indirect participants acting on behalf of the beneficial
owners.
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If we redeem a global note in part, DTCs practice is to
determine by lot the amount of the interest of each direct
participant holding an interest in the global note to be
redeemed.
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Neither DTC nor Cede (nor any other DTC nominee) will consent or
vote with respect to the notes unless authorized by a direct
participant in accordance with DTCs applicable procedures.
Under its usual procedures, DTC will mail an omnibus proxy to us
as soon as possible after the record date for any action by the
holders of notes. The omnibus proxy assigns Cedes
consenting or voting rights to those direct participants to
whose accounts the notes are credited on the record date
(identified in a listing attached to the omnibus proxy).
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DTC will take any action permitted to be taken by a holder of a
note (including the presentation of the note for exchange) only
at the direction of one or more participants to whose account
with DTC interests in the global note are credited and only in
respect of that portion of the principal amount of the global
note as to which that participant has, or those participants
have, given direction.
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DTC is a limited-purpose trust company organized under the New
York Banking Law, a banking organization within the
meaning of the New York Banking Law, a member of the Federal
Reserve System, a clearing corporation within the
meaning of the New York Uniform Commercial Code and a
clearing agency registered pursuant to the
provisions of Section 17A of the Exchange Act.
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DTC is a wholly-owned subsidiary of The Depository
Trust & Clearing Corporation, which we refer to as
DTCC. DTCC is the holding company for DTC, National Securities
Clearing Corporation and Fixed Income Clearing Corporation, all
of which are registered clearing agencies. DTCC is owned by the
users of its regulated subsidiaries.
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DTC holds securities for its participants and facilitate the
clearance and settlement of securities transactions between
participants through electronic computerized book-entry
transfers and pledges between direct participants accounts.
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Direct participants include U.S. and
non-U.S. securities
brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. Indirect access to
the DTC system is available to other entities such as both
U.S. and
non-U.S. securities
brokers and dealers, banks, trust companies and clearing
corporations that clear through or maintain a custodial
relationship with a direct participant, either directly or
indirectly.
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We have provided the descriptions of the operations and
procedures of DTC, Clearstream and Euroclear in this prospectus
supplement solely as a matter of convenience. These operations
and procedures are solely within the control of DTC, Clearstream
and Euroclear, respectively, and are subject to change by them
from time to time. Neither we, the underwriters nor the trustee
takes any responsibility for these operations or procedures, and
you are urged to contact DTC or their participants directly to
discuss these matters.
Neither we, the underwriters nor the trustee have any
responsibility or liability for any aspect of the records of
DTC, Clearstream or Euroclear, or any of their respective
participants, relating to beneficial interests in any global
note, including for payments of interest and premium, if any, on
and principal of any global note. Neither we, the underwriters
nor the trustee are responsible for maintaining, supervising or
reviewing any of those records.
The information in this section concerning DTC, Clearstream and
Euroclear, and their respective book-entry systems, has been
obtained from sources that we believe to be reliable, but we
take no responsibility for the accuracy thereof.
S-19
Certificated
Notes
No global note will be registered in the name of any person, or
exchanged for certificated notes that are registered in the name
of any person, other than DTC or its nominee, unless one of the
following occurs:
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DTC notifies us that it is unwilling or unable to continue
acting as the depositary for the global note or DTC has ceased
to be a clearing agency registered under the Exchange Act, and
in either case we fail to appoint a successor depositary;
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subject to the arrangements then existing between us and DTC, we
elect in our sole discretion not to have the notes represented
by a global note; or
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an event of default with respect to the notes has occurred and
is continuing, and DTC requests the issuance of certificated
notes.
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In those circumstances, DTC will determine the persons in whose
names any notes issued in exchange for the global note will be
registered, and we will issue certificated notes to those
persons upon surrender by DTC of the global note. Neither we nor
the trustee will be liable for any delay by DTC, its nominee or
any direct or indirect participant in identifying the beneficial
owners of a global note. We and the trustee may conclusively
rely on, and will be protected in relying on, instructions from
DTC or its nominee for all purposes, including with respect to
the registration and delivery, and the respective principal
amounts, of the certificated notes to be issued.
Holders of certificated notes, if so issued, can transfer or
exchange their notes, duly endorsed or accompanied by a written
instrument of transfer satisfactory to us and the security
registrar, without service charge, upon reimbursement of any
taxes or government charges, at the trustees corporate
trust office or at any other office we maintain for those
purposes.
Modifications
to the Indenture
In connection with this offering we are entering into a
supplemental indenture with the trustee to establish the terms
of the notes and to modify the terms of the indenture and of the
securities, including the notes, which may be issued under the
indenture. We summarize some of these modifications below.
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The supplemental indenture modifies the indenture to increase
the percentage of aggregate principal amount of the outstanding
debt securities of any series necessary to send us a notice of
default with respect to that series in the event of our breach
of any specified covenant, agreement or warranty in the
indenture from 10% to 25%. The continuation of the default
specified in such a notice for a period of 90 days after
delivery of the notice would constitute an Event of Default.
(Section 501(4))
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The supplemental indenture modifies the indenture to increase
the number of days an order or decree relating to bankruptcy,
insolvency or reorganization events must be in effect to
constitute an Event of Default from 60 to 90 days.
(Section 501(5))
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The supplemental indenture modifies the indenture to decrease
the percentage of the aggregate outstanding principal amount of
notes which holders who provide the trustee with written notice
of the occurrence of an Event of Default must hold before the
trustee is charged with knowledge of that event from 51% to at
least a majority. (Section 603(9))
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The supplemental indenture adds new provisions to the indenture
to provide that the trustee will not be liable for special,
indirect or consequential loss or damages, or for any failure or
delay in the performance of its obligations under the indenture
arising out of or caused by forces beyond its reasonable control
that could not be prevented by a reasonable disaster
preparedness plan. (Sections 603(11) and (12))
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The supplemental indenture modifies the indenture to permit us
to remove the trustee, upon notice, at any time unless an Event
of Default has occurred and is continuing. No similar right is
currently provided by the indenture. (Section 610)
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S-20
CERTAIN
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States federal
income tax considerations relating to the purchase, ownership
and disposition of the notes, but does not purport to be a
complete analysis of all potential tax considerations. This
summary is based on the provisions of the United States Internal
Revenue Code of 1986, as amended, which we refer to as the Code,
the regulations the Department of Treasury has promulgated under
the Code, which we refer to as Treasury regulations, judicial
authority, published administrative positions of the United
States Internal Revenue Service, which we refer to as the IRS,
and other applicable authorities, all as in effect on the date
of this prospectus supplement, and all of which are subject to
change, possibly on a retroactive basis. We have not sought any
ruling from the IRS with respect to the statements made and the
conclusions reached in the following summary, and there can be
no assurance that the IRS will agree with our statements and
conclusions.
This summary only describes certain anticipated United States
federal income tax considerations relevant to beneficial owners
of notes that purchase the notes in this offering at a price
equal to the price set out on the cover page of this prospectus
supplement, and that will hold the notes as capital
assets within the meaning of section 1221 of the Code
(generally, property held for investment). This summary does not
purport to address all aspects of United States federal income
taxation that might be relevant to particular holders in light
of their personal investment circumstances or status, nor does
it address tax considerations applicable to investors that may
be subject to special tax rules, such as certain financial
institutions, individual retirement and other tax-deferred
accounts, tax-exempt organizations, S corporations,
partnerships or other entities treated as partnerships for
United States federal income tax purposes or investors in such
entities, insurance companies, broker-dealers, dealers or
traders in securities or currencies, certain former citizens or
residents of the United States subject to section 877 of
the Code, and taxpayers subject to the alternative minimum tax.
This summary also does not discuss the tax considerations
applicable to persons that hold notes as part of a hedge,
straddle, synthetic security or conversion transaction, or
situations in which the functional currency of a
United States holder (as described below) is not the United
States dollar. Moreover, the effect of any applicable
U.S. federal estate or gift, state, local or
non-United
States tax laws is not discussed.
The following discussion is for informational purposes only and
is not a substitute for careful tax planning and advice.
Investors considering the purchase of notes should consult their
own tax advisors with respect to the application of the United
States federal income tax laws to their particular situations,
as well as any tax consequences arising under the federal estate
or gift tax laws or the laws of any state, local or
non-United
States taxing jurisdiction or under any applicable tax treaty.
United
States Holders
A United States holder is a beneficial owner of a note that is,
for United States federal income tax purposes:
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an individual who is a citizen or a resident of the United
States;
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a corporation, or other entity taxable as a corporation for
United States federal income tax purposes, created or organized
under the laws of the United States or any state thereof or the
District of Columbia;
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an estate, the income of which is subject to United States
federal income taxation regardless of its source; or
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a trust, if (i) a court within the United States is able to
exercise primary jurisdiction over its administration and one or
more United States persons have the authority to control all of
its substantial decisions, or (ii) in the case of a trust
that was treated as a domestic trust under the law in effect
before 1997, a valid election is in place under applicable
Treasury regulations to treat such trust as a domestic trust.
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In the case of a beneficial owner of notes that is classified as
a partnership for United States federal income tax purposes, the
tax treatment of the notes to a partner of the partnership
generally will depend upon the tax status of the partner and the
activities of the partnership. If you are a partner of a
partnership holding notes, then you should consult your own tax
advisors.
S-21
Payment
of interest
Stated interest on a note will be included in the gross income
of a United States holder as ordinary income at the time the
interest is accrued or received, in accordance with the
holders method of accounting for United States federal
income tax purposes.
Sale,
exchange, redemption, retirement or other taxable disposition of
the notes
Upon the sale, exchange, redemption, retirement or other taxable
disposition of a note, a United States holder generally will
recognize gain or loss equal to the difference between
(i) the amount realized upon the disposition and
(ii) the holders adjusted tax basis in the note. The
amount realized will be equal to the sum of the amount of cash
and the fair market value of any property received in exchange
for the note (less any portion allocable to any accrued and
unpaid interest, which will be taxed as ordinary interest income
to the extent not previously so taxed). A United States
holders adjusted tax basis in a note generally will equal
the cost of the note to that holder. This gain or loss generally
will be capital gain or loss, and will be long-term capital gain
or loss if the United States holder has held the note for more
than one year. In general, long-term capital gains of a
non-corporate United States holder are taxed at lower rates than
those applicable to ordinary income. The deductibility of
capital losses is subject to limitations. United States holders
should consult their own tax advisors as to the deductibility of
capital losses in their particular circumstances.
Information
reporting and backup withholding tax
In general, we must report certain information to the IRS with
respect to payments of principal, premium, if any, and interest
on a note, and payments of the proceeds of the sale or other
disposition of a note, to certain non-corporate United States
holders. The payor (which may be us or an intermediate payor)
will be required to impose backup withholding tax, currently at
a rate of 28%, if
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the payee fails to furnish a taxpayer identification number,
which we refer to as a TIN, to the payor or to establish an
exemption from backup withholding tax;
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the IRS notifies the payor that the TIN furnished by the payee
is incorrect;
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there has been a notified payee underreporting described in
section 3406(c) of the Code; or
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the payee has not certified under penalties of perjury that it
has furnished a correct TIN and that the IRS has not notified
the payee that it is subject to backup withholding tax under the
Code.
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United States backup withholding tax is not an additional tax.
Any amounts withheld under the backup withholding tax rules from
a payment to a United States holder will be allowed as a credit
against that holders United States federal income tax
liability and may entitle the holder to a refund, provided that
the required information is timely furnished to the IRS.
Non-United
States Holders
A non-United
States holder is a beneficial owner of a note that is, for
U.S. federal income tax purposes, an individual,
corporation, trust or estate that is not a U.S. holder (as
that term is defined above under United States
Holders).
The following discussion applies only to
non-U.S. holders,
and assumes that no item of income, gain, deduction or loss
derived by the
non-U.S. holder
in respect of the notes at any time is effectively connected
with the conduct of a United States trade or business by such
non-U.S. holder.
Special rules may apply to certain
non-U.S. holders
such as controlled foreign corporations,
passive foreign investment companies, corporations
that accumulate earnings to avoid United States federal income
tax, investors in pass-through entities that are subject to
special treatment under the Code, and certain former citizens or
residents of the United States. Such
non-U.S. holders
should consult their own tax advisors to determine the
U.S. federal, state, local and other tax consequences that
may be relevant to them.
Payment
of interest
Subject to the discussion of backup withholding tax below,
interest paid on a note by us or any paying agent to a
non-U.S. holder
will be exempt from United States income and withholding tax
under the portfolio interest exemption, provided
that (i) the
non-U.S. holder
does not, actually or constructively, own 10% or more of the
S-22
combined voting power of all classes of our stock entitled to
vote; (ii) the
non-U.S. holder
is not a controlled foreign corporation related to us, directly
or indirectly, through stock ownership; (iii) the
non-U.S. holder
is not a bank that acquired the notes in consideration for an
extension of credit made pursuant to a loan agreement entered
into in the ordinary course of its trade or business; and
(iv) either (a) the
non-U.S. holder
provides to us or our paying agent an applicable IRS
Form W-8BEN
(or a suitable substitute form), signed under penalties of
perjury, that includes its name and address and that certifies
its
non-United
States status in compliance with applicable law and regulations,
or (b) a securities clearing organization, bank or other
financial institution that holds customers securities in
the ordinary course of its trade or business on behalf of the
non-U.S. holder
provides a statement to us or our paying agent, signed under
penalties of perjury, in which it certifies that an applicable
IRS
Form W-8BEN
(or a suitable substitute form) has been received by it from the
non-U.S. holder
or qualifying intermediary and furnishes a copy of that form to
us or our paying agent. This certification requirement may be
satisfied with other documentary evidence in the case of a note
held in an offshore account or through certain foreign
intermediaries.
If a
non-U.S. holder
cannot satisfy the requirements of the portfolio interest
exemption described above, payments of interest made to that
holder generally will be subject to United States withholding
tax at the rate of 30%, unless that holder provides us or our
paying agent with a properly executed IRS
Form W-8BEN
establishing an exemption from or reduction of the withholding
tax under the benefit of an applicable tax treaty.
Sale,
exchange, redemption, retirement or other disposition of
notes
Subject to the discussion of backup withholding tax below, a
non-United
States holder generally will not be subject to United States
federal income tax or withholding tax on any gain realized on a
sale, exchange, redemption, retirement or other disposition of a
note (other than any amount representing accrued but unpaid
interest on the note, which is subject to the rules discussed
above under
Non-United
States Holders Payment of interest) unless the
non-U.S. holder
is an individual who was present in the United States for
183 days or more in the taxable year of the disposition and
certain other conditions are met. If a
non-U.S. holder
is an individual who is present in the United States for
183 days or more during the taxable year of the sale,
exchange or redemption of a note, and certain other requirements
are met, then that holder generally will be subject to United
States federal income tax at a flat rate of 30 percent
(unless a lower applicable treaty rate applies) on any realized
gain.
Information
reporting and backup withholding tax
The amount of interest paid to a
non-U.S. holder
and the amount of tax, if any, withheld from that payment
generally must be reported annually to the
non-U.S. holder
and to the IRS. The IRS may make this information available
under the provisions of an applicable income tax treaty to the
tax authorities in the country in which the
non-U.S. holder
is resident.
Provided that a
non-U.S. holder
has complied with certain reporting procedures (usually
satisfied by providing an IRS
Form W-8BEN)
or otherwise establishes an exemption, that holder generally
will not be subject to backup withholding tax with respect to
interest payments on, and the proceeds from the disposition of,
a note, unless we or our paying agent know or have reason to
know that the holder is a United States person. Additional
information reporting and backup withholding rules may be
applicable to certain
non-U.S. holders
who hold notes through brokers or other agents, and these
non-U.S. holders
should consult their own tax advisors regarding compliance with
those rules.
Any amounts withheld under the backup withholding tax rules will
be allowed as a refund or a credit against the
non-U.S. holders
United States federal income tax liability, provided that the
required information is timely furnished to the IRS.
S-23
UNDERWRITING
Subject to the terms and conditions of the underwriting
agreement, the underwriters named below, through their
representatives Credit Suisse Securities (USA) LLC, Deutsche
Bank Securities Inc., J.P. Morgan Securities Inc.,
Citigroup Global Markets Inc., Morgan Stanley & Co.
Incorporated, and RBS Securities Inc., have severally agreed to
purchase from us the following respective principal amounts of
notes listed opposite their name below at the public offering
price less the underwriting discounts and commissions set forth
on the cover page of this prospectus supplement:
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Principal
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Principal
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Amount of
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Amount of
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Underwriter
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2014 Notes
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2019 Notes
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Credit Suisse Securities (USA) LLC
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$
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52,500,000
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$
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75,000,000
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Deutsche Bank Securities Inc.
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52,500,000
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75,000,000
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J.P. Morgan Securities Inc.
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52,500,000
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75,000,000
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Citigroup Global Markets Inc.
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43,750,000
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62,500,000
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RBS Securities Inc.
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43,750,000
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62,500,000
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Morgan Stanley & Co. Incorporated
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24,500,000
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35,000,000
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BNP Paribas Securities Corp.
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24,500,000
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35,000,000
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Wells Fargo Securities, LLC
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24,500,000
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35,000,000
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Banca IMI S.p.A.
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7,875,000
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11,250,000
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Goldman, Sachs & Co.
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7,875,000
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11,250,000
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Mitsubishi UFJ Securities (USA), Inc.
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7,875,000
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11,250,000
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SunTrust Robinson Humphrey, Inc.
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7,875,000
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11,250,000
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Total
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$
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350,000,000
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$
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500,000,000
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The underwriting agreement provides that the obligations of the
several underwriters to purchase the notes offered hereby are
subject to certain conditions precedent and that the
underwriters will purchase all of the notes offered by this
prospectus supplement if any of these notes are purchased.
We have been advised by the representatives of the underwriters
that the underwriters propose to offer the notes initially to
the public at the initial public offering price set forth on the
cover of this prospectus supplement and to dealers at a price
that represents a concession not in excess of 0.35% of the
principal amount of the 2014 notes or 0.40% of the principal
amount of the 2019 notes. The underwriters may allow, and these
dealers may re-allow, a concession of not more than 0.25% of the
principal amount of the 2014 notes or the 2019 notes to other
dealers. After the initial public offering, representatives of
the underwriters may change the offering price and other selling
terms.
In addition, we estimate that our share of the total expenses of
this offering, excluding underwriting discounts and commissions,
will be approximately $1.7 million.
We have agreed to indemnify the underwriters and their officers,
directors and controlling persons against some specified types
of liabilities, including liabilities under the Securities Act,
and to contribute to payments any of those persons may be
required to make in respect of any of these liabilities.
The representatives of the underwriters have advised us that the
underwriters do not intend to confirm sales to any account over
which they exercise discretionary authority.
The notes are a new issue of securities with no established
trading market. The notes will not be listed on any securities
exchange or on any automated dealer quotation system. The
underwriters have advised us that they may make a market in the
notes after completion of the offering, but will not be
obligated to do so and may discontinue any market-making
activities at any time without notice. No assurance can be given
as to the liquidity of the trading market for the notes or that
an active public market for the notes will develop. If an
S-24
active public trading market for the notes does not develop, the
market price and liquidity of the notes may be adversely
affected.
In connection with the offering, the underwriters may purchase
and sell the notes in the open market. These transactions may
include short sales, purchases to cover positions created by
short sales and stabilizing transactions. If the underwriters
engage in these transactions, they may discontinue doing so at
any time.
Short sales involve the sale by the underwriters of a greater
principal amount of notes than they are required to purchase in
the offering. The underwriters may close out any short position
by purchasing notes in the open market. A short position is more
likely to be created if underwriters are concerned that there
may be downward pressure on the price of the notes in the open
market prior to the completion of the offering.
Stabilizing transactions consist of various bids for or
purchases of the notes made by the underwriters in the open
market prior to the completion of the offering.
The underwriters may impose a penalty bid. This occurs when a
particular underwriter repays to the other underwriters a
portion of the underwriting discount received by it because the
representatives of the underwriters have repurchased notes sold
by or for the account of that underwriter in stabilizing or
short covering transactions.
Purchases to cover a short position and stabilizing transactions
may have the effect of preventing or slowing a decline in the
market price of the notes. Additionally, these purchases, along
with the imposition of the penalty bid, may stabilize, maintain
or otherwise affect the market price of the notes. As a result,
the price of the notes may be higher than the price that might
otherwise exist in the open market. These transactions may be
effected in the
over-the-counter
market or otherwise.
A prospectus supplement in electronic format is being made
available on internet web sites maintained by one or more of the
lead underwriters of this offering and may be made available on
web sites maintained by other underwriters. Other than the
prospectus supplement in electronic format, the information on
any underwriters web site and any information contained in
any other web site maintained by an underwriter is not part of
the prospectus supplement or the registration statement of which
the accompanying prospectus forms a part.
Some of the underwriters or their respective affiliates have
from time to time performed various financial advisory,
commercial banking, investment banking, or hedging services for
us, including repurchases of Northrop Grumman common stock, in
the ordinary course of their respective businesses, for which
they have received customary fees and reimbursement of expenses.
Each underwriter or one of its affiliates is a lender, and in
some cases is also an agent, under our $2 billion revolving
credit facility.
Each underwriter has agreed that it will not knowingly offer,
sell or deliver any of the notes in any jurisdiction outside the
United States except under circumstances that will result in
compliance with the applicable laws of that jurisdiction, and
that it will take at its own expense whatever action is required
to permit its resale of the notes in such a jurisdiction.
LEGAL
MATTERS
Sheppard, Mullin, Richter & Hampton LLP,
San Diego, California, will issue an opinion about the
validity of the notes for us. The validity of the notes offered
hereby is being passed upon for the underwriters by
Sullivan & Cromwell LLP.
S-25
Northrop
Grumman Corporation
SENIOR DEBT
SECURITIES
COMMON STOCK
GUARANTEES OF SENIOR DEBT
SECURITIES
Northrop
Grumman S&MS Finance, LLC
Northrop
Grumman Systems Finance, LLC
SENIOR DEBT
SECURITIES
fully and unconditionally
guaranteed as described in the
applicable prospectus
supplement by
Northrop
Grumman Corporation
We may offer and sell any combination of the securities
described in this prospectus from time to time in one or more
offerings, in one or more series and in amounts, at prices and
on terms that we will determine at the time of the offering. Any
senior debt securities issued by Northrop Grumman S&MS
Finance, LLC or Northrop Grumman Systems Finance, LLC, which we
refer to as the Finance Subsidiaries, under this prospectus will
be fully and unconditionally guaranteed by Northrop Grumman
Corporation, which we refer to as Northrop Grumman.
We will provide the specific terms of the securities, including
their offering prices, any guarantee by Northrop Grumman, and
the methods by which we will sell them, in supplements to this
prospectus. The prospectus supplements may also add, update or
change information contained in this prospectus. You should read
this prospectus and any accompanying prospectus supplements
carefully before you make your investment decision.
We may offer and sell the securities on an immediate, continuous
or delayed basis directly to investors or through underwriters,
dealers or agents, or through a combination of these methods.
This prospectus may not be used to sell securities unless
accompanied by a prospectus supplement which will describe the
method and terms of the offering, including the specific plan of
distribution.
Northrop Grummans common stock is listed on the New York
Stock Exchange under the symbol NOC.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal
offense.
The date of this prospectus is July 29, 2008
TABLE OF
CONTENTS
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Page
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3
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3
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4
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5
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6
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6
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6
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13
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14
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14
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15
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15
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2
ABOUT
THIS PROSPECTUS
Unless otherwise stated or the context otherwise requires,
references in this prospectus to Northrop Grumman
are to Northrop Grumman Corporation, references to
we, our, us or similar
references are to Northrop Grumman and its consolidated
subsidiaries, and references to the Finance
Subsidiaries are to Northrop Grumman S&MS Finance,
LLC and Northrop Grumman Systems Finance, LLC, each of which is
a Delaware limited liability company.
This prospectus is part of a registration statement that we
filed with the Securities and Exchange Commission, or the SEC,
using a shelf registration process. Under this shelf
registration process, Northrop Grumman may from time to time
sell, either separately or together, senior debt securities or
common stock, in one or more offerings to the public, and the
Finance Subsidiaries may from time to time sell senior debt
securities, which will be fully and unconditionally guaranteed
by Northrop Grumman, in one or more offerings to the public.
This prospectus provides you with a general description of the
these securities.
Each time we sell securities, we will provide a prospectus
supplement containing specific information about the terms of
that offering. That prospectus supplement may include or
incorporate by reference a detailed and current discussion of
any risk factors and will discuss any special considerations
applicable to those securities. The prospectus supplement may
also add, update or change information contained in this
prospectus. You should read both this prospectus and any
prospectus supplement together with additional information
described under the heading Where You Can Find More
Information. If there is any inconsistency between the
information in this prospectus and any prospectus supplement,
you should rely on the information contained in that prospectus
supplement.
You should rely only on the information contained or
incorporated by reference in this prospectus and any prospectus
supplement. We have not authorized anyone to provide you with
different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not
making an offer to sell these securities in any jurisdiction
where the offer or sale is not permitted. You should read this
prospectus, including the documents incorporated by reference in
this prospectus, when making your investment decision. The
information in this prospectus is accurate as of the date on the
front cover. You should not assume that the information
contained in this prospectus is accurate as of any other date.
WHERE YOU
CAN FIND MORE INFORMATION
Northrop Grumman files annual, quarterly and current reports,
proxy statements and other information with the SEC. You may
read and copy any document we file with the SEC (including
exhibits to such documents) at the SECs Public Reference
Room at 100 F Street, N.E., Room 1580,
Washington, D.C. 20549. You may obtain additional
information about the Public Reference Room by calling the SEC
at
1-800-SEC-0330.
In addition, the SEC maintains a site on the Internet at
http://www.sec.gov/
that contains reports, proxy statements and other
information that we file electronically with the SEC. You may
also read such reports, proxy statements and other documents at
the offices of the New York Stock Exchange at 20 Broad
Street, New York, New York 10005.
We are incorporating by reference information into
this prospectus. This means that we are disclosing important
information to you by referring you to another document that has
been filed separately with the SEC. The information incorporated
by reference is considered to be part of this prospectus, and
information that we file later with the SEC will automatically
update and supersede the information contained in documents
filed earlier with the SEC or contained in this prospectus. We
incorporate by reference in this prospectus the documents listed
below and any future filings made by us with the SEC under
Section 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934 after the initial filing of the
registration statement that contains this prospectus and prior
to the time that we or the underwriters sell all of the
securities offered by this prospectus (except in each case the
information contained in such documents to the extent
furnished and not filed):
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our annual report on
Form 10-K
for the year ended December 31, 2007;
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our quarterly reports on
Form 10-Q
for the quarters ended March 31, 2008 and June 30,
2008;
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our current reports on
Form 8-K
filed on January 28, 2008 (as amended on March 14,
2008), February 21, 2008 (as amended on April 7,
2008), February 26, 2008, March 25, 2008, May 27,
2008 and July 29, 2008 (providing disclosures under
Items 8.01 and 9.01); and
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the description of our common stock in our registration
statement on
Form 8-A,
registering our common stock under the Exchange Act filed on
March 28, 2001.
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You may obtain copies, without charge, of documents incorporated
by reference in this prospectus, by requesting them in writing
or by telephone from us as follows:
Stephen D. Yslas
Corporate Vice President, Secretary and Deputy General Counsel
1840 Century Park East
Los Angeles, California 90067
(310) 553-6262
Exhibits to the filings will not be sent, unless those exhibits
have been specifically incorporated by reference in this
prospectus.
On July 29, 2008, we filed a current report on
Form 8-K
which recast the presentation of our consolidated financial
statements that we initially filed with the SEC in our annual
report on
Form 10-K
for the year ended December 31, 2007 to reflect:
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the transfer of certain businesses from our Electronics segment
to our Mission Systems segment during the first quarter of 2008;
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the transfer of certain programs and assets comprising the
missiles business in our Mission Systems segment to our Space
Technology segment during the second quarter of 2008; and
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the reclassification of our Electro-Optical Systems business,
formerly a part of our Electronics segment, as discontinued
operations due to the sale of that business in April 2008.
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We have not recast the presentation of our consolidated
financial statements that we filed with the SEC in our quarterly
report on
Form 10-Q
for the quarter ended March 31, 2008 to reflect the
transfer of certain programs and assets from the missiles
business in our Mission Systems segment to our Space Technology
segment because we do not deem that reclassification to be a
material change to those financial statements.
FORWARD-LOOKING
STATEMENTS AND IMPORTANT FACTORS
The Private Securities Litigation Reform Act of 1995 provides a
safe harbor for forward-looking statements. This prospectus, and
the documents incorporated herein by reference, contain
forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and
Section 21E of the Exchange Act. Additionally, we or our
representatives may, from time to time, make other written or
verbal forward-looking statements. In this prospectus, and the
documents incorporated by reference herein, we discuss plans,
expectations and objectives regarding our business, financial
condition and results of operations. Without limiting the
foregoing, statements that are in the future tense, and all
statements accompanied by terms such as believe,
project, expect, estimate,
forecast, assume, intend,
plan, anticipate, outlook,
will likely result, will continue,
we believe, and variations thereof and similar terms
are intended to be forward-looking statements as
defined by federal securities laws. We caution you not to place
undue reliance on forward-looking statements, which are based
upon assumptions, expectations, plans and projections.
Forward-looking statements are subject to risks and
uncertainties, including those identified in the Risk
Factors included in the documents incorporated by
reference herein or which may be included in any accompanying
prospectus supplements, that may cause actual results to differ
materially from those expressed or implied in the
forward-looking statements. Forward-looking statements may
represent challenges for us. Forward-looking statements speak
only as of the date when they are made. Except as required by
applicable law, we do not undertake any obligation to update
forward-looking statements to reflect events, circumstances,
changes in expectations, or the occurrence of unanticipated
events after the date of those statements.
4
We intend that all forward-looking statements made will be
subject to safe harbor protection of the federal securities laws
pursuant to Section 27A of the Securities Act and
Section 21E of the Exchange Act.
Forward-looking statements are based upon, among other things,
the companys assumptions with respect to:
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future revenues;
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expected program performance and cash flows;
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compliance with technical, operational and quality requirements;
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returns on pension plan assets and variability of pension
actuarial and related assumptions;
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the outcome of litigation, claims, appeals, bid protests and
investigations;
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hurricane-related insurance recoveries;
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environmental remediation;
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acquisitions and divestitures of businesses;
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joint ventures and other business arrangements;
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access to capital;
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performance issues with key suppliers and subcontractors;
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product performance and the successful execution of internal
plans;
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successful negotiation of contracts with labor unions;
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allowability and allocability of costs under
U.S. Government contracts;
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effective tax rates and timing and amounts of tax payments;
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the results of any audit or appeal process with the Internal
Revenue Service;
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the availability and retention of skilled labor; and
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anticipated costs of capital investments.
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NORTHROP
GRUMMAN CORPORATION AND THE FINANCE SUBSIDIARIES
We are an integrated enterprise consisting of many formerly
separate businesses that cover the entire defense spectrum, from
undersea to outer space and into cyberspace. The companies that
have become part of Northrop Grumman achieved historic
accomplishments, from transporting Charles Lindbergh across the
Atlantic to carrying astronauts to the moons surface and
back.
The acquisition of these businesses have shaped our company into
its present position as a premier provider of technologically
advanced, innovative products, services and solutions in
information and services, aerospace, electronics and
shipbuilding. As prime contractor, principal subcontractor,
partner, or preferred supplier, we participate in many
high-priority defense and commercial technology programs in the
U.S. and abroad. We conduct most of our business with the
U.S. Government, principally the Department of Defense
(DoD). We also conduct business with local, state and foreign
governments and domestic and international commercial customers.
Each Finance Subsidiary is a limited liability company formed on
July 1, 2008 under the laws of the State of Delaware for
the primary purpose of financing our business operations.
Northrop Grumman S&MS Finance, LLC is a direct wholly owned
finance subsidiary of Northrop Grumman Space & Mission
Systems Corp., which in turn is a direct wholly owned subsidiary
of Northrop Grumman. Northrop Grumman Systems Finance, LLC is a
direct wholly owned finance subsidiary of Northrop Grumman
Systems Corporation, which in turn is a direct wholly owned
subsidiary of Northrop Grumman.
The principal executive offices of Northrop Grumman and the
Finance Subsidiaries are located at 1840 Century Park East, Los
Angeles, California 90067 and our telephone number is
(310) 553-6262.
5
We maintain an internet site at
http://www.northropgrumman.com/.
The information contained at our internet site is not
incorporated by reference in this prospectus, and you should not
consider it a part of this prospectus.
USE OF
PROCEEDS
Unless we specify otherwise in a prospectus supplement, we will
use the net proceeds from the sale of the securities for general
corporate purposes. These purposes may include repayment of
debt, repurchase or redemption of our common stock, working
capital needs, capital expenditures, acquisitions and any other
general corporate purpose.
RATIO OF
EARNINGS TO FIXED CHARGES
The following table sets forth our ratios of earnings to fixed
charges for the periods indicated:
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Six Months Ended
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Year Ended December 31,
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June 30,
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2007
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2006
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2005
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2004
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2003
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2008
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2007
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6.1
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5.4
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4.7
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3.7
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2.6
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5.6
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5.8
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For purposes of computing the ratios of earnings to fixed
charges, earnings represent earnings from continuing operations
before income taxes and fixed charges, and fixed charges consist
of interest expense, the portion of rental expense calculated to
be representative of the interest factor, and amortization of
debt premiums. The ratios should be read in conjunction with the
financial statements and other financial data included or
incorporated by reference in this prospectus. See Where
You Can Find More Information.
DESCRIPTION
OF SENIOR DEBT SECURITIES
The following description of the senior debt securities, which
we refer to as the debt securities, sets forth certain general
terms and provisions of the debt securities to which any
prospectus supplement may relate. The specific terms of the debt
securities offered by any prospectus supplement, and the extent,
if any, to which such general provisions may apply to the debt
securities so offered, will be described in the prospectus
supplement relating to those debt securities.
Northrop Grumman may issue debt securities in one or more series
under an existing senior indenture between Northrop Grumman and
The Bank of New York Mellon, as indenture trustee. The Finance
Subsidiaries may each issue debt securities in one or more
series under a senior indenture to be entered into among the
applicable Finance Subsidiary, Northrop Grumman, as guarantor,
and an indenture trustee, which we expect to be The Bank of
New York Mellon. We refer to each of these three senior
indentures in this prospectus as an indenture. If we use a
different indenture trustee or a different indenture for any
series of debt securities, we will provide the details in a
prospectus supplement. We will file the forms of any other
indentures with the SEC at the time we use them.
We have summarized some of the material provisions of the
indentures on the following pages. The summary does not purport
to be complete and is subject to, and is qualified in its
entirety by reference to, all provisions of the indentures,
including definitions of various terms contained in the
indentures. A copy of the Northrop Grumman indenture and forms
of the indentures of the Finance Subsidiaries are exhibits to
the registration statement of which this prospectus is a part.
We encourage you to read the indentures. If you would like more
information on the indentures, see Where You Can Find More
Information on how to obtain copies of the indentures.
Section references in the summary below are to the section in
the applicable indenture. The referenced sections of the
indentures are incorporated by reference.
6
Terms
The indentures provide for the issuance of debt securities in
one or more series. A prospectus supplement relating to a series
of debt securities will include specific terms relating to the
offering. These terms will include some or all of the following:
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the issuer and applicable indenture;
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the title and type of the debt securities;
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any limit on the total principal amount of the debt securities;
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the person who will receive interest payments on any debt
securities if other than the registered holder;
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the price or prices at which we will sell the debt securities;
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the maturity date or dates of the debt securities;
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the rate or rates, which may be fixed or variable, per annum at
which the debt securities will bear interest and the date from
which such interest will accrue;
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the dates on which interest will be payable and the related
record dates;
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whether any index, formula or other method will determine
payments of principal, premium or interest and the manner of
determining the amount of such payments;
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the place or places of payments on the debt securities;
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whether the debt securities are redeemable;
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any redemption dates, prices, obligations and restrictions on
the debt securities;
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any mandatory or optional sinking fund or purchase fund or
analogous provisions;
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the denominations of the debt securities if other than $1,000 or
multiples of $1,000;
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the currency or currency units of principal, premium and
interest payments if other than U.S. dollars;
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any provisions granting special rights if certain events happen;
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any deletions from, changes in or additions to the events of
default or the covenants specified in the applicable indenture;
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any trustees, authenticating or paying agents, transfer agents,
registrars or other agents for the debt securities;
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any conversion or exchange features of the debt securities;
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whether we will issue the debt securities as original issue
discount securities for federal income tax purposes;
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any special tax implications of the debt securities;
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whether the debt securities will be issued in whole or in part
in temporary or permanent global form and, if so, the initial
depositary with respect to the global security;
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the terms of payment upon acceleration;
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the terms of any guarantee of the debt securities; and
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any other material terms of the debt securities.
(Section 301)
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Northrop Grumman may issue debt securities that are convertible
into or exchangeable for the common stock of Northrop Grumman.
If Northrop Grumman issues convertible or exchangeable debt
securities, we will provide additional information in a
prospectus supplement.
Northrop Grumman will fully and unconditionally guarantee the
debt securities offered by the Finance Subsidiaries.
7
We may sell debt securities at a discount below their stated
principal amount, bearing no interest or interest at a rate
that, at the time of issuance, is different than market rates.
Ranking
of Debt Securities and Northrop Grumman Guarantees
The debt securities will be senior unsecured obligations and
will rank equally and ratably with all other unsecured and
non-subordinated indebtedness of the issuer. The debt securities
issued by either Finance Subsidiary will be fully and
unconditionally guaranteed on a senior unsecured basis by
Northrop Grumman, which guarantee will rank equally and ratably
with all other unsecured and non-subordinated indebtedness of
Northrop Grumman.
Northrop
Grumman Guarantee
Northrop Grumman will fully and unconditionally guarantee to
each holder of a series of debt securities issued by any Finance
Subsidiary under the applicable indenture the due and punctual
payment by the Finance Subsidiary of the principal of, any
premium and interest on, and any sinking fund payment obligation
with respect to, the debt securities, when and as it becomes due
and payable, whether at maturity, upon acceleration, by call for
redemption, repayment or otherwise in accordance with the terms
of the debt securities and of the indenture.
Except as otherwise set forth in the applicable prospectus
supplement, with respect to any series of debt securities sold
by any Finance Subsidiary, Northrop Grumman will:
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agree that, if an event of default occurs under the debt
securities, its guarantee of the payment by the applicable
Finance Subsidiary of all amounts due under the debt securities
will be absolute and unconditional and will be enforceable
irrespective of any invalidity, irregularity or unenforceability
of the debt securities or the indenture or any supplement
thereto;
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waive its right to require the trustee or the holders to pursue
or exhaust their legal or equitable remedies against the Finance
Subsidiary before exercising their rights under the
guarantee; and
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agree to the restrictions set forth below under
Obligations Under the Indentures.
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The terms of the Northrop Grumman guarantee are set forth in the
Finance Subsidiary indentures.
(Article 14) These terms may be modified for
any series of debt securities issued by a Finance Subsidiary in
a supplemental indenture applicable to that series of debt
securities. Each prospectus supplement relating to a series of
debt securities offered by a Finance Subsidiary will describe
any material modifications to the terms of the Northrop Grumman
guarantee applicable to that series.
Denomination,
Form, Payment and Transfer
Normally, we will denominate and make payments on debt
securities in U.S. dollars. If we issue debt securities
denominated, or with payments, in a foreign or composite
currency, a prospectus supplement will specify the currency or
composite currency. (Section 301)
We may from time to time issue debt securities as registered
securities. This means that holders will be entitled to receive
certificates representing the debt securities registered in
their name. You can transfer or exchange debt securities in
registered form without service charge, upon reimbursement of
any taxes or government charges. You can make this transfer or
exchange at the trustees corporate trust office or at any
other office we maintain for such purposes. If the debt
securities are in registered form, we can pay interest by check
mailed to the person in whose name the debt securities are
registered on the days specified in the applicable indenture.
(Sections 301 and 305)
Global
Securities
We may issue the debt securities of a particular series in whole
or in part in the form of one or more global debt securities
that will be issued to and registered in the name of a
depositary, which we refer to as the depositary, or its nominee,
identified in the prospectus supplement relating to that series.
Global securities may be issued only in fully registered form
and in either temporary or permanent form. Unless and until a
global security is exchanged in whole or in part for individual
debt securities, a global security may only be transferred as a
whole between the depositary (or its successor) and any of its
nominees. (Section 305)
8
While the specific terms of the depositary arrangement with
respect to a series of debt securities will be described in the
prospectus supplement relating to that series, we anticipate
that the following provisions will generally apply to depositary
arrangements for global securities.
Upon the issuance of a global security, the depositary or its
nominee will credit, on its book-entry registration and transfer
system, the respective principal amounts of the persons who
beneficially own the global security to their accounts with the
depositary. These accounts will be designated by the dealers,
underwriters or agents through whom we sold the debt securities,
or by us if we offer and sell the debt securities directly.
Ownership of beneficial interests in a global security will be
limited to persons that have accounts with the depositary, whom
we refer to as participants, or persons that may hold interests
through participants. Ownership of beneficial interests in a
global security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by
the depositary or its nominee (with respect to interests of
participants) and the records of participants (with respect to
interests of beneficial owners other than participants). The
laws of some states require that certain purchasers of
securities must take physical delivery of debt securities in
definitive form. These requirements may impair our ability to
sell, and the ability of a purchaser to transfer, beneficial
interests in a global security.
So long as the depositary or its nominee is the registered owner
of a global security, the depositary or its nominee will be
considered the sole owner or Holder of the debt
represented by the global security for all purposes under the
indentures. Except as described below, owners of beneficial
interests in a global security will not be entitled to have any
of the debt represented by the global security registered in
their individual names, will not receive or be entitled to
receive physical delivery of any debt securities in definitive
form, and will not be considered the owners or
Holders of the debt securities under the indentures.
Accordingly, investors who hold an interest in global debt
securities in accounts at banks or brokers will not generally be
recognized by us as the legal holders of debt securities.
Payments of principal of and interest, if any, on a global
security registered in the name of the depositary or its nominee
will be made to the depositary or its nominee, as the registered
owner of the global security. Neither we nor the trustee, any
paying agent or the security registrar for the debt securities
will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial
ownership interests of the global security or for maintaining,
supervising or reviewing any records relating to those
beneficial ownership interests.
We expect that the depositary or its nominee, immediately upon
receipt of any payment of principal or interest in respect of a
global security, will credit the accounts of the applicable
participants with payments in amounts proportionate to their
respective beneficial ownership interests in the principal
amount of the global security, as shown on the records of the
depositary or its nominee. We further expect that payments by
participants to owners of beneficial interests in the global
security held through those participants will be governed by
standing instructions and customary practices, as is now the
case with securities held for the accounts of customers. These
payments will, however, be the sole responsibility of the
participants. We have no control over the practices of the
depositary or the participants, and there can be no assurance
that these practices will not be changed.
If the depositary for a series of debt securities is at any time
unwilling, unable or ineligible to continue as depositary and a
successor depositary is not appointed by us within 90 days,
we will issue individual debt securities of that series in
exchange for the global security held by that depositary. In
addition, we may at any time and in our sole discretion, subject
to any limitations described in the prospectus supplement
relating to the debt securities, determine not to have any
series of debt securities represented by one or more global
securities and, in that event, will issue individual debt
securities of that series in exchange for the global security.
Further, if an Event of Default with respect to any series
represented by a global debt security has occurred and is
continuing, the global security may be exchanged for individual
debt securities. In that case, each owner of a beneficial
interest in a global security will be entitled to a physical
delivery of individual debt securities of the series represented
by the global security equal in principal amount to that
owners beneficial interest, and to have those debt
securities registered in its name.
Payments
We will pay interest to direct holders listed in the
registrars records at the close of business on the record
date specified in the applicable prospectus supplement, which
usually falls about two weeks in advance of each due date for
interest, even if the holder on the record date no longer owns
the debt security on the interest due date.
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(Section 307) Holders buying and selling
securities must make their own arrangements to account for the
issuers payment of all the interest for an interest period
to the person who was the registered holder on the record date.
If any amount payable on any debt security remains unclaimed at
the end of two years after the amount became due and payable,
the paying agent or trustee will release that amount to the
issuer. (Section 1003)
Events of
Default
Unless we indicate otherwise in a prospectus supplement, the
following are events of default under the indenture with respect
to any series of issued debt securities:
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failure by the issuer of the debt securities and, in the case of
debt securities issued by a Finance Subsidiary, Northrop Grumman
as guarantor, to
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pay the principal or any premium on any debt security of that
series when due;
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pay interest on any debt security of that series within
30 days of when due;
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deposit any sinking fund payment on any debt security of that
series when due; or
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perform any other covenant in the applicable indenture
applicable to that series and the issuer or guarantor, if
applicable, that continues for 90 days after the issuer or
guarantor, as applicable, has been given written notice of the
failure by the trustee or the holders of at least 10% in
aggregate principal amount of the outstanding debt securities of
that series; or
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the occurrence of specified bankruptcy, insolvency or
reorganization events in respect of the issuer of the debt
securities or, if applicable, Northrop Grumman as guarantor;
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and the following is an additional event of default under the
Finance Subsidiary indentures with respect to any series of debt
securities issued by either Finance Subsidiary:
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the Northrop Grumman guarantee of that series ceases to be
effective. (Section 501)
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An event of default for one series of debt securities does not
necessarily constitute an event of default for any other series
under the same or another indenture. The trustee may withhold
notice to the debt securities holders of any default, except a
payment default, if it considers such action to be in the
holders interests.
If the specified bankruptcy, insolvency or reorganization events
occur, the entire principal of all the debt securities of that
series will be due and payable immediately. If any other event
of default occurs and continues, the trustee, or the holders of
at least 25% in aggregate principal amount of the outstanding
debt securities of the series, may declare the entire principal
of all the debt securities of that series to be due and payable
immediately. If this happens, and the issuer cures the event of
default in the manner specified in the applicable indenture, the
holders of a majority of the aggregate outstanding principal
amount of the debt securities of that series can void the
acceleration of payment. (Section 502)
The indentures provide that the trustee has no obligation to
exercise any of its rights at the direction of any holders,
unless the holders offer the trustee reasonable indemnity. If
they provide this indemnification, the holders of a majority in
principal amount of any series of debt securities have the right
to direct any proceeding, remedy, or power available to the
trustee with respect to that series. (Section 603)
Conversion
Rights
We will describe the terms upon which debt securities may be
convertible into the common stock of in a prospectus supplement.
These terms will include provisions as to whether conversion is
mandatory or optional. They may also include provisions
adjusting the number of shares of the common stock of Northrop
Grumman into which the debt securities are convertible.
10
Obligations
Under the Indentures
Under the indentures, Northrop Grumman, as the issuer or the
guarantor, as applicable, will agree to the following:
Limitations on Liens. The indentures restrict
Northrop Grummans ability to encumber specified types of
its assets or those of its restricted subsidiaries. If Northrop
Grumman, or any restricted subsidiary, pledges or mortgages any
principal property, or any stock or indebtedness of any
restricted subsidiary, to secure any debt or guarantee of debt,
then for as long as the debt or guarantee is secured by the
property, Northrop Grumman or the restricted subsidiary will be
obligated to pledge or mortgage the same property to the trustee
to secure the debt securities, unless an exception applies.
Restricted subsidiary means any direct or indirect subsidiary of
Northrop Grumman that has substantially all of its assets
located in the United States and carries on substantially all of
its business in the United States, or that holds substantially
all of its assets in the form of ownership of other restricted
subsidiaries. Principal property means any manufacturing plant
or facility located in the continental United States which is
owned by Northrop Grumman or any restricted subsidiary, unless
the board of directors of Northrop Grumman determines the plant
or facility is not of material importance to the total business
of Northrop Grumman and its restricted subsidiaries.
This limitation is subject to exceptions. We may encumber those
assets if the encumbrance is a permitted lien, without regard to
the amount of debt secured by the encumbrance. We may also
encumber those assets if the amount of all debt of Northrop
Grumman and its restricted subsidiaries secured by encumbrances,
other than the permitted liens, does not exceed the greater of
$1,000,000,000 or 10% of our consolidated net tangible assets.
Consolidated net tangible assets means our total assets,
including the assets of our subsidiaries, as reflected in our
most recent balance sheet, less current liabilities (other than
the current portion of debt and capital leases), goodwill,
patents and trademarks. Permitted liens include:
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liens on a corporations property, stock or debt at the
time it becomes a restricted subsidiary;
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liens on property at the time we or a restricted subsidiary
acquires the property;
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liens securing debt owing by a restricted subsidiary to Northrop
Grumman or another restricted subsidiary;
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liens existing at the time the applicable indenture became
effective;
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liens on property of an entity at the time it is merged into or
consolidated with Northrop Grumman or a restricted subsidiary or
at the time Northrop Grumman or any restricted subsidiary
acquires all or substantially all of the assets of the entity;
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liens in favor of any governmental customer to secure payments
or performance pursuant to any contract or statute, or to secure
indebtedness we incur with respect to the acquisition or
construction of the property subject to the liens, any related
indebtedness, or debt guaranteed by a government or governmental
authority; and
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any renewal, extension or replacement for any lien permitted by
one of the exceptions described above. (Section 1009)
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Limitations on Sale Leaseback
Arrangements. The indentures also restrict the
ability of Northrop Grumman or any restricted subsidiary to
enter into sale-leaseback transactions. A sale-leaseback
transaction is permitted if Northrop Grumman or the restricted
subsidiary would be permitted to incur indebtedness secured by
the principal property at least equal in amount to the
attributable debt with respect to the transaction, or the
greater of the net proceeds of the sale or the attributable debt
for the transaction is used to prepay long-term debt of Northrop
Grumman or any restricted subsidiary (other than debt owed to
Northrop Grumman or another restricted subsidiary).
Sale-leaseback transaction means, subject to some exceptions, an
arrangement pursuant to which Northrop Grumman, or a restricted
subsidiary, transfers a principal property to a person and
contemporaneously leases it back from that person. Attributable
debt for a sale and leaseback transaction means the lesser of
the fair value of the property, as determined by the Northrop
Grumman board of directors, or the present value of the
obligation of the lessee for net rental payments during the
remaining term of the lease. (Section 1010)
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The applicable indenture will not otherwise limit our ability to
incur additional debt, except as otherwise described in a
prospectus supplement.
Consolidation,
Merger or Sale
Under the indentures, neither Northrop Grumman nor, in the case
of indentures of the Finance Subsidiaries, the applicable
Finance Subsidiary, may consolidate with or merge into another
entity, transfer all or substantially all of its assets to
another entity, permit any entity to consolidate with or merge
into it, or acquire all or substantially all of the assets of
another entity, unless:
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the successor entity assumes all of Northrop Grummans or
the Finance Subsidiarys obligations, as applicable, under
the outstanding debt securities and the applicable indenture;
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immediately following the transaction, no event of default and
no circumstances which, after notice or lapse of time or both,
would become an event of default, continue to exist; and
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an officers certificate and a legal opinion have been
delivered to the trustee confirming that the transaction is
being effected in compliance with the applicable indenture.
(Sections 801 and 1409)
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Defeasance
and Covenant Defeasance
Any series of issued debt securities may be subject to the
defeasance and discharge provisions of the applicable indenture.
Under those provisions, the debt securities of any series may
authorize the issuer to elect:
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to defease and to discharge the issuer and, if applicable, the
guarantor, from any and all obligations of the issuer and, if
applicable, the guarantor, with respect to those debt securities
and, if applicable, the related guarantee, except for the rights
of holders of those debt securities to receive payments on the
securities solely from the trust fund established pursuant to
the applicable indenture and the obligations to exchange or
register the transfer of the securities, to replace temporary or
mutilated, destroyed, lost or stolen securities, to maintain an
office or agency with respect to the securities and to hold
moneys for payment in trust, which we refer to as a
defeasance; or
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to be released from the obligations of the issuer and, if
applicable, the guarantor, with respect to those debt securities
to comply with the restrictive covenants which are subject to
covenant defeasance, and the occurrence of certain events of
default with respect to those restrictive covenants shall no
longer be an event default, which we refer to as a covenant
defeasance. (Sections 1302 and 1303)
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To invoke defeasance or covenant defeasance with respect to any
series of debt securities, we must irrevocably deposit with a
trustee, in trust, money or U.S. Government obligations, or
both, which will provide money in an amount sufficient to pay
all sums due on that series. (Section 1304)
As a condition to defeasance or covenant defeasance, we must
deliver to the applicable indenture trustee an opinion of
counsel stating that holders of the applicable debt securities
will not recognize gain or loss for federal income tax purposes
as a result of the defeasance or covenant defeasance and will be
subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if we
did not elect the defeasance or covenant defeasance. We may
exercise our defeasance option with respect to the securities
notwithstanding our prior exercise of our covenant defeasance
option. If we exercise our defeasance option, payment of the
securities may not be accelerated by the reference to
restrictive covenants which are subject to covenant defeasance.
If we do not comply with our remaining obligations after
exercising our covenant defeasance option and the securities are
declared due and payable because of the occurrence of any event
of default, the amount of money and U.S. Government
obligations on deposit in the defeasance trust may be
insufficient to pay amounts due on the securities at the time of
the acceleration. However, we will remain liable for those
payments. (Sections 1302, 1303 and 1304)
Changes
to the Indentures
Holders who own more than a majority in principal amount of the
outstanding debt securities of a series can agree with us to
change the provisions of the applicable indenture relating to
that series. However, no change can
12
affect the payment terms or the percentage required to change
certain other terms without the consent of all holders of debt
securities of the affected series. (Section 902)
The issuer and trustee under any indenture may enter into
supplemental indentures for other specified purposes and to make
changes that would not materially adversely affect the interests
of the holders of debt securities issued under that indenture,
including the creation of any new series of debt securities,
without the consent of any holder of those debt securities.
(Section 901)
Governing
Law
New York law will govern the indentures, the debt securities and
the guarantee. (Section 112)
Trustee
The Bank of New York Mellon, as
successor-in-interest
of JPMorgan Chase Bank, serves as the trustee under Northrop
Grummans existing senior debt securities indenture, and we
expect it will serve as trustee under the indentures to be
entered into by the Finance Subsidiaries. If we use a different
trustee for any series of debt securities, we will inform you in
a prospectus supplement. In the ordinary course of its business,
The Bank of New York Mellon and its affiliates have engaged and
may in the future engage in commercial and investment banking
transactions with us.
DESCRIPTION
OF COMMON STOCK
Northrop Grumman has the authority to issue
800,000,000 shares of its common stock, par value $1.00 per
share. As of July 25, 2008, 337,531,256 shares of
common stock were outstanding. The number of shares of common
stock outstanding does not include shares issuable upon exercise
of outstanding awards under our stock compensation plans. The
common stock is listed on the New York Stock Exchange under the
symbol NOC.
Dividends. Dividends may be paid on the common
stock and on any class or series of stock entitled to
participate with the common stock as to dividends, but only when
and as declared by our board of directors and only if full
dividends on all then outstanding series of our preferred stock
for the then current and prior dividend periods have been paid
or provided for.
Voting Rights. Each holder of our common stock
is entitled to one vote per share on all matters submitted to a
vote of stockholders and does not have cumulative voting rights
for the election of directors.
Liquidation. If we liquidate, holders of
common stock are entitled to receive all remaining assets
available for distribution to stockholders after satisfaction of
our liabilities and the preferential rights of any preferred
stock that may be outstanding at that time.
Other Rights. Our outstanding common shares
are fully paid and nonassessable. The holders of our common
stock do not have any preemptive, conversion or redemption
rights.
Registrar and Transfer Agent. The registrar
and transfer agent for our common stock is Computershare
Investor Services.
Some Important Charter and Statutory
Provisions. We are subject to the provisions of
Section 203 of the Delaware General Corporation Law. In
general, the statute prohibits a Delaware corporation which has
a class of stock which is listed on a national stock exchange or
which has 2,000 or more stockholders of record from engaging in
a business combination with an interested stockholder
(generally, the beneficial owner of 15% or more of the
corporations outstanding voting stock) for three years
following the time the stockholder became an interested
stockholder, unless, prior to that time, the corporations
board of directors approved either the business combination or
the transaction that resulted in the stockholder becoming an
interested stockholder, or if at least two-thirds of the
outstanding shares not owned by that interested stockholder
approve the business combination, or if, upon becoming an
interested stockholder, that stockholder owned at least 85% of
the outstanding shares, excluding those held by officers,
directors and some employee stock plans. A business
combination includes a merger, asset
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sale, or other transaction resulting in a financial benefit,
other than proportionately as a stockholder, to the interested
stockholder.
DESCRIPTION
OF NORTHROP GRUMMAN GUARANTEES
OF SENIOR DEBT SECURITIES
Northrop Grumman will fully and unconditionally guarantee, on an
unsecured senior basis, the full and punctual payment by the
applicable Finance Subsidiary when due of all monetary
obligations, including principal, interest, any premium and the
payment of any sinking fund obligation, of that Finance
Subsidiary under the debt securities offered by that Finance
Subsidiary. The Northrop Grumman guarantee is included in each
of the indentures of the Finance Subsidiaries.
The prospectus supplement relating to a particular series of
senior debt securities issued by a Finance Subsidiary will
describe any material differences to the terms of the Northrop
Grumman guarantee described above under the heading
Description of Senior Debt Securities Northrop
Grumman Guarantee.
PLAN OF
DISTRIBUTION
We may sell the securities in one or more of the following ways
from time to time:
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to or through underwriters or dealers;
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directly to one or more purchasers;
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through agents; or
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through a combination of any of these methods of sale.
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We may effect the distribution of the securities from time to
time in one or more transactions either:
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at a fixed price or prices which may be changed;
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at market prices prevailing at the time of sale;
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at prices relating to such prevailing market prices; or
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at negotiated prices.
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The prospectus supplements relating to an offering of offered
securities will set forth the terms of such offering, including:
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the name or names of any underwriters, dealers or agents;
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the purchase price of the offered securities and the proceeds we
will receive from the sale;
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any underwriting discounts and commissions or agency fees and
other items constituting underwriters or agents
compensation; and
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any initial public offering price, any discounts or concessions
allowed or reallowed or paid to dealers and any securities
exchanges on which such offered securities may be listed.
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Any initial public offering prices, discounts or concessions
allowed or reallowed or paid to dealers may be changed from time
to time.
If underwriters are used in the sale, the underwriters will
acquire the offered securities for their own account and may
resell them from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. The
offered securities may be offered either to the public through
underwriting syndicates represented by one or more managing
underwriters or by one or more underwriters without a syndicate.
Unless otherwise set forth in a prospectus supplement, the
obligations of the underwriters to purchase any series of
securities will be subject to certain conditions precedent, and
the underwriters will be obligated to purchase all of such
series of securities, if any are purchased.
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In connection with underwritten offerings of the offered
securities and in accordance with applicable law and industry
practice, underwriters may over-allot or effect transactions
that stabilize, maintain or otherwise affect the market price of
the offered securities at levels above those that might
otherwise prevail in the open market, including by entering
stabilizing bids, effecting syndicate covering transactions or
imposing penalty bids, each of which is described below.
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A stabilizing bid means the placing of any bid, or the effecting
of any purchase, for the purpose of pegging, fixing or
maintaining the price of a security.
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A syndicate covering transaction means the placing of any bid on
behalf of the underwriting syndicate or the effecting of any
purchase to reduce a short position created in connection with
the offering.
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A penalty bid means an arrangement that permits the managing
underwriter to reclaim a selling concession from a syndicate
member in connection with the offering when offered securities
originally sold by the syndicate member are purchased in
syndicate covering transactions.
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These transactions may be effected on the NYSE, in the
over-the-counter
market, or otherwise. Underwriters are not required to engage in
any of these activities, or to continue such activities if
commenced.
If a dealer is used in the sale, we will sell such offered
securities to the dealer, as principal. The dealer may then
resell the offered securities to the public at varying prices to
be determined by that dealer at the time for resale. The names
of the dealers and the terms of the transaction will be set
forth in the prospectus supplement relating to that transaction.
Offered securities may be sold directly by us to one or more
institutional purchasers, or through agents designated by us
from time to time, at a fixed price or prices, which may be
changed, or at varying prices determined at the time of sale.
Any agent involved in the offer or sale of the offered
securities in respect of which this prospectus is delivered will
be named, and any commissions payable by us to such agent will
be set forth, in the prospectus supplement relating to that
offering. Unless otherwise indicated in such prospectus
supplement, any such agent will be acting on a best efforts
basis for the period of its appointment.
Underwriters, dealers and agents may be entitled under
agreements entered into with us to indemnification by us against
certain civil liabilities, including liabilities under the
Securities Act, or to contribution with respect to payments that
the underwriters, dealers or agents may be required to make in
respect thereof. Underwriters, dealers and agents may be
customers of, engage in transactions with, or perform services
for us and our affiliates in the ordinary course of business.
Each of the debt securities issued hereunder will be a new issue
of securities, will have no prior trading market, and may or may
not be listed on a national securities exchange. Any
underwriters to whom we sell debt securities for public offering
and sale may make a market in the securities, but such
underwriters will not be obligated to do so and may discontinue
any market making at any time without notice. We cannot assure
you that there will be a market for the offered securities.
VALIDITY
OF THE DEBT AND EQUITY SECURITIES
Except as set forth in the applicable prospectus supplement,
Sheppard, Mullin, Richter & Hampton LLP,
San Diego, California, will issue an opinion about the
validity of the senior debt securities and common stock and
Northrop Grummans guarantee of senior debt securities for
us. Underwriters, dealers or agents, who we will identify in a
prospectus supplement may have their counsel opine about certain
legal matters relating to the securities.
EXPERTS
The consolidated financial statements and the related financial
statement schedule, incorporated in this prospectus by reference
from the Companys Current Report on
Form 8-K
dated July 29, 2008 and the effectiveness of the
Companys internal control over financial reporting have
been audited by Deloitte & Touche LLP, an independent
registered public accounting firm as stated in their reports,
which are incorporated herein by reference
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(which reports (1) express an unqualified opinion on the
financial statements and financial statement schedule, with an
explanatory paragraph referring to Northrop Grummans
adoption of new accounting standards, and (2) express an
unqualified opinion on the effectiveness of internal control
over financial reporting). Such financial statements and
financial statement schedule have been so incorporated in
reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
With respect to the unaudited interim financial information for
the periods ended March 31, 2008 and 2007 and June 30,
2008 and 2007 which is incorporated herein by reference,
Deloitte & Touche LLP, an independent registered
public accounting firm, has applied limited procedures in
accordance with the standards of the Public Company Accounting
Oversight Board (United States) for a review of such
information. However, as stated in their reports included in the
Companys Quarterly Reports on
Form 10-Q
for the quarters ended March 31, 2008 and June 30,
2008 and incorporated by reference herein, they did not audit
and they do not express an opinion on that interim financial
information. Accordingly, the degree of reliance on their
reports on such information should be restricted in light of the
limited nature of the review procedures applied.
Deloitte & Touche LLP is not subject to the liability
provisions of Section 11 of the Securities Act of 1933 for
its reports on the unaudited interim financial information
because those reports are not reports or a
part of the Registration Statement prepared or
certified by an accountant within the meaning of Sections 7
and 11 of the Act.
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$850,000,000
$350,000,000
3.70% Senior Notes due 2014
$500,000,000
5.05% Senior Notes due 2019
PROSPECTUS SUPPLEMENT
Joint Book Running Managers
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Credit Suisse
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Deutsche Bank Securities
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J.P. Morgan
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Senior Co-Managers
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BNP PARIBAS
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Wells Fargo Securities
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Co-Managers
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Banca IMI
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Goldman, Sachs & Co.
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Mitsubishi UFJ Securities
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SunTrust Robinson Humphrey
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July 27,
2009