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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 10, 1999
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 6, 1999
LITTON INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-3998 95-1775499
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
21240 BURBANK BOULEVARD
WOODLAND HILLS, CALIFORNIA 91367
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (818) 598-5000
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Item 5. OTHER EVENTS
On May 6, 1999, Litton Industries, Inc. (Litton or the Company) announced that
it has sent letters to the chairmen and chief executive officers of Newport News
Shipbuilding (NNS) and Avondale Industries, Inc. (AVDL) proposing to acquire NNS
in a stock-for-stock merger and AVDL for cash. The NNS merger will be a
tax-free, stock-for-stock transaction in which each share of NNS common stock
would be converted into .55 shares of Litton common stock and is expected to be
accounted for as a pooling of interests. The acquisition of AVDL's common stock
will be in cash at $38 per share. Neither transaction is conditioned upon the
acceptance of the other and both are subject to regulatory approval.
Attached hereto as Exhibit 99.1 is the Company's press release dated May 6, 1999
which sets forth additional information about these transactions.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
99.1 Press Release issued by the registrant on May 6, 1999
Page 2 of 3
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LITTON INDUSTRIES, INC.
Date: May 10, 1999 By: /s/ CAROL A. WIESNER
-----------------------------
Carol A. Wiesner
Vice President and Controller
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
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<S> <C>
99.1 Press Release issued by the registrant on May 6, 1999
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EXHIBIT 99.1
Corporate Litton Industries, Inc.
21240 Burbank Blvd.
Woodland Hills, CA 91367
Tel 818 598-5907
Fax 818 598-3340
NYSE Symbol: LIT
NEWS
RELEASE
LITTON INDUSTRIES, INC. MAKES SEPARATE PROPOSALS TO
ACQUIRE NEWPORT NEWS SHIPBUILDING AND AVONDALE INDUSTRIES, INC.
PROPOSAL TO NEWPORT NEWS SHIPBUILDING VALUED AT $35.61 PER SHARE IN LITTON
INDUSTRIES, INC. STOCK;
PROPOSAL TO AVONDALE INDUSTRIES, INC. IS $38.00 PER SHARE IN CASH
WOODLAND HILLS, Calif. -- (May 6, 1999) -- Litton Industries, Inc. (NYSE: LIT)
today announced that it has sent letters to the chairmen and chief executive
officers of Newport News Shipbuilding (NYSE: NNS) and Avondale Industries, Inc.
(NASDAQ: AVDL), proposing to acquire Newport News Shipbuilding in a
stock-for-stock merger that would be valued at $35.61 per Newport News
Shipbuilding share, based on May 6, 1999 closing price of $64.75 for Litton
Industries, Inc.'s common stock, and Avondale Industries, Inc. for $38.00 per
share in cash. The two transactions are valued at $2.4 billion in the aggregate,
including assumption of debt. Neither offer is conditioned upon the acceptance
of the other offer.
When combined with Litton Industries, Inc.'s Ingalls Shipbuilding operations,
Newport News Shipbuilding and Avondale Industries, Inc. would create a worldwide
leader in the shipbuilding industry and a full-service contractor with the
ability to compete across the spectrum of the U.S. Navy's shipbuilding needs.
The proposal would benefit employees, suppliers and customers through the
formation of a dynamic, global competitor for commercial and government
business. Market capitalization of the combined company would be approximately
$6.5 billion ($4.3 billion in equity and $2.2 billion in debt). Based on latest
twelve months results, the combined company would have revenues of approximately
$7.4 billion, earnings before interest, taxes, depreciation and amortization
(EBITDA) in excess of $800 million, and more than 58,000 employees.
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Litton Industries, Inc. is proposing to acquire Newport News Shipbuilding in a
tax-free, stock-for-stock transaction in which each share of Newport News
Shipbuilding common stock would be converted into .55 shares of Litton
Industries, Inc. common stock. Based on the May 6, 1999 closing price of $64.75
per Litton Industries, Inc. share, the offer values Newport News Shipbuilding at
$1.9 billion, including the assumption of approximately $600 million in debt.
This represents a premium of 32% over the May 6, 1999 closing price for Newport
News Shipbuilding common stock. The transaction will be accounted for as a
pooling of interests.
Litton Industries, Inc.'s all-cash proposal to Avondale Industries, Inc. is
valued at approximately $500 million in the aggregate. This represents a
premium of 20% over May 6, 1999 closing price for Avondale Industries, Inc.
common stock. The Avondale Industries, Inc. transaction, which would be
effected through a merger, is not subject to any financing contingency. The
combined transaction is expected to be accretive to earnings in the first year.
Michael R. Brown, chairman and chief executive officer of Litton Industries,
Inc., said, "Our proposed transactions provide superior value to the
stockholders of both Newport News Shipbuilding and Avondale Industries, Inc.
When combined with our highly efficient Ingalls Shipbuilding business, this
triumvirate would create a world-class leader in shipbuilding. We offer a
significant premium, especially when compared with the market's valuation of
the proposed merger between Avondale Industries, Inc. and Newport News
Shipbuilding. The U.S. Navy and our other customers would benefit from the long
term savings and innovative, cost-effective solutions; employees would form a
powerful new team; and shareholders would benefit from a company that is more
efficient and better positioned to compete.
"The proposal also fits perfectly with Litton Industries, Inc.'s corporate
strategy of sustaining a strong balance sheet, maintaining diversified sources
of revenue, and redeploying its substantial cash flow to accelerate growth in
earnings and revenues," Mr. Brown continued. "We are, however, prepared to
proceed with either Newport News Shipbuilding or Avondale Industries, Inc.
independently if they so choose.
"We have had preliminary discussions with the Department of Defense about our
proposals, and we are well aware of the considerations that led to the
rejection of the proposed combination between General Dynamics and Newport
News Shipbuilding," Mr. Brown said. "In that case, DOD was concerned with the
potential concentration of R&D expenditures in one company and the impact of
consolidation upon competition. Our approach enhances competition and ensures
that the benefits of R&D are available to multiple competitors and companies
that team with them.
"Upon completion of these transactions, the U.S. shipbuilding industry would
continue to offer alternative suppliers to the Navy in both nuclear and
non-nuclear categories. We believe that the DOD will find both offers to be in
best interests of the nation, the shipbuilding industry and the local
communities involved.
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"Litton Industries, Inc. has been a leading shipbuilder for more than 30 years,
and we know that much of our success is rooted in our commitment to the
communities in which we operate," Mr. Brown said. "We pride ourselves on being
good corporate citizens and responsible community members, and we intend to
continue that tradition with the Newport News Shipbuilding and Avondale
Industries, Inc. families."
Litton Industries, Inc. is being advised by Merrill Lynch & Co., Inc. and the
company's legal counsel is Wachtell, Lipton, Rosen and Katz.
Following is the full text of letters from Michael R. Brown that were delivered
to Mr. William P. Fricks, chairman and chief executive officer of Newport News
Shipbuilding, and Mr. Albert Bossier, chairman and chief executive officer of
Avondale Industries, Inc.
May 5, 1999
Mr. William P. Fricks
Chairman and Chief Executive Officer
NEWPORT NEWS SHIPBUILDING
4101 Washington Avenue
Newport News, VA 23607
Dear Bill:
With the approval of the Litton Industries, Inc. Board of Directors, I am
writing on behalf of Litton Industries, Inc. to offer you an exceptional
opportunity to create value for your shareholders, employees and customers.
Given the changes that have occurred in the competitive environment of the
shipbuilding industry over the past decade, it has become apparent to us
that a combination of Litton Industries, Inc.'s Ingalls Shipbuilding
business with that of Newport News Shipbuilding would make a great deal of
sense. Indeed, we have from time to time discussed with you the possibility
of a combination of Newport News Shipbuilding and Ingalls Shipbuilding and
have generally agreed that the combination would create significant value.
Therefore, I am pleased to propose a tax-free, stock-for-stock merger of
Newport News Shipbuilding and Litton Industries, Inc., to be accounted for
as a pooling of interests, in which each Newport News Shipbuilding common
share would be converted into 0.55 Litton Industries, Inc. shares. This
would provide a value of $35.50 for each Newport News Shipbuilding share,
based on yesterday's Litton Industries, Inc. share price, representing a
32% premium to Newport News Shipbuilding's closing share price as of today.
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The transaction we propose would create a world-class leader in shipbuilding
and would provide Newport News Shipbuilding shareholders an opportunity to
participate in that leadership at a substantial premium and on a tax-free
basis. The U.S. Navy and our other customers would benefit from this combination
and your employees would join a powerful new team. Our Ingalls Shipbuilding
business has many strengths in the construction of complex warships, commercial
vessels and ship repair, maintenance and overhaul.
We further believe that an expanded Ingalls Shipbuilding/Avondale Industries,
Inc./Newport News Shipbuilding combination would represent the most logical
response to the challenging environment we are all facing now and will likely
face for the foreseeable future. This combination would create a strong,
full-service U.S. shipbuilder with the scale and scope to compete for all
shipbuilding programs. It also would create efficiencies and synergies that
will benefit all of our constituencies. Accordingly, Litton Industries, Inc.
today has independently proposed to combine with Avondale Industries, Inc. in
an all-cash transaction. Neither our proposal to you nor our proposal to
Avondale Industries, Inc. is conditioned upon the acceptance of our proposal to
the other. For your convenience, a copy of our proposal to Avondale Industries,
Inc. is enclosed.
The key to any successful business combination is the people involved and the
successful integration of their skills. We have an excellent relationship with
Ingalls Shipbuilding's employees, and are confident that we would be able to
gain the long-term support of Newport News Shipbuilding's employees. Litton
Industries, Inc. has been a leading shipbuilder for more than 30 years, and we
know that much of our success is rooted in our commitment to the communities in
which we operate. We've worked hard to be good corporate citizens and
responsible community members, and we're committed to continuing that tradition
with the Newport News Shipbuilding and Avondale Industries, Inc. families.
I also have great respect for Newport News Shipbuilding's management team,
having worked closely with them in the past. I contemplate that Newport News
Shipbuilding's team would remain largely intact in the transaction and that
Newport News Shipbuilding personnel would be well represented in the senior
management ranks of the combined shipbuilding businesses. I have given a
similar indication concerning management participation to Avondale Industries,
Inc., should Avondale Industries, Inc. accept our offer.
Bill, I recognize that your contributions to Newport News Shipbuilding have been
an essential factor in its success. I believe it is important to the success of
the combined enterprise that following the transaction you will agree to become
a senior officer of Litton Industries, Inc.
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Given the compelling logic of what we are proposing and the clear superiority of
our offers to the proposed merger between Newport News Shipbuilding and Avondale
Industries, Inc., we would like to meet with you and your advisors as soon as
possible to finalize a definitive agreement (comparable to your existing
agreement with Avondale Industries, Inc.) between our companies while conducting
due diligence. We are advised by our legal advisors that there are no
significant antitrust or other issues associated with a combination of our
companies.
Sincerely,
/s/
MICHAEL R. BROWN
cc: Board of Directors
Newport News Shipbuilding
May 5, 1999
Mr. Albert Bossier
Chairman, Chief Executive Officer & President
AVONDALE INDUSTRIES, INC.
5100 River Road
Avondale, LA 70094
Dear Al:
Over the years, Litton Industries, Inc. and Avondale Industries, Inc. have
worked together closely and cordially on a number of projects and, as recently
as last November and December, have discussed the advantages of combining our
two companies. It has always been our mutual conclusion that a strategic
relationship would provide exceptional value to our companies, customers and
employees and should be pursued. We were disappointed that intervening events
have prevented an opportunity to pursue those discussions. However, the logic of
a combination has remained and, after intensive review and evaluation of
publicly available information, we have concluded that the strategic and
financial advantages of combining our two companies are too compelling to
ignore.
Accordingly, with the approval of our Board of Directors, we are pleased to
propose that Litton Industries, Inc. acquire Avondale Industries, Inc. in an
all-cash transaction of $38.00 per common share. This price represents
exceptionally attractive value for your shareholders--specifically, an all-cash
offer at an additional premium of 18% over your closing price of today.
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In addition to providing substantially greater value to your shareholders than
the proposed Newport News Shipbuilding transaction, our proposal represents a
particularly attractive opportunity to build a combined enterprise uniquely
positioned for continued leadership in the shipbuilding industry. The U.S. Navy
and our other customers would benefit from this combination and your employees
would join a powerful new team. Our Ingalls Shipbuilding business has many
strengths in the construction of complex warships, commercial vessels and ship
repair, maintenance and overhaul. Avondale Industries, Inc. has complementary
strengths in these areas, plus recent commercial shipbuilding experience.
Supported by Litton Industries, Inc.'s financial resources and advanced
technology, the combined entity will be a formidable competitor, well
positioned to achieve considerable cost savings, to compete aggressively and
effectively and to provide superior service to our customers. We believe that
the combined company would be better suited than the Avondale Industries,
Inc./Newport News Shipbuilding combination to compete and to thrive in the
challenging environment in which we are operating now and will likely face for
the foreseeable future.
In addition, while our proposal to you is not conditioned on entering a
transaction with Newport News Shipbuilding, we believe that the Avondale
Industries, Inc./Litton Industries, Inc. combination would be further
strengthened and would offer even more powerful advantages if the shipbuilding
business of Litton Industries, Inc., Avondale Industries, Inc. and Newport News
Shipbuilding were combined. This combination would create a strong,
full-service U.S. shipbuilder with the scale and scope to compete for all
shipbuilding programs. It also would create efficiencies and synergies that
will benefit all of our constituencies. Therefore, we are also today
independently proposing to merge with Newport News Shipbuilding in a
stock-for-transaction. I enclose a copy of our proposal to Newport News
Shipbuilding delivered today.
The key to any successful business combination is the people involved and the
successful integration of their skills. We have an excellent relationship with
Ingalls Shipbuilding's employees, and are confident that we would be able to
gain the long-term support of Avondale Industries, Inc.'s employees. Litton
Industries, Inc. has been a leading shipbuilder for more than 30 years, and we
know that much of our success is rooted in our commitment to the communities in
which we operate. We've worked hard to be good corporate citizens and
responsible community members, and we're committed to continuing that tradition
with the Avondale Industries, Inc. and Newport News Shipbuilding families.
I also have great respect for Avondale Industries, Inc.'s management team,
having worked closely with them in the past. I contemplate that Avondale
Industries, Inc.'s team would remain largely intact in the transaction and that
Avondale Industries, Inc. personnel would be well represented in the senior
management ranks of the combined shipbuilding businesses. I have given a
similar indication concerning management participation to Newport News
Shipbuilding, should Newport News Shipbuilding accept our offer.
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Al, I recognize that your efforts have been critical to Avondale Industries,
Inc.'s success. I believe it is important to the success of the combined
enterprise that following the transaction you will agree to continue as the
chief executive of Avondale Industries, Inc. as well as to become a senior
officer of Litton Industries, Inc.
Given the compelling logic of what we are proposing and the clear superiority of
our offers to the proposed merger between Newport news Shipbuilding and Avondale
Industries, Inc., we would like to meet with you and your advisors as soon as
possible to negotiate and finalize a definitive agreement between our companies
while conducting confirmatory due diligence. In this regard, we are ready to
enter into a merger agreement substantially comparable to the Newport News
Shipbuilding agreement. Our proposal is not subject to any financing
contingencies, and we are advised by our legal advisors that there are no
significant antitrust or other issues associated with a combination of our
companies.
Sincerely,
/s/
Michael R. Brown
cc: Board of Directors
Avondale Industries, Inc.
Litton is a leader in worldwide technology markets for advanced electronic,
defense and information systems, and is a major designer and builder of surface
combatant ships for the U.S. Navy and allied nations.
This press release contains forward-looking statements made in reliance upon the
safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Such forward-looking statements reflect management's current assumptions
and estimates of future performance and economic conditions, and are subject to
risks and uncertainties that could, and may well, cause actual results to differ
materially. Important factors that could cause results to differ from those
indicated by the forward-looking statements include but are not limited to,
changes in the defense budgets, effects of industry consolidation, successful
development of technologies, and orders actually issued by the government
against IDIQ (indefinite delivery, indefinite quantity) contracts in information
technology markets different from those projected. The company does not
undertake any obligation to publicly release any revisions to forward-looking
statements to reflect changes in risk factors, events, circumstances or changes
in management's expectations after the date of this document.
FOR INVESTORS, CONTACT: FOR MEDIA, CONTACT:
J. Spencer Davis of Litton Randy Belote of Litton
(818) 598-5495 (703) 413-1521
Ian Campbell/Andrew Brimmer
Abernathy MacGregor Frank
(212) 371-5999
