Exhibit 99.1
------------
[LITTON LETTERHEAD]
--------------------------------------------------------------------------------
Corporate
Litton Industries, Inc.
21240 Burbank Boulevard
Woodland Hills, CA 91367
Tel 818 598-5000
Fax 818 598-5450
NYSE Symbol: LIT
NEWS
RELEASE
FOR IMMEDIATE RELEASE INVESTOR CONTACTS:
Northrop Grumman Litton
Gaston Kent J. Spencer Davis
(310) 201-3423 (818) 598-5495
MEDIA CONTACTS:
Northrop Grumman Litton
Jim Taft Randy Belote
(310) 201-3335 (703) 413-1521
NORTHROP GRUMMAN TO ACQUIRE LITTON INDUSTRIES FOR $80 PER SHARE CASH
CREATES ONE OF THE WORLD'S TOP TIER DEFENSE COMPANIES;
STRENGTHENS COMPANY'S COMMITMENT TO SYSTEMS INTEGRATION, DEFENSE ELECTRONICS
AND INFORMATION TECHNOLOGY
LOS ANGELES -- Dec. 21, 2000 -- Northrop Grumman Corporation (NYSE: NOC)
and Litton Industries Inc. (NYSE: LIT) jointly announced today that they have
signed a definitive agreement under which Northrop Grumman will acquire for cash
all of the outstanding shares of Litton for $80 per common share and $35 per
Series B Preferred share. The transaction is valued at approximately $5.1
billion, which includes the assumption of Litton's $1.3 billion in net debt.
Northrop Grumman's and Litton's boards of directors have unanimously approved
the transaction.
Litton is a leading supplier of advanced electronics and information
systems to the U.S. government and international customers and is the premier
designer and builder of non-nuclear surface combatant ships for U.S. and foreign
navies. The company reported sales of $5.6 billion and net income of $218
million for the 2000 fiscal year ended July 31. Litton had $8.2 billion in fully
funded backlog at the end of its first quarter, October 31, 2000.
Following the close of the transaction, it is Northrop Grumman's intention
to raise additional capital through a stock offering. The company said that it
expects the transaction, including the
- more -
<PAGE>
- 2 -
effect of the issuance of additional stock, to be approximately 7 to 10 percent
accretive to economic earnings (earnings excluding pension income and
amortization) and neutral to GAAP earnings per share in 2001. Northrop Grumman
said it expects the acquisition to be double-digit accretive to both economic
and GAAP earnings per share in 2002 and beyond. The company expects to realize
at least $250 million in cost savings over the next few years, including $100
million in cost savings in the first year following the completion of the
transaction.
Kent Kresa, Northrop Grumman's chairman, president and chief executive
officer said, "We are very pleased with our strategic acquisition of Litton,
which we believe brings tremendous value to the shareholders, employees and
customers of both companies. With projected combined pro forma revenues of more
than $15 billion in 2001, growing to $18 billion by 2003, this acquisition
solidly places Northrop Grumman among the world's top-tier defense companies and
strengthens our commitment to systems integration, defense electronics and
information technology."
Mr. Kresa added that, "Litton gives us a new core competency as a major
prime contractor and systems integrator of surface ships for the U.S. Navy.
Following the close, Northrop Grumman will be one of the country's largest
federal IT suppliers and our defense electronics business will heighten our
status as a premier systems and sensor integration leader by expanding into
navigation and guidance systems for airborne platforms and other military
avionics systems. The acquisition also significantly broadens our portfolio of
businesses."
"I am pleased that we were able to work with Northrop Grumman to create
this combination, which brings together two premier advanced technology
companies and generates a broad range of opportunities going forward," said
Michael R. Brown, Litton's chairman and chief executive officer. "The
combination creates outstanding value for Litton and Northrop Grumman
shareholders, customers and employees."
Following the close of the transaction and during the initial transition
period, Litton will be operated as a wholly owned subsidiary of Northrop
Grumman. Dr. Ronald D. Sugar, 52, currently Litton's president and chief
operating officer, will become a Northrop Grumman corporate vice president, and
president and chief executive officer of the new Litton subsidiary. Dr. Sugar
will also be nominated to Northrop Grumman Corporation's board of directors
following the close of the transaction. Mr. Brown plans to retire.
"I have enjoyed working with Mike over the past several years, and have
always admired his ability to successfully respond to the changing demands of
our industry. We wish him well in his
- more -
<PAGE>
- 3 -
retirement," said Mr. Kresa. "I am very pleased to have Ron Sugar and all the
Litton employees join Northrop Grumman at such an exciting time in our company's
history," Mr. Kresa added. "Dr. Sugar's solid background and proven track record
will enhance our superior management team as he and our sector presidents work
together to quickly integrate Litton's operations to maximize our competitive
advantages and continue to enhance shareholder value.
"We have an excellent track record of successfully integrating new
businesses into our portfolio and I am confident that we will once again deliver
results commensurate with our past performance," Mr. Kresa concluded.
The transaction, which is expected to close within the first quarter of
2001, is subject to review under the Hart-Scott-Rodino Act as well as other
governmental and regulatory agencies. The transaction will be structured as a
cash tender offer which will be initiated on January 5, 2001, for all the
outstanding stock of Litton.
Northrop Grumman, based in Los Angeles, is a world-class, high technology
company providing innovative solutions in systems integration, defense
electronics and information technology for its U.S. and international military,
government and commercial customers, as a prime contractor, principal
subcontractor, team member or preferred supplier. The company expects to report
sales of approximately $7.6 billion for 2000 and has more than 39,000 employees
in three major sectors at sites in 43 states and various international
locations.
Litton designs, builds and overhauls surface ships for government and
commercial customers worldwide and is a leading provider of defense electronics
and information technology services and support to the U.S. government and
international customers. The company also provides specialized IT services to
both commercial and government customers at the local, national and
international level. Headquartered in Woodland Hills, Calif., Litton has more
than 40,000 employees in four major business units at facilities in 29 states
and other locations worldwide. It had 48 million fully diluted common shares and
approximately 411,000 Series B Preferred shares outstanding as of October 31,
2000.
Salomon Smith Barney acted as principal financial advisor to Northrop
Grumman in this transaction. Goldman Sachs & Co. also provided transaction
advice and a fairness opinion. To complete the transaction, Northrop Grumman has
received financing commitments totaling $6 billion from Credit Suisse First
Boston and The Chase Manhattan Bank. Litton was advised by Merrill Lynch & Co.
- more -
<PAGE>
- 4 -
Northrop Grumman's and Litton's senior management will conduct an investor
conference call today at 2 p.m. PST. The call-in number is (303) 804-1806 and
the conference ID is 891693. The call will be webcast live on the Internet at
www.northropgrumman.com. A press conference will follow at 3 p.m. PST at
Northrop Grumman's corporate headquarters in Los Angeles. The call-in number is
1-800-720-5850. The international call-in number is 904-779-4779.
Note: Certain statements and assumptions in this release contain or are based on
"forward-looking" information (that the company believes to be within the
definition in the Private Securities Litigation Reform Act of 1995) and involve
risks and uncertainties. Such "forward-looking" information includes the
statements above as to the impact of the proposed acquisition on revenues and
earnings. Such statements are subject to numerous assumptions and uncertainties,
many of which are outside the company's control. These include the company's
ability to successfully integrate the operations of Litton, assumptions with
respect to future revenues, expected program performance and cash flows, the
outcome of contingencies including litigation, environmental remediation,
divestitures of businesses, and anticipated costs of capital investments. The
company's operations are subject to various additional risks and uncertainties
resulting from its position as a supplier, either directly or as subcontractor
or team member, to the U.S. Government and its agencies as well as to foreign
governments and agencies; actual outcomes are dependent upon factors, including,
without limitation, the company's successful performance of internal plans;
government customers' budgetary restraints; customer changes in short-range and
long-range plans; domestic and international competition in both the defense and
commercial areas; product performance; continued development and acceptance of
new products; performance issues with key suppliers and subcontractors;
government import and export policies; acquisition or termination of government
contracts; the outcome of political and legal processes; legal, financial, and
governmental risks related to international transactions and global needs for
military aircraft, military and civilian electronic systems and support and
information technology; as well as other economic, political and technological
risks and uncertainties and other risk factors set out in the company's filings
from time to time with the Securities and Exchange Commission, including,
without limitation, the company's reports on Form 10-K and Form 10-Q.
THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN OFFER
TO SELL SHARES OF THE COMPANY. AT THE TIME THE OFFER IS COMMENCED, NORTHROP
GRUMMAN WILL FILE A TENDER OFFER STATEMENT WITH THE SEC AND LITTON WILL FILE A
SOLICITATION/RECOMMENDATION STATEMENT WITH RESPECT TO THE OFFER.
THE TENDER OFFER STATEMENT (INCLUDING AN OFFER TO PURCHASE, A RELATED LETTER OF
TRANSMITTAL AND OTHER OFFER DOCUMENTS) AND THE SOLICITATION/ RECOMMENDATION
STATEMENT WILL CONTAIN IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY
BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER.
THE OFFER TO PURCHASE, THE RELATED LETTER OF TRANSMITTAL AND CERTAIN OTHER
DOCUMENTS, AS WELL AS THE SOLICITATION/RECOMMENDATION STATEMENT, WILL BE MADE
AVAILABLE TO ALL SHAREHOLDERS OF LITTON, AT NO EXPENSE TO THEM. THE TENDER OFFER
STATEMENT (INCLUDING THE OFFER TO PURCHASE, THE RELATED LETTER OF TRANSMITTAL
AND ALL OTHER OFFER DOCUMENTS FILED WITH THE SEC) AND THE
SOLICITATION/RECOMMENDATION STATEMENT WILL ALSO BE AVAILABLE AT NO CHARGE AT THE
SEC'S WEBSITE AT www.sec.gov.
# # #
