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EX-99. (a) (5) (vii)
Contact: Jim Taft (Media) (310) 201-3335
Gaston Kent (Investors) (310) 201-3423
For Immediate Release
NORTHROP GRUMMAN DISCUSSING AMENDMENT
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TO POST-TENDER MERGER TERMS FOR LITTON STOCK
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LOS ANGELES -- Jan. 16, 2001 -- Northrop Grumman Corporation
(NYSE: NOC) announced today that it is holding discussions with Litton
Industries Inc. (NYSE: LIT) and Litton's largest shareholder, Unitrin Inc.
(NASDAQ: UNIT), to potentially amend the post-tender merger terms of its
previously announced tender offer for all outstanding shares of Litton stock.
The amendment would include the option for Litton shareholders to receive a
limited number of shares of Northrop Grumman stock on a tax-free basis in lieu
of cash.
If such an amendment is implemented, it is not expected to affect the
pending cash tender offer for all of Litton's outstanding stock, which commenced
on Jan. 5, 2001, and will expire on Feb. 2, 2001, unless extended. Northrop
Grumman and Litton jointly announced on Dec. 21, 2000, that they had signed a
definitive agreement under which Northrop Grumman will acquire for cash all
Litton common stock for $80 per share and Series B preferred stock for $35 per
share in a transaction valued at approximately $5.1 billion, which includes the
assumption of Litton's $1.3 billion in net debt.
The amendment under discussion would provide Litton shareholders with the
opportunity to receive stock of the combined company in a second step merger
designed to allow a tax-free exchange for shares of Litton common stock for
Northrop Grumman stock. The stock offering would consist of not more than 14
million shares of
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NORTHROP GRUMMAN DISCUSSING AMENDMENT
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TO POST-TENDER MERGER TERMS FOR LITTON STOCK
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common stock and approximately $350 million of new convertible preferred
Northrop Grumman stock. Stockholders electing to receive stock in the merger
would be subject to proration if such elections exceeded the amount of stock
made available. All Litton common stock not exchanged for Northrop Grumman stock
would be exchanged for $80 per share in cash. As part of the amendment, the
parties would seek to avoid any discrepancy between the value of the stock
issued in the second step merger and the $80 per share cash price.
Northrop Grumman also stated that because of the complex issues involved,
there is no assurance that the amendment under discussion will be implemented.
If an amendment is not agreed upon, Northrop Grumman and Litton will continue
the current tender offer and associated merger as previously announced.
Northrop Grumman stated that the amendment would not affect the value of
the transaction as previously reported and that the company continues to expect
the acquisition will be 7 to 10 percent accretive to economic earnings (earnings
excluding pension income and amortization) and neutral to GAAP earnings per
share in 2001. The company said it expects the acquisition to be double-digit
accretive to both economic and GAAP earnings per share in 2002 and beyond.
Northrop Grumman Corporation, headquartered 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 had revenues of $7.6 billion in 1999 (restated) and has a workforce of
approximately 39,000 employees.
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NORTHROP GRUMMAN DISCUSSING AMENDMENT
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TO POST-TENDER MERGER TERMS FOR LITTON STOCK
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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.
If the amendment is adopted, the company will file the appropriate documentation
with the Securities and Exchange Commission and will distribute a supplement to
the offering materials to Litton shareholders. Litton shareholders are urged to
read carefully the complete offering materials which contain important
information.
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0101-08
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