SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] Annual report pursuant to Section 15 (d) of the Securities
Exchange Act of 1934 (No fee required)
For the period ended December 31, 1999.
OR
[ ] Transition report pursuant to SECTION 15 (d) of the Securities Exchange Act
of 1934 (No fee required)
For the transition period from __________ to ____________
Commission file number 1-3229
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
EMPLOYEES' STOCK PURCHASE PLAN OF LOGICON, INC.
Logicon, Inc.
3701 Skypark Drive
Torrance, California 90505
B. Name of issuer of the securities held pursuant to the Plan and the
address of its principal executive office:
NORTHROP GRUMMAN CORPORATION
1840 Century Park East
Los Angeles, California 90067
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
EMPLOYEES' STOCK PURCHASE PLAN OF LOGICON, INC.
/s/ Steve Movius
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Dated: March 24, 2000 By Steve Movius
Chief Financial Officer
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EMPLOYEES' STOCK PURCHASE PLAN OF LOGICON, INC.
TABLE OF CONTENTS
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Page
INDEPENDENT AUDITORS' REPORT 4
FINANCIAL STATEMENTS:
Statements of Financial Condition
December 31, 1999 (Liquidation Basis) and 1998 5
Statements of Income and Changes in Plan Equity
Years Ended December 31, 1999 (Liquidation Basis), 1998 and 1997 6
Notes to Financial Statements 7-8
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INDEPENDENT AUDITORS' REPORT
To the Participants and the
Administrative Committee of the
Employees' Stock Purchase Plan of Logicon, Inc.:
We have audited the accompanying statements of financial condition of the
Employees' Stock Purchase Plan of Logicon, Inc. as of December 31, 1999
(liquidation basis) and 1998, and the related statements of income and changes
in plan equity for each of the three years in the period ended December 31,
1999. These financial statements are the responsibility of the Plan's
Administrative Committee. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial condition of the Employees' Stock Purchase Plan of
Logicon, Inc. as of December 31, 1999 (liquidation basis) and 1998, and its
income and changes in plan equity for each of the three years in the period
ended December 31, 1999 in conformity with accounting principles generally
accepted in the United States of America.
As discussed in Note 5 to the accompanying financial statements, the board of
directors of Logicon, Inc., the Plan's Sponsor, elected on December 18, 1999 to
terminate the Plan. In accordance with accounting principles generally accepted
in the United States of America, the Plan has changed its basis of accounting
used to determine the amounts at which investments information is stated from
the ongoing basis used in presenting 1998 and 1997 financial statements to the
liquidation basis used in presenting the 1999 financial statements.
/s/ Deloitte & Touche LLP
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Deloitte & Touche LLP
Los Angeles, California
March 30, 2000
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EMPLOYEES' STOCK PURCHASE PLAN OF LOGICON, INC.
STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1999 (LIQUIDATION BASIS) AND 1998
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<CAPTION>
1999 1998
<S> <C> <C> <C> <C>
ASSETS:
Investment in common stock of Northrop Grumman Corporation,
at fair value (Notes 1 and 2) $13,262,465 $18,208,271
Cash and short-term investments 2,142,601 915,360
Receivable for sale of common stock 982,250 -
Contributions receivable from participants 5,176 245,056
Due from Logicon, Inc. 7,795 6,170
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Total assets 16,400,287 19,374,857
LIABILITIES:
Dividends and interest payable to participants 237,839 233,032
Dividends and interest payable to Logicon, Inc. 117,680 116,211
Net assets payable to participants upon plan termination (Note 5) 15,909,805 -
Payable for purchase of common stock - 363,344
Participant withdrawals payable 134,963 341,488
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Total liabilities 16,400,287 1,054,075
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PLAN EQUITY $ - $18,320,782
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See notes to financial statements.
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EMPLOYEES' STOCK PURCHASE PLAN OF LOGICON, INC.
STATEMENTS OF INCOME AND CHANGES IN PLAN EQUITY
YEARS ENDED DECEMBER 31, 1999 (LIQUIDATION BASIS), 1998 AND 1997
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<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
ADDITIONS:
Investment income:
Dividend income $ 338,590 $ 331,321 $ 256,332
Interest income 19,574 16,836 18,864
Net realized and unrealized appreciation in
market value of Logicon, Inc. common stock 13,199,447
Net realized and unrealized (depreciation)
appreciation in market value of Northrop
Grumman Corporation common stock (5,021,276) (7,694,223) 230,946
Contributions by participants 6,344,164 6,072,697 5,460,278
Contributions by Logicon, Inc., net of participant
forfeitures of $291,010, $754,405 and $783,459 2,938,668 2,169,065 1,846,696
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4,619,720 895,696 21,012,563
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DEDUCTIONS:
Participant withdrawals 1,713,240 3,317,793 2,564,383
Distributions to participants 5,079,685 10,626,339 5,431,944
Distributions of dividends and interest 237,772 232,968 203,268
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6,994,577 14,177,100 8,199,595
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DISTRIBUTIONS TO PARTICIPANTS UPON
PLAN TERMINATION (Note 5) 15,909,805
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(DECREASE) INCREASE IN PLAN EQUITY (18,320,782) (13,281,404) 12,812,968
PLAN EQUITY:
Beginning of period 18,320,782 31,602,186 18,789,218
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End of period $ - $ 18,320,782 $ 31,602,186
============ ============ ============
See notes to financial statements.
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EMPLOYEES' STOCK PURCHASE PLAN OF LOGICON, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 (LIQUIDATION BASIS), 1998 AND 1997
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1. DESCRIPTION OF THE PLAN
The Employees' Stock Purchase Plan of Logicon, Inc. (the "Plan") was
established to provide the employees of certain subsidiaries of Logicon,
Inc. (the "Company") the opportunity to acquire shares of Logicon, Inc.
common stock. As a result of the merger of Logicon, Inc. and Northrop
Grumman Corporation ("Northrop") on August 1, 1997, each share of Logicon,
Inc. common stock was converted to .6161 of a share of Northrop Grumman
common stock. Effective August 21, 1997, the Plan was amended to provide for
the purchase of Northrop common stock. Participants may contribute up to 6%
of their base compensation to the Plan through regular after tax payroll
deductions. The Company makes contributions to the Plan equal to 50% of the
amounts contributed by participants, less participant forfeitures of
non-vested amounts. As provided in the Trust agreement, all participant and
Company contributions are invested by Sanwa Bank California (the "Trustee")
in shares of Northrop common stock. The shares are purchased at fair market
value on the open market. All administrative and other expenses of the Plan
are paid by the Company. Dividend and interest income is distributed ratably
to the participants and to the Company each year based upon participants'
vested and non-vested account balances.
Participants' interests in the Plan are accumulated in units which, at the
time of distribution or withdrawal, are converted into whole shares of
Northrop common stock and into cash for fractional shares. This conversion
is based upon each participant's proportionate interest in the Plan as
measured in units, multiplied by the total number of shares of Northrop
common stock held by the Plan. Participant contributions are fully vested at
all times. Company contributions vest two years after the close of the plan
year in which the contributions were made, or at the time of the
participant's total disability, death or retirement. Distributions of class
year equity are made annually following the end of the Plan year in which
the Company contributions become fully vested. On December 18, 1999, the
Company terminated the Plan with all participants becoming fully vested in
their share of Company contributions as of and after July 1, 1999.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting - The financial statements of the Plan are prepared on
the accrual basis of accounting.
Use of Estimates - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the reported amounts of assets, liabilities and changes therein, and
disclosure of contingent assets and liabilities. Actual results could differ
from those estimates.
Investment Valuation and Income Recognition - The Plan's investments are
stated at fair value. Investment in Northrop Grumman Corporation common
stock is stated at its closing market price on the date of valuation.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are recorded on
the ex-dividend date.
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Financial Statement Reclassification - To conform to the presentation in
1999, certain amounts for 1998 and 1997 have been reclassified in the
financial statements.
3. INCOME TAXES
The Plan is established under current tax law as a grantor trust and is
therefore not subject to taxes on its income. For tax purposes, the Company
is considered to be the owner of the portion of the Plan equity attributable
to non-vested Company contributions. Company contributions, and earnings
thereon, become taxable to participants as compensation upon vesting and
distribution. Participants are responsible for individual income taxes on
dividend and interest distributions from the Plan.
4. DETAIL OF PLAN EQUITY
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<CAPTION>
December 31,
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1999 1998 1997
<S> <C> <C> <C>
Plan equity is comprised of the following:
Class year ended December 31, 1995 $10,424,080*
Class year ended December 31, 1996 $ 6,145,706* 11,372,353
Class year ended December 31, 1997 $ 3,350,245 5,241,209 9,805,753
Class year ended December 31, 1998 4,383,103 6,933,867
Class year ended December 31, 1999 8,176,457
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$15,909,805** $ 18,320,782 $31,602,186
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* Subsequent to the applicable plan year end, the appropriate class year
equity was distributed to participants.
** Represents plan equity prior to accrual of final distribution to
participants upon liquidation.
At December 31, 1999, the number of units attributable to the Classes of
1999, 1998 and 1997 were 424,535, 227,579 and 173,951, respectively, and
Plan equity per unit was approximately $19.26.
5. PLAN TERMINATION
The Company elected to terminate the Plan as of December 18, 1999. At the
Plan's termination, all employees who participate in the Plan on or after
July 1, 1999 became fully vested in their share of Company contributions for
all class years. Distributions for all class years are expected to be made
during April 2000.
******
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Exhibit 1
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INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement
No. 333-34717 of Northrop Grumman Corporation on Form S-8 of our report
dated March 30, 2000, appearing in this Annual Report on Form 11-K of
the Employees' Stock Purchase Plan of Logicon, Inc., for the year ended
December 31, 1999.
/s/ Deloitte & Touche LLP
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Deloitte & Touche LLP
Los Angeles, California
March 30, 2000
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