8-KMaterial AgreementsExhibits & Filings

NORTHROP GRUMMAN CORP /DE/ 8-K Report, Material Agreement (Oct 21, 2019)

Filed October 21, 2019For Securities:NOC

Summary

Northrop Grumman Corporation (NOC) announced on October 21, 2019, an amendment to its Credit Agreement dated August 17, 2018. The key change is the extension of the credit facility's final maturity date by one year, from August 17, 2023, to August 17, 2024. This amendment provides the company with extended financial flexibility and reinforces its commitment to maintaining a strong liquidity position. Additionally, the amendment addresses a technical accounting change related to the recognition of actuarial gains and losses for pension and other post-employment benefit (OPB) plans. By excluding certain impacts of this accounting change from the definition of "Shareholders' Equity" within the credit agreement, the company ensures that its leverage covenants remain aligned with its operational and financial reporting standards. This proactive measure helps to maintain compliance with existing debt agreements and avoid potential covenant breaches.

Key Highlights

  • 1Extended credit facility maturity by one year to August 17, 2024.
  • 2Amended Credit Agreement dated August 17, 2018.
  • 3NOC is the borrower, Northrop Grumman Systems Corporation is the guarantor.
  • 4JPMorgan Chase Bank, N.A. remains the administrative agent.
  • 5Amendment adjusts the definition of "Shareholders' Equity" to exclude specific accounting impacts.
  • 6Accounting adjustment relates to recognition of actuarial gains and losses for pension and OPB plans.
  • 7Enhances financial flexibility and covenant compliance.

Frequently Asked Questions

The primary impact is the extension of the credit facility's final maturity date by one year, pushing it from August 17, 2023, to August 17, 2024. This provides Northrop Grumman with greater financial flexibility and longer-term access to committed capital.

The amendment was made to disregard certain effects on consolidated shareholders' equity resulting from a change in the accounting method for recognizing actuarial gains and losses for pension and OPB plans. This ensures that the company's leverage covenants within the credit agreement remain consistent despite the accounting change.

No, this amendment does not indicate financial distress. Extending credit maturity and adjusting covenants proactively are common financial management strategies to ensure continued operational and financial flexibility, especially in large, complex organizations.

Northrop Grumman Systems Corporation acts as a guarantor, meaning it pledges its assets or creditworthiness to support the debt obligations of the parent company, Northrop Grumman Corporation, under the Credit Agreement. This strengthens the lenders' security.