NORTHROP GRUMMAN TO ACQUIRE FEDERAL DATA CORPORATION
Contacts: Bob Bishop (Media) (310) 201-3458
Larry Hamilton (Media) (703) 875-8450
Gaston Kent (Investors) (310) 201-3423
LOS ANGELES -- Sept. 6, 2000 -- Northrop Grumman Corporation (NYSE: NOC) announced today that it has signed a definitive agreement to acquire Federal Data Corporation, a leading systems integrator and supplier of information technology (IT) solutions to the U.S. government. The transaction is valued at $302 million, including approximately $127 million in cash, $157 million in debt (which will be retired in conjunction with the closing) and $18 million in other transaction costs. The acquisition is expected to be neutral to Northrop Grumman earnings in 2000 and accretive to earnings in 2001 and beyond.
Federal Data, with 1999 revenues of $584 million, is a leading provider of a full range of innovative IT solutions which meet the unique and rapidly growing requirements of the federal civil marketplace. Major customers include the National Institutes of Health, Veterans Administration, the FAA, NASA, the Internal Revenue Service and the Department of State. The Department of Defense is also a customer.
"The acquisition of Federal Data is an excellent strategic fit with Logicon, our information technology sector, which is one of the company's key engines of growth," stated Kent Kresa, Northrop Grumman chairman, president and chief executive officer. "Federal Data's strong brand recognition and expertise in the federal systems integration business enhances Logicon's thrust into high-end professional IT services and support. Coupled with our recent acquisition of Comptek Research, we continue to acquire businesses with significant growth prospects which we believe will provide long-term value for our shareholders."
Based in Bethesda, Md., Federal Data is owned by The Carlyle Group, a private investment firm, and has approximately 1,400 employees in the Washington, D.C., area and throughout the United States. Following the close of the transaction, Federal Data will be integrated into the operations of Logicon.
Federal Data is a key provider of professional software services and solutions, ranging from high-end systems integration, to network management and outsourcing. In late 1999, the company was awarded an eight-year, $260 million NASA contract, under which it will develop, build and operate microgravity research facilities and payloads for Space Shuttle missions and the International Space Station. The Veterans Administration has just awarded Federal Data a $55 million contract extension to provide continuing IT support for its benefits modernization program. Also, Federal Data is the largest supplier of Cisco Systems hardware to the Federal government.
Logicon Inc., with 1999 revenues of approximately $1.5 billion, is headquartered in Herndon, Va., and is a leader in advanced technology and information systems and services. Areas of expertise include command, control, communications and intelligence, information systems, training and simulation, science and technology, base and range support and commercial information services.
The acquisition is subject to normal governmental review and is expected to close within 45 days. The assumed debt includes a Federal Data Corporation Senior Subordinated Note of 2005, which will be redeemed in conjunction with closing in accordance with the terms of the indenture agreement. Salomon Smith Barney is the financial advisor to Northrop Grumman in this transaction.
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 now has a workforce of approximately 37,000 employees.
Note: The forward-looking statements contained in this release concerning, among other things, the company's expectations as to future results of operations, deliveries, trends, cash flows, markets and programs are projections and are necessarily subject to various risks and uncertainties. Actual outcomes are dependent upon 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, termination of government contracts, political processes, legal, financial and governmental risks related to international transactions and global needs for military and commercial aircraft and electronic systems and support 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 report on form 10-K.
