SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 2003
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from __________ to __________
Commission file number: 1-12385
A. Full title of the plan and address of the plan, if different from
that of the issuer named below:
NORTHROP GRUMMAN SAVINGS PLAN
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
SIGNATURES
Pursuant to the requirements of the Securities and 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.
NORTHROP GRUMMAN SAVINGS PLAN
Dated: June 25, 2004 /s/ J. Michael Hateley
-----------------------------------------
By: J. Michael Hateley
Chairman, Administrative Committee
Northrop Grumman Savings Plan
(Formerly the Northrop Grumman Savings and Investment Plan)
Financial Statements as of December 31,
2003 and 2002 and for the Year Ended December 31,
2003, Supplemental Schedules and Report of
Independent Registered Public Accounting Firm
NORTHROP GRUMMAN SAVINGS PLAN
(Formerly the Northrop Grumman Savings and Investment Plan)
TABLE OF CONTENTS
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Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Plan Benefits as of December 31, 2003 and 2002 2
Statement of Changes in Net Assets Available for Plan Benefits for the
Year Ended December 31, 2003 3
Notes to Financial Statements 4-12
SUPPLEMENTAL SCHEDULES:
Form 5500, Schedule H, Part IV, Line 4a,
Schedule of Delinquent Participant Contributions for the year ended December 31, 2003 13
Form 5500, Schedule H, Part IV, Line 4i,
Schedule of Assets (Held at End of Year) as of December 31, 2003 14
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Administrative Committee
Northrop Grumman Savings Plan
We have audited the accompanying statements of net assets available for benefits
of the Northrop Grumman Savings Plan (the "Plan") as of December 31, 2003 and
2002, and the related statement of changes in net assets available for benefits
for the year ended December 31, 2003. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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 also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements, 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, the financial statements, referred to above, present fairly, in
all material respects, the net assets available for plan benefits as of December
31, 2003 and 2002 and the changes in net assets available for plan benefits for
the year ended December 31, 2003, in conformity with accounting principles
generally accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules as listed in
the Table of Contents are presented for the purposes of additional analysis and
are not a required part of the basic financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. These schedules are the responsibility of the Plan's management. Such
schedules have been subjected to the auditing procedures applied in the audit of
the basic 2003 financial statements and, in our opinion, are fairly stated in
all material respects when considered in relation to the basic financial
statements taken as a whole.
/s/ DELOITTE & TOUCHE LLP
Los Angeles, California
June 25, 2004
1
NORTHROP GRUMMAN SAVINGS PLAN
(FORMERLY THE NORTHROP GRUMMAN SAVINGS AND INVESTMENT PLAN)
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 2003 AND 2002
--------------------------------------------------------------------------------
2003 2002
ASSETS:
Investment in Northrop Grumman Defined Contribution Plans
Master Trust (Notes A, B, C, D and E) $5,655,953,474 $3,666,622,346
Other investments (Notes A, B and C) 753,777,161 513,468,593
-------------- --------------
Total investments 6,409,730,635 4,180,090,939
-------------- --------------
Receivables:
Participant contributions 8,627,405 4,313,329
Employer contributions 3,064,914 1,174,022
Dividends and interest receivable 10,322 --
-------------- --------------
Total receivables 11,702,641 5,487,351
-------------- --------------
Total assets 6,421,433,276 4,185,578,290
-------------- --------------
LIABILITIES:
Accrued expenses 1,894,835 2,090,276
-------------- --------------
Total liabilities 1,894,835 2,090,276
-------------- --------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $6,419,538,441 $4,183,488,014
============== ==============
See accompanying notes to financial statements.
2
NORTHROP GRUMMAN SAVINGS PLAN
(FORMERLY THE NORTHROP GRUMMAN SAVINGS AND INVESTMENT PLAN)
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2003
--------------------------------------------------------------------------------
INVESTMENT INCOME:
Plan interest in Northrop Grumman Defined Contribution Plans Master Trust
investment income (Notes A, B, C, D and E) $ 826,652,570
Net (depreciation) in fair value of other investments (26,826)
Interest 82,163
Dividends 105,455,276
---------------
Total investment income 932,163,183
---------------
CONTRIBUTIONS:
Participant 337,578,606
Employer 120,916,092
---------------
Total contributions 458,494,698
---------------
TRANSFER FROM OTHER PLANS (Notes A and J) 1,113,042,076
---------------
Total additions 2,503,699,957
---------------
DEDUCTIONS:
Benefits paid to participants (Note B) (262,028,677)
Administrative expenses (5,620,853)
---------------
Total deductions (267,649,530)
---------------
NET INCREASE 2,236,050,427
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of year 4,183,488,014
---------------
End of year $ 6,419,538,441
===============
See accompanying notes to financial statements.
3
NORTHROP GRUMMAN SAVINGS PLAN
(FORMERLY THE NORTHROP GRUMMAN SAVINGS AND INVESTMENT PLAN)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
--------------------------------------------------------------------------------
A. DESCRIPTION OF THE PLAN
The following description of the Northrop Grumman Savings Plan (the
"Plan") provides only general information. Participants should refer to
the Plan document for a more complete description of the Plan's
provisions.
General -- The Plan is a qualified profit-sharing and employee stock
ownership plan sponsored by Northrop Grumman Corporation (the "Company").
It was established February 1, 1962 and restated effective January 1,
1998. It covers substantially all hourly and salaried employees who are at
least 18 years old, are citizens or residents of the United States of
America and are not covered under another plan. It is subject to the
provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA").
During 2003, the Continental Maritime Employee Stock Ownership Plan,
Newport News Shipbuilding Inc. 401(k) Investment Plan for Salaried
Employees, TASC Profit Sharing and Savings Plan and TASC Services
Corporation Employees Savings Plan were merged with the Plan (see Note K).
Effective October 1, 2002, the Plan utilized the Northrop Grumman Defined
Contribution Plans Master Trust (the "Master Trust") for its investments,
except for the participant loans, temporary (short-term) investments and
the Charles Schwab Personal Choice Retirement Account.
Effective July 1, 2003, the Plan was amended to change its name from the
"Northrop Grumman Savings and Investment Plan" to the "Northrop Grumman
Savings Plan". Both the savings and ESOP features are reported within the
Plan's 2003 financial statements as they have been in prior periods.
Contributions -- Plan participants may contribute between 1% and 30% of
eligible compensation in increments of 1%, on a tax-deferred (before-tax)
basis, an after-tax basis, or a combination thereof. An active participant
may change the percentage of his or her contributions. Contributions are
subject to certain limitations.
The Company's matching contributions are as follows:
Employee Contribution Company Match
First 2% of eligible compensation 100%
Next 2% of eligible compensation 50%
Next 4% of eligible compensation 25%
Contribution over 8% 0%
Participant Accounts -- A separate account is maintained for each
participant. Each participant's account is credited with the participant's
contribution and allocations of (a) the Company's contribution, (b) Plan
earnings, and (c) administrative expenses. Allocations are based on
participant earnings on account balances, as defined in the Plan document.
The benefit to which a participant is entitled is the benefit that can be
provided from the participant's vested account.
4
Vesting -- Plan participants are fully vested (100%) at all times in the
balance of their accounts (both employee and employer contributions), none
of which may be forfeited for any reason.
Investment Options -- Upon enrollment in the Plan, each participant may
direct that his or her employee contributions and Company matching
contributions, in 1% increments, be invested in any of the following 12
investment funds.
U.S. Equity Fund -- The U.S. Equity Fund consists predominantly of
holdings in large and medium sized U.S. company stocks. The fund's
objectives are capital appreciation over the long term, along with
current income (dividends). The fund's stock investments are selected
by independent professional investment managers appointed by the Plan's
Investment Committee.
U.S. Fixed Income Fund -- The Fixed Income Fund consists of holdings in
marketable, fixed income securities rated within the three highest
investment grades (i.e., A or better) assigned by Moody's Investor
Services or Standard & Poor's Corporation, U.S. Treasury or federal
agency obligations, or cash equivalent instruments. The fund is broadly
diversified and maintains an average maturity of 10 years. The
securities are selected by independent professional investment managers
appointed by the Plan's Investment Committee.
Stable Value Fund -- The Plan holds an interest in the Northrop Grumman
Stable Value Fund (the "Stable Value Fund", see Notes D and E).
Investments of the Stable Value Fund are diversified among U.S.
government securities and obligations of government agencies, bonds,
short-term investments, cash and investment contracts issued by
insurance companies and banks. The Stable Value Fund is managed by an
independent professional investment manager appointed by the Plan's
Investment Committee.
Northrop Grumman Fund -- The Northrop Grumman Fund invests primarily in
Northrop Grumman Corporation common stock.
Balanced Fund -- The Balanced Fund consists of fixed portions of five
of the savings plan funds (Stable Value Fund, U.S. Equity Fund, Fixed
Income Fund, International Equity Fund and Small Cap Fund). The fund
seeks to exceed the return of the bond market and approach the return
of the stock market, but with less risk than an investment only in
stocks.
International Equity Fund -- The International Equity Fund consists of
stocks of a diversified group of companies in developed countries
outside the United States. The fund's objectives are capital
appreciation over the long term, along with current income (dividends).
Small Cap Fund -- The Small Cap Fund consists of stocks of a
diversified group of small capitalization U.S. companies. The stocks
purchased by the fund typically have a market capitalization similar to
companies in the Russell 2000 Index, which are companies with an
average market capitalization of $500 million. The fund's objective is
capital appreciation over the long term, rather than current income
(dividends).
Equity Index Fund -- The Equity Index Fund consists of a diversified
portfolio of stocks, as defined by an established market index. These
stocks are selected by independent professional investment managers
appointed by the Plan's Investment Committee. This fund is designed to
provide results that closely match those of the Standard & Poor's 500
Stock Index.
High Yield Bond Fund -- The High Yield Bond Fund consists of
below-investment-grade securities (i.e., BBB or lower) assigned by
Moody's Investor Services or Standard & Poor's Corporation. The fund
seeks to exceed the return of the high-quality (investment grade) bond
market.
5
International Bond Fund -- The International Bond Fund consists of
non-U.S. dollar denominated debt instruments rated within the three
highest investment grades (i.e., A or better) by Moody's Investor
Services or Standard & Poor's Corporation. The fund's objective is to
provide a higher level of income and capital appreciation than the
domestic fixed income market.
Emerging Markets Fund -- The Emerging Markets Fund consists of a
diversified portfolio of stocks issued by companies based in developing
countries. The fund's objective is capital appreciation over the long
term.
Schwab Personal Choice Retirement Account -- The Schwab Personal Choice
Retirement Account consists of more than 2,500 mutual funds, more than
300 fund families and the option to invest in individual stocks and
bonds.
Participants may change their investment options daily.
Contributions deposited into each investment fund buy a number of units in
each fund. The value of each participant's account within each fund
depends on two factors: (1) the number of units purchased to date and
(2) the current value of each unit. Unit values are updated daily prior to
any Plan transactions, including contributions, withdrawals, distributions
and transfers.
Participant Loans -- Participants may borrow from their fund accounts a
minimum of $1,000, up to a maximum equal to the lesser of $50,000, reduced
by the highest outstanding loan balance over the past 12 months, or 50% of
their account balance (not including Company contributions). A participant
may not have more than two outstanding loans at any given time (except for
those merged from other plans). Loans will be prorated across all
investment funds and are secured by the balance in the participant's
account. The interest rate is fixed on the first business day of each
month at the prime rate of the Plan's trustee plus 1%. Repayments are made
from payroll deductions (for active employees) or personal check (for
former employees or employees on a leave of absence). The maximum loan
period is five years or, effective January 1, 2003, fifteen years for a
loan used to acquire a dwelling that is to be the principal residence of
the participant. Loans may be prepaid in full; partial prepayments are not
permitted.
Payment of Benefits -- On termination of service (including termination
due to death, disability or retirement) a participant may receive a
lump-sum payment of his or her account balance. A participant may also
delay his or her lump-sum payment until the age of 70 1/2, if the account
balance exceeds $5,000.
Distributions from the Northrop Grumman Fund will be paid in cash, stock
or a combination of both, depending on the participant's election.
Withdrawals -- A participant may withdraw all or a portion of his or her
after-tax contributions (plus earnings) at any time but limited to one
withdrawal per quarter. In addition, a participant may withdraw all or a
portion of his or her Company matching contribution (plus earnings) at any
time but limited to one withdrawal per quarter. A participant may withdraw
all or a portion of his or her before-tax contributions for any reason
after reaching age 59 1/2, or prior to reaching age 59 1/2 in the case of
hardship (as described in the Plan document).
B. SUMMARY OF ACCOUNTING POLICIES
Basis of Accounting -- The accompanying financial statements have been
prepared in accordance with accounting principles generally accepted in
the United States of America.
6
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.
Risk and Uncertainties -- The Plan invests in various securities,
including U.S. government securities, corporate debt instruments and
corporate stocks. Investment securities, in general, are normally exposed
to various risks, such as interest rate, credit and overall market
volatility. Due to the ongoing level of risk associated with investment
securities, changes in the values of investment securities may occur in
the near term, which could materially affect the amounts reported in the
statements of net assets available for plan benefits.
Investment Valuation and Income Recognition -- The Plan's investments,
including the Plan's interest in the Master Trust, are stated at fair
value as determined by State Street Bank and Trust Company ("State Street"
or the "Trustee"). The underlying investments in the Master Trust are
valued with investments in securities traded on a national securities
exchange valued at their quoted market price at the end of the Plan year
and securities that have no quoted market price presented at their
estimated fair value.
Securities are valued at their market values based on information and
financial publications of general circulation, statistical and valuation
services, records of security exchanges, appraisals by qualified persons,
transactions and bona fide offers in assets of the type in question and
other information customarily used in the valuation of assets or if market
values are not available, at their fair values as provided to the Trustee
by the party with authority to trade such securities (investment managers,
the Investment Committee, or, in the case of participant directed
brokerage accounts, the participant's broker, as applicable). The Trustee
relies on the prices provided by pricing sources or the investment
managers, Investment Committee or participant's broker as a certification
as to value in performing any valuations or calculations required of the
Trustee.
All securities and cash or cash equivalents are quoted in the local
currency and then converted into US dollars using the appropriate exchange
rate obtained by the Trustee. The investment contracts with insurance
companies included in the Stable Value Fund are stated at contract value
(see Notes D and E). Loans from participants are valued at cost, which
approximates fair value. 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.
Broker commissions, transfer taxes and other charges and expenses incurred
in connection with the purchase, sale or other disposition of securities
or other investments held by the Master Trust are added to the cost of
such securities or other investments, or are deducted from the proceeds of
the sale or other disposition thereof, as appropriate. Taxes (if any) on
the assets of the funds, or on any gain resulting from the sale or other
disposition of such assets, or on the earnings of the funds, are
apportioned among the participants and former participants (if any) whose
interests in the Plan are affected, and the share of such taxes
apportioned to each such person is charged against his or her account in
the Plan.
The Master Trust allocates investment income, realized gains and losses,
and unrealized appreciation on the underlying securities to the
participating plans daily based upon the market value of each plan's
investment. The unrealized appreciation or depreciation in the aggregate
current value of investments is the difference between current value and
the cost of investments. The realized gain or loss on investments is the
difference between the proceeds received and the average cost of
investments sold.
7
Expenses -- Administrative expenses of the Plan are paid by either the
Plan or the Plan's sponsor as provided in the Plan document.
Payment of Benefits -- Benefits are recorded when paid.
C. INVESTMENTS
As of December 31, 2003, the Plan's investments include a proportionate
interest in certain investments held by the Master Trust. These
investments are stated at fair value determined and reported by the
Trustee in accordance with the Master Trust Agreement established by the
Company (see Notes A and B). Proportionate interests of each participating
plan are ascertained on the basis of the Trustee's plan accounting method
for master trust arrangements. The Plan's investment in the Master Trust
represents 87% and 81% of total net assets as reported by the Trustee of
the Master Trust as of December 31, 2003 and 2002, respectively.
As of December 31, 2003 and 2002, Master Trust assets of $695,984,508 and
$635,648,142, respectively, were on loan to third party borrowers under
security lending agreements. Such assets could be subject to sale
restrictions in the event security lending agreements are terminated and
the securities have not been returned to the Plan.
The net assets of the Master Trust at fair value are as follows as of
December 31, 2003 and 2002:
2003 2002
Assets:
Temporary investments (See Note D) $ 152,963,469 $ 298,243,357
U.S. and foreign government securities 411,233,413 314,399,692
Corporate debt instruments 174,859,840 186,349,259
Common stock 2,487,376,512 1,704,725,533
Common/collective trust funds 1,507,330,059 440,836,676
Guaranteed and synthetic investment contracts (See Notes D and E) 1,757,340,661 1,690,110,231
Other investments 11,684,933 3,790,201
Receivable for investments sold 28,549,033 55,685,018
Dividends, interest and tax receivable 8,511,236 6,938,752
-------------------------------
Total Assets 6,539,849,156 4,701,078,719
-------------------------------
Liabilities:
Due to broker for securities purchased 80,811,923 151,289,439
-------------------------------
Total Liabilities 80,811,923 151,289,439
-------------------------------
Net assets of the Master Trust $6,459,037,233 $4,549,789,280
===============================
8
Investment gain for the Master Trust is as follows for the year ended
December 31, 2003:
Net appreciation (depreciation) in fair value of investments:
U.S. and foreign government securities $ (6,430,781)
Corporate debt instruments 9,472,406
Common stock 435,855,240
Common/collective trust funds 213,116,026
Other investments 260,091
-------------
652,272,982
Interest 2,807,904
Dividends 60,745,505
Other income 87,034,461
Investment manager fees (10,641,254)
-------------
Total investment gain $ 792,219,598
=============
The following presents investments, other than the Plan's investment in
the Master Trust, that represent 5% or more of the Plan's net assets
available for Plan benefits as of December 31, 2003 and 2002:
2003 2002
Charles Schwab Personal Choice Retirement Account $ 621,900,164 $436,886,177
D. INTEREST IN NORTHROP GRUMMAN STABLE VALUE FUND
A portion of the Plan's investments that is part of the Master Trust
includes amounts in the Northrop Grumman Stable Value Fund, which was
established for the investment of the assets of the Plan and two other
Northrop Grumman Corporation sponsored savings plans. Each participating
savings plan has an undivided interest in the Stable Value Fund. At
December 31, 2003 and 2002, the Plan's interests in the net assets of the
Stable Value Fund were approximately 86% and 83%, respectively. Investment
income and administrative expenses relating to the Stable Value Fund are
allocated among the participating plans on a daily basis.
Investments held in the Stable Value Fund were as follows as of December
31:
2003 2002
Guaranteed and Synthetic Investment Contracts (at contract value) $1,757,340,661 $1,690,110,231
Merrill Lynch Retirement Preservation Trust 353,175,048 --
Cash and cash equivalents 7,241,405 49,488,133
-------------------------------
Total $2,117,757,114 $1,739,598,364
===============================
Investment income of the Stable Value Fund totaled $85,849,902 for the
year ended December 31, 2003.
9
The Plan has an arrangement with the investment manager of the Stable
Value Fund whereby the investment manager has the ability to borrow
amounts from third parties to satisfy liquidity needs of the Stable Value
Fund, if necessary. As of December 31, 2003, no borrowings under this
arrangement were outstanding.
E. INVESTMENT CONTRACTS WITH INSURANCE COMPANIES
All investment contracts held by the Stable Value Fund are considered to
be fully benefit responsive and therefore are recorded at contract value.
Contract value represents contributions made under the contract, plus
interest at the contract rate, less withdrawals and administrative
expenses.
The Stable Value Fund holds wrapper contracts in order to manage the
market risk and return of certain securities held by the Stable Value
Fund. The wrapper contracts generally modify the investment
characteristics of certain underlying securities similar to those of
guaranteed investment contracts. Each wrapper contract and its related
underlying assets is referred to as a Synthetic Investment Contract
("SIC") and is recorded at contract value. The SICs held by the Stable
Value Fund had a contract value totaling $1,753,314,248 and $1,646,981,826
at December 31, 2003 and 2002, respectively. The fair value of the
underlying assets related to the wrapper contracts totaled $1,834,125,347
and $1,746,621,817 as of December 31, 2003 and 2002, respectively.
The fair value of the non-synthetic guaranteed investment contracts
totaled $4,027,108 and $43,495,206 at December 31, 2003 and 2002,
respectively.
The following information is disclosed for the investment contracts within
the Stable Value Fund as of December 31:
2003 2002
Average yield of assets on December 31 4.68% 5.53%
Average crediting interest rate of assets at December 31 4.68% 5.53%
Average duration 3.16 years 2.58 years
F. PARTY-IN-INTEREST TRANSACTIONS
Certain Plan investments represent short-term investments managed by State
Street. State Street is the Trustee of the Plan, and therefore, these
transactions qualify as party-in-interest transactions. Fees paid by the
Plan for the investment management services amounted to $68,200 for the
year ended December 31, 2003. In Plan management's opinion, fees paid
during the year for services rendered by parties-in-interest were based
upon customary and reasonable rates for such services.
G. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of the
Plan's termination, the interests of all participants in their accounts
are 100% vested and nonforfeitable.
10
H. FEDERAL INCOME TAX STATUS
The plan obtained its latest determination letter dated July 17, 2002 in
which the Internal Revenue Service determined that the Plan terms at the
time of the determination letter application were in compliance with
applicable sections of the Internal Revenue Code of 1986, as amended ("the
Code") and, therefore, the related trust is exempt from taxation. The Plan
has been amended since receiving the determination letter. Although the
amendments have not yet been filed for a favorable determination letter,
management will make any changes necessary to maintain the Plans qualified
status. However, management believes that the Plan and related trust are
currently designed and operated in compliance with the applicable
requirements of the Code. Therefore, no provision for income taxes has
been included in the Plan's financial statements.
I. PROHIBITED TRANSACTIONS
During 2003, certain participant contributions were withheld by the
Company but not funded within the time period prescribed by the government
(Department of Labor Regulation 2510.3-102). Of the total, $400,366 was
delinquent by 21 days and $4,201 was delinquent by 70 days. The Plan
Sponsor intends to file a Form 5330 with the Internal Revenue Service and
pay the required excise tax on the transactions.
J. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for Plan
benefits per the financial statements to the Form 5500 as of December 31:
2003 2002
Net assets available for Plan benefits, per the financial statements $ 6,419,538,441 $ 4,183,488,014
Less: Amounts allocated to withdrawing participants (2,473,125) (6,606,122)
----------------------------------
Net assets available for Plan benefits per the Form 5500 $ 6,417,065,316 $ 4,176,881,892
==================================
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500 for the year ended December 31,
2003:
Benefits paid to participants per the financial statements $ 262,028,677
Add: Amounts allocated to withdrawing participants at December 31, 2003 2,473,125
Less: Amounts allocated to withdrawing participants at December 31, 2002 (6,606,122)
-------------
Benefits paid to participants per the Form 5500 $ 257,895,680
=============
Amounts allocated to withdrawing participants are recorded on the Form
5500 for benefit claims that have been processed and approved for payment
prior to December 31, but not yet paid as of that date.
11
K. PLAN MERGERS
Effective March 28, 2003, the TASC Profit Sharing and Savings Plan (the
"TASC Savings Plan") and TASC Services Corporation Employees Savings Plan
(the "TASC Employee Savings Plan") were merged with the Plan, and the
participants of the TASC Savings Plan and the TASC Employee Savings Plan
became eligible for participation in the Plan. The Continental Maritime
Employee Stock Ownership Plan and the Newport News Shipbuilding, Inc.
401(k) Investment Plan for Salaried Employees were merged with the Plan on
December 18, 2003 and December 19, 2003, respectively. Net assets
available for benefits were transferred into the Plan as follows:
TASC Savings Plan and the TASC Employees Savings Plan $ 240,310,607
Continental Maritime Employee Stock Ownership Plan 27,506,084
Newport News Shipbuilding Inc. 401(k) Investment Plan for Salaried Employees 845,225,385
--------------
$1,113,042,076
==============
12
NORTHROP GRUMMAN SAVINGS PLAN
(FORMERLY THE NORTHROP GRUMMAN SAVINGS AND INVESTMENT PLAN)
FORM 5500 SCHEDULE H, PART IV, LINE 4a
SCHEDULE OF DELINQUENT PARTICIPANT CONTRIBUTIONS
FOR THE YEAR ENDED DECEMBER 31, 2003
--------------------------------------------------------------------------------
Total that Constitute Nonexempt Prohibited Transactions
----------------------------------------------------------------
Contributions Total Fully Corrected
Participant Contributions Contributions Corrected Outside Contributions Pending Under VFCP and PTE
Transferred Late to Plan Not Corrected VFCP Correction in VFCP 2002 - 051
-------------------------------------------------------------------------------------------------------------------------
404,568 -0- 404,568 -0- -0-
13
NORTHROP GRUMMAN SAVINGS PLAN
(FORMERLY THE NORTHROP GRUMMAN SAVINGS AND INVESTMENT PLAN)
FORM 5500 SCHEDULE H, PART IV, LINE 4i
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2003
--------------------------------------------------------------------------------
Description of Investment,
Identity of Issue, Including Maturity Date,
Borrower, Lessor Rate of Interest, Collateral, Current
or Similar Party Par or Maturity Value Value
-------------------------------------------------------------------------------------------------------------------
* Northrop Grumman Defined Participation in Northrop Grumman Defined
Contribution Plans Master Trust Contribution Plans Master Trust $ 5,655,953,474
Charles Schwab Personal Choice Retirement Account 621,900,164
* State Street Participation in the Cash/STIF Accounts 9,599,656
* Northrop Grumman Corporation Participant loans (Prime + 1%) 122,277,341
---------------
Total $ 6,409,730,635
==============
* Party-in-interest
14