Northrop Grumman Reports Second Quarter 2008 Results

Northrop Grumman Reports Second Quarter 2008 Results

* Earnings from Continuing Operations Increase to $1.40 per Share
* Net Earnings Increase to $1.44 per Share
* Sales Increase 10 Percent to $8.6 Billion
* Operating Income Increases 6 Percent
* Cash from Operations of $607 Million
* Free Cash Flow of $431 Million

LOS ANGELES - July 29, 2008 - Northrop Grumman Corporation (NYSE:NOC) reported that second quarter 2008 earnings from continuing operations increased to $483 million, or $1.40 per diluted share, from $472 million, or $1.35 per diluted share, in the second quarter of 2007. Earnings for the 2007 second quarter included tax benefits totaling $16 million, or $0.05 per share. Sales for the 2008 second quarter increased 10 percent to $8.6 billion from $7.9 billion in the 2007 second quarter. Cash provided by operations for the 2008 second quarter totaled $607 million compared with $741 million in the prior year period.

Second Quarter Highlights
-------------------------

* The U.S. Navy awarded Northrop Grumman a $1.16 billion contract for
System Development and Demonstration of the service's new Broad
Area Maritime Surveillance Unmanned Aircraft System (BAMS UAS)
program. BAMS UAS will provide the U.S. Navy with a persistent
maritime intelligence, surveillance and reconnaissance system to
protect the fleet and provide a capability to detect, track,
classify and identify maritime and littoral targets. The award is
being protested by one of the other competitors.

* The U.S. Navy awarded Northrop Grumman a contract for maintenance
work on the USS Enterprise (CVN 65) valued at $453.3 million.
Northrop Grumman is the prime contractor for the work, which
includes overhaul, maintenance and repairs to the ship and the
ship's systems.

* Northrop Grumman received a contract with a potential value of up
to $240 million to provide critical technologies for the Airborne
and Maritime/Fixed Station Joint Tactical Radio System program. An
initial $186.7 million contract was awarded focused on the
software-defined radio development for the program.

* The U.S. Air Force awarded Northrop Grumman two undefinitized
contracts, worth $300 million collectively, to complete
non-recurring engineering, flight test/certification and begin
production of new engines for the service's E-8C Joint Surveillance
Target Attack Radar System (Joint STARS) fleet.

* Northrop Grumman was awarded an indefinite delivery/indefinite
quantity subcontract with potential value of approximately
$135 million as part of the Global Linguist Solutions LLC team to
provide management of translation and interpretation services for
the U.S. Army Intelligence and Security Command in support of
Operation Iraqi Freedom.

* The U.S. Navy awarded Northrop Grumman a $101.9 million firm,
fixed-price contract for a third lot of Improved Capability III
airborne electronic attack systems for its fleet of EA-6B Prowlers.
The company will deliver seven complete systems, plus associated
piece parts and spares.

* The U.S. Army selected Northrop Grumman to produce the new
multi-function radar for the Extended Range/Multi-Purpose Unmanned
Aerial Vehicle (UAV) Radar program. Under the terms of the initial
$42 million contract Northrop Grumman will deliver 10 STARLite(tm)
Synthetic Aperture Radar (SAR)/Ground Moving Target Indication
radars to the Army.

* Northrop Grumman received a $79.4 million contract for the Global
Hawk Multi-Platform Radar Technology Insertion Program (MP-RTIP)
sensors as the first element of the lot 7 production contract. The
sensors will be carried on the RQ-4 Block 40 Global Hawk
high-altitude long-endurance unmanned aerial system currently in
production. The first flight with the MP-RTIP sensor is scheduled
in early 2009.

* The U.S. Department of Defense awarded Northrop Grumman a five-year
contract to support theoretical studies and engineering research
for Army, Navy and Air Force research-and-development programs. The
program has a ceiling of $100 million over a 10-year period.

* Northrop Grumman delivered the National Security Cutter Bertholf
(WMSL 750) to the U.S. Coast Guard. The cutter is the most
technologically advanced ship in U.S. Coast Guard history.

* Northrop Grumman completed thermal-vacuum testing, a critical
spacecraft environmental test, on NASA's Lunar Crater Observation
and Sensing Satellite (LCROSS) two months ahead of schedule. LCROSS
is a NASA mission to impact the moon in the search for water ice
and water-bearing compounds in lunar craters.

* Northrop Grumman completed the sale of its Electro-Optical Systems
business for $175 million in cash to L-3 Communications.

* Northrop Grumman increased its quarterly dividend to $0.40 per
share from $0.37 per share.

* Northrop Grumman completed the previously announced redemption of
its Series B Convertible Preferred Stock.
About Northrop Grumman

Northrop Grumman Corporation is a global defense and technology company whose 120,000 employees provide innovative systems, products, and solutions in information and services, electronics, aerospace and shipbuilding to government and commercial customers worldwide.

Northrop Grumman will webcast its earnings conference call at 12:00 p.m. EDT on July 29, 2008. A live audio broadcast of the conference call along with a supplemental presentation will be available on the investor relations page of the company's Web site at http://www.northropgrumman.com.

Note: Certain statements and assumptions in this release contain or are based on "forward-looking" information that Northrop Grumman Corporation (the "Company") believes to be within the definition in the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties, and include, among others, statements in the future tense, and all statements accompanied by terms such as "project," "expect," "estimate," "assume," "believe," "plan," "forecast," "intend," "anticipate," "guidance," "outlook," "trends," "target" or variations thereof. This information reflects the Company's best estimates when made, but the Company expressly disclaims any duty to update this information if new data become available or estimates change after the date of this release.

Such "forward-looking" information includes, among other things, financial guidance regarding sales, segment operating income, pension expense, employer contributions under pension plans and medical and life benefits plans, cash flow, and earnings per share, and is subject to numerous assumptions and uncertainties, many of which are outside the Company's control. These include the Company's assumptions with respect to future revenues; expected program performance and cash flows; returns on pension plan assets and variability of pension actuarial and related assumptions; the outcome of litigation, claims, appeals, bid protests, and investigations; hurricane-related insurance recoveries; environmental remediation; acquisitions and divestitures of businesses; joint ventures and other business arrangements; access to capital; performance issues with key suppliers and subcontractors; product performance and the successful execution of internal plans; successful negotiation of contracts with labor unions; allowability and allocability of costs under U.S. Government contracts; effective tax rates and timing and amounts of tax payments; the results of any audit or appeal process with the Internal Revenue Service; the availability and retention of skilled labor; and anticipated costs of capital investments, among other things.

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 various factors, including, without limitation, the Company's successful performance of internal plans; government customers' budgetary constraints; customer changes in short-range and long-range plans; domestic and international competition in both the defense and commercial areas; technical, operational or quality setbacks that could adversely affect the profitability or cash flow of the company; product performance; continued development and acceptance of new products and, in connection with any fixed-price development programs, controlling cost growth in meeting production specifications and delivery rates; 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 and of the assertion or prosecution of potential substantial claims by or on behalf of a U.S. Government customer; natural disasters, including amounts and timing of recoveries under insurance contracts, availability of materials and supplies, continuation of the supply chain, contractual performance relief and the application of cost sharing terms, allowability and allocability of costs under U.S. Government contracts, impacts of timing of cash receipts and the availability of other mitigating elements; terrorist acts; legal, financial and governmental risks related to international transactions and global needs for military aircraft, military and civilian electronic systems and support, information technology, naval vessels, space systems, technical services and related technologies, 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, Company reports on Form 10-K and Form 10-Q.

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