ENWV Endwave Corp. (MM)

Earnings per Share from Continuing Operations $0.80 LOS ANGELES, Oct. 25 /PRNewswire-FirstCall/ -- Northrop Grumman Corporation (NYSE:NOC) reported third quarter 2005 income from continuing operations of $288 million, or $0.80 per diluted share, compared with $291 million, or $0.80 per diluted share, for the same period of 2004. Third quarter 2005 sales were unchanged at $7.4 billion. As announced on Oct. 10, 2005, Northrop Grumman's third quarter 2005 consolidated sales and earnings were negatively impacted by hurricane damage to the company's Ship Systems facilities on the Gulf Coast. Hurricane-related impacts reduced Ships third quarter operating margin by $165 million and reduced consolidated third quarter earnings by $0.30 per diluted share. The hurricane-related impacts were partially offset by the sale of 2.1 million shares of Endwave Corporation (NASDAQ:ENWV) common stock, which resulted in a pre-tax gain of $81 million, or $0.15 per diluted share. "We again demonstrated our ability to produce higher sales, margin and cash across our businesses," said Ronald D. Sugar, Northrop Grumman chairman, chief executive officer and president. "Although Hurricane Katrina impacted Ships, sales and operating margin rose in every other business, and we've generated $2 billion in operating cash year to date, 20 percent more than last year." The company's third quarter 2005 consolidated operating margin includes higher operating margin in all of the company's segments, with the exception of Ships, and operating margin rate expansion in Mission Systems, Information Technology and Space Technology. Operating margin declined to $433 million from $538 million for the same period of 2004, due to the hurricane-related impacts in Ships. Unallocated expenses for the 2005 third quarter declined to $42 million from $62 million in the same period of 2004 reflecting lower legal costs and lower mark-to-market stock compensation expense. During the third quarter of 2005, the company sold 2.1 million shares of Endwave common stock, which generated $81 million in pre-tax earnings. This contributed to the increase in Other, net for the 2005 third quarter to $95 million from an expense of $6 million for the same period in 2004. The effective tax rate applied to income from continuing operations for the 2005 third quarter was 33.8 percent compared with 34.2 percent in the 2004 third quarter. Net income for the 2005 third quarter increased to $293 million, or $0.81 per diluted share, from $278 million, or $0.76 per diluted share, for the same period of 2004. Third quarter 2005 net income reflects a $5 million gain on disposal of discontinued operations, and third quarter 2004 results include a $13 million loss on disposal of discontinued operations. Contract acquisitions increased to $5.2 billion in the third quarter of 2005 from $4.7 billion for the same period of 2004. Total backlog, which includes funded backlog and firm orders for which funding is not currently contractually obligated by the customer, was $56.2 billion at Sept. 30, 2005. Cash Measurements and Debt Net cash provided by operating activities for the 2005 third quarter increased to $891 million from $739 million for the third quarter of 2004. Capital spending in the 2005 third quarter totaled $173 million. Northrop Grumman's total debt was $5.2 billion at Sept. 30, 2005, unchanged from Dec. 31, 2004. Net debt was $3.4 billion at Sept. 30, 2005, compared with $3.9 billion at Dec. 31, 2004. 2005 & 2006 Guidance For 2005, the company expects sales to increase to between $30.5 and $31 billion, and earnings from continuing operations to increase to $3.60 to $3.70 per diluted share. The 2005 guidance includes estimated pension expense as determined in accordance with accounting principles generally accepted in the United States of $415 million, and government Cost Accounting Standards (CAS) pension expense of $395 million. Net cash provided by operating activities in 2005 is expected to range between $2.2 and $2.5 billion. For 2006, the company expects sales to increase to approximately $32 billion, and earnings from continuing operations to increase to between $4.10 and $4.30 per diluted share, which assumes that pension expense as determined in accordance with accounting principles generally accepted in the United States and CAS pension expense are the same as estimates for 2005. Actual 2006 pension expense is subject to variation and will depend on plan asset returns in 2005 and discount rate and expected rate of return assumptions. Net cash provided by operating activities in 2006 is expected to range between $2.3 and $2.5 billion. Segment Results Effective Jan. 1, 2005, certain business areas within the Electronic Systems, Ships and Space Technology segments were realigned and some business areas have been renamed. Where applicable, all prior period information has been reclassified to reflect these realignments, as shown in Schedule 5 of this press release. In addition, the Air Combat Systems business area in the Integrated Systems segment has been renamed and is referred to as Integrated Systems Western Region in the discussion below. ELECTRONIC SYSTEMS ($ in millions) THIRD QUARTER 2005 2004 Sales $1,594 $1,558 Operating Margin 182 178 % Operating margin to sales 11.4% 11.4% Electronic Systems third quarter 2005 sales increased 2 percent from the third quarter of 2004 primarily due to increases in Government Systems and Defensive & Navigation Systems, which were partially offset by lower sales in Aerospace Systems. Government Systems sales increased 32 percent, and Defensive & Navigation Systems sales increased 11 percent. Electronic Systems third quarter 2005 operating margin increased 2 percent from the third quarter of 2004. On Jan. 1, 2005, the manufacturer of complex printed circuit boards and assemblies and the electronic connector manufacturer previously reported under "Other" were realigned to the company's Electronic Systems segment. The impact to prior year results for Electronic Systems is not significant and prior year results have not been reclassified. SHIPS ($ in millions) THIRD QUARTER 2005 2004 Sales $1,222 $1,537 Operating Margin (68) 96 % Operating margin to sales -- 6.2% Ships third quarter 2005 sales, which include the financial results of the Newport News and Ship Systems sectors, decreased 20 percent from the third quarter of 2004, due to hurricane impacts and lower DD(X) sales at the Ship Systems sector. Sales in Surface Combatants, Expeditionary Warfare and Commercial & Other declined due to hurricane-related work delays and the adjustment of prior sales to account for hurricane-related cost growth. The decrease in Surface Combatants also includes lower DD(X) sales than in the prior year period. Sales in Submarines and Aircraft Carriers increased 6 percent and 4 percent, respectively, over the prior year results. The decline in Ships third quarter 2005 operating margin reflects a $150 million cumulative adjustment to account for hurricane-related cost growth at the Ship Systems sector, as well as a $15 million impact from hurricane-related work delays at Ship Systems. Third quarter 2005 results also include higher margin in Aircraft Carriers and Submarines due to higher sales volume and improved performance. INTEGRATED SYSTEMS ($ in millions) THIRD QUARTER 2005 2004 Sales $1,426 $1,164 Operating Margin 112 105 % Operating margin to sales 7.9% 9.0% Integrated Systems third quarter 2005 sales increased 23 percent from the third quarter of 2004 due to higher sales in Airborne Early Warning & Electronic Warfare Systems and Integrated Systems Western Region. Airborne Early Warning & Electronic Warfare Systems sales increased 42 percent due to higher volume from the E-2 Advanced Hawkeye and EA-18G programs, and Integrated Systems Western Region sales increased 18 percent due to higher sales in the Joint Unmanned Combat Air System (J-UCAS), Multi-Platform Radar Technology Insertion Program (MP-RTIP) and B-2 programs. Integrated Systems third quarter 2005 operating margin increased 7 percent from the third quarter of 2004 reflecting higher sales offset by a higher proportion of lower margin development program sales than in the prior year period. MISSION SYSTEMS ($ in millions) THIRD QUARTER 2005 2004 Sales $1,405 $1,266 Operating Margin 100 82 % Operating margin to sales 7.1% 6.5% Mission Systems third quarter 2005 sales increased 11 percent from the third quarter of 2004 due to higher sales in Missile Systems and Command, Control & Intelligence Systems. Missile Systems sales rose 31 percent primarily due to higher revenue in the Intercontinental Ballistic Missile program. Command, Control & Intelligence Systems revenue rose 5 percent. Mission Systems third quarter 2005 operating margin increased 22 percent from the third quarter of 2004 primarily due to higher sales and improved performance in Missile Systems and Command, Control & Intelligence Systems. INFORMATION TECHNOLOGY ($ in millions) THIRD QUARTER 2005 2004 Sales $1,311 $1,261 Operating Margin 93 80 % Operating margin to sales 7.1% 6.3% Information Technology third quarter 2005 sales increased 4 percent from the third quarter of 2004 due to higher sales in Government Information Technology and Commercial Information Technology, partially offset by lower sales in Enterprise Information Technology. Government Information Technology sales rose 9 percent due to higher volume in existing programs, new program awards, and the acquisition of Integic. Commercial Information Technology sales rose 11 percent, primarily due to higher volume on existing programs and new program awards. Information Technology third quarter 2005 operating margin increased 16 percent from the third quarter of 2004, primarily due to higher sales in Government Information Technology and Commercial Information Technology and improved performance in Commercial Information Technology and Technology Services, partially offset by lower performance in Enterprise Information Technology. SPACE TECHNOLOGY ($ in millions) THIRD QUARTER 2005 2004 Sales $842 $823 Operating Margin 67 57 % Operating margin to sales 8.0% 6.9% Space Technology third quarter 2005 sales increased 2 percent from the third quarter of 2004, primarily due to higher sales in Civil Space and Intelligence, Surveillance & Reconnaissance, which were partially offset by lower sales in Missile & Space Defense and Satellite Communications. Civil Space revenue increased 23 percent, due to higher volume from NASA and National Oceanic and Atmospheric Administration programs. Intelligence, Surveillance & Reconnaissance revenue rose 6 percent due to higher volume in restricted programs. Space Technology third quarter 2005 operating margin increased 18 percent from the third quarter of 2004 primarily due to improved performance in Intelligence, Surveillance & Reconnaissance and higher sales volume in Civil Space. Third Quarter 2005 Highlights * A Northrop Grumman-led team was awarded a contract by the Missile Defense Agency to continue its prime contractor role for the Joint National Integration Center (JNIC) Research and Development Contract. The award is an indefinite delivery/indefinite quantity contract potentially worth $1 billion over 10 years. * Northrop Grumman signed a contract with the United Kingdom for E-3D AWACS support program valued at approximately $1 billion. * The U.S. Navy awarded Northrop Grumman a contract to provide operations, maintenance and engineering support for the Navy and U.S. Marine Corps East and West Coast training ranges. The contract is valued at approximately $208 million over five years. * The U.S. Navy awarded Northrop Grumman a contract valued at $109.8 million for advanced planning, long-lead material and systems engineering on the LHA(R) amphibious assault ship program. The total contract value, if all options are exercised, will be $264 million. * Northrop Grumman was selected as the lead system integrator for unmanned ground vehicles under the U.S. Army's Family of Integrated Rapid Response Equipment (FIRRE) program. The company's Remotec, Inc. subsidiary will provide its Tactical Amphibious Ground Support (TAGS) vehicle as the main unmanned ground platform to support the program. * Northrop Grumman received U.S. Department of Homeland Security approval of its design for the Guardian(TM) protection system, the company's Counter-MANPADS system intended to protect commercial aircraft from attack by ground-based, shoulder-fired missiles. * The DD(X) national team led by Northrop Grumman has successfully completed the initial critical design review for the overall systems design for the DD(X) multi-mission destroyer. The event demonstrated that the program was ready for the Flag level review in September 2006 and that the DD(X) Flight 1 is complete, stable and mature enough to enter detail design. * Northrop Grumman reached the first construction milestone in the life of the new-generation aircraft carrier, CVN 21. The company cut one of the first pieces of steel, a 15-ton plate for a side shell unit of CVN 78, the first ship of the CVN 21 program. * The company announced that it will compete as the prime contractor for the U.S. Air Force's next-generation air refueling tanker. * Stephen E. Frank, former chairman, president and chief executive officer of Southern California Edison was elected to the company's board of directors. Northrop Grumman's board now totals 11 members, 10 of whom are non-employee directors. * Jerry B. Agee was elected president of the company's Mission Systems sector and lead executive for the company's missile defense business. * James F. Pitts was elected president of the company's Electronic Systems sector. About Northrop Grumman Northrop Grumman Corporation is a global defense company headquartered in Los Angeles, Calif. Northrop Grumman provides technologically advanced, innovative products, services and solutions in systems integration, defense electronics, information technology, advanced aircraft, shipbuilding and space technology. With more than 125,000 employees, and operations in all 50 states and 25 countries, Northrop Grumman serves U.S. and international military, government and commercial customers. Northrop Grumman will webcast its earnings conference call at 12 p.m. ET on Oct. 25, 2005. 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," "guidance" 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 becomes available or estimates change after the date of this release. Such "forward-looking" information includes, among other things, financial guidance regarding sales, segment operating margin, pension expense, employer contributions under pension plans and medical and life benefits plans, and cash flow, 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 and appeals, hurricane recoveries, environmental remediation, divestitures of businesses, successful reduction of debt, successful negotiation of contracts with labor unions, effective tax rates and timing and amounts of tax payments, the results of any audit or appeal process with the Internal Revenue Service, 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; 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 recent hurricanes affecting the Company's Gulf Coast shipyards and the associated risks underlying the Company's assumptions regarding timely return of experienced workers with critical skills, achieving expected learning-curve progress, amounts and timing of recoveries under insurance contracts, availability of materials and supplies, reconstitution of the supply chain and other infrastructure within and outside Company facilities to enable efficient production, contractual performance relief and the application of cost sharing terms, 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 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. NORTHROP GRUMMAN CORPORATION SCHEDULE 1 FINANCIAL HIGHLIGHTS ($ in millions, except per share) (unaudited) THIRD QUARTER FIRST NINE MONTHS 2005 2004(4) 2005 2004(4) OPERATING RESULTS HIGHLIGHTS Total contract acquisitions(1) $5,233 $4,700 $18,630 $18,595 Total sales 7,446 7,408 22,861 22,007 Total operating margin 433 538 1,644 1,469 Income from continuing operations 288 291 1,052 821 Net income 293 278 1,069 812 Diluted earnings per share from continuing operations .80 .80 2.88 2.25 Diluted earnings per share .81 .76 2.93 2.23 Net cash provided by operating activities 891 739 1,967 1,612 SEPT 30, DEC 31, 2005 2004(4) BALANCE SHEET HIGHLIGHTS Cash and cash equivalents $1,712 $1,230 Accounts receivable, net 3,519 3,492 Inventoried costs, net 1,262 1,049 Property, plant, and equipment, net 4,190 4,210 Total debt 5,150 5,158 Net debt (2) 3,438 3,928 Mandatorily redeemable preferred stock 350 350 Shareholders' equity 16,949 16,700 Total assets 33,851 33,295 Net debt to capitalization ratio (3) 16% 18% (1) Contract acquisitions represent orders received during the period for which funding has been contractually obligated by the customer. (2) Total debt less cash and cash equivalents. (3) Net debt divided by the sum of shareholders' equity and total debt. (4) Certain prior year amounts have been reclassified to conform to the 2005 presentation. NORTHROP GRUMMAN CORPORATION SCHEDULE 2 OPERATING RESULTS ($ in millions, except per share) (unaudited) THIRD QUARTER FIRST NINE MONTHS 2005 2004(1) 2005 2004(1) Sales Electronic Systems $1,594 $1,558 $4,902 $4,687 Ships 1,222 1,537 4,323 4,538 Integrated Systems 1,426 1,164 4,129 3,444 Mission Systems 1,405 1,266 4,030 3,747 Information Technology 1,311 1,261 3,871 3,716 Space Technology 842 823 2,580 2,465 Other 9 58 31 178 Intersegment Eliminations (363) (259) (1,005) (768) $7,446 $7,408 $22,861 $22,007 Operating margin Electronic Systems $182 $178 $541 $474 Ships (68) 96 137 282 Integrated Systems 112 105 356 311 Mission Systems 100 82 290 244 Information Technology 93 80 267 224 Space Technology 67 57 198 169 Other (5) 1 (11) 6 Total segment operating margin (2) 481 599 1,778 1,710 Reconciliation to operating margin Unallocated expenses (42) (62) (111) (216) Pension expense (102) (87) (308) (263) Reversal of CAS pension expense included above 98 90 295 247 Reversal of royalty income included above (2) (2) (10) (9) Operating margin 433 538 1,644 1,469 Interest income 5 20 44 52 Interest expense (98) (110) (287) (335) Other, net 95 (6) 184 7 Income from continuing operations before income taxes 435 442 1,585 1,193 Federal and foreign income taxes 147 151 533 372 Income from continuing operations 288 291 1,052 821 Income from discontinued operations, net of tax -- -- -- 1 Gain from disposal of discontinued operations, net of tax 5 (13) 17 (10) Net income $293 $278 $1,069 $812 Weighted average diluted shares outstanding, in millions 362.2 364.0 364.7 364.2 Diluted earnings per share Continuing operations $.80 $.80 $2.88 $2.25 Disposal of discontinued operations .01 (.04) .05 (.02) Diluted earnings per share $.81 $.76 $2.93 $2.23 (1) Certain prior year amounts have been reclassified to conform to the 2005 presentation. (2) Non-GAAP measure. Management uses segment operating margin as an internal measure of financial performance for the individual business segments. Pension expense is included in determining segment operating margin to the extent that the cost is currently recognized under U.S. Government Cost Accounting Standards (CAS). In order to reconcile from segment operating margin to total company operating margin, these amounts are reported under the caption "Reversal of CAS pension expense included above." Total pension expense or income determined in accordance with accounting principles generally accepted in the United States is reported separately as a reconciling item under the caption "Pension expense." The reconciling item captioned "Unallocated expenses" includes the portion of corporate, legal, environmental, other retiree benefits, stock compensation, and other expenses not allocated to the segments. NORTHROP GRUMMAN CORPORATION SCHEDULE 3 ADDITIONAL SEGMENT INFORMATION ($ in millions) (unaudited) CONTRACT FUNDED ACQUISITIONS(1) BACKLOG(2) THIRD QUARTER FIRST NINE MONTHS September 30, 2005 2004(3) 2005 2004(4) 2005 2004(3) Electronic Systems $1,470 $1,288 $4,535 $4,549 $6,411 $6,330 Ships 445 614 1,932 2,724 6,774 7,935 Integrated Systems 801 420 3,407 3,008 3,969 3,862 Mission Systems 1,094 987 3,506 3,313 2,643 2,471 Information Technology 1,344 1,156 4,155 3,557 2,852 2,160 Space Technology 362 411 1,972 2,096 1,141 1,189 Other 14 47 41 177 38 62 Intersegment Eliminations (297) (223) (918) (829) (497) (493) Total $5,233 $4,700 $18,630 $18,595 $23,331 $23,516 TOTAL BACKLOG, September 30, 2005 TOTAL FUNDED UNFUNDED(4) BACKLOG Electronic Systems $6,411 $1,917 $8,328 Ships 6,774 3,484 10,258 Integrated Systems 3,969 9,499 13,468 Mission Systems 2,643 7,828 10,471 Information Technology 2,852 3,098 5,950 Space Technology 1,141 7,016 8,157 Other 38 38 Intersegment Eliminations (497) (497) Total $23,331 $32,842 $56,173 (1) Contract acquisitions represent orders received during the period for which funding has been contractually obligated by the customer. (2) Funded backlog represents unfilled orders for which funding has been contractually obligated by the customer. (3) Certain prior year amounts have been reclassified to conform to the 2005 presentation. (4) Unfunded backlog represents firm orders for which funding is not currently contractually obligated by the customer. Unfunded backlog excludes unexercised contract options and unfunded Indefinite Delivery Indefinite Quantity (IDIQ) orders. NORTHROP GRUMMAN CORPORATION SCHEDULE 4 SALES BY BUSINESS AREA WITHIN SEGMENTS ($ in millions) (unaudited) THIRD QUARTER FIRST NINE MONTHS 2005 2004(1) 2005 2004(1) Electronic Systems Defensive & Navigation Systems $482 $433 $1,490 $1,338 Aerospace Systems 376 417 1,240 1,187 Naval & Marine Systems 216 207 628 617 Government Systems 208 158 607 466 C4ISR & Space Systems 162 155 482 483 Defense Other 150 188 455 596 1,594 1,558 4,902 4,687 Ships Aircraft Carriers 484 466 1,411 1,381 Surface Combatants 280 486 1,132 1,434 Expeditionary Warfare 235 344 1,033 996 Submarines 191 180 571 520 Coast Guard & Coastal Defense 32 29 114 75 Services 13 19 68 73 Commercial & Other (1) 38 33 119 Intrasegment Eliminations (12) (25) (39) (60) 1,222 1,537 4,323 4,538 Integrated Systems Integrated Systems Western Region (2) 836 706 2,432 2,088 Airborne Early Warning & Electronic Warfare Systems 439 309 1,251 907 Airborne Ground Surveillance & Battle Management Systems 156 149 455 452 Intrasegment Eliminations (5) (9) (3) 1,426 1,164 4,129 3,444 Mission Systems Command, Control & Intelligence Systems 829 792 2,408 2,306 Missile Systems 419 319 1,141 941 Technical & Management Services 168 172 509 545 Intrasegment Eliminations (11) (17) (28) (45) 1,405 1,266 4,030 3,747 Information Technology Government Information Technology 816 750 2,416 2,243 Commercial Information Technology 178 160 528 492 Technology Services 177 163 525 476 Enterprise Information Technology 177 220 506 598 Intrasegment Eliminations (37) (32) (104) (93) 1,311 1,261 3,871 3,716 Space Technology Intelligence, Surveillance & Reconnaissance 298 281 883 781 Civil Space 187 152 598 470 Software Defined Radios 137 138 408 423 Missile & Space Defense 89 121 321 368 Satellite Communications 118 127 332 396 Technology 26 15 88 74 Intrasegment Eliminations (13) (11) (50) (47) 842 823 2,580 2,465 Other 9 58 31 178 Intersegment Eliminations (363) (259) (1,005) (768) Total Sales $7,446 $7,408 $22,861 $22,007 (1) Certain prior year amounts have been reclassified to conform to the 2005 presentation. (2) Formerly known as Air Combat Systems. NORTHROP GRUMMAN CORPORATION SCHEDULE 5 SEGMENT SALES RESULTS - AFTER REALIGNMENT ($ IN MILLIONS) (unaudited) Electronic Systems Pro-Forma Sales - After Realignment 2004 Three Months Ended Total Mar 31 Jun 30 Sep 30 Dec 31 Year Defensive & Navigation Systems $440 $465 $433 $497 $1,835 Aerospace Systems 403 367 417 422 1,609 Naval & Marine Systems 205 205 207 240 857 Government Systems 128 180 158 223 689 C4ISR & Space Systems 161 167 155 169 652 Defense Other 201 207 188 179 775 TOTAL SALES $1,538 $1,591 $1,558 $1,730 $6,417 Ships Pro-Forma Sales - After Realignment 2004 Three Months Ended Total Mar 31 Jun 30 Sep 30 Dec 31 Year Surface Combatants $462 $486 $486 $487 $1,921 Aircraft Carriers 440 475 466 520 1,901 Expeditionary Warfare 306 346 344 440 1,436 Submarines 162 178 180 210 730 Coast Guard & Coastal Defense 16 30 29 39 114 Services 30 24 19 26 99 Commercial & Other 41 40 38 23 142 Intrasegment Eliminations (13) (22) (25) (31) (91) TOTAL SALES $1,444 $1,557 $1,537 $1,714 $6,252 Space Technology Pro-Forma Sales - After Realignment 2004 Three Months Ended Total Mar 31 Jun 30 Sep 30 Dec 31 Year Intelligence, Surveillance & Reconnaissance $237 $263 $281 $260 $1,041 Civil Space 155 163 152 168 638 Software Defined Radios 143 142 138 123 546 Missile & Space Defense 119 128 121 119 487 Satellite Communications 138 131 127 113 509 Technology 27 32 15 26 100 Intrasegment Eliminations (13) (23) (11) (5) (52) TOTAL SALES $806 $836 $823 $804 $3,269 DATASOURCE: Northrop Grumman Corporation CONTACT: Media, Dan McClain, +1-310-201-3335, or Investors, Gaston Kent, +1-310-201-3423, both of Northrop Grumman Corporation Web site: http://www.northropgrumman.com/

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