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northrop grumman Ron Sugar, Chairman and CEO (Overview and Strategic Perspective)
northrop grumman Ron Sugar, Chairman and CEO (Overview and Strategic Perspective)
northrop grumman Ron Sugar, Chairman and CEO (Overview and Strategic Perspective)
northrop grumman Ron Sugar, Chairman and CEO (Overview and Strategic Perspective)
northrop grumman Ron Sugar, Chairman and CEO (Overview and Strategic Perspective)
northrop grumman Ron Sugar, Chairman and CEO (Overview and Strategic Perspective)
northrop grumman Ron Sugar, Chairman and CEO (Overview and Strategic Perspective)
northrop grumman Ron Sugar, Chairman and CEO (Overview and Strategic Perspective)
northrop grumman Ron Sugar, Chairman and CEO (Overview and Strategic Perspective)
northrop grumman Ron Sugar, Chairman and CEO (Overview and Strategic Perspective)
northrop grumman Ron Sugar, Chairman and CEO (Overview and Strategic Perspective)
northrop grumman Ron Sugar, Chairman and CEO (Overview and Strategic Perspective)
northrop grumman Ron Sugar, Chairman and CEO (Overview and Strategic Perspective)
northrop grumman Ron Sugar, Chairman and CEO (Overview and Strategic Perspective)
northrop grumman Ron Sugar, Chairman and CEO (Overview and Strategic Perspective)
northrop grumman Ron Sugar, Chairman and CEO (Overview and Strategic Perspective)
northrop grumman Ron Sugar, Chairman and CEO (Overview and Strategic Perspective)
northrop grumman Ron Sugar, Chairman and CEO (Overview and Strategic Perspective)
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northrop grumman Ron Sugar, Chairman and CEO (Overview and Strategic Perspective)

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  • 1. Overview and Strategic Perspective 2006 Institutional Investor Conference November 9, 2006 Ron Sugar Chairman and CEO 1 Copyright 2006 Northrop Grumman Corporation
  • 2. Safe Harbor Statement Certain statements and assumptions in these presentations and materials contain or are based on “forward- looking” information. Such “forward-looking” information includes, among other things, projected deliveries, expected funding for various programs, future effective income tax rates, financial guidance and estimated amounts regarding sales, segment operating margin, 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 Northrop Grumman’s control. These include Northrop Grumman’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, 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, and anticipated costs of capital investments, among other things. Northrop Grumman’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, Northrop Grumman’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, and any associated 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, 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 Northrop Grumman’s filings from time to time with the Securities and Exchange Commission, including, without limitation, Northrop Grumman reports on Form 10-K and Form 10-Q. 1 Copyright 2006 Northrop Grumman Corporation
  • 3. Northrop Grumman Vision Be the most trusted provider of systems and technologies that ensure the security and freedom of our nation and its allies Customers’ provider of choice Industry’s employer of choice Shareholders’ investment of choice Creating Value Through People and Technology 2 Copyright 2006 Northrop Grumman Corporation
  • 4. Financial Performance Sales Operating Margin 35 8% 30 25 6% ($Billion) 20 4% 15 10 2% 5 0 0% 2003 2004 2005 2006E 2007E 2003 2004 2005 2006E 2007E Cash from Operations EPS $3.0 $5.00 $2.5 $4.00 $2.0 ($Billion) $3.00 $1.5 $2.00 $1.0 $1.00 $0.5 $0.0 $0.00 2003* 2004** 2005** 2006E 2007E 2003 2004 2005 2006E 2007E Actual Range B-2 Tax Payment Pension Focus on Performance Paying Off 3 * Non-GAAP: Adjusted for $1B B-2 tax payment; ** Non-GAAP: Adjusted for pension pre-funding Copyright 2006 Northrop Grumman Corporation
  • 5. Market Assessment Defense/Intelligence top-line budget authority driven by threat environment Moderate growth from today’s levels Transition from war supplementals to force modernization / reset Pervasive need for information, electronics and technical services NOC competencies match evolving national security priorities NOC programs well supported in FY07 budget and the FYDP Substantial non-DoD opportunities aligned with NOC capabilities are growing faster than DoD Federal government State & local International 4 Copyright 2006 Northrop Grumman Corporation
  • 6. Balanced, Diversified Portfolio Electronics 21% Aerospace 27% Information & Services 36% Ships 16% Strong Franchise Base . . . Substantial Growth Opportunities 5 Copyright 2006 Northrop Grumman Corporation
  • 7. Information & Services Prime contractor Growing markets Low capital requirements and strong cash returns Successfully penetrating adjacent markets with competitive wins Accelerating growth Organic core & adjacent markets Selected acquisitions Well Positioned in Rapidly Growing Markets 6 Copyright 2006 Northrop Grumman Corporation
  • 8. Information & Services—Awards & Opportunities Recent Awards NYC Wireless Center for Disease Control Virginia IT Outsourcing Joint National Integration Center San Diego County NGA Enterprise Engineering Nevada Test Site National Health Information Network U.S. Immigration & Customs Biometrics Intelligence programs Joint Warfighter Center New Opportunities Intelligence Programs UK Military Flight Training System Information Operations / Joint Network Node Information Assurance GCCS - M State & Local IT Guardrail Modernization / ACS First Responder Wireless GPS OCX Lawrence Livermore National Lab Integrated Air & Missile Defense Uni-Comm Adjunct Sensor Significant Wins . . . Large Opportunity Space 7 Copyright 2006 Northrop Grumman Corporation
  • 9. Essex Overview Strategic Rationale Business Description • Expands position in high growth • Products and Services for Intel areas of C4ISR Community and DoD • Signals Intelligence & Processing • Strong synergy potential with combination of capabilities • Computer Network Operations • Information Assurance • Expectation of continued growth in customer investment in these • 2007E sales of $330-350M mission areas • 04-06E sales CAGR of 34% Integration Plan Transaction Summary • Essex will be integrated as a • Cash acquisition of all stock business unit of NGMS • $24 per share consideration • Portion of NGMS existing • $580M transaction value intelligence business will report • Closing targeted 1Q07 to Essex • Neutral to EPS in ′07, accretive in ′08 8 Copyright 2006 Northrop Grumman Corporation
  • 10. Electronics Premier position across entire sensor system spectrum Undersea, sea, ground, air, space, and cyberspace Solid double-digit margins Strong cash returns Substantial domestic and international opportunities Technology leadership ensures position on future upgrades and new platforms Solid Growth, Double-Digit Margins . . . High Returns 9 Copyright 2006 Northrop Grumman Corporation
  • 11. Electronics—Awards & Opportunities Recent Awards Restricted Bio-detection Counter-MANPADS Large Aircraft IRCM (NATO) New Opportunities F-22 production F-35 production International Jordan Air Defense System MESA Radar – Korea RSIP - Japan USPS Flats Sequencing & Sorting System Counter-MANPADS production G/ATOR Counter-IED Significant Domestic and International Opportunities 10 Copyright 2006 Northrop Grumman Corporation
  • 12. Aerospace Prime contractor or major partner on large platform programs Manned and unmanned aircraft Space systems Differentiated by technology leadership Large development programs Long production cycles and substantial cash returns Stable market with large new competitive opportunities Solid Performance and Backlog . . . Large Platform Opportunities 11 Copyright 2006 Northrop Grumman Corporation
  • 13. Aerospace—Awards & Opportunities Recent Awards Multiple Restricted Platforms F/A-18 Multi-year AEHF 3 Payload New Opportunities E-2D Production Multiple Restricted Platforms NATO Air to Ground F-35 Production Surveillance Broad Are Maritime Surveillance TSAT KC-X Tanker/transport Space Radar Naval UCAS STSS Euro Hawk GOES-R Long Range Strike Robust Pipeline of High Impact Opportunities 12 Copyright 2006 Northrop Grumman Corporation
  • 14. Ships Prime or partner across all classes of conventional and nuclear naval platforms Strong franchise position with long term visibility Growing consensus for strong shipbuilding budgets Modest growth Post-Katrina regeneration on-track Margin expansion opportunities Operational efficiencies Gulf Coast shipyard recovery Improving returns during recapitalization Managing for Enhanced Returns 13 Copyright 2006 Northrop Grumman Corporation
  • 15. Ships—Awards & Opportunities Recent Awards LHA (R) Long Lead LPD 22 – 24 DDG 1000 Design USS Toledo CVN 71 RCOH New Opportunities CVN 78 & 79 Production Virginia-class Submarines (2/year) DDG 1000 Production Fast Response Cutter CG(X) MPFF - Maritime Pre-position Force Future Strong Backlog . . . Large Opportunities 14 Copyright 2006 Northrop Grumman Corporation
  • 16. Building Value Working Together Current Programs New Opportunities Tanker/ KEI Transport E-10/MP-RTIP Counter IED Restricted CG(X) UK AWACS Restricted Space Radar Cross-Business Collaboration Enhancing Competitive Position 15 Copyright 2006 Northrop Grumman Corporation
  • 17. The Leadership Team Bus Dev & HR & Communications Law Govt Relations Administration Ron Sugar Wes Bush Chairman President & CFO & CEO Bob Helm Burks Terry Ian Ziskin Rosanne O'Brien Corp VP Corp VP & Corp VP & Chief Corp VP General Counsel HR & Admin Officer Mission Information Technical Electronic Integrated Space Ship Newport Systems Technology Services Systems Systems Technology Systems News Jerry Agee Jim O’Neill Jim Cameron Jim Pitts Scott Seymour Alexis Livanos Phil Teel Mike Petters Corp VP & President Corp VP & President Corp VP & President Corp VP & President Corp VP & President Corp VP & President Corp VP & President Corp VP & President Information & Services Electronics Aerospace Ships The Right Team For Our Strategy 16 Copyright 2006 Northrop Grumman Corporation
  • 18. What You Should Expect From NOC Growth Portfolio structured for growth Substantial near-term opportunities Performance Program Financial Value-creating cash deployment Returning cash to shareholders Investing for growth 17 Copyright 2006 Northrop Grumman Corporation

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