- Northrop Grumman reported financial results for Q3 2007 with sales of $7.9 billion, a 7% increase over Q3 2006. Operating margin was 10.2% of sales. - For the first nine months of 2007, sales were $23.2 billion, a 5% increase over the same period in 2006. Operating margin was 9.7% of sales. - Northrop Grumman updated full-year 2007 guidance with sales expected to be approximately $31.5 billion and diluted EPS from continuing operations of around $5.10.

1. Northrop
Grumman
Corporation
Q3 2007
October 24, 2007

2. Safe Harbor Statement
Certain statements and assumptions in these materials contain
or are based on “forward-looking” information. Such “forward-
looking” information includes, and is subject to, numerous
assumptions, risks and uncertainties, many of which are outside
Northrop Grumman’s control. The Safe Harbor Note to today’s
press release and Northrop Grumman’s filings from time to time
with the Securities and Exchange Commission including,
without limitation, reports on Form 10-K and Form 10-Q,
describe such economic, political and technological risk factors
and other uncertainties.
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3. CEO Highlights
Quarter highlights
New contract awards
Opportunities
Guidance
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4. COO Highlights
Operations update
Ships
NPOESS
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5. Q3 & YTD 2007 Highlights
Third Quarter Nine Months
2007 Change 2007 Change
($ millions except per share data) 2006 2006
Sales 7,928 7,429 7% 23,194 22,100 5%
Operating margin 807 549 47% 2,246 1,841 22%
as a % of sales 10.2% 7.4% 280 bps 9.7% 8.3% 140 bps
Income from continuing operations 490 308 59% 1,346 1,116 21%
Diluted EPS from continuing operations 1.41 .88 60% 3.84 3.17 21%
Net income 489 302 62% 1,336 1,089 23%
Diluted EPS 1.41 .86 64% 3.81 3.09 23%
Cash from operations 1,015 962 6% 2,156 1,485 45%
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Free cash flow 873 750 16% 1,636 949 72%
1 Non-GAAP Measure – see reconciliation and definition on pages 10 and 11
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6. Sales
Third Quarter Nine Months
($ millions) 2007 Change 2007 Change
2006 2006
2,889 9% 8,355 11%
Information & Services 3,139 9,295
2,016 (1%) 6,286 (4%)
Aerospace 2,005 6,034
1,665 - 4,756 5%
Electronics 1,673 4,980
1,238 19% 3,808 5%
Ships 1,469 3,984
(379) (1,105)
Intersegment eliminations (358) (1,099)
7,429 7% 22,100 5%
Sales 7,928 23,194
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7. Operating Margin
Third Quarter Nine Months
2007 Change 2007 Change
2006 2006
($ millions)
Segment operating margin1
Information & Services 244 257 (5%) 759 752 1%
Aerospace 204 203 - 641 610 5%
Electronics 211 198 7% 579 552 5%
Ships 183 76 141% 396 273 45%
Intersegment eliminations (25) (35) (82) (87)
Segment operating margin1 817 699 17% 2,293 2,100 9%
as a % of sales 10.3% 9.4% 90 bps 9.9% 9.5% 40 bps
Reconciliation to operating margin:
Unallocated & other expenses (41) (148) (139) (235)
Net pension adjustment2 31 (2) 92 (24)
Operating margin 807 549 47% 2,246 1,841 22%
as a % of sales 10.2% 7.4% 280 bps 9.7% 8.3% 140 bps
1Non-GAAP measure – see definition on page 11
2Net pension adjustment includes pension expense determined in accordance with GAAP less pension expense allocated to the
business segments under U.S. Government Cost Accounting Standards.
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8. Key Cash Components
Third Quarter Nine Months
2007 Change 2007 Change
2006 2006
($ milions)
302 187 1,089 247
Net income 489 1,336
168 9 519 3
Depreciation & amortization 177 522
(46) 44 68 28
Non-cash pension/OPEB (2) 96
418 (236) (217) 162
Change in working capital 182 (55)
48 46 (17) 101
Deferred & payable income taxes 94 84
56 30 124 64
All other 86 188
16 (27) (81) 66
Cash used in discontinued operations (11) (15)
962 53 1,485 671
Cash from Operations 1,015 2,156
Free cash flow1 750 123 949 687
873 1,636
1 Non-GAAP Measure – see reconciliation and definition on pages 10 and 11
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9. 2007E Outlook
($ billions except per share amounts) Prior Current
±
Sales ~31.5 250 million Same
Segment OM %1 Mid 9% Same
OM % Low 9% Mid 9%
Diluted EPS from continuing operations 4.90 - 5.05 ~5.10
Cash from operations Upper end of Range 2.5 - 2.8 Same
Free cash flow1 Upper end of Range 1.6 - 2.0 Same
1 Non-GAAP Measure – see definition on page 11
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10. Non-GAAP Measure Reconciliation
Third Nine
Quarter Months
($ millions)
Cash from operations 1,015 2,156
Less:
Capital expenditures 133 431
Outsourcing contract & related
software costs 9 89
Free cash flow1 873 1,636
1Non-GAAP Measure - see definition on page 11
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11. Non-GAAP Measures Definitions
Non-GAAP Financial Measures Disclosure
Today’s presentation and the accompanying web charts contain non-GAAP (Generally Accepted
Accounting Principles) financial measures, as defined by SEC Regulation G and indicated by a footnote.
While we believe that these non-GAAP financial measures may be useful in evaluating Northrop Grumman,
this information should be considered as supplemental in nature and not as a substitute for financial
information prepared in accordance with GAAP.
Definitions are provided for the non-GAAP measures used in our presentation. Other companies may
define the measures differently.
Segment Operating Margin
Segment Operating Margin is the total earnings from each of our seven segments including allocated
pension expense recognized under government Cost Accounting Standards (CAS).
Reconciling items to total company Operating Margin are:
– Unallocated & other expenses, which include unallocated corporate, legal, environmental, state income tax, and other
retiree benefits expenses.
– Net pension expense, which includes GAAP pension expense less the CAS pension expense included in Segment
Operating Margin.
Management uses segment operating margin as an internal measure of financial performance of our
individual business segments. This measure also may be helpful to investors in understanding period-over-
period operating results separate from items that may be influenced by external market fluctuations.
Free Cash Flow
Free cash flow (FCF) is the cash from operations less capital expenditures and outsourcing contract &
related software costs.
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