Northrop Grumman Reports 1Q Results

Northrop Grumman Corporation reported first quarter 2006 income from continuing operations of $357 million, or $1.02 per diluted share, compared with $398 million, or $1.08 per diluted share, for the same period of 2005.

First quarter 2005 income from continuing operations included an after-tax gain of $45 million, or $0.12 per diluted share, from the sale of TRW Automotive common stock. First quarter 2006 sales decreased to $7.2 billion from $7.5 billion in the first quarter of 2005, due to lower sales in the company's Ships business.

“As expected, our first quarter includes strong operating performances from Information & Services, Aerospace and Electronics. At Ships, we continue to progress toward pre-Katrina production levels," said Ronald D. Sugar, Northrop Grumman chairman, chief executive officer and president.

The company's first quarter 2006 segment operating margin increased to $644 million from $638 million in first quarter of 2005. First quarter 2006 segment operating margin reflects higher operating margin in Information & Services, Electronics and Aerospace, partially offset by lower operating margin in Ships.

Ships

Ships first quarter 2006 sales decreased 25 percent from the first quarter of 2005 due to lower volume on the DD(X) program, as well as lower volume due to hurricane-related work delays on the LPD, LHD, DDG, and Coast Guard Deepwater programs. Results for Aircraft Carrier and Submarine programs were comparable to prior year results. Ships operating margin decreased 36 percent from the first quarter of 2005, and reflects lower DD(X) volume and lower volume and reduced margin rates for the LPD, LHD, DDG, and Coast Guard Deepwater programs as a result of hurricane-related cost growth and work delays.

1Q Highlights

* The U.S. Navy awarded Northrop Grumman a contract for work to support the Los Angeles, Ohio, Seawolf and Virginia-class submarines. The total estimated value of the contract is approximately $248 million through 2008.

* The U.S. Navy exercised a $93.8 million contract modification option to Northrop Grumman for detail design and the procurement of long-lead- time material on the LHA 6 amphibious assault ship program. This is the first option exercised on the initial contract, awarded in July 2005. With this option, the total contract value has increased to $203.7 million.

* The Aegis guided missile destroyer USS Forrest Sherman (DDG 98) was commissioned at Naval Air Station Pensacola, Fla.