Economic Earnings Increase
 Sales Nearly Double
 Sector Operating Margin Up 110 Percent
 Cash Flow From Operations Strong
 Business Backlog Totals $21.5 Billion
 Confirms 2002 Financial Guidance of $6.60 to $7.10 EEPS
 

LOS ANGELES, Jan. 30, 2002 (PRIMEZONE) -- Northrop Grumman Corporation(NYSE:NOC) today reported 2001 fourth quarter economic earnings of $158 million, compared with $106 million for the same period of 2000. On a per share basis, the company reported 2001 fourth quarter economic earnings of $1.55 on average diluted shares outstanding of 98.0 million, compared with economic earnings of $1.46 on average diluted shares outstanding of 72.5 million for the fourth quarter of 2000.

Under Generally Accepted Accounting Principles (GAAP), the company reported fourth quarter 2001 net income of $131 million, or $1.28 per share, compared with net income from continuing operations of $144 million, or $1.99 per share, for the same period of 2000. The comparable decline reflects a substantial decrease in pension income and increases in interest expense and in the number of shares outstanding.

For the quarter ended Dec. 31, 2001, sales increased to $4.3 billion compared with $2.2 billion reported for the fourth quarter of 2000. The increase is primarily due to the contributions of the three companies acquired in 2001: Litton Industries Inc., Newport News Shipbuilding and the Electronics and Information Systems group of Aerojet-General Corporation. Also contributing to the sales increase was strong organic growth at the company's Electronic Systems sector.

Northrop Grumman's operating margin for the 2001 fourth quarter increased 25 percent to $314 million from $252 million for the same period last year despite a sharp drop in pension income. Pension income declined to $88 million from $128 million reported for the last three months of 2000.

"Today's outstanding results validate our strategy to create a top-tier defense enterprise focused on our customers' current and future needs," said Kent Kresa, chairman and chief executive officer of Northrop Grumman. "Last year's strategic acquisitions -- which added some $8 billion in annualized revenues -- provided new core competencies and established a solid foundation for future growth."

Mr. Kresa added, "Looking ahead, we expect to focus on several critical areas as demand intensifies for next-generation warfighting capabilities, particularly C(4)ISR, precision strike, unmanned aerial vehicles and all classes of naval vessels. Another priority will be to support emerging initiatives such as missile defense and homeland security. With more than $21 billion in business backlog, continued strong operating performance and expected increases in the U.S. defense budget over the next several years, Northrop Grumman's future is certainly bright.

"We are reaffirming our 2002 financial guidance targets and expectations for double-digit revenue and economic earnings growth in 2003," Mr. Kresa concluded.

"We achieved several key operational milestones last year," said Dr. Ronald D. Sugar, Northrop Grumman's president and chief operating officer. "We have made substantial progress integrating newly acquired businesses and established three new operating sectors. Our Electronic Systems sector in particular posted excellent fourth quarter results, generating organic growth in sales and operating margin. Integrated Systems' role on the Joint Strike Fighter program positions the sector for an upturn in sales and our Information Technology sector's expanded capabilities as a result of the Litton acquisition position it to win major programs in 2002.

"Going forward, the watchwords for 2002 are 'execute and integrate' -- execute on our commitments and realize the synergies of our integrated enterprise," Dr. Sugar added.

For the year ended Dec. 31, 2001, the company reported economic earnings of $517 million, a 21 percent increase compared with 2000 economic earnings of $429 million. On a per share basis, 2001 economic earnings were $5.85 on average diluted shares outstanding of 85.3 million, compared with $6.05 for 2000 on average diluted shares outstanding of 70.9 million.

Under GAAP, the company reported 2001 net income totaling $427 million, or $4.80 per share for the year, compared with 2000 net income from continuing operations of $625 million, or $8.82 per share. The comparable decline reflects a substantial decrease in pension income and increases in interest expense and in the number of shares outstanding.

Sales for 2001 increased 78 percent to $13.6 billion from $7.6 billion for 2000, primarily due to the contributions of the three recently acquired companies. Northrop Grumman's 2001 operating margin was $1.0 billion, down from the prior year despite a 37 percent decline in pension income to $337 million from $538 million in 2000.

Contract acquisitions in 2001 totaled $24.9 billion, including $13.6 billion of funded order backlog from the three acquired companies. Business backlog increased to $21.5 billion, more than double the $10.1 billion reported for 2000.

Sales at Electronic Systems in the 2001 fourth quarter increased 60 percent to $1.5 billion from $962 million in reported sales for the last three months of 2000. Operating margin for the quarter nearly tripled to $145 million compared with $55 million for the same period last year. The 2001 sales and margin improvements reflect the contributions by Litton's Advanced Electronics business and the Electronics and Information Systems group of Aerojet-General. The increases are also due to growth at the sector's Combat Avionics Systems, Land Combat Systems and its Automation and Information business areas.

Information Technology reported 2001 fourth quarter sales of $1.1 billion, more than double the $537 million in sales reported for the same period of 2000. The increase reflects the contributions from Litton's Information Systems business as well as organic growth in its Enterprise Information Technology business. Operating margin increased to $45 million for the 2001 fourth quarter compared with $11 million for the same period in 2000. Last year's fourth quarter operating margin included a $9 million non cash reduction related to retiree benefits.

Integrated Systems generated 2001 fourth quarter sales of $784 million, up slightly from the $779 million in sales reported for the same period a year ago. The sector's operating margin for the quarter was $42 million compared with $52 million reported in the fourth quarter of 2000, reflecting lower sales and operating margin in the Airborne Early Warning and Electronics Warfare business area and lower operating margin on unmanned vehicle contracts.

Ships generated sales of $803 million and operating margin of $28 million for the fourth quarter. The results include the contributions of Newport News Shipbuilding, acquired by the company on Nov. 29. Although Newport News will operate as a separate sector for the near term, the company has aggregated Newport News and Ships Systems results for financial reporting purposes. Operating margin for the quarter includes a downward cumulative margin rate adjustment of $13 million on the polar tanker program.

Component Technologies reported 2001 fourth quarter sales of $127 million and an operating loss of $12 million. Component Technologies' operating margin continued to be adversely impacted by the downturn in the telecommunications industry and by the effect of additional amortization due to the company's acquisition of Litton. Looking ahead, the sector is well positioned to capitalize on a market turnaround. Component Technologies continues to generate solid performance in its nontelecommunications business.

For the last three months of 2001, the company generated $405 million of cash from operations, reflecting strong cash performance particularly from the Electronic Systems sector. Northrop Grumman's net debt at Dec. 31, 2001, was $5.0 billion, up from the $1.3 billion reported at the end of 2000, reflecting both the assumption of Litton and Newport News debt and increased borrowings to finance last year's three acquisitions. Interest expense for the 2001 fourth quarter was $104 million, up from the $40 million reported for the same period of 2000.

Northrop Grumman Corporation is an $18 billion global aerospace and defense company with its worldwide headquarters in Los Angeles. Northrop Grumman provides technologically advanced, innovative products, services and solutions in defense and commercial electronics, information technology, systems integration and nuclear and non-nuclear shipbuilding and systems. With approximately 100,000 employees and operations in 44 states and 25 countries, Northrop Grumman serves U.S. and international military, government and commercial customers.

Note: Certain statements and assumptions in this release contain or are based on "forward-looking" information (that the company believes to be within the definition in the Private Securities Litigation Reform Act of 1995) and involve risks and uncertainties. Such "forward-looking" information includes the statements above as to future impacts on revenues and earnings. Such statements are subject to numerous assumptions and uncertainties, many of which are outside the company's control. These include the company's ability to successfully integrate its acquisitions, assumptions with respect to future revenues, expected program performance and cash flows, the outcome of contingencies including litigation, environmental remediation, divestitures of businesses, and anticipated costs of capital investments. 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 factors, including, without limitation, the company's successful performance of internal plans; government customers' budgetary restraints; 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; 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; legal, financial, and governmental risks related to international transactions and domestic and global needs for ships, military aircraft, military and civilian electronic systems and support, information technology and other products; 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, the company's reports on Form 10-K and Form 10-Q.

Northrop Grumman will webcast its security analyst conference call at 2 p.m. E.S.T. on Jan. 30, 2002. A live audio broadcast of the conference call will be available on the investor relations page of the company's Web site at http://www.northropgrumman.com .

Members of the news media may receive our releases via e-mail by registering at: http://www.northgrum.com/cgi-bin/regist_form.cgi

LEARN MORE ABOUT US: Northrop Grumman news releases, product information, photos and video clips are available on the Internet at: http://www.northropgrumman.com

  NORTHROP GRUMMAN CORPORATION
                         FINANCIAL HIGHLIGHTS
                   QUARTER ENDED SEPTEMBER 30, 2001
                   ($ in millions, except per share)
 
 
                               FOURTH QUARTER            TOTAL YEAR
                              2001        2000         2001       2000
 FINANCIAL METRICS
  (Other Data)
  Economic earnings
   (see Reconciliation)   $   158     $   106      $   517    $   429
  Economic earnings
   per share              $  1.55     $  1.46      $  5.85    $  6.05
 
  Net cash provided by
   operating activities   $   405*    $   379      $   597*   $   975
 
  EBITDAP
   (See Reconciliation)   $   407     $   221      $ 1,347    $   942
  EBITDAP per share       $  4.14     $  3.03      $ 15.79    $ 13.29
 
 
                           DEC. 31      DEC. 31
                             2001        2000
 
  Cash and cash
   equivalents            $   464     $   319
  Accounts receivable       2,522       1,557
  Inventoried costs         1,525         585
  Property, plant
   and equipment, net       2,767       1,015
  Total debt                5,495       1,615
 
  Net debt(3)               5,031       1,296
  Mandatorilly
   redeemable
    preferred stock           350           -
  Shareholders'
   equity                   7,408       3,919
  Total assets            $21,081     $ 9,622
 
  Debt to
   capitalization
    ratio(4)                   41%         29%
 
 
                             FOURTH QUARTER          TOTAL YEAR
  Reconciliations from
   GAAP to                   2001        2000         2001       2000
    final metrics
  Economic earnings
    Income from
     continuing
      operations
       before taxes       $   214     $   219      $   699    $   975
    Amortization of
     goodwill and
      purchased
       intangibles            101          58          379        206
    Pension income            (88)       (128)        (337)      (538)
    Income tax                (69)        (43)        (224)      (214)
                          -------     -------      -------    -------
    Economic earnings         158         106          517        429
      Preferred
       dividend                (6)          -          (18)         -
                          -------     -------      -------    -------
    Economic earnings
     available to
      Common
       shareholders       $   152     $   106      $   499    $   429
                          =======     =======      =======    =======
 
 
    Diluted weighted
     average common
     shares outstanding
      (in Millions)         98.04       72.50        85.26      70.90
 
    Calculation of
     EDITDAP
      Income from
       continuing
        operations
         before taxes     $   214     $   219      $  699     $   975
     Net interest
      expense                 103          31         340         145
     Depreciation              77          41         266         154
     Amortization of
      goodwill and
       purchased
        intangibles           101          58         379         206
     Pension income           (88)       (128)       (337)       (538)
                          -------     -------      -------    -------
 EBITDAP                  $   407     $   221      $1,347     $   942
                          =======     =======      =======    =======
 
 
 * preliminary amounts
 1 Total debt less cash and cash equivalents
 
 2 Total debt divided by the sum of shareholders'
    equity, mandatorily redeemable preferred stock and total debt
 
 
                     NORTHROP GRUMMAN CORPORATION
                           OPERATING RESULTS
                   ($ in millions, except per share)
 
 
                                  CONTRACT ACQUISITIONS
                         FOURTH QUARTER             TOTAL YEAR
 
                         2001         2000           2001        2000
 Electronic Systems   $ 1,551      $ 1,111        $ 5,771      $4,370
 Information
  Technology            1,139          907          4,276       2,051
 Integrated Systems       750        1,295          2,233       2,990
 Ships                  6,458            -         12,408           -
 Component
  Technologies            129            -            645           -
 Intersegment
  Eliminations           (208)         (58)          (394)       (186)
 
 TOTAL                $ 9,819      $ 3,255       $ 24,939      $9,225
 
 
                                  FUNDED
                              ORDER BACKLOG
                                 DEC. 31
                         2001               2000
 
 Electronic Systems   $ 6,031            $ 4,979
 Information
  Technology            1,436                943
 Integrated Systems     3,523              4,291
 Ships                 10,528                  -
 Component
  Technologies            218                  -
 Intersegmen
  Eliminations           (249)              (107)
 
 TOTAL                $21,487            $10,106
 
 
                                        NET SALES
                         FOURTH QUARTER             TOTAL YEAR
 
                         2001        2000            2001        2000
 
 Electronic Systems   $ 1,543       $ 962         $ 4,719      $2,915
 Information
  Technology            1,130         537           3,783       1,717
 Integrated Systems       784         779           3,001       3,150
 Ships                    803           -           1,880           -
 Component
  Technologies            127           -             427           -
 Intersegment
  Eliminations            (83)        (49)           (252)       (164)
 
 TOTAL                $ 4,304     $ 2,229        $ 13,558      $7,618
 
 
                                      OPERATING MARGIN
                         FOURTH QUARTER             TOTAL YEAR
 
                         2001        2000            2001        2000
 
 Electronic Systems     $ 145        $ 55           $ 359        $181
 Information
  Technology               45          11             170         104
 Integrated
  Systems                  42          52             258         316
 Ships                     28           -              19           -
 Component
  Technologies            (12)          -             (38)          -
 
        Total           $ 248       $ 118           $ 768        $601
 
   Other items
    included in
     operating
      margin:
    Corporate
     expenses             (16)         (1)            (74)        (17)
    Deferred
     state tax
      provision            (6)          7             (27)        (24)
    Pension income         88         128             337         538
 
 Operating margin         314         252           1,004       1,098
 
 Other income, net          4           7              68          52
 Interest expense        (104)        (40)           (373)       (175)
 
 Income from
  continuing
   operations
    before taxes          214         219             699         975
 
 Federal and foreign
  income taxes             83          75             272         350
 
 Income from
  continuing
   operations             131         144             427         625
 
 Income from
  discontinued
   operations,
    net of tax                          0                          39
 Loss on disposal
  of discontinued
   operations,
    net of tax                        (19)                        (56)
 
 Net income            $ 131        $ 125           $ 427        $608
 
 
  Diluted earnings
   per share
   Continuing
    operations        $ 1.28       $ 1.99          $ 4.80      $ 8.82
   Discontinued
    operations             -                            -        0.55
   Disposal of
    discontinued
     operations            -        (0.26)              -       (0.79)
   Diluted
   earnings per
    share             $ 1.28       $ 1.73           $4.80       $8.58
 
 
 
                     NORTHROP GRUMMAN CORPORATION
                    ADDITIONAL SEGMENT INFORMATION
                            ($ in millions)
 
 
   Sales by business area
     within segment:          FOURTH QUARTER         TOTAL YEAR
                              2001      2000          2001       2000
 Electronic Sensors &
  Systems
   Aerospace Electronic
    Systems                  $ 548     $ 371       $ 1,702     $1,179
   C3I&N                       246       326           911        902
   Navigation Systems          286         -           798          -
   Defensive Electronic
    Systems                    307       191           767        511
   Other                       156        74           541        323
    Total                    1,543       962         4,719      2,915
 
 Information Technology
   Government Information
    Technology               $ 630     $ 257       $ 2,178       $829
   Enterprise Information
    Technology                 285       111           829        229
   Technology Services         140       115           515        475
   Commercial Information
    Technology                  75        54           261        184
    Total                    1,130       537         3,783      1,717
 
 Integrated Systems
   ACS                       $ 421     $ 386       $ 1,594     $1,717
   AEW/EW                      211       235           745        780
   AGS/BM                      148       163           664        674
   Intrasegment
    Eliminations                 4        (5)           (2)       (21)
    Total                      784       779         3,001      3,150
 
 Ships
 Surface Combatants          $ 236      $  -       $   672     $    -
 Amphibious & Auxiliary      $ 197      $  -       $   514     $    -
 Commercial &
  International              $  77      $  -       $   336     $    -
 Aircraft Carriers           $ 185      $  -       $   185     $    -
 Submarines                  $  63      $  -       $    63     $    -
 Services & Other            $  68      $  -       $   172     $    -
 Intersegment
  Eliminations               $ (23)     $  -       $   (62)    $    -
     Total                   $ 803      $  -       $ 1,880     $    -
 
 
 Component Technologies      $ 127      $  -       $   427     $    -
 
 
 
                              FOURTH QUARTER         TOTAL YEAR
  Amortization of Goodwill    2001      2000          2001       2000
 
 Electronic Systems          $  22      $ 18       $    81     $   63
 Information Technology         16         8            58         19
 Integrated Systems              8         9            32         32
 Ships                          11         -            31          -
 Component Technologies          8         -            38          -
 
       Total                    65        35           240        114
 
 
   Amortization of            FOURTH QUARTER         TOTAL YEAR
    Purchased Intangibles     2001      2000          2001       2000
 
 Electronic Systems          $  21      $ 19       $    81     $   76
 Information Technology          5         1            15          2
 Integrated Systems              4         3            15         14
 Ships                           2         -            17          -
 Component Technologies          4         -            11          -
 
       Total                 $  36      $ 23       $   139        $92
 
  Amortization of Goodwill
   and Other Purchased        FOURTH QUARTER         TOTAL YEAR
    Intangibles               2001      2000          2001       2000
 
 Electronic Systems          $  43      $ 37       $   162     $  139
 Information Technology         21         9            73         21
 Integrated Systems             12        12            47         46
 Ships                          13         -            48          -
 Component Technologies         12         -            49          -
 
       Total                 $ 101      $ 58       $   379     $  206
 
  Contact:  Frank Moore (Media)
          (310) 201-3335

          Gaston Kent (Investors)
          (310) 201-3423