LOS ANGELES, July 25, 2001 (PRIMEZONE) -- Northrop Grumman Corporation (NYSE:NOC) today reported second quarter 2001 economic earnings of $137 million, a 14 percent increase compared with $120 million in economic earnings reported for the second quarter of 2000. On a per share basis, 2001 economic earnings were $1.57 per share on average diluted shares outstanding of 84.0 million, compared with economic earnings of $1.71 per share on average diluted shares outstanding of 70.1 million for the comparable period in 2000. Northrop Grumman's second quarter results include the operations of Litton Industries Inc., which the company acquired April 3, 2001.

Under Generally Accepted Accounting Principles (GAAP), the company reported second quarter 2001 net income of $114 million, or $1.28 per share, compared with net income from continuing operations of $175 million, or $2.50 per share, reported for the second quarter last year. The comparable decline reflects a substantial decrease in pension income.

Sales for the quarter ended June 30, 2001, were $3.7 billion, compared with $1.9 billion reported for the second quarter of 2000. Northrop Grumman's operating margin for the quarter was $275 million compared with the $317 million reported for the same period a year ago. Operating margin for the 2001 second quarter included $91 million of pension income, down from the $140 million reported in the second quarter of 2000. With the inclusion of the Litton plans, pension income for 2001 is expected to be approximately $340 million, in line with previous guidance.

"We are pleased to report another strong quarter of operating results, led by our Electronic Sensors and Systems Sector, which generated 35 percent organic sales growth, and by our Integrated Systems Sector, which exceeded our operational performance expectations," said Kent Kresa, Northrop Grumman's chairman, president and chief executive officer. "The integration of Litton's businesses into Northrop Grumman is also well under way and we remain confident that we will achieve our future annual cost savings objectives of $100 million by the end of the first 12 months and $250 million by the end of 2003. We expect combined revenues this year of more than $13 billion, growing to approximately $16 billion in 2002."

Mr. Kresa added that due to a change in the planned accounting treatment of certain Litton research and experimental tax credits, the effective tax rate for 2001 will be higher than previously estimated, reducing economic earnings by 80 cents per share. As a result, the company's economic earnings for 2001 are expected to range from $6.20 to $6.50 per share, down from earlier guidance of $7.00 to $7.40 per share. The company added that this accounting change will not affect 2001 cash generation, which is expected to range between $100 million and $200 million.

The company also said that it now anticipates a 15 percent to 20 percent increase in 2002 economic earnings based on the revised 2001 guidance. The new guidance reflects the continued strong operational performance across the company, partially offset by a higher than expected tax rate and continued uncertainty in the telecommunications market.

Northrop Grumman's contract acquisitions in the second quarter of 2001 totaled $10.1 billion and include $7.5 billion of funded order backlog acquired in the Litton transaction. The company's business backlog at June 30, 2001, was $16.8 billion, compared with the $8.8 billion reported a year earlier.

Due to additional statement of work, the company also said that the B-2 stealth bomber engineering and manufacturing development (EMD) contract would now be completed in the fourth quarter of 2002. The corresponding federal and state income taxes totaling approximately $1 billion will become payable in March 2003.

As previously announced, Northrop Grumman completed its acquisition of Litton Industries Inc., for approximately $5.2 billion in cash and stock, including the assumption of Litton's $1.3 billion of net debt. As a result, the company now has five reporting segments: Electronic Sensors and Systems Sector (ES3), which includes Litton's Advanced Electronics business; Logicon Inc., which includes Litton's Information Systems business; Integrated Systems Sector (ISS), which is unchanged by the acquisition of Litton; Ship Systems, a new segment comprised of the former Litton Ship Systems business; and Electronic Components and Materials (EC&M), a new segment comprised of the former Litton EC&M business.

ES3 sales in the second quarter of 2001 were $1.2 billion compared with the $664 million reported in the second quarter of 2000. The increase is due to both the inclusion of Litton's Advanced Electronics business and higher land combat systems and combat avionics systems revenues in the Aerospace Electronic Systems business area. Operating margin for the quarter was $79 million compared with $48 million for the same period last year, reflecting the addition of the Litton business and improved performance in the automation and information business.

Logicon reported second quarter sales of $1 billion and operating margin of $48 million compared with sales of $425 million and operating margin of $33 million reported in the second quarter of 2000. The increases are due to the addition of Litton's Information Systems business as well as to sales generated by Federal Data, Sterling's Federal Systems Group and the Federal Systems unit of Comptek Research Inc., which were acquired in the second half of 2000. Last year's second quarter operating margin included a $5 million noncash positive adjustment related to retiree benefits.

Integrated Systems Sector sales in the second quarter were $766 million, down 5 percent from the same period a year ago, reflecting lower B-2 sales. Operating margin for the quarter was $64 million compared with $113 million reported in the second quarter of 2000, which included the delivery of the last two B-2's under the production contract and an $8 million upward cumulative margin rate adjustment on the F/A-18E/F program.

The two new segments, Ship Systems and EC&M, reported sales for the quarter of $549 million and $158 million, respectively, with operating margin of $33 million and a loss of $6 million, respectively. EC&M's margin was impacted by the effect of $13 million of amortization due to the acquisition of Litton and by the downturn in the telecommunications industry.

Northrop Grumman's net debt at June 30, 2001, was $5.2 billion, up from the $1.3 billion reported at Dec. 31, 2000, reflecting both the assumption of Litton debt and increased borrowings to finance the Litton acquisition. Interest expense for the second quarter was $114 million, up from the $46 million reported for the second quarter of 2000.

Northrop Grumman Corporation is a $15 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, systems integration, information technology and non-nuclear shipbuilding and systems. With 80,000 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 the operations of Litton, 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 global needs for military aircraft, military and civilian electronic systems and support and information technology; 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.D.T. on July 25, 2001. 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 .

  NORTHROP GRUMMAN CORPORATION
                          FINANCIAL HIGHLIGHTS
                    ($ in millions, except per share)


                                  SECOND QUARTER    FIRST SIX MONTHS
                                   2001*    2000     2001*      2000

 FINANCIAL METRICS (Other Data)
  Economic earnings(1)             $ 137   $ 120     $ 238    $ 221
  Economic earnings
    per share(1)                   $1.57   $1.71     $2.97    $3.15

  Net cash provided
   by (used in)
   operating activities            $  19   $ 310     $ (14)   $ 401

  EBITDAP(2)                       $ 373   $ 262     $ 594    $ 496
  EBITDAP per share(2)             $4.44   $3.74     $7.59    $7.10


                                              JUN. 30     DEC. 31
                                                2001*      2000

  Cash and cash equivalents                  $   225    $   319
  Accounts receivable                          2,056      1,557
  Inventoried costs                            1,386        585
  Property, plant and
       equipment, net                          2,189      1,015
  Total debt                                   5,474      1,615
  Net debt(3)                                  5,249      1,296
  Mandatorily redeemable
       preferred stock                           350       --
  Shareholders' equity                         5,211      3,919
  Total assets                               $17,325    $ 9,622

  Debt to capitalization ratio(4)                 50%        29%
 

* Includes preliminary estimates of the fair market value of the assets acquired and liabilities assumed and the related allocations of the purchase price related to the Litton acquisition. Final valuations and allocations, which are expected to be completed by December 31, 2001, may differ from the amounts included herein.

(1) Diluted earnings from continuing operations available to common shareholders per share excluding pension income and amortization of goodwill and other purchased intangibles, after tax. The company believes that economic earnings is a better performance metric of operating results. Pension income is a noncash item which is impacted more by market conditions than by the entity's results from operations. Amortization of goodwill and other purchased intangibles are also noncash items which do not require recurring cash outflows for replenishment and upgrades like property, plant and equipment.

(2) Earnings before interest expense, interest income, federal and foreign income taxes, depreciation, amortization and pension income

(3) Total debt less cash and cash equivalents

(4) Total debt divided by the sum of shareholders' equity, mandatorily redeemable preferred stock and total debt

  NORTHROP GRUMMAN CORPORATION
                            OPERATING RESULTS
                       QUARTER ENDED JUNE 30, 2001
                    ($ in millions, except per share)

                                    CONTRACT ACQUISITIONS
                              SECOND QUARTER        FIRST SIX MONTHS
                            2001         2000        2001       2000

 Electronic Sensors
  & Systems              $  2,231    $  1,644    $  3,218    $  2,239
 Logicon                    1,437         371       2,073         808
 Integrated Systems           448         531       1,063         993
 Ship Systems               5,824        --         5,824        --
 Electronic Components
  & Materials                 281        --           281        --
 Intersegment
  Eliminations               (104)        (68)       (142)       (103)

 Total Sector            $ 10,117    $  2,478    $ 12,317    $  3,937


                                           FUNDED
                                       ORDER BACKLOG
                                          JUNE 30
                                       2001      2000

  Electronic Sensors & Systems       $ 6,260   $4,498
  Logicon                              1,410      614
  Integrated Systems                   3,855    3,779
  Ship Systems                         5,275       --
  Electronic Components & Materials      123       --
  Intersegment Eliminations             (149)    (113)

  Total Sector                       $16,774   $8,778


                                          NET SALES
                            SECOND QUARTER        FIRST SIX MONTHS
                            2001*     2000        2001*      2000

 Electronic Sensors
  & Systems              $ 1,236    $   664    $ 1,937    $ 1,265
 Logicon                   1,017        425      1,606        803
 Integrated Systems          766        809      1,499      1,665
 Ship Systems                549       --          549       --
 Electronic Components
  & Materials                158       --          158       --
 Intersegment
  Eliminations               (63)       (42)      (100)       (75)

 Total Sector            $ 3,663    $ 1,856    $ 5,649    $ 3,658


                                       OPERATING MARGIN (LOSS)
                                 SECOND QUARTER   FIRST SIX MONTHS
                                2001*     2000    2001*     2000

 Electronic Sensors
  & Systems                    $  79    $  48    $ 115    $  82
 Logicon                          48       33       72       64
 Integrated Systems               64      113      144      213
 Ship Systems                     33     --         33     --
 Electronic Components
  & Materials                     (6)    --         (6)    --

 Total Sector                  $ 218    $ 194    $ 358    $ 359

 Other items included in
  operating margin:
 Corporate expenses              (30)      (4)     (39)     (11)
 Deferred state tax
  provision                       (4)     (13)     (14)     (24)
 Pension income                   91      140      160      280

 Operating margin                275      317      465      604

 Other income, net                31        2       48        4
 Interest expense               (114)     (46)    (161)     (92)

 Income from continuing
  operations before taxes        192      273      352      516
 
 Federal and foreign
  income taxes                    78       98      135      185
 
 Income from continuing
  operations                     114      175      217      331

 Income from
  discontinued
  operations,
  net of tax                    --         18     --         35
 Loss on disposal
  of discontinued
  operations, net
  of tax                        --        (15)    --        (15)
 
 Net income                    $ 114    $ 178    $ 217    $ 351
 
 
 Diluted earnings per share
  Continuing operations        $1.28    $2.50    $2.69    $4.73
  Discontinued operations       --       0.26     --       0.50
  Disposal of discontinued
   operations                   --      (0.21)    --      (0.21)
  Diluted earnings per share   $1.28    $2.55    $2.69    $5.02
 

* Includes preliminary estimates of the fair market value of the assets acquired and liabilities assumed and the related allocations of the purchase price related to the Litton acquisition. Final valuations and allocations, which are expected to be completed by December 31, 2001, may differ from the amounts included herein.

  NORTHROP GRUMMAN CORPORATION
                     ADDITIONAL SEGMENT INFORMATION
                            ($ in millions)


  Sales by business area
    within segment:              SECOND QUARTER     FIRST SIX MONTHS
                                2001*      2000      2001*      2000
 Electronic Sensors
  & Systems
   Aerospace Electronic
     Systems                $   439    $   291    $   764    $   548
   C3I&N                        241        184        441        361
   Navigation Systems           238       --          238       --
   Defensive Electronic
    Systems                     179        107        262        203
   Other                        139         82        232        153
    Total                   $ 1,236    $   664    $ 1,937    $ 1,265

 Logicon
   Government Information
    Technology              $   617    $   203    $   893    $   386
   Enterprise Information
    Technology                  208         64        349        101
   Technology Services          129        118        242        235
   Commercial Information
    Technology                   63         40        122         81
    Total                   $ 1,017    $   425    $ 1,606    $   803

 Integrated Systems
   ACS                      $   406    $   450    $   812    $   952
   AEW/EW                       188        196        354        379
   AGS/BM                       176        170        341        346
   Intrasegment
     Eliminations                (4)        (7)        (8)       (12)
    Total                   $   766    $   809    $ 1,499    $ 1,665

 Ship Systems               $   549    $  --      $   549    $  --

 Electronic Components
  & Materials               $   158    $  --      $   158    $  --


  Amortization of Goodwill
   and Other Purchased          SECOND QUARTER      FIRST SIX MONTHS
   Intangibles                 2001*       2000     2001*       2000

 Electronic Sensors
  and Systems                 $ 41         $ 34     $ 75       $ 68
 Logicon                        17            4       28          8
 Integrated Systems             12           12       24         23
 Ship Systems                   13           --       13         --
 Electronic Components
  & Materials                   13           --       13         --

 Total                        $ 96         $ 50     $153       $ 99
 

* Includes preliminary estimates of the fair market value of the assets acquired and liabilities assumed and the related allocations of the purchase price related to the Litton acquisition. Final valuations and allocations, which are expected to be completed by December 31, 2001, may differ from the amounts included herein.

  CONTACT:  Northrop Grumman Corporation 
          Frank Moore (Media) 
          (310) 201-3369
          
          Gaston Kent (Investors) 
          (310) 201-3423