Copyright 2006 Northrop Grumman Corporation

Copyright 2006 Northrop Grumman Corporation0

Copyright 2006 Northrop Grumman Corporation

May 17, 2006

Ronald D. SugarChairman, CEO and PresidentNorthrop Grumman Corporation

Annual Meeting of Shareholders


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. You should refer to Northrop Grumman’s filings from time to time with the Securities and Exchange Commission including, without limitation, reports on Form 10K and Form 10Q, for a description of such economic, political and technological risks factors and other uncertainties.

Safe Harbor Statement


Northrop Grumman Today

$30.7 billion sales in 2005$58 billion total backlog 125,000 people, 50 states, 25 countriesThird largest U.S. defense contractorLeading capabilities in:

Systems integrationC4ISR and battle managementInformation technology and networksDefense electronics Naval shipbuildingSpace and missile defense

Focus on PerformanceFocus on Performance


NOC – Focus on Performance

* Non-GAAP: Adjusted for $1B B-2 tax payment

EPS

Operating Margin

Cash from Operations

Sales($

Billio

n)

($Bi

llion)

ActualRange

$0

$10

$20

$30

$40

2003 2004 2005 2006E0%

2%

4%

6%

8%

2003 2004 2005 2006E

0.00

1.00

2.00

3.00

4.00

5.00

2003 2004 2005 2006E$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

2003* 2004 2005 2006E


Hurricane Katrina

• Category 4 at landfall• 145 mph sustained winds• 24 foot storm surge across shipyard

August 28, 2005

Lake Charles

New Orleans

Gulfport PascagoulaOcean Springs


Workforce Recovery Assistance

Full pay and benefits continuation during post-hurricane shutdown

– 21,000 people ($60M)Northrop Foundation grants and employee donations ($3M)Replaced employee personal vehicles and tools ($2M)Crisis counseling

Fuel for employees

Vaccinations for all employees

Centralized assistance area


Hurricane Katrina Recovery

Debris removal and clean up

Electrical substations operational

Recovery & production underway

Major recovery effort underway 2 ships delivered in DecemberProduction underway on 12 shipsFull operational capability expected 2007


Ships ~$5B

Information & Services~$11B

Aerospace~$9B

Electronics~$7B

Balanced, Diversified Portfolio

2006E Revenues ~$31B*†

* Assumes 2006 sales adjusted for exit of Enterprise Information Technology & other small businesses† Net of intersegment eliminations


Aligned with National Defense Priorities

Global Reach

Improved Intelligence

Precision Strike

Missile Defense

All NOC CompetenciesAll NOC Competencies


Global Reach

New CarrierNew CarrierNew DestroyerNew Destroyer

Future BomberFuture BomberNew Tanker/TransportNew Tanker/Transport


Improved Intelligence

SpaceSpace Manned - AirManned - Air Unmanned - AirUnmanned - Air

ARLARL

GuardrailGuardrail

JSTARSJSTARS

E-2CE-2C

E-10E-10 Global HawkGlobal Hawk

UCASUCAS

Fire ScoutFire Scout

HunterHunter

KillerBeeKillerBee

SBIRSSBIRS

STSSSTSS

Space RadarSpace Radar


Precision Strike

Moving Target EngagementMoving Target Engagement Advanced Gun SystemAdvanced Gun System

Submarine Launch Cruise MissileSubmarine Launch Cruise Missile Manned Unmanned IntegrationManned Unmanned Integration

Apache

Hunter


Missile Defense

Kinetic Energy InterceptorsKinetic Energy InterceptorsAirborne LaserAirborne Laser

Ship Launched InterceptorShip Launched Interceptor Battle ManagementBattle Management


Key Recent Awards

Commonwealth of Virginia IT Agency support program

San Diego County outsourcing

Restricted programs

UK AWACS support

Missile Defense Integration Center

LHA(R) amphibious assault ship

Nevada Test Site


Opportunities – Crew Exploration Vehicle

NASA’s next generation human space transportation system


Opportunities –KC-30 Multi-Role Tanker Transport


Balanced Cash Deployment Strategy

Cash toShareholders

Growth throughInvestment

DividendsShare Repurchases

Internal GrowthAcquisitions

Free Cash Flow and Balance Sheet Flexibility Free Cash Flow and Balance Sheet Flexibility Support Investment and Cash to Shareholders Support Investment and Cash to Shareholders

Regular Review Disciplined FinancialProcess


Returning Cash to Shareholders

Share Repurchase

$3.2B authorized since 8/03

$3B completed to date

Achieved meaningful reduction in shares outstanding

Review regularly

15% increase announced today

13% increase in 2005

15% increase in 2004

Maintain a competitive payout ratio

Review regularly

Balanced Strategy Reflects Management DisciplineBalanced Strategy Reflects Management Disciplineand Confidence in the Companyand Confidence in the Company’’s Futures Future

Dividends


Strong top line…

Margin expansion…

Predictable cash returns…

Strong capital structure…

Shareholder & management interests aligned…

Focus on financial discipline & shareholder value

What You Should Expect from NOC

Making a Good Company Great



Copyright 2006 Northrop Grumman Corporation

Documents