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Copyright 2006 Northrop Grumman Corporation0

Northrop Grumman 2006 Institutional Investor Conference

November 9, 2006

Gaston KentVice President, Investor RelationsNorthrop Grumman Corporation


Certain statements and assumptions in these presentations and materials contain or are based on “forward-looking” information. Such “forward-looking” information includes, among other things, projected deliveries,expected funding for various programs, future effective income tax rates, financial guidance and estimated amounts regarding sales, segment operating margin, pension expense, employer contributions under pension plans and medical and life benefits plans, cash flow and earnings per share, and is subject to numerous assumptions and uncertainties, many of which are outside Northrop Grumman’s control. These include Northrop Grumman’s assumptions with respect to future revenues, expected program performance and cash flows, returns on pension plan assets and variability of pension actuarial and related assumptions, the outcome of litigation and appeals, environmental remediation, divestitures of businesses, successful reduction of debt, successful negotiation of contracts with labor unions, effective tax rates and timing and amounts of tax payments, and anticipated costs of capital investments, among other things. Northrop Grumman’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 various factors, including, without limitation, Northrop Grumman’s successful performance of internal plans; government customers’ budgetary constraints; 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 and, in connection with any fixed price development programs, controlling cost growth in meeting production specifications and delivery rates; 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 and of the assertion or prosecution of potential substantial claims by or on behalf of a U.S. government customer; natural disasters, and any associated amounts and timing of recoveries under insurance contracts, availability of materials and supplies, continuation of the supply chain, contractual performance relief and the application of cost sharing terms, impacts of timing of cash receipts and the availability of other mitigating elements; terrorist acts; legal, financial and governmental risks related to international transactions and global needs for military aircraft, military and civilian electronic systems and support, information technology, naval vessels, space systems, technical services and related technologies, as well as other economic, political and technological risks and uncertainties and other risk factors set out in Northrop Grumman’s filings from time to time with the Securities and Exchange Commission, including, without limitation, Northrop Grumman reports on Form 10-K and Form 10-Q.

Safe Harbor Statement


Presentation Format

GuidanceEffective 1/1/07 Radio Systems business will be transferred from Space Technology to Mission SystemsReported results for Q4 2006 & Full Year 2006 will not reflect the transferGuidance does not reflect the changeGuidance does not include Essex

Segment results 2003 - 2005Presented on a pro forma basis reflecting

Previously announced organizational realignmentsTransfer of Radio Systems businessAdoption of dual-margin recognition on inter-segment sales


The Leadership Team

Bob HelmCorp VP

Bus Dev &Govt Relations

Jim O’NeillCorp VP & President

InformationTechnology

MissionSystems

Jerry AgeeCorp VP & President

Jim CameronCorp VP & President

TechnicalServices

Information & Services

Jim PittsCorp VP & President

Electronic Systems

Electronics

Mike PettersCorp VP & President

NewportNews

Phil TeelCorp VP & President

ShipSystems

Ships

Burks TerryCorp VP &

General Counsel

Law

Ian ZiskinCorp VP & Chief

HR & Admin Officer

HR &Administration

Rosanne O'BrienCorp VP

Communications

Space Technology

Alexis LivanosCorp VP & President

Scott SeymourCorp VP & President

Integrated Systems

Aerospace

Ron SugarChairman & CEO

Wes BushPresident& CFO

The Right Team For Our StrategyThe Right Team For Our Strategy


Information & Services

Operating Margin

1 Non-GAAP Metric - see reconciliation and definition on pages 25 & 262 Dependent on long-term business mix

9+High 8Low 8Total Operating Margin

~10Low 9Low 9Segment OM1

9+Mid 8~7Ships

~12High 11Mid to High 11Electronics

9-10~9Low 9Aerospace

8-9~8Low 8Information & Services

Operating Margin %

Long-TermMargin

Opportunity2

2007E2006E

$31-32~$30.2Total

~10%~$5Ships

~5%~$6.6Electronics

~(5)%~$9Aerospace

8-10%~$11I & S

2006E ($B) 2007EGrowth

Growth


Information TechnologyOverview

November 9, 2006

James R. O’NeillPresidentInformation Technology Sector

2006 Institutional Investor Conference


IT Sector at a Glance2005 Sales – $3.8B18,500 employeesNorthern Virginia headquarters, geographically dispersed facilitiesPrimary customers:

Intelligence AgenciesDoD, DHSCivilian AgenciesState & Local Governments

Key programs: Virginia IT OutsourcingNew York City WirelessNational Health Information NetworkDefense Integrated Military HR SystemRestricted Programs

Strong Pipeline of New Business, Strong Pipeline of New Business, Projecting High SingleProjecting High Single--Digit GrowthDigit Growth

2006E Sales

Civilian Agencies

29%

Intelligence

32%

Defense

22%

Commercial, State & Local

17%


The IT Market Is Large, Growing & Diverse

Majority of IT sector’s sales are from outside DoDFastest growing segments include:

State/Local – NYC Wireless, Virginia, San DiegoHealth IT – CDC, DoD Electronic Health RecordInternational – IDENT1

Lead sector for corporate initiatives:Homeland Security – Homeland Secure Data Network, MaxHRInformation Operations – Army First IO Command

Robust pipeline of new business opportunities:Uni-Comm, UK Military Flight Training System, Intelligence Programs, First Responder Wireless Opportunities1,100 proposals in process

Strategic focus on key growth segmentsStrategic focus on key growth segments

Focus on Performance

Emphasis on program executionHigher award fee grades, improved profitability on fixed-rate/fixed-price contracts

Cost reduction initiativesMaximize facilities utilizationImplementation of a single ERP system

Repeatable solutionsIT outsourcing, enterprise architecture, wireless marketplaces

Process improvement initiativesBilling cycle reductionsProcurement and payable processes

Reduction in capital expendituresAggressive focus on contract structure

Milestone payments, interim billing, etc.

Committed to continued margin expansionCommitted to continued margin expansionand increased cash generationand increased cash generation


M A

R G

I NM

A R

G I N

C A

S H

C A

S H


Summary

Diverse market mix drives growth and reduces riskSignificant growth opportunities with key current customers

DoD, Intelligence Community, Civil Agencies, State & LocalLeverage capabilities to expand presence in key growing markets

Secure WirelessIT OutsourcingSecurity/Information AssuranceHealth ITEnterprise Business ApplicationsSelect International Opportunities

Combination of growth and program performance will drive improvements in margin and cash

Positioned for growth and strongPositioned for growth and strongfinancial performancefinancial performance


Success with Approaching Adjacencies


Mission Systems Overview

November 9, 2006

Jerry AgeePresidentNorthrop Grumman Mission Systems



Sector at a Glance. . .

$11B Current Total Backlog$11B Current Total Backlog

2006E Sales2006E Sales2006E Sales

$5.5B – 2005 Actual Sales (adjusted for Radio Systems)17,000 employees, 47 states, 19 countriesPrimary customers

Air Force Army NavyRestricted MDA

Key programsICBM Prime Integration ContractKinetic Energy InterceptorsJoint Warfighting CenterF/A-22 and F-35 CNIBlue Force TrackingGlobal Command & Control System

Note: Information presented on a pro forma basis to reflect 2007 organizational realignment

Command, Control &

Communications50%

Missile Systems

26%

Intelligence, Surveillance & Reconnaissance

24%


Margin InitiativesPursue opportunities/markets with higher returnsDeemphasize/exit markets with substandard returnsAdhere to strict program risk management strategies and tacticsBid higher margins/reduce indirect costsLeverage competitive excellence initiatives


15% Fixed

>90% Development / Integration / Services

<10% Manufacturing / Production

ProductProduct

85% Cost (includes T&M)Contract Contract TypeType

Business Mix Performance Trends

Pro forma financials reflecting 2007 organizational realignment

Sales and Margin %

0

1

2

3

4

5

6

2003 2004 2005

Sale

s ($

B)

6.5%

7.0%

7.5%

8.0%

Sales ($B)Margin %

Mar

gin

%


Command, Control & Communications

Products/OfferingsProducts/OfferingsProducts/Offerings

Major OpportunitiesMajor OpportunitiesMajor Opportunities

Command, Control & Information SystemsTactical Operations CentersNetworks, Communications & InteroperabilitySystem Engineering and AnalysisCommunication, Navigation and IdentificationSoftware Defined Radios

Joint Network NodeNetwork Comms OpportunitiesGlobal Command and Control – Maritime

Blue Force Tracking Command Post PlatformGlobal Command & Control SystemJoint Warfighting CenterF/A-22 & F-35 Communication, Navigation and Identification

U.S. Army, Air Force, Navy and Department of Defense (Including Joint Forces)

Key CustomersKey CustomersKey Customers

Major ProgramsMajor ProgramsMajor Programs


Intelligence, Surveillance and Reconnaissance



Signals Intelligence and Exploitation SystemsPayload SoftwareInformation OperationsSpecial IntelligenceMulti-INT IntegrationSatellite Ground Stations

Guardrail Modernization / ACSGPS OCXRestricted

Airborne Signals Intelligence PayloadSurvivorGuardrailDiamondRestricted

Intelligence CommunityU.S. Army, Air Force, Navy




Missile Systems



Inter-Continental Ballistic Missile (ICBM)Battle Management Command and Control Systems

Integrated Air & Missile DefenseAdjunct SensorKEI International / Sea Basing

ICBM Prime Integration ContractGround-Based Midcourse Defense SegmentJoint National Integration CenterKinetic Energy Interceptors

ICBM System Program OfficeU.S. Air ForceU.S. Strategic CommandMissile Defense Agency




Trusted Provider of Mission-Enabling Systems

Provide thought leadership

Deliver technically differentiated, fully integrated solutions

Consistent performance / track record

Provide thought leadership

Deliver technically differentiated, fully integrated solutions

Consistent performance / track record

Competing and performing as a Tier 1 playerCompeting and performing as a Tier 1 player

Trusted partner and thought leaderTrusted partner and thought leader


Technical ServicesOverview

November 9, 2006

James CameronPresidentNorthrop Grumman Technical Services


Copyright 2006 Northrop Grumman Corporation17 * Funded & Unfunded Backlog** Includes JVs

Sector at a Glance. . .18,304 employees**Sites: 285** all 50 States and 29 Countries

Primary customers:DoD DHSDoE NASADoS

Key missions:“City” Managers: Kennedy Space Center; Nevada Test Site; Ft. Eustis; Incerlik, Turkey

Aircraft Sustainment and Modernization:B2; JSTARS; F18; EA-6; Hunter UAV

Homeland Security: Biometrics for Citizenship and Immigration

Air and Ground Combat Ranges:Combined Tactical Training Ranges; Ft. Hood Range Complex

Physical and Electronic Security: Space Gateway Support; Qatar

Performance Based Logistics and Supply Chain Management: Whiteman AFB; Tinker AFB; Robins AFB

Training: Live, Virtual and Constructive Domains

$4.3B Total Backlog*$4.3B Total Backlog*

2006E Sales

NASA

23%

DoD

50%

DoE

15%

* including DHS, DoS, etc

Other*

12%

Customer Sales Profile


Examples Of What We Do and Where We Do It

Space Gateway Support – Kennedy Space Center

Hunter Support –Sierra Vista, AZ with deployed Teams in OIF

Korean Battle Simulation Center –Yongsan, South Korea

Saudi Arabian National Guard –Riyadh, SA

African Contingency Operations and Training Assistance

Tactical Training

Ranges –East and

West Coasts

Nevada Test Site

B2 Supply Chain Management –Whiteman AFB, MS

Battle Command Training Branch – Ft. Hood, TX

Citizenship and Immigration Service –All 50 States (136 Centers)


Market EnvironmentCore business

How We Are Organized To Attack Opportunities?Training and Simulation Group: Product Development, Scenario Development/Planning, Exercise Support, Linguists

System Support Group: Operations and Maintenance, Base and Range O&M (DoD, DOE, NASA), Biometric Collection (DHS)Life Cycle Optimization and Engineering Group: MRO and Maintenance, in the Field and Depot, Performance Based Logistics, Supply Chain Management

Infrastructure and ProductDevelopment

Preparednessand

Training

Operationsand

Maintenance

ModernizationThrough

Sustainment

NG Development Sectors NG Technical Services

$75B DoD Addressable Market$55B NASA, DoE, DHS,

DoS Market

NG Dev~35% DOD Budget ~65% DOD Budget


Delivered 2006 Performance

New Programs – Recent WinsNevada Test Site (DOE)Saudi Arabian National Guard Modernization Program (Army)U.S. Citizenship and Immigration Service - Application Support Centers (DHS)Robins Air Base Education and Training (AF)Battle Command Training Branch (Army)

Financial Performance

Realizing immediate impact of new NGTS organization!

Double-digit organic growthOutstanding cash contributionsSolid mid-single digit margins

Year-Over-Year Organic Growth

2003 2004 2005 2006E 2007E


Strategic Thrusts & Growth Expectations

Strategic Thrusts Capitalize on “integrated” NOC pedigree and “reach back”Leverage services and MRO businesses through a tactical and strategic focus Exploit a growing DoD marketGrow existing position in adjacent markets (DOE, DOS, NASA, DHS, etc)Expand international footprint

Growth Expectations Expect double digit growth

SSG

TSG

LCOE



GrowthDeliver consistent year-over-year double digit growthLeverage robust pipeline Key: identifying/qualifying new business pursuits. Have increased at a ratio of more than 3 to 1

MarginFocus on higher margin market segments - logistics & trainingEnhance contract mix with an increase in performance-based and fixed-price contracts“Manage with leading indicator metrics in a continuous process improvement environment”

CashDrive strong working capital performanceExecute with minimal capital utilization


Summary

Vision and strategiesBe the best in the world at what we doDeliver superior performance on ALL programs

DoD businessRepresents only half of our portfolioStrong integrated NOC pedigree offers great opportunity for rapid organic growth

Non-DoD businessAlready possess a diverse portfolio in adjacent markets

Sales/Margin/Cash driversDriving double digit top-line growthSolid, mid-single digit margin performance todayBusiness base has highly favorable capital utilization yielding strong returns

Economy & Finance

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