SEC Filing - Northrop Grumman

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7,000,000 Shares

NORTHROP GRUMMAN
Common Stock
($1.00 PAR VALUE)

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ALL OF THE SHARES OF COMMON STOCK, PAR VALUE $1.00 PER SHARE ("COMMON STOCK"),
OF NORTHROP GRUMMAN CORPORATION (THE "COMPANY") OFFERED HEREBY ARE BEING SOLD
BY THE COMPANY. OF THE 7,000,000 SHARES OF COMMON STOCK BEING OFFERED,
5,950,000 SHARES ARE INITIALLY BEING OFFERED IN THE UNITED STATES AND
CANADA (THE "U.S. SHARES") BY THE U.S. UNDERWRITERS (THE "U.S.
OFFERING") AND 1,050,000 SHARES ARE INITIALLY BEING CONCURRENTLY
OFFERED OUTSIDE THE UNITED STATES AND CANADA (THE "INTERNATIONAL
SHARES") BY THE MANAGERS (THE "INTERNATIONAL OFFERING" AND,
TOGETHER WITH THE U.S. OFFERING, THE "OFFERINGS"). THE OFFERING
PRICE AND UNDERWRITING DISCOUNTS AND COMMISSIONS OF THE U.S.
OFFERING AND THE INTERNATIONAL OFFERING ARE IDENTICAL.

THE COMMON STOCK OF THE COMPANY IS LISTED ON THE NEW YORK STOCK EXCHANGE (THE
"NYSE") AND THE PACIFIC STOCK EXCHANGE UNDER THE SYMBOL "NOC." ON JUNE 3, 1996,
THE LAST REPORTED SALE PRICE OF THE COMMON STOCK ON THE NYSE WAS
$63.25. SEE "PRICE RANGE OF COMMON STOCK AND DIVIDENDS."

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR AD-
EQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS COMPANY(1)
----------------- ----------------- -----------------

PER SHARE............................................. $63.25 $1.97 $61.28
TOTAL (2)............................................. $442,750,000 $13,790,000 $428,960,000

(1) BEFORE DEDUCTION OF EXPENSES PAYABLE BY THE COMPANY, ESTIMATED AT $700,000.

(2) THE COMPANY HAS GRANTED THE U.S. UNDERWRITERS AND THE MANAGERS AN OPTION,
EXERCISABLE BY CS FIRST BOSTON CORPORATION FOR THIRTY (30) DAYS FROM THE
DATE OF THIS PROSPECTUS, TO PURCHASE A MAXIMUM OF 1,050,000 ADDITIONAL
SHARES TO COVER OVER-ALLOTMENTS OF SHARES. IF THE OPTION IS EXERCISED IN
FULL, THE TOTAL PRICE TO PUBLIC WILL BE $509,162,500, UNDERWRITING DISCOUNTS
AND COMMISSIONS WILL BE $15,858,500 AND PROCEEDS TO COMPANY WILL BE
$493,304,000.

THE U.S. SHARES ARE OFFERED BY THE SEVERAL U.S. UNDERWRITERS WHEN, AS AND IF
ISSUED BY THE COMPANY, DELIVERED TO AND ACCEPTED BY THE U.S. UNDERWRITERS AND
SUBJECT TO THEIR RIGHT TO REJECT ORDERS IN WHOLE OR IN PART. IT IS EXPECTED THAT
THE U.S. SHARES WILL BE READY FOR DELIVERY ON OR ABOUT JUNE 7, 1996, AGAINST
PAYMENT IN IMMEDIATELY AVAILABLE FUNDS.

CS First Boston
Merrill Lynch & Co.

Salomon Brothers Inc

THE DATE OF THIS PROSPECTUS IS JUNE 3, 1996.

IN CONNECTION WITH THE OFFERINGS, CS FIRST BOSTON CORPORATION ON BEHALF OF
THE U.S. UNDERWRITERS AND THE MANAGERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS
WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT A LEVEL
ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS
MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, THE PACIFIC STOCK EXCHANGE OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

DURING THIS OFFERING, CERTAIN PERSONS AFFILIATED WITH PERSONS PARTICIPATING
IN THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR THE
ACCOUNTS OF OTHERS IN THE COMMON STOCK OF THE COMPANY PURSUANT TO EXEMPTIONS
CONTAINED IN RULES 10B-6, 10B-7 AND 10B-8 UNDER THE SECURITIES EXCHANGE ACT OF
1934.

FORWARD LOOKING STATEMENTS

THE FORWARD LOOKING STATEMENTS CONTAINED IN THIS PROSPECTUS, CONCERNING,
AMONG OTHER THINGS, FUTURE RESULTS OF OPERATIONS, DELIVERIES, TRENDS, CASH
FLOWS, MARKETS AND PROGRAMS ARE PROJECTIONS AND ARE NECESSARILY SUBJECT TO
VARIOUS RISKS AND UNCERTAINTIES. ACTUAL OUTCOMES ARE DEPENDENT UPON 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, TERMINATION OF GOVERNMENT CONTRACTS, POLITICAL PROCESSES,
LEGAL, FINANCIAL AND GOVERNMENTAL RISKS RELATED TO INTERNATIONAL TRANSACTIONS
AND GLOBAL NEEDS FOR MILITARY AND COMMERCIAL AIRCRAFT AND ELECTRONIC SYSTEMS AND
SUPPORT, AS WELL AS OTHER ECONOMIC, POLITICAL AND TECHNOLOGICAL RISKS AND
UNCERTAINTIES.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copies may be obtained at
the principal office of the Commission at 450 Fifth Street, N.W, Washington,
D.C. 20549, and at the following regional offices of the Commission:
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; and 7 World Trade Center, 13th Floor, New York, New York 10048.
Copies of such materials can be obtained from the Public Reference Section of
the Commission, 450 Fifth Street, N.W, Washington, D.C. 20549, at prescribed
rates. Reports, proxy statements and other information concerning the Company
can also be inspected at the offices of the New York Stock Exchange, Inc., 20
Broad Street, New York, New York 10005; and the Pacific Stock Exchange, Inc.,
233 South Beaudry Avenue, Los Angeles, California 90012, and 301 Pine Street,
San Francisco, California 94104.

The Company has filed with the Commission a Registration Statement (herein,
together with all amendments thereto, called the "Registration Statement") under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the securities offered hereby. This Prospectus does not contain all of the
information included in the Registration Statement and the exhibits and
schedules thereto. Statements contained in this Prospectus as to the contents of
any contract or other document referred to herein and filed as an exhibit to the
Registration Statement are not necessarily complete, and, in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference. For further information with respect to the
Company and the securities being offered hereby, reference is hereby made to the
Registration Statement and the exhibits and schedules thereto.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Company has filed with the Commission, pursuant to Section 13 of the
Exchange Act:

(i) an Annual Report on Form 10-K for the year ended December 31, 1995;

(ii) a Current Report on Form 8-K filed March 18, 1996, as amended on
Form 8-K/A dated May 31, 1996;

(iii) a Quarterly Report on Form 10-Q for the quarter ended March 31,
1996;

(iv) a description of the Common Stock of the Company set forth in a
Registration Statement on Form 8-B dated June 20, 1985; and

(v) a description of the Common Stock Purchase Rights of the Company set
forth in a Registration Statement on Form 8-A filed September 22, 1988, as
amended on Form 8 filed August 2, 1991, as further amended on Form 8-A/A
filed October 7, 1994;

which are hereby incorporated by reference in and made a part of this
Prospectus.

All documents hereafter filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to
the filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities then
remaining unsold shall be deemed to be incorporated by reference in and to
be a part of this Prospectus from the date of filing of such documents. Any
statement contained in a document incorporated by reference or deemed to be
incorporated herein shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.

In this Prospectus, references to "dollars" and "$" are to United States
dollars.

THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (NOT INCLUDING
EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE INCORPORATED BY
REFERENCE IN SUCH DOCUMENTS) ARE AVAILABLE WITHOUT CHARGE UPON WRITTEN OR
ORAL REQUEST DIRECTED TO: JAMES C. JOHNSON, CORPORATE VICE PRESIDENT AND
SECRETARY, NORTHROP GRUMMAN CORPORATION, 1840 CENTURY PARK EAST, LOS
ANGELES, CALIFORNIA 90067 (TELEPHONE: (310) 553-6262).

PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND FINANCIAL DATA (INCLUDING
FINANCIAL STATEMENTS, PRO FORMA FINANCIAL DATA AND THE NOTES THERETO) INCLUDED
ELSEWHERE IN THIS PROSPECTUS OR INCORPORATED HEREIN BY REFERENCE.

THE COMPANY

Northrop Grumman Corporation (the "Company") is an advanced technology
aerospace and defense company operating primarily in two business segments:
electronics and systems integration and military and commercial aircraft. Within
the electronics and systems integration segment, the Company is engaged in the
design, development and manufacture of a wide variety of complex electronic
products such as airborne radar, surveillance and battle management systems,
electronic countermeasures, precision weapons, antisubmarine warfare systems and
air traffic control systems. Within the military and commercial aircraft
segment, the Company is engaged in the design, development, manufacture and
modification of military aircraft and commercial aerostructures. The Company is
also engaged in the design, development and manufacture of information systems,
marine propulsion and power generation systems and a variety of other products
and services. Approximately three-fourths of the Company's revenues in 1996 are
expected to be generated from the U.S. Department of Defense (the "DOD"), with
the balance provided by contracts with commercial aerospace manufacturers, other
U.S. government agencies and various foreign customers.

The Company has a balance of programs in both the production and development
phases. While production programs generally involve less risk and generate
greater cash flow than development programs, development programs are essential
for future growth opportunities. Based on its backlog and business mix, the
Company believes that its cash flow from operations as compared to its
investment requirements will result in significant cash flow available for debt
reduction, dividends and other uses over the next several years.

Many of the Company's programs are among the principal programs for the
various branches of the U.S. military. The Company is the prime contractor on
the B-2 Stealth Bomber, the only strategic bomber currently in production; the
principal subcontractor on the F/A-18C/D Hornet, the U.S. Navy's primary
strike/attack aircraft, as well as on the next generation F/A-18E/F Super
Hornet; the prime contractor on the E-2C Hawkeye, the U.S. Navy's principal
early warning, command and control aircraft; the prime contractor for the E-8
Joint STARS aircraft radar system, which will be the primary airborne ground
surveillance and battle management system for the U.S. Air Force and Army; the
prime contractor on the BAT "Brilliant" self-guided submunition under
development for the U.S. Army; the supplier of the APG-68 Fire Control Radar
used on the F-16, one of the most widely used fighter aircraft in the world; the
supplier of the ARSR-4 Long Range Radar, a three-dimensional air traffic control
radar system used by the U.S. Air Force and the U.S. Federal Aviation
Administration; and the supplier of the AN/APY-1, 2 surveillance radar which
provides real-time, all-altitude and beyond-the-horizon target detection,
identification and tracking for the E-3 AWACS surveillance aircraft.

The Company is also one of the world's leading manufacturers of commercial
aerostructures and components. The Company manufactures major portions of the
Boeing 747, 757 and 767 jetliners as well as significant subassemblies and
components for other commercial aircraft, including the Boeing 777 jetliner.

STRATEGY

The Company intends to strengthen its position as a leader in the aerospace
and defense industry by pursuing the following strategies: (i) focusing on
segments of defense markets that are growing and where the Company has premier
technological capabilities, particularly in electronics and electronics systems
integration; and (ii) leveraging its airframe design expertise and manufacturing
strengths to remain a key competitor in military aircraft and commercial
aerostructures. The Company has been pursuing these strategies since 1992
through both internal initiatives and acquisitions and, as a result, enjoys
leading positions in those market segments in which it chooses to compete. The
Company's primary objective in pursuit of these strategies is to maximize total
return on investment.

The Company is transforming itself from primarily an aircraft
designer/manufacturer to an electronics and systems integration company with a
leading airframe and aerostructures business. In early 1994, the Company
significantly expanded its electronics business with the acquisition of Grumman
Corporation ("Grumman"), a leading electronic systems integration company. In
March of 1996, the Company acquired the Electronics Systems Group of
Westinghouse Electric Corporation ("ESG"). ESG is a leading producer of
sophisticated electronics for defense, government and commercial applications.
As a result of these acquisitions, the Company expects that its electronics and
systems integration revenues will approximate 50% of total revenues in 1996 and
that this percentage will continue to increase in the future.

This strategic transformation positions the Company to meet the growing
needs of the DOD for more sophisticated electronics and integrated electronics
systems. Since the end of the Cold War, the DOD has recognized the necessity of
maintaining an effective fighting force with fewer defense dollars, thereby
placing a premium on sophisticated systems that provide long-range surveillance,
battle management and precision-strike capabilities. As military systems have
become more complex, integration of the electronic functions of the various
platforms, weapons and support systems has become increasingly important. Budget
constraints have also encouraged spending on program modifications, upgrades and
extensions rather than on new development programs, further increasing demand
for sophisticated electronics systems. As a technological leader in designing,
manufacturing and integrating the sophisticated electronics systems that provide
long-range surveillance, battle management and precision-strike capabilities,
the Company believes that it is well positioned to serve the electronic systems
market.

The Company has also strengthened its military and commercial aircraft
segment. In 1992, the Company acquired 49% of Vought Aircraft Company
("Vought"), a leading manufacturer of commercial and military aerostructures,
and in 1994 acquired the remaining 51% of Vought and the military aircraft
business of Grumman. These acquisitions and the Company's internal initiatives
have enabled the Company to establish a leading position in military aircraft
and commercial aerostructures. The Company believes that it will maintain this
leadership position as a result of its airframe design experience, including
stealth technology, as well as its cost-competitive manufacturing capabilities.

ACQUISITION OF ESG

On March 1, 1996, the Company completed the acquisition of ESG for
approximately $2.9 billion in cash (the "Acquisition"). For the year ended
December 31, 1995, ESG generated revenue of $2.6 billion. The Acquisition was
financed with a combination of bank borrowings and intermediate and long-term
notes and debentures. The business of ESG is now operated as the Company's new
Electronic Sensors and Systems Division ("ESSD").

ESSD is a leading supplier of electronic systems for defense, government and
commercial applications. It employs nearly 12,000 people worldwide at 15
operating locations, primarily in the United States. ESSD has a diversified
portfolio of programs with no single program accounting for more than 10% of
revenues in 1995. Approximately one-half of ESSD's 1995 revenues were
attributable to radar technology applied to surveillance, fire control, air
traffic control and other purposes. ESSD also designs and manufactures other
avionics products, electro-optical systems, undersea and marine products and
material handling systems.

The Acquisition represents a substantial step in the Company's continuing
transformation from an aircraft designer/manufacturer to a defense electronics
and systems integration company with a leading aircraft and aerostructures
business. The Acquisition enables the Company to serve a larger customer base,
domestically and internationally, and is expected to provide the opportunity to
achieve revenue growth and greater cash flow stability. The Acquisition will
also enable the Company to enhance its role on important programs such as E-8
Joint STARS and BAT, and to expand its business into the areas of air traffic
control and anti-submarine warfare systems.

THE OFFERINGS

Common Stock Offered (1):
U.S. Offering............... 5,950,000 shares
International Offering...... 1,050,000 shares
---------
Total..................... 7,000,000 shares
---------
---------
Common Stock Outstanding:
Before the Offerings (at May
30, 1996).................. 49,638,407 shares
After the Offerings (1)..... 56,638,407 shares
Dividends..................... For historical information related to dividends declared
and the Company's future dividend policy, see "Price Range
of Common Stock and Dividends."
Use of Proceeds............... The net proceeds of the Offerings will be used to repay a
portion of the bank borrowings incurred by the Company in
connection with the Acquisition. See "Use of Proceeds" and
"The Company -- Acquisition of ESG."
New York Stock Exchange and
Pacific Stock Exchange
Symbol....................... NOC

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(1) Does not include up to 1,050,000 shares of Common Stock subject to the
over-allotment option granted by the Company to the U.S. Underwriters and
the Managers.

SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA

The following summary historical financial data with respect to the five
years ended December 31, 1995, have been derived from and are qualified by
reference to the audited consolidated financial statements and notes thereto
filed by the Company with the Commission which are incorporated herein by
reference. The data for the three months ended March 31, 1996 and 1995 are
unaudited but, in the opinion of management, reflect all adjustments, consisting
of normal recurring adjustments, necessary for a fair presentation of the
results of operations and financial position for such periods. Operating results
for the three months ended March 31, 1996 may not be indicative of the results
that may be expected for the year ending December 31, 1996, or any future
period. All such summary historical financial data should be read in conjunction
with "Selected Consolidated Financial Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," included or
incorporated by reference herein. The summary pro forma data for December 31,
1995 and March 31, 1996 and the periods then ended have been derived from the
"Unaudited Pro Forma Condensed Combined Financial Data" included herein which
are based upon the historical consolidated financial statements of the Company
and the historical combined financial statements of ESG which are also
incorporated herein by reference, adjusted to give effect to the Acquisition
using the purchase method of accounting. The pro forma Operating Data for the
year ended December 31, 1995 and the three months ended March 31, 1996 give
effect to the Acquisition as if it had occurred as of January 1, 1995. The pro
forma Balance Sheet Data give effect to the Acquisition as if it had occurred on
December 31, 1995. The pro forma financial data do not give effect to the
proposed issuance of shares in the Offerings and the use of proceeds therefrom.
See also "Available Information," "Incorporation of Certain Documents by
Reference" and "Unaudited Pro Forma Condensed Combined Financial Data."

FOR FISCAL YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
1995 1994 1993 1992 1991
-------- ---------- -------- -------- ----------
PRO FORMA
1995
---------
(UNAUDITED) ($ IN MILLIONS, EXCEPT PER SHARE DATA)

Operating Data:
Net sales.............................................. $ 9,158 $ 6,818 $ 6,711 $ 5,063 $ 5,550 $ 5,694
Cost of sales
Operating costs...................................... 7,230 5,319 5,477 4,385 4,877 4,817
Administrative and general expenses.................. 1,283 963 753 485 455 531
Special termination benefits......................... 282
Restructuring charges................................ 51
--------- -------- ---------- -------- -------- ----------
Operating margin....................................... 594 536 199 193 218 346
Other, net............................................. (5) 9 (31) 13 5
Interest expense, net.................................. (346) (136) (103) (36) (43) (69)
--------- -------- ---------- -------- -------- ----------
Income before income taxes and cumulative effect of
accounting principle changes.......................... 243 409 65 170 180 277
Federal and foreign income taxes....................... 107 157 30 74 59 9
--------- -------- ---------- -------- -------- ----------
Income before cumulative effect of accounting principle
changes............................................... 136 252 35 96 121 268
Cumulative effect of accounting principle changes...... (67)
--------- -------- ---------- -------- -------- ----------
Net income............................................. $ 136 $ 252 $ 35 $ 96 $ 121 $ 201
--------- -------- ---------- -------- -------- ----------
--------- -------- ---------- -------- -------- ----------
Earnings per share before cumulative effect of
accounting principle changes.......................... $ 2.75 $ 5.11 $ .72 $ 1.99 $ 2.56 $ 5.69
Cumulative effect of accounting principle changes, per
share................................................. (1.43)
--------- -------- ---------- -------- -------- ----------
Earnings per share..................................... $ 2.75 $ 5.11 $ .72 $ 1.99 $ 2.56 $ 4.26
--------- -------- ---------- -------- -------- ----------
--------- -------- ---------- -------- -------- ----------
Balance Sheet Data:
Total assets........................................... $ 9,646 $ 5,455 $ 6,047 $ 2,939 $ 3,162 $ 3,128
Net working capital.................................... 321 357 467 481 354 611
Total debt............................................. 4,344 1,372 1,934 160 510 550
Shareholders' equity................................... 1,459 1,459 1,290 1,322 1,254 1,182
Other Data:
Capital expenditures................................... $ 188 $ 133 $ 134 $ 135 $ 123 $ 118
Depreciation and amortization.......................... 471 283 269 214 160 171
Funded order backlog................................... 13,433 9,947 12,173 6,919 7,175 8,561
Dividends per share.................................... $ 1.60 $ 1.60 $ 1.60 $ 1.60 $ 1.20 $ 1.20
Weighted average shares outstanding (in millions)...... 49.4 49.4 49.2 48.1 47.2 47.1

SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA (CONTINUED)

THREE MONTHS ENDED MARCH 31,
---------------------------------
(UNAUDITED)
PRO FORMA
1996 1996 1995
--------- -------- ----------
($ IN MILLIONS, EXCEPT PER SHARE
DATA)

Operating Data:
Net sales.................................................................. $ 1,850 $ 1,603 $ 1,617
Cost of sales
Operating costs.......................................................... 1,476 1,273 1,299
Administrative and general expenses...................................... 231 191 201
--------- -------- ----------
Operating margin........................................................... 143 139 117
Interest expense, net...................................................... (81) (46) (34)
Other, net................................................................. 8 9 5
--------- -------- ----------
Income before income taxes................................................. 70 102 88
Federal and foreign income taxes........................................... 29 41 34
--------- -------- ----------
Net income................................................................. $ 41 $ 61 $ 54
--------- -------- ----------
--------- -------- ----------
Earnings per share......................................................... $ .83 $ 1.23 $ 1.10
--------- -------- ----------
--------- -------- ----------
Balance Sheet Data:
Total assets............................................................... $ 9,495 $ 6,090
Net working capital........................................................ 339 469
Total debt................................................................. 4,201 1,787
Shareholders' equity....................................................... 1,505 1,326
Other Data:
Capital expenditures....................................................... $ 41 $ 45
Depreciation and amortization.............................................. 71 67
Funded order backlog....................................................... 12,543 11,477
Dividends per share........................................................ $ .40 $ .40
Weighted average shares outstanding (in millions).......................... 49.6 49.3

USE OF PROCEEDS

The Company intends to apply the net proceeds from the Offerings, estimated
to be approximately $428.3 million (or approximately $492.6 million if the
overallotment option is exercised), to repay a portion of the Company's bank
borrowings incurred to finance the Acquisition in March 1996. The indebtedness
to be repaid with the proceeds of the Offerings currently bears interest at
5.94% and has a maturity date of March 1, 1998.

CAPITALIZATION

The following table sets forth (i) the capitalization of the Company as at
March 31, 1996, and (ii) the capitalization as adjusted to reflect the sale
pursuant to the Offerings of 7,000,000 shares of Common Stock and the
application of the estimated net proceeds therefrom. See "Use of Proceeds."

AS OF MARCH 31, 1996
-----------------------------
ACTUAL AS ADJUSTED (A)
------------ ---------------
($ IN MILLIONS)

Current portion of long-term debt................................................. $ 250 $ 250
------ ------
Long-term debt:
Bank term loans and revolving credit facility (b)............................... 2,350 1,922
8 5/8% Notes due 2004........................................................... 350 350
7% Notes due 2006............................................................... 400 400
7 3/4% Debentures due 2016...................................................... 300 300
9 3/8% Debentures due 2024...................................................... 250 250
7 7/8% Debentures due 2026...................................................... 300 300
Other........................................................................... 1 1
------ ------
Total long-term debt.......................................................... 3,951 3,523
------ ------
Total debt.................................................................... 4,201 3,773
Shareholders' equity:
Preferred stock, 10,000,000 shares authorized; none issued......................
Common stock (c), 200,000,000 shares authorized; 49,632,060 shares issued;
56,632,060 shares issued as adjusted (d)....................................... 276 704
Retained earnings............................................................... 1,241 1,241
Unfunded pension losses, net of taxes........................................... (12) (12)
------ ------
Total shareholders' equity.................................................... 1,505 1,933
------ ------
Total capitalization........................................................ $ 5,706 $ 5,706
------ ------
------ ------

- ------------------------
(a) Based on estimated proceeds net of underwriting discounts and estimated
expenses.

(b) Amended bank credit facility consisting of a $1.8 billion revolving credit
facility expiring in March 2002 and two term loan facilities aggregating $2
billion ($500 million due March 1998 and $1.5 billion due in quarterly
installments of $62.5 million through March 2002), the proceeds of which,
together with $1 billion of institutionally placed notes and debentures,
were utilized to finance the Acquisition.

(c) Includes an equal number of Common Stock Purchase Rights. See "Description
of Capital Stock -- Common Stock Purchase Rights."

(d) Excludes 3,959,423 shares of Common Stock reserved for issuance pursuant to
outstanding options and rights granted under the Company's stock plans.

PRICE RANGE OF COMMON STOCK AND DIVIDENDS

The Company's Common Stock is traded on the New York Stock Exchange and the
Pacific Stock Exchange under the symbol NOC. The table below sets forth the high
and low trading prices of the Common Stock as reported on the New York Stock
Exchange Composite Tape and quarterly cash dividends declared per share of
Common Stock during the periods indicated. For a recent closing price of the
Common Stock, see the cover page of this Prospectus.

PRICE RANGE CASH
------------- DIVIDENDS
LOW HIGH DECLARED
----- ----- ---------

1994
First Quarter ended March 31, 1994............................................ 36 7/8 45 7/8 $ .40
Second Quarter ended June 30, 1994............................................ 34 1/2 39 3/4 .40
Third Quarter ended September 30, 1994........................................ 35 3/4 45 3/8 .40
Fourth Quarter ended December 31, 1994........................................ 40 1/4 47 3/8 .40
1995
First Quarter ended March 31, 1995............................................ 39 3/4 49 3/4 .40
Second Quarter ended June 30, 1995............................................ 47 54 .40
Third Quarter ended September 30, 1995........................................ 51 7/8 62 5/8 .40
Fourth Quarter ended December 31, 1995........................................ 56 64 1/4 .40
1996
First Quarter ended March 31, 1996............................................ 58 3/8 67 3/8 .40
Second Quarter (through June 3, 1996)......................................... 57 3/4 63 3/4 .40

Dividends on the Common Stock of the Company are payable at the discretion
of the Company's Board of Directors out of funds legally available therefor.
Future dividend policy will depend on the Company's earnings, capital
requirements, financial condition and other factors considered relevant by the
Company's Board of Directors. The record date for the second quarter dividend in
1996 was May 28, 1996.

SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth certain selected consolidated financial data
for the Company for each of the periods indicated which have been derived from,
and are qualified by reference to, the audited consolidated financial statements
and notes thereto filed by the Company with the Commission which are
incorporated herein by reference. The data for the three months ended March 31,
1996 and 1995 are unaudited but, in the opinion of management, reflect all
adjustments, consisting of normal recurring adjustments, necessary for a fair
presentation of the results of operations and financial position for such
periods. Operating results for the three months ended March 31, 1996 may not be
indicative of the results that may be expected for the year ending December 31,
1996, or any future period. See also "Available Information," "Incorporation of
Certain Documents by Reference" and "Unaudited Pro Forma Condensed Combined
Financial Data."

THREE MONTHS ENDED
MARCH 31, FISCAL YEAR ENDED DECEMBER 31,
------------------- ---------------------------------------------------
1996(B) 1995 1995 1994(A) 1993 1992 1991
------- ------ ------ ------- ------ ------ ------
(UNAUDITED) ($ IN MILLIONS, EXCEPT PER SHARE DATA)

Operating Data:
Net sales....................................... $ 1,603 $1,617 $6,818 $ 6,711 $5,063 $5,550 $5,694
Cost of sales
Operating costs............................... 1,273 1,299 5,319 5,477 4,385 4,877 4,817
Administrative and general expenses........... 191 201 963 753 485 455 531
Special termination benefits.................. 282
------- ------ ------ ------- ------ ------ ------
Operating margin................................ 139 117 536 199 193 218 346
Other, net...................................... 9 5 9 (31) 13 5
Interest expense, net........................... (46) (34) (136) (103) (36) (43) (69)
------- ------ ------ ------- ------ ------ ------
Income before income taxes and cumulative effect
of accounting principle changes................ 102 88 409 65(b) 170 180 277
Federal and foreign taxes....................... 41 34 157 30 74 59 9
------- ------ ------ ------- ------ ------ ------
Income before cumulative effect of accounting
principle changes.............................. 61 54 252 35 96 121 268
Cumulative effect of accounting principle
changes........................................ (67)(c)
------- ------ ------ ------- ------ ------ ------
Net income...................................... $ 61 $ 54 $ 252 $ 35 $ 96 $ 121 $ 201
------- ------ ------ ------- ------ ------ ------
------- ------ ------ ------- ------ ------ ------
Earnings per share before cumulative effect of
accounting principle changes................... $ 1.23 $ 1.10 $ 5.11 $ .72 $ 1.99 $ 2.56 $ 5.69
Cumulative effect of accounting principle
changes, per share............................. (1.43)(c)
------- ------ ------ ------- ------ ------ ------
Earnings per share.............................. $ 1.23 $ 1.10 $ 5.11 $ .72 $ 1.99 $ 2.56 $ 4.26
------- ------ ------ ------- ------ ------ ------
------- ------ ------ ------- ------ ------ ------
Balance Sheet Data:
Total assets.................................... $ 9,495 $6,090 $5,455 $ 6,047 $2,939 $3,162 $3,128
Net working capital............................. 339 469 357 467 481 354 611
Total debt (d).................................. 4,201 1,787 1,372 1,934 160 510 550
Shareholders' equity............................ 1,505 1,326 1,459 1,290 1,322 1,254 1,182
Other Data:
Net cash provided by operating activities....... $ 230 $ 191 $ 744 $ 441 $ 380 $ 284 $ 609
Capital expenditures............................ 41 45 133 134 135 123 118
Depreciation and amortization................... 71 67 283 269 214 160 171
Funded order backlog............................ 12,543 11,477 9,947 12,173 6,919 7,175 8,561
Dividends per share............................. $ .40 $ .40 $ 1.60 $ 1.60 $ 1.60 $ 1.20 $ 1.20
Weighted average shares outstanding (in
millions)...................................... 49.6 49.3 49.4 49.2 48.1 47.2 47.1

- --------------------------
(a) Includes Grumman Corporation data from April 1994 and Vought Aircraft
Company data from August 1994.

(b) Includes ESSD data from March 1, 1996.

(c) The Financial Accounting Standards Board's (FASB) accounting standard No.
106 EMPLOYER'S ACCOUNTING FOR POST-RETIREMENT BENEFITS OTHER THAN PENSIONS
was adopted by the Company in 1991. The liability representing previously
unrecognized costs of $145 million for all years prior to 1991 was recorded
as of January 1, 1991, with an after-tax effect on earnings of $88 million.
In 1991 the Company adopted the FASB standard No. 109 ACCOUNTING FOR INCOME
TAXES and recorded, as of January 1, 1991, a benefit of $21 million.

(d) Total debt includes long-term, short-term and current portion of long-term
debt.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

The following unaudited pro forma condensed combined financial statements
reflect the ESG acquisition and are based upon the historical financial
statements of the Company and ESG for the period indicated, combined and
adjusted to give effect to the ESG acquisition using the purchase method of
accounting. The unaudited pro forma condensed combined statement of financial
position gives effect to the ESG acquisition as if it had occurred on December
31, 1995. The unaudited pro forma condensed combined statements of income give
effect to the ESG acquisition as if it had occurred on January 1, 1995. The
adjustments to the unaudited pro forma financial statements do not give effect
to the proposed issuance of shares in the Offerings and the use of proceeds
therefrom. The pro forma adjustments are described in the accompanying notes.

The purchase price has been allocated to the assets and liabilities acquired
based upon preliminary estimates of their respective fair values. The
liabilities acquired include contingent liabilities of the type normally
associated with the conduct of the business including product warranty,
employee, environmental and litigation claims. As to certain contingent
liabilities, the Company's exposure has been limited, above certain thresholds,
by indemnification from or a participation agreement with the seller up to
limits that the Company believes, based on its investigations and negotiations
to date, will not be exceeded as the liabilities are settled or otherwise
satisfied. Based upon available information, the Company expects that those
contingent liabilities for which loss provisions have not been included in the
purchase price adjustment will not have a material adverse impact on the
Company's results of operations or financial position. The Company does not
presently anticipate that the changes to the purchase price allocation presented
will be material. The unaudited pro forma financial information does not give
effect to any synergies or cost savings that the Company may realize as a result
of the ESG acquisition. The Company is compiling data to determine those
business areas and facilities that do not fit in its long-term strategy and
intends to complete this process by December 31, 1996. During the remainder of
1996, the estimates of fair value for other assets and liabilities will be
refined and changes, if any, will be reflected in the Company's periodic
Exchange Act filings for 1996.

The unaudited pro forma condensed combined financial statements are not
necessarily indicative of the results of operations or financial position of the
combined company that would have occurred had the ESG acquisition occurred on
the dates indicated above, nor are they necessarily indicative of future
operating results or financial position.

The unaudited pro forma condensed combined financial statements should be
read in conjunction with the audited consolidated financial statements,
including the notes thereto, of the Company in its Annual Report on Form 10-K
for the year ended December 31, 1995 and of ESG contained in the Company's
Current Report on Form 8-K/A dated May 31, 1996, and the unaudited consolidated
financial statements, including the notes thereto, of the Company in its
Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1996,
which are incorporated herein by reference. See "Available Information" and
"Incorporation of Certain Documents by Reference."

PRO FORMA CONDENSED COMBINED
STATEMENT OF FINANCIAL POSITION
(UNAUDITED)
DECEMBER 31, 1995
ASSETS

NORTHROP PRO FORMA PRO FORMA
GRUMMAN ESG ADJUSTMENTS COMBINED
------- ------ ----------- ---------
($ IN MILLIONS)

Cash and cash equivalents....................................................... $ 18 $ 4 $ $ 22
Accounts receivable............................................................. 1,197 462 66(c) 1,725
Inventoried costs............................................................... 771 182 (85)(a)(c) 868
Deferred income taxes........................................................... 25 136 (121)(a) 40
Prepaid expenses................................................................ 61 14 75
------- ------ ----------- ---------
Total current assets............................................................ 2,072 798 (140) 2,730
Property, plant and equipment, net.............................................. 1,176 404 112(a) 1,692
Goodwill........................................................................ 1,403 119 1,946(a) 3,468
Other purchased intangibles..................................................... 356 646(a) 1,002
Prepaid pension cost, intangible pension asset and benefit trust fund........... 99 19 (19)(b) 99
Deferred income taxes........................................................... 255 173 76(a)(b) 504
Investments in and advances to affiliates and sundry assets..................... 94 12 45(a) 151
------- ------ ----------- ---------
$5,455 $1,525 $2,666 $9,646
------- ------ ----------- ---------
------- ------ ----------- ---------

LIABILITIES AND SHAREHOLDERS' EQUITY

Notes payable................................................................... $ 65 $ $ (65)(a) $
Current portion of long-term debt............................................... 144 188(a) 332
Trade accounts payable.......................................................... 360 105 465
Accrued employees' compensation................................................. 203 203
Income taxes.................................................................... 528 528
Other current liabilities....................................................... 415 443 23(a) 881
------- ------ ----------- ---------
Total current liabilities....................................................... 1,715 548 146 2,409
Long-term debt.................................................................. 1,163 2,849(a) 4,012
Accrued retiree benefits........................................................ 1,048 648 (40)(b) 1,656
Deferred income taxes........................................................... 31 31
Other liabilities and deferred gain............................................. 39 15 25(a) 79
Shareholders' equity
Common stock.................................................................. 272 272
Retained earnings............................................................. 1,187 314 (314)(a) 1,187
------- ------ ----------- ---------
1,459 314 (314) 1,459
------- ------ ----------- ---------
$5,455 $1,525 $2,666 $9,646
------- ------ ----------- ---------
------- ------ ----------- ---------

PRO FORMA CONDENSED COMBINED
STATEMENTS OF INCOME
(UNAUDITED)
YEAR ENDED DECEMBER 31, 1995

NORTHROP PRO FORMA PRO FORMA
GRUMMAN ESG ADJUSTMENTS COMBINED
------- ------ ------------------- ---------
($ IN MILLIONS, EXCEPT PER SHARE DATA)

Net sales............................................................. $6,818 $2,554 $ (214)(c)(h) $9,158
Cost of sales.........................................................
Operating costs................................................... 5,319 1,997 (86)(c)(d)(h) 7,230
Administrative and general expenses............................... 963 320 1,283
Restructuring charges............................................. 51 51
------- ------ ------ ---------
Operating margin...................................................... 536 186 (128) 594
Interest expense, net................................................. (136) (210)(e) (346)
Other, net............................................................ 9 (14) (5)
------- ------ ------ ---------
Income before income taxes............................................ 409 172 (338) 243
Federal and foreign income taxes...................................... 157 65 (115)(f) 107
------- ------ ------ ---------
Net income............................................................ $ 252 $ 107 $ (223) $ 136
------- ------ ------ ---------
------- ------ ------ ---------
Earnings per share.................................................... $ 5.11 $ 2.75
------- ---------
------- ---------
Weighted average shares outstanding (in millions)..................... 49.4 49.4

THREE MONTHS ENDED MARCH 31, 1996

NORTHROP PRO FORMA PRO FORMA
GRUMMAN(G) ESG(G) ADJUSTMENTS COMBINED
------- ------ ------------------- ---------
($ IN MILLIONS, EXCEPT PER SHARE DATA)

Net sales............................................................. $1,603 $ 259 $ (12)(h) $1,850
Cost of sales.........................................................
Operating costs................................................... 1,273 194 9 (d)(h 1,476
Administrative and general expenses............................... 191 40 231
------- ------ ------ ---------
Operating margin...................................................... 139 25 (21) 143
Interest expense, net................................................. (46) (35)(e) (81)
Other, net............................................................ 9 (1) 8
------- ------ ------ ---------
Income before income taxes............................................ 102 24 (56) 70
Federal and foreign income taxes...................................... 41 8 (20)(f) 29
------- ------ ------ ---------
Net income............................................................ $ 61 $ 16 $ (36) $ 41
------- ------ ------ ---------
------- ------ ------ ---------
Earnings per share.................................................... $ 1.23 $ .83
------- ---------
------- ---------
Weighted average shares outstanding (in millions)..................... 49.6 49.6

NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)

(a)Adjustments to record $3 billion in loans obtained to finance the acquisition
of ESG, and to assign the purchase price to assets acquired and liabilities
assumed. The allocation of the purchase price to assets and liabilities is
based upon preliminary estimates of their respective fair values. The Company
is compiling data to determine the final allocation of the purchase price,
which process will be completed by December 31, 1996. The Company does not
presently anticipate material changes in the purchase price allocations.

(b) Adjustment to record the preliminary estimate of ESG retiree benefits
liabilities in excess of the market value of related assets at December 31,
1995. The Company is reviewing the actuarial data relative to the ESG
retiree benefit plans and based on the results of the review the liability
may be adjusted.

(c) Adjustment to reflect a change in the method of recognizing contract revenue
from the milestone method applied by ESG to conform with the Company's
method of revenue recognition, the cost-to-cost type of percentage of
completion, on similar type contracts (adjustment for the year ended
December 31, 1995: net sales -- $113 million; operating costs -- $103
million).

(d)Adjustment to amortize goodwill over a 40-year period on a straight-line
basis and other purchased intangibles on a straight-line basis over periods
ranging from 1 to 10 years, with a combined weighted average life of 33 years
which results in amortization for the twelve-month period ended December 31,
1995 of $118 million and amortization for the three-month period ended March
31, 1996 of $21 million.

(e) Adjustment to record interest expense on $3 billion of borrowings incurred
in connection with the acquisition of ESG at an average annual effective
interest rate of 7%. A change of 1/8% in the assumed annual interest rate on
the variable rate debt of approximately $2 billion would change the annual
interest expense by approximately $2.5 million.

(f) Adjustment to record the income tax effects of pretax pro forma adjustments.

(g) Northrop Grumman data includes one month of combined operations of Northrop
Grumman and ESG. ESG data reflects operations for the two months ended
February 29, 1996.

(h) Adjustment to eliminate intercompany sales between ESG and the Company (for
the year ended December 31, 1995: net sales -- $101 million; for the three
months ended March 31, 1996: net sales -- $12 million).

THE COMPANY

GENERAL

On March 1, 1996, the Company completed the acquisition of the Electronic
Systems Group of Westinghouse Electric Corporation which is now the Company's
Electronic Sensors and Systems Division ("ESSD"). ESSD is a leading supplier of
electronics systems for defense, government and commercial applications. This
acquisition further enhances the Company's electronics and systems integration
capabilities, broadens the Company's product offerings and provides growth
opportunities in key defense and commercial markets. See "-- Acquisition of ESG"
and "-- Divisions -- Electronic Sensors and Systems Division."

In 1992 the Company acquired a 49% interest in Vought Aircraft Company
("Vought"), a leading manufacturer of commercial and military aerostructures. In
1994 the Company acquired Grumman Corporation ("Grumman") and the remaining
portion of Vought. With Grumman, the Company acquired a premier supplier of
electronic surveillance and electronic systems integration products as well as
military aircraft.

The Company is also one of the world's leading manufacturers of commercial
aerostructures and components. The Company manufactures major portions of the
Boeing 747, 757 and 767 jetliners, as well as significant subassemblies and
components for other commercial aircraft, including the Boeing 777 jetliner.

The Company was founded in 1939 and reincorporated in 1985 in Delaware. The
Company's executive offices are located at 1840 Century Park East, Los Angeles,
California 90067 and its telephone number is (310) 553-6262.

STRATEGY

The Company is transforming itself from being primarily an aircraft
designer/manufacturer to an electronics and systems integration company with a
leading airframe and aerostructures business. In early 1994, the Company
significantly expanded its electronics business with the acquisition of Grumman.
In March of 1996, the Company acquired ESG, a leading producer of sophisticated
electronics for defense, government and commercial applications. As a result of
these acquisitions, the Company expects that its electronics and systems
integration revenues will approximate nearly 50% of total revenues in 1996 and
that this percentage will continue to increase in the future.

The Company has also strengthened its military and commercial aircraft
segment. In 1992, the Company acquired 49% of Vought and in 1994 acquired
Grumman and the remaining 51% of Vought. These acquisitions and the Company's
internal initiatives have enabled the Company to establish a leading position in
military aircraft and commercial aerostructures. The Company believes that it
will maintain this leadership position as a result of its airframe design
experience, including stealth technology, as well as its cost-competitive
manufacturing capabilities.

ACQUISITION OF ESG

The Acquisition represents a substantial step in the Company's continuing
transformation from an aircraft designer/manufacturer to an electronics and
systems integration company with a leading aircraft and aerostructures business.
The Acquisition enables the Company to serve a larger customer base,
domestically and internationally, and is expected to provide the opportunity to
achieve revenue growth and greater cash flow stability. The Acquisition will
also enable the Company to enhance its role on important programs such as E-8
Joint STARS and BAT, and to expand its business into the areas of air traffic
control and anti-submarine warfare systems.

DIVISIONS

The Company is organized into five operating divisions: Military Aircraft
Systems Division; Electronic Sensors and Systems Division; Electronics and
Systems Integration Division; Commercial Aircraft Division; and Data Systems and
Services Division. In addition, the Company's Advanced Technology and
Development Center provides product development and technology functions for all
of the operating divisions, drawing on technologies and skills in each of the
divisions.

MILITARY AIRCRAFT SYSTEMS DIVISION

The Military Aircraft Systems Division is responsible for the development
and manufacture of several types of military aircraft. The Company is the prime
contractor for the B-2, a strategic, long-range, large payload bomber with
advanced stealth technology that is capable of operating at both high and low
altitudes. The B-2 is able to penetrate the most sophisticated air-defenses and
is capable of responding more quickly, from greater distances and with more
accurate firepower than any other U.S. aircraft.

The Company is currently under contract to provide 20 operational and one
test B-2 aircraft. All 21 aircraft are fully funded. To date, the Company has
delivered six test aircraft and 11 of 15 production aircraft. At least five out
of the six test aircraft will be refurbished to an operational configuration and
delivered to the U.S. Air Force. The Clinton Administration has announced its
intent, and the Company has been asked to provide a proposal, to refurbish the
remaining test aircraft for subsequent delivery to the U.S. Air Force as an
operational vehicle. The U.S. Air Force currently operates a squadron of 10 B-2s
at Whiteman Air Force Base in Missouri. In addition, the B-2 program is expected
to generate maintenance and support revenues upon completion of production.
While the Company continues to seek funding for additional B-2s, there is no
assurance that such funding will be available.

The Company is the prime or principal subcontractor on all of the U.S.
Navy's carrier-based fighter, attack and early warning aircraft, including the
F/A-18. For more than two decades the Company has been teamed with prime
contractor McDonnell Douglas on the F/A-18 program. The F/A-18C/D Hornet is the
U.S. Navy's primary strike/attack aircraft and is deployed by the Navy from
aircraft carriers and by the Marines from air bases. In total, more than 1,300
F/A-18 Hornets have been delivered to the U.S. and to certain foreign
governments. The Company produces approximately 40% of each F/A-18C/D Hornet,
including the center and aft fuselage, twin vertical tails and all associated
subsystems. The Company is also the principal subcontractor on the U.S. Navy's
newest combat aircraft, the F/A-18E/F Super Hornet, which successfully completed
its first test flight in November 1995. The F/A-18E/F Super Hornet has greater
range and payload, more powerful engines and more advanced avionics and weapon
systems than the F/A-18C/D Hornet. The Company will also produce approximately
40% of each F/A-18E/F Super Hornet. The first production deliveries are
scheduled to begin in 1999, with initial operating capability expected in 2001.

Modification and enhancement of existing airborne platforms has become an
important part of the military aircraft market. With U.S. and foreign defense
planners seeking modern systems at affordable costs, upgrading existing aircraft
can be an attractive alternative to the purchase of new aircraft. The Company
provides a broad array of aircraft upgrade, modification, overhaul and support
services for several operational aircraft, including the F-5, T-38, F-14, C-2
and A-10. The Company is also responsible for remanufacturing Boeing 707
aircraft as the platform for the Company's E-8 Joint STARS program, for
structural enhancements of the EA-6B Prowler and for airframe upgrades of the
E-2C Hawkeye.

ELECTRONIC SENSORS AND SYSTEMS DIVISION

The Electronic Sensors and Systems Division ("ESSD") represents the acquired
business of ESG. ESSD has a diversified portfolio of programs with no single
program accounting for more than 10% of revenues in 1995. Approximately one-half
of ESSD's 1995 revenues were attributable to radar technology applied to
surveillance, fire control, air traffic control and other purposes. ESSD also
designs and manufactures other avionics products, electro-optical systems,
underseas and marine products and material handling systems.

With its state-of-the-art surveillance and imaging technologies, ESSD has
gained significant positions on a wide variety of high priority platforms for
the DOD and certain foreign governments. ESSD produces radars and electronics
for military aircraft and battlespace management systems, including those for
the F-16 fighter, Apache Longbow helicopter, B-1B bomber, C-130 transport and
E-3 AWACS and E-8 Joint STARS surveillance aircraft.

ESSD's products are also present on numerous development programs such as
the F-22 fighter and the Comanche helicopter. Should budget pressures force the
stretch-out of these next generation programs, ESSD is expected to benefit from
an increased demand for electronic upgrades and retrofits to existing aircraft.
For example, ESSD is currently providing mid-life fire control radar upgrades
for the F-16.

ESSD is also a leading supplier of air traffic control radars to the U.S.
Federal Aviation Administration and to countries in Europe, the Middle East,
Africa, Asia and South America. ESSD is the prime contractor on the ASR-9
terminal radar system which detects and displays aircraft and weather conditions
simultaneously, helping air traffic controllers guide aircraft through
traffic-dense regions surrounding airports. The international air traffic
control market is expected to increase significantly, due in large part to the
growth of international air traffic and infrastructure development in Asia and
Eastern Europe. The Company believes that ESSD is well positioned to benefit
from this anticipated growth in the international air traffic control market.
ESSD also develops electronic countermeasures, tactical communication equipment,
space products and underseas and marine technologies, including anti-submarine
combat systems, surface ship propulsion and power generation equipment.

International sales are also an increasingly important component of ESSD's
military electronics business. The F-16 radar system, ESSD's longest running
program, is installed in the F-16s of 23 countries. In addition to the F-16,
many other DOD weapon systems with ESSD subsystems, such as the E-3 AWACS
surveillance aircraft and the AH-64 Apache helicopter, have been sold
internationally.

ELECTRONICS AND SYSTEMS INTEGRATION DIVISION

The Electronics and Systems Integration Division manages major electronics
systems programs. The Company is the overall systems integrator and prime
contractor for the E-8 Joint STARS, the U.S. military's primary airborne radar
system which is designed to provide real-time detection, location,
classification and tracking of hostile moving and stationary ground targets. The
surveillance capabilities of the E-8 Joint STARS will enable it to be a critical
part of future battle management systems. The E-8 Joint STARS program is in
limited production and funding has been approved for the first six E-8 Joint
STARS production aircraft (designated the E-8C). One aircraft has been
delivered, a second is expected to be delivered in 1996 and the remaining four
aircraft are scheduled to be delivered in 1997 and 1998. The Company believes
that U.S. government support for the E-8 Joint STARS program is strong, due in
part to successful tests and operational activity of prototype aircraft in
combat conditions in the Persian Gulf and Bosnia. The U.S. government has
approved the sale of E-8 Joint STARS aircraft to NATO, although no such
purchases have been committed to or funded.

The Company is the prime contractor for the E-2C Hawkeye, the U.S. Navy's
principal early warning, command and control aircraft. The E-2C Hawkeye is
designed for missions such as air defense, strike control, air traffic control
and search and rescue. The U.S. Navy recently received approval for a program of
36 E-2C aircraft, of which seven are under contract for delivery during 1997 and
1998. The Company is also involved with the Navy's upgrade program for existing
E-2C aircraft. In response to upgraded threat

capabilities, the U.S. Navy continues to plan additional E-2C avionics
improvements including data processing and capacity increases, passive detection
systems, radar anti-jamming improvements, tactical program updates and jam
resistant communication systems.

The Company is the prime contractor on the BAT "Brilliant" self-guided
submunition program under development for the U.S. Army. This weapon may be
carried by a variety of air vehicles and is designed to autonomously locate,
attack and destroy tanks, armored vehicles and other mobile targets by using
acoustic and infrared sensors working in combination with a high speed onboard
computer. Prototype manufacture began in 1992, and the BAT is now in a testing
phase to verify that the system meets all established requirements.

COMMERCIAL AIRCRAFT DIVISION

The Commercial Aircraft Division is one of the world's leading suppliers of
aerostructures, as well as a major supplier of aircraft components for
commercial and military use. The Company manufactures the fuselage and the tail
section for the Boeing 747, the tail section for the Boeing 757 and 767, various
other components for the Boeing 757, 767 and 777 and major subassemblies
(including the tail section) for the McDonnell Douglas C-17 military transport.
In April 1995, the Company entered into an agreement with Boeing to continue
production of the major sections of the 747, 757 and 767 aircraft into the next
century. The Company also produces wings for the new Gulfstream V ("G-V")
business jet program and components for other aircraft. The G-V's first flight
was in November 1995, and aircraft deliveries to customers are expected to begin
in January 1997.

While the Company's commercial aircraft deliveries declined in 1995 compared
to 1994, the three leading jet-airliner manufacturers collectively recorded
substantially increased orders for new aircraft in 1995 compared to 1994.
Boeing, the Company's largest customer for commercial aerostructures, announced
in December 1995 and March 1996, planned increases in production rates for 1996
and 1997 for its 747, 767 and 777 models and a return to current levels of
production in the second quarter of 1997 for its 757 model following a reduction
in the fourth quarter of 1996. The Boeing labor strike, settled in January 1996,
will cause some deliveries scheduled for 1996 to be made in 1997. The Company
has made substantial investments in productivity improvements and capital
equipment to further improve its competitive position in the growing commercial
aerostructure marketplace.

DATA SYSTEMS AND SERVICES DIVISION

The Data Systems and Services Division provides data processing system
services for external customers as well as the Company's various divisions.
Included among these services are space station program support services, flight
simulator maintenance services and the development of data processing systems
for a wide variety of U.S. Government entities and applications. The Division
also provides operational and support services to U.S. Air Force bases, an area
of potential growth if the U.S. Government increases the outsourcing of
maintenance and support activities.

DESCRIPTION OF CAPITAL STOCK

AUTHORIZED CAPITAL STOCK

Under the Company's Certificate of Incorporation, the total number of shares
of stock which the Company has authority to issue is 210,000,000, consisting of
200,000,000 shares of Common Stock, par value $1.00 per share, and 10,000,000
shares of Preferred Stock, $1.00 par value per share. As of May 30, 1996,
49,638,407 shares of Common Stock were issued and outstanding, not including
shares reserved for issuance under the Company's stock plans. No shares of
Preferred Stock were issued and outstanding on such date. The Common Stock is
listed on the New York Stock Exchange and the Pacific Stock Exchange.

PREFERRED STOCK

Under the Company's Certificate of Incorporation, the Board of Directors of
the Company is authorized, without further stockholder action, to provide for
the issuance of Preferred Stock in one or more series, with such designations of
titles, dividend rates, redemption provisions, special or relative rights in the
event of liquidation, dissolution, distribution or winding up of the Company,
sinking fund provisions, conversion provisions, voting rights, and any other
preferences, privileges, powers, rights, qualifications, limitations and
restrictions, as shall be set forth as and when established by the Board of
Directors of the Company.

DESCRIPTION OF COMMON STOCK

The holders of Common Stock are entitled to receive such dividends as may be
declared from time to time by the Board of Directors out of funds legally
available therefor subject to restrictions on the declaration of dividends on
the Common Stock which may be imposed in connection with the issuance of shares
of any class or series of Preferred Stock. The Company's principle credit
agreement contains provisions restricting dividends and other distributions and
the purchase or redemption of shares of Common Stock under certain
circumstances. Except as otherwise provided by law, the holders of Common Stock
are entitled to one vote per share on all matters submitted to a vote of
stockholders and do not have cumulative voting rights. Holders of Common Stock
are entitled to receive, upon any liquidation of the Company, all remaining
assets available for distribution to stockholders after satisfaction of the
Company's liabilities and the preferential rights of any Preferred Stock that
may then be issued and outstanding. The outstanding shares of Common Stock are,
and the shares offered hereby will be, upon payment therefore by the purchasers
thereof, fully paid and nonassessable. The holders of Common Stock have no
preemptive, conversion or redemption rights. The registrar and transfer agent
for the Common Stock is ChaseMellon Shareholder Services L.L.C., New York.

COMMON STOCK PURCHASE RIGHTS

In 1988, the Company's Board of Directors authorized the distribution of one
Common Stock Purchase Right (a "Right") for each outstanding share of Common
Stock.

As distributed, the Rights trade together with the Common Stock. They may be
exercised or traded separately 10 business days after a person or group of
persons acquires 15% or more of the outstanding Common Stock, or announces the
intention to make a tender offer for 30% or more of the Company's outstanding
Common Stock. Upon exercise, each Right entitles the holder thereof to buy one
share of Common Stock at a price of $105. If a Person acquires 15% of the
outstanding voting power of the Company, each Right (other than those held by
the acquiror) will entitle its holder to purchase, at the Right's exercise
price, shares of Common Stock having a market value of two times the Right's
exercise price. Additionally, if the Company is acquired in a merger or other
business combination, each Right (other than those held by the surviving or
acquiring company) will entitle its holder to purchase, at the Right's exercise
price, shares of the acquiring company's common stock (or Common Stock of the
Company if it is the surviving corporation) having a market value of two times
the Right's exercise price.

Rights may be redeemed at the option of the Board of Directors for $.02 per
Right at any time prior to the earlier of the expiration of the Rights or the
date that a person or persons acquire 15% of the general voting power of the
Company. The Board may amend the Rights at any time without stockholder
approval. The Rights will expire by their terms in October 1998.

CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
FOR NON-UNITED STATES HOLDERS

The following is a general discussion of certain United States federal
income and estate tax consequences of the ownership and disposition of Common
Stock by a holder of such stock that, for United States federal income tax
purposes, is not a "United States person" (a "Non-United States Holder"). This
discussion is not intended to be exhaustive and is based on statutes,
regulations, rulings and court decisions as currently in effect all of which may
be changed either retroactively or prospectively. This discussion does not
consider any specific facts or circumstances that may apply to a particular
Non-United States Holder (including, for example, the fact that, in the case of
a Non-United States Holder that is a partnership, the U.S. tax consequences of
purchasing, holding and disposing of Common Stock may be affected by
determinations made both at the partnership and the partner level) and applies
only to Non-United States Holders that hold Common Stock as a capital asset.
PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE
UNITED STATES FEDERAL TAX CONSEQUENCES OF ACQUIRING, HOLDING AND DISPOSING OF
COMMON STOCK (INCLUDING SUCH INVESTOR'S STATUS AS A UNITED STATES PERSON OR
NON-UNITED STATES HOLDER) AS WELL AS ANY TAX CONSEQUENCES THAT MAY ARISE UNDER
THE LAWS OF ANY STATE, MUNICIPALITY OR OTHER TAXING JURISDICTION.

For purposes of this discussion, "United States person" means a citizen or
resident of the United States, a corporation or partnership created or organized
in the United States or under the laws of the United States or of any political
subdivision thereof, or an estate or trust whose income is includable in gross
income for United States federal income tax purposes regardless of its source.
An alien individual generally is treated as a United States person for any
calendar year if either (i) the individual is present in the United States 183
days or more during such calendar year or (ii) the individual is present in the
United States at least 31 days during such calendar year and the sum of the
number of days present during such calendar year, one-third the number of days
present during the first preceding year and one-sixth the number of days present
during the second preceding year is 183 or more.

DIVIDENDS

Dividends paid to a Non-United States Holder generally will be subject to
withholding of United States federal income tax at the rate of 30%, unless the
withholding rate is reduced under an applicable income tax treaty between the
United States and the country of tax residence of the Non-United States Holder.
No U.S. withholding will apply if the dividend is effectively connected with a
trade or business conducted within the United States by the Non-United States
Holder (or, alternatively, where an income tax treaty applies, if the dividend
is effectively connected with a permanent establishment maintained within the
United States by the Non-United States Holder), but, instead, the dividend will
be subject to the United States federal income tax on net income that applies to
United States persons (and, with respect to corporate holders, may also be
subject to the branch profits tax). A Non-United States Holder may be required
to satisfy certain certification requirements in order to claim treaty benefits
or to otherwise claim a reduction of or exemption from withholding under the
foregoing rules. A Non-United States Holder that is eligible for a reduced rate
of U.S. withholding tax pursuant to a tax treaty may obtain a refund of any
excess amounts currently withheld by filing an appropriate claim for refund with
the United States Internal Revenue Service (the "Service").

GAIN ON DISPOSITION

Subject to special rules described below, a Non-United States Holder will
generally not be subject to United States federal income tax on gain recognized
on a sale or other disposition of Common Stock unless the gain is effectively
connected with a trade or business conducted within the United States by the
Non-United States Holder (or, alternatively, where an income tax treaty applies,
unless the gain is effectively connected with a permanent establishment
maintained within the United States by the Non-United States Holder). Any such
effectively connected gain would be subject to the United States federal income
tax on net income that applies to United States persons (and, with respect to
corporate holders, may also be subject to the branch profits tax). Such tax is
not collected by withholding.

In addition, an individual Non-United States Holder who holds Common Stock
would generally be subject to tax at a 30% rate on any gain recognized on the
disposition of such Common Stock if such individual is present in the United
States for 183 days or more in the taxable year of disposition and either (i)
has a "tax home" in the United States (as specifically defined for purposes of
the United States federal income tax) or (ii) maintains an office or other fixed
place of business in the United States and the income from the sale of the stock
is attributable to such office or other fixed place of business. Individual Non-
United States Holders may also be subject to tax pursuant to provisions of
United States federal income tax law applicable to certain United States
expatriates.

Also, special rules apply to Non-United States Holders if the Company is or
becomes a "United States real property holding corporation" for United States
federal income tax purposes. The Company believes that it has not been, is not
currently, and is not likely to become, a United States real property holding
corporation. If the Company were a United States real property holding
corporation, gain or loss on a sale of the Common Stock by any Non-United States
Holder (other than, in most cases, a Non-United States Holder that owns or owned
(directly or constructively) 5% or less of the Common Stock during the five-year
period ending on the date of such sale) would be treated as income effectively
connected with the conduct of a trade or business within the United States by
the holder and subject to the net income tax described above.

UNITED STATES FEDERAL ESTATE TAXES

Common Stock owned or treated as owned by an individual who is not a citizen
or resident (as specially defined for United States federal estate tax purposes)
of the United States at the date of death, or Common Stock subject to certain
lifetime transfers made by such an individual, will be included in such
individual's estate for United States federal estate tax purposes and may be
subject to United States federal estate tax, unless an applicable estate tax
treaty provides otherwise. Estates of nonresident aliens are generally allowed a
credit that is equivalent to an exclusion of $60,000 of assets from the estate
for United States federal estate tax purposes.

INFORMATION REPORTING AND BACKUP WITHHOLDING

The Company must report annually to the Service and to each Non-United
States Holder the amount of dividends paid to, and the tax withheld with respect
to, such holder, regardless of whether any tax was actually withheld. That
information may also be made available to the tax authorities of the country in
which a Non-United States Holder resides.

United States federal backup withholding tax (which, generally, is imposed
at the rate of 31% on certain payments to persons not otherwise exempt who fail
to furnish information required under United States information reporting
requirements) generally will not apply to dividends paid to a Non-United States
Holder either at an address outside the United States (provided that the payor
does not have actual knowledge that the payee is a United States person) or if
the dividends are subject to withholding at the 30% rate (or lower treaty rate).
As a general matter, information reporting and backup withholding also will not
apply to a payment of the proceeds of a sale of Common Stock by a foreign office
of a broker. However, information reporting requirements (but not backup
withholding) will apply to a payment of the proceeds of a sale of Common Stock
by a foreign office of a broker that is a United States person, or by a foreign
office of a foreign broker that derives 50% or more of its gross income for
certain periods from the conduct of a trade or business in the United States, or
that is a "controlled foreign corporation" as to the United States, unless the
broker has documentary evidence in its records that the holder is a Non-United
States Holder and certain conditions are met, or the holder otherwise
establishes an exemption. Payment by a United States office of a broker of the
proceeds of a sale of Common Stock is subject to both backup withholding and
information reporting unless the holder certifies as to its non-United States
status under penalties of perjury or otherwise establishes an exemption (and the
broker has no actual knowledge to the contrary.) The backup withholding tax is
not an additional tax and may be credited against the Non-United States Holder's
United States federal income tax liability or refunded to the extent excess
amounts are withheld, provided that the required information is supplied to the
Service.

NEW PROPOSED REGULATIONS

The United States Treasury recently proposed new regulations regarding the
withholding and information reporting rules discussed above. Among other
changes, the proposed regulations would unify certification forms and
procedures, require certification of residence to claim treaty benefits, and
clarify reliance standards and make other changes affecting withholding agents
and intermediaries. If finalized in their current form, the proposed regulations
would generally be effective for payments made after December 31, 1997, subject
to certain transition rules.

UNDERWRITING

Under the terms and subject to the conditions contained in an Underwriting
Agreement dated June 3, 1996 (the "U.S. Underwriting Agreement"), the
underwriters named below (the "U.S. Underwriters"), for whom CS First Boston
Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Salomon
Brothers Inc are acting as representatives (the "Representatives"), have
severally and not jointly agreed to purchase from the Company the following
respective numbers of U.S. Shares:

NUMBER OF
U.S. UNDERWRITER U.S. SHARES
- -------------------------------------------------------------------------------- ------------

CS First Boston Corporation..................................................... 1,400,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.......................................................... 1,400,000
Salomon Brothers Inc............................................................ 1,400,000
Bear, Stearns & Co. Inc. ....................................................... 175,000
BT Securities Corporation....................................................... 175,000
Cowen & Company................................................................. 175,000
Deutsche Morgan Grenfell/C.J. Lawrence Inc. .................................... 175,000
Goldman, Sachs & Co. ........................................................... 175,000
Lehman Brothers Inc. ........................................................... 175,000
J.P. Morgan Securities Inc. .................................................... 175,000
Oppenheimer & Co., Inc. ........................................................ 175,000
PaineWebber Incorporated........................................................ 175,000
Scotia Capital Markets (USA) Inc. .............................................. 175,000
------------
Total....................................................................... 5,950,000
------------
------------

The U.S. Underwriting Agreement provides that the obligations of the U.S.
Underwriters are subject to certain conditions precedent and that the U.S.
Underwriters will be obligated to purchase all of the U.S. Shares offered hereby
(other than those shares covered by the overallotment option described below) if
any are purchased. The U.S. Underwriting Agreement provides that, in the event
of a default by a U.S. Underwriter, in certain circumstances the purchase
commitments of non-defaulting U.S. Underwriters may be increased or the U.S.
Underwriting Agreement may be terminated.

The Company has entered into a Subscription Agreement (the "Subscription
Agreement") with the Managers of the International Offering (the "Managers")
providing for the concurrent offer and sale of the International Shares outside
the United States and Canada. The closing of the U.S. Offering is a condition to
the closing of the International Offering and vice versa.

The Company has granted to the U.S. Underwriters and the Managers an option,
exercisable by CS First Boston Corporation, expiring at the close of business on
the thirtieth (30th) day after the date of this Prospectus, to purchase up to
1,050,000 additional shares at the initial public offering price, less the
underwriting discounts or commissions, all as set forth on the cover page of
this Prospectus. Such option may be exercised only to cover over-allotments in
the sale of the Common Stock offered hereby. To the extent that this option to
purchase is exercised, each U.S. Underwriter and each Manager will become
obligated, subject to certain conditions, to purchase approximately the same
percentage of additional shares being sold to the U.S. Underwriters and the
Managers as the number of U.S. Shares set forth next to such U.S. Underwriter's
name in the preceding table and as the number of International Shares set forth
next to such Manager's name in the corresponding table in the prospectus
relating to the International Offering bears to the sum of the total number of
shares of Common Stock in such tables.

The Company has been advised by the Representatives that the U.S.
Underwriters propose to offer the U.S. Shares to the public in the United States
and Canada initially at the offering price set forth on the cover page of this
Prospectus and, through the Representatives, to certain dealers at such price
less a concession of $1.20 per share, and the U.S. Underwriters and such dealers
may allow a discount of $.10 per share on sales to certain other dealers. After
the initial public offering, the public offering price and concession and
discount to dealers may be changed by the Representatives.

The public offering price and the aggregate underwriting discounts and
commissions per share and per share concession and discount to dealers for the
U.S. Offering and the concurrent International Offering will be identical.
Pursuant to an Agreement between the U.S. Underwriters and the Managers (the
"Intersyndicate Agreement") relating to the Offerings, changes in the public
offering price, concession and discount to dealers will be made only upon mutual
agreement of CS First Boston Corporation, as representative of the U.S.
Underwriters, and CS First Boston Limited ("CSFBL") on behalf of the Managers.

Pursuant to the Intersyndicate Agreement, each of the U.S. Underwriters has
agreed that, as part of the distribution of the U.S. Shares and subject to
certain exceptions, it has not offered or sold, and will not offer or sell,
directly or indirectly, any shares of Common Stock or distribute any prospectus
relating to the Common Stock to any person outside the United States or Canada
or to any other dealer who does not so agree. Each of the Managers has agreed or
will agree that, as part of the distribution of the International Shares and
subject to certain exceptions, it has not offered or sold, and will not offer or
sell, directly or indirectly, any shares of Common Stock or distribute any
prospectus relating to the Common Stock in the United States or Canada or to any
dealer who does not so agree. The foregoing limitations do not apply to
stabilization transactions or to transactions between the U.S. Underwriters and
the Managers pursuant to the Intersyndicate Agreement. As used herein, "United
States" means the United States of America (including the States and the
District of Columbia), its territories, possessions and other areas subject to
its jurisdiction, "Canada" means Canada, its provinces, territories, possessions
and other areas subject to its jurisdiction, and an offer or sale shall be in
the United States or Canada if it is made to (i) any individual resident of the
United States or Canada or (ii) any corporation, partnership, pension,
profit-sharing or other trust or other entity (including any such entity acting
as an investment advisor with discretionary authority) whose office most
directly involved with the purchase is located in the United States or Canada.

Pursuant to the Intersyndicate Agreement, sales may be made between the U.S.
Underwriters and the Managers of such number of shares of Common Stock as may be
mutually agreed upon. The price of any shares so sold will be the public
offering price, less such amount as may be mutually agreed upon by CS First
Boston Corporation, as representative of the U.S. Underwriters, and CSFBL, on
behalf of the Managers, but such amount will not exceed the selling concession
applicable to such shares. To the extent there are sales between the U.S.
Underwriters and the Managers pursuant to the Intersyndicate Agreement, the
number of shares of Common Stock initially available for sale by the U.S.
Underwriters or by the Managers may be more or less than the amount appearing on
the cover page of this Prospectus. Neither the U.S. Underwriters nor the
Managers are obligated to purchase from the other any unsold shares of Common
Stock.

The Company has agreed that it will not offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, or file with the
Securities and Exchange Commission a registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), relating to any additional
shares of its Common Stock or securities convertible into or exchangeable or
exercisable for any shares of its Common Stock, or publicly disclose the
intention to make any such offer, sale, pledge, disposal or filing, without the
prior written consent of CS First Boston Corporation for a period of 90 days
after the date of this Prospectus, except for issuances of Common Stock pursuant
to the conversion or exchange of convertible or exchangeable securities or the
exercise of warrants, rights or options in each case outstanding as of the date
of this Prospectus, grants of employee stock options or rights pursuant to a
plan in effect on the date of this Prospectus, issuances pursuant to the
exercise of such options or rights, issuances pursuant to the Company's dividend
reinvestment plan as in effect on the date of this Prospectus, and any filing of
a registration statement under the Securities Act with respect to any of the
foregoing permitted issuances or grants.

The Company has agreed to indemnify the U.S. Underwriters and the Managers
against certain liabilities, including civil liabilities under the Securities
Act, or to contribute to payments that the U.S. Underwriters and the Managers
may be required to make in respect thereof.

Certain of the U.S. Underwriters and Managers and their affiliates have from
time to time performed, and continue to perform, various investment banking and
commercial banking services for the Company, for which customary compensation
has been received.

NOTICE TO CANADIAN RESIDENTS

RESALE RESTRICTIONS

The distribution of the Common Stock in Canada is being made only on a
private placement basis exempt from the requirement that the Company prepare and
file a prospectus with the securities regulatory authorities in each province
where trades of the Common Stock are effected. Accordingly, any resale of the
Common Stock in Canada must be made in accordance with applicable securities
laws which will vary depending on the relevant jurisdiction, and which may
require resales to be made in accordance with available statutory exemptions or
pursuant to a discretionary exemption granted by the applicable Canadian
securities regulatory authority. Purchasers are advised to seek legal advice
prior to any resale of the Common Stock.

REPRESENTATIONS OF PURCHASERS

Each purchaser of Common Stock in Canada who receives a purchase
confirmation will be deemed to represent to the Company and the dealer from whom
such purchase confirmation is received that (i) such purchaser is entitled under
applicable provincial securities laws to purchase such Common Stock without the
benefit of a prospectus qualified under such securities laws, (ii) where
required by law, that such purchaser is purchasing as principal and not as
agent, and (iii) such purchaser has reviewed the text above under "Resale
Restrictions."

RIGHTS OF ACTION AND ENFORCEMENT

The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
the civil liability provisions of the U.S. federal securities laws.

All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Ontario purchasers to effect service of process within Canada upon the
issuer or such persons. All or a substantial portion of the assets of the issuer
and such persons may be located outside of Canada and, as a result, it may not
be possible to satisfy a judgment against the issuer or such persons in Canada
or to enforce a judgment obtained in Canadian courts against such issuer or
persons outside of Canada.

NOTICE TO BRITISH COLUMBIA RESIDENTS

A purchaser of Common Stock to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
shares of Common Stock acquired by such purchaser pursuant to this Offering.
Such report must be in the form attached to British Columbia Securities
Commission Blanket Order BOR #95/17, a copy of which may be obtained from the
Company. Only one such report must be filed in respect of shares of Common Stock
acquired on the same date and under the same prospectus exemption.

EXPERTS

The consolidated financial statements of the Company as of December 31,
1995, 1994, 1993, 1992 and 1991, and for each of the five years in the period
ended December 31, 1995 incorporated by reference from the Company's Annual
Report on Form 10-K for the year ended December 31, 1995, have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.

The combined financial statements of Electronic Systems (a unit of
Westinghouse Electric Corporation) incorporated in this Prospectus by reference
to the Current Report on Form 8-K/A of the Company dated May 31, 1996 have been
so incorporated in reliance on the report of Price Waterhouse LLP, independent
accountants, given upon the authority of said firm as experts in accounting and
auditing.

LEGAL MATTERS

The validity of the issuance of the shares of Common Stock and certain other
legal matters related to the Offerings will be passed upon for the Company by
Sheppard, Mullin, Richter & Hampton LLP, Los Angeles, California. Latham &
Watkins, Los Angeles, California, will pass on certain legal matters for the
U.S. Underwriters and Managers.

- -------------------------------------------
-------------------------------------------

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER OR MANAGER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.

--------------

TABLE OF CONTENTS

PAGE
-----

Forward Looking Statements..................... 2
Available Information.......................... 2
Incorporation of Certain Documents by
Reference..................................... 3
Prospectus Summary............................. 4
Use of Proceeds................................ 9
Capitalization................................. 9
Price Range of Common Stock and Dividends...... 10
Selected Consolidated Financial Data........... 11
Unaudited Pro Forma Condensed Combined
Financial Data................................ 12
The Company.................................... 16
Description of Capital Stock................... 21
Certain United States Federal Tax Consequences
For Non-United States Holders................. 22
Underwriting................................... 25
Notice to Canadian Residents................... 27
Experts........................................ 27
Legal Matters.................................. 28

NORTHROP GRUMMAN

7,000,000 Shares

Common Stock
($1.00 PAR VALUE)

P R O S P E C T U S

CS First Boston
Merrill Lynch & Co.
Salomon Brothers Inc

- -------------------------------------------
-------------------------------------------

7,000,000 Shares

NORTHROP GRUMMAN
Common Stock
($1.00 PAR VALUE)

--------------

ALL OF THE SHARES OF COMMON STOCK, PAR VALUE $1.00 PER SHARE ("COMMON STOCK"),
OF NORTHROP GRUMMAN CORPORATION (THE "COMPANY") OFFERED HEREBY ARE BEING SOLD
BY THE COMPANY. OF THE 7,000,000 SHARES OF COMMON STOCK BEING OFFERED,
1,050,000 SHARES ARE INITIALLY BEING OFFERED OUTSIDE THE UNITED STATES AND
CANADA (THE "INTERNATIONAL SHARES") BY THE MANAGERS (THE "INTERNATIONAL
OFFERING") AND 5,950,000 SHARES ARE INITIALLY BEING CONCURRENTLY
OFFERED IN THE UNITED STATES AND CANADA (THE "U.S. SHARES") BY THE
U.S. UNDERWRITERS (THE "U.S. OFFERING" AND, TOGETHER WITH THE
INTERNATIONAL OFFERING, THE "OFFERINGS"). THE OFFERING PRICE AND
UNDERWRITING DISCOUNTS AND COMMISSIONS OF THE INTERNATIONAL
OFFERING AND THE U.S. OFFERING ARE IDENTICAL.

--------------

UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS COMPANY(1)
----------------- ----------------- -----------------

PER SHARE............................................. $63.25 $1.97 $61.28
TOTAL (2)............................................. $442,750,000 $13,790,000 $428,960,000

(1) BEFORE DEDUCTION OF EXPENSES PAYABLE BY THE COMPANY, ESTIMATED AT $700,000.

(2) THE COMPANY HAS GRANTED THE MANAGERS AND THE U.S. UNDERWRITERS AN OPTION,
EXERCISABLE BY CS FIRST BOSTON CORPORATION FOR THIRTY (30) DAYS FROM THE
DATE OF THIS PROSPECTUS TO PURCHASE A MAXIMUM OF 1,050,000 ADDITIONAL SHARES
TO COVER OVER-ALLOTMENTS OF SHARES. IF THE OPTION IS EXERCISED IN FULL, THE
TOTAL PRICE TO PUBLIC WILL BE $509,162,500, UNDERWRITING DISCOUNTS AND
COMMISSIONS WILL BE $15,858,500 AND PROCEEDS TO COMPANY WILL BE
$493,304,000.

THE INTERNATIONAL SHARES ARE OFFERED BY THE SEVERAL MANAGERS WHEN, AS AND IF
ISSUED BY THE COMPANY, DELIVERED TO AND ACCEPTED BY THE MANAGERS AND SUBJECT TO
THEIR RIGHT TO REJECT ORDERS IN WHOLE OR IN PART. IT IS EXPECTED THAT THE
INTERNATIONAL SHARES WILL BE READY FOR DELIVERY ON OR ABOUT JUNE 7, 1996,
AGAINST PAYMENT IN IMMEDIATELY AVAILABLE FUNDS.

CS First Boston Merrill Lynch International

Salomon Brothers International Limited

Credit Lyonnais Securities Deutsche Morgan Grenfell

NatWest Securities Limited Societe Generale

THE DATE OF THIS PROSPECTUS IS JUNE 3, 1996.

FORWARD LOOKING STATEMENTS

TABLE OF CONTENTS

PAGE
-----

Forward Looking Statements..................... 2
Available Information.......................... 3
Incorporation of Certain Documents by
Reference..................................... 3
Prospectus Summary............................. 4
Use of Proceeds................................ 9
Capitalization................................. 9
Price Range of Common Stock and Dividends...... 10
Selected Consolidated Financial Data........... 11

PAGE
-----

Unaudited Pro Forma Condensed Combined
Financial Data................................ 12
The Company.................................... 16
Description of Capital Stock................... 21
Certain United States Federal Tax Consequences
For Non-United States Holders................. 22
Subscription and Sale.......................... 25
Experts........................................ 27
Legal Matters.................................. 27

AVAILABLE INFORMATION

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Company has filed with the Commission, pursuant to Section 13 of the
Exchange Act:

(i) an Annual Report on Form 10-K for the year ended December 31, 1995;

(ii) a Current Report on Form 8-K filed March 18, 1996, as amended on
Form 8-K/A dated May 31, 1996;

(iii) a Quarterly Report on Form 10-Q for the quarter ended March 31,
1996;

(iv) a description of the Common Stock of the Company set forth in a
Registration Statement on Form 8-B dated June 20, 1985; and

which are hereby incorporated by reference in and made a part of this
Prospectus.

In this Prospectus, references to "dollars" and "$" are to United States
dollars.

SUBSCRIPTION AND SALE

The Institutions named below (the "Managers"), have, pursuant to a
Subscription Agreement dated June 3, 1996 (the "Subscription Agreement"),
severally but not jointly agreed to subscribe and pay for, the following
respective numbers of International Shares as set forth opposite their names:

NUMBER OF
INTERNATIONAL
MANAGER SHARES
- -------------------------------------------------------------------------------- ------------

CS First Boston Limited......................................................... 450,000
Merrill Lynch International..................................................... 200,000
Salomon Brothers International Limited.......................................... 200,000
Credit Lyonnais Securities...................................................... 50,000
Morgan Grenfell & Co. Limited................................................... 50,000
NatWest Securities Limited...................................................... 50,000
Societe Generale................................................................ 50,000
------------
Total....................................................................... 1,050,000
------------
------------

The Subscription Agreement provides that the obligations of the Managers are
such that, subject to certain conditions precedent, the Managers will be
obligated to purchase all of the International Shares offered hereby (other than
those shares covered by the over allotment option described below) if any are
purchased. The Subscription Agreement provides that, in the event of a default
by a Manager, in certain circumstances the purchase commitments of
non-defaulting Managers may be increased or the Subscription Agreement may be
terminated.

The Company has entered into an Underwriting Agreement (the "Underwriting
Agreement") with the U.S. Underwriters of the U.S. Offering (the "U.S.
Underwriters") providing for the concurrent offer and sale of the U.S. Shares in
the United States and Canada. The closing of the U.S. Offering is a condition to
the closing of the International Offering and vice versa.

The Company has granted to the Managers and the U.S. Underwriters an option,
exercisable by CS First Boston Corporation ("CSFBC"), expiring at the close of
business on the thirtieth (30th) day after the date of this Prospectus, to
purchase up to 1,050,000 additional shares, at the initial public offering
price, less the underwriting discounts or commissions, all as set forth on the
cover page of this Prospectus. Such option may be exercised only to cover
over-allotments in the sale of the shares of Common Stock offered hereby. To the
extent that this option to purchase is exercised, each Manager and U.S.
Underwriter will become obligated, subject to certain conditions, to purchase
approximately the same percentage of additional shares being sold to the
Managers and the U.S. Underwriters as the number of International Shares set
forth next to such Manager's name in the preceding table and as the number of
U.S. Shares set forth next to such U.S. Underwriter's name in the corresponding
table in the prospectus relating to the U.S. Offering bears to the sum of the
total number of shares of Common Stock in such tables.

The Company has been advised by CS First Boston Limited ("CSFBL"), on behalf
of the Managers, that the Managers propose to offer the International Shares
outside the United States and Canada initially at the public offering price set
forth on the cover page of this Prospectus and, through the Managers, to certain
dealers at such price less a commission of $1.20 per share, and the Managers and
such dealers may allow a commission of $.10 per share on sales to certain other
dealers. After the initial public offering, the public offering price and
commission and reallowance may be changed by the Managers.

The offering price and the aggregate underwriting discounts and commissions
per share and per share commission and reallowance to dealers for the
International Offering and the concurrent U.S. Offering will be identical.
Pursuant to an Agreement between the U.S. Underwriters and the Managers (the
"Intersyndicate Agreement") relating to the Offerings, changes in the offering
price, the aggregate Underwriting discounts and commissions per share and per
share commission and reallowance to dealers, will be made only upon mutual
agreement of CSFBL, on behalf of the Managers, and CSFBC on behalf of the U.S.
Underwriters.

Pursuant to the Intersyndicate Agreement, each of the Managers has agreed
that, as part of the distribution of the International Shares and subject to
certain exceptions, it has not offered or sold, and will not offer or sell,
directly or indirectly, any shares of Common Stock or distribute any prospectus
relating to the Common Stock to any person in the United States or Canada or to
any other dealer who does not so agree. Each of the U.S. Underwriters has agreed
that, as part of the distribution of the U.S. Shares and subject to certain
exceptions, it has not offered or sold, and will not offer or sell, directly or
indirectly, any shares of Common Stock or distribute any prospectus relating to
the Common Stock to any person outside the United States or Canada or to any
dealer who does not so agree. The foregoing limitations do not apply to
stabilization transactions or to transactions between the Managers and the U.S.
Underwriters pursuant to the Intersyndicate Agreement. As used herein, "United
States" means the United States of America (including the States and the
District of Columbia), its territories and possessions and other areas subject
to its jurisdiction, "Canada" means Canada, its provinces, territories and
possessions and other areas subject to its jurisdiction, and an offer or sale
shall be in the United States or Canada if it is made to (i) any individual
resident of the United States or Canada or (ii) any corporation, partnership,
pension, profit-sharing or other trust or other entity (including any such
entity acting as an investment advisor with discretionary authority) whose
office most directly involved with the purchase is located in the United States
or Canada.

Pursuant to the Intersyndicate Agreement, sales may be made between the
Managers and the U.S. Underwriters of such number of shares of Common Stock as
may be mutually agreed upon. The price of any shares of Common Stock so sold
will be the public offering price less such amount agreed upon by CSFBL, on
behalf of the Managers, and CSFBC, as representative of the U.S. Underwriters,
but such amount will not exceed the selling concession applicable to such
shares. To the extent there are sales between the Managers and the U.S.
Underwriters pursuant to the Intersyndicate Agreement, the number of shares of
Common Stock initially available for sale by the Managers or by the U.S.
Underwriters may be more or less than the amount appearing on the cover page of
this Prospectus. Neither the Managers nor the U.S. Underwriters are obligated to
purchase from the other any unsold shares of Common Stock.

Prior to the expiry of the period of six months from the closing of the
Offerings no Common Stock may be offered or sold in the United Kingdom except to
persons whose ordinary activities involve them in acquiring, holding, managing
or disposing of investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances that have not resulted and will not
result in an offer to the public in the United Kingdom within the meaning of the
Public Offers of Securities Regulations 1995. All applicable provisions of the
Public Offers of Securities Regulations 1995 and the Financial Services Act 1986
must be complied with in respect of anything done in relation to any Common
Stock in, from or otherwise involving the United Kingdom. No document issued in
connection with the issue of any Common Stock may be issued or passed on in the
United Kingdom to a person, unless that person is of a kind described in Article
11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1995 or is a person to whom the document may otherwise
lawfully be issued or passed on. The Company has not authorized any offer of
Common Stock to the public in the United Kingdom within the meaning of the
Public Offers of Securities Regulations 1995 (the "Regulations"). The Common
Stock may not lawfully be offered or sold to persons in the United Kingdom
except in circumstances that do not result in an offer to the public in the
United Kingdom within the meaning of the Regulations or otherwise in compliance
with all applicable provisions of the Regulations.

The Company has agreed that it will not offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, or file with the
Securities and Exchange Commission a registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), relating to any additional
shares of its Common Stock or securities convertible into or exchangeable or
exercisable for any shares of its Common Stock, or publicly disclose the
intention to make any such offer, sale, pledge, disposal or filing, without the
prior written consent of CSFBC for a period of 90 days after the date of this
Prospectus, except for issuances of Common Stock pursuant to the conversion or
exchange of convertible or exchangeable securities or the exercise of warrants,
rights or options in each case outstanding as of the date of this Prospectus,
grants of employee stock options or rights pursuant to a plan in effect on the
date of this Prospectus, issuances pursuant to the exercise of such options or
rights, issuances pursuant to the Company's dividend reinvestment plan as in
effect on the date of this Prospectus, and any filing of a registration
statement under the Securities Act with respect to any of the foregoing
permitted issuances or grants.

The Company has agreed to indemnify the Managers and the U.S. Underwriters
against certain liabilities, including civil liabilities under the Securities
Act, or to contribute to payments that the Managers and the U.S. Underwriters
may be required to make in respect thereof.

Certain of the Managers and U.S. Underwriters and their affiliates have from
time to time performed, and continue to perform, various investment banking and
commercial banking services for the Company, for which customary compensation
has been received.

EXPERTS

LEGAL MATTERS