SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549
                                 FORM 10-K
                                     
(X)  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
                                     
                For the fiscal year ended December 31, 1996
                                    or
( )    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934

       For the transition period from          Commission file number
                        to                            1-3229
                                     
                       NORTHROP GRUMMAN CORPORATION
          (Exact name of registrant as specified in its charter)

         DELAWARE                                           95-1055798
(State or other jurisdiction of                       (I.R.S. Employer
 incorporation or organization)                    Identification No.)

     1840 Century Park East
     Los Angeles, California                                  90067
(Address of principal executive offices)                    (Zip Code)
                                     
     Registrant's telephone number, including area code (310) 553-6262
        Securities registered pursuant to Section 12(b) of the Act:
                                                 Name of each exchange
     Title of each class                           on which registered
      Common Stock, $1 par value               New York Stock Exchange
                                                Pacific Stock Exchange

        Securities Registered pursuant to Section 12(g) of the Act:
                                     
                                   None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.

          Yes x                                   No

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not  contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.

As of February 14, 1997, 57,972,721 shares of Common Stock were
outstanding, and the aggregate market value of the Common Stock (based upon
the closing price of the stock on the New York Stock Exchange) of the
Registrant held by nonaffiliates was approximately $4,400 million.

                    DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the 1997 Annual Meeting of
Stockholders.  Part III

NORTHROP GRUMMAN CORPORATION

                                  PART I


Item 1.  Business

     Northrop Corporation was incorporated in Delaware in 1985.  Effective
May 18, 1994, Northrop Corporation was renamed Northrop Grumman
Corporation.  Northrop Grumman is an advanced technology company operating
in the aircraft and electronics industry segments of the broadly defined
aerospace industry.  The aircraft segment includes the design, development
and manufacturing of aircraft and aircraft subassemblies. The electronics
segment includes the design, development, manufacturing and integration of
electronic systems for military and commercial use and the operation and
support of computer systems for scientific and management information.
     Additional information required by this Item is contained in Part II
Item 7 of this Annual Report on Form 10-K.














NORTHROP GRUMMAN CORPORATION

Item 2.  Properties

     The major locations, general status of the company's interest in the
property and identity of the industry segments that use the property
described, are indicated in the following table.

          Location                                 Property Interest
    Annapolis, Maryland (2) (a) (b) (c) (d)                    Owned
    Arlington, Virginia (1) (3) (a)                           Leased
    Auburn, Washington (1) (c)                                Leased
    Baltimore, Maryland (2) (b) (c) (d)                       Leased
    Benton, Pennsylvania (2) (b)                              Leased
   *Bethpage, New York  (2) (3) (a) (b) (c) (d)        Owned, Leased
    Bohemia, New York (2) (a)                          Owned, Leased
    Bridgeport, West Virginia (2) (a) (b)              Owned, Leased
    Burlington, Canada (2) (a) (b) (c) (d)                     Owned
    Calverton, New York (2) (a) (b) (c) (d) (e)                Owned
    Carson, California (1) (c)                                Leased
    Chandler, Arizona (1) (a) (b)                              Owned
    Cincinnati, Ohio (2) (b)                                  Leased
    Cleveland, Ohio (2) (b)                                    Owned
    College Station, Texas (2) (b)                             Owned
    Compton, California (1) (b) (c)                    Owned, Leased
    El Segundo, California (1) (a) (b) (c) (d)                 Owned
    Fairborn, Ohio (2) (a)                                    Leased
    Fort Tejon, California (1) (d)                     Owned, Leased
    Gardena, California (1) (c)                                Owned
    Glen Arm, Maryland (2) (b)                                 Owned
    Glen Burnie, Maryland (2) (a)                              Owned
    Grand Prairie, Texas (1) (a) (b) (c) (d)           Owned, Leased
    Great River, New York (2) (a) (b)                          Owned
    Hanover, Maryland (2) (b)                                 Leased
    Hawthorne, California (1) (2) (3) (a) (b) (c) (d)  Owned, Leased
    Herndon, Virginia (1) (2) (a)                             Leased
   *Hicksville, New York  (2) (a) (d) (e)                      Owned
    Houston, Texas (2) (a)                                    Leased
    Hunt Valley, Maryland (2) (b)                             Leased
    Kent, Washington (1) (c)                                  Leased

NORTHROP GRUMMAN CORPORATION

    Lake Charles, Louisiana (1) (a) (b) (c)                   Leased
    Lawton, Oklahoma (1) (a) (c)                       Owned, Leased
    Lexington, South Carolina (1) (a) (c)                      Owned
    Linthicom, Maryland (2) (a) (b) (c)                Owned, Leased
    Los Angeles, California (1) (2) (3) (a)                   Leased
    Melbourne, Florida (2) (a) (b) (c) (e)             Owned, Leased
    Melville, New York (2) (b)                                Leased
    Milledgeville, Georgia (1) (b) (c) (e)                     Owned
    Mojave, California (1) (e)                         Owned, Leased
    Montgomery, Pennsylvania (1) (b)                           Owned
    New Town, North Dakota (2) (b) (c)                 Owned, Leased
    Newbury Park, California (3) (a) (b) (c) (d)               Owned
    Norwalk, Connecticut (2) (a) (b) (c) (d)                  Leased
    Norwood, Massachusetts (3) (b) (c) (e)             Owned, Leased
    Orlando, Florida (2) (a) (b) (c) (d)                      Leased
    Palatine, Illinois (2) (c)                                Leased
    Palmdale, California (1) (a) (b) (c) (d) (e)       Owned, Leased
    Perry, Georgia (1) (3) (a) (b ) (c)                        Owned
    Pico Rivera, California (1) (a) (b) (c) (d)        Owned, Leased
    Pittsburgh, Pennsylvania (2) (d)                          Leased
    Portsmouth, Rhode Island (1) (b) (e)               Owned, Leased
    Rolling Meadows, Illinois (2) (a) (b)              Owned, Leased
    St. Augustine, Florida (1) (a) (b) (c) (e)         Owned, Leased
    Stuart, Florida (1) (b) (c)                               Leased
    Sturgis, Michigan (1) (a) (b) (c)                  Owned, Leased
    Sunnyvale, California (2) (a) (b) (c) (d)                  Owned
    Sykesville, Maryland (2) (b)                               Owned
    Titusville, Florida (2) (a) (d)                    Owned, Leased
    Torrance, California (1) (b) (c)                   Owned, Leased
    Tulare, California (1) (b)                                 Owned
    Warner Robins, Georgia (2) (a)                     Owned, Leased
    Warren, Michigan (1) (b)                                  Leased
__________

* Certain portions of the properties at each of these locations are leased
  or subleased to others.  The company believes that in the aggregate the
  property covered by such leases or subleased to others is not material
  compared to the property actually utilized by the company in its
  business.

NORTHROP GRUMMAN CORPORATION


Following each described property are numbers indicating the industry
segments utilizing the property:

        (1)  Aircraft
        (2)  Electronics
        (3)  General Corporate Asset

Following each described property are letters indicating the types of
facilities located at each location:

        (a)  office
        (b)  manufacturing
        (c)  warehouse
        (d)  research and testing
        (e)  other

     Government-owned facilities used or administered by the company
consist of 9 million square feet at various locations across the United
States.

     The company believes its properties are well-maintained and in good
operating condition.  Under present business conditions and the company's
volume of business, productive capacity is currently in excess of
requirements.

NORTHROP GRUMMAN CORPORATION

Item 3.  Legal Proceedings


False Claims Act Litigation

     On June 9, 1987, a Complaint, entitled U.S. ex rel, David Peterson and
Jeff Kroll v. Northrop Corporation, was filed in the U.S. District Court
for the Central District of California alleging violations by the company
of the False Claims Act in connection with the operation of petty cash
funds, inspection, testing, and pricing for the MX Peacekeeper Missile
program.  On September 1, 1989, the government intervened and reduced the
scope of the lawsuit by filing an amended complaint.  The amended complaint
did not completely specify the total amount being sought but, rather,
sought damages in excess of $1.2 million.  On May 7, 1990, the Court ruled
that the original plaintiffs could proceed with portions of the lawsuit
that the government had declined to include in the amended complaint.  In
1994, the court granted summary judgment for the company on the
government's fraud allegations related to petty cash, integrated test
stations, extended work week and experimental change orders.
     A Federal jury trial commenced in the first quarter of 1996 with
respect to the government's remaining allegations.  The relators' severed
allegations were resolved prior to trial.  The government had asserted
three separate claims totaling approximately $13.5 million, including a
claim for alleged mischarging of approximately $12 million in violation of
the False Claims Act.  Damages awarded under the False Claims Act are
subject to doubling or trebling and possible additional penalties including
disallowance of attorneys' fees.  In the second quarter of 1996, the
Federal jury returned a unanimous verdict for the company.  The
government's motion for a new trial, filed May 30, 1996, was denied on
August 16, 1996.  A notice of appeal was filed by the government on 
October 10, 1996.

NORTHROP GRUMMAN CORPORATION


     In addition, the company is a party to a number of civil actions
brought by private parties alleging violation of the False Claims Act in
which the government has declined to intervene.  These actions, which have
been previously reported, relate to the MX Peacekeeper Missile, the Air
Launched Cruise Missile and the Advanced Technology Bomber (B-2) programs.
In a number of these actions, plaintiffs also allege employment-related
claims including claims of wrongful termination.  Damages sought include
claims for compensatory and punitive damages.  A number of these civil
actions were initially reported when it was unclear what position, if any,
the government would take in the litigation.  In light of the government's
decision not to intervene or otherwise pursue the litigation, as well as
the amounts involved, the cases will not be individually reported.
Further, the company learns from time to time that it has been named as a
defendant in lawsuits that are filed under seal pursuant to the False
Claims Act.  Since these matters remain under seal, the company does not
possess sufficient information to report accurately on the particular
allegations.


Walsh, et al. v. Northrop Grumman Corporation

     In November 1994, a class action complaint was filed against Northrop
Grumman Corporation, Grumman Corporation, Renso Caporali, Howard J. Dunn,
Jr., Robert Denien and Robert E. Foster in the U.S. District Court for the
Eastern District of New York, Case No. CV 94-5105 (Platt C.J.).  A first
amended complaint was filed on November 29, 1994 alleging that Grumman
Corporation's March 8 and April 4, 1994 Form 14D-9 filings with the
Securities and Exchange Commission incorporated a statement concerning the
Grumman Severance Plan which violated Sections 10(b) and 14(e) of the
Securities and Exchange Act of 1934 (the "Act") and Rule 10b-5 of the Rules
and Regulations under the Act.  The complaint also contains a cause of
 

NORTHROP GRUMMAN CORPORATION

action for equitable estoppel based upon the same statement and plaintiffs'
alleged reliance thereon.  The complaint also alleges that the trustees of
Grumman's Investment Plan violated their fiduciary obligations by voting
the Plan's shares in favor of the merger without consulting the class
members.  The complaint seeks an order enjoining the defendants from
amending or discontinuing the Severance Plan for a period of thirty (30)
months from the date of the merger and an order mandating that defendants
permit class members who have accepted voluntary termination with severance
pay to rescind their elections.  On December 8, 1994, the court denied
plaintiffs' application for a preliminary injunction but declined to
dismiss the action.  On April 7, 1995, the court granted plaintiffs' motion
to amend their complaint to add a claim for damages based on post
acquisition changes to Grumman benefit plans.  In July 1995 the court
certified a class of plaintiffs consisting of all employees who, at the
time of the tender offer, were Grumman employees, owned Grumman stock
either directly or beneficially through the Employee Investment Plan, and
were injured as a result of defendants' conduct.  Absent dispositive
motions, this matter will proceed to trial in 1997.  The defendants intend
to vigorously defend this litigation and the company does not expect this
matter to have a material adverse effect on its financial condition.

NORTHROP GRUMMAN CORPORATION

Executive Officers of the Registrant

       The following individuals were the elected officers of the company as 
of February 1997:

                                                  Business Experience
Name                  Age   Office Held    Since    Last Five Years

Kent Kresa            58   Chairman,       1990
                           President & CEO


Herbert W. Anderson   57  Corporate Vice   1995    Vice President and
                          President and            Deputy General
                          General Manager,         Manager, Data
                          Data Systems &           Systems and
                          Services Division        Services Division;
                                                   Prior to 1994,
                                                   Vice President and
                                                   Center General
                                                   Manager, Northrop
                                                   Information
                                                   Services Center


Ralph D. Crosby, Jr.  49  Corporate Vice   1996    Corporate Vice
                          President and            President and
                          General Manager,         Deputy General
                          Commercial               Manager, Commercial
                          Aircraft Division        Aircraft Division;
                                                   Prior to March 1996,
                                                   Corporate Vice President 
                                                   and Deputy General
                                                   Manager, Military
                                                   Aircraft Systems
                                                   Division; Prior to
                                                   January 1996
                                                   Corporate Vice
                                                   President and
                                                   General Manager,
                                                   B-2 Division;
                                                   Prior to 1994,
                                                   Vice President
                                                   Business and
                                                   Advanced Systems
                                                   Development at
                                                   the B-2 Division;
                                                   Prior to 1992,
                                                   Vice President
                                                   Business Development
                                                   and Administration
                                                   B-2 Division


Marvin Elkin          60  Corporate Vice   1996    Corporate Vice President 
                          President and Chief      and Chief Human Resources 
                          Human Resources,         and Administrative Officer; 
                          Communications and       Prior to 1994, Corporate 
                          Administrative Officer   Vice President 
                                                   Administration and Services

Nelson F. Gibbs       59  Corporate Vice   1992    Vice President and
                          President and            Controller
                          Controller

John E. Harrison      61  Corporate Vice   1994    Senior Vice President
                          President and            and General Manager,
                          General Manager,         Electronics Programs,
                          Electronics and Systems  Aerospace and Electronics
                          Integration Division     Group, Grumman Corporation; 
                                                   Prior to 1992, President,
                                                   Electronics Division,
                                                   Grumman Corporation

Robert W. Helm        45  Corporate Vice   1994    Vice President,
                          President,               Legislative Affairs
                          Government Relations

James C. Johnson      44  Corporate Vice   1996    Corporate Vice
                          President and            President and
                          Secretary and Assistant  Secretary; Prior 
                          General Counsel          to 1995, Senior
                                                   Corporate Counsel;
                                                   Prior to 1992,
                                                   Senior Counsel

Charles L. Jones, Jr. 55  Corporate Vice   1996    Corporate Vice
                          President and            President, Quality
                          Chief Strategic          Operations; Prior
                          Planning Advanced        to 1992, Vice
                          Development and          President, Quality
                          Programs Officer         Operations

William H. Lawler     56  Corporate Vice   1997    Vice President and
                          President and            Deputy General
                          General Manager,         Manager, Military
                          Military Aircraft        Aircraft Systems
                          Systems Division         Division; Prior to
                                                   1996, Vice President
                                                   and Deputy General
                                                   Manager, B-2 Division;
                                                   Prior to 1995, Vice
                                                   President and B-2
                                                   Program Manager;
                                                   Prior to June 1994,
                                                   Vice President,
                                                   Business and Advanced
                                                   Systems Development,
                                                   B-2 Division; Prior to
                                                   1994, Vice President
                                                   and Deputy, Chief
                                                   Engineer, Business
                                                   and Advanced
                                                   Systems Development,
                                                   B-2 Division; Prior
                                                   to 1993, Vice President
                                                   Engineering and B-2
                                                   Chief Engineer, B-2
                                                   Division

Richard R. Molleur    64  Corporate Vice   1991
                          President and 
                          General Counsel

Albert F. Myers       51  Corporate Vice   1994    Vice President, Business
                          President and            Strategy; Prior to 1992,
                          Treasurer                Vice President, Test
                                                   Operations, at B-2
                                                   Division

James G. Roche        57  Corporate Vice   1996    Corporate Vice
                          President and            President and Chief
                          General Manager,         Advanced Development,
                          Electronic Sensors       Planning, and Public
                          and Systems Division     Affairs Officer; Prior
                                                   to 1993, Corporate Vice
                                                   President Advanced
                                                   Development and
                                                   Planning Officer;
                                                   Prior to 1992, Vice
                                                   President, Advanced
                                                   Development and Planning

Richard B. Waugh, Jr. 53  Corporate Vice   1993    Vice President,
                          President and Chief      Taxes, Risk
                          Financial Officer        Management and
                                                   Business Analysis



NORTHROP GRUMMAN CORPORATION

Item 4.  Submission of Matters to a Vote of Security Holders
         No information is required in response to this Item.

                                  PART II
                                     
Item 5.  Market for Registrant's Common Equity and Related Stockholder
         Matters

         The information required by this Item is contained in Part II, 
         Item 8 of this Annual Report on Form 10-K.


Item 6.  Selected Financial Data

        The information required by this Item is contained in Part II, Item 7
        of this Annual Report on Form 10-K.


NORTHROP GRUMMAN CORPORATION


Item 7.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations

Business Conditions

Northrop Grumman's industry segments - aircraft and electronics - are each
a factor in the broadly defined aerospace industry.  While Northrop Grumman
is subject to the usual vagaries of the marketplace, it is also affected by
the unique characteristics of the aerospace industry and by certain
elements peculiar to its own business mix.
     Northrop Grumman is one of the major companies that compete for the
relatively small number of large, long-term programs that characterize both
the defense and commercial segments of the aerospace business.  It is
common in the aerospace industry for work on major programs to be shared
between a number of companies.  A company competing to be a prime
contractor can turn out to be a subcontractor.  It is not uncommon to
compete with customers, and simultaneously to be both a supplier to and
customer of a given competitor.  Over the past several years the aerospace
industry has been going through a consolidation process and along with it,
significant downsizing.  These actions, in which Northrop Grumman has
participated, have made competition even more intense than in the
past.  The nature of major aerospace programs, conducted under binding
contracts, allows companies that perform well to benefit from a level of
program continuity unknown in many industries.  Lockheed Martin and The
Boeing Company, which in late 1996 announced its intention to acquire
McDonnell Douglas, are the largest companies in the aerospace industry at
this time.  Northrop Grumman also competes against these and other
companies for a number of large and smaller programs in the electronics and
systems integration areas.  Thus, intense competition and long operating
cycles are both characteristic of the industry's - and Northrop Grumman's -
business.
     In the first quarter of 1996 Northrop Grumman acquired the defense and
electronics systems business (ESG) of Westinghouse Electric Corporation at
a cost of $2.9 billion.  The business acquired is being operated as a
component of the electronics industry segment.  The company purchased the
outstanding common stock of Grumman Corporation (Grumman) for $2.1 billion
in the second quarter of 1994.  Northrop Corporation was renamed Northrop
Grumman Corporation effective May 18, 1994.  In August 1994 the company
purchased the remaining 51 percent interest in Vought Aircraft Company
(Vought) for $130 million.  The company had purchased a 49 percent interest
in Vought in 1992.

NORTHROP GRUMMAN CORPORATION

     The B-2 bomber, for which the company is the prime contractor, is
Northrop Grumman's largest program.  The aircraft segment is responsible
for final assembly of the B-2's airframe and systems integration at its
Palmdale, California facility.  The company also manufactures the fuselage
and elements of the B-2's navigation and electronic warfare/situation
awareness system.  Major subcontractors include Boeing, which produces the
aft center section, outboard wing sections, landing gear and fuel system,
and Hughes Electronics Corporation, which produces the radar systems.  The
U. S. Air Force currently plans to operate two B-2 bomber squadrons of
eight aircraft each with an additional five aircraft available to fill in
for those in depot for periodic maintenance.
     The company also is the principal subcontractor to McDonnell Douglas
on the F/A-18 program.  The F/A-18 is a fighter/ground-attack aircraft with
configurations equipped for either one or two crew members.  Principally
deployed by the U.S. Navy on aircraft carriers, it has also been purchased
by several other nations as a land-based combat aircraft.  The company
builds approximately 40 percent of the aircraft including the center and
aft fuselage, vertical tails, and associated subsystems.  Of the versions
of the F/A-18 currently in production, the C is a single-seat combat
aircraft that was first delivered to the U.S. Navy in 1987 and the D is a
two-seat version principally used for training.  The F/A-18 single-seat E
and two-seat F are enhanced versions currently in the test phase of
development and will serve as the U.S. Navy's next-generation multimission
aircraft.
     The company manufactures portions of the Boeing 747, 757, 767 and 777
jetliners, the Gulfstream IV and V business jets, and the McDonnell Douglas
C-17 military transport.  Northrop Grumman has been a principal airframe
subcontractor for the Boeing 747 jetliner since the program began in 1966,
producing the fuselage and aft body section for the 747 as well as cargo
and passenger doors, the vertical and horizontal body stabilizers, floor
beams and smaller structural components.  The majority of the Boeing
jetliner work is performed at the aircraft segment's production sites in
Hawthorne, California; Grand Prairie, Texas; and Stuart, Florida.  Northrop
Grumman manufactures engine nacelles for the Gulfstream IV and other
business jets and has begun production of the wings for Gulfstream's newest
business jet, the Gulfstream V.  The company also produces the empennage,
engine nacelles and control surfaces for the McDonnell Douglas C-17, the
U.S. Air Force's most advanced airlifter.  The work performed on the C-17,
Gulfstream IV and V, 757, 767, 777 and some of the components of the 747
were added as a result of the Grumman and Vought acquisitions.

NORTHROP GRUMMAN CORPORATION

     Northrop Grumman also is a major producer of early warning and
surveillance/battle management  aircraft.  The company designed and built
all-weather E-2C Hawkeye airborne early warning command-and-control
aircraft that has been in active service with the U.S. Navy since 1973,
also is employed by the air forces of five other nations.  The E-2C is
produced by the company's electronics segment.
     The company also serves as prime contractor for the E-8 Joint
Surveillance Target Attack Radar System (Joint STARS).  Joint STARS
detects, locates, classifies, tracks and targets potentially hostile ground
movement in all weather conditions.  It is designed to operate around the
clock, in constant communication through secure data links with air force
command posts, army mobile ground stations or centers of military analysis
far from the point of conflict.  The Joint STARS platform is a
remanufactured Boeing 707-300 airframe.  The 707 is remanufactured at
Northrop Grumman's Lake Charles, Louisiana site.  Final installation of
electronics and testing are performed at the electronics segment
integration and test facility in Melbourne, Florida.
     ECM denotes electronic countermeasures equipment manufactured by the
company's electronics segment.  The company's Rolling Meadows, Illinois
site produces the AN/ALQ-135, currently the largest program in this
business area.  The AN/ALQ-135 is an internally mounted radar jammer
deployed on F-15 fighter aircraft as part of that aircraft's Tactical
Electronic Warfare System.  The AN/ALQ-162 Shadowbox,  a jammer built
specifically to counter continuous wave radars, has been installed on the
AV-8B and certain foreign F/A-18 aircraft.  It is also being deployed on
U.S. Army helicopters and special mission aircraft and has been sold to the
air forces of three other nations.  The company is also under contract to
develop and produce a directional infrared countermeasures (DIRCM) system
for the United Kingdom and the U.S. Special Operations Command slated for
use on British helicopters, transports, and U.S. Special Operations Command
C-130 transports to reduce vulnerability to heatseeking missiles.  DIRCM is
designed to provide high-powered jamming required to counter more advanced
seekers expected in the twenty-first century.
     The company's Baltimore, Maryland site produces the Airborne Self-
Protection Jammer (ASPJ) in a joint venture with ITT-Avionics.  The ASPJ is
an internally mounted system that protects tactical aircraft against
numerous radar guided threats.  It is currently installed on selected F/A-18 
and F-14 aircraft.
     Northrop Grumman as the prime contractor to the U.S. Army is
developing a "brilliant" anti-armor submunition, designated as BAT, with
production scheduled to commence in 1998.  BAT is a three-foot-long, 44
pound, wide-area-attack submunition that will be used to disable and
destroy armored vehicles and trucks.

NORTHROP GRUMMAN CORPORATION

BATs are meant to be carried and dispensed by a larger missile and designed
to be ejected over an armored vehicle column or attacking formation.  Each
BAT has an acoustic sensor that can home in on the noise created by the
tank's or truck's engine and an infrared sensor that can home in on the
heat generated by a vehicle's engine.
     The company's electronics segment is a major producer of airborne
radar systems.  Included in this business area are the AN/APG-66 and 
AN/APG-68 fire control radars for the F-16 aircraft of which more than 
6,000 have been produced since 1976.  The AN/APG-66 is presently on 16 
airborne platforms and is deployed in 20 countries.  Northrop Grumman is 
currently leading a joint venture with Texas Instruments to develop the 
AN/APG-77 radar for the F-22 aircraft.  The AN/APG-77 is designed for 
air-superiority and strike operations and features a low observable, 
active aperture, electronically-scanned array with multi-target all-weather 
capability.  The company's electronics segment also produces the AN/APY-1/2 
surveillance radar system which provides air-to-air surveillance capability for 
the E-3 Airborne Warning And Control System (AWACS).   AWACS is designed to 
detect and track both enemy and friendly aircraft throughout a large volume of
airspace.
     The company is a leader in producing marine machinery and advanced
propulsion systems,  missile launchers, shipboard instrumentation and
control systems, mine countermeasures and undersea vehicles.  Every Nimitz-
class aircraft carrier is fitted with eight turbine generator sets that are
produced at the  electronics segment Sunnyvale, California site.  Each
shipset of these powerful generators develops enough  power to supply a
city of 75,000 people.  The company also produces the main propulsion
system for the Navy's Seawolf-class attack submarines.
     In addition, the company produces air defense and air traffic control
radar systems for airspace management for both domestic and foreign
customers.  The three-dimensional AN/TPS-70/75 radars and predecessor
AN/TPS-43 are among the products in this business area.  They have been the
U.S. Air Force air defense system standard since 1968.  They are currently
in operation in more than 30 countries, supporting air defense, air
sovereignty, air traffic control and counternarcotics needs. The ASR-9
Terminal Radar detects and displays aircraft and weather simultaneously,
helping air traffic controllers guide aircraft through the crowded skies
surrounding airports.

NORTHROP GRUMMAN CORPORATION

     Northrop Grumman designs, develops, operates and supports computer
systems for scientific and management information.  Services provided
include systems integration, systems service, information conversion and
training for federal, state and local governments and private industry.
The company also provides military base support functions and aircraft
maintenance at a number of U.S. Government facilities.
     Tables of contract acquisitions, net sales and funded order backlog
follow and complement industry segment data.  The reporting of industry
segment data has been realigned based upon the company's current mix of
products.  Operating results for those programs formerly reported in the
missiles and unmanned vehicles segment along with aircraft services
programs previously included in the data systems and other services segment
(DSOS) are now included in the aircraft segment.  The balance of the
programs included in the DSOS and all of the operations of ESG are included
in the electronics industry segment.  Data for prior years has been
restated.  B-2, F/A-18, Boeing Jetliners (the 747, 757, 767 and 777) and 
C-17 are currently the major programs of the aircraft industry segment.
Surveillance Aircraft (the E-2C Hawkeye and E-8 Joint STARS), ECM, Airborne
Radar, Marine, Space and Airspace Management are included in the
electronics  industry segment.
     Individual companies prosper in the competitive aerospace/defense
environment according to their ability to develop and market innovative
products.  They also must have the ability to provide the people,
facilities, equipment and financial capacity needed to deliver those
products with maximum efficiency.  It is necessary to maintain, as the
company has, sources for raw materials, fabricated parts, electronic
components and major subassemblies.  In this manufacturing and systems
integration environment, effective oversight of subcontractors and
suppliers is as vital to success as managing internal operations.  Northrop
Grumman's operating policies are designed to enhance these capabilities.
The company also believes that it maintains good relations with its
employees, approximately 13 percent of whom are covered by collective
bargaining agreements.
     U.S. Government programs in which Northrop Grumman either
participates, or strives to participate, must compete with other programs
for consideration during our nation's budget formulation and appropriation
processes.  As a consequence of the continued pressure to reduce the
federal budget deficit, the U.S. defense budget is not expected to increase
substantially in the near term.  Budget decisions made in this environment
will have long-term consequences for the size and structure of Northrop
Grumman and the entire defense industry.  An important factor in
determining Northrop Grumman's ability to compete successfully for future
contracts will be its cost structure vis-a-vis other bidders.

NORTHROP GRUMMAN CORPORATION


     Although the ultimate size of future defense budgets remains
uncertain, the defense needs of the nation are expected to provide
substantial research and development (R&D) funding and other business for
the company to pursue well into the future.
     Northrop Grumman has historically concentrated its efforts in such
high technology areas as stealth, airborne surveillance, battle management,
precision weapons and systems integration.  Even though a high priority has
been assigned by the Department of Defense to the company's major programs,
there remains the possibility that one or more of them may be reduced,
stretched or terminated.
     Business conditions in the commercial aircraft industry appear to be
on the upswing.  The major producers of jetliners recorded more than twice
the number of new aircraft orders in 1995 than in 1994.  This positive
trend continued in 1996, potentially signifying a new commercial airplane
buying cycle.  Northrop Grumman, with its involvement on various Boeing
jetliners, remains optimistic about the long-term prospects for its
commercial structures business.
     Northrop Grumman pursues new business opportunities when justified by
acceptable financial returns and technological risks.  The company examines
opportunities to acquire or invest in new businesses and technologies to
strengthen its traditional business areas.  Northrop Grumman continues to
capitalize on its technologies and skills by entering into joint ventures,
partnerships or associations with other companies.

NORTHROP GRUMMAN CORPORATION

Results Of Operations By Industry Segment And Major Customer

Year ended December 31, $ in millions 1996 1995 1994 1993 1992 Revenue Aircraft United States Government $ 3,217 $ 3,735 $ 4,434 $ 3,899 $ 4,281 Other customers 802 837 703 567 583 Intersegment sales 256 188 74 1 1 4,275 4,760 5,211 4,467 4,865 Electronics United States Government 3,482 1,969 1,238 582 677 Other customers 570 277 336 15 9 Intersegment sales 42 103 106 114 120 4,094 2,349 1,680 711 806 Intersegment eliminations (298) (291) (180) (115) (121) Total revenue $ 8,071 $ 6,818 $ 6,711 $ 5,063$ 5,550 Operating Profit Aircraft $ 515 $ 471 $ 487 $ 251 $ 269 Electronics 344 211 141 59 65 Total operating profit 859 682 628 310 334 Adjustments to reconcile operating profit to operating margin: Other income included above (17) (6) (3) (2) State and local income taxes (48) (37) (28) (18) (12) General corporate expenses (123) (109) (113) (96) (102) Mark-to-market restricted stock rights (13) Special termination benefits (282) Operating margin $ 658 $ 536 $ 199 $ 193 $ 218
NORTHROP GRUMMAN CORPORATION
Year ended December 31, $ in millions 1996 1995 1994 1993 1992 Contract Acquisitions Aircraft $ 4,056 $ 1,986 $ 8,580 $ 4,191 $ 3,596 Electronics 6,468 2,606 3,385 616 568 Total acquisitions $10,524 $ 4,592 $11,965 $ 4,807 $ 4,164 Funded Order Backlog Aircraft $ 7,114 $ 7,077 $ 9,663 $ 6,220 $ 6,495 Electronics 5,286 2,870 2,510 699 680 Total backlog $12,400 $ 9,947 $12,173 $ 6,919 $ 7,175 Identifiable Assets Aircraft $ 2,387 $ 2,537 $ 3,222 $ 1,993 $ 2,148 Electronics 5,970 2,367 2,181 404 448 Operating assets 8,357 4,904 5,403 2,397 2,596 General corporate 1,065 551 644 542 566 Total assets $ 9,422 $ 5,455 $ 6,047 $ 2,939 $ 3,162 Capital Expenditures Aircraft $ 85 $ 86 $ 89 $ 80 $ 54 Electronics 108 44 44 54 67 General corporate 1 3 1 1 2 Total expenditures $ 194 $ 133 $ 134 $ 135 $ 123 Depreciation and Amortization Aircraft $ 118 $ 172 $ 166 $ 150 $ 96 Electronics 247 110 103 63 63 General corporate 2 1 1 1 Total depreciation and amortization $ 367 $ 283 $ 269 $ 214 $ 160
NORTHROP GRUMMAN CORPORATION Northrop Grumman, as well as many other companies in the defense industry, suffered the effects of the Department of Defense's practice in the 1980s of structuring high-risk research and development contracts, such as the Tri-Service Standoff Attack Missile (TSSAM), as fixed-price or capped cost-reimbursement type contracts. Although Northrop Grumman has stopped accepting these types of contracts, it has experienced financial losses on TSSAM and other similar programs acquired under them in the past. In the event of termination for convenience, contractors are normally protected by provisions covering reimbursement for costs incurred subsequent to termination. The company received a termination for convenience notice on the TSSAM program in February 1995. In December 1996, the company filed a lawsuit against the U.S. Government in the U.S. Court of Federal Claims seeking the recovery of approximately $750 million for uncompensated performance costs, investments, and a reasonable profit. In prior years, the company had charged to operations in excess of $600 million related to this program. Northrop Grumman is unable to predict whether it will realize some or all its claims against the U.S. Government from the TSSAM contract. The company does not expect that these actions will have a material adverse effect on the company's financial position. Prime contracts with various agencies of the U.S. Government and subcontracts with other prime contractors are subject to a profusion of procurement regulations, with noncompliance found by any one agency possibly resulting in fines, penalties, debarment or suspension from receiving additional contracts with all agencies. Given the company's dependence on U. S. Government business, suspension or debarment could have a material adverse affect on the company's future. Moreover, these contracts may be terminated at the U. S. Government's convenience as was done with the TSSAM program. While Northrop Grumman conducts most of its business with the U.S. Government, principally the Department of Defense, commercial sales still represent a significant portion of total revenue. NORTHROP GRUMMAN CORPORATION Federal, state and local laws relating to the protection of the environment affect the company's manufacturing operations. The company has provided for the estimated cost to complete remediation where it is probable that the company will incur such costs in the future, including those for which it has been named a Potentially Responsible Party (PRP) by the Environmental Protection Agency or similarly designated by other environmental agencies. The company has been designated a PRP under federal Superfund laws at 16 hazardous waste sites and under state Superfund laws at six sites. It is difficult to estimate the timing and ultimate amount of environmental cleanup costs to be incurred in the future due to the uncertainties regarding the extent of the required cleanup and the status of the law, regulations and their interpretations. Nonetheless, to assess the potential impact on the company's financial statements, management estimates the total reasonably possible remediation costs that could be incurred by the company. Such estimates take into consideration the professional judgment of the company's environmental engineers and, when necessary, consultation with outside environmental specialists. In most instances, only a range of reasonably possible costs can be estimated. However, in the determination of accruals the most probable amount is used when determinable and the minimum is used when no single amount is more probable. The company records accruals for environmental cleanup costs in the accounting period in which the company's responsibility is established and the costs can be reasonably estimated. Management estimates that at December 31, 1996, the reasonable range of future costs for environmental remediation, including Superfund sites, is $63 million to $107 million, of which $64 million has been accrued. The amount accrued has not been offset by potential recoveries from insurance carriers or other PRPs. Should other PRPs not pay their allocable share of remediation costs, the company may have to incur costs in addition to those already estimated and accrued. The company is making the necessary investments to comply with environmental laws; the amounts, while not insignificant, are not considered material to the company's financial position or results of its operations. NORTHROP GRUMMAN CORPORATION Measures of Volume Contract acquisitions tend to fluctuate and are determined by the size and timing of new and add-on orders. The effects of multiyear orders and/or funding can be seen in the highs and lows shown in the following table. The funded order backlog of ESG, Grumman and Vought on the date the businesses were acquired are reflected as acquisitions in the years they were acquired. The Airborne Radar, Marine and Airspace Management business areas were added as part of the ESG acquisition. The 757, 767, 777 (included in Boeing Jetliners category), Surveillance Aircraft (E-2 and E-8 Joint STARS) and C-17 programs were acquired as part of Grumman and Vought. B-2 acquisitions in 1996 included $453 million for the upgrade of test vehicle AV-1 to operational status increasing the program to 21 operational aircraft. The balance of B-2 acquisitions in 1996 and acquisitions for 1995 include incremental funding for ongoing development work, spares and other customer support for the operational aircraft program. In 1994, $2.4 billion of funding to complete five B-2 production aircraft was received as well as incremental funding for ongoing development work, spares and other customer support. The company still stands to gain future new post production business, such as airframe depot maintenance, repair of components, operational software changes and product improvement modifications. The debate over the future of the B-2, which is built in the nation's only active bomber producing facility, is now taking place. Without future production orders the nation's multibillion-dollar investment in this capability will be disassembled and become retrievable only at a large additional cost. Contract Acquisitions $ in millions 1996 1995 1994 1993 1992 B-2 $ 1,682 $ 475 $ 3,646 $ 2,632 $ 2,235 Surveillance Aircraft 1,330 1,084 2,287 F/A-18 759 888 462 832 707 Boeing Jetliners 737 464 1,177 242 76 Airborne Radar 1,639 Marine 901 ECM 335 592 323 445 361 Space 414 C-17 383 208 434 Airspace Management 629 Data Systems 240 198 251 All other 1,475 683 3,385 656 785 $10,524 $ 4,592 $11,965 $ 4,807 $ 4,164 NORTHROP GRUMMAN CORPORATION Acquisitions in 1996 included orders for 62 F/A-18C/D shipsets. In 1996 the company also received long-lead funding for the first phase of the Low Rate Initial Production (LRIP) of the F/A-18E/F along with continued funding of the engineering and manufacturing development (EMD) phase of the program. Orders for 128 F/A-18C/D shipsets were finalized in 1995. In 1994 the company received long-lead funding from the McDonnell Douglas Corporation for new F/A-18C/D shipsets. The company received final authorization to produce 50 additional 747 jetliner shipsets in 1996. Advance funding was received from The Boeing Company in 1995 for the current phase of the 747 jetliner program. The company recorded orders for 18, 16, and 5 wing shipsets for the Gulfstream V business jet in 1996, 1995 and 1994 respectively. The company is producing the Gulfstream V wings under a revenue-sharing agreement with Gulfstream Aerospace (Gulfstream). The company will recognize revenue for its proportionate share of the revenue of each business jet when they are delivered to the ultimate customer by Gulfstream. Gulfstream has received 70 orders for the Gulfstream V through December 1996. The Gulfstream V received provisional certification in December 1996 and full certification is expected late in the first quarter of 1997. The company is using program accounting for the Gulfstream V with an estimated program of 250 shipsets to be delivered over a ten-year period. Inventoried costs at December 31, 1996 include $56 million of learning-curve costs for this program. The learning-curve costs represent the excess of production cost of delivered and in process items over the estimated average unit cost. This concept assumes that production cost per unit decreases over time due to efficiencies from continuous improvements in the performance of repetitive tasks. All nonrecurring costs for the development of the wings have been expensed as incurred. ECM acquisitions for 1995 included an award of $279 million from the United Kingdom Ministry of Defence to develop and produce the DIRCM systems. The balance of ESG, Grumman and Vought funded order backlog at the dates of acquisition, for those programs not listed in the table, is included in the "all other" category. ESG accounts for the major increase in the "all other" category in 1996 over 1995 and Grumman and Vought account for the increase in 1994 over 1993. NORTHROP GRUMMAN CORPORATION Year-to-year sales vary less than contract acquisitions and reflect performance under new and ongoing contracts. The 1996 results of operations include ESG since the acquisition in March 1996. Comparative results for 1995 and prior do not include ESG data. The 1994 results of operations include Grumman and Vought since the acquisitions in April and August 1994, respectively. Comparative results for 1993 and prior do not include Grumman and Vought data. Sales for 1996 were the highest in the company's history and were 18 percent higher than the previous record registered in 1995. Without the ESG acquisition, sales for 1996 would have declined 11 percent from the 1995 level. Sales for 1995 were 2 percent higher than in 1994 and without the Grumman and Vought acquisitions, sales for 1994 would have declined 10 percent from the 1993 level. Net Sales $ in millions 1996 1995 1994 1993 1992 B-2 $ 1,725 $ 1,914 $ 2,392 $ 2,881 $ 3,212 Surveillance Aircraft 1,104 1,179 754 F/A-18 715 822 817 641 610 Boeing Jetliners 569 569 483 531 549 Airborne Radar 560 Marine 496 ECM 398 351 357 372 378 Space 315 C-17 249 244 121 Airspace Management 223 Data Systems 208 187 120 All other 1,509 1,552 1,667 638 801 $ 8,071 $ 6,818 $ 6,711 $ 5,063 $ 5,550 The decreasing trend in the B-2 revenues from both EMD and production work continued in 1996. The level of EMD effort, included in amounts reported as contract R&D, constituted 33 percent of the total B-2 revenue, up from 30 percent in 1995 and 26 percent in 1994. Current planning data indicate that the level of overall B-2 revenue will decline roughly 20 percent per year for the remainder of the decade. Sales increased in 1996 for the C/D version of the F/A-18 program with an increase of deliveries to 68, as compared to 56 shipsets delivered in 1995 and 42 delivered in 1994. The company currently plans to deliver 35 F/A-18C/D shipsets in 1997. F/A-18E/F revenue was lower in 1996 with the delivery of the final three shipsets for the EMD phase of the program. A total of seven shipsets were delivered under the F/A-18E/F EMD contract in 1995. The LRIP phase of the F/A-18E/F program began in late 1996. NORTHROP GRUMMAN CORPORATION Deliveries of 747 shipsets were 28 in 1996, 24 in 1995 and 31 in 1994. The change in the mix of Boeing jetliners delivered in 1996 resulted in the same level of sales as in 1995. Forty-eight 747 shipsets are expected to be delivered in 1997. Increased deliveries of all Boeing jetliners planned for 1997 is expected to result in more than a 50 percent increase in revenue from these programs. The electronics industry segment revenues increased 74 percent in 1996 as a result of the inclusion of the ESG operations, which more than offset the reduction in revenue on the company's other electronics programs. Higher revenues on the E-2 Hawkeye and E-8 Joint STARS programs were the primary reason for the 40 percent increase in 1995 electronics revenues. The increase in 1994 was due to the acquisition of Grumman which more than offset the decrease from lower BAT development revenue and lower ECM sales. The year-end funded order backlog is the sum of the previous year-end backlog plus the year's contract acquisitions minus the year's sales. Backlog is converted into the following years' sales as costs are incurred or deliveries are made. It is expected that approximately 54 percent of the 1996 year-end backlog will be converted into sales in 1997. Funded Order Backlog $ in millions 1996 1995 1994 1993 1992 B-2 $ 3,693 $ 3,736 $ 5,175 $ 3,921 $ 4,170 Surveillance Aircraft 1,664 1,438 1,533 F/A-18 675 631 565 920 729 Boeing Jetliners 1,480 1,312 1,417 723 1,012 Airborne Radar 1,079 Marine 405 ECM 684 747 506 540 467 Space 99 C-17 411 277 313 Airspace Management 406 Data Systems 174 142 131 All other 1,630 1,664 2,533 815 797 $12,400 $ 9,947 $12,173 $ 6,919 $ 7,175 Total U.S. Government orders, including those made on behalf of foreign governments (FMS), comprised 76 percent of the backlog at the end of 1996 compared with 77 percent at the end of 1995 and 80 percent at the end of 1994. Total foreign customer orders, including FMS, accounted for 17 percent of the backlog at the end of 1996 compared with 13 percent in 1995 and 9 percent in 1994. Domestic commercial business in backlog at the end of both 1996 and 1995 was 16 percent and 14 percent at the end of 1994. NORTHROP GRUMMAN CORPORATION Measures of Performance The company's operating profit for 1996 was a record high and has improved in its electronics segment for the last three years. The improvement in 1996 is due to the addition of ESG. The improvements in 1995 and 1994 stem from both increased revenue and improved operating margin rates in the electronics segment. Company-wide efforts to reduce costs, install tighter business controls, improve cash management, dispose of excess assets and more effectively utilize productive assets are all goals aimed at contributing to the future success of Northrop Grumman. This financial report demonstrates the degree to which the accomplishment of these goals is being achieved. Operating profit in the aircraft segment increased to its highest level ever in 1996 principally as a result of increased operating margin on the C-17 military transport and Boeing jetliners. These items offset the reduced operating margin on the B-2 program due to lower sales volume. The amount and rate of operating margin recognized on the 747 increased in 1996 due to increased deliveries and higher operating margin on the deliveries of the last phase of a 300-shipset production contract. Aircraft segment operating profit decreased in 1995 primarily as a result of lower overall sales volume and $31 million in expenditures for company-sponsored research and development for commercial aerostructures. The rate and amount of operating margin recorded on the B-2 production contract increased in 1995 as a result of negotiated contract adjustments and a revised estimate of the overall operating margin expected to be earned. This increase was offset by lower operating margin recorded on decreased revenue on the other phases of the B-2 program. The rate and amount of operating margin on the F/A-18E/F increased in 1995 due to an increase in the rate of operating margin being recorded on the EMD contract. This resulted from the continuing evaluation of the overall operating margin to be earned on this phase of the program. The increase on the F/A-18E/F more than offset reduced operating margin earned, on higher sales volume, for the F/A-18C/D. Fewer deliveries and cost increases related to a stretch-out of the 300-shipset production contract for the Boeing 747 jetliner resulted in a lower rate and amount of operating margin in 1995. NORTHROP GRUMMAN CORPORATION Aircraft industry segment operating profit increased in 1994 as margin rates improved on the B-2 and F/A-18 programs. The rate and amount of operating margin recorded on the F/A-18E/F increased in 1994 due to an approximately one and one-half percent increase in the rate of operating margin being recorded on the EMD contract. The F/A-18 program operating margin improved in 1994 despite reduced F/A-18C/D shipset deliveries. These increases were partially offset by a reduction in the rate of operating margin on the 747 program due to increased costs allocated as a result of establishing a separate commercial aircraft operating element in 1994 and fewer deliveries than in 1993. B-2 operating margin improved in 1994 as the amount of margin recorded on the delivery of four aircraft more than offset reduced operating margin from lower production and EMD sales. Following the award of the last increment of production funding for the B-2, the company began recording future operating margin increases on all production aircraft as these units are delivered and accepted by the customer. At the time each unit is delivered an assessment is made of the status of the production contract so as to estimate the amount of any probable additional margin available beyond that previously recognized. That unit's proportionate share of any such unrecognized remaining balance will then be recorded. In this fashion it is believed that margin improvements will be recognized on a more demonstrable basis. The current 15 production units are scheduled for their initial delivery over a five-year period, which began in December 1993. All but two units (four equivalent units for this purpose) will be returned for scheduled retrofitting with final deliveries beginning in 1997 and ending in 2000. Operating profit in the electronics segment reached a record level in 1996. The improvement in 1996 is due to the addition of ESG which more than offset the reductions in the company's other electronics programs. The reductions were primarily due to reduced volume and a $29 million charge recorded as a result of the write-down of a claim related to avionics work performed by Grumman Corporation prior to its acquisition by Northrop. NORTHROP GRUMMAN CORPORATION The increase in 1995 operating profit in the electronics segment was a result of an increased rate of operating margin and higher sales volume on the E-2 Hawkeye and increased sales volume on the E-8 Joint STARS program. The electronics segment operating profit increased in 1994 due primarily to the addition of the E-2 Hawkeye, E-8 Joint STARS and various other military electronics programs associated with the Grumman acquisition and an increased rate of margin recorded in the company's electronic countermeasures business, which more than offset the $8 million in provisions recorded by the electronics segment Norwood operation for unrecoverable costs incurred. Operating margin in 1996 included $39 million of pension income compared with $23 million in 1995 and $36 million in 1994. Also impacting operating margin is the cost of providing retiree health care and life insurance benefits - $91 million in 1996 versus $87 million in 1995 and $69 million in 1994. A major contributor to the increase in retiree health care and life insurance benefits cost was the addition of the Grumman and Vought retiree plans in 1994. Operating margin in 1994 was reduced by $282 million to record the effect of an early retirement incentive program. In 1996 the company recorded a $90 million pretax charge related to the closure of four plants. The charge included $30 million for costs related to the reduction of personnel and other closure activities, which lowered operating profit in the aircraft and electronics industry segments by $22 million and $8 million, respectively, and $60 million for the write- down of facilities included in Other Deductions in the Consolidated Statements of Income. The company recorded a $42-million pretax charge in 1994 for the planned disposal of excess real estate and other assets. This charge is reported in Other Deductions in the Consolidated Statements of Income. These charges were a result of the company's continuing efforts to reduce operating costs and dispose of assets that have become excess due to changes in the company's business strategy. Interest expense increased $133 million in 1996, following increases of $28 million in 1995 and $71 million in 1994. The increase in 1996 came primarily from the issuance of debt to finance the ESG acquisition. The increases in 1995 and 1994 came primarily from the issuance of debt related to the financing of the acquisition of Grumman. Total debt at December 31, 1996 stood at $3.4 billion compared to $1.4 billion at the end of 1995 and $1.9 billion at the end of 1994. The company's effective federal income tax rate was 39.1 percent in 1996, 38.4 percent in 1995 and 46.2 percent in 1994. The decrease in the 1995 rate was due to a reduction in the ratio of expenses not deductible for income taxes to the tax provision at the statutory rate of 35 percent. The higher rates in 1996 and 1994 were due to the amount of expenses not deductible for income taxes, primarily the amortization of goodwill. NORTHROP GRUMMAN CORPORATION Measures of Liquidity and Capital Resources The trend and relationship of sales volume with net accounts receivable and inventoried costs is a useful measure in assessing the company's liquidity. In 1994, the company's net investment in these balances represented 33 percent of sales. It decreased to 29 percent at the end of 1995 before increasing to 30 percent at year-end 1996 with the acquisition of ESG. Cash flows from operations over the last three years have averaged over $600 million annually. The $701 million of cash flow from operations in 1996 was a decrease of $43 million from 1995 which was an increase of $303 million over 1994 which in turn was a $61 million increase over that of 1993. These cash flows have been sufficient to service debt, finance capital expansion projects and continue paying dividends to shareholders. The following table is a condensed summary of the detailed cash flow information contained in the Consolidated Statements of Cash Flows. Year ended December 31 1996 1995 1994 1993 1992 Cash came from Customers 65% 96% 71% 99% 98% Lenders 30 2 29 1 2 Shareholders 4 Buyers of assets/other 1 2 100% 100% 100% 100% 100% Cash went to Employees and suppliers of services and materials 57% 83% 65% 89% 93% Sellers of assets 23 2 18 1 Lenders 14 12 15 8 3 Suppliers of facilities/other 5 2 1 2 2 Shareholders 1 1 1 1 1 100% 100% 100% 100% 100% The increased cash received from lenders in 1996 and 1994 resulted from borrowing for the acquisitions of ESG and Grumman respectively. The cash received from shareholders in 1996 was from a public stock offering in which the company issued approximately 8 million shares of common stock at $63.25 per share. The net proceeds of $493 million were used to pay down outstanding debt under the company's Credit Agreement. NORTHROP GRUMMAN CORPORATION In connection with the financing of the Grumman acquisition, the company in April 1994, replaced its $400 million Credit Agreement with a new $2.8 billion Credit Agreement. The new facility provided for $600 million, available on a revolving credit basis through March 1999 and a $2.2 billion term loan payable through March 1999. The Credit Agreement was amended in May 1994 to increase the revolving credit line to $800 million and reduce the term loan to $2 billion. In October 1994, the company issued $350 million of notes due in 2004 and $250 million of debentures due in 2024 pursuant to a public offering. The net proceeds from the offering, along with other available funds, were used to prepay $900 million under the term loan facility in addition to paying the $100 million September quarterly installment due under that facility. In December 1994, the company amended the Credit Agreement to provide for the repayment of the remaining $1 billion balance of the term loan in 14 quarterly installments of $62.5 million plus interest beginning in September 1995, with a final installment of $125 million due in March 1999. Cash flow from operations during 1994 enabled the company to prepay the $160 million of notes payable to institutional investors due in 1995 and acquire, in the open market, $58 million of notes due in 1999, while paying a net premium of $5 million for the early payments of these notes. The charge for the premium is included in Other Deductions in the Consolidated Statements of Income. Cash flow from operations in 1995 was sufficient to allow the company to make the $125 million required term loan payment as well as $312 million in voluntary payments for amounts that were due through March 1997. During the first quarter of 1996 the company sold to institutional investors $400 million of 7 percent notes due 2006, $300 million of 7 3/4 percent debentures due 2016 and $300 million of 7 7/8 percent debentures due 2026. The proceeds from this issuance were used to finance a portion of the purchase price of ESG. The debt indentures contain restrictions relating to limitations on liens, sale and leaseback arrangements and funded debt of subsidiaries. To finance the balance of the purchase price of ESG the company amended its Credit Agreement with a group of domestic and foreign banks to provide for three credit facilities: $1.8 billion available on a revolving credit basis through March 2002; a variable interest $500 million two-year term loan due March 1, 1998, which was repaid in July 1996; and a variable interest rate $1.5 billion six-year term loan due in 24 quarterly installments of $62.5 million plus interest beginning June 1996. Effective November 1, 1996, the Credit Agreement was further amended to reduce the $1.5 billion term loan to $1.05 billion payable in 21 quarterly installments of $50 million plus interest beginning March 1, 1997. NORTHROP GRUMMAN CORPORATION During 1995 the company entered into an agreement with a financial institution to sell designated pools of its commercial accounts receivable, in amounts up to $75 million. At December 31, 1995, $34 million of accounts receivable had been sold. Northrop Grumman terminated this agreement in 1996. To provide for long-term liquidity the company believes it can obtain additional capital from such sources as: the public or private capital markets, the further sale of assets, sale and leaseback of operating assets, and leasing rather than purchasing new assets. The cost reduction and cash improvement programs underway throughout the company have produced favorable results, with the expectation that further efforts will result in minimizing the need to incur additional borrowings during 1997. Cash generated from operations is expected to be sufficient in 1997 to service debt, finance capital expansion projects and continue paying dividends to the shareholders. Capital expenditure commitments at December 31, 1996, were approximately $127 million including $4 million for environmental control and compliance purposes. The company will continue to provide the productive capacity to perform its existing contracts, dispose of assets no longer needed to fulfill operating requirements, prepare for future contracts and conduct R&D in the pursuit of developing opportunities. While these expenditures tend to limit short-term liquidity, they are made with the intention of improving the long-term growth and profitability of the company. Forward-Looking Information Certain statements and assumptions in Management's Discussion and Analysis contain or are based on "forward-looking" information (as defined in the Private Securities Litigation and Reform Act of 1995) that involves risk and uncertainties, including statements and assumptions with respect to future revenues, program performance and cash flows, the outcome of contingencies including litigation and environmental remediation, and anticpated costs of capital investments and planned dispostions. The company's operations are necessarily subject to various risks and uncertainties; actual outcomes are dependent upon many factors, including, without limitation, the company's successful performance of internal plans; government customers' budgetary restraints; customer changes in short-range and long-range plans; domestic and international competition in both the defense and commercial areas; product performance; continued development and acceptance of new products; performance issues with key suppliers and subcontractors, government import and export policies; termination of government contracts; the outcome of political and legal processes; legal, financial, and governmental risks related to international transactions and global needs for military and commercial aircraft and electronic systems and support; as well as other economic, political and technological risks and uncertainties. NORTHROP GRUMMAN CORPORATION Selected Financial Data
Year ended December 31, $ in millions, except per share 1996 1995 1994 1993 1992 Net sales to United States Government $ 6,699 $ 5,703 $ 5,672 $ 4,481 $ 4,958 The Boeing Company 569 569 483 531 549 Other customers 803 546 556 51 43 Total net sales 8,071 6,818 6,711 5,063 5,550 Net income 234 252 35 96 121 Earnings per share 4.33 5.11 .72 1.99 2.56 Cash dividends per share 1.60 1.60 1.60 1.60 1.20 Net working capital (3) 357 467 481 354 Current ratio 1.00 to 1 1.21 to 1 1.24 to 1 1.45 to 1 1.25 to 1 Total assets $ 9,422 $ 5,455 $ 6,047 $ 2,939 $ 3,162 Long-term debt 2,950 1,163 1,633 160 160 Total long-term obligations 4,619 2,234 2,757 468 426 Long-term debt as a percentage of shareholders'equity 138.6% 79.7% 126.6% 12.1% 12.8% Operating margin as a percentage of Net sales 8.2 7.9 3.0 3.8 3.9 Average operating assets 9.9 10.4 5.2 7.7 8.2 Net income as a percentage of Net sales 2.9 3.7 .5 1.9 2.2 Average assets 3.1 4.4 .8 3.1 3.8 Average shareholders' equity 13.1 18.3 2.7 7.5 9.9 Research and development expenses Contract $ 1,628 $ 1,175 $ 1,477 $ 1,603 $ 1,693 Noncontract 255 164 121 97 93 Payroll and employee benefits 3,096 2,656 2,661 1,906 2,001 Number of employees at year-end 46,600 37,300 42,400 29,800 33,600 Number of shareholders at year-end 10,136 10,834 11,241 11,618 12,599 Depreciation $ 204 $ 226 $ 227 $ 214 $ 160 Amortization of Goodwill 81 36 27 Other purchased intangibles 82 21 15 Maintenance and repairs 93 80 105 87 106 Rent expense 90 89 84 47 52 Floor area (millions of square feet) Owned 22.5 20.1 21.3 12.9 12.6 Commercially leased 8.7 7.0 7.5 3.2 4.2 Leased from United States Government 9.0 10.2 9.4 2.1 1.9
NORTHROP GRUMMAN CORPORATION Item 8. Financial Statements and Supplementary Data CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
December 31, $ in millions 1996 1995 1994 1993 1992 Assets: Current assets Cash and cash equivalents $ 44 $ 18 $ 17 $ 100 $ 230 Accounts receivable 1,356 1,197 1,202 820 791 Inventoried costs 1,053 771 1,043 569 670 Deferred income taxes 77 25 38 46 38 Prepaid expenses 67 61 47 25 31 Refundable federal income taxes 84 Total current assets 2,597 2,072 2,431 1,560 1,760 Property, plant and equipment at cost Land and land improvements 207 192 203 118 117 Buildings 801 780 857 744 719 Machinery and other equipment 2,078 1,864 2,024 1,898 1,982 Leasehold improvements 68 64 62 29 59 3,154 2,900 3,146 2,789 2,877 Accumulated depreciation (1,752) (1,724) (1,768) (1,773) (1,753) 1,402 1,176 1,378 1,016 1,124 Other assets Goodwill, net of amortization of $144 in 1996, $63 in 1995 and $27 in 1994 3,436 1,403 1,359 Other purchased intangibles, net of amortization of $116 in 1996, $36 in 1995 and $15 in 1994 988 356 376 Prepaid pension cost, intangible pension asset and benefit trust fund 229 99 222 278 190 Deferred income taxes 520 255 203 7 7 Investments in and advances to affiliates and sundry assets 250 94 78 78 81 5,423 2,207 2,238 363 278 $ 9,422 $ 5,455 $ 6,047 $ 2,939 $ 3,162
NORTHROP GRUMMAN CORPORATION
December 31, $ in millions 1996 1995 1994 1993 1992 Liabilities and Shareholders' Equity: Current liabilities Notes payable to banks $ 228 $ 65 $ 171 $ $ 100 Current portion of long-term debt 200 144 130 250 Trade accounts payable 452 360 396 324 363 Accrued employees' compensation 315 203 228 146 144 Advances on contracts 230 98 184 40 39 Income taxes payable 25 57 55 12 Deferred income taxes 629 471 413 426 389 Other current liabilities 521 317 387 131 121 Total current liabilities 2,600 1,715 1,964 1,079 1,406 Long-term debt 2,950 1,163 1,633 160 160 Accrued retiree benefits 1,624 1,048 1,070 308 266 Other long-term liabilities 59 39 74 23 26 Deferred income taxes 61 31 16 47 50 Shareholders' equity Paid-in capital Preferred stock, 10,000,000 shares authorized; none issued Common stock, 200,000,000 shares authorized; issued and outstanding 1996 - 57,928,466; 1995 - 49,462,615; 1994 - 49,241,642; 1993 - 48,913,403; 1992 - 47,398,303 784 272 264 254 205 Retained earnings 1,348 1,199 1,026 1,070 1,051 Unfunded pension losses, net of taxes (4) (12) (2) (2) 2,128 1,459 1,290 1,322 1,254 $ 9,422 $ 5,455 $ 6,047 $ 2,939 $ 3,162
The accompanying notes are an integral part of these consolidated financial statements. NORTHROP GRUMMAN CORPORATION CONSOLIDATED STATEMENTS OF INCOME
Year ended December 31, $ in millions, except per share 1996 1995 1994 1993 1992 Net sales $8,071 $6,818 $6,711 $5,063 $5,550 Cost of sales Operating costs 6,216 5,319 5,477 4,385 4,877 Administrative and general expenses 1,197 963 753 485 455 Special termination benefits 282 Operating margin 658 536 199 193 218 Other income(deductions) Interest income 9 1 6 2 4 Other, net (13) 9 (31) 13 5 Interest expense (270) (137) (109) (38) (47) Income before income taxes 384 409 65 170 180 Federal and foreign income taxes 150 157 30 74 59 Net income $ 234 $ 252 $ 35 $ 96 $ 121 Weighted average common shares outstanding, in millions 54.0 49.4 49.1 48.1 47.2 Earnings per share $ 4.33 $ 5.11 $ .72 $ 1.99 $ 2.56
The accompanying notes are an integral part of these consolidated financial statements NORTHROP GRUMMAN CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Year ended December 31, $ in millions, except per share 1996 1995 1994 1993 1992 Paid-in Capital At beginning of year $ 272 $ 264 $ 254 $ 205 $ 195 Stock issuance 493 Employee stock awards and options exercised, net of forfeitures 19 8 10 49 10 At end of year 784 272 264 254 205 Retained Earnings At beginning of year 1,199 1,026 1,070 1,051 987 Net income 234 252 35 96 121 Cash dividends (85) (79) (79) (77) (57) At end of year 1,348 1,199 1,026 1,070 1,051 Unfunded Pension Losses, Net of Taxes At beginning of year (12) (2) (2) Change in excess of additional minimum liability over unrecognized prior service costs 8 (12) 2 (2) At end of year (4) (12) (2) (2) Total shareholders' equity $ 2,128 $ 1,459 $ 1,290 $ 1,322 $ 1,254 Book value per share $ 36.74 $ 29.50 $ 26.20 $ 27.04 $ 26.46 Cash dividends per share 1.60 1.60 1.60 1.60 1.20
The accompanying notes are an integral part of these consolidated financial statements. NORTHROP GRUMMAN CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31, $ in millions 1996 1995 1994 1993 1992 Operating Activities Sources of Cash Cash received from customers Progress payments $ 2,226 $ 2,289 $ 2,616 $ 2,028 $ 2,647 Other collections 5,822 4,355 4,767 2,924 2,914 Interest received 9 1 6 2 4 Income tax refunds received 12 48 11 3 Other cash receipts 8 7 13 6 5 Cash provided by operating activities 8,077 6,700 7,413 4,963 5,570 Uses of Cash Cash paid to suppliers and employees 7,040 5,750 6,786 4,484 5,186 Interest paid 219 144 94 42 47 Income taxes paid 117 59 90 52 48 Other cash payments 3 2 5 5 Cash used in operating activities 7,376 5,956 6,972 4,583 5,286 Net cash provided by operating activities 701 744 441 380 284 Investing Activities Payment for purchase, net of cash acquired, of ESG (2,886) Grumman Corporation (1,842) Vought Aircraft Company (12) Additions to property, plant and equipment (194) (133) (134) (135) (123) Proceeds from sale of property, plant and equipment 58 33 17 2 5 Proceeds from sale of affiliates/ operations 45 5 8 Proceeds from sale of marketable securities 28 Funding of retiree benefit trust (25) (31) Dividends from affiliates, net of investments 5 2 (47) Other investing activities 4 (21) 6 Net cash used in investing activities (2,998) (116) (1,963) (123) (165) Financing Activities Borrowings under lines of credit 2,734 153 2,371 55 100 Repayment of borrowings under lines of credit (635) (259) (1,200) (155) Proceeds from issuance of long-term debt 1,000 600 Principal payments of long-term debt (1,090) (446) (251) (251) (140) Proceeds from issuance of stock 499 4 7 41 5 Dividends paid (85) (79) (79) (77) (57) Other financing activities (100) (9) Net cash provided by (used in) financing activities 2,323 (627) 1,439 (387) (92) Increase(decrease) in cash and cash equivalents 26 1 (83) (130) 27 Cash and cash equivalents balance at beginning of year 18 17 100 230 203 Cash and cash equivalents balance at end of year $ 44 $ 18 $ 17 $ 100 $ 230
NORTHROP GRUMMAN CORPORATION
Year ended December 31, $ in millions 1996 1995 1994 1993 1992 Reconciliation of Net Income to Net Cash Provided by Operating Activities: Net income $ 234 $ 252 $ 35 $ 96 $ 121 Adjustments to reconcile net income to net cash provided Depreciation 204 226 227 214 160 Amortization of intangible assets 163 57 42 Common stock issued to employees 10 1 3 3 Loss on disposals of property, plant and equipment 32 34 33 26 11 Retiree benefits cost(income) 52 64 33 (39) (42) Special termination benefits 282 Decrease(increase) in Accounts receivable (101) 197 209 (4) 339 Inventoried costs 7 426 (368) 142 63 Prepaid expenses 12 (15) 10 (5) 4 Refundable income taxes 84 (84) Increase(decrease) in Progress payments 84 (282) 407 (90) (340) Accounts payable and accruals 25 (111) (319) (34) (65) Provisions for contract losses (1) (143) (84) 36 9 Provisions for disposal of real estate and other assets 50 (8) 42 1 1 Deferred income taxes 126 84 78 26 48 Income taxes payable (32) 2 (25) 12 (25) Retiree benefits (170) (114) (80) (1) (1) Other noncash transactions 6 (9) 2 (3) (2) Net cash provided by operating activities $ 701 $ 744 $ 441 $ 380 $ 284 Noncash Investing and Financing Activities: Purchase of ESG Fair value of assets acquired $ 4,003 Cash paid (2,888) Liabilities assumed $ 1,115 Purchase of Grumman Corporation Fair value of assets acquired $ 3,495 Cash paid (2,129) Liabilities assumed $ 1,366 Purchase of Vought Aircraft Company Fair value of assets acquired $ 722 Cash paid (130) Liabilities assumed $ 592
The accompanying notes are an integral part of these consolidated financial statements. NORTHROP GRUMMAN CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include the accounts of the corporation and its subsidiaries. All material intercompany accounts, transactions and profits are eliminated in consolidation. The company's financial statements are in conformity with generally accepted accounting principles. The preparation thereof requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Estimates have been prepared on the basis of the most current and best available information and actual results could differ from those estimates. Nature of Operations Northrop Grumman is a major producer of military and commercial aircraft subassemblies and defense electronics and is the prime contractor on the U.S. Air Force B-2 Stealth Bomber. The company operates in the aircraft and electronics industry segments within the broadly defined aerospace industry. The majority of the company's products and services are ultimately sold to the U.S. Government and the company is therefore affected by the federal budget process and the competition in the aerospace and defense environment. Sales to the U.S. Government (including foreign military sales) are reported within each industry segment and in total in the Selected Financial Data. The company does not conduct a significant volume of activity through foreign operations or in foreign currencies. Descriptions of the company's principal products and services along with industry segment data, which is considered to be an integral part of these financial statements, can be found in the Management's Discussion and Analysis section of this report. Intersegment sales are transacted at cost incurred with no profit added. Operating profit is defined to include the Other Income earned by each industry segment, but to exclude costs allocated to segments for General Corporate Expenses and State and Local Income Taxes. General corporate assets include cash and cash equivalents, corporate office furnishings and equipment, other unallocable property, investments in affiliates, prepaid pension cost, intangible pension asset, benefit trust fund assets, deferred tax assets and certain assets held for sale. NORTHROP GRUMMAN CORPORATION Sales Sales under cost-reimbursement, service, research and development, and construction-type contracts are recorded as costs are incurred and include estimated earned fees or profits calculated on the basis of the relationship between costs incurred and total estimated costs (cost-to-cost type of percentage-of-completion method of accounting). Construction-type contracts embrace those fixed-price type contracts that provide for the delivery at a low volume per year or a small number of units after a lengthy period of time over which a significant amount of costs have been incurred. Sales under other types of contracts are recorded as deliveries are made and are computed on the basis of the estimated final average unit cost plus profit (units-of-delivery type of percentage-of-completion method of accounting). Certain contracts contain provisions for price redetermination or for cost and/or performance incentives. Such redetermined amounts or incentives are included in sales when the amounts can reasonably be determined. In the case of the B-2 bomber production contract, future changes in operating margin will be recognized on a units-of-delivery basis and recorded as each equivalent production unit is delivered. Amounts representing contract change orders, claims or limitations in funding are included in sales only when they can be reliably estimated and realization is probable. In the period in which it is determined that a loss will result from the performance of a contract, the entire amount of the estimated ultimate loss is charged against income. Loss provisions are first offset against costs that are included in assets, with any remaining amount reflected in Other Current Liabilities. Other changes in estimates of sales, costs, and profits are recognized using the cumulative catch-up method of accounting. This method recognizes in the current period the cumulative effect of the changes on current and prior periods. Hence, the effect of the changes on future periods of contract performance is recognized as if the revised estimates had been the original estimates. NORTHROP GRUMMAN CORPORATION Contract Research and Development Customer-sponsored research and development costs (direct and indirect costs incurred pursuant to contractual arrangements) are accounted for like other contracts. Noncontract Research and Development This category includes independent research and development costs and company-sponsored research and development costs (direct and indirect costs not recoverable under contractual arrangements). Independent research and development (IR&D) costs are included in administrative and general expenses (indirect costs allocable to U.S. Government contracts) whereas company-sponsored research and development costs are charged against income as incurred. Environmental Costs Environmental liabilities are accrued when the company determines it is responsible for remediation costs and such amounts are reasonably estimable. When only a range of amounts is established and no amount within the range is better than another, the minimum amount in the range is recorded. The company does not anticipate and record insurance recoveries before collection is probable. Interest Rate Swap Agreements The company may enter into interest rate swap agreements to offset the variable-rate characteristic of certain variable-rate term loans outstanding under the company's Credit Agreement. Interest on these interest rate swap agreements is recognized as an adjustment to interest expense in the period incurred. NORTHROP GRUMMAN CORPORATION Income Taxes Provisions for federal, state and local income taxes are calculated on reported financial statement pretax income based on current tax law and also include, in the current period, the cumulative effect of any changes in tax rates from those used previously in determining deferred tax assets and liabilities. Such provisions differ from the amounts currently payable because certain items of income and expense are recognized in different time periods for financial reporting purposes than for income tax purposes. The company accounts for certain contracts in process using different methods of accounting for financial statements and tax reporting and thus provides deferred taxes on the difference between the financial and taxable income reported during the performance of such contracts. In accordance with industry practice, state and local income and franchise tax provisions are included in administrative and general expenses. Earnings per Share Earnings per share are based on the weighted average number of shares of common stock outstanding during each period, after giving recognition to stock splits and stock dividends. The dilutive effect of common stock equivalents, shares under stock options, was insignificant. Cash and Cash Equivalents Cash and cash equivalents include interest-earning debt instruments that mature in three months or less from the date purchased. Accounts Receivable Accounts receivable include amounts billed and currently due from customers, amounts currently due but unbilled (primarily related to contracts accounted for under the cost-to-cost type of percentage-of-completion method of accounting), certain estimated contract changes, claims in negotiation and amounts retained by the customer pending contract completion. NORTHROP GRUMMAN CORPORATION Inventoried Costs Inventoried costs primarily relate to work in process under fixed-price type contracts (excluding those included in unbilled accounts receivable as previously described). They represent accumulated contract costs less the portion of such costs allocated to delivered items. Accumulated contract costs include direct production costs, factory and engineering overhead, production tooling costs, and allowable administrative and general expenses (except for general corporate expenses and IR&D allocable to commercial contracts, which are charged against income as incurred). In accordance with industry practice, inventoried costs are classified as a current asset and include amounts related to contracts having production cycles longer than one year. Depreciable Properties Property, plant and equipment owned by the company are depreciated over the estimated useful lives of individual assets. Capital leases providing for the transfer of ownership upon their expiration or containing bargain purchase options are amortized over the estimated useful lives of individual assets. Most of these assets are depreciated using declining-balance methods, with the remainder using the straight-line method, with the following lives: Years Land improvements 5-20 Buildings 5-45 Machinery and other equipment 1-18 Leasehold improvements Length of lease NORTHROP GRUMMAN CORPORATION Goodwill and Other Purchased Intangible Assets Goodwill and other purchased intangible assets are amortized on a straight- line basis over periods of 40 years and a weighted average 15 years, respectively. Goodwill and other purchased intangibles balances are included in the identifiable assets of the industry segment to which they have been assigned and amortization is charged against the respective industry segment operating profit. The recoverability of goodwill and other purchased intangibles is evaluated at least annually considering the projected future profitability and cash flow at the operations to which they relate. When it is determined that an impairment has occurred, an appropriate charge to operations is recorded. Acquisitions On March 1, 1996 the company purchased substantially all of the defense and electronics systems business (ESG) of Westinghouse Electric Corporation at a cost of $2.9 billion and financed the transaction with new borrowings. The operations of ESG have been consolidated with Northrop Grumman effective March 1, 1996 and are included in the electronics industry segment. In April 1994 the company purchased the outstanding stock of Grumman Corporation (Grumman) at a cost of $2.1 billion and financed the transaction mainly with new borrowings. The operations of Grumman since acquisition are included in the industry segments to which products are associated. In August 1994 the company purchased the remaining 51 percent interest in Vought Aircraft Company (Vought) for $130 million cash. The company had previously purchased a 49 percent interest in Vought for $45 million in September 1992. The operations of Vought since August 1994 are included in the aircraft industry segment. NORTHROP GRUMMAN CORPORATION The purchase method of accounting was used to record all three acquisitions with estimated fair values being assigned to assets and liabilities. The excess of the purchase price over the net tangible assets acquired was assigned to identifiable intangible assets and the remaining balance to goodwill. The following unaudited pro forma financial information combines Northrop Grumman's and ESG's results of operations as if the acquisitions had taken place on January 1, 1995, and is not necessarily indicative of future operating results for Northrop Grumman. $ in millions, except per share 1996 1995 Sales $8,318 $9,158 Net income 214 136 Earnings per share 3.95 2.76 The following unaudited pro forma financial information combines Northrop's, Grumman's and Vought's results of operations as if the acquisitions had taken place on January 1, 1993, and is not necessarily indicative of future operating results for Northrop Grumman. $ in millions, except per share 1994 1993 Sales $7,770 $8,653 Net income 57 112 Earnings per share 1.16 2.33 Financial Statement Reclassification To conform to the presentation in 1996, certain amounts for 1995 and prior years have been reclassified in the Consolidated Financial Statements. The reclassifications had no effect on net income or earnings per share for any period presented. NORTHROP GRUMMAN CORPORATION ACCOUNTS RECEIVABLE Unbilled amounts represent sales for which billings have not been presented to customers at year end, including differences between actual and estimated overhead and margin rates. These amounts are usually billed and collected within one year. Progress payments are, however, received on a number of fixed-price contracts accounted for using the cost-to-cost type percentage-of-completion method. Amounts due upon contract completion are retained by customers until work is completed and customer acceptance is obtained. In 1996 the company terminated an agreement that was entered into in 1995 with a financial institution to sell designated pools of its commercial accounts receivables, with limited recourse, in amounts up to $75 million. At December 31, 1995, $34 million of accounts receivable had been sold. Accounts receivable at December 31, 1996, are expected to be collected in 1997 except for approximately $255 million due in 1998 and $188 million due in 1999 and later. These amounts principally relate to long-term contracts with the U.S. Government. Allowances for doubtful amounts represent mainly estimates of overhead type costs which may not be successfully negotiated and collected. Account receivable were comprised of the following:
$ in millions 1996 1995 1994 1993 1992 Due from U.S. Government, long-term contracts Current accounts Billed $ 396 $ 261 $ 420 $ 65 $ 82 Unbilled 3,463 3,235 3,140 3,050 3,100 Progress payments received (2,721) (2,426) (2,532) (2,410) (2,467) Net current accounts 1,138 1,070 1,028 705 715 Due upon contract completion 2 9 55 14 19 1,140 1,079 1,083 719 734 Due from other customers, long-term contracts Current accounts Billed 78 14 74 66 31 Unbilled 47 50 41 43 48 125 64 115 109 79 Total due, long-term contracts 1,265 1,143 1,198 828 813 Trade and other accounts receivable Due from U.S. Government 75 61 34 36 28 Due from other customers 71 61 34 13 7 Total due, trade and other 146 122 68 49 35 1,411 1,265 1,266 877 848 Allowances for doubtful amounts (55) (68) (64) (57) (57) $ 1,356 $ 1,197 $ 1,202 $ 820 $ 791
NORTHROP GRUMMAN CORPORATION INVENTORIED COSTS Inventoried costs were comprised of the following:
$ in millions 1996 1995 1994 1993 1992 Production costs of contracts in process $ 1,169 $ 924 $ 1,314 $ 800 $ 920 Excess of production cost of delivered items over the estimated average unit cost 105 85 43 Administrative and general expenses 199 166 270 95 109 1,473 1,175 1,627 895 1,029 Progress payments received (533) (428) (611) (326) (359) 940 747 1,016 569 670 Product inventories - at the lower of average cost or market 113 24 27 $ 1,053 $ 771 $ 1,043 $ 569 $ 670
Inventoried costs relate to long-term contracts in process and include expenditures for raw materials and work in process beyond what is required for recorded orders. These expenditures are incurred to help maintain stable and efficient production schedules. The excess of production costs of delivered and in process items over the estimated average costs is carried in inventory under the learning curve concept. Under this concept, production costs per unit are expected to decrease over time due to efficiencies arising from continuous improvement in the performance of repetitive tasks. However, no material amount representing claims, unamortized tooling or other deferred costs is included in inventoried costs. The ratio of inventoried administrative and general expenses to total inventoried costs is estimated to be the same as the ratio of total administrative and general expenses incurred to total contract costs incurred. According to the provisions of U.S. Government contracts, the customer has title to, or a security interest in, substantially all inventories related to such contracts. NORTHROP GRUMMAN CORPORATION INCOME TAXES Income tax expense, both federal and foreign (which arises primarily from work performed abroad by domestic operations), was comprised of the following:
$ in millions 1996 1995 1994 1993 1992 Currently payable Federal income taxes $ 41 $ 76 $ 61 $ 41 $ 7 Foreign income taxes 2 1 1 1 1 43 77 62 42 8 Change in deferred federal income taxes 107 80 (32) 32 51 $ 150 $ 157 $ 30 $ 74 $ 59
Income tax expense differs from the amount computed by multiplying the statutory federal income tax rate times the income before income taxes due to the following:
$ in millions 1996 1995 1994 1993 1992 Income tax expense at statutory rate $ 135 $ 143 $ 23 $ 59 $ 61 Goodwill amortization 16 13 9 Provision for nondeductible expenses 2 4 4 1 1 Benefit from ESOP dividends (3) (3) (4) (4) (3) Dividend exclusion (2) Retroactive effect of statutory rate increase 18 $ 150 $ 157 $ 30 $ 74 $ 59
Deferred income taxes arise because of differences in the treatment of income and expense items for financial reporting and income tax purposes. The principal type of temporary difference stems from the recognition of income on contracts being reported under different methods for tax purposes than for financial reporting. NORTHROP GRUMMAN CORPORATION The tax effects of significant temporary differences and carryforwards that gave rise to year-end deferred federal and state tax balances, as categorized in the Consolidated Statements of Financial Position, were as follows:
$ in millions 1996 1995 1994 1993 1992 Deferred tax assets Deductible temporary differences Retiree benefit plan expense $ 602 $ 421 $ 409 $ 21 $ 21 Provision for estimated expenses 79 25 39 28 27 Income on contracts 49 14 17 21 13 Other 41 35 52 2 2 771 495 517 72 63 Taxable temporary differences Purchased intangibles (110) (124) (133) Excess tax over book depreciation (64) (71) (94) Retiree benefit plan income (18) (48) (19) (15) Administrative and general expenses period costed for tax purposes (2) (1) (3) (174) (215) (276) (19) (18) $ 597 $ 280 $ 241 $ 53 $ 45 Deferred tax liabilities Taxable temporary differences Income on contracts $ 868 $ 795 $ 744 $ 811 $ 789 Administrative and general expenses period costed for tax purposes 1 1 18 18 18 Retiree benefit plan income 9 94 64 Excess tax over book depreciation 10 2 70 89 Other 14 15 9 902 813 771 993 960 Deductible temporary differences Provision for estimated expenses (82) (117) (145) (135) (120) Retiree benefit plan expense (1) (2) (2) (106) (93) Other (9) (11) (83) (119) (147) (250) (224) Tax carryforwards Tax credits (39) (102) (105) (129) (140) Alternative minimum tax credit (90) (90) (90) (87) (40) Operating losses (54) (117) (129) (192) (195) (270) (297) $ 690 $ 502 $ 429 $ 473 $ 439 Net deferred tax liability Total deferred tax liabilities (taxable temporary differences above) $1,076 $1,028 $1,047 $1,012 $ 978 Less total deferred tax assets (deductible temporary differences and tax carryforwards above) 983 806 859 592 584 $ 93 $ 222 $ 188 $ 420 $ 394
NORTHROP GRUMMAN CORPORATION The tax carryforward benefits are expected to be used in the periods in which net deferred tax liabilities mature. The expiration dates for these tax credit carryforwards are in various amounts over the years 1997 through 2007. The alternative minimum tax credit can be carried forward indefinitely. NOTES PAYABLE TO BANKS AND LONG-TERM DEBT The company has available short-term credit lines in the form of money market facilities with several banks. The amount and conditions for borrowing under these credit lines depend on the availability and terms prevailing in the marketplace. No fees or compensating balances are required for these credit facilities. At December 31, 1996, $226 million was outstanding at a weighted average interest rate of 6.44 percent. At December 31, 1995, $65 million was outstanding at a weighted average interest rate of 6.15 percent. At December 31, 1994, $171 million was outstanding at a weighted average interest rate of 7 percent. Additionally, the company has a credit agreement with a group of domestic and foreign banks to provide for three credit facilities: $1.8 billion available on a revolving credit basis through March 2002; a variable interest rate $500 million two-year term loan due March 1, 1998, that was repaid in July 1996; and a variable interest rate $1.5 billion six-year term loan due in 24 quarterly installments of $62.5 million plus interest beginning June 1996. Effective November 1, 1996, the Credit Agreement was further amended to reduce the $1.5 billion term loan to $1.05 billion payable in 21 quarterly installments of $50 million plus interest beginning March 1, 1997. The company pays, at least quarterly, interest on the outstanding debt under the Credit Agreement at rates that vary based in part on the company's credit rating and leverage ratio. At December 31, 1996, $1.05 billion under the term loan was outstanding at a weighted average interest rate of 5.97 percent. Principal payments permanently reduce the amount available under this agreement as well as the debt outstanding. At December 31, 1996, $500 million at a weighted average interest rate of 5.79 percent was outstanding under the company's revolving credit facility. In 1995 there were no borrowings under the company's revolving credit facility. Under these agreements, in the event of a "change in control," the banks are relieved of their commitments. Compensating balances are not required under these agreements. The company's credit agreements contain restrictions relating to the payment of dividends, acquisition of the company's stock, aggregate indebtedness for borrowed money and interest coverage. At December 31, 1996, $326 million of retained earnings were unrestricted as to the payment of dividends. Total indebtedness for all types of borrowed money is limited under the company's credit agreement covenants. At December 31, 1996, indebtedness was limited to $7.4 billion. NORTHROP GRUMMAN CORPORATION Long-term debt consisted of the following:
$ in millions 1996 1995 1994 1993 1992 Notes due 1999, 8.4% $ $ 143 $ 153 $ $ Notes due 2004, 8.625% 350 350 350 Notes due 2006, 7% 400 Debentures due 2016, 7.75% 300 Debentures due 2024, 9.375% 250 250 250 Debentures due 2026, 7.875% 300 Notes payable and mortgages 1 10 160 370 Revolving credit facility 500 Term loans payable to banks due in quarterly installments through 2002 at floating rates 1,050 563 1,000 40 3,150 1,307 1,763 160 410 Less current portion 200 144 130 250 $2,950 $ 1,163 $ 1,633 $ 160 $ 160
During the first quarter of 1996 the company sold to institutional investors $400 million of 7 percent notes due 2006, $300 million of 7 3/4 percent debentures due 2016 and $300 million of 7 7/8 percent debentures due 2026. The proceeds from this issuance were used to finance a portion of the purchase price of ESG. The debt indenture contains restrictions relating to limitations on liens, sale and leaseback arrangements and funded debt of subsidiaries. In November 1995 the notes due in 1999 were called for redemption at face value, on January 2, 1996. The December 31, 1995 balance of $143 million was classified as current. The debentures due in 2024 are callable after October 15, 2004 at a premium of 4 percent declining to par after 2013. The principal amount of long-term debt outstanding at December 31, 1996, due in each of the years 1997 through 2001 is $200 million with $2,150 million due after five years. NORTHROP GRUMMAN CORPORATION FAIR VALUE OF FINANCIAL INSTRUMENTS The following methods and assumptions were used by the company in estimating its fair value disclosures for financial instruments: The carrying amount reported in the consolidated Statements of Financial Position for Cash and Cash Equivalents, Accounts Receivable and amounts borrowed under the company's short-term credit lines approximate their fair value. The fair value of the long-term debt was calculated based on interest rates available for debt with terms and due dates similar to the company's existing debt arrangements. The company has limited involvement with derivative financial instruments and does not use them for trading purposes. To mitigate the variable rate characteristic of the term loans, the company entered into interest rate swap agreements maturing at various dates through May 1999 with several banks resulting in a fixed interest rate of 6.23 percent on a notional amount of $425 million at December 31, 1996. Unrealized gain(loss) on interest rate swap agreements are calculated based upon the amounts at which they could be settled at current interest rates. The market gain(loss) on interest rate swaps was $(1) million, $(7) million and $7 million at December 31, 1996, 1995 and 1994 respectively. The institutions have options to extend $200 million of the swaps through May 1998. The company expects the banks to fully satisfy their obligations under the arrangements. Carrying amounts and the related estimated fair values of the company's financial instruments at December 31 of each year are as follows: $ in millions 1996 1995 1994 1993 1992 Long-term debt Carrying amount 3,150 1,307 1,763 160 410 Fair value 3,221 1,405 1,758 160 443 Interest rate swap agreements Notional amount 425 300 200 Gains(losses) (1) (7) 7 NORTHROP GRUMMAN CORPORATION RETIREMENT BENEFITS The company sponsors several defined-benefit pension plans covering substantially all employees. Pension benefits for most employees are based on the employee's years of service and compensation during the last ten years before retirement. It is the policy of the company to fund at least the minimum amount required for all qualified plans, using actuarial cost methods and assumptions acceptable under U.S. Government regulations, by making payments into a trust separate from the company. Five of the company's fifteen qualified plans which cover over 80 percent of all employees, were in a legally defined full-funding limitation status at December 31, 1996. To protect the assets in the master trust from a "change in control" the trust agreement and the Northrop Grumman Pension Plan were appropriately amended during 1991. The company and subsidiaries also sponsor defined-contribution plans in which most employees are eligible to participate. Company contributions, up to 4 percent of compensation, are based on a matching of employee contributions. In addition, the company and its subsidiaries provide certain health care and life insurance benefits for retired employees. Employees achieve eligibility to participate in these contributory plans upon retirement from active service and if they meet specified age and years of service requirements. Election to participate must be made at the date of retirement. Qualifying dependents are also eligible for medical coverage. Approximately 85 percent of the company's current retirees participate in the medical plans. The cost and funded status for the medical and life benefits are combined in the tables that follow because (1) life benefits constitute an insignificant amount of the combined cost, and (2) for those plans with assets, the assets in trust for each plan can be used to pay benefits under either plan. Plan documents reserve the company's right to amend or terminate the plans at any time. Premiums charged retirees for medical coverage are based on years of service and are adjusted annually for changes in the cost of the plans as determined by an independent actuary. In addition to this medical inflation cost-sharing feature, the plans also have provisions for deductibles, copayments, coinsurance percentages, out-of-pocket limits, schedule of reasonable fees, managed care providers, maintenance of benefits with other plans, Medicare carve-out and a maximum lifetime benefit of from $250,000 to $1,000,000 per covered individual. It is the policy of the company to fund the maximum amount deductible for income taxes into the VEBA trust established for the Northrop Retiree Health Care Plan for Retired Employees for payment of benefits. NORTHROP GRUMMAN CORPORATION The cost to the company of these plans in each of the last five years is shown in the following table.
$ in millions 1996 1995 1994 1993 1992 Defined benefit pension plans Actual return on assets $(1,379) $(1,856) $ 25 $ (449) $ (298) Deferral of actual return on assets 618 1,233 (541) 153 38 Expected return on assets (761) (623) (516) (296) (260) Service cost 174 125 176 104 99 Interest cost 570 520 372 190 175 Amortization of unrecognized items Transition asset, net (42) (42) (42) (42) (42) Prior service costs 41 31 14 15 13 Net gain from previous years (21) (34) (40) (42) (68) Net periodic pension income $ (39) $ (23) $ (36) $ (71) $ (83) Defined contribution plans $ 73 $ 54 $ 59 $ 47 $ 48 Retiree health care and life insurance benefit plans Actual return on assets $ (60) $ (95) $ 22 $ (19) $ (10) Deferral of actual return on assets 38 76 (42) (1) (10) Expected return on assets (22) (19) (20) (20) (20) Service cost 27 20 28 21 25 Interest cost 91 89 61 37 39 Amortization of unrecognized gain from previous years (5) (3) (2) (6) (3) Excess dependent cost 2 Net periodic postretirement benefit cost $ 91 $ 87 $ 69 $ 32 $ 41
In addition to the net periodic pension income and postretirement benefit cost, in 1994 the company recognized the effect of an early retirement incentive program of $250 million for pension and $32 million for postretirement benefits. The total $282 million effect on the company's 1994 operating margin is shown in the Consolidated Statements of Income under the caption Special Termination Benefits. NORTHROP GRUMMAN CORPORATION Major assumptions as of each year-end used in the accounting for the defined-benefit plans are shown in the following table. Pension cost is determined using all three factors as of the end of the preceding year, whereas the funded status of the plans, shown later, uses only the first two factors, as of the end of each year. 1996 1995 1994 1993 1992 Discount rate for obligations 7.50% 7.00% 8.25% 7.00% 8.00% Rate of increase for compensation 4.50 5.00 5.25 5.50 5.50 Expected long-term rate of return on plan assets 9.00 9.00 8.75 8.25 8.25 These assumptions were also used in retiree health care and life insurance benefit calculations with one modification. Since, unlike the pension trust, the earnings of the VEBA trust are taxable, the above 9 percent expected rate of return on plan assets was reduced accordingly to 5.25 percent after taxes. A significant factor used in estimating future per capita cost, for the company and its retirees, of covered health care benefits is the health care cost trend rate assumption. The rate used was 7 percent for 1996 and is assumed to decrease gradually to 6 percent for 2006 and remain at that level thereafter. An additional one-percentage-point of increase each year in that rate would result in a $12 million annual increase in the aggregate of the service and interest cost components of net periodic postretirement benefit cost, and a $111 million increase in the accumulated postretirement benefit obligation at December 31, 1996. The following tables set forth the funded status and amounts recognized in the Consolidated Statements of Financial Position at each year-end for the company's defined-benefit pension and retiree health care and life insurance benefit plans. The summary showing pension plans whose accumulated benefits are in excess of assets at December 31, 1996, is comprised of seven qualified plans along with twelve unfunded nonqualified plans for benefits provided to directors, officers and employees either beyond those provided by, or payable under, the company's main plans. The company revised its estimate of the discount rate for obligations and rate of increase for compensation assumptions in calculating the funded status of the plans at December 31, 1996. The changes resulted in a $483 million decrease in the projected benefit obligation for pension plans and a $59 million decrease in the accumulated postretirement benefit obligation. NORTHROP GRUMMAN CORPORATION
$ in millions 1996 1995 1994 1993 1992 Pension plans whose assets exceed accumulated benefits Actuarial present value of benefit obligations Vested benefits $ 6,255 $ 6,572 $ 2,487 $ 2,059 $ 1,690 Nonvested benefits 328 320 228 175 153 Accumulated benefit obligations 6,583 6,892 2,715 2,234 1,843 Effect of assumed salary rate increases 391 469 409 453 421 Projected benefit obligations 6,974 7,361 3,124 2,687 2,264 Less market value of plan assets 9,184 8,319 4,210 3,970 3,642 Excess of assets over projected benefit obligations (2,210) (958) (1,086) (1,283) (1,378) Unrecognized items Net transition asset 247 289 332 374 415 Prior service costs (248) (286) (307) (114) (133) Net gain 2,067 921 897 764 916 Accrued retiree benefits pension asset included in Consolidated Statements of Financial Position $ (144) $ (34) $ (164) $ (259) $ (180) Pension plans whose accumulated benefits exceed assets Actuarial present value of benefit obligations Vested benefits $ 839 $ 311 $ 2,865 $ 57 $ 33 Nonvested benefits 51 8 252 3 Accumulated benefit obligations 890 319 3,117 60 33 Effect of assumed salary rate increases 145 15 16 19 3 Projected benefit obligations 1,035 334 3,133 79 36 Less market value of plan assets 436 177 2,872 16 Excess of projected benefit obligations over assets 599 157 261 63 36 Unrecognized items Net transition obligation (3) (3) (4) (5) (4) Prior service costs (16) (5) (8) (14) 5 Net gain(loss) (10) (31) 1 (7) (3) Additional minimum liability 22 29 6 12 7 Accrued retiree benefits liability included in Consolidated Statements of Financial Position $ 592 $ 147 $ 256 $ 49 $ 41
NORTHROP GRUMMAN CORPORATION Pension plan assets at December 31, 1996, were comprised of 49 percent domestic equity type investments in listed companies (including 4 percent in Northrop Grumman common stock), 17 percent equity investments listed on international exchanges, 27 percent in fixed income type investments, principally U.S. Government securities, 3 percent in venture capital and real estate investments, and 4 percent in cash. The investment in Northrop Grumman represents 4,798,523 shares, or eight percent of the company's total shares outstanding. Effective January 1, 1995, the company adopted amendments to two of the company's retirement plans to cap the maximum years of service credit that an employee can earn and adjusted the amount of service credit earned each year. The effect of these changes was to increase the projected benefit obligation at December 31, 1994 by $210 million.
$ in millions 1996 1995 1994 1993 1992 Retiree health care and life insurance benefit plans Accumulated postretirement benefit obligation (APBO) Retirees $ 841 $ 960 $ 575 $ 274 $ 243 Fully eligible active employees 81 88 172 86 82 Active employees not yet eligible 383 288 258 192 194 1,305 1,336 1,005 552 519 Less market value of plan assets 468 433 353 373 369 Excess of APBO over assets 837 903 652 179 150 Unrecognized items Prior service cost (2) (1) Net gain(loss) 191 (15) 156 74 72 Accrued retiree benefits liability included in Consolidated Statements of Financial Position $1,026 $ 887 $ 808 $ 253 $ 222
Retiree health care and life insurance plan assets at December 31, 1996, were almost entirely comprised of equity type investments in listed companies. CONTINGENCIES The corporation and its subsidiaries have been named as defendants in various legal actions. Based upon available information, it is the company's expectation that those actions are either without merit or will have no material adverse effect on the company's results of operations or financial position. NORTHROP GRUMMAN CORPORATION In accordance with company policy on environmental remediation, the estimated cost to complete remediation has been accrued where it is probable that the company will incur such costs in the future, including those for which it has been named a Potentially Responsible Party by the Environmental Protection Agency or similarly designated by other environmental agencies. To assess the potential impact on the company's financial statements, management estimates the total reasonably possible remediation costs that could be incurred by the company, taking into account currently available facts on each site as well as the current state of technology and prior experience in remediating contaminated sites. These estimates are reviewed periodically and adjusted to reflect changes in facts and technical and legal circumstances. Management estimates that at December 31, 1996, the reasonable range of future costs for environmental remediation, including those sites acquired in the purchase of ESG, is $63 million to $107 million, of which $64 million has been accrued. Although management cannot predict whether new information gained as projects progress will materially affect the estimated liability accrued, management does not anticipate that future remediation expenditures will have a material adverse effect on the company's results of operations or financial position. Minimum rental commitments under long-term noncancellable operating leases total $239 million which is payable as follows: 1997 - $64 million, 1998 - $45 million, 1999 - $37 million, 2000 - $27 million, and 2001 - $19 million, and 2002 and thereafter - $47 million. NORTHROP GRUMMAN CORPORATION STOCK RIGHTS The company has a Common Stock Purchase Rights plan with one right issued in tandem with each share of common stock. The rights will become exercisable on the tenth business day after a person or group has acquired 15 percent or more of the general voting power of the company, or announces an intention to make a tender offer for 30 percent or more of such voting power, without the prior consent of the Board of Directors. If the rights become exercisable, a holder will be entitled to purchase one share of common stock from the company at an initial exercise price of $105. If a person acquires more than 15 percent of the then outstanding voting power of the company or if the company is combined with an acquiror, each right will entitle its holder to receive, upon exercise, shares of the company's or the acquiror's (depending upon which is the surviving company) common stock having a value equal to two times the exercise price of the right. The company will be entitled to redeem the rights at $.02 per right at any time prior to the earlier of the date that a person has acquired or obtained the right to acquire 15 percent of the general voting power of the company or the expiration of the rights in October 1998. The rights are not exercisable until after the date on which the company's prerogative to redeem the rights has expired. The rights do not have voting or dividend privilege and cannot be traded independently from the company's common stock until such time as they become exercisable. STOCK COMPENSATION PLANS At December 31, 1996, the company had two stock-based compensation plans -- the 1993 Long-Term Incentive Stock Plan (LTISP) and the 1995 Stock Option Plan for Non-Employee Directors (SOPND). The LTISP permits grants to key employees of three general types of stock incentive awards: stock options, stock appreciation rights (SARs) and stock awards. With shareholder approval of this plan and subsequent amendment, a total of 4.1 million additional shares were made available for future grants. Up to 1.8 million of these shares may be in the form of stock awards. At December 31, 1996, 227,062 shares remained available for future grants under the LTISP. NORTHROP GRUMMAN CORPORATION Under the LTISP each grant of a stock option is made at the closing market price on the date of grant. Options generally vest in 25 percent increments, two, three, four and five years from the grant date and expire ten years after the grant date. No SARs have been granted under the LTISP. Stock awards, in the form of restricted performance stock rights, are granted to key employees without payment to the company. Recipients of the rights earn shares of stock based on a total-shareholder-return measure of performance over a five-year period with interim distributions three and four years after grant. If at the end of the five-year period the performance objectives have not been met, up to 70 percent of the original grant will be forfeited. Termination of employment can result in forfeiture of some or all of the benefits extended under the plan. The shareholder approval of the SOPND in 1995 made available 300,000 shares for grants of stock options to nonemployee directors. Each grant of a stock option is made at the closing market price on the date of the grant, is immediately exercisable and expires ten years after the grant date. At December 31, 1996, 289,500 shares were available for future grants under the SOPND. The company applies Accounting Principles Board Opinion 25 - Accounting for Stock Issued to Employees and related Interpretations in accounting for awards made under the plans. When stock options are exercised, the amount of the cash proceeds to the company is recorded as an increase to paid-in capital. No compensation expense is recognized in connection with stock options. Compensation expense for restricted performance stock rights is estimated and accrued over the vesting period. The fixed 30 percent minimum distribution portion is recorded at grant value and the variable portion is recorded at market value. Compensation expense recognized for stock awards was $25 million in 1996, $4 million in 1995, $4 million in 1994, $5 million in 1993, and $4 million in 1992. NORTHROP GRUMMAN CORPORATION Stock option activity for the last five years is summarized below: Weighted- Average Shares Exercise Shares Under Option Prices Exercisable Outstanding at January 1, 1992 2,823,870 $25 1,841,070 Granted 635,700 26 Cancelled (43,380) 20 Exercised (281,660) 21 Outstanding at December 31, 1992 3,134,530 25 1,798,550 Granted 515,300 36 Cancelled (96,640) 25 Exercised (1,405,330) 29 Outstanding at December 31, 1993 2,147,860 25 738,300 Granted 708,700 43 Cancelled (61,215) 28 Exercised (265,430) 25 Outstanding at December 31, 1994 2,529,915 30 817,660 Granted 762,500 56 Cancelled (130,885) 31 Exercised (170,810) 23 Outstanding at December 31, 1995 2,990,720 37 1,064,925 Granted 987,800 78 Cancelled (87,921) 49 Exercised (240,334) 28 Outstanding at December 31, 1996 3,650,265 49 1,236,689 Had compensation expense been determined based on the fair value at the grant dates for stock option awards granted in 1996 and 1995, consistent with the method of Financial Accounting Standards Board Statement 123 - Accounting for Stock Based Compensation, net income and earnings per share in 1996 would have been lower by $2 million and three cents, respectively. For 1995 net income would have been unchanged and earnings per share would have been lower by one cent. These amounts were determined using weighted-average per share fair values of options granted in 1996 and 1995 of $25 and $19, respectively. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model based on an expected life of six years and for 1996 and 1995, respectively, the following additional assumptions: dividend yield - 2.1% and 2.8%; expected volatility - 28% and 31%; and risk-free interest rate - 6.2% and 5.8%. NORTHROP GRUMMAN CORPORATION At December 31, 1996, the following stock options were outstanding: Options Outstanding Options Exercisable Weighted- Weighted- Weighted- Range of Number Average Average Number Average Exercise Outstanding Remaining Exercise Exercisable Exercise Prices at 12/31/96 Contractual Life Prices at 12/31/96 Prices $16 to 25 632,070 3.1 years $18 632,070 $18 $26 to 40 686,001 6.3 years 32 415,846 30 $41 to 55 673,837 7.8 years 43 181,266 43 $56 to 70 796,557 8.8 years 58 7,507 57 $71 to 81 861,800 10.0 years 81 3,650,265 1,236,689 Restricted performance stock rights were granted with weighted-average grant-date fair values per share as follows: 1996 - 802,800 at $81; 1995 - 22,660 at $53; 1994 - 141,540 at $43; 1993 - 473,000 at $36; and 1992 - none granted. NORTHROP GRUMMAN CORPORATION UNAUDITED SELECTED QUARTERLY DATA Quarterly financial results, previously reported are set forth in the following tables together with dividend and common stock price data. 1996 Quarters, $ in millions, except per share 4 3 2 1 Net sales $2,282 $2,043 $2,143 $1,603 Operating margin 146 165 208 139 Net income 17 70 86 61 Earnings per share .30 1.21 1.69 1.23 Dividend per share .40 .40 .40 .40 Stock price: High 84 1/4 80 1/4 69 1/4 67 3/8 Low 76 3/8 63 3/4 57 3/4 58 3/8 The fourth quarter of 1996 includes a $90 million pretax charge related to the closure of four plants. The charge included $30 million for costs related to the reduction of personnel and other closure activities and $60 million for the write-down of facilities. The sale of shares owned by the company in ETEC Systems, Inc. generated pretax gains of $10 million, $6 million and $12 million in the fourth, third and second quarters, respectively. The first quarter includes a $25 million charge related to nacelles work the company performed for Fokker Aircraft N.V., which declared bankruptcy in March 1996. The sum of quarterly earnings per share for 1996 does not equal earnings per share for the year because the average number of common shares outstanding for the second half of 1996 was disproportionately higher than the full year average due to the issuance in June of approximately 8 million shares of common stock in a public stock offering. NORTHROP GRUMMAN CORPORATION 1995 Quarters, $ in millions, except per share 4 3 2 1 Net sales $1,812 $1,630 $1,759 $1,617 Operating margin 121 131 167 117 Net income 58 61 79 54 Earnings per share 1.17 1.25 1.59 1.10 Dividend per share .40 .40 .40 .40 Stock price: High 64 1/4 62 5/8 54 49 3/4 Low 56 51 7/8 47 39 3/4 The operating margin in the second quarter of 1995 benefited from a net $34 million in cumulative operating margin adjustments. Positive adjustments on the B-2 stealth bomber and C-17 military transport programs were partially offset by a downward adjustment on the Boeing 747 jetliner program. The 747 adjustment reflected cost increases related to the stretch-out of the current production contract. The B-2 adjustment was made as a result of negotiated contract adjustments and a revised estimate of the overall operating margin expected to be earned on the B-2 production contract. The positive adjustment on the C-17 reflected improved operating performance on this program. The corporation's common stock is traded on the New York and Pacific Stock Exchanges (trading symbol NOC). The approximate number of holders of record of the corporation's common stock at January 31, 1997, was 10,106. NORTHROP GRUMMAN CORPORATION INDEPENDENT AUDITORS' REPORT Board of Directors and Shareholders Northrop Grumman Corporation Los Angeles, California We have audited the accompanying consolidated statements of financial position of Northrop Grumman Corporation and Subsidiaries as of December 31 for each of the years 1992 through 1996, and the related consolidated statements of income, changes in shareholders' equity, and cash flows for the years then ended. Our audits also included the financial statement schedule listed in the Index at Item 14. These financial statements and financial statement schedule are the responsibility of the company's management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Northrop Grumman Corporation and Subsidiaries at December 31 for each of the years 1992 through 1996, and the results of their operations and their cash flows for the years then ended in conformity with generally accepted accounting principles. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein. Deloitte & Touche LLP Los Angeles, California February 5, 1997 NORTHROP GRUMMAN CORPORATION Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure No information is required in response to this Item. PART III Item 10. Directors and Executive Officers of the Registrant The information as to Directors will be incorporated herein by reference to the Proxy Statement for the 1997 Annual Meeting of Stockholders to be filed within 120 days after the end of the company's fiscal year. The information as to Executive Officers is contained in Part I of this report as permitted by General Instruction G(3). Item 11. Executive Compensation The information required by this Item will be incorporated herein by reference to the Proxy Statement for the 1997 Annual Meeting of Stockholders to be filed within 120 days after the end of the company's fiscal year. Item 12. Security Ownership of Certain Beneficial Owners and Management The information required by this Item will be incorporated herein by reference to the Proxy Statement for the 1997 Annual Meeting of Stockholders to be filed within 120 days after the end of the company's fiscal year. Item 13. Certain Relationships and Related Transactions The information required by this Item will be incorporated herein by reference to the Proxy Statement for the 1997 Annual Meeting of Stockholders to be filed within 120 days after the end of the company's fiscal year. NORTHROP GRUMMAN CORPORATION PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) 1. Financial Statements Consolidated Statements of Financial Position Consolidated Statements of Income Consolidated Statements of Changes in Shareholders' Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Independent Auditors' Report 2. Financial Statement Schedule Schedule II - Valuation and Qualifying Accounts All other schedules are omitted either because they are not applicable or not required or because the required information is included in the financial statements or notes thereto. Separate financial statements of the parent company are omitted since it is primarily an operating company and minority equity interests in and/or nonguaranteed long-term debt of subsidiaries held by others than the company are in amounts which together do not exceed 5 percent of the total consolidated assets at December 31, 1996. (b) No reports on Form 8-K were filed during the last quarter of the period covered by this report. NORTHROP GRUMMAN CORPORATION Exhibits: 3(a) Certificate of Incorporation, as amended (incorporated by reference to Form S-3 Registration Statement, filed August 18, 1994) 3(b) Northrop Grumman Corporation Bylaws, amended and restated as of January 27, 1997. 4(a) Common Stock Purchase Rights Agreement (incorporated by reference to Form 8-A filed September 22, 1988), amended on August 2, 1991 (incorporated by reference to Form 8 filed August 2, 1991) and amended on September 28, 1994 (incorporated by reference to Form 8/A-A filed October 7, 1994) 4(b) Indenture Agreement dated as of October 15, 1994 (incorporated by reference to Form 8-K filed October 25, 1994) 4(c) Form of Officer's Certificate (without exhibits) establishing the terms of Northrop Grumman Corporation's 7% Notes Due 2006, 7 3/4% Debentures Due 2016 and 7 7/8% Debentures Due 2026 (incorporated by reference to Form S-4 Registration Statement, filed April 19, 1996) 4(d) Form of Northrop Grumman Corporation's 7% Notes Due 2006 (incorporated by reference to Form S-4 Registration Statement, filed April 19, 1996) 4(e) Form of Northrop Grumman Corporation's 7 3/4% Debentures Due 2016 (incorporated by reference to Form S-4 Registration Statement, filed April 19, 1996) 4(f) Form of Northrop Grumman Corporation's 7 7/8% Debentures Due 2026 (incorporated by reference to Form S-4 Registration Statement, filed April 19, 1996) 10(a) Second Amended and Restated Credit Agreement dated as of April 15, 1994, Amended and Restated as of March 1, 1996 among Northrop Grumman Corporation, Bank of American National Trust and Savings Association, as Documentation Agent, Chemical Securities, Inc., as Syndication Agent, The Chase Manhattan Bank (National Association), as Administrative Agent, and the Banks Signatories thereto (incorporated by reference to Form 8-K, filed March 18, 1996), and amended as of November 1, 1996 10(b) Uncommitted Credit Facility dated October 10, 1994, between Northrop Grumman Corporation and Wachovia Bank of Georgia, N.A., which is substantially identical to facilities between Northrop Grumman Corporation and certain banks some of which are parties to the Credit Agreement filed as Exhibit 10(a) hereto (incorporated by reference to Form 10-K filed February 22, 1996) *10(c) 1973 Incentive Compensation Plan (incorporated by reference to Form 8-B filed June 21, 1985) *10(d) 1973 Performance Achievement Plan (incorporated by reference to Form 8-B filed June 21, 1985) NORTHROP GRUMMAN CORPORATION *10(e) Northrop Supplemental Plan 2 (incorporated by reference to Form 10-K filed February 22, 1996), and amended as of June 19, 1996. *10(f) Northrop Grumman Corporation ERISA Supplemental Plan 1 (incorporated by reference to Form 10-K filed February 28, 1994). *10(g) Retirement Plan for Independent Outside Directors (incorporated by reference to Form SE filed March 29, 1991), amended September 21, 1994 (incorporated by reference to Form 10-K filed March 21, 1995) *10(h) 1987 Long-Term Incentive Plan, as amended (incorporated by reference to Form SE filed March 30, 1989) *10(i) Executive Life Insurance Policy (incorporated by reference to Form 10-K filed February 22, 1996) *10(j) Executive Accidental Death, Dismemberment and Plegia Insurance Policy (incorporated by reference to Form 10-K filed February 22, 1996) *10(k) Executive Long-Term Disability Insurance Policy (incorporated by reference to Form 10-K filed February 22, 1996) *10(l) Key Executive Medical Plan Benefit Matrix (incorporated by reference to Form 10-K filed February 22, 1996) *10(m) Executive Dental Insurance Policy Group Numbers 5134 and 5135 (incorporated by reference to Form 10-K filed February 22, 1996) *10(n) Group Excess Liability Policy (incorporated by reference to Form 10-K filed February 22, 1996) *10(o) Northrop Grumman 1993 Long-Term Incentive Stock Plan, as amended (incorporated by reference to Northrop Grumman Corporation Proxy Statement filed March 30, 1995), as amended (incorporated by reference to Northrop Grumman Corporation Proxy Statement filed April 1, 1996) and amended on December 18, 1996 NORTHROP GRUMMAN CORPORATION *10(p) Northrop Corporation 1993 Stock Plan for Non-Employee Directors (incorporated by reference to Northrop Corporation 1993 Proxy Statement filed March 30, 1993), amended as of September 21, 1994 (incorporated by reference to Form 10-K filed March 21, 1995) *10(q) Northrop Grumman Corporation 1995 Stock Option Plan for Non-Employee Directors (incorporated by reference to 1995 Proxy Statement filed March 30, 1995) *10(r) Form of Northrop Grumman Corporation Special Agreement *10(s) Executive Deferred Compensation Plan (effective December 29, 1994) (incorporated by reference to Form 10-K filed February 22, 1996) 10(t) Memorandum of Agreement dated December 16, 1996 (W. C. Solberg Retirement Arrangements) and Release Agreement between Northrop Grumman Corporation and W. C. Solberg 11 Statement Re Computation of Per Share Earnings 23 Independent Auditors' Consent 24 Power of Attorney 27 Financial Data Schedule ________________ * Listed as Exhibits pursuant to Item 601(b)(10) of Regulation S-K NORTHROP GRUMMAN CORPORATION SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 25th day of February 1997. Northrop Grumman Corporation By: Nelson F. Gibbs Nelson F. Gibbs Corporate Vice President and Controller (Principal Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed on behalf of the registrant this 25th day of February 1997, by the following persons and in the capacities indicated. Signature Title Kent Kresa* Chairman of the Board, President and Chief Executive Officer and Director (Principal Executive Officer) Jack R. Borsting* Director John T. Chain, Jr.* Director Jack Edwards* Director Phillip Frost* Director Aulana L. Peters* Director John E. Robson* Director Richard R. Rosenberg* Director Brent Scowcroft* Director John Brooks Slaughter* Director Wallace C. Solberg* Director Richard J. Stegemeier* Director Richard B. Waugh, Jr.* Corporate Vice President and Chief Financial Officer *By James C. Johnson James C. Johnson, Attorney-in-Fact pursuant to a power of attorney NORTHROP GRUMMAN CORPORATION SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Dollars in Thousands)
COL. A COL. B COL. C COL. D COL. E Other Balance at Changes-- Balance Classification Beginning Additions Add at End of Period At Cost(2) (Deduct)(1) of Period Description: Year ended December 31, 1992 Reserves and allowances deducted from asset accounts: Allowances for doubtful amounts $52,001 $ 7,571 $ (2,412) $57,160 Year ended December 31, 1993 Reserves and allowances deducted from asset accounts: Allowances for doubtful amounts $57,160 $ 9,304 $ (9,759) $56,705 Year ended December 31, 1994 Reserves and allowances deducted from asset accounts: Allowances for doubtful amounts $56,705 $25,283 $(18,262) $63,726 Year ended December 31, 1995 Reserves and allowances deducted from asset accounts: Allowances for doubtful amounts $63,726 $ 6,357 $ (2,129) $67,954 Year ended December 31, 1996 Reserves and allowances deducted from asset accounts: Allowances for doubtful amounts $67,954 $19,364 $(31,873) $55,445 ____________ (1) Uncollectible amounts written off, net of recoveries (2) Additions include allowances for bad debts from acquired companies - $15,625 in 1994 and $4,751 in 1996
NORTHROP GRUMMAN CORPORATION EXHIBIT 11 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS (in thousands, except per share)
1996 1995 1994 1993 1992 Primary: Average shares outstanding 54,012 49,364 49,139 48,085 47,179 Net effect of the assumed exercise of stock options - based on the treasury stock method 1,260 1,111 758 792 251 Totals 55,272 50,475 49,897 48,877 47,430 Net Income $234,126 $252,159 $35,264 $95,755 $120,922 Earnings per share(1) $ 4.24 $ 5.00 $ .71 $ 1.96 $ 2.55 Fully diluted: Average shares outstanding 54,012 49,364 49,139 48,085 47,179 Net effect of the assumed exercise of stock options - based on the treasury stock method 1,474 1,356 837 872 805 Totals 55,486 50,720 49,976 48,957 47,984 Net Income $234,126 $252,159 $35,264 $95,755 $120,922 Earnings per share(1) $ 4.22 $ 4.97 $ .71 $ 1.96 $ 2.52
(1) This calculation was made in compliance with Item 601 of Regulation S-K. Earnings per share presented elsewhere in this report exclude from their calculation shares issuable under employee stock options, since their dilutive effect is less than 3%. NORTHROP GRUMMAN CORPORATION EXHIBIT 23 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statements Nos. 2-73293, 2-98614, 33-15764, 33-49667, 33-55146, 33-59815, 33-59853, 333-03959, 333-02653 and 333-02453 of Northrop Grumman Corporation on Form S-8 of our report appearing in this Annual Report on Form 10-K of Northrop Grumman Corporation for the year ended December 31, 1996. DELOITTE & TOUCHE LLP Los Angeles, California February 25, 1997
				                            BYLAWS
				                             OF
			                  NORTHROP GRUMMAN CORPORATION
			                    (A Delaware Corporation)


				                         ARTICLE I

			                           OFFICES

	    Section 1.01.   REGISTERED OFFICE.  The registered office of 
Northrop Grumman Corporation (the "Corporation") in the State of Delaware 
shall be at Corporation Trust Center, 1209 Orange Street, City of 
Wilmington, County of New Castle, and the name of the registered agent at 
that address shall be The Corporation Trust Company.

	    Section 1.02.   PRINCIPAL EXECUTIVE OFFICE.  The principal executive 
office of the Corporation shall be located at 1840 Century Park East, Los 
Angeles, California 90067.  The Board of Directors of the Corporation (the 
"Board of Directors") may change the location of said principal executive 
office.

	    Section 1.03.   OTHER OFFICES.  The Corporation may also have an 
office or offices at such other place or places, either within or without 
the State of Delaware, as the Board of Directors may from time to time 
determine or as the business of the Corporation may require.


			                        	ARTICLE II

			                    MEETINGS OF STOCKHOLDERS

    	Section 2.01.   ANNUAL MEETINGS.  The annual meeting of stockholders 
of the Corporation shall be held between May 1 and July 1 of each year on 
such date and at such time as the Board of Directors shall determine.  At 
each annual meeting of stockholders, directors shall be elected in accordance 
with the provisions of Section 3.04 hereof and any other proper business may 
be transacted. 

    	Section 2.02.   SPECIAL MEETINGS.  Special meetings of stockholders 
for any purpose or purposes may be called at any time by a majority of the 
Board of Directors, the Chairman of the Board, or by the President and Chief
Executive Officer.  Special meetings may not be called by any other person 
or persons.  Each special meeting shall be held at such date and time as is 
requested by the person or persons calling the meeting, within the limits 
fixed by law.

    	Section 2.03.   PLACE OF MEETINGS.  Each annual or special meeting 
of stockholders shall be held at such location as may be determined by the 
Board of Directors or, if no such determination is made, at such place as 
may be determined by the Chairman of the Board.  If no location is so 
determined, any annual or special meeting shall be held at the principal 
executive office of the Corporation.

    	Section 2.04.   NOTICE OF MEETINGS.  Written notice of each annual 
or special meeting of stockholders stating the date and time when, and the 
place where, it is to be held shall be delivered either personally or by 
mail to stockholders entitled to vote at such meeting not less than ten (10) 
nor more than sixty (60) days before the date of the meeting.  The purpose or 
purposes for which the meeting is called may, in the case of an annual 
meeting, and shall, in the case of a special meeting, also be stated.  If 
mailed, such notice shall be directed to a stockholder at his address as 
it shall appear on the stock books of the Corporation, unless he shall have 
filed with the Secretary of the Corporation a written request that notices 
intended for him be mailed to some other address, in which case such notice 
shall be mailed to the address designated in such request.

    	Section 2.05.   CONDUCT OF MEETINGS.  All annual and special meetings 
of stockholders shall be conducted in accordance with such rules and 
procedures as the Board of Directors may determine subject to the requirements 
of applicable law and, as to matters not governed by such rules and procedures, 
as the chairman of such meeting shall determine.  The chairman of any annual 
or special meeting of stockholders shall be the Chairman of the Board.  The 
Secretary, or in the absence of the Secretary, a person designated by the 
Chairman of the Board, shall act as secretary of the meeting.

    	Section 2.06.   NOTICE OF BUSINESS.  At any meeting of stockholders, 
only such business shall be conducted as shall be a proper matter for 
stockholder action under the laws of the State of Delaware and as shall have 
been brought before the meeting (a) by or at the direction of the Board of 
Directors or (b) by any stockholder of the Corporation who is a stockholder 
of record at the time of giving of the notice provided for in this Section
2.06 who shall be entitled to vote at such meeting and who complies with the 
notice procedures set forth in this Section 2.06.  For business to be properly
brought before a meeting of stockholders by a stockholder, the stockholder 
shall have given timely notice thereof in writing to the Secretary.  To be 
timely, a stockholder's notice shall be delivered to or mailed and received 
at the principal executive office of the Corporation not less than sixty (60) 
days nor more than ninety (90) days prior to the meeting: provided, however, 
that in the event that less than seventy (70) days' notice or prior public 
disclosure of the date of the meeting is given or made to stockholders, notice 
by the stockholder to be timely must be so received not later than the close 
of business on the 10th day following the date on which such notice of the 
date of the meeting was mailed or such public disclosure was made, whichever 
first occurs.  Such stockholder's notice to the Secretary shall set forth as 
to each matter the stockholder proposes to bring before the meeting (a) a 
brief description of the business desired to be brought before the meeting, 
the reasons for conducting such business at the meeting, and, in the event 
that such business includes a proposal to amend either the Certificate of 
Incorporation or these Bylaws, the language of the proposed amendment, (b) 
the name and address as they appear on the Corporation's books of the 
stockholder proposing such business, (c) the class and number of shares of 
capital stock of the Corporation which are beneficially owned by such 
stockholder and (d) any material interest of such stockholder in such 
business.  Notwithstanding anything in these Bylaws to the contrary, no 
business shall be conducted at a stockholder meeting except in accordance 
with the procedures set forth in this Section 2.06.  The chairman of the 
meeting shall, if the facts warrant, determine and declare to the meeting 
that business was not properly brought before the meeting and in accordance 
with the provisions of these Bylaws and if he should so determine, he shall 
so declare to the meeting and any such business not properly brought before 
the meeting shall not be transacted.  Notwithstanding the foregoing provisions 
of this Section 2.06, a stockholder shall also comply with all applicable 
requirements of the Securities Exchange Act of 1934 as amended and the rules 
and regulations thereunder with respect to the matters set forth in this 
Section 2.06.  Nothing in this Bylaw shall be deemed to affect any rights of 
stockholders or the Corporation under Rule 14a-8 of the Securities Exchange 
Act of 1934 with respect to proposals which are requested to be included in 
the Corporation's proxy statement.  
				    
	    Section 2.07.   QUORUM.  At any meeting of stockholders, the presence, 
in person or by proxy, of the holders of record of a majority of shares then 
issued and outstanding and entitled to vote at the meeting shall constitute 
a quorum for the transaction of business; provided, however, that this Section 
2.07 shall not affect any different requirement which may exist under statute, 
pursuant to the rights of any authorized class or series of stock, or under 
the Certificate of Incorporation of the Corporation (the "Certificate") for 
the vote necessary for the adoption of any measure governed thereby.  In the 
absence of a quorum, the stockholders present in person or by proxy, by 
majority vote and without further notice, may adjourn the meeting from time 
to time until a quorum is attained.  At any reconvened meeting following such 
an adjournment at which a quorum shall be present, any business may be 
transacted which might have been transacted at the meeting as originally 
notified. 

    	Section 2.08.   VOTES REQUIRED.  A majority of the votes cast at a 
duly called meeting of stockholders, at which a quorum is present, shall be 
sufficient to take or authorize action upon any matter which may properly 
come before the meeting, unless the vote of a greater or different number 
thereof is required by statute, by the rights of any authorized class of 
stock or by the Certificate.  Unless the Certificate or a resolution of the 
Board of Directors adopted in connection with the issuance of shares of any 
class or series of stock provides for a greater or lesser number of votes 
per share, or limits or denies voting rights, each outstanding share of 
stock, regardless of class, shall be entitled to one vote on each matter 
submitted to a vote at a meeting of stockholders. 

    	Section 2.09.   PROXIES.  A stockholder may vote the shares owned of 
record by him either in person or by proxy executed in writing (which shall 
include writings sent by telex, telegraph, cable or facsimile transmission) 
by the stockholder himself or by his duly authorized attorney-in-fact.  No 
proxy shall be valid after three (3) years from its date, unless the proxy 
provides for a longer period.  Each proxy shall be in writing, subscribed 
by the stockholder or his duly authorized attorney-in-fact, and dated, but 
it need not be sealed, witnessed or acknowledged.

    	Section 2.10.   STOCKHOLDER ACTION.  Any action required or permitted 
to be taken by the stockholders of the Corporation must be effected at a duly 
called annual meeting or special meeting of stockholders of the Corporation, 
unless such action requiring or permitting shareholder approval is approved 
by a majority of the Continuing Directors (as defined in the Certificate), 
in which case such action may be authorized or taken by the written consent 
of the holders of outstanding shares of stock having not less than the 
minimum voting power that would be necessary to authorize or take such action 
at a meeting of stockholders at which all shares entitled to vote thereon 
were present and voted, provided all other requirements of applicable law 
and the Certificate have been satisfied.

    	Section 2.11.   LIST OF STOCKHOLDERS.  The Secretary of the Corporation 
shall prepare and make (or cause to be prepared and made), at least ten 
(10) days before every meeting of stockholders, a complete list of the 
stockholders entitled to vote at the meeting, arranged in alphabetical 
order and showing the address of, and the number of shares registered in the 
name of, each stockholder.  Such list shall be open to the examination of any 
stockholder, for any purpose germane to the meeting, during ordinary business 
hours, for a period of at least ten (10) days prior to the meeting, either at 
a place within the city where the meeting is to be held, which place shall 
be specified in the notice of the meeting, or, if not so specified, at the 
place where the meeting is to be held.  The list shall also be produced and 
kept at the time and place of the meeting during the duration thereof, and 
may be inspected by any stockholder who is present.

    	Section 2.12.   INSPECTORS OF ELECTION.  In advance of any meeting 
of stockholders, the Board of Directors may appoint Inspectors of Election 
to act at such meeting or at any adjournment or adjournments thereof.  If 
such Inspectors are not so appointed or fail or refuse to act, the chairman 
of any such meeting may (and, upon the demand of any stockholder or 
stockholder's proxy, shall) make such an appointment.
						     
	    The number of Inspectors of Election shall be one (1) or three (3).  
If there are three (3) Inspectors of Election, the decision, act or 
certificate of a majority shall be effective and shall represent the 
decision, act or certificate of all.  No such Inspector need be a stockholder 
of the Corporation.

    	The Inspectors of Election shall determine the number of shares 
outstanding, the voting power of each, the shares represented at the meeting, 
the existence of a quorum and the authenticity, validity and effect of 
proxies; they shall receive votes, ballots or consents, hear and determine 
all challenges and questions in any way arising in connection with the right 
to vote, count and tabulate all votes or consents, determine when the polls 
shall close and determine the result; and finally, they shall do such acts 
as may be proper to conduct the election or vote with fairness to all 
stockholders.  On request, the Inspectors shall make a report in writing to 
the secretary of the meeting concerning any challenge, question or other 
matter as may have been determined by them and shall execute and deliver to 
such secretary a certificate of any fact found by them.

			                         ARTICLE III

                         				DIRECTORS

    	Section 3.01.   POWERS.  The business and affairs of the Corporation 
shall be managed by and be under the direction of the Board of Directors.  
The Board of Directors shall exercise all the powers of the Corporation, 
except those that are conferred upon or reserved to the stockholders by 
statute, the Certificate or these Bylaws.

    	Section 3.02.   NUMBER.  Except as otherwise fixed pursuant to the 
provisions of Section 2 of Article Fourth of the Certificate in connection 
with rights to elect additional directors under specified circumstances which 
may be granted to the holders of any class or series of Preferred Stock, par 
value One Dollar ($1.00) per share of the Corporation ("Preferred Stock"), 
the number of directors shall be fixed from time to time by resolution of the 
Board of Directors but shall not be less than three (3).  The Board of 
Directors, as of May 17, 1989, and thereafter, shall consist of fourteen (14) 
directors until changed as herein provided.

    	Section 3.03.   INDEPENDENT OUTSIDE DIRECTORS.  At least sixty percent 
(60%) of the members of the Board of Directors of the Corporation shall at 
all times be "Independent Outside Directors", which term is hereby defined to 
mean any director who:

   		1.  has not in the last five (5) years been an officer or 
	employee of the Corporation or any of its subsidiaries or affiliates; 
	and

   		2.  is not related to an officer of the Corporation (or an 
	officer of any of the Corporation's parents, subsidiaries or 
	affiliates) by blood, marriage or adoption (except relationships more 
	remote than first cousin); and
			  
	   	3.  is not, and has not within the last two (2) years been, an 
	officer, director or employee of, and does not own, and has not within 
	the last two (2) years owned, directly or indirectly, in excess of one 
	percent (1%) of any firm, corporation or other business or professional 
	entity which has made or proposes to make during either the 	Corporation's 
 or such entity's last or next fiscal year payments for property or 
 services in excess of one percent (1%) of the gross revenues either of 
 the Corporation for its last fiscal year or of such	entity for its last 
 fiscal year, but excluding payments determined by 	competitive bids, 
 public utility services at rates set by law or government authority, 
 or payments arising solely from the ownership 	of securities, or to 
 which the corporation was indebted at any time	during the Corporation's 
 last fiscal year in an aggregate amount in	excess of one percent (1%) 
 of the Corporation's total assets at the	end of such fiscal year or 
 Five Million Dollars ($5,000,000), whichever is less, but excluding 
 debt securities which have been publicly offered or which are publicly 
 traded; and
	
	   	4.  is not a director, partner, officer or employee of an 
	investment banking firm which has performed services for the 
	Corporation in the last two (2) years or which the Corporation 
	proposes to have perform services in the next year other than as a 
	participating underwriter in a syndicate; and 

   		5.  is not a control person of the Corporation (other than 
	as a director of the Corporation) as defined by the regulations of 
	the Securities and Exchange Commission.

    	Section 3.04.   ELECTION AND TERM OF OFFICE.  Except as provided in 
Section 3.07 hereof and subject to the right to elect additional directors 
under specified circumstances which may be granted, pursuant to the 
provisions of Section 2 of Article Fourth of the Certificate, to the holders 
of any class or series of Preferred Stock, directors shall be elected by the 
stockholders of the Corporation.  The Board of Directors shall be and is 
divided into three classes:  Class I, Class II and Class III.  The number 
of directors in each class shall be the whole number contained in the 
quotient obtained by dividing the authorized number of directors (fixed 
pursuant to Section 3.02 hereof) by three.  If a fraction is also contained 
in such quotient, then additional directors shall be apportioned as follows:  
if such fraction is one-third, the additional director shall be a member of 
Class I; and if such fraction is two-thirds, one of the additional directors 
shall be a member of Class I and the other shall be a member of Class II.  
Each director shall serve for a term ending on the date of the third annual 
meeting of stockholders of the Corporation following the annual meeting at 
which such director was elected; provided, however, that the directors first 
elected to Class I shall serve for a term ending on the date of the annual 
meeting next following the end of the calendar year 1985, the directors first 
elected to Class II shall serve for a term ending on the date of the second 
annual meeting next following the end of the calendar year 1985 and the 
directors first elected to Class III shall serve for a term ending on the 
date of the third annual meeting next following the end of the calendar year 
1985.

    	Notwithstanding the foregoing provisions of this Section 3.04: each 
director shall serve until his successor is elected and qualified or until 
his death, resignation or removal; no decrease in the authorized number of 
directors shall shorten the term of any incumbent director; and additional 
directors, elected pursuant to Section 2 of Article Fourth of the Certificate 
in connection with rights to elect such additional directors under specified 
circumstances which may be granted to the holders of any class or series of 
Preferred Stock, shall not be included in any class, but shall serve for such 
term or terms and pursuant to such other provisions as are specified in the 
resolution of the Board of Directors establishing such class or series.
			    
    	Nominations for the election of directors may be made by the Board 
or a committee thereof or by any stockholder entitled to vote in the election 
of directors; provided, however, that a stockholder may nominate a person 
for election as a director at a meeting only if written notice of such 
stockholder's intent to make such nomination has been given by such 
stockholder to, and received by, the Secretary of the Corporation at the 
principal executive offices of the Corporation not less than sixty (60) days 
nor more than ninety (90) days prior to the meeting;  provided, however, that 
(a) in the event that less than seventy (70) days' notice or prior public 
disclosure of the date of the meeting is given or made to stockholders, 
notice by the stockholder to be timely must be so received not later than the 
close of business on the 10th day following the date on which such notice 
of the date of the meeting was mailed or such public disclosure was made, 
whichever first occurs; and (b) in the event that less than seventy (70) days 
shall remain from the date of public disclosure of the adoption of this bylaw 
provision to the date of any meeting, notice by the stockholder to be timely 
with respect to such meeting must be so received not later than the close of 
business on the 10th day following the date on which such public disclosure 
was made.  Each such notice shall set forth:  (a) the name and address of 
the stockholder who intends to make the nomination and of the person or 
persons to be nominated; (b) the name and address as they appear on the 
Corporation's books of the stockholder intending to make such nomination; 
(c) the class and number of shares of capital stock of the Corporation which 
are beneficially owned by such stockholder (d) a description of all 
arrangements or understandings between the stockholder and each nominee and 
any other person or persons (naming such person or persons) pursuant to 
which the nomination or nominations are to be made by the stockholder; 
(e) the occupations and business history for the previous five years, other 
directorships, names of business entities of which the proposed nominee owns 
a 10 percent or more equity interest, a list of any criminal convictions, 
including federal and state securities violations and such other information 
regarding each proposed nominee as may be required by the federal proxy rules 
in effect at the time the notice is submitted and (f) the consent of each 
nominee to serve as a director of the Corporation if so elected.  No person 
shall be eligible for election as a director of the Corporation unless 
nominated in accordance with the  procedures set forth in this Section 3.04. 
The Chairman of any meeting of stockholders shall direct that any nomination 
not made in accordance with these procedures be disregarded.

    	Section 3.05.   ELECTION OF CHAIRMAN OF THE BOARD.  At the 
organizational meeting immediately following the annual meeting of 
stockholders, the directors shall elect a Chairman of the Board from among 
the directors who shall hold office until the corresponding meeting of the 
Board of Directors in the next year and until his successor shall have been 
elected or until his earlier resignation or removal.  Any vacancy in such 
office may be filled for the unexpired portion of the term in the same 
manner by the Board of Directors at any regular or special meeting.

    	Section 3.06.   REMOVAL.  Subject to the right to elect directors 
under specified circumstances which may be granted pursuant to Section 2 of 
Article Fourth of the Certificate to the holders of any class or series of 
Preferred Stock, any director may be removed from office only as provided 
in Article Tenth of the Certificate.

    	Section 3.07.   VACANCIES AND ADDITIONAL DIRECTORSHIPS.  Except as 
otherwise provided pursuant to Section 2 of Article Fourth of the Certificate 
in connection with rights to elect additional directors under specified 
circumstances which may be granted to the holders of any class or series of 
Preferred Stock, newly created directorships resulting from any increase in 
the number of directors and any vacancies on the Board of Directors resulting 
from death, resignation, disqualification, removal or other cause shall be 
filled solely by the affirmative vote of a majority of the remaining directors 
then in office, even though less than a quorum of the Board of Directors.  
Any director elected in accordance with the preceding sentence shall hold 
office for the remainder of the full term of the class of directors in which 
the new directorship was created or the vacancy occurred and until such 
director's successor shall have been elected and qualified.  No decrease in 
the number of directors constituting the Board of Directors shall shorten 
the term of any incumbent director.
				   
    	Section 3.08.   REGULAR AND SPECIAL MEETINGS.  Regular meetings of 
the Board of Directors shall be held immediately following the annual meeting
of stockholders, and at 9:00 o'clock a.m. on the third Wednesday of each 
succeeding month (or, should such day fall upon a legal holiday, then on the 
first day thereafter which is not a legal holiday), unless a regular meeting 
is otherwise called by the Chairman of the Board in accordance with applicable 
law.

    	Special meetings of the Board of Directors shall be held upon call 
by or at the direction of the Chairman of the Board, the President either of 
whom may be the, Chief Executive Officer, or any two directors, except that 
when the Board of Directors consists of one director, then the one director 
may call a special meeting.  Except as otherwise required by law, notice of 
each special meeting shall be mailed to each director, addressed to him at 
his residence or usual place of business, at least two days before the day 
on which the meeting is to be held, or shall be sent to him at such place by 
telex, telegram, cable, facsimile transmission or telephoned or delivered to 
him personally, not later than the day before the day on which the meeting is 
to be held.  Such notice shall state the time and place of such meeting, but 
need not state the purpose or purposes thereof unless otherwise required by 
law, the Certificate or these Bylaws.

    	Notice of any meeting need not be given to any director who shall 
attend such meeting in person or who shall waive notice thereof, before or 
after such meeting, in a signed writing. 

    	Section 3.09.   QUORUM.  At all meetings of the Board of Directors, 
a majority of the fixed number of directors shall constitute a quorum for the 
transaction of business, except that when the Board of Directors consists of 
one director, then the one director shall constitute a quorum.  In the 
absence of a quorum, the directors present, by majority vote and without 
notice other than by announcement, may adjourn the meeting from time to time 
until a quorum shall be present.  At any reconvened meeting following such 
an adjournment at which a quorum shall be present, any business may be 
transacted which might have been transacted at the meeting as originally 
notified.

    	Section 3.10.   VOTES REQUIRED.  Except as otherwise provided by 
applicable law or by the Certificate, the vote of a majority of the directors 
present at a meeting duly held at which a quorum is present shall be 
sufficient to pass any measure.

    	Section 3.11.   PLACE AND CONDUCT OF MEETINGS.  Each regular meeting 
and special meeting of the Board of Directors shall be held at a location 
determined as follows:  The Board of Directors may designate any place, 
within or without the State of Delaware, for the holding of any meeting.  
If no such designation is made: (i) any meeting called by a majority of the 
directors shall be held at such location, within the county of the 
Corporation's principal executive office, as the directors calling the 
meeting shall designate; and (ii) any other meeting shall be held at such 
location, within the county of the Corporation's principal executive office, 
as the Chairman of the Board may designate or, in the absence of such 
designation, at the Corporation's principal executive office.  Subject to 
the requirements of applicable law, all regular and special meetings of the 
Board of Directors shall be conducted in accordance with such rules and 
procedures as the Board of Directors may approve and, as to matters not 
governed by such rules and procedures, as the chairman of such meeting shall 
determine.  The chairman of any regular or special meeting shall be the 
Chairman of the Board, or in his absence a person designated by the Board 
of Directors.  The Secretary, or in the absence of the Secretary a person 
designated by the chairman of the meeting, shall act as secretary of the 
meeting.

    	Section 3.12.   FEES AND COMPENSATION.  Directors shall be paid such 
compensation as may be fixed from time to time by resolutions of the Board 
of Directors (a) for their usual and contemplated services as directors,
(b) for their services as members of committees appointed by the Board of 
Directors, including attendance at committee meetings as well as services 
which may be required when committee members must consult with management 
staff, and (c) for extraordinary services as directors or as members of 
committees appointed by the Board of Directors, over and above those services 
for which compensation is fixed pursuant to items (a) and (b) in this 
Section 3.12.  Compensation may be in the form of an annual retainer fee or 
a fee for attendance at meetings, or both, or in such other form or on such 
basis as the resolutions of the Board of Directors shall fix.  Directors 
shall be reimbursed for all reasonable expenses incurred by them in attending 
meetings of the Board of Directors and committees appointed by the Board of 
Directors and in performing compensable extraordinary services.  Nothing 
contained herein shall be construed to preclude any director from serving the 
Corporation in any other capacity, such as an officer, agent, employee, 
consultant or otherwise, and receiving compensation therefor.

    	Section 3.13.   COMMITTEES OF THE BOARD OF DIRECTORS.  Subject to the 
requirements of applicable law, the Board of Directors may from time to time 
establish committees, including standing or special committees, which shall 
have such duties and powers as are authorized by these Bylaws or by the Board 
of Directors.  Committee members, and the chairman of each committee, shall 
be appointed by the Board of Directors.  The Chairman of the Board, in 
conjunction with the several committee chairmen, shall make recommendations 
to the Board of Directors for its final action concerning members to be 
appointed to the several committees of the Board of Directors.  Any member 
of any committee may be removed at any time with or without cause by the 
Board of Directors.  Vacancies which occur in any committee shall be filled 
by a resolution of the Board of Directors.  If any vacancy shall occur in 
any committee by reason of death, resignation, disqualification, removal or 
otherwise, the remaining members of such committee, so long as a quorum is 
present, may continue to act until such vacancy is filled by the Board of 
Directors.  The Board of Directors may, by resolution, at any time deemed 
desirable, discontinue any standing or special committee.  Members of 
standing committees, and their chairmen, shall be elected yearly at the 
organizational meeting of the Board of Directors which is held immediately 
following the annual meeting of stockholders.

    	Section 3.14.   AUDIT COMMITTEE.  There shall be an Audit Committee 
of the Board of Directors which shall serve at the pleasure of the Board of 
Directors and be subject to its control.  The Committee shall have the 
following membership and powers:

   		1.  The Committee shall have at least three (3) members.  
	All members of the Committee shall be Independent Outside Directors.

   		2.  The Committee shall recommend to the Board of Directors 
	for its action the appointment or discharge of the Corporation's 
	independent auditors, based upon the Committee's judgment of the 
	independence of the auditors (taking into account the fees charged 
	both for audit and non-audit services) and the quality of its audit 
	work.  Ratification by the stockholders of the Board of Directors' 
	appointment of the Corporation's independent auditors may be sought 
	in conjunction with management's solicitation of proxies for the 
	annual meeting of stockholders, if so determined by the Board of 
	Directors.  If the auditors must be replaced, the Committee shall 
	recommend to the Board of Directors for its action the appointment 
	of new auditors until the next annual meeting of stockholders.

   		3.  The Committee shall review and approve the scope and plan 
	of the audit.

   		4.  The Committee shall meet with the independent auditors 
	at appropriate times to review, among other things, the results of 
	the audit and any certification, report or opinion which the auditors 
	propose to render in connection with the Corporation's financial 
	statements.

   		5.  The Committee shall review and approve each professional 
	service of a non-audit nature to be provided by the auditors.

   		6.  The Committee shall meet with the Corporation's chief 
	internal auditor at least once a year to review his comments 
	concerning the adequacy of the Corporation's system of internal 
	accounting controls and such other matters as the Committee may deem 
	appropriate.

   		7.  The Committee shall have the power to direct the auditors 
	and the internal audit staff to inquire into and report to it with 
	respect to any of the Corporation's contracts, transactions or 
	procedures, or the conduct of the Corporate Office, or any division, 
	profit center, subsidiary or other unit, or any other matter having 
	to do with the Corporation's business and affairs.  If authorized by 
	the Board of Directors, the Committee may initiate special 
	investigations in these regards.

   		8.  The Committee shall have such other duties as may be 
	lawfully delegated to it from time to time by the Board of Directors.

    	Section 3.15.   COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE.  
There shall be a Compensation and Management Development Committee of the 
Board of Directors which shall serve at the pleasure of the Board of 
Directors and be subject to its control.  The Committee shall have the 
following membership and powers:

   		1.  The Committee shall be composed of at least three (3) 
	members.  All members of the Committee shall be Independent Outside 
	Directors.  The principal Human Resources officer of the Corporation 
	shall be a non-voting member of the Committee.

   		2.  The Committee shall recommend to the Board of Directors 
	for its action the amount to be appropriated for awards to be made 
	each year to elected officers under the Corporation's incentive 
	compensation plan.

   		3.  The Committee shall establish the Corporation's annual 
	performance objectives under the Corporation's incentive compensation 
	plans.

   		4.  The Committee shall make recommendations to the Board 
	of Directors with respect to the base salary and incentive 
	compensation of the elected officers.  The Committee shall take final 
	action with respect to the base salary and incentive compensation 
	of all other officers and employees receiving a base salary over an 
	amount as shall be determined from time to time either by the 
	Committee or the Board of Directors.

   	5.  The Committee shall review management's recommendations 
	and take final action with respect to all awards to be made under 
	the Corporation's long-term incentive plans or other similar benefit 
	plans which may be adopted by the Board of Directors or the 
	stockholders and in which corporate officers or directors are 
	eligible to participate, provided however that all such awards 
	relative to the five (5) most highly compensated officers must be 
	reported to the Board of Directors.
       
	   6.  The Committee shall review on a continuing basis the 
	Corporation's general compensation policies and practices, fringe 
	benefits and the Corporation's compliance with its various affirmative 
	action plans and programs.  The committee shall also review and 
	recommend to the Board of Directors for its final action all 
	compensation plans in which  elected officers or directors are 
	eligible to participate.

  		7.  The Committee shall review from time to time and report 
	to the Board of Directors actions taken by management concerning the 
	Corporation's overall executive structure and the steps being taken 
	to assure the succession of qualified management.

  		8.  The Committee shall have such other duties as may be 
	lawfully delegated to it from time to time by the Board of Directors.
	
	   Section 3.16.   EXECUTIVE AND PUBLIC POLICY COMMITTEE.  There shall 
be an Executive and Public Policy Committee of the Board of Directors which 
shall serve at the pleasure of the Board of Directors and be subject to its 
control.  The Committee shall have the following membership and powers:

   	1.  The Committee shall have at least five (5) members.  At 
	least sixty percent (60%) of the members shall be Independent Outside 
	Directors.

  		2.  The Committee shall review, approve and monitor the 
	policy, organization, charter and implementation of the Northrop 
	Grumman Employees Political Action Committee.

  		3.  The Committee shall review and approve the policy of the 
	Corporation for engaging the services of Consultants and Commission 
	Agents.

  		4.  The Committee shall review and report to the Board of 
	Directors from time to time concerning the Corporation's compliance 
	with the Corporation's policies, practices and procedures with respect 
	to consultants and commission agents.  

  		5.  The Committee shall review and make policy and budget 
	recommendations to the Board of Directors for its actions concerning 
	proposed charitable contributions and aid to higher education to be 
	given by the Corporation each year.

  		6.  The Committee shall have such other duties as lawfully 
	may be delegated to it from time to time by the Board of Directors.

   	Section 3.17.   FINANCE COMMITTEE.  There shall be a Finance 
Committee of the Board of Directors which shall serve at the pleasure of the 
Board of Directors and be subject to its control.  The Committee shall have
the following membership and powers:
 
  		1.  The Committee shall have at least five (5) members.  At 
	least fifty percent (50%) of the members of the Committee shall be 
	Independent Outside Directors.  The chief financial officer of the
	Corporation shall be a non-voting member of the Committee.

  		2.  The Committee shall review and give consideration to 
	management requests for required specific new financing of a long-
	term nature, whether debt or equity, and make recommendations to the
	Board of Directors for its final action.
       
		  3.  The Committee shall review the current financial condition 
	of the Company and planned financial requirements.

  		4.  The Committee shall review periodically the Corporation's 
	dividend policy in connection with dividend declarations and make 
	recommendations to the Board of Directors for its final action.

  		5.  The Committee shall consider management's recommendations 
	concerning acquisitions, mergers or divestments which management has 
	determined to be of an unusual or material nature and shall make 
	recommendations to the Board of Directors for its final action.

  		6.  The Committee shall consider management's recommendations 
	concerning contracts or programs which management has determined to 
	be of an unusual or material nature and shall make recommendations 
	to the Board of Directors for its final action.

  		7.  The Committee shall periodically review the investment 
	performance of the employee benefit plans, capital asset requirements 
	and short-term investment policy when appropriate.

  		8.  The Committee shall have such other duties as lawfully 
	may be delegated to it from time to time by the Board of Directors.

   	Section 3.18.   NOMINATING COMMITTEE.  There shall be a Nominating 
Committee of the Board of Directors which shall serve at the pleasure of the 
Board of Directors and be subject to its control.  The Committee shall have 
the following membership and powers:

  		1.  The Committee shall have at least three (3) members.  
	All members of the Committee shall be Independent Outside Directors.

  		2.  The Committee shall review candidates to serve as 
	directors and shall recommend nominees to the Board of Directors 
	for election at each annual meeting of stockholders or other special 
	meetings where directors are to be elected and shall recommend 
	persons to serve as proxies to vote proxies solicited by management 
	in connection with such meetings.

  		3.  The Committee shall cause the names of all director 
	candidates that are approved by the Board of Directors to be listed 
	in the Corporation's proxy materials and shall support the election 
	of all candidates so nominated by the Board of Directors to the 
	extent permitted by law.

  		4.  The Committee shall review and make recommendations to 
	the Board of Directors for its final action concerning the composition 
	and size of the Board of Directors, its evaluation of the performance 
	of incumbent directors, its recommendations concerning the 
	compensation of the Directors, its recommendations concerning 
	directors to fill vacancies and its evaluation and recommendations 
	concerning potential candidates to serve in the future on the Board 
	of Directors to assure the Board's continuity and succession.

  		5.  The Committee shall have such other duties as lawfully 
	may be delegated to it from time to time by the Board of Directors.

   	Section 3.19.   MEETINGS OF COMMITTEES.  Each committee of the 
Board of Directors shall fix its own rules of procedure consistent with the 
provisions of applicable law and of any resolutions of the Board of Directors 
governing such committee.  Each committee shall meet as provided by such 
rules or such resolution of the Board of Directors, and shall also meet at 
the call of its chairman or any two (2) members of such committee.  Unless 
otherwise provided by such rules or by such resolution, the provisions of 
these Bylaws under Article III entitled "Directors" relating to the place 
of holding meetings and the notice required for meetings of the Board of 
Directors shall govern the place of meetings and notice of meetings for 
committees of the Board of Directors.  A majority of the members of each 
committee shall constitute a quorum thereof, except that when a committee
consists of one (1) member, then the one (1) member shall constitute a 
quorum.  In the absence of a quorum, a majority of the members present at 
the time and place of any meeting may adjourn the meeting from time to time 
until a quorum shall be present and the meeting may be held as adjourned 
without further notice or waiver.  Except in cases where it is otherwise 
provided by the rules of such committee or by a resolution of the Board of 
Directors, the vote of a majority of the members present at a duly 
constituted meeting at which a quorum is present shall be sufficient to pass 
any measure by the committee.    


                              				ARTICLE IV

                              				 OFFICERS

     Section 4.01.   DESIGNATION, ELECTION AND TERM OF OFFICE.  The 
Corporation shall have a Chairman of the Board and/or a President either of 
whom may be designated Chief Executive Officer by the Board of Directors, 
such Vice Presidents (each of whom may be assigned by the Board of Directors 
or the Chief Executive Officer an additional title descriptive of the 
functions assigned to him and one or more of whom may be designated Executive, 
Group or Senior Vice President) as the Board of Directors deems appropriate, 
a Secretary and a Treasurer.  These officers shall be elected annually by 
the Board of Directors at the organizational meeting immediately following 
the annual meeting of stockholders, and each such officer shall hold office 
until the corresponding meeting of the Board of Directors in the next year 
or until his earlier resignation, death or removal.  Any vacancy in any of 
the above offices may be filled for an unexpired portion of the term by the 
Board of Directors at any regular special meeting.  The Chief Executive 
Officer may, by a writing filed with the Secretary, designate titles for 
employees and agents, as, from time to time, may appear necessary or 
advisable in the conduct of the affairs of the Corporation and, in the same 
manner, terminate or change such titles.  

     Section 4.02.   CHAIRMAN OF THE BOARD.  The Board of Directors shall 
designate the Chairman of the Board from among its members.  The Chairman of 
the Board of Directors shall preside at all meetings of the Board and the 
Shareholders, and shall perform such other duties as shall be delegated to 
him by the Board or the officer designated as chief executive.

     Section 4.03.   PRESIDENT.  The President shall perform such duties and 
have such responsibilities as may from time to time be delegated or assigned 
to him by the Board of Directors or the officer designated as chief executive.

     Section 4.04.   CHIEF EXECUTIVE.  The Board of Directors shall designate 
either the Chairman of the Board or the President to be the chief executive 
of the Corporation.  The officer so designated shall be responsible for the 
general supervision, direction and control of the business and affairs of 
the Corporation.
		
     Section 4.05.   CHIEF FINANCIAL OFFICER.  The Chief Financial Officer 
of the Corporation shall be responsible to the Chief Executive Officer for 
the management and supervision of all financial matters and to provide for 
the financial growth and stability of the Corporation.  He shall attend all 
regular meetings of the Board of Directors and keep the Directors currently 
informed concerning all significant financial matters that could impact upon 
the business or affairs of the Corporation.  He shall also perform such 
additional duties as may be assigned to him from time to time by the Board 
of Directors or the Chief Executive Officer.

    Section 4.06.   EXECUTIVE VICE PRESIDENTS, SENIOR VICE PRESIDENTS AND 
VICE PRESIDENTS.  Executive vice presidents, senior vice presidents and vice 
presidents of the Corporation that are elected by the Board of Directors 
shall perform such duties as may be assigned to them from time to time by 
the Chief Executive Officer.

    Section 4.07.   CHIEF LEGAL OFFICER.  The chief legal officer of the 
Corporation shall be the General Counsel who shall be responsible to the Chief 
Executive Officer for the management and supervision of all legal matters.  
The General Counsel shall attend all regular meetings of the Board of 
Directors and shall keep the Directors currently informed concerning all 
significant legal matters, particularly those involving important business, 
legal, moral or ethical issues that could impact upon the business or affairs 
of the Corporation.

    Section 4.08.   SECRETARY.  The Secretary shall keep the minutes of 
the meetings of the stockholders, the Board of Directors and all committee 
meetings.  The Secretary shall be the custodian of the corporate seal and 
shall affix it to all documents which he is authorized by law or the Board 
of Directors to sign and seal.  The Secretary also shall perform such other 
duties as may be assigned from time to time by the Chief Executive Officer.
	
	   Section 4.09.   TREASURER.  The Treasurer shall be accountable to 
the Senior Vice President, Finance, and shall perform such duties as may be 
assigned to the Treasurer from time to time by the Senior Vice President, 
Finance.

   	Section 4.10.   APPOINTED OFFICERS.  The Chief Executive Officer may 
appoint one or more Corporate Staff Vice Presidents, officers of groups or 
divisions or assistant secretaries, assistant treasurers and such other 
assistant officers as the business of the Corporation may require, each of 
whom shall hold office for such period, have such authority and perform such 
duties as may be specified from time to time by the Chief Executive Officer.

   	Section 4.11.   ABSENCE OR DISABILITY OF AN OFFICER.  In the case of 
the absence or disability of an officer of the Corporation the Board of 
Directors, or any officer designated by it, or the Chief Executive Officer 
may, for the time of the absence or disability, delegate such officer's duties 
and powers to any other officer of the Corporation.

   	Section 4.12.   OFFICERS HOLDING TWO OR MORE OFFICES.  The same person 
may hold any two or more of the above-mentioned offices.  However, no officer 
shall execute, acknowledge or verify any instrument in more than one capacity, 
if such instrument is required by law, by the Certificate or by these Bylaws, 
to be executed, acknowledged or verified by any two or more officers.

   	Section 4.13.   COMPENSATION.  The Board of Directors shall have the 
power to fix the compensation of all officers and employees of the 
Corporation. 

   	Section 4.14.   RESIGNATIONS.  Any officer may resign at any time 
by giving written notice to the Board of Directors, to the Chief Executive 
Officer, or to the Secretary of the Corporation.  Any such resignation shall 
take effect at the time specified therein unless otherwise determined by the 
Board of Directors.  The acceptance of a resignation by the Corporation shall 
not be necessary to make it effective.

   	Section 4.15.   REMOVAL.  Any officer of the Corporation may be 
removed, with or without cause, by the affirmative vote of a majority of the 
entire Board of Directors.  Any assistant officer of the Corporation may be 
removed, with or without cause, by the Chief Executive Officer, or by the 
Board of Directors.


                          				ARTICLE V

       INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS

   	Section 5.01.   RIGHT TO INDEMNIFICATION.  Each person who was or is 
made a party, or is threatened to be made a party, to any actual or threatened 
action, suit, or proceeding, whether civil, criminal, administrative, or 
investigative (hereinafter a "proceeding"), by reason of the fact that he or 
she is or was a director, officer, employee, or agent of the Corporation 
(hereinafter an "indemnitee") shall be indemnified and held harmless by the 
Corporation to the fullest extent authorized by the Delaware General 
Corporation Law, as the same exists or may hereafter be amended, or by other 
applicable law as then in effect, against all expense, liability, and loss 
(including attorneys' fees, judgments, fines, ERISA excise taxes or 
penalties, and amounts paid in settlement) actually and reasonably incurred 
or suffered by such indemnitee in connection therewith.  Any person who was 
or is made a party, or is threatened to be made a party, to any proceeding 
by reason of the fact that he or she is or was serving at the request of an 
executive officer of the Corporation as a director, officer, employee or 
agent of another corporation or of a partnership, joint venture, trust or 
other enterprise, including service with respect to an employee benefit plan, 
shall also be considered an indemnitee for the purposes of this Article.  
The right to indemnification provided by this Article shall apply whether 
or not the basis of such proceeding is alleged action in an official capacity 
as such director, officer, employee or agent or in any other capacity while 
serving as such director, officer, employee or agent.  Notwithstanding 
anything in this Section 5.01 to the contrary, except as provided in Section 
5.03 of this Article with respect to proceedings to enforce rights to 
indemnification, the Corporation shall indemnify any such indemnitee in 
connection with a proceeding (or part thereof) initiated by such indemnitee 
only if such proceeding (or part thereof) was authorized by the Corporation.
	
	   Section 5.02.   ADVANCEMENT OF EXPENSES.  (a)  The right to 
indemnification conferred in Section 5.01 shall include the right to have 
the expenses incurred in defending or preparing for any such proceeding in 
advance of its final disposition (hereinafter an "advancement of expenses") 
paid by the Corporation; provided, however, that an advancement of expenses 
incurred by an indemnitee in his or her capacity as a director or officer 
(and not in any other capacity in which service was or is to be rendered by 
such indemnitee, including, without limitation, service to an employee 
benefit plan) shall be made only upon delivery to the Corporation of an 
undertaking containing such terms and conditions, including the requirement 
of security, as the Board of Directors deems appropriate (hereinafter an 
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so 
advanced if it shall ultimately be determined by final judicial decision from 
which there is no further right to appeal that such indemnitee is not entitled 
to be indemnified for such expenses under this Article or otherwise; and 
provided, further, that an advancement of expenses shall not be made if the 
Corporation's Board of Directors makes a good faith determination that such 
payment would violate any applicable law.  The Corporation shall not be 
obligated to advance fees and expenses to a director, officer, employee or 
agent in connection with a proceeding instituted by the Corporation against 
such person.  (b)  Notwithstanding anything in Section 5.02(a) to the 
contrary, the right of employees or agents to advancement of expenses shall 
be at the discretion of the Board of Directors and on such terms and 
conditions, including the requirement of security, as the Board of Directors 
deems appropriate.  The Corporation may, by action of its Board of Directors, 
authorize one or more executive officers to grant rights for the advancement 
of expenses to employees and agents of the Corporation on such terms and 
conditions as such officers deem appropriate.

   	Section 5.03.   RIGHT OF INDEMNITEE TO BRING SUIT.  If a claim under 
Section 5.01 is not paid in full by the Corporation within sixty (60) 
calendar days after a written claim has been received by the Corporation, 
except in the case of a claim for an advancement of expenses under Section 
5.02 in which case the applicable period shall be thirty (30) calendar days, 
the indemnitee may at any time thereafter bring suit against the Corporation 
to recover the unpaid amount of the claim.  If the indemnitee is successful 
in whole or in part in any such suit, the indemnitee shall also be entitled 
to be paid the expense of prosecuting or defending such suit.

   	Section 5.04.   NONEXCLUSIVITY OF RIGHTS.  (a)  The rights to 
indemnification and to the advancement of expenses conferred in this Article 
shall not be exclusive of any other right which any person may have or 
hereafter acquire under any statute, provisions of the Certificate of 
Incorporation, Bylaw, agreement, vote of stockholders or disinterested 
directors, or otherwise.  Notwithstanding any amendment to or repeal of this 
Article, any indemnitee shall be entitled to indemnification in accordance 
with the provisions hereof with respect to any acts or omissions of such 
indemnitee occurring prior to such amendment or repeal.  (b)  The Corporation
may maintain insurance, at its expense, to protect itself and any past or 
present director, officer, employee, or agent of the Corporation or another 
corporation, partnership, joint venture, trust, or other enterprise against 
any expense, liability, or loss,  whether or not the Corporation would have 
the power to indemnify such person against such expense, liability, or loss 
under the Delaware General Corporation Law.  The Corporation may enter into 
contracts with any indemnitee in furtherance of the provisions of this 
Article and may create a trust fund, grant a security interest or use other 
means (including, without limitation, a letter of credit) to ensure the 
payment of such amounts as may be necessary to effect indemnification as 
provided in this Article.  (c)  The Corporation may without reference to 
Sections 5.01 through 5.04 (a) and (b) hereof, pay the expenses, including 
attorneys fees, incurred by any director, officer, employee or agent of the 
Corporation who is subpoenaed, interviewed or deposed as a witness or 
otherwise incurs expenses in connection with any civil, arbitration, 
criminal, or administrative proceeding or governmental or internal 
investigation to which the Corporation is a party, target, or potentially 
a party or target, or of any such individual who appears as a witness at any 
trial, proceeding or hearing to which the Corporation is a party, if the 
Corporation determines that such payments will benefit the Corporation and 
if, at the time such expenses are incurred by such individual and paid by 
the Corporation, such individual is not a party, and is not threatened to 
be made a party, to such proceeding or investigation.


                       			       ARTICLE VI

                              				 STOCK

    	Section 6.01.   CERTIFICATES.  Except as otherwise provided by law, 
each stockholder shall be entitled to a certificate or certificates which 
shall represent and certify the number and class (and series, if appropriate) 
of shares of stock owned by him in the Corporation.  Each certificate shall 
be signed in the name of the Corporation by the Chairman of the Board, or the 
President, or a Vice President, together with the Secretary, or an Assistant 
Secretary, or the Treasurer or Assistant Treasurer.  Any or all of the 
signatures on any certificate may be facsimile.  In case any officer, 
transfer agent or registrar who has signed or whose facsimile signature has 
been placed upon a certificate shall have ceased to be such officer, transfer 
agent or registrar before such certificate is issued, it may be issued by 
the Corporation with the same effect as if such person were an officer, 
transfer agent or registrar at the date of issue.

   	Section 6.02.   TRANSFER OF SHARES.  Shares of stock shall be 
transferable on the books of the Corporation only by the holder thereof, in 
person or by his duly authorized attorney, upon the surrender of the 
certificate representing the shares to be transferred, properly endorsed, 
to the Corporation's registrar if the Corporation has a registrar.  The Board 
of Directors shall have power and authority to make such other rules and 
regulations concerning the issue, transfer and registration of certificates 
of the Corporation's stock as it may deem expedient.

   	Section 6.03.   TRANSFER AGENTS AND REGISTRARS.  The Corporation may 
have one or more transfer agents and one or more registrars of its stock 
whose respective duties the Board of Directors or the Secretary may, from 
time to time, define.  No certificate of stock shall be valid until 
countersigned by a transfer agent, if the Corporation has a transfer agent, 
or until registered by a registrar, if the Corporation has a registrar.  
The duties of transfer agent and registrar may be combined.  

   	Section 6.04.   STOCK LEDGERS.  Original or duplicate stock ledgers, 
containing the names and addresses of the stockholders of the Corporation 
and the number of shares of each class of stock held by them, shall be kept 
at the principal executive office of the Corporation or at the office of its 
transfer agent or registrar.

   	Section 6.05.   RECORD DATES.  The Board of Directors shall fix, in 
advance, a date as the record date for the purpose of determining 
stockholders entitled to notice of, or to vote at, any meeting of 
stockholders or any adjournment thereof, or stockholders entitled to receive 
payment of any dividend or other distribution or allotment of any rights, or 
entitled to exercise any rights in respect of any change, conversion or 
exchange of stock, or in order to make a determination of stockholders for 
any other proper purpose.  Such date in any case shall be not more than sixty 
(60) days, and in case of a meeting of stockholders, not less than ten (10) 
days, prior to the date on which the particular action, requiring such 
determination of stockholders is to be taken.  Only those stockholders of 
record on the date so fixed shall be entitled to any of the foregoing rights, 
notwithstanding the transfer of any such stock on the books of the 
Corporation after any such record date fixed by the Board of Directors.

   	Section 6.06.   NEW CERTIFICATES.  In case any certificate of stock 
is lost, stolen, mutilated or destroyed, the Board of Directors may authorize 
the issuance of a new certificate in place thereof upon such terms and 
conditions as it may deem advisable; or the Board of Directors may delegate 
such power to any officer or officers or agents of the Corporation; but the 
Board of Directors or such officer or officers or agents, in their 
discretion, may refuse to issue such a new certificate unless the Corporation 
is ordered to do so by a court of competent jurisdiction.
			 

                       			      ARTICLE VII

                		 RESTRICTIONS ON SECURITIES REPURCHASES

   	Section 7.01.   RESTRICTIONS ON SECURITIES REPURCHASES.  

   	1.   Vote required for certain acquisition of securities.  Except as 
set forth in Subsection 2 of this Section 7.01, in addition to any 
affirmative vote of stockholders required by any provision of law, the 
Certificate of Incorporation or Bylaws of this Corporation, or any policy 
adopted by the Board of Directors, neither the Corporation nor any Subsidiary 
shall knowingly effect any direct or indirect purchase or other acquisition 
of any equity security of a class of securities which is registered pursuant 
to Section 12 of the /Securities Exchange Act of 1934, as amended (the 
"Exchange Act"), issued by the Corporation at a price which is in excess of 
the highest Market Price of such equity security on the largest principal 
national securities exchange in the United States on which such security is 
listed for trading on the date that the understanding to effect such 
transaction is entered into by the Corporation (whether or not such 
transaction is concluded or a written agreement relating to such transaction 
is executed on such date, and such date to be conclusively established by 
determination of the Board of Directors), from any Interested Person, without 
the affirmative vote of the holders of the Voting Shares representing at 
least a majority of the aggregate voting power of all outstanding voting 
shares, excluding Voting Shares beneficially owned by such Interested Person, 
voting together as a single class.  Such affirmative vote shall be required 
notwithstanding the fact that no vote may be required, or that a lesser 
percentage may be specified, by law or any agreement with any national 
securities exchange, or otherwise.

   	2.   When A Vote Is Not Required.  The provisions of Subsection 1 of 
this Section 7.01 shall not be applicable with respect to:

       		a.  any purchase, acquisition, redemption or exchange of 
   	such equity securities, the purchase, acquisition, redemption or 
	   exchange of which is provided for in the Corporation's Certificate of 
	   Incorporation;

      	 	b.  any purchase or other acquisition of equity securities 
    	made as part of a tender or exchange offer by the Corporation to 
    	purchase securities of the same class made on the same terms to all 
    	holders of such securities and complying with the applicable 
    	requirements of the Exchange Act of 1934, as amended and the rules 
    	and regulations thereunder (or any successor provisions to such Act, 
    	rules or regulations); 

     	 	c.  any purchase or acquisition of equity securities made 
    	pursuant to an open market purchase program which has been approved 
    	by the Board of Directors.     

    3.  Certain definitions.  For the purpose of this Section:

       a.   "Affiliate" and "Associate" shall have their respective 
	   meanings ascribed to such terms in Rule 12b-2 of the General Rules 
   	and Regulations under the Exchange Act, as in effect on 
   	January 1, 1991.

      	b.   "Beneficial Owner" and "Beneficial Ownership" shall 
   	have the meanings ascribed to such terms in  Rule 13d-3 and Rule 
	   13d-5 of the General Rules and Regulations under the Exchange Act, 
   	as in effect on January 1, 1991.

     		c.   "Interested person" shall mean any person (other than 
   	the Corporation or any subsidiary) that is the direct or indirect 
   	Beneficial Owner of five percent (5%) or more of the aggregate voting 
	   power of the Voting Shares, and any Affiliate or Associate of any such 
	   person.  For the purpose of determining whether a person is an 
   	Interested Person, the outstanding Voting Shares include unissued 
   	shares of voting stock of the Corporation of which the Interested 
   	Person is the Beneficial Owner, but shall not include any other shares 
   	of voting stock of the Corporation which may be issuable pursuant 
   	to any agreement, arrangement or understanding, or upon exercise 
   	or conversion of rights, warrants or options, or otherwise to any 
   	person who is not the Interested Person.

      	d.  "Market Price" of shares of the class of equity security 
   	of the Corporation on any day shall mean the highest sale price 
   	(regular way) of shares of such class of such equity security on 
   	such day, or, if that day is not a trading day, on the trading day 
   	immediately preceding such day, on the largest principal national 
   	securities exchange on which such class of stock is then listed or 
   	admitted to trading, or if not listed or admitted to trading on any 
   	national securities exchange, then the highest reported sale price 
   	for such shares in the over-the-counter market as reported on the 
   	NASDAQ National Market System, or if such sale price shall not be 
   	reported thereon, the highest bid price so reported, or, of such 
   	price shall not be reported thereon, as the same shall be reported 
   	by the National Quotation Bureau, Incorporated, or if the price is 
   	not determinable as set forth above, as determined in good faith 
   	by the Board of Directors.

		     e.  "Person" shall mean any individual, partnership, firm, 
   	corporation, association, trust, unincorporated organization or 
   	other entity, as well as any syndicate or group deemed to be a person 
   	pursuant to Section 13(d)(3) of the Exchange Act, as in effect on 
   	January 1, 1991.

		     f.   "Subsidiary" shall mean any company or entity of which 
   	the Corporation owns, directly or indirectly, (i) a majority of the 
   	outstanding shares of equity securities, or (ii) shares having a 
   	majority of the voting power represented by all of the outstanding 
   	Voting Stock of such company entitled to vote generally in the 
   	election of directors.  For the purpose of determining whether a 
   	company is a Subsidiary, the outstanding voting stock and shares of 
   	equity securities thereof shall include unissued shares of which 
   	The Corporation is the beneficial owner but, except for the purpose 
   	of determining whether a company is a Subsidiary for the purpose of 
   	Subsection 3(c) hereof shall not include any shares which may be 
   	issuable pursuant to any agreement, arrangement,or understanding, or 
   	upon the exercise of conversion rights, warrants or options, or 
   	otherwise to any Person who is not the Corporation.

    		g.  "Voting shares" shall mean the outstanding shares of 
   	capital stock of the Corporation entitled to vote generally in the 
   	election of directors.


                           				ARTICLE VIII

                    			      SUNDRY PROVISIONS

     	Section 8.01.   FISCAL YEAR.  The fiscal year of the Corporation 
shall end on the 31st day of December of each year.
				  
     	Section 8.02.   SEAL.  The seal of the Corporation shall bear the 
name of the Corporation and the words "Delaware" and "Incorporated 
March 12, 1985."

     	Section 8.03.   VOTING OF STOCK IN OTHER CORPORATIONS.  Any shares 
of stock in other corporations or associations, which may from time to time 
be held by the Corporation, may be represented and voted at any of the 
stockholders' meetings thereof by the Chief Executive Officer or his 
designee.  The Board of Directors, however, may by resolution appoint some 
other person or persons to vote such shares, in which case such person or 
persons shall be entitled to vote such shares upon the production of a 
certified copy of such resolution.

     	Section 8.04.   AMENDMENTS.  These Bylaws may be adopted, repealed, 
rescinded, altered or amended only as provided in Articles Fifth and Sixth 
of the Certificate.




January 27, 1997
 



 

 







EXECUTION COPY

		     NORTHROP GRUMMAN CORPORATION AMENDMENT NO. 1 
			  
			         Dated as of November 1, 1996 
				       
				                   to
		
		SECOND AMENDED AND RESTATED CREDIT AGREEMENT Dated as 

             				of April 15, 1994
		       
		       Amended and Restated as of March 1, 1996
			     
			            CHASE SECURITIES INC.,
            				  as Arranger
				   
       			   THE CHASE MANHATTAN BANK, 
			          as Administrative Agent 
			       
		 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, 
			              as Syndication Agent

		      MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
     			       as Documentation Agent
										


				AMENDMENT NO. 1

     AMENDMENT NO. 1 dated as of November 1, 1996, between 
NORTHROP GRUMMAN CORPORATION, a corporation duly organized and validly 
existing under the laws of the State of Delaware (the "Company"); each of 
the lenders that is a signatory hereto (individually, a "Bank" and, 
collectively, the "Banks"); THE CHASE MANHATTAN BANK, as Swingline Bank; 
and THE CHASE MANHATTAN BANK, as agent for the Banks (in such capacity, 
together with its successors in such capacity, the "Administrative Agent").
			
     The Company, the Banks, and certain other banks listed 
on Schedule II hereto (hereinafter the "Non-Continuing Banks") and the 
Administrative Agent are parties to a Second Amended and Restated Credit 
Agreement dated as of April 15, 1994 amended and restated as of March 1, 
1996 (as heretofore modified and supplemented and in effect on the date 
hereof, the "Credit Agreement"), providing, subject to the terms and 
conditions thereof, for loans to be made by said Banks to the Company in an 
aggregate principal amount not exceeding $3,800,000,000.  The Company, the 
Banks and the Administrative Agent wish to amend the Credit Agreement in 
certain respects, and accordingly, the parties hereto hereby agree as 
follows:
		       
     Section 1.  Definitions.  Except as otherwise defined in this Amendment 
No. 1, terms defined in the Credit Agreement are used herein 
as defined therein.
     
     Section 2.  Amendments.  Subject to the satisfaction of the 
conditions precedent specified in Section 4 below, but effective as of the 
date hereof, the Credit Agreement shall be amended as follows:
			
     2.01.  References in the Credit Agreement to "this Agreement" (and 
indirect references such as "hereunder", "hereby", "herein" and "hereof") 
shall be deemed to be references to the Credit Agreement as amended hereby.
			
     2.02.  Section 1.01 of the Credit Agreement is amended by amending and 
(to the extent not already included in said Section 1.01) adding the 
following definitions and inserting the same in the appropriate alphabetical 
locations:"'Amendment No. 1' shall mean the Amendment No. 1 dated as 
of November 1, 1996 to this Agreement among the Company, the Banks party 
thereto and the Administrative Agent.
		       
     "'Amendment No. 1 Effective Date' shall mean the date on which Amendment 
No. 1 became effective.
			
     "'Applicable Facility Fee Rate' and 'Applicable Margin' shall mean, 
during any period when the Rating is in one of the Rating Groups specified 
below, the percentage set forth below opposite the reference to such fee or 
to the relevant Class and Type of Syndicated Loan:
				
                      				REVOLVING CREDIT LOANS
		
		                    Rating     Rating      Rating      Rating
              		      Group      Group       Group       Group
     Fee or Loan        I          II         III         IV
      
 Applicable           .10%       .125%       .15%        .25%
  Facility Fee
   Rate
 
 Applicable           .20%       .25%        .30%        .50%
  Margin for
  Eurodollar
   Loans
 
 Applicable            0%         0%          0%          0%
  Margin for
  Base Rate
  Loans



                      			       TERM LOANS
       
	              	      Rating     Rating     Rating      Rating
              		      Group      Group      Group       Group
       Fee or Loan     I          II         III          IV
	       
Applicable            .30%       .375%      .45%        .75%
	Margin for
	Eurodollar
	Loans
 
Applicable             0%         0%         0%          0%
	Margin for
	Base Rate
	Loans
	
Any change in the Applicable Facility Fee Rate or in the Applicable Margin 
by reason of a change in the Moody's Rating or the S&P Rating shall become 
effective on the date of announcement or publication by the respective Rating 
Agency of a change in such Rating or, in the absence of such announcement or 
publication, on the effective date of such changed Rating."

     "'Facility' shall mean the Revolving Credit Facility." 

     "'Majority Banks' shall mean Banks holding more than 50% of the aggregate 
amount of (a) the Revolving Credit Commitments or, if the Revolving Credit 
Commitments shall have terminated, the sum of (i) the aggregate unpaid 
principal amount of the Revolving Loans plus (ii) the aggregate unpaid 
principal amount of the Competitive Bid Loans plus (b) the aggregate 
principal amount of the Series II Term Loans."  "Mandatory Prepayment Period" 
shall mean any period during which one or more of the following conditions 
is satisfied:  (a) the Leverage Ratio is greater than 50%; or (b) an 
Investment Grade Rating Period does not exist.
		
     "'Rating' shall mean a Moody's Rating or an S&P Rating."

     "'Rating Agency' shall mean Moody's or S&P."


     "'Rating Group' shall mean any of Rating Group I, Rating Group II, 
Rating Group III and Rating Group IV."
	       
     "'Rating Group I' shall mean (a) no Event of Default has occurred and 
is continuing and (b) the Moody's Rating is at or above Baa1 (or a Substitute 
Rating is at the corresponding rating level or higher) or the S&P Rating is 
at or above BBB+ (or a Substitute Rating is at the corresponding rating level 
or higher); "Rating Group II" shall mean (a) no Event of Default has occurred 
and is continuing, (b) the Moody's Rating is at or above Baa2 (or a 
Substitute Rating is at the corresponding rating level or higher) or the S&P 
Rating is at or above BBB (or a Substitute Rating is at the corresponding 
rating level or higher) and (c) Rating Group I is not in effect; "Rating 
Group III" shall mean (a) no Event of Default has occurred and is continuing, 
(b) the Moody's Rating is at or above Baa3 (or a Substitute Rating is 
at the corresponding rating level or higher) or the S&P Rating is at 
or above BBB- (or a Substitute Rating is at the corresponding rating 
level or higher) and (c) neither Rating Group I nor Rating Group II is 
in effect; and "Rating Group IV" shall mean none of Rating Group I, 
Rating Group II or Rating Group III is in effect; provided that, (A) 
if the Moody's Rating and the S&P Rating (or, in either case, a 
Substitute Rating) shall be at different Rating levels and one of such 
Ratings is no more than one Rating level lower than the other of such 
Ratings, then the applicable Rating Group shall be based upon the 
higher of such Ratings and (B) if the Moody's Rating and the S&P 
Rating (or, in either case, a Substitute Rating) shall be at different 
Rating levels and one of such Ratings is two or more Rating levels 
lower than the other of such Ratings, then the applicable Rating Group 
shall be based upon a Rating that is one level lower than the higher 
of such Ratings."


     "'Revolving Credit Banks' shall mean (a) on the Amendment No. 1 
Effective Date, the Banks having Revolving Credit Commitments as set forth 
in Schedule I hereto and (b) thereafter, the Banks from time to time holding 
Revolving Loans and/or Revolving Credit Commitments after giving effect to 
any assignments thereof permitted by Section 11.06 hereof."

     "'Series II Principal Payment Date' shall mean each Quarterly Date in 
each year, commencing with the second such Quarterly Date following the 
Amendment No. 1 Effective Date through and including the Series II
Term Loan Final Maturity Date."

     "'Series II Term Loan Banks' shall mean (a) on the Amendment 
No. 1 Effective Date, the Banks having Series II Term Loans as set forth in 
Schedule I hereto and (b) thereafter, the Banks from time to time
holding Series II Term Loans after giving effect to any assignments
thereof permitted by Section 11.06 hereof."
				
     "'Term Loan Banks' shall mean the Series II Term Loan Banks."
			
     "'Term Loans' shall mean the Series II Term Loans."
				
     2.03.  Clause (i) of the fourth sentence of the definition of 
"Interest Period" is amended to read in its entirety as follows:
	
	"(i) no Interest Period for any Revolving Loan may end after the 
Revolving Commitment Termination Date;".
				
     2.04.  The definitions of "Equity Issuance", "Excess Cash 
Flow", "Principal Office", "Rating Level 1", "Rating Level 2", "Series I Term 
Loans", "Series I Term Loan Banks", "Series I Term Loan Commitment", "Series 
I Term Loan Facility", "Series I Term Loan Final Maturity Date", "Series II 
Term Loan Commitment", "Series II Term Loan Facility" and "Term Loan 
Commitments" in Section 1.01 of the Credit Agreement are deleted in their 
entirety.

     2.05.  The second sentence of Section 1.03 is amended to 
delete the following: "a Series I Term Loan,".

     2.06.  Section 2.01 is amended to read in its entirety as 
follows:
				
     "2.01 Syndicated Loans.  Subject to and upon the terms and 
     conditions herein set forth, each Bank severally agrees (i) to make
     Revolving Loans (together with the Series II Term Loans, the "Syndicated 
     Loans" and each a "Syndicated Loan") to the Company in Dollars up to 
     such Bank's Commitment under the Revolving Credit Facility and (ii) to 
     effect a prepayment and reallocation of, and thereafter to maintain, its 
     Series II Term Loans, all as set forth below:
					
	  (a)  [Intentionally omitted].
					
	  (b)  Series II Term Loans.  Subject to the terms 
     and conditions of this Agreement and Amendment No. 1, Series II Term 
     Loans shall be prepaid and reallocated pursuant to Section 4.03(a) of 
     Amendment No. 1 and thereafter may, at the option of the Company, be 
     maintained as, and/or Converted into, Base Rate Loans or Eurodollar 
     Loans.
	 
	 (c)  Revolving Loans.  Syndicated Loans under the 
     Revolving Credit Facility shall be available at any time and from time 
     to time from and after the Amendment Effective Date to and including the
     Revolving Commitment Termination Date.  Subject to the terms and 
     conditions of this Agreement, during such period, Revolving Loans may 
     be borrowed, repaid and reborrowed and may, at the option of the 
     Company, be borrowed and maintained as, and/or Converted into, Base 
     Rate Loans or Eurodollar Loans.  Notwithstanding the foregoing, no 
     Revolving Loan shall be made if the sum of (i) such Revolving Loan 
     (together with all other Revolving Loans and Competitive Bid Loans to 
     be made on the same day as such Revolving Loan) plus (ii) the 
     aggregate principal amount of all outstanding Competitive Bid Loans 
     plus (iii) the aggregate principal amount of all outstanding Revolving 
     Loans plus (iv) the aggregate principal amount of all outstanding 
     Swingline Loans exceeds the aggregate amount of the Revolving Credit 
     Commitments at such time."
	 
     2.07.  The second sentence of Section 2.02(a) of the 
Credit Agreement is amended to read in its entirety as follows:
		
     "Not later than 1:00 p.m. New York time on the date specified for
     each Syndicated Loan borrowing hereunder, each Bank shall make available 
     the amount of the Syndicated Loan to be made by it on such date to the 
     Administrative Agent, at an account in New York designated by the 
     Administrative Agent, in immediately available funds, for account of the 
     Company."
	
     2.08.  Subsection (f) of Section 2.03 of the Credit Agreement 
is amended to read in its entirety as follows:
	
	"(f)  Any Bank whose offer to make any Competitive Bid Loan 
     has been accepted shall, not later than 1:00 p.m. New York time on the 
     date specified for the making of such Loan, make the amount of such Loan
     available to the Administrative Agent at an account in New York 
     designated by the Administrative Agent in immediately available funds. 
     The amount so received by the Administrative Agent shall, subject to the 
     terms and conditions of this Agreement, be made available to the Company 
     on such date by depositing the same, in immediately available funds, in 
     an account designated by the Company."

     2.09.  Subsection (b) of Section 2.04 is amended to read 
in its entirety as follows:
		
	    "(b)  Termination of Commitments.  The Revolving 
     Credit Commitments and the Swingline Commitment shall terminate on the 
     Revolving Commitment Termination Date."
	
2.10.  Subsection (a) of Section 2.08 is amended to read 
in its entirety as follows:
		
	    (a)  The Syndicated Loans made by each Bank shall 
     be evidenced (i) if Series II Term Loans, by a single promissory note of
     the Company in substantially the form of Exhibit A-2 hereto, dated the 
     Restatement Date, payable to such Bank in a principal amount equal to 
     its Series II Term Loan and otherwise duly completed (each a "Series II 
     Term Note", collectively the "Series II Term Notes" or the "Term Notes") 
     and (ii) if Revolving Loans, by a single promissory note of the Company 
     substantially in the form of Exhibit A-3 hereto, dated the Restatement 
     Date, payable to such Bank in a principal amount equal to its Revolving 
     Credit Commitment and otherwise duly completed (each a "Revolving Note" 
     and collectively the "Revolving Notes").  The date, amount, Type and 
     interest rate of each Series II Term Loan and each Revolving Loan made 
     by each Bank, and all payments made on account of the principal thereof, 
     shall be recorded by such Bank on its books and, prior to any transfer 
     of the Note evidencing the same, endorsed by such Bank on the schedule 
     attached to such Note or any continuation thereof; provided that the 
     failure by such Bank to make such recordation or endorsement shall not 
     relieve the Company of any of its obligations hereunder or under such 
     Note.
	
     2.11.  Section 2.09 is amended to delete the word "first" and 
the following phrase: "and second to the aggregate outstanding principal 
amount of the Series I Term Loans".
	
     2.12.  Subsections (a), (b) and (e) of Section 2.10 of the 
Credit Agreement are each amended to read in their entirety as follows: 
"[Intentionally omitted]."
	
     2.13.  Subsection (c) of Section 2.10 of the Credit Agreement 
is amended to read in its entirety as follows:
		
	   "(c)  Sale of Assets.  Without limiting the obligation 
     of the Company to obtain the consent of the Majority Banks pursuant to
     Section 8.09 hereof to any Disposition not otherwise permitted under 
     Section 8.09 hereof, in the event that the Net Available Proceeds of 
     any individual Disposition made after the Amendment Effective Date 
     while a Mandatory Prepayment Period is in effect (or if, after giving 
     effect to any such Disposition, a Mandatory Prepayment Period would 
     exist) (herein, the "Current Disposition") exceeds $5,000,000 and, 
     together with the Net Available Proceeds that individually exceed 
     $5,000,000 of each prior Disposition as to which a prepayment has not 
     yet been made under this Section 2.10(c), shall in the aggregate exceed 
     $50,000,000 then, (i) at the time the Company gives notice to the 
     Administrative Agent pursuant to Section 4.07 of the prepayment to be 
     made pursuant to this Section 2.10(c), the Company will deliver to the 
     Administrative Agent a statement, certified by a senior financial 
     officer of the Company, in form and detail satisfactory to the 
     Administrative Agent, of the aggregate amount of the Net Available 
     Proceeds of such Current Disposition and prior Dispositions and (ii) 
     the Company shall prepay the Term Loans in an aggregate amount equal 
     to 100% of the Net Available Proceeds received for such Current 
     Disposition and such prior Dispositions (except that Net Available 
     Proceeds consisting of Permitted Buyer Indebtedness need not be 
     applied to such prepayment until the earlier of any payment or 
     Disposition of such Permitted Buyer Indebtedness and then only to the 
     extent of such payment or the Net Available Proceeds of such 
     Disposition), such prepayment to be effected as provided in paragraph 
     (f) of this Section 2.10.

     2.14.  Subsections (i) and (ii) of Section 2.10(f) shall be 
amended to read in their entirety as follows:
					
	   "(i) Prepayments of Term Loans described in paragraph (d) 
     of this Section 2.10 shall be applied to the then remaining
     installments of the Series II Term Loans ratably.
					
	   (ii)  Prepayments of Term Loans described in paragraph 
     (c) of this Section 2.10 shall be applied (A) to the extent that any
     such prepayment, together with all such prepayments theretofore made in
     any fiscal year after the Amendment No. 1 Amendment Effective Date, does 
     not exceed $100,000,000, to the then remaining installments of the 
     Series II Term Loans in direct order of their maturities and (B) 
     thereafter to the then remaining installments of the Series II Term 
     Loans ratably."
			
     2.15.  The second sentence of Section 2.11(b) of the 
Credit Agreement is amended to read in its entirety as follows:
		
     "Not later than 3:00 p.m. New York time, on the date specified in 
     each Swingline Borrowing Notice hereunder, the Swingline Bank shall, 
     subject to the terms of this Agreement, make the amount of the Swingline 
     Loan to be made by it on such date available to the Administrative Agent 
     at an account in New York designated by the Administrative Agent in
     immediately available funds, for account of the Company."

     2.16.  Subsection (c) of Section 3.01 of the Credit 
Agreement is amended to read in its entirety as follows: "[Intentionally 
omitted]".
			
     2.17.  Subsection (d) of Section 3.01 of the Credit 
Agreement is amended to read in its entirety as follows:
			
	   "(d)  The Company hereby promises to pay to the 
     Administrative Agent for account of the Banks the aggregate principal 
     amount of the Series II Term Loans outstanding on the Amendment No. 1 
     Effective Date in 21 equal consecutive quarterly installments payable 
     on the Series II Principal Payment Dates."
			
     2.18.  The first sentence of Section 4.01 of the 
Credit Agreement is amended to read in its entirety as follows:
	
     "Except to the extent otherwise provided herein, all payments of 
     principal, interest and other amounts to be made by the Company under 
     this Agreement and the Notes shall be made in Dollars, in immediately 
     available funds, to the Administrative Agent at an account in New 
     York designated by the Administrative Agent, not later than 1:00 p.m. 
     New York time on the date on which such payment shall become due 
     (each such payment made after such time on such due date to be deemed 
     to have been made on the next succeeding Business Day)."
		
     2.19.  Subsection (b) of Section 4.02 is amended to read in 
its entirety as follows:
	
	    "(b) the making, Conversion and Continuation of Revolving Loans, 
     and the Conversion and Continuation of Series II Term Loans, of a 
     particular Type (other than Conversions provided for by Section 5.04 
     hereof) shall be made pro rata among the relevant Banks according to 
     the amounts of their respective Revolving Credit Commitments (in the 
     case of making of Loans) or their respective Revolving Credit and Series 
     II Term Loans (in the case of Conversions and Continuations of Loans);
     
     2.20.  Subsection (c) of Section 8.01 of the Credit 
Agreement is amended to read in its entirety as follows:
		
	    "(c)  with each of the financial statements required to be 
     delivered under Section 8.01(a) or 8.01(b) hereof, a certificate of an 
     authorized financial or accounting officer of the Company, in form and 
     substance satisfactory to the Administrative Agent setting forth (i) the 
     Net Available Proceeds of each Disposition in excess of $5,000,000 that
     has occurred in the fiscal period to which such financial statements 
     relate and (ii) the aggregate amount of Net Available Proceeds for each 
     other Disposition in excess of $5,000,000 that has occurred in prior 
     fiscal periods and for which no prepayment has been made pursuant to 
     Section 2.10(c) hereof;".
		
     2.21.  Clause (i) of Section 8.09(d) of the Credit Agreement is 
amended to read in its entirety as follows: "[Intentionally omitted];".
		
     2.22.  Section 8.19 of the Credit Agreement is amended to read 
in its entirety as follows: "[Intentionally omitted]."
		
     2.23.  The first sentence of Section 10.09 of the Credit 
Agreement is amended to read in its entirety as follows:
		
	    "The Documentation Agent, the Syndication Agent and the 
     Arranger identified on the cover page of this Agreement, or on the cover
     page of any amendment hereto, shall have no duties or responsibilities 
     hereunder other than, in the case of the Documentation Agent and the 
     Syndication Agent, as Banks hereunder."
		
     2.24.  Schedule I of the Credit Agreement is amended to read 
in its entirety as Schedule I hereto.
		
     2.25.  Exhibit A-1 is amended to read in its entirety as 
follows:
 "[Intentionally omitted]."
		
		
     Section 3.  Representations and Warranties.  The Company 
represents and warrants to the Banks that (i) the representations and 
warranties set forth in Section 7 of the Credit Agreement are true and
complete on the date hereof as if made on and as of the date hereof (or, if 
any such representation or warranty is expressly stated to have been made as 
of a specific date, as of such specific date) and as if each reference in
said Section 7 to "this Agreement" included reference to this Amendment No. 1, 
(ii) after giving effect to the amendments in Section 2 of this Amendment 
No. 1, no Default shall have occurred and be continuing, (iii) the making 
and performance by the Company of this Amendment No. 1, and the Revolving 
Notes and Series II Term Notes delivered pursuant to Section 4.04 hereof, 
have been duly authorized by all necessary corporate action and (iv) this 
Amendment No. 1, and the Credit Agreement as amended by Amendment No. 1, 
constitute, and each of such Notes (when executed and delivered for value) 
will constitute, legal, valid and binding obligations of the Company, 
enforceable in accordance with its terms, except as such enforceability may 
be limited by (a) bankruptcy, insolvency, reorganization, moratorium or 
other similar laws of general applicability affecting the enforcement of 
creditors' rights and (b) the application of general principles of equity 
(regardless of whether such enforceability is considered in a proceeding in 
equity or at law). 

     
     Section 4.  Conditions Precedent.  As provided in Section 2
above, the amendments to the Credit Agreement set forth in said Section 2 
shall become effective, as of the date hereof, upon the satisfaction of the
following conditions precedent:
		
     4.01.  Execution by All Parties.  This Amendment No. 1 shall 
have been executed and delivered by each of the parties hereto.
		
     4.02.  Payment of Interest and Fees.  Each Bank and Non-
Continuing Bank shall have been paid in full all interest and fees accrued 
under the Credit Agreement to the Amendment No. 1 Effective Date (as defined 
in the Credit Agreement as hereby amended).
	      
     4.03.  Reallocation.  The Series II Term Loans shall have been 
prepaid under Section 2.09 of the Credit Agreement on November 1, 1996, but 
prior to the effectiveness of the amendments to the Credit Agreement set forth 
in Section 2 above, in an aggregate principal amount of $257,500,000; and 
immediately thereafter the Banks and the Non-Continuing Banks shall be deemed 
to have made and taken such assignments, as the case may be, of the remaining 
Series II Term Loans such that, after giving effect thereto, each Bank shall 
hold a Series II Term Loan in an aggregate principal amount set forth in 
opposite the name of such Bank in Schedule I hereto.  In order to fund such 
assignments and thereby effect the reallocations of the Series II Term Loans, 
each Bank listed in Part A of Schedule III will pay on the Amendment No. 1 
Effective Date to the Administrative Agent the amount set forth opposite such 
Bank's name in Part A of Schedule III, out of which aggregate amounts the 
Administrative Agent will pay on the Amendment No. 1 Effective Date to each 
Bank and Non-Continuing Bank listed in Part B of Schedule III the amount set 
forth opposite its name in Part B of Schedule III.
		
     4.04.  Notes.  The Administrative Agent shall have received 
Revolving Notes and Series II Term Notes, duly completed and executed by the 
Company in exchange for the Revolving Notes and Series II Term Notes of the 
Company previously delivered pursuant to the Credit Agreement.
		
     4.05.  Documents.  The Administrative Agent shall have
received such other documents as the Administrative Agent or any Bank or 
special New York counsel to Chase may reasonably request.
		
		
     Section 5.  Miscellaneous.  Except as herein provided, the 
Credit Agreement shall remain unchanged and in full force and effect.  This 
Amendment No. 1 may be executed in any number of counterparts, all of which 
taken together shall constitute one and the same amendatory instrument and 
any of the parties hereto may execute this Amendment No. 1 by signing any 
such counterpart.  This Amendment No. 1 shall be governed by, and construed 
in accordance with, the law of the State of New York.
		
     IN WITNESS WHEREOF, the parties hereto have caused this 
Amendment No. 1 to be duly executed and delivered as of the day and year 
first above written.


				     NORTHROP GRUMMAN CORPORATION 


				      By
					  
					  Title:
	 
			     
			     THE BANKS


THE CHASE MANHATTAN BANK


By
		Title:


BANK OF AMERICA NATIONAL TRUST
 AND SAVINGS ASSOCIATION


By
		Title:



MORGAN GUARANTY TRUST COMPANY
 OF NEW YORK


By
		Title:




                             			  FIRST AMENDMENT TO THE
                            			NORTHROP SUPPLEMENTAL PLAN 2

	This amendment to the Northrop Supplemental Plan 2, as described 
below, is intended to include compensation deferred under the Northrop 
Grumman Corporation Executive Deferred Compensation Plan within the 
definition of compensation used to calculate Northrop Supplemental 
Retirement Income Program For Senior Executives benefits.

1.      Section A.04 is modified to read as follows:

	A.04    Amount of Retirement Benefit. A Participant entitled to a 
		benefit under Section A.03 will receive a benefit equal in 
		value to the excess of (a) over (b) as follows:

		(a)     is the greater of

		       (1)     the amount of the Participant's retirement 
			       income under the Retirement Plan on a straight 
			       life annuity basis, computed

			       (A)     without regard to the limitations on 
				       benefits and the cap on counted 
				       compensation imposed by Code sections 
				       415 and 401(a)(17), and

			       (B)     by modifying Rate of Annual Salary 
				       under the Retirement Plan to include 
				       compensation deferred under the 
				       Northrop Grumman Corporation Executive 
				       Deferred Compensation Plan, or

		       (2)     the amount of a straight life annuity with 
			       annual payments equal to the Participant's 
			       Final Average Salary (as defined under the 
			       Retirement Plan except that Rate of Annual 
			       Salary is modified to include compensation 
			       deferred under the Northrop Grumman 
			       Corporation Executive Deferred Compensation 
			       Plan) in effect on the date of his or her 
			       Termination of Employment multiplied by the 
			       appropriate percentage shown in the following 
			       schedule:

					Percentage of Final Average
	Age at Termination Date*        Salary at Termination Date**

		55                              30%
		56                              34%
		57                              38%
		58                              42%
		59                              46%
		60                              50%
		61                              52%
		62                              54%
		63                              56%
		64                              58%
		65 and over                     60%

	   (b)   is the amount of the Participant's retirement income 
		 under the Retirement Plan on a straight life annuity 
		 basis, computed as of his or her Termination of 
		 Employment, taking into account the limitations on 
		 benefits and the cap on counted compensation imposed 
		 by Code sections 415 and 401(a)(17).

* Calculated to years and completed months on the Termination Date. 
** The applicable percentage shall be straight line interpolation depending 
on the Participant's age on his termination date. The percentage thus 
determined shall be rounded to the nearest hundredth. For example, if a  
Participant terminates when he is 55 years and 8 months old, the applicable 
percentage is 30.00% + 2.67% = 32.67%. 
 




                        NORTHROP GRUMMAN CORPORATION
                            SPECIAL AGREEMENT





        THIS AGREEMENT is made and entered into as of this _____ day of ____,
1996, by and between Northrop Grumman Corporation, a Delaware corporation
(hereinafter referred to as the "Company") and _____________________________
(hereinafter referred to as the "Executive").
        
                               RECITALS

        The Board of Directors of the Company has approved the Company 
entering into severance agreements with certain key executives of the 
Company.

        The Executive is a key executive of the Company.

        Should the possibility of a Change in Control of the Company arise, 
the Board believes it imperative that the Company and the Board should be 
able to rely upon the Executive to continue in his position, and that the 
Company should be able to receive and rely upon the Executive's advice, if 
requested, as to the best interests of the Company and its shareholders 
without concern that the Executive might be distracted by the personal 
uncertainties and risks created by the possibility of a Change in Control.

        Should the possibility of a Change in Control arise, in addition to 
his regular duties, the Executive may be called upon to assist in the 
assessment of such possible Change in Control, advise management and the 
Board as to whether such Change in Control would be in the best interests 
of the Company and its shareholders, and to take such other actions as the 
Board. 

        The Executive and the Company desire that, with respect to those
Executives who have previously entered an Amended and Restated Special 
Severance Pay Agreement, might determine to be appropriate, the terms of this 
Agreement shall completely replace and supersede the provisions set forth 
in the Amended and Restated Special Severance Pay Agreement, entered into 
by and between the Company and the Executive prior to the date hereof 
(setting forth terms and provisions with respect to the Executive's 
entitlement to payments and benefits following a Change in Control of the 
Company);

        NOW THEREFORE, to assure the Company that it will have the continued
dedication of the Executive and the availability of his advice and counsel
notwithstanding the possibility, threat, or occurrence of a Change in Control 
of the Company, and to induce the Executive to remain in the employ of the 
Company in the face of these circumstances and for other good and valuable 
consideration, the Company and the Executive agree as follows:

Article 1.  Certain Definitions

        Whenever used in this Agreement, the following terms shall have the
meanings set forth below and, when the meaning is intended, the initial 
letter of the word is capitalized:

        (a)     "Agreement" means this Special Agreement.

        (b)     "Base Salary" means the salary of record paid to the 
                Executive as annual salary, excluding amounts received under 
                incentive or other bonus plans, whether or not deferred.

        (c)     "Beneficial Owner" shall have the meaning ascribed to such 
                term in Rule 13d-3 of the General Rules and Regulations under 
                the Exchange Act.

        (d)     "Beneficiary" means the persons or entities designated or 
                deemed designated by the Executive pursuant to Section 9.2 
                herein.

        (e)     "Board" means the Board of Directors of the Company.

        (f)     "Cause" shall mean the occurrence of either or both of the
                following:

                (i)     The Executive's conviction for committing an act of
                        fraud, embezzlement, theft, or other act constituting 
                        a felony; or

                (ii)    The willful engaging by the Executive in gross 
                        misconduct materially and demonstrably injurious to 
                        the Company.  However, no act or failure to act, on 
                        the Executive's part shall be considered "willful" 
                        unless done, or omitted to be done, by the Executive 
                        not in good faith and without reasonable belief that 
                        his action or omission was in the best interest of 
                        the Company.
        
        (g)     "Change in Control" of the Company shall be deemed to have 
                occurred as of the first day that any one or more of the 
                following conditions shall have been satisfied:

                (i)     Any Person (other than those Persons in control of 
                        the Company as of the Effective Date, or other than 
                        a trustee or other fiduciary holding securities under 
                        an employee benefit plan of the Company), becomes 
                        the Beneficial Owner, directly or indirectly, of 
                        securities of the Company representing fifteen percent 
                        (15%) or more of the combined voting power of the 
                        Company's then outstanding securities, and for 
                        purposes of this subsection (i) "Person" or "group" 
                        shall not include underwriters acquiring newly-issued 
                        voting securities (or securities convertible into 
                        voting securities) directly from the Company with a 
                        view towards distribution; or 
                        
                (ii)    During any period of two (2) consecutive years (not
                        including any period prior to the execution of this 
                        Agreement), individuals who at the beginning of such 
                        period constitute the Board (and any new Director, 
                        whose election by the Company's stockholders was 
                        approved by a vote of at least two-thirds (2/3) of 
                        the Directors then still in office who either were 
                        Directors at the beginning of the period or whose 
                        election or nomination for election was so approved), 
                        cease for any reason to constitute a majority thereof; 
                        or 
                        
                (iii)   The stockholders of the Company approve: (A) a plan
                        of complete liquidation of the Company; or (B) an 
                        agreement for the sale or disposition of all or 
                        substantially all the Company's assets in one or a 
                        series of related transactions; or (C) a merger,
                        consolidation, or reorganization of the Company with 
                        or involving any other corporation, other than a 
                        merger, consolidation, or reorganization that would 
                        result in the voting securities of the Company 
                        outstanding immediately prior thereto continuing to 
                        represent (either by remaining outstanding or by 
                        being converted into voting securities of the 
                        surviving entity), more than seventy-five percent 
                        (75%) of the combined voting power of the voting 
                        securities of the Company (or such surviving entity) 
                        outstanding immediately after such merger, 
                        consolidation, or reorganization.

        (h)     "Code" means the United States Internal Revenue Code of 1986,
                as amended.

        (i)     "Committee" means the Compensation and Management Development
                Committee of the Board, or any other committee appointed by 
                the Board to perform the functions of the Compensation and 
                Management Development Committee.

        (j)     "Company" means Northrop Grumman Corporation, a Delaware
                corporation (including any and all subsidiaries), or any 
                successor thereto as provided in Article 8 herein.

        (k)     "Disability" means permanent and total disability, within 
                the meaning of Code Section 22(e)(3), as determined by the 
                Committee in the exercise of good faith and reasonable 
                judgment, upon receipt of and in reliance on sufficient 
                competent medical advice from one or more individuals 
                licensed and qualified to give professional medical advice.

        (l)     "Effective Date" means the date this Agreement is approved 
                by the Board or its delagatee, or such other date as the 
                Board or its delagatee shall determine.

        (m)     "Effective Date of Termination" means the date on which a
                Qualifying Termination occurs.

        (n)     "Exchange Act" means the United States Securities Exchange 
                Act of 1934, as amended.

        (o)     "Executive" means the individual identified in the first 
                sentence and on the signature page of this Agreement.

        (p)     "Good Reason" means, without the Executive's express written
                consent, the occurrence after a Change in Control of the 
                Company of any one or more of the following:

                (i)     The assignment of the Executive to duties materially
                        inconsistent with the Executive's authorities, duties,
                        responsibilities, and status (including titles and 
                        reporting requirements) as an officer of the Company, 
                        or a material reduction or alteration in the nature 
                        or status of the Executive's authorities, duties, or 
                        responsibilities, from their highest level during the 
                        ninety (90) days prior to the Change in Control, other 
                        than an insubstantial and inadvertent act that is 
                        remedied by the Company promptly after receipt of 
                        notice thereof given by the Executive;

                (ii)    A reduction by the Company of the Executive's Base 
                        Salary as in effect on the Effective Date, or as the 
                        same shall be increased from time to time;

                (iii)   A significant reduction by the Company of the 
                        Executive's aggregate incentive opportunities under 
                        the Company's short- and long-term incentive programs, 
                        as such opportunities exist on the Effective Date, or 
                        as such opportunities may be increased after the 
                        Effective Date.  For this purpose, a significant 
                        reduction in the Executive's incentive opportunities 
                        shall be deemed to have occurred in the event his 
                        targeted annualized award opportunities and/or the 
                        degree of probability of attainment of such annualized 
                        award opportunities are diminished from the levels 
                        and probability of attainment that existed as of the 
                        Effective Date;

                (iv)    The failure of the Company to maintain the
                        Executive's relative level of coverage and accruals 
                        under the Company's employee benefit and/or retirement 
                        plans, policies, practices, or arrangements in which 
                        the Executive participates as of the Effective Date, 
                        both in terms of the amount of benefits provided, 
                        amounts accrued and the relative level of the 
                        Executive's participation on a basis at least as 
                        beneficial as, or substantially equivalent to that 
                        on which the Executive participated in such plans 
                        immediately prior to the Effective Date.  For this 
                        purpose, the Company may eliminate and/or modify 
                        existing programs and coverage levels; provided, 
                        however, that the Executive's level of coverage under 
                        all such programs must be at least as great as is 
                        such coverage provided to executives who have the 
                        same or lesser levels of reporting responsibilities 
                        within the Company's organization;

                (v)     The failure of the Company to obtain a satisfactory
                        agreement from any successor to the Company to assume 
                        and agree to perform the Company's obligations under 
                        this Agreement, as contemplated in Article 8 herein; 
                        and 

                (vi)    Any purported termination by the Company of the
                        Executive's employment that is not effected pursuant 
                        to a Notice of Termination satisfying the 
                        requirements of Section 2.8 herein, and for purposes 
                        of this Agreement, no such purported termination shall 
                        be effective.

                The Executive's right to terminate employment for Good Reason
                shall not be affected by the Executive's incapacity due to 
                physical or mental illness.  The Executive's continued 
                employment shall not constitute a consent to, or a waiver 
                of rights with respect to, any circumstance constituting Good 
                Reason herein.

        (q)     "Person" shall have the meaning ascribed to such term in 
                Section 3(a)(9) of the Exchange Act and used in Sections 
                13(d) and 14(d) thereof, including a "group" as defined in 
                Section 13(d).

        (r)     "Qualifying Termination" means any of the events described 
                in Section 2.3 herein.

        (s)     "Severance Benefits" means the payments provided in Section 
                2.4 herein.


Article 2.  Severance Benefits

        2.1.    Right to Severance Benefits.  The Executive shall be entitled 
to receive from the Company Severance Benefits as described in Section 2.4 
herein, if there has been a Change in Control of the Company and if, within 
the six (6) full calendar month period prior to the effective date of a 
Change in Control, or within twenty-four (24) calendar months thereafter, 
the Executive's employment with the Company shall end for any reason 
specified in Section 2.3 herein.

        The Executive shall not be entitled to receive Severance Benefits 
if he is terminated for Cause, or if his employment with the Company ends 
due to death or voluntary termination of employment by the Executive without 
Good Reason.

        2.2.    Services During Certain Events.  In the event a Person begins 
a tender or exchange offer, circulates a proxy to shareholders of the 
Company, or takes other steps seeking to effect a Change in Control, the 
Executive agrees that he will not voluntarily leave the employ of the Company 
and will render services until such Person has abandoned or terminated his 
or its efforts to effect a Change in Control, or until six (6) months after 
a Change in Control has occurred; provided, however, that the Company may 
terminate the Executive for Cause at any time, and the Executive may 
terminate his employment any time after the Change in Control for Good 
Reason.

       2.3.    Qualifying Termination.  The occurrence of any one or more 
of the following events within twenty-four (24) calendar months after a 
Change in Control of the Company shall cause the Company or any successor 
to pay immediately the Severance Benefits to the Executive under this 
Agreement: 

       (a)     An involuntary termination of the Executive's employment by 
               the Company for reasons other than Cause;

       (b)     A voluntary termination of employment by the Executive for 
               Good Reason;

        (c)    A successor company fails or refuses to assume by written
               instrument the Company's obligations under this Agreement, 
               as required by Article 8 herein; or

        (d)    The Company or any successor company repudiates or breaches 
               any of the provisions of this Agreement.

        2.4.   Description of Severance Benefits.  In the event that the 
Executive becomes entitled to receive Severance Benefits, as provided in 
Sections 2.1 and 2.3 herein, the Company shall pay to the Executive and 
provide him with the following:

        (a)    An amount equal to three (3) times the highest rate of the
               Executive's annual Base Salary in effect at any time up to and
               including the Effective Date of Termination.

        (b)    An amount equal to three (3) times the greater of: (i) the
               Executive's average annual bonus earned over the three (3) 
               full fiscal years prior to the Effective Date of Termination; 
               or (ii) the Executive's target annual bonus established for 
               the bonus plan year in which the Executive's Effective Date 
               of Termination occurs.

        (c)    An amount equal to the Executive's unpaid Base Salary and
               accrued vacation pay through the Effective Date of 
               Termination, together with a portion of the Executive's 
               target bonus under the bonus plan in which he participates 
               for that year, calculated by multiplying the target bonus by 
               a fraction the numerator of which is the number of days from 
               January 1 through the Effective Date of Termination and the
               denominator of which is 365.

        (d)    A continuation of all benefits pursuant to any and all
               welfare benefit plans under which the Executive and/or 
               the Executive's family is eligible to receive benefits and/or 
               coverage as of the effective date of the Change in Control, 
               including, but not limited to, group life insurance, 
               hospitalization, disability, medical, dental, and thrift 
               plans.  Such benefits shall be provided to the Executive at 
               the same premium cost, and at the same coverage level, as in 
               effect as of the Executive's Effective Date of Termination.

               The welfare benefits described in this Subsection 2.4(d)
               shall continue following the Effective Date of Termination 
               for three (3) years; provided, however, that such benefits 
               shall be discontinued prior to the end of such period in the 
               event the Executive receives substantially similar benefits 
               from a subsequent employer, as determined by the Committee.

        (e)    A lump sum cash payment of the actuarial present value 
               equivalent of the aggregate benefits accrued by the 
               Executive as of the Effective Date of Termination under the 
               terms of the Northrop Grumman Corporation ERISA Supplemental 
               Plan 1 and ERISA Supplemental Plan 2, and if applicable, the 
               Grumman Corporation Supplemental Retirement Plan and all 
               similar excess benefit plans applicable to the Executive.  
               For this purpose, such benefits shall be calculated under 
               the assumption that the Executive's employment continued
               following the Effective Date of Termination for three (3) 
               years (i.e., three (3) additional years of service credits 
               shall be added to the Executive's record of service with the 
               Company and three (3) additional years to his chronological 
               age for status and actuarial purposes); provided, however, 
               that for purposes of determining "final average pay" under 
               the benefit calculation, the Executive's actual pay history 
               as of the Effective Date of Termination shall be used, 
               including for this purpose the higher of (x) the average of
               the last three bonuses received by the Executive or (y) the
               Executive's target bonus for the year in which the Effective 
               Date of Termination occurs.

        (f)    A lump sum cash payment of the entire balance of the 
               Executive's compensation which has been deferred under any 
               plan or program of the Company together with all interest that 
               has been credited with respect to such deferred compensation 
               balance. 
        
        (g)    For purposes of this Agreement, any acceleration of vesting,
               lapse of restrictions and/or payout occasioned by the Change 
               in Control pursuant to the provisions of long-term incentive 
               plans and/or individual award agreements under such long-term 
               incentive plans shall be deemed a benefit within the meaning 
               of this Section 2.4.  Any amounts paid either directly to, or 
               for the benefit of the Executive pursuant to Article 7 of this 
               Agreement shall also be deemed a benefit within the meaning 
               of this Section 2.4.

       2.5.    Termination for Total and Permanent Disability.  Following a
Change in Control of the Company, if the Executive's employment is terminated 
due to Disability, the Executive shall receive his Base Salary through the 
Effective Date of Termination, at which point in time the Executive's benefits 
shall be determined in accordance with the Company's retirement, insurance, 
and other applicable plans and programs then in effect, provided, however, 
that if immediately prior to the condition or event leading to, or the 
commencement of, the Disability of the Executive, the Executive would have 
been entitled to invoke any of the subsections of Section 2.3 of this Special 
Agreement if he had terminated at that time, then upon termination of his 
employment for Disability he shall be entitled to collect immediately his 
full Severance Benefits hereunder.  

        2.6.    Termination on Executive's Death.  Following a Change in 
Control of the Company, if the Executive's employment is terminated by reason 
of his death, the Executive's benefits shall be determined in accordance with 
the Company's retirement, survivor's benefits, insurance, and other applicable 
programs of the Company then in effect.

        2.7.    Termination for Cause or by the Executive Other Than for Good
Reason.  Following a Change in Control of the Company, if the Executive's
employment is terminated either: (i) by the Company for Cause; or (ii) by the
Executive other than for Good Reason, the Company shall pay the Executive his 
full Base Salary and accrued vacation through the Effective Date of 
Termination, at the rate then in effect, plus all other amounts to which the 
Executive is entitled under any compensation plans of the Company, at the time 
such payments are due, and the Company shall have no further obligations to 
the Executive under this Agreement.

        2.8.    Notice of Termination.  Any termination by the Company for 
Cause or by the Executive for Good Reason shall be communicated by Notice 
of Termination to the other party.  For purposes of this Agreement, a "Notice 
of Termination" shall mean a written notice which shall indicate the specific 
termination provision in this Agreement relied upon, and shall set forth in 
reasonable detail the facts and circumstances claimed to provide a basis 
for termination of the Executive's employment under the provision so 
indicated.  If the Executive is terminating for Good Reason hereunder, the 
Notice of Termination shall be effective on the date specified in Section 
9.7 of this Agreement.


Article 3.  Form and Timing of Severance Benefits

        3.1.    Form and Timing of Severance Benefits.  The Severance Benefits
described in Sections 2.4(a), 2.4(b), 2.4(c), 2.4(e), and 2.4(f) herein shall 
be paid in cash to the Executive in a single lump sum as soon as practicable
following the Effective Date of Termination, but in no event beyond thirty 
(30) days from such date.

        3.2.    Withholding of Taxes.  The Company shall be entitled to 
withhold from any amounts payable under this Agreement all taxes as legally 
shall be required (including, without limitation, any United States Federal 
taxes, and any other state, city, or local taxes).


Article 4.  Excise Tax Gross-Up

        4.1.    Equalization Payment.  If upon or following a Change in 
Control, the tax imposed by Section 4999 of the Code or any similar or 
successor tax (the "Excise Tax") applies, solely because of the Change in 
Control, to any payments, benefits and/or amounts received by the Executive 
as Severance Benefits or otherwise, including, without limitation, any fees, 
costs and expenses paid under Article 7 of this Agreement and/or any amounts 
received or deemed received, within the meaning of any provision of the Code, 
by the Executive as a result of (and not by way of limitation) any automatic 
vesting, lapse of restrictions and/or accelerated target or performance 
achievement provisions, or otherwise, applicable to outstanding grants or 
awards to the Executive under any of the Company's incentive plans, including 
without limitation, the 1993 Long Term Incentive Stock Plan, the 1987 Long 
Term Incentive Plan and the 1981 Long-Term Incentive Plan, the Company shall 
pay to the Executive in cash an additional amount or amounts (the "Gross-Up 
Payment(s)") such that the net amount retained by the Executive after the 
deduction of any Excise Tax on such payments, benefits and/or amounts so 
received and any Federal, state and local income tax and Excise Tax upon the 
Gross-Up Payment(s) provided for by this Section 4.1 shall be equal to such 
payments, benefits and/or amounts so received had they not been subject to 
the Excise Tax.  Such payment(s) shall be made by the Company to the Executive 
as soon as practicable following the receipt or deemed receipt of any such 
payments, benefits and/or amounts so received, and may be satisfied by the 
Company making a payment or payments on Executive's account in lieu of 
withholding for tax purposes but in all events shall be made within thirty 
(30) days of the receipt or deemed receipt by the Executive of any such 
payment, benefit and/or amount. 

        4.2.    Tax Computation.  For purposes of determining whether any
payments, benefits and/or amounts, including amounts paid as Severance 
Benefits, will be subject to Excise Tax, and the amount of any such Excise 
Tax:

       (a)     Any other payments, benefits and/or amounts received or to be
               received by the Executive in connection with or contingent 
               upon a Change in Control of the Company or the Executive's 
               termination of employment (whether pursuant to the terms of 
               this Agreement or any other plan, arrangement or agreement 
               with the Company, or with any Person whose actions result in 
               a Change in Control of the Company or any Person affiliated 
               with the Company or such Persons) shall be combined to 
               determine whether the Executive has received any "parachute 
               payment" within the meaning of Section 280G(b)(2) of the Code, 
               and if so, the amount of any "excess parachute payments" 
               within the meaning of Section 280G(b)(1) that shall be treated 
               as subject to the Excise Tax, unless in the opinion of tax 
               counsel selected by the Company's independent auditors and 
               acceptable to the Executive, such other payments, benefits
               and/or amounts (in whole or in part) do not constitute 
               parachute payments, or unless such excess parachute payments 
               represent reasonable compensation for services actually 
               rendered within the meaning of Section 280G(b)(4) of the Code 
               in excess of the base amount within the meaning of Section 
               280G(b)(3) of the Code, or are otherwise not subject to the 
               Excise Tax;

        (b)    The value of any noncash benefits or any deferred payment or
               benefit shall be determined by the Company's independent 
               auditors in accordance with the principles of Sections 
               280G(d)(3) and (4) of the Code.

                For purposes of determining the amount of the Gross-Up Payment, 
        the Executive shall be deemed to pay Federal income taxes at the 
        highest marginal rate of Federal income taxation in the calendar year 
        in which the Gross-Up Payment is to be made and such highest marginal 
        rate shall take into account the loss of itemized deductions by the 
        Executive and shall also include the Executive's share of the 
        hospital insurance portion of FICA and state and local income taxes 
        at the highest marginal rate of taxation in the state and locality 
        of the Executive's residence on the Effective Date of Termination, 
        net of the maximum reduction in Federal income taxes that could be 
        obtained from the deduction of such state and local taxes.

        4.3.    Subsequent Recalculation.  In the event the Internal Revenue
Service adjusts the computation of the Company under Section 4.2 herein, so 
that the Executive did not receive the greatest net benefit, the Company shall 
reimburse the Executive as provided herein for the full amount necessary to 
place the Executive in the same after-tax position as he would have been in 
had no Excise Taxapplied.


Article 5.  The Company's Payment Obligation

        5.1.    Payment Obligations Absolute.  The Company's obligation to 
make the payments and the arrangements provided for herein shall be absolute 
and unconditional, and shall not be affected by any circumstances, including, 
without limitation, any offset, counterclaim, recoupment, defense, or other 
right which the Company may have against the Executive or anyone else.  All 
amounts payable by the Company hereunder shall be paid without notice or 
demand.  Each and every payment made hereunder by the Company shall be final, 
and the Company shall not seek to recover all or any part of such payment 
from the Executive or from whomsoever may be entitled thereto, for any 
reasons whatsoever, except as otherwise provided in Article 7 hereof.

        The Executive shall not be obligated to seek other employment in
mitigation of the amounts payable or arrangements made under any provision 
of this Agreement, and the obtaining of any such other employment shall in 
no event effect any reduction of the Company's obligations to make the 
payments and arrangements required to be made under this Agreement, except 
to the extent provided in Section 2.4(d) herein.

        5.2.    Contractual Rights to Benefits.  This Agreement establishes 
and vests in the Executive a contractual right to the benefits to which he is 
entitled hereunder and the Company expressly waives any ability, if possible, 
to deny liability for any breach of its contractual commitment hereunder upon 
the grounds of lack of consideration, accord and satisfaction or any other 
defense.  In any dispute arising after a Change in Control as to whether 
Executive is entitled to benefits under this Agreement, there shall be a 
presumption that Executive is entitled to such benefits and the burden of 
proving otherwise shall be on the Company.  However, nothing herein contained 
shall require or be deemed to require, or prohibit or be deemed to prohibit, 
the Company to segregate, earmark, or otherwise set aside any funds or other 
assets, in trust or otherwise, to provide for any payments to be made or 
required hereunder.

        5.3.    All payments, benefits and amounts provided under this 
Agreementshall be in addition to and not in substitution for any pension 
rights under the Company's tax-qualified pension plan, and any disability, 
workers' compensation or other Company benefit plan distribution that 
Executive is entitled to at his Effective Date of Termination.


Article 6.  Term of Agreement

        This Agreement will commence on the Effective Date and shall continue 
in effect for three (3) full calendar years.  However, at the end of such 
three-year (3) period and, if extended, at the end of each additional year 
thereafter, the term of this Agreement shall be extended automatically for 
one (1) additional year, unless the Committee delivers written notice six 
(6) months prior to the end of such term, or extended term, to the 
Executive, that the Agreement will not be extended.  In such case, the 
Agreement will terminate at the end of the term, or extended term, then in 
progress.

        However, in the event a Change in Control occurs during the original 
or any extended term, this Agreement will remain in effect for the longer 
of: (i) twenty-four (24) months beyond the month in which such Change in 
Control occurred; or (ii) until all obligations of the Company hereunder have 
been fulfilled, and until all benefits required hereunder have been paid to 
the Executive.


Article 7.      Legal Remedies

        7.1.    Payment of Legal Fees.  To the extent permitted by law, the
Company shall pay in advance all legal fees, costs of litigation, prejudgment
interest, and other expenses incurred in good faith by the Executive as a 
result of the Company's refusal to provide the Severance Benefits to which 
the Executive becomes entitled under this Agreement, or as a result of the 
Company's contesting the validity, enforceability, or interpretation of this 
Agreement, or as a result of any conflict between the parties pertaining to 
this Agreement; provided, however, that if it is finally adjudicated that 
the Participant did not commence the litigation in good faith and had no 
reasonable basis therefor, the Participant shall repay all advanced fees and 
expenses and reimburse the Company for its reasonable legal fees and expenses 
in connection therewith.  

       7.2.    Arbitration.  The Executive shall have the right and option 
to elect (in lieu of litigation) to have any dispute or controversy arising 
under or in connection with this Agreement settled by arbitration, conducted 
before a panel of three (3) arbitrators sitting in a location selected by the 
Executive within fifty (50) miles from the location of his job with the 
Company, in accordance with the rules of the American Arbitration Association 
then in effect.

       Judgment may be entered on the award of the arbitrator in any court
having proper jurisdiction.  All expenses of such arbitrations, including 
the fees and expenses of the counsel for the Executive, shall be advanced 
and borne by the Company; provided however, that if it is finally adjudicated 
that the Participant did not commence the arbitration in good faith and had 
no reasonable basis therefor, the Participant shall repay all advanced fees 
and expenses and reimburse the Company for its reasonable legal fees and 
expenses in connection therewith.


Article 8.      Successors

        The Company will require any successor (whether direct or indirect, 
by purchase, merger, consolidation, or otherwise) of all or substantially all 
of the business and/or assets of the Company or of any division or subsidiary 
thereof (the business and/or assets of which constitute at least fifty percent 
(50%) of the total business and/or assets of the Company) to expressly assume 
and agree to perform the Company's obligations under this Agreement in the 
same manner and to the same extent that the Company would be required to 
perform them if no such succession had taken place but a Change in Control 
had occurred.  Failure of the Company to obtain such assumption and agreement 
in a written instrument prior to the effective date of any such succession 
shall be a breach of this Agreement and shall entitle the Executive to 
compensation from the Company in the same amount and on the same terms as he 
would be entitled to hereunder if he had terminated his employment with the 
Company voluntarily for Good Reason and in such case, the date on which any 
such succession becomes effective shall be deemed the Effective Date of 
Termination if the Executive so elects, but any delay or failure by the 
Executive to so elect shall not be a waiver or release of any rights hereunder
which may be asserted at any time.

        This Agreement shall inure to the benefit of and be enforceable by 
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees, and legatees.  If the Executive 
should die while any amount would still be payable to him hereunder had he 
continued to live, all such amounts, unless otherwise provided herein, shall 
be paid in accordance with the terms of this Agreement, to the Executive's 
Beneficiary.  If the Executive has not named a Beneficiary, then such amounts 
shall be paid to the Executive's devisee, legatee, or other designee, or if 
there is no such designee, to the Executive's estate.

Article 9.      Miscellaneous
        
        9.1.    Employment Status.  The Executive and the Company acknowledge
that, except as may be provided under any other agreement between the 
Executive and the Company, the employment of the Executive by the Company is 
"at will," and, prior to the effective date of a Change in Control, may be 
terminated by either the Executive or the Company at any time, subject to 
applicable law.

        9.2.    Beneficiaries.  The Executive may designate one or more 
persons or entities as the primary and/or contingent Beneficiaries of any 
Severance Benefits owing to the Executive under this Agreement.  Such 
designation must be in the form of a signed writing acceptable to the 
Committee.  The Executive may make or change such designation at any time.

        9.3.    Entire Agreement.  This Agreement contains the entire
understanding of the Company and the Executive with respect to the subject 
matter hereof.  In particular, this Agreement completely replaces and 
supersedes the terms of the Amended and Restated Special Severance Pay 
Agreement, entered into by and between the Company and the Executive, setting 
forth the terms and provisions with respect to the Executive's entitlement 
to payments and benefits following a Change in Control of the Company. [to 
be used for Executives with prior agreement] 

        9.4.    Gender and Number.  Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the 
plural shall include the singular, and the singular shall include the plural.

        9.5.    Severability.  In the event any provision of this Agreement 
shall be held illegal or invalid for any reason, the illegality or invalidity 
shall not affect the remaining parts of the Agreement, and the Agreement 
shall be construed and enforced as if the illegal or invalid provision had 
not been included.  Further, the captions of this Agreement are not part of 
the provisions hereof and shall have no force and effect.

        9.6.    Modification.  No provision of this Agreement may be 
modified, waived, or discharged unless such modification, waiver, or 
discharge is agreed to in writing and signed by the Executive and by an 
authorized member of the Committee, or by the respective parties' legal 
representatives and successors. 
        
        9.7.  Notice.  For purposes of this Agreement, notices including 
Notice of Termination for Good Reason and all other communications provided 
for in this Agreement shall be in writing and shall be deemed to have been 
duly given when delivered or on the date stamped as received by the U.S. 
Postal Service for delivery by certified or registered mail, postage prepaid, 
address: (i) if to Executive, to his latest address as reflected on the 
records of the Company, and if to Company: Northrop Grumman Corporation, 
1840 Century Park East, Los Angeles, California  90067, Attn: President, or 
to such other address as Company may furnish to Executive in writing with 
specific reference to this Agreement and the importance of the notice, 
except that notice of change of address shall be effective only upon receipt.

        9.8.    Applicable Law.  To the extent not preempted by the laws of 
the United States, the laws of the State of California shall be the 
controlling law in all matters relating to this Agreement. 

        IN WITNESS WHEREOF, the parties have executed this Agreement on this 
____ day of ______________________, 1996.



Northrop Grumman Corporation                    Executive



By: _______________________

____________________________ Attest: ___________________





















        










Memorandum

To     W.C. Solberg                  

From     K. Kresa

Subject  Memorandum of Agreement     

February 22, 1997



This memorandum confirms your recent discussions with Marv Elkin regarding 
your retirement arrangements.

You have agreed to retire from employment and resign from the Board of 
Directors effective February 28, 1997.  The Company has agreed to provide 
you with the following benefits:

1.  Upon retirement, you will be provided with a total pension benefit payable 
from all sources (excluding the Northrop Grumman Savings and Investment Plan) 
equivalent to a single life annuity of $342,664.91 per year.  This amount is 
calculated to equal 50% of your pensionable earnings averaged over the highest 
three of your last ten years of employment.  Of course, if you elect to 
receive this benefit in a joint annuity form under the qualified defined 
benefit plans, and/or take lump sum equivalents from one or more of the 
Company's non-qualified benefit plans, the dollar amount that you (and your 
spouse) actually receive will be adjusted according to the normal actuarial 
factors that apply under the plans with respect to such benefit forms.

2.  On or before February 28, 1997, you will receive a bonus under the 
Incentive Compensation Plan for your work in 1996.  You will also receive 
a pro-rata Incentive Compensation Plan bonus for your work from January 1 
through February 28, 1997, paid in February 1998.  These bonuses will be 
calculated in accordance with the normal ICP factors, including my judgment 
as to the performance of the Company.

     You will receive the following portion of your unvested outstanding grants 
     (as of February 28, 1997) of stock and stock options:

     RPSR granted 11/93:  3,600 shares if the performance of Northrop Grumman 
     stock results in a 100% performance factor being applied.

     Options granted 11/92:  5,600 

     Options granted 11/93:  3,000

     Options granted 12/94:  3,000

     Options granted 11/95:  2,500

     You will be responsible for paying all taxes which may be due as a result 
     of your receipt of shares of stock or stock options.

3.  You will be reimbursed for eligible expenses you incur in 1997 for income 
tax preparation fees and for financial counseling in accordance with the 
terms of the Company's executive perquisite program.

4.  You will have an option to purchase your Company-provided automobile 
at 25% of the wholesale Blue Book value, if you make a written election to 
do so not later than February 14, 1997.  If you elect this option, you will 
be fully responsible for all tax consequences, including taxes on imputed 
income, and will be required to pay the Company applicable withholding taxes 
at the time you exercise this option.

5.  If the Company undergoes a Change of Control (as that term is defined in 
your Special Agreement dated August 1, 1996) prior to February 28, 1997, you 
will receive the benefits set forth in the Special Agreement, and you will 
not receive any of the benefits in this Memorandum of Agreement except for 
the pension benefits described in paragraph 1.

6.  If the Company undergoes a Change of Control (as that term is defined 
in your Special Agreement dated August 1, 1996) between March 1 and 
December 31, 1997, you will receive the benefits provided by your Special 
Agreement, and the benefit of the Change of Control provisions in the Long 
Term Incentive Plans governing the unvested stock and stock options you 
forfeited upon retirement as if you were an employee at the time of the 
Change of Control, except that:

    The stock or stock options you receive as a result of the Change of 
    Control will be offset by the options you receive at retirement.

    Any benefits you receive from ERISA Supplemental Plan I and ERISA 
    Supplemental Plan II as a result of the Change of Control will be 
    offset by any ERISA Supplemental Plan I and ERISA Supplemental 
    Plan II benefits you receive following your retirement.

    Your right to Severance Benefits under the Special Agreement shall 
    be determined by whether or not, as of the date of the Change of 
    Control, the employee incumbent in the position you now hold terminates 
    from employment after the Change of Control and before December 31, 1997, 
    under circumstances which would entitle that employee to such Severance 
    Benefits if he had a Special Agreement identical to yours at the time 
    of the Change of Control.

Your receipt of these benefits upon your retirement is conditioned upon your 
signing this Memorandum of Agreement and the attached Release Agreement, 
which is incorporated herein by reference.

If you are in agreement with these terms, please sign and date where 
indicated below.





						Kent Kresa
						Chairman, President and
						Chief Executive Officer




AGREED TO:






Wallace C. Solberg




Date






RELEASE AGREEMENT
1.  PARTIES:  The parties to this Release Agreement 
(referred to hereafter as "Agreement") are Wallace C. 
Solberg (referred to hereafter as "Mr. Solberg") and 
Northrop Grumman Corporation (referred to hereafter as 
"Northrop Grumman" or "the Company").

2.  COMPLETE RELEASE:  In consideration of the promises 
contained herein and in the attached Memorandum of 
Agreement which is incorporated herein by reference, and 
for other good and valuable consideration the receipt of 
which is hereby acknowledged, Mr. Solberg does hereby 
acknowledge full and complete satisfaction of and does 
hereby agree to release, absolve and discharge Northrop 
Grumman, its subsidiaries, affiliated and related 
companies, past, present and future, and each of them, 
as well as its and their employees, officers, directors, 
and agents (collectively referred to hereafter as 
"Releases"), past and present, and each of them, from 
all claims, causes of action, demands, damages or costs 
he may have against Releasees on behalf of himself or 
others arising out of or relating to his employment with 
Northrop Grumman or the termination of such employment.

2.1  This waiver and release includes, but is not 
limited to, any rights, claims, causes of action, 
demands, damages or costs arising under the Age 
Discrimination in Employment Act, which prohibits 
discrimination in employment based on age; Title 
VII of the Civil Rights Act of 1964, which 
prohibits discrimination in employment based on 
race, color, religion, sex or national origin; the 
California Fair Employment and Housing Act, which 
prohibits discrimination in employment based on 
race, color, religion, sex, national origin, 
ancestry, physical handicap, medical condition, 
marital status or age; the Americans with 
Disabilities Act, which prohibits discrimination in 
employment based on disability; or any other 
federal, state or local laws or regulations 
prohibiting employment discrimination or 
retaliation whether such claim be based upon an 
action filed by Mr. Solberg or by a governmental 
agency.

2.2  This waiver and release also includes, but is not 
limited to, 
any rights, claims, causes of action, demands, 
damages or costs arising under or in relation to 
Northrop Grumman's employee handbook and personnel 
policies, or any oral or written representations or 
statements made by officers, directors, lawyers, 
employees or agents of Northrop Grumman, past and 
present, and each of them, or under any state or 
federal law regulating wage, hours, compensation or 
employment, or any claim for severance benefits 
under any Company severance plan, or any claim for 
retaliation, wrongful discharge, breach of 
contract, breach of the implied covenant of good 
faith and fair dealing, intentional or negligent 
infliction of emotional distress, intentional or 
negligent misrepresentation, or defamation.

2.3  This waiver and release also includes, but is not 
limited to, any rights, claims, causes of action, demands or 
costs arising under the federal False Claims Act.

2.4  This release covers both claims that Mr. Solberg 
knows about and those he may not know about.  Mr. 
Solberg hereby specifically waives and relinquishes 
all rights and benefits provided by Section 1542 of 
the Civil Code of the State of California, and does 
so understanding and acknowledging the significance 
of this specific waiver of Section 1542.  Section 
1542 of the Civil Code of the State of California 
states as follows:   
"A general release does not extend to claims which the 
creditor does not know or suspect to exist in his 
favor at the time of executing the release, which 
if known by him must have materially affected his 
settlement with the debtor."

2.5  Notwithstanding the provisions of  Section 1542 and 
for the purpose of implementing a full and complete 
release, Mr. Solberg expressly acknowledges that 
this Agreement is intended to include all claims 
which he does not know or suspect to exist in his 
favor at the time of his signature of the 
Agreement, and that this Agreement will extinguish 
any such claims.

2.6  Notwithstanding anything to the contrary herein, 
this Agreement does not waive or release:  (i) any 
rights or claims which Mr. Solberg may have under 
the Age Discrimination in Employment Act which 
arise after the date he signs this Agreement; (ii) 
any rights or claims which Mr. Solberg may have for 
employee benefits pursuant to the terms of any of 
Northrop Grumman's retirement plans, the Northrop 
Grumman Savings Plan, or any Northrop Grumman 
employee welfare benefit plan providing medical, 
surgical or hospital benefits; or (iii) any rights 
or claims Mr. Solberg may have for breach of this 
Agreement.

3.  COVENANT NOT TO SUE:  Mr. Solberg agrees and promises 
that he will not file any suit or action against 
Releasees with any court of law based upon the matters 
released in this Agreement.  Mr. Solberg represents and 
warrants that he has not filed any suit or action 
relating to the matters herein as of the date he 
executes this Agreement.If Mr. Solberg violates this 
Agreement by filing such a lawsuit based on claims that 
he has released, Mr. Solberg agrees (1) to immediately 
return to Northrop Grumman all consideration provided to 
him pursuant to this Agreement, and (2) to pay all costs 
incurred by Releasees, including reasonable attorney's 
fees, in defending against Mr. Solberg's claims.    

4.  CONFIDENTIALITY:  Mr. Solberg represents and agrees that 
he will keep the terms, amount and fact of this 
Agreement completely confidential, and that he will not 
hereafter disclose any information  concerning this 
Agreement to anyone other than his immediate family, 
attorney(s) or accountant(s).  Should Mr. Solberg choose 
to disclose any information concerning this Agreement to 
his immediate family, attorney(s) or accountant(s), Mr. 
Solberg represents and agrees that he will advise them 
that they will also be under an obligation to keep the 
terms, amount and fact of this Agreement completely 
confidential.  Nothing in this Section shall prohibit 
Mr. Solberg or his legal counsel or accountants from 
disclosing the facts, terms or amounts of this Agreement 
when required to do so by any court or administrative 
agency (including state or federal taxing authorities) 
or tribunal of appropriate jurisdiction.

5.  INDEMNIFICATION:   If Mr. Solberg, his estate, or his 
current spouse (hereinafter referred to as 
"indemnitees") is made a party, or is threatened to be 
made a party, to any actual or threatened action, suit, 
or proceeding, whether civil, criminal, administrative, 
or investigative, by reason of the fact that Mr. Solberg 
was a Northrop Grumman officer and employee or by his 
action or inaction within the general scope of his 
employment, indemnitees (and each of them) shall be 
indemnified and held harmless by Northrop Grumman to the 
fullest extent authorized by the Delaware General 
Corporation Law, as the same exists or may hereafter by 
amended, or by other applicable law as then in effect, 
against all expense, liability, and loss (including 
attorneys fees, judgments, fines, ERISA excise taxes or 
penalties, and amounts paid in settlement) actually and 
reasonably incurred by indemnitees in connection 
therewith.


6.  PERIOD FOR REVIEW AND CONSIDERATION OF AGREEMENT; ADVICE OF COUNSEL:   
Mr. Solberg agrees and understands that he has been given a period 
of twenty-one (21) calendar days from his receipt of this Agreement 
to review and consider this Agreement before signing it.  Mr. 
Solberg further understands that he may use as much of this review 
period as he wishes prior to signing; he can sign this Agreement at 
any time prior to the expiration of the twenty-one calendar day 
period.  Mr. Solberg is advised and encouraged to consult with his 
own legal counsel prior to signing this agreement.

7.  RIGHT TO REVOKE AGREEMENT:  Mr. Solberg may revoke this Agreement 
within seven (7) calendar days of signing it.  Revocation can be 
made by delivering a written notice of revocation to Mr. Marv Elkin, 
Corporate Vice President and Chief Human Resources, Communications 
and Administrative Officer, Northrop Grumman Corporation, 1840 
Century Park East, Los Angeles, CA  9067.  For this revocation to be 
effective, written notice must be received by Mr. Elkin no later 
than 5:00 p.m. PST on the seventh calendar day after Mr. Solberg 
signs this Agreement.  If Mr. Solberg revokes this Agreement, it 
shall not be effective or enforceable, and Mr. Solberg will not 
receive the benefits described in the attached Memorandum of 
Agreement.

8.  SEVERABILITY:   The provisions of the Agreement and the attached 
Memorandum of Agreement are severable, and if any part of either 
document is found to be illegal or invalid and thereby 
unenforceable, the validity of the remaining parts, terms or 
provisions shall not be affected and shall remain fully enforceable.  
The unenforceable part, terms or provision, shall be deemed not to 
be a part of this Agreement or the Memorandum of Agreement.

9.  SOLE AND ENTIRE AGREEMENT:  This Agreement and the attached 
Memorandum of agreement which is incorporated herein by reference 
set forth the entire agreement between the parties hereto, and fully 
supersede any and all discussions, prior agreements or 
understandings between the parties hereto pertaining to the subject 
matter of this Agreement and the attached Memorandum of Agreement.

10. GOVERNING LAW:  This Agreement and the attached Memorandum of 
Agreement shall be interpreted and enforced in accordance with the 
law of the State of California without regard to rules regarding 
conflicts of laws.
MR. SOLBERG ACKNOWLEDGES THAT HE HAS HAD AN OPPORTUNITY TO ASK 
QUESTIONS, CONFER WITH COUNSEL, AND TO CAREFULLY CONSIDER ALL OF THE 
PROVISIONS OF THIS AGREEMENT BEFORE SIGNING IT.  HE FURTHER AGREES THAT 
HE HAS READ THIS AGREEMENT, UNDERSTANDS IT, AND IS VOLUNTARILY ENTERING 
INTO IT.
PLEASE READ THIS AGREEMENT CAREFULLY.  IT CONTAINS A RELEASE OF ALL 
KNOWN AND UNKNOWN CLAIMS.
DATED:	BY:  


			NORTHROP GRUMMAN 
CORPORATION
DATED:	BY: 
		TITLE:  






    	       POWER OF ATTORNEY IN CONNECTION WITH THE
		              1996 ANNUAL REPORT ON FORM 10-K




KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors 
and officers of NORTHROP GRUMMAN CORPORATION, a Delaware corporation, 
does hereby appoint RICHARD R. MOLLEUR and JAMES C. JOHNSON, and each of 
them as his agents and attorneys-in-fact (the "Agents"), in his 
respective name and in the capacity or capacities indicated below to 
execute and/or file the Annual Report on Form 10-K for the fiscal year 
ended December 31, 1996 (the "Report") under the Securities Exchange Act 
of 1934, as amended (the "Act"), and any one or more amendments to any 
part of the Report that may be required to be filed under the Act 
(including the financial statements, schedules and all exhibits and 
other documents filed therewith or constituting a part thereof) and to 
any part or all of any amendment(s) to the Report, whether executed and 
filed by the undersigned or by any of the Agents.  Further, each of the 
undersigned does hereby authorize and direct the Agents to take any and 
all actions and execute and file any and all documents with the 
Securities and Exchange Commission (the "Commission"), which they deem 
necessary or advisable to comply with the act and the rules and 
regulations or orders of the Commission adopted or issued pursuant 
thereto, to the end that the Report shall be properly filed under the 
Act.  Finally, each of the undersigned does hereby ratify each and every 
act and documents which the Agents may take, execute or file pursuant 
thereto with the same force and effect as though such action had been 
taken or such document had been executed or filed by the undersigned, 
respectively.

This Power of Attorney shall remain in full force and effect until 
revoked or superseded by written notice filed with the Commission.

IN WITNESS THEREOF, each of the undersigned has subscribed these 
presents this 19th day of February, 1997.




\s\ Kent Kresa                  Chairman of the Board, President and Chief 
Executive Kent Kresa            Officer and Director (Principal 
Executive Officer)


\s\ Jack R. Borsting            Director
    Jack R. Borsting

\s\ John T. Chain, Jr.          Director
    John T. Chain, Jr.

\s\ Jack Edwards                Director
    Jack Edwards

\s\ Phillip Frost               Director
    Phillip Frost

\s\ Aulana L. Peters            Director
    Aulana L. Peters

\s\ John E. Robson              Director
    John E. Robson

\s\ Richard M. Rosenberg        Director
    Richard M. Rosenberg

\s\ Brent Scowcroft             Director
    Brent Scowcroft

\s\ John Brooks Slaughter       Director
    John Brooks Slaughter

\s\ Wallace C. Solberg          Director
    Wallace C. Solberg

\s\ Richard J. Stegemeier       Director
    Richard J. Stegemeier

\s\ Richard B. Waugh, Jr.       Corporate Vice President
    Richard B. Waugh, Jr.       and Chief Financial Officer
				(Principal Financial Officer)

\s\ Nelson F. Gibbs             Corporate Vice President
    Nelson F. Gibbs             and Controller
				(Principal Accounting Officer)
 



 

 



WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

 

5 YEAR Dec-31-96 Dec-31-96 44 4,312 73 1,053 2,597 3,154 1,752 9,422 2,600 3,150 0 0 784 1,344 9,422 8,071 8,071 7,413 7,413 4 0 270 384 150 234 0 0 0 234 4.33 4.33