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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 29549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________________ to___________________
Commission File Number 1-3229
NORTHROP GRUMMAN CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE No. 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)
(310) 553-6262
(Registrant's telephone number, including area code)
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
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock outstanding as of July 26, 1996 57,709,530 shares
Northrop Grumman Corporation and Subsidiaries
Part I. Financial Information
Item 1. Financial Statements
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
Three months ended Six months ended
June 30 June 30
$ in millions, except per share 1996 1995 1996 1995
Net Sales $2,143 $1,759 $3,746 $3,376
Cost of sales
Operating costs 1,631 1,360 2,904 2,659
Administrative and
general expenses 304 232 495 433
Operating margin 208 167 347 284
Other, net 14 (3) 23 2
Interest expense (82) (36) (128) (70)
Income before income taxes 140 128 242 216
Federal and foreign income taxes 54 49 95 83
Net income $ 86 $ 79 $ 147 $ 133
Weighted average shares outstanding,
in millions 51.0 49.3 50.3 49.3
Earnings per share $ 1.69 $ 1.59 $ 2.92 $ 2.69
Dividends per share $ .40 $ .40 $ .80 $ .80
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Northrop Grumman Corporation and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS
OF FINANCIAL POSITION
June 30 December 31
$ in millions 1996 1995
Assets
Cash and cash equivalents $ 119 $ 18
Accounts receivable, net of progress payments
of $2,705 in 1996 and $2,426 in 1995 1,251 1,197
Inventoried costs, net of progress payments
of $640 in 1996 and $428 in 1995 1,089 771
Deferred income taxes 32 25
Prepaid expenses 76 61
Total current assets 2,567 2,072
Property, plant and equipment 3,316 2,900
Accumulated depreciation (1,759) (1,724)
1,557 1,176
Goodwill, net of amortization of $99 in 1996
and $63 in 1995 3,384 1,403
Other purchased intangibles, net of amortization
of $70 in 1996 and $36 in 1995 1,039 356
Prepaid pension cost, intangible
pension asset and benefit trust fund 169 99
Deferred income taxes 459 255
Investments in and advances to
affiliates and sundry assets 256 94
5,307 2,207
$9,431 $5,455
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Northrop Grumman Corporation and Subsidiaries
June 30 December 31
$ in millions 1996 1995
Liabilities and Shareholders' Equity
Notes payable to banks $ $ 65
Current portion of long-term debt 250 144
Trade accounts payable 457 360
Accrued employees' compensation 318 203
Advances on contracts 190 98
Income taxes payable, including deferred
income taxes of $495 in 1996 and $471 in 1995 584 528
Other current liabilities 471 317
Total current liabilities 2,270 1,715
Long-term debt 3,338 1,163
Accrued retiree benefits 1,678 1,048
Other long-term obligations 63 39
Deferred income taxes 17 31
Paid-in capital
Preferred stock, 10,000,000 shares
authorized and none issued
Common stock, 200,000,000 shares
authorized; issued and outstanding:
1996 -- 57,694,790; 1995 -- 49,462,615 770 272
Retained earnings 1,307 1,199
Unfunded pension losses, net of taxes (12) (12)
2,065 1,459
$9,431 $5,455
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Northrop Grumman Corporation and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS
OF CASH FLOWS
Six months ended June 30
$ in millions 1996 1995
Operating Activities
Sources of Cash
Cash received from customers
Progress payments $ 1,117 $1,254
Other collections 2,722 2,066
Income tax refunds received 5 7
Interest Received 3
Other cash receipts 1 7
Cash provided by operating activities 3,848 3,334
Uses of Cash
Cash paid to suppliers and employees 3,250 3,040
Interest paid 91 74
Income taxes paid 46 44
Other cash payments 3
Cash used in operating activities 3,387 3,161
Net cash provided by operating activities 461 173
Investing Activities
Payment for purchase of Westinghouse ESG,
net of cash acquired (2,884)
Additions to property, plant and equipment (85) (71)
Proceeds from sale of property,
plant and equipment 12 16
Proceeds from sale of affiliates 12 4
Funding of retiree benefit trust (25)
Other investing activities 32 (7)
Net cash used in investing activities (2,938) (58)
Financing Activities
Borrowings under lines of credit 1,973 150
Repayment of borrowings under lines of credit (613) (171)
Proceeds from issuance of long-term debt 1,000
Principal payments of long-term debt (140) (71)
Proceeds from issuance of stock 498 2
Dividends paid (39) (39)
Other financing activities (101)
Net cash provided by(used in)
financing activities 2,578 (129)
Increase(decrease) in cash and cash equivalents 101 (14)
Cash and cash equivalents balance at
beginning of period 18 17
Cash and cash equivalents balance
at end of period $ 119 $ 3
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Northrop Grumman Corporation and Subsidiaries
Six months ended June 30
$ in millions 1996 1995
Reconciliation of Net Income to Net Cash
Provided by Operating Activities
Net income $ 147 $ 133
Adjustments to reconcile net income to
net cash provided
Depreciation 100 115
Amortization of intangible assets 70 28
Write-off of intangible asset 10
Loss/(gain) on disposals of property,
plant and equipment 9 (3)
Noncash retiree benefit income (65) (51)
Decrease(increase) in
Accounts receivable 106 55
Inventoried costs (75) 116
Prepaid expenses (43) 24
Increase(decrease) in
Progress payments (25) (75)
Accounts payable and accruals 178 (108)
Provisions for contract losses (16) (117)
Income taxes 70 56
Other transactions (5)
Net cash provided by operating
activities $ 461 $ 173
Noncash Investing and Financing Activities
Purchase of Westinghouse ESG
Fair value of assets acquired $ 3,894
Cash paid (2,889)
Liabilities assumed $ 1,005
I-5
Northrop Grumman Corporation and Subsidiaries
Six months ended June 30
$ in millions 1996 1995
Paid-in Capital
At beginning of year $ 272 $ 265
Stock issuance 493
Employee stock awards and options exercised,
net of forfeitures 5 2
$ 770 $ 267
Retained Earnings
At beginning of year $1,199 $1,026
Net income 147 133
Cash dividends (39) (39)
$1,307 $1,120
Unvested Employee Restricted Award Shares $ $ (1)
Unfunded Pension Losses, Net of Taxes $ (12) $
I-6
Northrop Grumman Corporation and Subsidiaries
SELECTED INDUSTRY SEGMENT INFORMATION
Three months ended Six months ended
June 30 June 30
$ in millions, except per share 1996 1995 1996 1995
Net Sales
Military and Commercial
Aircraft $1,073 $1,260 $2,061 $2,408
Electronics 1,136 573 1,828 1,107
Intersegment sales (66) (74) (143) (139)
$2,143 $1,759 $3,746 $3,376
Operating Profit
Military and Commercial
Aircraft $ 125 $ 132 $ 213 $ 227
Electronics 96 46 158 77
Total operating profit 221 178 371 304
Adjustments to reconcile
operating profit to operating margin:
Other deductions(income)
included above (1) 4 (1)
State and local income taxes (13) (7) (19) (14)
General corporate expenses (29) (30) (59) (57)
Retiree benefit cost included in
contract costs 44 42 72 89
Retiree benefit cost (14) (20) (17) (38)
Operating margin $ 208 $ 167 $ 347 $ 284
Contract Acquisitions
Military and Commercial
Aircraft $1,139 $ 639 $ 1,878 $ 635
Electronics 1,057 627 4,601 1,618
Intersegment acquisitions (78) (71) (162) (137)
$2,118 $1,195 $ 6,317 $ 2,116
Funded Order Backlog
Military and Commercial
Aircraft $ 6,894 $ 7,890
Electronics 5,678 3,077
Intersegment backlog (54) (54)
$12,518 $10,913
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Northrop Grumman Corporation and Subsidiaries
NOTES TO CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
Basis of Presentation
The accompanying unaudited consolidated condensed financial statements
have been prepared by management in accordance with the instructions to
Form 10-Q of the Securities and Exchange Commission. They do not
include all information and notes necessary for a complete presentation
of financial position, results of operations, changes in shareholders'
equity, and cash flows in conformity with generally accepted accounting
principles. They do, however, in the opinion of management, include all
adjustments (all of which were normal recurring accruals) necessary for
a fair statement of the results for the periods presented. The
financial statements should be read in conjunction with the Notes and
Independent Auditors' Report contained in the company's 1995 Annual
Report.
Acquisition
On March 1, 1996 the company purchased substantially all of the defense
and electronics systems business of Westinghouse Electric Corporation at
a cost of $2.9 billion and financed the transaction with new borrowings.
The purchase method of accounting was used to record the transaction
with fair values being assigned to the assets acquired and liabilities
assumed. The excess of the purchase price over the tangible net assets
acquired was assigned to identifiable intangible assets and the balance
to goodwill with amortization on a straight-line basis over weighted
average periods of 11 years and 40 years, respectively.
The business acquired is being operated as a division of the
company and has been designated the Electronic Sensors and Systems
Division (ESSD). Financial data of ESSD have been consolidated with
Northrop Grumman effective March 1, 1996. The following unaudited pro
forma financial information combines Northrop Grumman's and ESSD's
results of operations as if the acquisition had taken place on January
1, 1995, and is not necessarily indicative of future operating results
for Northrop Grumman.
Three months ended Six months ended
June 30 June 30
$ in millions 1996 1995 1996 1995
Sales $2,143 $2,317 $3,993 $4,413
Net Income 86 54 127 77
Earnings per share 1.69 1.09 2.52 1.56
Inventoried Costs
The company's inventoried costs consist primarily of work in process
related to long-term contracts with customers; therefore further
breakdown is considered inapplicable.
Goodwill and Other Purchased Intangibles
Goodwill and other purchased intangible assets are amortized over
periods of 40 years and a weighted average of 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.
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Northrop Grumman Corporation and Subsidiaries
Long-Term Debt
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 ESSD. The debt indenture contains
restrictions relating to limitations on liens, sale and leaseback
arrangements and funded debt of subsidiaries. Concurrent with this debt
issuance the company entered into a Registration Rights Agreement with
the purchasers of the debt instruments requiring the company to file a
registration statement with the Securities and Exchange Commission
offering to exchange the debt instruments for registered securities of
like kind and maturities. The registration statement was filed and
became effective June 17, 1996.
To finance the balance of the purchase price of ESSD 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 rate $500
million two-year term loan due March 1, 1998; 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. At June 30, 1996, a
total of $2 billion was outstanding under these facilities.
The company will pay a facility fee and, at least quarterly,
interest on the outstanding debt under the Credit Agreement at rates
which vary based in part on the company's credit rating and leverage
ratio. In the event of a change in control as defined, the banks are
relieved of their commitments. Compensating balances are not required.
The credit agreement contains restrictions relating to the payment
of dividends, acquisition of the company's stock, aggregate indebtedness
for borrowed money and interest coverage.
Common Stock
In June 1996 the company, in a public offering, issued approximately 8
million shares of common stock at $63.25 per share. The net proceeds of
$493 million was used to pay down outstanding debt under the company's
credit agreement.
Contingencies
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 remediation of contaminated
sites. These estimates are reviewed periodically and adjusted to reflect
changes in facts and technical and legal circumstances. Management
estimates that at June 30, 1996, the reasonable range of future costs for
environmental remediation, including those acquired in the purchase of
the defense and electronics systems business of Westinghouse Electric
Corporation, is $50.6 million to $75.3 million, of which $60.5 million
has been accrued. While 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.
I-9
Northrop Grumman Corporation and Subsidiaries
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE COMPANY'S FINANCIAL
CONDITION AND THE RESULTS OF ITS OPERATIONS.
During the first quarter of 1996, Northrop Grumman acquired the defense
and electronics systems business of Westinghouse Electric Corporation.
The business acquired is being operated as a division of the company and
has been designated the Electronic Sensors and Systems Division (ESSD).
Northrop Grumman results for 1996 include ESSD operations from March 1,
1996, the date of acquisition. Results for 1995 do not include ESSD
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
and aircraft services programs previously included in the data systems
and other services segment (DSOS) are now included in the military and
commercial aircraft segment (MCA). The balance of the programs included
in DSOS and all of the operations of ESSD are included in the electronics
industry segment. Data for comparable prior periods has been restated.
Sales for the second quarter were the highest in the company's
history and were 22 percent higher than the second quarter of 1995.
Sales rose 11 percent in the first half of 1996 when compared to the
first six months of 1995.
MCA industry segment sales decreased in the second quarter and first
half of 1996 versus comparable periods of 1995 as a result of decreased
volume on all of the segments military programs.
Electronics industry segment sales for the second quarter and first
six months of 1996 increased as compared to the same periods of 1995
primarily as a result of the post acquisition sales added by ESSD.
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Northrop Grumman Corporation and Subsidiaries
Sales by major program/business area and units delivered were as
shown in the table below. The Airborne Radar, Marine, Space and Airspace
Management program areas were acquired as part of ESSD. The balance of
sales for ESSD are included in the "All Other" category.
Three months Six months
$ in millions 1996 1995 1996 1995
B-2 $ 456 $ 518 $ 888 $ 974
Surveillance Aircraft
(E-8 Joint STARS, E-2) 304 322 561 528
F/A-18 185 213 336 394
Boeing Jetliners 158 157 261 297
Airborne Radar 161 216
ECM 115 78 199 153
Marine 129 171
C-17 50 72 121 139
Space 91 117
Airspace Management 81 113
Data Systems 47 29 89 104
All Other 366 370 674 787
$2,143 $1,759 $3,746 $3,376
Three months Six months
Units 1996 1995 1996 1995
F/A-18 C/D 19 15 32 23
747 7 7 12 13
F/A-18 E/F 1 3 3 3
C-17 1 3 2
B-2 1 1 3 2
The amount of operating profit and the rate earned on sales during
the second quarter and first half of 1996 increased for the total company
as compared with the comparable figures for 1995. The rate of operating
profit earned on sales increased for the second quarter of 1996 as
compared to the second quarter of 1995 in the MCA industry segment
primarily as a result of higher rates of margin on the C-17 military
transport and commercial aerostructures programs. However, the amount of
operating profit recorded in the MCA segment decreased due to lower sales
volume for the segment. The second quarter of 1996 was also impacted by
$7 million in expenditures for ongoing company-sponsored research and
development on commercial aerostructures. The second quarter 1995
results included cumulative margin rate adjustments of a net $34 million
resulting from positive improvements on the B-2 and C-17 programs, which
were partially offset by a downward adjustment on the Boeing 747 jetliner
program. MCA segment operating profit for the first six months decreased
as compared to the first half of 1995 as a result of the lower overall
revenues on the segment's military programs, $14 million of company-
sponsored research and development on commercial aerostructures and a $25
million charge recorded in the first quarter related to the work
performed for Fokker Aircraft N.V., which declared bankruptcy in March
1996. These decreases were partially offset by higher operating margin
recorded on the C-17 and commercial aerostructures programs. Electronics
industry segment operating profit for the second quarter of 1996
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Northrop Grumman Corporation and Subsidiaries
increased versus the second quarter of 1995 as a result of increased
operating margin on several of the company's existing electronics
programs as well as the inclusion of the ESSD operations. Operating
profit for the first six months of 1996 increased as compared to the
first half of 1995 as a result of a higher amount and rate of operating
margin on increased E-2 Hawkeye program revenues and the post-
acquisition results of ESSD.
Other income for the second quarter of 1996 included a $12 million
gain from the sale of an equity investment in a manufacturer of high
technology equipment. Other income for the first half of 1996 also
included a $4 million gain from the early retirement of notes payable
which were due in 1999.
Interest expense for the second quarter of 1996 was $46 million
higher than the corresponding quarter in 1995. Interest expense for the
first six months of 1996 was $58 million higher than the first half of
1995. These increases resulted from the higher average level of
borrowings due to new borrowings required for the ESSD acquisition.
In June 1996 the company issued approximately 8 million shares of
common stock in a public offering. The $493 million in net proceeds from
the issuance were used to pay down long-term debt. During the first half
of 1996, $461 million of cash was generated from operations versus $173
million in the first six months of 1995 and was more than sufficient to
finance capital expenditures and dividends. The company's liquidity and
financial flexibility will continue to be provided by cash flow generated
from operating activities, which for the balance of this year is not
expected to continue at the level achieved in the first half,
supplemented by unused borrowing capacity under the company's credit
agreement and other short term credit facilities.
Forward-Looking Information
Certain statements or 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 involve risk and uncertainties, including the availability of future
cash flow. The company's operations are necessarily subject to various
risks and uncertainties, actual outcomes are dependent upon the company's
successful performance of internal plans, government customers'budgetary
restraints, customer changes in short range and long range plans, domestic
and international competition in both the defense and commercial areas,
product performance, continued development and acceptance of new products,
performance issues with key suppliers and subcontractors, government import
and export policies, termination of government contracts, political
processes, legal, financial and governmental risks related to international
transactions and global needs for military and commercial aircraft and
electronic systems and support, as well as other economic, political and
technological risks and uncertainties.
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Northrop Grumman Corporation and Subsidiaries
Part II OTHER INFORMATION
Item 1. Legal Proceedings
False Claims Act Litigation
In the second quarter of 1996, a Federal jury returned a unanimous
verdict for the company with respect to the remaining issues in the
litigation described in the company's Annual Report on Form 10-K for 1995
as supplemental in Item 1 of Part II of the company's Form 10-Q for the
quarterly period ended March 31, 1996 entitled U.S. ex rel David Peterson
and Jeff Kroll v. Northrop Corporation. 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. The government has filed a
motion for a new trial.
Item 4. Submission of Matters to a Vote of Security Holders
(a) Annual Meeting --
The annual meeting of stockholders of Northrop Grumman Corporation
was held on May 15, 1996.
(b) Election of Directors --
The following Class II Director nominees were elected at the annual
meeting:
Phillip Frost
John E. Robson
John Brooks Slaughter
The Directors whose term of office continues are:
Jack R. Borsting
John T. Chain, Jr.
Jack Edwards
Kent Kresa
Aulana L. Peters
Richard M. Rosenberg
Wallace C. Solberg
Brent Scowcroft
Richard J. Stegemeier
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Northrop Grumman Corporation and Subsidiaries
(c) The matters voted upon at the meeting and the results of each vote
are as follows:
Votes Votes Shares
For Directors: For Against Abstaining
Phillip Frost 42,296,225 526,405 -
John E. Robson 42,277,304 545,326 -
John Brooks Slaughter 42,321,561 501,069 -
Votes Votes Shares Broker
For Against Abstaining Non-Votes
Approval of the amendments
to the Company's 1993 Long-
Term Incentive Stock Plan 38,991,109 3,304,996 526,529 0
Ratification of the
appointment of Deloitte & Touche
as the Company's independent
auditors 42,357,028 264,540 198,816 2,259
Shareholder Proposal 2,611,780 33,499,450 2,517,163 4,194,240
II-2
Northrop Grumman Corporation and Subsidiaries
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 4.1 - Form of Officers' Certificate (without exhibits)
establishing the terms of Northrop Grumman Corporation 7% Note Due
2006, 7 3/4% Debenture Due 2016 and 7 7/8% Debenture Due 2026
(incorporated by reference to Form S-4 Registration Statement (Reg.
No. 333-02653) filed April 19, 1996, as amended by Amendment No. 1
filed May 22, 1996 and Amendment No. 2 filed June 14, 1996).
Exhibit 4.2 - Form of Northrop Grumman Corporation 7% Note Due 2006
(incorporated by reference to Form S-4 Registration Statement (Reg.
No. 333-02653) filed on April 19, 1996, as amended by Amendment No.
1 filed May 22, 1996 and Amendment No. 2 filed June 14, 1996).
Exhibit 4.3 - Form of Northrop Grumman Corporation 7 3/4% Debenture
Due 2016 (incorporated by reference to Form S-4 Registration
Statement (Reg. No. 333-02653) filed April 19, 1996, as amended by
Amendment No. 1 filed May 22, 1996 and Amendment No. 2 filed June
14, 1996).
Exhibit 4.4 - Form of Northrop Grumman Corporation 7 7/8% Debenture
Due 2026 (incorporated by reference to Form S-4 Registration
Statement (Reg. No. 333-02653) filed April 19, 1996, as amended by
Amendment No. 1 filed May 22, 1996 and Amendment No. 2 filed June
14, 1996).
Exhibit 10.1 - Second Amended and Restated Credit Agreement dated as
of April 15, 1994, Amended and Restated as of March 1, 1996
(incorporated by reference to Form 8-K/A filed June 3, 1996).
Exhibit 11 - Statement re Computation of Per Share Earnings
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
A report on Form 8-K/A was filed with the Securities and Exchange
Commission on June 3, 1996 regarding the acquisition from
Westinghouse Electric Corporation of substantially all of the assets
of its Electronics Systems Group, amending the report on Form 8-K
filed on March 18, 1996.
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Northrop Grumman Corporation and Subsidiaries
SIGNATURES
Pursuant to the requirements 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.
Northrop Grumman Corporation (Registrant)
Date: August 2, 1996 by/s/N. F. Gibbs
Nelson F. Gibbs
Vice President and Controller
Date: August 2, 1996 by/s/James C. Johnson
James C. Johnson
Vice President and Secretary
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Northrop Grumman Corporation and Subsidiaries
EXHIBIT 11
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(in thousands, except per share)
Three months ended Six months ended
June 30 June 30
Primary: 1996 1995 1996 1995
Average shares outstanding 50,978 49,350 50,275 49,309
Common stock equivalents 1,300 1,057 1,319 945
Totals 52,278 50,407 51,594 50,254
Net income $86,044 $78,408 $146,789 $132,530
Earnings per share(1) $ 1.65 $ 1.56 $ 2.85 $ 2.64
Fully diluted:
Average shares outstanding 50,978 49,350 50,275 49,309
Common stock equivalents 1,419 1,092 1,420 1,092
Totals 52,397 50,442 51,695 50,401
Net income $86,044 $78,408 $146,789 $132,530
Earnings per share(1) $ 1.64 $ 1.55 $ 2.84 $ 2.63
____________
(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%
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.