Northrop Grumman
Corporation (NYSE: NOC) reported that second quarter 2004 income from
continuing operations rose 40 percent to $289 million, or $0.79 per diluted
share, compared with $207 million, or $0.55 per diluted share, for the same
period of 2003. The increase reflects higher sales and operating margin, as
well as a lower tax rate than in the second quarter of 2003. Sales for the
second quarter of 2004 increased 11 percent to $7.4 billion from $6.6 billion
for the same period of 2003.

“These results reinforce Northrop Grumman’s record of solid sales and
earnings growth and demonstrate our ability to consistently deliver strong
financial performance,” said Ronald D. Sugar, chairman, chief executive
officer and president. “Based on the strength of year-to-date results, we now
expect 2004 sales to increase to around $29 billion, earnings per share from
continuing operations to grow to between $2.90 and $3.00, and net cash
provided by operations to be about $1.7 billion.”

Operating margin for the 2004 second quarter increased 24 percent to
$483 million from $391 million in the same period a year ago. Second quarter
2004 operating margin includes lower pension expense and higher unallocated
corporate expenses than in the second quarter of 2003, as well as the effect
of a $60 million pre-tax charge for increased projected costs for the
F-16 Block 60 fixed-price development combat avionics program reported in the
Electronic Systems segment.

Second quarter 2004 pension expense, as determined in accordance with
accounting principles generally accepted in the United States, declined to
$86 million from $140 million in the second quarter of 2003. Pension expense
allocated to contracts pursuant to U.S. Government Cost Accounting Standards
(CAS) increased operating margin by $77 million in the second quarter of 2004
and $66 million for the comparable 2003 period.

Unallocated corporate expenses were $53 million in the second quarter of
2004 compared with $22 million in the second quarter of 2003. The $31 million
increase in unallocated corporate expenses was primarily due to higher
mark-to-market stock compensation expense and deferred state income taxes.

The effective tax rate applied to income from continuing operations for
the 2004 second quarter was 26 percent compared with 31 percent in the 2003
second quarter. During the second quarter of 2004, the company completed
studies and recognized additional tax credits of $31 million related to
research and development and export sales activities for the years 1997
through 2003.

Net income for the 2004 second quarter was $295 million, or $0.81 per
diluted share, compared with $205 million, or $0.54 per diluted share for the
same period of 2003.

Contract acquisitions were $5.3 billion in the second quarter of 2004
compared with $5.2 billion for the same period of 2003. Total funded backlog
was $26.2 billion at June 30, 2004, compared with $26.9 billion at
Dec. 31, 2003. Total backlog, which includes funded backlog and firm orders
for which funding is not currently contractually obligated by the customer,
was $57.2 billion at June 30, 2004, compared with $58.2 billion at
Dec. 31, 2003.

2004 Guidance

The company expects 2004 sales of approximately $29 billion versus
previous guidance of approximately $28 billion. Earnings per share from
continuing operations are now expected to range between $2.90 and $3.00 versus
previous guidance of between $2.80 and $2.95. Net cash provided by operating
activities is expected to be approximately $1.7 billion in 2004, versus the
prior estimate of approximately $1.5 billion.

     Segment Results

     ELECTRONIC SYSTEMS
                                                ($ in millions)
                                                SECOND QUARTER
                                              2004            2003
     Sales                                   $1,591         $1,512
     Operating Margin                           138            148
     % Operating margin to sales                8.7%           9.8%



Electronic Systems second quarter 2004 sales increased 5 percent from the
second quarter of 2003 due to revenue increases in Government Systems and
Defensive Systems. Sales in Government Systems rose 72 percent, primarily due
to higher sales to the U.S. Postal Service. Defensive Systems revenue
increased 39 percent reflecting increased sales of infrared countermeasures
for military helicopters, LITENING targeting pods, and test equipment. These
sales increases were partially offset by lower sales in Aerospace Systems and
Space Systems. Second quarter 2004 operating margin declined 7 percent due to
a $60 million pre-tax charge for increased projected costs for the F-16 Block
60 fixed-price development combat avionics program. The principal portion of
the charge reflects a higher estimate to complete qualification and production
of the “Falcon Edge” electronic warfare suite. The impact of the charge was
partially offset by improved performance and contract close-outs for several
programs in the Navigation Systems, Defensive Systems, Aerospace Systems, and
Government Systems business areas.

     SHIPS
                                                    ($ in millions)
                                                     SECOND QUARTER
                                                  2004            2003
     Sales                                       $1,557         $1,368
     Operating Margin                               100             23
     % Operating margin to sales                    6.4%           1.7%



Ships 2004 second quarter sales, which include the financial results of
the Newport News and Ship Systems sectors, increased 14 percent compared with
the 2003 second quarter, driven by higher sales in Surface Combatants,
Amphibious & Auxiliary, and Submarines, which were partially offset by a
decline in revenue in Aircraft Carriers. Surface Combatants sales rose
38 percent, primarily due to higher DD(X) program revenue. Amphibious &
Auxiliary revenue rose 31 percent due to higher revenue in the LPD-17 and
LHD-8 programs. Operating margin for the 2004 second quarter increased more
than fourfold compared with the 2003 second quarter due to a $68 million
pre-tax charge for the commercial Polar Tanker program recorded in the second
quarter of 2003.

     INFORMATION TECHNOLOGY
                                               ($ in millions)
                                               SECOND QUARTER
                                             2004           2003
     Sales                                  $1,225         $1,123
     Operating Margin                           73             62
     % Operating margin to sales               6.0%           5.5%



Information Technology second quarter 2004 sales increased 9 percent due
to higher revenue in Government Information Technology and Enterprise
Information Technology. Government Information Technology revenue increased
13 percent, primarily due to new business awards and organic sales growth in
existing programs. Enterprise Information Technology increased 12 percent,
primarily due to expanded opportunities for product and service sales with
civil agencies. Second quarter 2004 operating margin increased 18 percent, as
compared with the second quarter of 2003, primarily due to higher revenue in
Government Information Technology and Enterprise Information Technology and
improved program performance in Commercial Information Technology.

     MISSION SYSTEMS
                                                ($ in millions)
                                                 SECOND QUARTER
                                              2004            2003
     Sales                                  $1,298          $1,100
     Operating Margin                           86              78
     % Operating margin to sales               6.6%            7.1%



Mission Systems second quarter 2004 sales increased 18 percent, primarily
due to revenue increases in Command, Control & Intelligence Systems and
Missile Systems. Command, Control & Intelligence Systems revenue increased
26 percent, primarily due to higher revenue for the Tactical Automated
Security Systems II program. Missile Systems revenue increased 12 percent,
reflecting revenue from the new Kinetic Energy Interceptors program and the
XonTech acquisition, as well as increased revenue from existing programs.
Second quarter 2004 operating margin rose 10 percent due to higher volume
compared with second quarter 2003 results. Operating margin in the 2003
second quarter included the recognition of favorable performance on a
restricted program.

     INTEGRATED SYSTEMS
                                                    ($ in millions)
                                                     SECOND QUARTER
                                                  2004           2003
     Sales                                      $1,133         $1,004
     Operating Margin                               90            124
     % Operating margin to sales                   7.9%          12.4%



Integrated Systems sales for the second quarter of 2004 increased
13 percent over the second quarter of 2003, primarily due to higher sales in
Airborne Early Warning/Electronic Warfare Systems and Air Combat Systems.
Airborne Early Warning/Electronic Warfare Systems revenue increased 28 percent
due to higher volume in the E-2 Advanced Hawkeye and EA-6B programs. Air
Combat Systems revenue increased 8 percent due to higher volume in the F-35,
Global Hawk, and Multi-Platform Radar Technology Insertion programs.
Operating margin for the second quarter of 2004 declined 27 percent reflecting
the segment’s changing business mix, which includes a greater proportion of
lower margin development programs, including F-35, Global Hawk, E-2 Advanced
Hawkeye, and the E-10A.

    SPACE TECHNOLOGY
                                                   ($ in millions)
                                                    SECOND QUARTER
                                                 2004           2003
     Sales                                       $836           $733
     Operating Margin                              61             55
     % Operating margin to sales                  7.3%           7.5%



Space Technology second quarter 2004 sales rose 14 percent over second
quarter 2003 results, primarily due to higher sales in Software Defined
Radios, Civil Space, and Intelligence, Surveillance & Reconnaissance.
Software Defined Radios revenue increased 38 percent, primarily due to higher
volume in the F-35 and F/A-22 programs. Civil Space revenue increased
28 percent, primarily due to higher volume in the National Polar-Orbiting
Operational Environmental Satellite System and James Webb Space Telescope
programs. Intelligence, Surveillance & Reconnaissance revenue also rose more
than 18 percent. Second quarter 2004 operating margin rose 11 percent as
compared with the second quarter 2003, primarily due to higher sales volume.

Debt and Cash Measurements

Northrop Grumman’s total debt was $5.8 billion at June 30, 2004, compared
with $5.9 billion at Dec. 31, 2003. Interest expense for the second quarter
of 2004 declined to $112 million from $119 million for the 2003 second quarter
as a result of a reduction in fixed-rate debt acquired with the acquisition of
TRW Inc. Second quarter 2004 interest expense also includes the impact of the
adoption of Statement of Financial Accounting Standards No. 150 – Accounting
for Certain Financial Instruments with Characteristics of both Liabilities and
Equity, which was adopted on July 1, 2003, and required $6 million of
dividends payable on mandatorily redeemable preferred stock for the quarter to
be classified as interest expense.

Net cash provided by operating activities for the 2004 second quarter
decreased to $610 million versus net cash provided by operating activities of
$737 million for the second quarter of 2003. The decrease was primarily due
to higher tax payments in the second quarter of 2004 compared with the second
quarter of 2003.

During the second quarter of 2004, the company repurchased approximately
2.4 million shares of its common stock at an average price of $49.92 per
share, after giving effect for the 2-for-1 stock split, in the form of a stock
dividend, effective June 21, 2004. Since the Aug. 20, 2003, announcement of a
plan to repurchase up to $700 million of Northrop Grumman common stock, the
company has repurchased approximately 10.4 million shares at an average price
of $47.50.

About Northrop Grumman

Northrop Grumman Corporation is a global defense company headquartered in
Los Angeles, Calif. Northrop Grumman provides a broad array of
technologically advanced, innovative products, services and solutions in
systems integration, defense electronics, information technology, advanced
aircraft, shipbuilding and space technology. The company has 125,000
employees and operates in all 50 states and 25 countries and serves U.S. and
international military, government and commercial customers.

Certain statements and assumptions in this release contain or are based on
“forward-looking” information (that Northrop Grumman believes to be within the
definition in the Private Securities Litigation Reform Act of 1995) and
involve risks and uncertainties, and include, among others, statements in the
future tense, and all statements accompanied by terms such as “project,”
“expect,” “estimate,” “assume,” “guidance” or variations thereof. This
information reflects the company’s best estimates when made, but the company
expressly disclaims any duty to update this information if new data becomes
available or estimates change after the date of this release.

Such “forward-looking” information includes, among other things, projected
deliveries, expected funding for various programs, future effective income tax
rates, financial guidance regarding sales, segment operating margin, pension
expense, employer contributions under pension plans and medical and life
benefits plans, and cash flow, and is subject to numerous assumptions and
uncertainties, many of which are outside Northrop Grumman’s control. These
include Northrop Grumman’s assumptions with respect to future revenues,
expected program performance and cash flows, returns on pension plan assets
and variability of pension actuarial and related assumptions, the outcome of
litigation and appeals, environmental remediation, divestitures of businesses,
successful reduction of debt, successful negotiation of contracts with labor
unions, effective tax rates and timing and amounts of tax payments, and
anticipated costs of capital investments, among other things. Northrop
Grumman’s operations are subject to various additional risks and uncertainties
resulting from its position as a supplier, either directly or as subcontractor
or team member, to the U.S. Government and its agencies as well as to foreign
governments and agencies; actual outcomes are dependent upon various factors,
including, without limitation, Northrop Grumman’s successful performance of
internal plans; government customers’ budgetary constraints; customer changes
in short-range and long-range plans; domestic and international competition in
both the defense and commercial areas; product performance; continued
development and acceptance of new products and, in connection with any fixed
price development programs, controlling cost growth in meeting production
specifications and delivery rates; performance issues with key suppliers and
subcontractors; government import and export policies; acquisition or
termination of government contracts; the outcome of political and legal
processes; natural disasters and terrorist acts; legal, financial, and
governmental risks related to international transactions and global needs for
military aircraft, military and civilian electronic systems and support,
information technology, naval vessels, space systems and related technologies,
as well as other economic, political and technological risks and uncertainties
and other risk factors set out in Northrop Grumman’s filings from time to time
with the Securities and Exchange Commission, including, without limitation,
Northrop Grumman reports on Form 10-K and Form 10-Q.

Northrop Grumman will webcast its security analyst conference call at
12 p.m. EDT on July 29, 2004. A live audio broadcast of the conference call
along with a supplemental presentation will be available on the investor
relations page of the company’s Web site at http://www.northropgrumman.com.

                         NORTHROP GRUMMAN CORPORATION
                             FINANCIAL HIGHLIGHTS
                      ($ In millions, except per share)
                                 (unaudited)

                                          SECOND QUARTER    FIRST SIX MONTHS
                                           2004    2003      2004     2003
      OPERATING RESULTS HIGHLIGHTS
        Total contract acquisitions (1)  $5,344  $5,240    $13,764  $12,330
        Total sales                       7,374   6,627     14,479   12,493
        Total operating margin              483     391        917      719
        Income from continuing
         operations                         289     207        517      381
        Net income                          295     205        527      458
        Diluted earnings per share from
         continuing operations              .79     .55       1.42     1.00
        Diluted earnings per share          .81     .54       1.45     1.21

        Net cash provided by (used in)
         operating activities               610     737        873     (375)


                                             JUNE 30,         DECEMBER 31,
                                               2004             2003 (4)
      BALANCE SHEET HIGHLIGHTS
        Cash and cash equivalents              $559                 $342
        Accounts receivable, net              3,487                3,198
        Inventoried costs, net                1,220                1,147
        Property, plant, and
         equipment, net                       4,033                4,036
        Total debt                            5,764                5,881
        Net debt (2)                          5,205                5,539
        Mandatorily redeemable
         preferred stock                        350                  350
        Shareholders' equity                 16,012               15,785
        Total assets                         33,327               33,009

        Net debt to capitalization
         ratio (3)                               24%                  26%

       (1)  Contract acquisitions represent orders received during the period
            for which funding has been contractually obligated by the
            customer.
       (2)  Total debt less cash and cash equivalents.
       (3)  Net debt divided by the sum of shareholders' equity and total
            debt.
       (4)  Certain prior year amounts have been reclassified to conform to
            the 2004 presentation.



                         NORTHROP GRUMMAN CORPORATION
                              OPERATING RESULTS
                      ($ in millions, except per share)
                                 (unaudited)

                                      SECOND QUARTER      FIRST SIX MONTHS
                                      2004    2003 (1)      2004   2003 (1)
     Sales
       Electronic Systems            $1,591    $1,512      $3,129   $2,850
       Ships                          1,557     1,368       3,001    2,563
       Information Technology         1,225     1,123       2,455    2,214
       Mission Systems                1,298     1,100       2,481    2,023
       Integrated Systems             1,133     1,004       2,280    1,829
       Space Technology                 836       733       1,642    1,381
       Intersegment Eliminations       (266)     (213)       (509)    (367)

                                     $7,374    $6,627     $14,479  $12,493

     Operating margin
       Electronic Systems              $138      $148        $296     $269
       Ships                            100        23         186       98
       Information Technology            73        62         144      123
       Mission Systems                   86        78         162      134
       Integrated Systems                90       124         206      212
       Space Technology                  61        55         112       87

     Total segment operating margin     548       490       1,106      923

     Reconciliation to operating
      margin (2)
       Unallocated expenses             (53)      (22)       (163)     (52)
       Pension expense                  (86)     (140)       (176)    (280)
       Reversal of CAS pension expense
        included above                   77        66         157      137
       Reversal of royalty income
        included above                   (3)       (3)         (7)      (9)

     Operating margin                   483       391         917      719

     Interest income                     16        17          32       29
     Interest expense                  (112)     (119)       (225)    (263)
     Other, net                           3        11          13       28

     Income from continuing operations
      before income taxes               390       300         737      513

     Federal and foreign income taxes   101        93         220      132

     Income from continuing operations  289       207         517      381

     Income from discontinued
      operations, net of tax              6         2           7       82
     (Loss) gain from disposal of
      discontinued operations,
      net of tax                                   (4)          3       (5)

     Net income                        $295      $205        $527     $458

     Diluted earnings per share
       Continuing operations           $.79      $.55       $1.42    $1.00
       Discontinued operations          .02                   .02      .22
       Disposal of discontinued
        operations                               (.01)       .01     (.01)
     Diluted earnings per share        $.81      $.54       $1.45    $1.21

     (1) Certain prior year amounts have been reclassified to conform to the
         2004 presentation.

     (2) Pension expense is included in determining the segments' operating
         margin to the extent that the cost is currently recognized under U.S.
         Government Cost Accounting Standards (CAS). In order to reconcile
         from segment operating margin to total company operating margin,
         these amounts are reported under the caption "Reversal of CAS pension
         expense included above."Total pension expense or income determined
         in accordance with accounting principles generally accepted in the
         United States is reported separately as a reconciling item under the
         caption "Pension expense."The reconciling item captioned
         "Unallocated
         expenses" includes the portion of corporate, legal, environmental,
         other retiree benefits, stock compensation, and other expenses not
         allocated to the segments.



                         NORTHROP GRUMMAN CORPORATION
                        ADDITIONAL SEGMENT INFORMATION
                               ($ in millions)
                                 (unaudited)

                                     CONTRACT                    FUNDED
                                   ACQUISITIONS(1)              BACKLOG(2)
                           SECOND QUARTER   FIRST SIX MONTHS     JUNE 30,
                            2004  2003 (4)  2004   2003 (4)   2004   2003 (4)

     Electronic Systems    $1,489  $1,336   $3,261   $2,914   $6,600   $6,559
     Ships                    592     782    2,110    1,632    8,858    9,430
     Information
      Technology            1,207     930    2,401    2,256    2,265    2,151
     Mission Systems          990     893    2,326    2,105    2,750    2,283
     Integrated Systems       820     893    2,588    2,558    4,606    4,494
     Space Technology         552     643    1,685    1,410    1,601    1,337
     Intersegment
      Eliminations           (306)   (237)    (607)    (545)    (529)    (364)
     Total                 $5,344  $5,240  $13,764  $12,330  $26,151  $25,890


                                           TOTAL BACKLOG, JUNE 30, 2004
                                                                   TOTAL
                                           FUNDED   UNFUNDED(3)   BACKLOG

     Electronic Systems                    $6,600      $2,239      $8,839
     Ships                                  8,858       4,926      13,784
     Information Technology                 2,265       2,043       4,308
     Mission Systems                        2,750       7,248       9,998
     Integrated Systems                     4,606       6,018      10,624
     Space Technology                       1,601       8,590      10,191
     Intersegment Eliminations               (529)                   (529)
     Total                                $26,151     $31,064     $57,215

     (1) Contract acquisitions represent orders received during the period for
         which funding has been contractually obligated by the customer.
     (2) Funded backlog represents unfilled orders for which funding has been
         contractually obligated by the customer.
     (3) Unfunded backlog represents firm orders for which funding is not
         currently contractually obligated by the customer.  Unfunded backlog
         excludes unexercised contract options and unfunded Indefinite
         Delivery Indefinite Quantity (IDIQ) orders.
     (4) Certain prior year amounts have been reclassified to conform to the
         2004 presentation.


     AMORTIZATION OF PURCHASED INTANGIBLES

                                        SECOND QUARTER     FIRST SIX MONTHS
                                         2004      2003      2004    2003

     Electronic Systems                   $22       $22       $43     $43
     Ships                                 11        11        21      21
     Information Technology                 4         5         9      10
     Mission Systems                        8         7        16      16
     Integrated Systems                     3         3         7       7
     Space Technology                       9         9        17      17
                                          $57       $57      $113    $114



                         NORTHROP GRUMMAN CORPORATION
                    SALES BY BUSINESS AREA WITHIN SEGMENTS
                               ($ in millions)
                                 (unaudited)

                                          SECOND QUARTER    FIRST SIX MONTHS
                                          2004   2003 (1)    2004    2003 (1)
        Electronic Systems
            Aerospace Systems             $362     $429      $754      $785
            C4ISR & Naval Systems          327      327       659       606
            Defensive Systems              267      192       522       406
            Navigation Systems             199      191       383       365
            Government Systems             177      103       301       189
            Space Systems                  116      138       227       248
            Other                          143      132       283       251
                                         1,591    1,512     3,129     2,850

        Ships
            Surface Combatants             511      371       981       692
            Aircraft Carriers              475      528       915       998
            Amphibious & Auxiliary         346      265       652       468
            Submarines                     178      160       340       292
            Commercial & International      34       19        72        55
            Services & Other                35       36        76        75
            Intrasegment Eliminations      (22)     (11)      (35)      (17)
                                         1,557    1,368     3,001     2,563

        Information Technology
            Government Information
             Technology                    740      654     1,493     1,278
            Enterprise Information
             Technology                    202      180       378       362
            Commercial Information
             Technology                    157      169       332       326
            Technology Services            154      152       313       305
            Intrasegment Eliminations      (28)     (32)      (61)      (57)
                                         1,225    1,123     2,455     2,214

        Mission Systems
            Command, Control &
             Intelligence Systems          791      630     1,514     1,187
            Missile Systems                337      302       622       514
            Technical & Management
             Services                      185      177       373       342
            Intrasegment Eliminations      (15)      (9)      (28)      (20)
                                         1,298    1,100     2,481     2,023

        Integrated Systems
            Air Combat Systems             670      619     1,382     1,135
            Airborne Early
             Warning/Electronic Warfare
             Systems                       318      248       598       427
            Airborne Ground
             Surveillance/Battle
             Management                    147      139       303       269
            Intrasegment Eliminations       (2)      (2)       (3)       (2)
                                         1,133    1,004     2,280     1,829

        Space Technology
            Intelligence, Surveillance
             & Reconnaissance              263      223       500       425
            Civil Space                    164      128       319       246
            Software Defined Radios        142      103       285       188
            Satellite Communications       126      131       258       250
            Missile & Space Defense        102      106       201       195
            Technology                      63       55       115       100
            Intrasegment Eliminations      (24)     (13)      (36)      (23)
                                           836      733     1,642     1,381

        Intersegment Eliminations         (266)    (213)     (509)     (367)

        Total Sales                     $7,374   $6,627   $14,479   $12,493

       (1) Certain prior year amounts have been reclassified to conform to
           the 2004 presentation.