What changed in this filing

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Item 1. Financial Statements

2025-07-22 compared with 2025-04-22 · 132 added, 86 removed, 564 unchanged (28% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (Unaudited)

Three Months Ended March 31

Three Months Ended June 30 Six Months Ended June 30

$ in millions, except per share amounts 2025 2024 2025 2024

7 unchanged sentences

Total operating costs and expenses 9,157 9,128 18,052 18,190

Gain on sale of business 231 — 231 —

Operating income 1,425 1,090 1,998 2,161

19 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

$ in millions, except par value March 31, 2025 December 31, 2024

$ in millions, except par value June 30, 2025 December 31, 2024

Cash and cash equivalents $ 1,899 $ 4,353

41 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31

Six Months Ended June 30

$ in millions 2025 2024

1 unchanged sentence

Net earnings $ 1,655 $ 1,884

Adjustments to reconcile to net cash used in operating activities:

Adjustments to reconcile to net cash (used in) provided by operating activities:

Depreciation and amortization 687 625

2 unchanged sentences

B-21 loss provision 477 —

Gain on sale of business ( 231 ) —

Net periodic pension and OPB income ( 169 ) ( 226 )

8 unchanged sentences

Other, net 10 16

Net cash used in operating activities ( 1,565 ) ( 706 )

Net cash (used in) provided by operating activities ( 697 ) 719

Investing activities

Capital expenditures ( 487 ) ( 590 )

Divestiture of training services business 333 —

Other, net ( 37 ) —

9 unchanged sentences

Net cash (used in) provided by financing activities ( 1,566 ) 34

Decrease in cash and cash equivalents ( 2,668 ) ( 48 )

(Decrease) increase in cash and cash equivalents ( 2,454 ) 163

Cash and cash equivalents, beginning of year 4,353 3,109

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Three Months Ended March 31

Three Months Ended June 30 Six Months Ended June 30

$ in millions, except per share amounts 2025 2024 2025 2024

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These realignments are reflected in the financial information contained in this report.

On May 24, 2025 (the “Divestiture date”), the company completed its previously announced sale of substantially all of the Immersive Mission Solutions (IMS) operating unit of Defense Systems (the “training services” business or “divestiture”) for $ 333 million in cash, subject to a final working capital adjustment, and recorded a pre-tax gain on sale of $ 231 million.

IMS is a provider of mission training and satellite ground network communications software for U.S.

government customers.

Operating results include sales and operating income for the training services business prior to the Divestiture date.

The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP” or “FAS”) and in accordance with the rules of the Securities and Exchange Commission (SEC) for interim reporting.

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sales and operating margins in future periods are recognized as if the revised estimates had been used since contract inception.

If it is determined that a loss is expected to result on an individual performance obligation, the entire amount of the estimable future loss, including an allocation of general and administrative expense, is charged against income in the period the loss is identified.

If it is determined that a loss is expected to result on an individual performance

NORTHROP GRUMMAN CORPORATION

obligation, the entire amount of the estimable future loss, including an allocation of general and administrative expense, is charged against income in the period the loss is identified.

During the fourth quarter of 2023, we recognized a projected loss of $ 1.56 billion across the five low-rate initial production (LRIP) options on the B-21 program.

During the first quarter of 2025, we recognized an additional $ 477 million loss across the five LRIP options.

This additional loss largely relates to higher manufacturing costs

NORTHROP GRUMMAN CORPORATION

primarily resulting from a process change made by the company to enable an accelerated production ramp, as well as increases in the projected cost and quantity of general procurement materials.

The additional loss comprises $ 226 million of unfavorable EAC adjustments on the first and second LRIP lots and a $ 251 million loss contingency accrual for lots 3-5, which have not yet been exercised.

As of March 31, 2025, the remaining loss accrual on the B-21 program totaled $ 1.7 billion, which is included in Other current liabilities.

As of June 30, 2025 , the remaining loss accrual on the B-21 program totaled $ 1.6 billion, which is included in Other current liabilities.

Net EAC Adjustments

The following table presents the effect of aggregate net EAC adjustments:

Three Months Ended March 31

Three Months Ended June 30 Six Months Ended June 30

$ in millions, except per share data 2025 2024 2025 2024

2 unchanged sentences

Net earnings (1)

100 30 21 104

Diluted earnings per share (1)

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When such adjustments occur, we generally disclose the nature, underlying conditions and financial impact of the adjustments.

During the first quarter of 2025, the company recorded a $ 226 million unfavorable EAC adjustment on the first and second LRIP lots of the B-21 program at Aeronautics Systems, as described above.

No EAC adjustments on a single performance obligation had a significant impact on the financial statements during the three months ended March 31, 2024.

During the second quarter of 2025, the company recorded a $ 76 million favorable EAC adjustment on the EMD phase of the Sentinel program at Defense Systems largely related to our expectations for achieving certain contract incentives.

During the first quarter of 2025, the company recorded a $ 226 million unfavorable EAC adjustment on the first and second LRIP lots of the B-21 program at Aeronautics Systems.

No EAC adjustments on a single performance obligation had a significant impact on the financial statements during the six months ended June 30, 2024.

Backlog represents the future sales we expect to recognize on firm orders received by the company and is equivalent to the company’s remaining performance obligations at the end of each period.

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Backlog is converted into sales as costs are incurred or deliveries are made.

Company backlog as of March 31, 2025 was $ 92.8 billion.

Of our March 31, 2025 backlog, we expect to recognize approximately 40 percent as revenue over the next 12 months and 65 percent as revenue over the next 24 months, with the remainder to be recognized thereafter.

Company backlog as of June 30, 2025 was $ 89.7 billion and reflects a $ 150 million reduction of backlog in connection with the training services divestiture.

Of our June 30, 2025 backlog, we expect to recognize approximately 40 percent as revenue over the next 12 months and 65 percent as revenue over the next 24 months, with the remainder to be recognized thereafter.

Contract Assets and Liabilities

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Contract liabilities are equivalent to and reflected as Advance payments and billings in excess of costs incurred in the unaudited condensed consolidated statements of financial position.

The amount of revenue recognized for each of the three months ended March 31, 2025 and 2024 that was included in the contract liability balances at the beginning of each year was $ 1.9 billion.

The amount of revenue recognized for the three and six months ended June 30, 2025 that was included in the December 31, 2024 contract liability balance was $ 780 million and $ 2.7 billion, respectively.

The amount of revenue recognized for the three and six months ended June 30, 2024 that was included in the December 31, 2023 contract liability balance was $ 1.1 billion and $ 3.0 billion, respectively.

Disaggregation of Revenue

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We believe those categories best depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.

Property, Plant, and Equipment

Non-cash investing activities for the three months ended March 31, 2025 and 2024 include capital expenditures incurred but not yet paid of $ 44 million and $ 63 million, respectively.

NORTHROP GRUMMAN CORPORATION

Pending Divestiture of Training Services Business

On January 29, 2025, the company entered into a definitive agreement to sell substantially all of the Immersive Mission Solutions (IMS) operating unit of Defense Systems for $ 327 million in cash.

IMS is a provider of mission training and satellite ground network communications software for U.S.

government customers.

The transaction, which is subject to final government approvals and closing conditions, is expected to be completed mid-year 2025.

The carrying amounts of the major classes of assets and liabilities of the IMS business were classified as held for sale and included in Prepaid and other current assets and Other current liabilities, respectively, in the condensed consolidated statement of financial position as of March 31, 2025.

We expect to recognize an after-tax gain of approximately $ 150 million when the transaction closes.

Property, Plant, and Equipment

Non-cash investing activities for the six months ended June 30, 2025 and 2024 include capital expenditures incurred but not yet paid of $ 134 million and $ 77 million, respectively.

As of June 30, 2025 , we have approximately $ 1.3 billion in rental commitments for real estate leases that have not yet commenced.

These leases are expected to commence between 2025 and 2027 with lease terms of 8 to 26 years.

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss, net of tax, are as follows:

$ in millions March 31, 2025 December 31, 2024

$ in millions June 30, 2025 December 31, 2024

Cumulative translation adjustment $ ( 131 ) $ ( 140 )

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however, we do not expect the standard will have a material impact on the company’s consolidated financial position, results of operations and/or cash flows.

Other accounting standards updates adopted and/or issued, but not effective until after March 31, 2025, are not expected to have a material effect on the company’s consolidated financial position, results of operations and/or cash flows.

Other accounting standards updates adopted and/or issued, but not effective until after June 30, 2025 , are not expected to have a material effect on the company’s consolidated financial position, results of operations and/or cash flows.

EARNINGS PER SHARE, SHARE REPURCHASES AND DIVIDENDS ON COMMON STOCK

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Diluted earnings per share include the dilutive effect of awards granted to employees under stock-based compensation plans.

The dilutive effect of these securities totaled 0.3 million shares and 0.4 million shares for the three months ended March 31, 2025 and 2024, respectively.

The dilutive effect of these securities totaled 0.3 million shares for the three and six months ended June 30, 2025 .

The dilutive effect of these securities totaled 0.2 million shares and 0.4 million shares for the three and six months ended June 30, 2024, respectively.

Share Repurchases

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Repurchases under the 2023 Repurchase Program commenced in February 2024 upon completion of the 2022 Repurchase Program.

As of March 31, 2025, repurchases under the 2023 Repurchase Program totaled $ 1.8 billion ;

As of June 30, 2025 , repurchases under the 2023 Repurchase Program totaled $ 2.2 billion;

$ 0.3 billion remained under this share repurchase authorization.

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Repurchases under the 2024 R epurchase Program will commence upon completion of the 2023 Repurchase Program and will expire when we have used all authorized funds for repurchases.

As of March 31, 2025, there have been no repurchases under the 2024 Repurchase Program and the company’s total outstanding share repurchase authorization was $ 3.7 billion .

As of June 30, 2025 , there have been no repurchases under the 2024 Repurchase Program and the company’s total outstanding share repurchase authorization was $ 3.3 billion.

Accelerated Share Repurchase Agreements

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Per Share (1)

Date Completed Three Months Ended March 31

Date Completed Six Months Ended June 30

January 24, 2022 $ 2,000 4.4 $ 455.01 February 2024 — 2.5

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Inventoried costs, net consist of the following:

$ in millions March 31, 2025 December 31, 2024

$ in millions June 30, 2025 December 31, 2024

Raw materials $ 350 $ 293

3 unchanged sentences

NORTHROP GRUMMAN CORPORATION

Three Months Ended March 31

Three Months Ended June 30 Six Months Ended June 30

$ in millions 2025 2024 2025 2024

1 unchanged sentence

Effective income tax rate 17.7 % 18.0 % 17.5 % 17.3 %

The company’s first quarter 2025 effective tax rate (ETR) increased to 16.8 percent from 16.5 percent in the prior year period.

The increase in our ETR was driven by interest expense on unrecognized tax benefits and excess tax benefits for employee share-based compensation, partially offset by research credits.

The first quarter 2025 ETR includes benefits of $ 34 million for research credits and $ 6 million for foreign derived intangible income (FDII), partially offset by $ 16 million of interest expense on unrecognized tax benefits.

The first quarter 2024 ETR included benefits of $ 44 million for research credits and $ 15 million for FDII, partially offset by $ 21 million of interest expense on unrecognized tax benefits.

During the first quarter of 2025, we increased our unrecognized tax benefits by approximately $ 100 million principally in connection with state apportionment matters and research credits.

Current Quarter

Second quarter 2025 income tax expense increased $ 47 million, or 23 percent, due to higher earnings before income taxes, partially offset by a lower effective tax rate (ETR).

The second quarter 2025 ETR decreased to 17.7 percent from 18.0 percent in the prior year period primarily due to lower interest expense on unrecognized tax benefits and higher research credits, partially offset by additional income tax expense related to nondeductible goodwill in the divested training services business.

The second quarter 2025 ETR includes benefits of $ 68 million for research credits and $ 12 million for foreign derived intangible income (FDII), partially offset by $ 18 million of interest expense on unrecognized tax benefits and $ 17 million of tax expense related to nondeductible goodwill in the divested business.

The second quarter 2024 ETR included benefits of $ 46 million for research credits and $ 15 million for FDII, partially offset by $ 25 million of interest expense on unrecognized tax benefits.

Year to date 2025 income tax expense decreased $ 43 million, or 11 percent, due to lower earnings before income taxes, partially offset by a higher effective tax rate.

The year to date 2025 ETR increased to 17.5 percent from 17.3 percent in the prior year period primarily due to additional income tax expense related to nondeductible goodwill in the divested training services business and lower benefits for FDII and employee share-based compensation.

These increases were partially offset by higher research credits and lower interest expense on unrecognized tax benefits.

The year to date 2025 ETR includes benefits of $ 103 million for research credits and $ 18 million for FDII, partially offset by $ 34 million of interest expense on unrecognized tax benefits and $ 17 million of tax expense related to nondeductible goodwill in the divested business.

The year to date 2024 ETR included benefits of $ 90 million for research credits and $ 30 million for FDII, partially offset by $ 46 million of interest expense on unrecognized tax benefits.

During 2025, we increased our unrecognized tax benefits by approximately $ 140 million principally in connection with state apportionment matters and research credits.

It is reasonably possible that within the next 12 months the company’s unrecognized tax benefits may increase by approximately $ 80 million.

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The Organization for Economic Co-operation and Development issued Pillar Two model rules for a global minimum tax of 15% effective January 1, 2024.

Pillar Two had no impact on our first quarter 2025 or 2024 ETR, and we do not currently expect Pillar Two to significantly impact our ETR going forward.

Pillar Two had no impact on our second quarter or year to date 2025 or 2024 ETR, and we do not currently expect Pillar Two to significantly impact our ETR going forward.

Subsequent Event

On July 4, 2025 , the One Big Beautiful Bill Act (OBBBA) was enacted.

Key income tax-related provisions of the OBBBA include the repeal of mandatory capitalization of research and development expenditures under Internal Revenue Code (IRC) Section 174 (reinstating full expensing beginning in 2025), extension of bonus depreciation, and revisions to international tax regimes.

The company is evaluating the financial implications of the OBBBA and will begin reflecting its effects in the third quarter of 2025.

We currently expect the impact of the OBBBA will be to increase the company’s effective tax rate and to favorably impact the timing of cash taxes, subject to the federal corporate alternative minimum tax.

For 2025, we currently expect the OBBBA will increase our 2025 effective tax rate to the high 17 percent range and provide a current year cash tax benefit of $ 200 million to $ 250 million.

NORTHROP GRUMMAN CORPORATION

FAIR VALUE OF FINANCIAL INSTRUMENTS

The company holds a portfolio of marketable securities to partially fund non-qualified employee benefit plans.

The company holds a portfolio of marketable securities including investments to partially fund non-qualified employee benefit plans as well as investments in companies that are advancing or developing technologies applicable to our business.

A portion of these securities are held in common/collective trust funds and are measured at fair value using net asset value (NAV) per share as a practical expedient;

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The following table presents the financial assets and liabilities the company records at fair value on a recurring basis identified by the level of inputs used to determine fair value:

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

$ in millions Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

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Derivatives — 9 — 9 — ( 11 ) — ( 11 )

The notional value of the company’s foreign currency forward contracts at March 31, 2025 and December 31, 2024 was $ 408 million and $ 399 million, respectively.

The portion of notional value designated as a cash flow hedge at March 31, 2025 and December 31, 2024 was $ 256 million and $ 273 million, respectively.

NORTHROP GRUMMAN CORPORATION

The derivative fair values and related unrealized gains/losses at March 31, 2025 and December 31, 2024 were not material.

There were no transfers of financial instruments into or out of Level 3 of the fair value hierarchy during the three months ended March 31, 2025.

The notional value of the company’s foreign currency forward contracts at June 30, 2025 and December 31, 2024 was $ 335 million and $ 399 million, respectively.

The portion of notional value designated as a cash flow hedge at June 30, 2025 and December 31, 2024 was $ 236 million and $ 273 million, respectively.

The derivative fair values and related unrealized gains/losses at June 30, 2025 and December 31, 2024 were not material.

There were no transfers of financial instruments into or out of Level 3 of the fair value hierarchy during the six months ended June 30, 2025 .

The carrying value of cash and cash equivalents and commercial paper approximates fair value.

Long-term Debt

The estimated fair value of the company’s long-term debt was $ 13.9 billion and $ 15.3 billion as of March 31, 2025 and December 31, 2024, respectively.

The estimated fair value of the company’s long-term debt was $ 14.9 billion and $ 15.3 billion as of June 30, 2025 and December 31, 2024, respectively.

We calculated the fair value of long-term debt using Level 2 inputs, based on interest rates available for debt with terms and maturities similar to the company’s existing debt arrangements.

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Issuance of Senior Notes

In May 2025, the company issued $ 1.0 billion of unsecured senior notes for general corporate purposes, including debt repayment, share repurchases, and working capital, as follows:

• $ 500 million of 4.65 % senior notes due 2030 (the “2030 Notes”) and

• $ 500 million of 5.25 % senior notes due 2035 (the “2035 Notes”).

In January 2024, the company issued $ 2.5 billion of unsecured senior notes for general corporate purposes, including debt repayment, share repurchases, and working capital, as follows:

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• $ 1.15 billion of 5.20 % senior notes due 2054 (the “2054 Notes”).

We refer to the 2029 Notes, 2034 Notes and 2054 Notes together, as the “notes.” Interest on the notes is payable semi-annually in arrears.

The notes are generally subject to redemption, in whole or in part, at the company’s discretion at any time, or from time to time, prior to maturity at a redemption price equal to the greater of 100% of the principal amount of the notes to be redeemed or an applicable “make-whole” amount, plus accrued and unpaid interest.

We refer to the 2029 Notes, 2030 Notes, 2034 Notes, 2035 Notes, and 2054 Notes together, as the “notes.” Interest on the notes is payable semi-annually in arrears.

The notes are generally subject to redemption, in whole or in part, at the company’s discretion at any time, or from time to time, prior to maturity at a redemption price equal to the

NORTHROP GRUMMAN CORPORATION

greater of 100% of the principal amount of the notes to be redeemed or an applicable “make-whole” amount, plus accrued and unpaid interest.

Repayment of Senior Notes

In January 2025, the company repaid $ 1.5 billion of 2.93 percent unsecured senior notes upon maturity.

In January 2025, the company repaid $ 1.5 billion of 2.93 % unsecured senior notes upon maturity.

INVESTIGATIONS, CLAIMS AND LITIGATION

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We are also a party to various individual lawsuits and a putative class action in the Eastern District of New York alleging personal injury and property damage related to the legacy Bethpage environmental conditions (the “Bethpage EDNY cases”).

The court has stayed the filed individual lawsuits, pending its decision on class certification, which the court will undertake if an ongoing mediation between the parties is unsuccessful.

The court has stayed the filed individual lawsuits, pending its decision on class certification.

Although the court has ordered supplemental briefing on pending class certification and expert motions in the putative class action, the parties remain engaged in an ongoing mediation.

We are also a party, and may become a party, to other lawsuits brought by or against insurance carriers, and by other individual plaintiffs and/or putative classes, as well as other parties.

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We cannot at this point predict the outcome of these matters.

NORTHROP GRUMMAN CORPORATION

The company is a party to various other investigations, lawsuits, arbitration, claims, enforcement actions and other legal proceedings, including government investigations and claims, that arise in the ordinary course of our business.

The nature of legal proceedings is such that we cannot assure the outcome of any particular matter.

However, based on information available to the company to date, the company does not believe that the outcome of any of these other matters pending against the company is likely to have a material adverse effect on the company’s unaudited condensed consolidated financial position as of March 31, 2025, or its annual results of operations and/or cash flows.

However, based on information available to the company to date, the company does not believe that the outcome of any of these other matters pending against the company is likely to have a material adverse effect on the company’s unaudited condensed consolidated financial position as of June 30, 2025 , or its annual results of operations and/or cash flows.

COMMITMENTS AND CONTINGENCIES

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Such provisions are reviewed periodically using the most recent information available.

The company believes it has adequately reserved for disputed amounts that are probable and reasonably estimable, and that the outcome of any such matters would not have a material adverse effect on its unaudited condensed consolidated financial position as of March 31, 2025, or its annual results of operations and/or cash flows.

The company believes it has adequately reserved for disputed amounts that are probable and reasonably estimable, and that the outcome of any such matters would not have a material adverse effect on its unaudited condensed consolidated financial position as of June 30, 2025 , or its annual results of operations and/or cash flows.

In 2019, the Defense Contract Management Agency (DCMA) raised questions about an interest rate assumption used by the company to determine our CAS pension expense.

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We submitted a formal response on July 31, 2020, which we believed demonstrates the appropriateness of the assumptions used.

On November 24, 2020, DCMA replied to the company’s response, disagreeing with our position and requesting additional input, which we provided on February 22, 2021.

On November 24, 2020, DCMA replied to the company’s response, disagreeing with our position

NORTHROP GRUMMAN CORPORATION

and requesting additional input, which we provided on February 22, 2021.

We subsequently continued to exchange correspondence and engage with DCMA on this matter, including responding to requests for and providing additional information.

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We cannot at this point predict the outcome of these matters.

The sensitivity to changes in interest rate assumptions makes it reasonably possible the outcome of the DCMA matter could have a material adverse effect on our financial position, results of operations and/or cash flows, although we are not currently able to estimate a range of any potential loss.

The sensitivity to changes in interest rate assumptions makes it reasonably possible the outcome of these matters could have a material adverse effect on our financial position, results of operations and/or cash flows, although we are not currently able to estimate a range of any potential loss.

Environmental Matters

The table below summarizes the amount accrued for environmental remediation costs, management’s estimate of the amount of reasonably possible future costs in excess of accrued costs and the deferred costs expected to be recoverable through overhead charges on U.S.

government contracts as of March 31, 2025 and December 31, 2024:

government contracts as of June 30, 2025 and December 31, 2024:

$ in millions Accrued Costs (1)(2)

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Deferred Costs (3)

March 31, 2025 $ 554 $ 388 $ 515

June 30, 2025 $ 555 $ 394 $ 516

December 31, 2024 546 377 507

(1) As of March 31, 2025, $ 180 million is recorded in Other current liabilities and $ 374 million is recorded in Other non-current liabilities.

(1) As of June 30, 2025 , $ 187 million is recorded in Other current liabilities and $ 368 million is recorded in Other non-current liabilities.

(2) Estimated remediation costs are not discounted to present value.

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government contracts.

(3) As of March 31, 2025, $ 169 million is deferred in Prepaid expenses and other current assets and $ 346 million is deferred in Other non-current assets.

(3) As of June 30, 2025 , $ 176 million is deferred in Prepaid expenses and other current assets and $ 340 million is deferred in Other non-current assets.

These amounts are evaluated for recoverability on a routine basis.

NORTHROP GRUMMAN CORPORATION

remediation expenditures associated with our currently identified projects will have a material adverse effect on the company’s unaudited condensed consolidated financial position as of March 31, 2025, or its annual results of operations and/or cash flows.

Although management cannot predict whether (i) new information gained as our environmental remediation projects progress, (ii) changes in remediation standards or other requirements to which we are subject, or (iii) other changes in facts and circumstances will materially affect the estimated liability accrued, we do not anticipate that future remediation expenditures associated with our currently identified projects will have a material adverse effect on the company’s unaudited condensed consolidated financial position as of June 30, 2025 , or its annual results of operations and/or cash flows.

Financial Arrangements

In the ordinary course of business, the company uses standby letters of credit and guarantees issued by commercial banks and surety bonds issued principally by insurance companies to guarantee the performance on certain obligations.

At March 31, 2025, there were $ 565 million of stand-by letters of credit and guarantees and $ 277 million of surety bonds outstanding.

At June 30, 2025 , there were $ 619 million of stand-by letters of credit and guarantees and $ 269 million of surety bonds outstanding.

Commercial Paper

The company maintains a commercial paper program that serves as a source of short-term financing with capacity to issue unsecured commercial paper notes up to $ 2.5 billion.

At March 31, 2025, the company had $ 1.5 billion of outstanding commercial paper borrowings at a weighted-average interest rate of 4.69 %, with original maturities of three months or less from the date of issuance.

At June 30, 2025 , the company had $ 570 million of outstanding commercial paper borrowings at a weighted-average interest rate of 4.76 %, with original maturities of three months or less from the date of issuance.

The outstanding balance of commercial paper borrowings is recorded in Other current liabilities in the unaudited condensed consolidated statements of financial position.

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Commercial paper borrowings reduce the amount available for borrowing under the 2022 Credit Agreement.

At March 31, 2025, there were no borrowings outstanding under this facility;

however, the amount available for borrowing was reduced by the $ 1.5 billion of commercial paper borrowings described above.

The 2022 Credit Agreement contains generally customary terms and conditions, including covenants restricting the company’s ability to sell all or substantially all of its assets, merge or consolidate with another entity or undertake other fundamental changes and incur liens.

At June 30, 2025 , there were no borrowings outstanding under this facility;

however, the amount available for borrowing was reduced by the $ 570 million of commercial paper borrowings described above.

NORTHROP GRUMMAN CORPORATION

other fundamental changes and incur liens.

The company also cannot permit the ratio of its debt to capitalization (as set forth in the credit agreement) to exceed 65 percent.

At March 31, 2025, the company was in compliance with all covenants under its credit agreements.

At June 30, 2025 , the company was in compliance with all covenants under its credit agreements.

RETIREMENT BENEFITS

The cost to the company of its pension and other postretirement benefit (OPB) plans is shown in the following table:

Three Months Ended March 31

Three Months Ended June 30 Six Months Ended June 30

Benefits OPB Pension

$ in millions 2025 2024 2025 2024 2025 2024 2025 2024

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We fund our defined benefit pension plans annually in a manner consistent with the Employee Retirement Income Security Act of 1974, as amended by the Pension Protection Act of 2006 .

NORTHROP GRUMMAN CORPORATION

Contributions made by the company to its retirement plans are as follows:

Three Months Ended March 31

Three Months Ended June 30 Six Months Ended June 30

$ in millions 2025 2024 2025 2024

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The following table presents the number of restricted stock rights (RSRs) and restricted performance stock rights (RPSRs) granted to employees under the company’s long-term incentive stock plan and the grant date aggregate fair value of those stock awards for the periods presented:

Three Months Ended March 31

Six Months Ended June 30

in millions 2025 2024

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RSRs typically vest on the third anniversary of the grant date, while RPSRs generally vest and pay out based on the achievement of certain performance metrics and market conditions over a three-year period.

NORTHROP GRUMMAN CORPORATION

The following table presents the minimum and maximum aggregate payout amounts related to cash units (CUs) and cash performance units (CPUs) granted to employees in the periods presented:

Three Months Ended March 31

Six Months Ended June 30

$ in millions 2025 2024

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The following table presents sales, operating costs and expenses, and operating income by segment:

Three Months Ended March 31

Three Months Ended June 30 Six Months Ended June 30

$ in millions 2025 2024 2025 2024

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Operating costs and expenses:

Aeronautics Systems operating (loss) income

2,109 2,028 4,467 4,087

649 692 1,250 1,341

Aeronautics Systems operating income

321 312 138 618

Defense Systems

1,991 1,859 3,796 3,596

Operating costs and expenses:

1,372 1,295 2,634 2,495

319 333 643 678

Defense Systems operating income

253 191 432 347

Mission Systems

3,157 2,773 5,964 5,432

Operating costs and expenses:

1,945 1,685 3,675 3,290

483 475 917 921

288 252 570 482

Mission Systems operating income

441 361 802 739

Space Systems

2,646 3,002 5,214 6,151

Operating costs and expenses:

1,893 2,254 3,722 4,629

362 355 724 705

111 89 205 183

Space Systems operating income

280 304 563 634

Intersegment profit eliminations

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FAS/CAS operating adjustment 63 6 126 12

Unallocated corporate expense ( 58 ) ( 39 )

Unallocated corporate income (expense) 143 ( 17 ) 85 ( 56 )

Total operating income 1,425 1,090 1,998 2,161

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Unallocated corporate expense also includes costs not considered part of management’s evaluation of segment operating performance, such as amortization of purchased intangible assets and the additional depreciation expense related to the step-up in fair value of property, plant and equipment acquired through business combinations, as well as certain compensation and other costs.

During the second quarter of 2025, the $ 231 million pre-tax gain on the sale of our training services business and $ 19 million of unallowable state taxes and transaction costs associated with the divestiture were recorded in Unallocated corporate income (expense).

NORTHROP GRUMMAN CORPORATION

Disaggregation of Revenue

Sales by Customer Type Three Months Ended March 31

Sales by Customer Type Three Months Ended June 30 Six Months Ended June 30

2025 2024 2025 2024

$ in millions $ % (3)

44 unchanged sentences

NORTHROP GRUMMAN CORPORATION

Sales by Contract Type Three Months Ended March 31

Sales by Contract Type Three Months Ended June 30 Six Months Ended June 30

2025 2024 2025 2024

$ in millions $ % (1)

24 unchanged sentences

NORTHROP GRUMMAN CORPORATION

Sales by Geographic Region Three Months Ended March 31

Sales by Geographic Region Three Months Ended June 30 Six Months Ended June 30

2025 2024 2025 2024

$ in millions $ % (3)

5 unchanged sentences

Other geographic regions (2)

17 — % 8 — % 26 — % 15 — %

Intersegment sales 38 34 79 66

40 unchanged sentences

The following table presents capital expenditures and depreciation and amortization for each of our reportable segments and for Corporate:

Three Months Ended March 31

Three Months Ended June 30 Six Months Ended June 30

$ in millions 2025 2024 2025 2024

21 unchanged sentences

Results of Review of Interim Financial Information

We have reviewed the accompanying condensed consolidated statement of financial position of Northrop Grumman Corporation and subsidiaries (the “Company”) as of March 31, 2025, and the related condensed consolidated statements of earnings and comprehensive income, cash flows, and changes in shareholders’ equity for the three-month periods ended March 31, 2025 and 2024, and the related notes (collectively referred to as the “interim financial information”).

We have reviewed the accompanying condensed consolidated statement of financial position of Northrop Grumman Corporation and subsidiaries (the “Company”) as of June 30, 2025 , and the related condensed consolidated statements of earnings and comprehensive income and changes in shareholders’ equity for the three-month and six-month periods ended June 30, 2025 and 2024, and of cash flows for the six-month periods ended June 30, 2025 and 2024 and the related notes (collectively referred to as the “interim financial information”).

Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

12 unchanged sentences

McLean, Virginia

April 21, 2025

July 21, 2025

NORTHROP GRUMMAN CORPORATION

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements