What changed in this filing

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Item 1. Financial Statements

2026-04-21 compared with 2025-10-21 · 144 added, 193 removed, 516 unchanged (40% of the section changed)

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CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (Unaudited)

Three Months Ended September 30 Nine Months Ended September 30

Three Months Ended March 31

$ in millions, except per share amounts 2026 2025

7 unchanged sentences

Total operating costs and expenses 8,892 8,895

Gain on sale of business — — 231 —

Operating income 989 573

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Net earnings (from above) $ 875 $ 481

Other comprehensive income (loss), net of tax

Other comprehensive (loss) income, net of tax

Change in cumulative translation adjustment ( 2 ) 2

Change in other, net ( 3 ) 8

Other comprehensive income (loss), net of tax 1 10 29 ( 8 )

Other comprehensive (loss) income, net of tax ( 5 ) 10

Comprehensive income $ 870 $ 491

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CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

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

$ in millions, except par value March 31, 2026 December 31, 2025

Cash and cash equivalents $ 2,090 $ 4,403

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Goodwill 17,439 17,437

Intangible assets, net 220 254

Deferred tax assets 743 1,051

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30

Three Months Ended March 31

$ in millions 2026 2025

1 unchanged sentence

Net earnings $ 875 $ 481

Adjustments to reconcile to net cash provided by operating activities:

Adjustments to reconcile to net cash used in operating activities:

Depreciation and amortization 372 337

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B-21 loss provision — 477

Gain on sale of business ( 231 ) —

Net periodic pension and OPB income ( 120 ) ( 81 )

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Prepaid expenses and other assets ( 37 ) ( 42 )

Accounts payable and other liabilities ( 642 ) ( 915 )

Trade accounts payable

( 559 ) ( 93 )

Advance payments and billings in excess of costs incurred

( 389 ) ( 358 )

Other liabilities

( 802 ) ( 563 )

Income taxes payable, net ( 164 ) 58

Other, net ( 39 ) 37

Net cash provided by operating activities

Other operating activities ( 1 ) ( 3 )

Net cash used in operating activities ( 1,656 ) ( 1,565 )

Investing activities

Capital expenditures ( 167 ) ( 256 )

Divestiture of training services business 333 —

Other, net ( 36 ) —

Other investing activities ( 1 ) 4

Net cash used in investing activities ( 168 ) ( 252 )

Financing activities

Net proceeds from issuance of long-term debt 998 2,495

Payments of long-term debt ( 527 ) ( 1,500 )

Net borrowings on commercial paper 498 1,474

Common stock repurchases ( 68 ) ( 480 )

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Payments of employee taxes withheld from share-based awards ( 57 ) ( 38 )

Other, net ( 93 ) ( 120 )

Other financing activities ( 2 ) ( 5 )

Net cash used in financing activities ( 489 ) ( 851 )

( 2,765 ) ( 642 )

(Decrease) increase in cash and cash equivalents ( 2,396 ) 217

Decrease in cash and cash equivalents ( 2,313 ) ( 2,668 )

Cash and cash equivalents, beginning of year 4,403 4,353

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Three Months Ended September 30 Nine Months Ended September 30

Three Months Ended March 31

$ in millions, except per share amounts 2026 2025

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Beginning of period — —

Stock compensation 8 —

End of period 8 —

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Beginning of period ( 126 ) ( 152 )

Other comprehensive income (loss), net of tax 1 10 29 ( 8 )

Other comprehensive (loss) income, net of tax ( 5 ) 10

End of period ( 131 ) ( 142 )

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Investments in equity securities and joint ventures where the company has significant influence, but not control, are accounted for using the equity method.

Effective July 1, 2024, the company realigned the Strategic Deterrent Systems (SDS) division, which includes the Ground-Based Strategic Deterrent (“Sentinel”) program, from Space Systems to Defense Systems.

Effective January 1, 2025, the company realigned the Strike and Surveillance Aircraft Solutions (SSAS) business unit from Defense Systems to Aeronautics Systems.

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.

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 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.

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For classification of certain current assets and liabilities, we consider the duration of our customer contracts when defining our operating cycle, which is generally longer than one year.

During the fourth quarter of 2025, we modified our presentation of the changes in liabilities in the operating cash flow section of the consolidated statement of cash flows by disaggregating Accounts payable and other liabilities into three separate line items:

Accounts payable, Advance payments and billings in excess of costs incurred, and Other liabilities.

Prior period amounts have been conformed to the current period presentation.

The modified presentation does not impact previously reported cash provided by operating activities.

Results reported in the financial statements are not necessarily indicative of results that may be expected for the entire year.

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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.

obligation, the entire amount of the estimable future loss, including an allocation of general and administrative (G&A) cost, 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 of the B-21 program.

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

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

As of March 31, 2026, the remaining loss accrual on the B-21 program totaled $ 1.0 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 September 30 Nine Months Ended September 30

Three Months Ended March 31

$ in millions, except per share data 2026 2025

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(1) Based on a 21 percent federal statutory tax rate .

EAC adjustments on a single performance obligation can have a significant effect on the company’s financial statements.

EAC adjustments can have a significant effect on the company’s financial statements.

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

During the third quarter of 2025, the company recorded a $ 122 million unfavorable EAC adjustment on the first and second LRIP lots of the B-21 program at Aeronautics Systems largely driven by higher-than-expected costs to produce the EMD flight test aircraft, which increased our estimates to manufacture the LRIP units;

this EAC adjustment was largely offset by a reduction in our loss contingency accrual on the remaining LRIP lots due to a contract restructure that occurred during the third quarter of 2025.

Also during the third quarter of 2025, the company recorded a $ 68 million favorable EAC adjustment in the restricted advanced microelectronics portfolio at Mission Systems largely driven by program efficiencies and risk mitigations.

During the second quarter of 2025, the company recorded a $ 76 million favorable EAC adjustment on the engineering and manufacturing development (EMD) phase of the Sentinel program at Defense Systems.

In most cases, EAC adjustments have an equal impact on both revenue and operating income.

However, for contracts in a forward loss position, the impact of EAC adjustments on revenue is different than the impact on operating income because changes in reach forward losses also impact cost of sales.

2026 – During the first quarter of 2026, the company reached an agreement with the U.S.

Air Force to expand production capacity and increase the aircraft production rate for the B-21 program at Aeronautics Systems.

We made no significant changes to the previously recognized loss on the program;

however, impacts from the agreement and higher estimated production costs resulted in a $ 157 million net unfavorable EAC adjustment on the first four LRIP lots, which was offset by a net reduction in the loss contingency accrual on the remainder of the program.

The company also recorded a $ 71 million unfavorable EAC adjustment on the Graphite Epoxy Motor (GEM) 63XL program at Space Systems associated with the evaluation and implementation of corrective actions for a solid rocket motor anomaly that occurred during a Q1 2026 launch.

2025 – 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.

During the third quarter of 2024, the company recorded a $ 39 million favorable EAC adjustment on the HALO program at Space Systems.

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 September 30, 2025 was $ 91.4 billion and reflects a $ 150 million reduction to backlog in connection with the training services divestiture during the second quarter of 2025.

Of our September 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.

Company backlog as of March 31, 2026 was $ 95.6 billion.

Of our March 31, 2026 backlog, we expect to recognize approximately 35 percent as revenue over the next 12 months and 60 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 the three and nine months ended September 30, 2025 that was included in the December 31, 2024 contract liability balance was $ 431 million and $ 3.1 billion, respectively.

The amount of revenue recognized for the three and nine months ended September 30, 2024 that was included in the December 31, 2023 contract liability balance was $ 354 million and $ 3.4 billion, respectively.

The amount of revenue recognized for the three months ended March 31, 2026 that was included in the December 31, 2025 contract liability balance was $ 1.8 billion.

The amount of revenue recognized for the three months ended March 31, 2025 that was included in the December 31, 2024 contract liability balance was $ 1.9 billion.

NORTHROP GRUMMAN CORPORATION

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Property, Plant, and Equipment

Non-cash investing activities for the nine months ended September 30, 2025 and 2024 include capital expenditures incurred but not yet paid of $ 140 million and $ 251 million, respectively.

As of September 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 5 to 26 years.

In connection with the company’s first quarter 2026 agreement with the U.S.

Air Force to expand production capacity and increase the aircraft production rate for the B-21 program, we agreed to sell an aircraft to the U.S.

Air Force that we had previously planned to utilize as a company-owned test asset.

While the sale of this asset accelerates the LRIP aircraft delivery schedule, it does not change the number of aircraft we expect to deliver under the LRIP phase of the program.

The test asset was under construction at the time of sale, and our construction costs prior to the agreement were recognized as capital expenditures and included in property, plant and equipment.

The agreement to sell the asset resulted in a reduction of PP&E during the first quarter of 2026;

we had no material cash inflows related to the sale during the quarter.

Non-cash investing activities for the three months ended March 31, 2026 and 2025 include capital expenditures incurred but not yet paid of $ 42 million and $ 44 million, respectively.

Accumulated Other Comprehensive Loss

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

$ in millions September 30, 2025 December 31, 2024

$ in millions March 31, 2026 December 31, 2025

Cumulative translation adjustment $ ( 133 ) $ ( 131 )

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Accounting Standards Updates

On December 14, 2023, the FASB issued ASU No.

2023-09 Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

ASU 2023-09 requires companies to disclose, on an annual basis, specific categories in the effective tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.

In addition, ASU 2023-09 requires companies to disclose additional information about income taxes paid.

ASU 2023-09 will be effective for annual periods beginning January 1, 2025 and will be applied on a prospective basis with the option to apply the standard retrospectively.

We are evaluating the disclosure impact of ASU 2023-09;

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

On November 4, 2024, the FASB issued ASU No.

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We are evaluating the disclosure impact of ASU 2024-03;

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

however, the standard will not have an impact on the company’s consolidated financial position, results of operations or cash flows.

On September 18, 2025, the FASB issued ASU No.

2025-06 Targeted Improvements to the Accounting for Internal-Use Software (Subtopic 350-40) .

ASU 2025-06 removes references to prescriptive and sequential development stages, requiring companies to capitalize internal-use software costs when management commits to funding the software project and it is probable the project will be completed.

ASU 2025-06 removes references to prescriptive and sequential software development stages, requiring companies to capitalize internal-use software costs when management commits to funding the software project and it is probable the project will be completed.

ASU 2025-06 will be effective for annual and interim periods beginning January 1, 2028, and can be applied on a prospective, modified prospective, or retrospective basis.

We are currently evaluating the potential impact of ASU 2025-06 on the company’s consolidated financial position, results of operations and cash flows.

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

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

On December 8, 2025, the FASB issued ASU No.

2025-11 Interim Reporting (Topic 270):

Narrow-Scope Improvements .

ASU 2025-11 clarifies the applicability of Topic 270 and the form and content of interim financial statements.

In addition, ASU 2025-11 requires entities to disclose material events occurring since the last annual reporting period.

ASU 2025-11 will be effective for interim periods beginning January 1, 2028, and can be applied on a prospective or retrospective basis.

We are evaluating the disclosure impact of ASU 2025-11;

however, the standard will not have an impact on the company’s consolidated financial position, results of operations or cash flows.

Other accounting standards updates adopted and/or issued, but not effective until after March 31, 2026, are not expected to have a material effect on the company’s consolidated financial position, results of operations and/or cash flows.

NORTHROP GRUMMAN CORPORATION

EARNINGS PER SHARE, SHARE REPURCHASES AND DIVIDENDS ON COMMON STOCK

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We calculate basic earnings per share by dividing net earnings by the weighted-average number of shares of common stock outstanding during each period.

NORTHROP GRUMMAN CORPORATION

Diluted Earnings Per Share

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 0.4 million shares and 0.3 million shares for the three and nine months ended September 30, 2025, respectively.

The dilutive effect of these securities totaled 0.3 million shares for each of the three and nine months ended September 30, 2024.

The dilutive effect of these securities totaled 0.4 million shares and 0.3 million shares for the three months ended March 31, 2026 and 2025, respectively.

Share Repurchases

Share Repurchase Programs

On January 24, 2022, the company’s board of directors authorized a share repurchase program of up to $ 2.0 billion in share repurchases of the company’s common stock (the “2022 Repurchase Program”).

Repurchases under the 2022 Repurchase Program commenced in April 2023 and were completed in February 2024.

On December 6, 2023, the company’s board of directors authorized a new share repurchase program of up to an additional $ 2.5 billion in share repurchases of the company’s common stock (the “2023 Repurchase Program”).

On December 6, 2023, the company’s board of directors authorized a share repurchase program of up to $ 2.5 billion in share repurchases of the company’s common stock (the “2023 Repurchase Program”).

Repurchases under the 2023 Repurchase Program commenced in February 2024 and were completed in September 2025.

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Repurchases under the 2024 R epurchase Program commenced in September 2025 upon completion of the 2023 Repurchase Program.

As of September 30, 2025, repurchases under the 2024 Repurchase Program totaled $ 8 million;

As of March 31, 2026, repurchases under the 2024 Repurchase Program totaled $ 0.5 billion;

$ 2.5 billion remained under this share repurchase authorization.

By its terms, the 2024 Repurchase Program will expire when we have used all authorized funds for repurchases.

Accelerated Share Repurchase Agreements

During the first quarter of 2024, the company entered into an accelerated share repurchase (ASR) agreement with Morgan Stanley & Co.

LLC (Morgan Stanley) to repurchase $ 1.0 billion of the company’s common stock as part of the 2022 Repurchase Program.

Under the agreement, we made a payment of $ 1.0 billion to Morgan Stanley and received an initial delivery of 1.8 million shares valued at $ 800 million that were immediately canceled by the company.

The remaining balance of $ 200 million was settled on May 1, 2024 with a final delivery of 0.4 million shares from Morgan Stanley.

The final average purchase price was $ 455.73 per share.

Share repurchases take place from time to time, subject to market and regulatory conditions and management’s discretion, in the open market or in privately negotiated transactions.

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Per Share (1)

Date Completed Nine Months Ended September 30

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

Date Completed Three Months Ended March 31

December 6, 2023 $ 2,500 5.2 $ 482.41 September 2025 — 1.0

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In May 2025, the company increased the quarterly common stock dividend 12 percent to $ 2.31 per share from the previous amount of $ 2.06 per share.

NORTHROP GRUMMAN CORPORATION

INVENTORIED COSTS, NET

Inventoried costs, net consist of the following:

$ in millions September 30, 2025 December 31, 2024

Inventoried costs, net consisted of the following:

$ in millions March 31, 2026 December 31, 2025

Raw materials $ 318 $ 306

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Inventoried costs, net $ 1,450 $ 1,309

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

NORTHROP GRUMMAN CORPORATION

In July 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 recognized the income tax effects of the OBBBA in its third quarter 2025 financial statements.

Three Months Ended September 30 Nine Months Ended September 30

As part of the enactment of the OBBBA, the company became subject to the corporate alternative minimum tax (CAMT) and recorded CAMT credit carryforwards of $ 187 million during 2025.

In February 2026, the Internal Revenue Service (IRS) issued Notice 2026-7, providing interim relief for the CAMT through a favorable adjustment related to the amortization of research and development expenditures under IRC Section 174.

The company recognized the impacts of Notice 2026-7 during the first quarter of 2026, resulting in a $ 187 million decrease in CAMT credit carryforwards and a corresponding increase in Taxes receivable, as well as a $ 19 million reduction to federal income tax expense.

Three Months Ended March 31

$ in millions 2026 2025

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Effective income tax rate 15.0 % 16.8 %

Current Quarter

Third quarter 2025 income tax expense increased $ 61 million, or 38 percent, due to a higher effective tax rate (ETR) and higher earnings before income taxes.

The third quarter 2025 ETR increased to 16.9 percent from 13.6 percent primarily due to the prior year ETR reflecting a net reduction in tax reserves largely due to a federal court decision in 2024 as well as a reduction in research credits in the current year due to enactment of the OBBBA, partially offset by lower interest expense on unrecognized tax benefits.

The third quarter 2025 ETR includes benefits of $ 66 million for research credits and $ 16 million for foreign derived intangible income (FDII), partially offset by $ 19 million of interest expense on unrecognized tax benefits.

The third quarter 2024 ETR included benefits of $ 191 million for research credits, partially offset by $ 64 million of interest expense on unrecognized tax benefits and $ 41 million in tax expense related to FDII.

Year to date 2025 income tax expense increased $ 18 million, or 3 percent, due to a higher ETR, which more than offset lower earnings before income taxes.

The year to date 2025 ETR increased to 17.2 percent from 16.0 percent primarily due to the prior year ETR reflecting a net reduction in tax reserves largely due to a federal court decision in 2024 as well as additional income tax expense in the current year related to nondeductible goodwill in the divested training services business, partially offset by lower interest expense on unrecognized tax benefits.

The year to date 2025 ETR includes benefits of $ 169 million for research credits and $ 34 million for FDII, partially offset by $ 53 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 $ 280 million for research credits, partially offset by $ 110 million of interest expense on unrecognized tax benefits and $ 11 million in tax expense related to FDII.

Taxes receivable, which are included in Prepaid expenses and other current assets in the unaudited condensed consolidated statements of financial position, were $ 786 million as of September 30, 2025 and $ 517 million as of December 31, 2024.

Enactment of the OBBBA resulted in an increase of $ 346 million to taxes receivable and a decrease of $ 383 million to deferred tax assets as of September 30, 2025.

During 2025, we increased our unrecognized tax benefits by approximately $ 180 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 $ 90 million.

NORTHROP GRUMMAN CORPORATION

First quarter 2026 income tax expense increased $ 58 million, or 60 percent, due to $ 452 million of higher earnings before income taxes, partially offset by a lower effective tax rate (ETR).

The first quarter 2026 ETR decreased to 15.0 percent from 16.8 percent primarily due to higher research credits, including a $ 19 million benefit related to the CAMT guidance discussed above.

The first quarter 2026 ETR includes benefits of $ 68 million for research credits and $ 9 million for foreign-derived deduction-eligible income (FDDEI), partially offset by $ 19 million of interest expense on unrecognized tax benefits.

The first quarter 2025 ETR included 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.

Taxes receivable, which are included in Prepaid expenses and other current assets in the unaudited condensed consolidated statements of financial position, were $ 1.1 billion as of March 31, 2026 and $ 924 million as of December 31, 2025.

Non-current unrecognized tax benefits, which are included in Other non-current liabilities, were $ 1.7 billion and $ 1.6 billion as of March 31, 2026 and December 31, 2025, respectively, with the remainder of our unrecognized tax benefits included within Other current liabilities.

We file income tax returns in the U.S.

federal jurisdiction and in various state and foreign jurisdictions.

During the fourth quarter of 2024, the company entered into an agreed Revenue Agent’s Report (“RAR”) for certain matters related to the company’s 2018-2020 federal income tax returns, resulting in a $ 766 million reduction to our unrecognized tax benefits and an immaterial impact to income tax expense.

The matters not addressed by the agreed RAR related to the company’s 2018-2020 federal income tax returns are currently under Internal Revenue Service (IRS) examination.

Certain matters related to the 2014-2017 federal income tax returns and refund claims related to its 2007-2016 federal tax returns are currently under review by the IRS Appeals Office.

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 third quarter or year to date 2025 or 2024 ETR, and we do not currently expect Pillar Two to significantly impact our ETR going forward.

Certain matters related to the company’s 2018-2024 federal income tax returns are currently under IRS examination.

Certain matters related to the company’s 2014-2017 federal income tax returns and refund claims related to its 2007-2016 federal tax returns are currently under review by the IRS Appeals Office.

FAIR VALUE OF FINANCIAL INSTRUMENTS

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Where model-derived valuations are appropriate, the company utilizes the income approach to determine the fair value using internal models based on observable market inputs.

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:

September 30, 2025 December 31, 2024

NORTHROP GRUMMAN CORPORATION

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

March 31, 2026 December 31, 2025

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

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Derivatives — — — — — 2 — 2

During the third quarter of 2025, the company transferred $ 50 million of securities from Level 3 to Level 1 in connection with the initial public offering (“IPO”) of a company in which we hold an investment.

As of September 30, 2025, the company’s investment was valued at $ 115 million.

The company is prohibited from selling this investment until the first quarter of 2026 .

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

Unrealized gains and losses from marketable securities, which are reflected in Other, net on the unaudited condensed consolidated statement of earnings and comprehensive income, were $ 82 million and $ 92 million for the three and nine months ended September 30, 2025, respectively.

Unrealized gains and losses from marketable securities were not material for the three and nine months ended September 30, 2024.

The notional value of the company’s foreign currency forward contracts at September 30, 2025 and December 31, 2024 was $ 334 million and $ 399 million, respectively.

The portion of notional value designated as a cash flow hedge at September 30, 2025 and December 31, 2024 was $ 241 million and $ 273 million, respectively.

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

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

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, 2026.

Unrealized gains and losses from marketable securities, which are reflected in Other, net on the unaudited condensed consolidated statement of earnings and comprehensive income, were not material for the three months ended March 31, 2026 and 2025.

The notional value of the company’s foreign currency forward contracts at March 31, 2026 and December 31, 2025 was $ 318 million and $ 308 million, respectively.

The portion of notional value designated as a cash flow hedge at March 31, 2026 and December 31, 2025 was $ 149 million and $ 167 million, respectively.

The derivative fair values and related unrealized gains/losses at March 31, 2026 and December 31, 2025 were not material.

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 $ 15.1 billion and $ 15.3 billion as of September 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

NORTHROP GRUMMAN CORPORATION

arrangements.

The estimated fair value of the company’s long-term debt was $ 14.2 billion and $ 15.1 billion as of March 31, 2026 and December 31, 2025, 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.

The current portion of long-term debt is recorded in Other current liabilities in the unaudited condensed consolidated statements of financial position.

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• $ 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:

• $ 500 million of 4.60 % senior notes due 2029 (the “2029 Notes”),

• $ 850 million of 4.90 % senior notes due 2034 (the “2034 Notes”), and

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

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.

We refer to the 2030 Notes and 2035 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.

Repayment of Senior Notes

In March 2026, the company repaid $ 270 million of 7.875 % unsecured senior notes and $ 257 million of 7.75 % unsecured senior notes upon maturity.

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

NORTHROP GRUMMAN CORPORATION

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.

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

The court had previously stayed the filed individual lawsuits and recently set an April 24 hearing on plaintiffs’ motion to lift that stay as to a subset of plaintiffs.

Although the court has ordered, and the parties have submitted, supplemental briefing on pending class certification and expert motions in the putative class action, the parties remain engaged in a 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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Government Cost Accounting Standards (CAS) pension expense, which we discuss in Note 7 below.

The company is engaging with the government and responding to the requests.

The company has responded to requests and expects to continue to engage with the government as these matters progress.

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

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

NORTHROP GRUMMAN CORPORATION

condensed consolidated financial position as of September 30, 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 March 31, 2026, 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 September 30, 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 March 31, 2026, 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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On February 15, 2024, DCMA sent to the company a Contracting Officer’s determination of noncompliance with CAS, which is an interim, non-final determination, and the parties engaged in discussions.

In addition, as noted in Note 6 above, the company received from the DOJ a criminal subpoena on December 9, 2022 and a CID on February 2, 2023, both seeking information related to the interest rate assumptions at issue in our discussions with DCMA.

The company has responded to requests and expects to continue discussions with the DOJ and DCMA as these matters progress.

NORTHROP GRUMMAN CORPORATION

addition, as noted in Note 6 above, the company received from the DOJ a criminal subpoena on December 9, 2022 and a CID on February 2, 2023, both seeking information related to the interest rate assumptions at issue in our discussions with DCMA.

The company has responded to requests and expects to continue to engage with the government as these matters progress.

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

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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 September 30, 2025 and December 31, 2024:

$ in millions Accrued Costs (1)(2)

Reasonably Possible Future Costs in Excess of Accrued Costs (2)

The table below summarizes the amount of accrued and deferred costs associated with the company’s environmental remediation liabilities as of March 31, 2026 and December 31, 2025:

$ in millions March 31, 2026 December 31, 2025

Accrued costs (1)

Deferred costs (2)

September 30, 2025 $ 567 $ 387 $ 522

December 31, 2024 546 377 507

(1) As of September 30, 2025, $ 198 million is recorded in Other current liabilities and $ 369 million is recorded in Other non-current liabilities.

(1) As of March 31, 2026, $ 213 million is recorded in Other current liabilities and $ 348 million is recorded in Other non-current liabilities in the unaudited condensed consolidated statements of financial position.

Estimated remediation costs are not discounted to present value.

The reasonably possible future costs in excess of accrued costs do not take into consideration amounts expected to be recoverable through overhead charges on U.S.

(2) The company defers the portion of environmental remediation costs we expect to be recoverable through overhead charges on U.S.

government contracts.

(3) As of September 30, 2025, $ 184 million is deferred in Prepaid expenses and other current assets and $ 338 million is deferred in Other non-current assets.

These amounts are evaluated for recoverability on a routine basis.

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 September 30, 2025, or its annual results of operations and/or cash flows.

NORTHROP GRUMMAN CORPORATION

As of March 31, 2026, $ 197 million is deferred in Prepaid expenses and other current assets and $ 317 million is deferred in Other non-current assets in the unaudited condensed consolidated statements of financial position.

These amounts are routinely evaluated for recoverability.

Reasonably possible future costs in excess of accrued costs were $ 402 million and $ 380 million as of March 31, 2026 and December 31, 2025, respectively.

We currently expect any such future costs would be recoverable through overhead charges on our U.S.

government contracts in a similar proportion as the amounts deferred in the table above.

Although we 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 March 31, 2026, 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 September 30, 2025, there were $ 598 million of stand-by letters of credit and guarantees and $ 269 million of surety bonds outstanding.

At March 31, 2026, there were $ 597 million of stand-by letters of credit and guarantees and $ 271 million of surety bonds outstanding.

Commercial Paper

The company maintains a commercial paper program that serves as a source of short-term financing.

In September 2025, the company amended its commercial paper program to increase its capacity to issue unsecured commercial paper notes from $ 2.5 billion to $ 3.0 billion.

At September 30, 2025, there were no commercial paper borrowings outstanding.

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 $ 3.0 billion.

At March 31, 2026, the company had $ 500 million of outstanding commercial paper borrowings at a weighted-average interest rate of 3.96 %, 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.

Credit Facilities

In September 2025, the company entered into a new five-year senior unsecured revolving credit facility in an aggregate principal amount of $ 3.0 billion (the “2025 Credit Agreement”).

The 2025 Credit Agreement replaced the company’s prior five-year, $ 2.5 billion revolving credit facility entered into in August 2022.

The revolving credit facility established under the 2025 Credit Agreement is intended to support the company's commercial paper program and other general corporate purposes.

The company maintains a five-year senior unsecured revolving credit facility in an aggregate principal amount of $ 3.0 billion (the “2025 Credit Agreement”) that matures in September 2030 and is intended to support the company's commercial paper program and other general corporate purposes.

Commercial paper borrowings reduce the amount available for borrowing under the 2025 Credit Agreement.

At September 30, 2025, there were no borrowings outstanding under this facility.

At March 31, 2026, there were no borrowings outstanding under this facility;

however, the amount available for borrowing was reduced by the $ 500 million of commercial paper borrowings described above.

The 2025 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.

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

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

NORTHROP GRUMMAN CORPORATION

At March 31, 2026, 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 September 30 Nine Months Ended September 30

Benefits OPB Pension

Three Months Ended March 31

$ in millions 2026 2025 2026 2025

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

Three Months Ended September 30 Nine Months Ended September 30

Three Months Ended March 31

$ in millions 2026 2025

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Defined contribution plans 229 229

NORTHROP GRUMMAN CORPORATION

STOCK COMPENSATION PLANS AND OTHER COMPENSATION ARRANGEMENTS

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:

Nine Months Ended September 30

Three Months Ended March 31

in millions 2026 2025

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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:

Nine Months Ended September 30

Three Months Ended March 31

$ in millions 2026 2025

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CUs typically vest and settle in cash on the third anniversary of the grant date, while CPUs generally vest and pay out in cash based on the achievement of certain performance metrics over a three-year period.

During the three months ended March 31, 2026 , there were no CUs granted to employees.

NORTHROP GRUMMAN CORPORATION

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

Three Months Ended September 30 Nine Months Ended September 30

Three Months Ended March 31

$ in millions 2026 2025

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Operating costs and expenses:

2,108 1,956 6,575 6,043

690 666 1,940 2,007

Aeronautics Systems operating income

305 309 443 927

Aeronautics Systems operating income (loss)

Defense Systems

2,059 1,800 5,855 5,396

Operating costs and expenses:

1,483 1,269 4,117 3,764

297 333 940 1,011

45 38 132 114

Defense Systems operating income

234 160 666 507

Mission Systems

3,093 2,823 9,057 8,255

Operating costs and expenses:

1,825 1,747 5,500 5,037

466 451 1,383 1,372

287 235 857 717

Mission Systems operating income

515 390 1,317 1,129

Space Systems

2,698 2,870 7,912 9,021

Operating costs and expenses:

1,980 2,077 5,702 6,706

297 351 1,021 1,056

123 97 328 280

Space Systems operating income

298 345 861 979

Intersegment profit eliminations

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Unallocated corporate expense ( 90 ) ( 58 )

( 102 ) ( 46 ) ( 17 ) ( 102 )

Total operating income $ 989 $ 573

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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 September 30 Nine Months Ended September 30

2025 2024 2025 2024

Sales by Customer Type Three Months Ended March 31

$ in millions $ % (3)

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Each of the company’s segments derives a substantial percentage of its revenue from the U.S.

(2) International sales include sales from contracts for which we are the prime contractor, as well as those for which we are a subcontractor and the ultimate customer is an international customer.

(2) International sales include sales from contracts for which we are the prime contractor, as well as those for which we are a subcontractor and the ultimate customer is an international customer to the extent that information is available to us or can be reasonably estimated.

These sales include foreign military sales contracted through the U.S.

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NORTHROP GRUMMAN CORPORATION

Sales by Contract Type Three Months Ended September 30 Nine Months Ended September 30

2025 2024 2025 2024

Sales by Contract Type Three Months Ended March 31

$ in millions $ % (1)

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NORTHROP GRUMMAN CORPORATION

Sales by Geographic Region Three Months Ended September 30 Nine Months Ended September 30

2025 2024 2025 2024

Sales by Geographic Region (1)

Three Months Ended March 31

$ in millions $ % (3)

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United States $ 2,709 83 % $ 2,295 83 %

$ 2,536 82 % $ 2,458 84 % $ 7,363 82 % $ 7,657 85 %

Asia/Pacific 229 7 % 200 7 %

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Other geographic regions

22 1 % 11 — % 48 1 % 26 — %

Intersegment sales 34 41

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United States 1,612 87 % 1,471 84 %

1,589 79 % 1,486 85 % 4,693 82 % 4,489 85 %

Asia/Pacific 81 4 % 81 5 %

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United States 2,012 81 % 1,997 81 %

2,197 80 % 2,121 83 % 6,505 81 % 6,098 82 %

Asia/Pacific 114 5 % 128 5 %

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United States 2,267 98 % 2,419 98 %

2,498 98 % 2,713 98 % 7,391 98 % 8,538 98 %

Asia/Pacific 18 1 % 8 — %

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Other geographic regions

10 — % 8 1 % 32 — % 29 — %

Intersegment sales 171 105

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United States 8,600 87 % 8,182 86 %

8,820 85 % 8,778 88 % 25,952 86 % 26,782 88 %

Asia/Pacific 442 4 % 417 4 %

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Total Sales $ 9,881 $ 9,468

(1) No country other than the United States represents greater than 10% of total company sales.

(1) Sales are attributed to countries based on the ultimate customer’s location to the extent that information is available to us or can be reasonably estimated.

No country other than the United States represents greater than 10 percent of total company sales.

(2) Other geographic regions are principally comprised of the Middle East.

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

Three Months Ended September 30 Nine Months Ended September 30

Three Months Ended March 31

$ in millions 2026 2025

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Corporate (1)

71 45 194 127

Total depreciation and amortization $ 372 $ 337

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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 September 30, 2025, and the related condensed consolidated statements of earnings and comprehensive income and changes in shareholders’ equity for the three-month and nine-month periods ended September 30, 2025 and 2024, and of cash flows for the nine-month periods ended September 30, 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 March 31, 2026, 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, 2026 and 2025, 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.

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McLean, Virginia

October 20, 2025

April 20, 2026

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