What changed in this filing

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Item 1. Financial Statements

2026-07-21 compared with 2026-04-21 · 132 added, 102 removed, 558 unchanged (30% 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 2026 2025 2026 2025

7 unchanged sentences

Total operating costs and expenses 9,780 9,157 18,672 18,052

Gain on sale of business — 231 — 231

Operating income 1,096 1,425 2,085 1,998

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CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

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

$ in millions, except par value June 30, 2026 December 31, 2025

Cash and cash equivalents $ 2,307 $ 4,403

40 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31

Six Months Ended June 30

$ in millions 2026 2025

6 unchanged sentences

B-21 loss provision — 477

Gain on sale of business — ( 231 )

Net periodic pension and OPB income ( 240 ) ( 169 )

16 unchanged sentences

Capital expenditures ( 469 ) ( 487 )

Proceeds from sale of investment 107 —

Divestiture of training services business — 333

Other investing activities ( 2 ) ( 37 )

1 unchanged sentence

Financing activities

Net proceeds from issuance of long-term debt — 998

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

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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 2026 2025 2026 2025

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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 March 31, 2026, the remaining loss accrual on the B-21 program totaled $ 1.0 billion, which is included in Other current liabilities.

The company has previously recognized and disclosed cumulative losses of approximately $ 2.0 billion on the low-rate initial production (LRIP) phase of the B-21 program.

As of June 30, 2026, the remaining loss accrual 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 March 31

Three Months Ended June 30 Six Months Ended June 30

$ in millions, except per share data 2026 2025 2026 2025

2 unchanged sentences

Net earnings (1)

( 63 ) ( 79 )

Diluted earnings per share (1)

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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.

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 forward losses also impact cost of sales.

2026 – The company recorded the following significant EAC adjustments during 2026:

• Graphite Epoxy Motor (GEM) 63XL – During the second quarter of 2026, the company recorded a $ 91 million unfavorable EAC adjustment on the GEM 63XL program at Space Systems largely related to increases in the projected cost and quantity of material needed to complete the program.

During the first quarter of 2026, the company recorded a $ 71 million unfavorable EAC adjustment on the program associated with the evaluation and implementation of corrective actions for a solid rocket motor anomaly that occurred during a Q1 2026 launch.

• Stand-in Attack Weapon (SiAW) – During the second quarter of 2026, the company recorded a $ 68 million unfavorable EAC adjustment on the SiAW program at Defense Systems driven by increases in the projected costs to support the design and qualification of system software and hardware architecture for the U.S.

• B-21 – 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.

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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.

2025 – The company recorded the following significant EAC adjustments during 2025:

• B-21 – 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.

• Sentinel – 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.

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, 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.

NORTHROP GRUMMAN CORPORATION

Company backlog as of June 30, 2026 was $ 104.7 billion.

Of our June 30, 2026 backlog, we expect to recognize approximately 35 percent as revenue over the next 12 months and 55 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 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

The amount of revenue recognized for the three and six months ended June 30, 2026 that was included in the December 31, 2025 contract liability balance was $ 784 million and $ 2.6 billion, respectively.

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.

Disaggregation of Revenue

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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.

Non-cash investing activities for the six months ended June 30, 2026 and 2025 include capital expenditures incurred but not yet paid of $ 102 million and $ 134 million, respectively.

Accumulated Other Comprehensive Loss

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

$ in millions March 31, 2026 December 31, 2025

$ in millions June 30, 2026 December 31, 2025

Cumulative translation adjustment $ ( 133 ) $ ( 131 )

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Accounting Standards Updates

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

On November 4, 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2024-03 Disaggregation of Income Statement Expenses (Subtopic 220-40).

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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.

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

NORTHROP GRUMMAN CORPORATION

retrospective basis.

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.

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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

Other accounting standards updates adopted and/or issued, but not effective until after June 30, 2026, 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 0.4 million shares and 0.3 million shares for the three months ended March 31, 2026 and 2025, respectively.

The dilutive effect of these securities totaled 0.3 million shares for each of the three and six months ended June 30, 2026.

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

Share Repurchases

Share Repurchase Programs

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.

On December 11, 2024, the company’s board of directors authorized a new share repurchase program of up to an additional $ 3.0 billion in share repurchases of the company’s common stock (the “2024 Repurchase Program”).

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

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

$ 2.5 billion remained under this share repurchase authorization.

We had no repurchases of common stock during the three months ended June 30, 2026.

On December 11, 2024, the company’s board of directors authorized a share repurchase program of up to $ 3.0 billion in share repurchases of the company’s common stock.

Repurchases under the p rogram commenced in September 2025 and $ 2.5 billion of the share repurchase authorization remained as of June 30, 2026.

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.

The company retires its common stock upon repurchase and, in the periods presented, has not made any purchases of common stock other than in connection with these publicly announced repurchase programs.

The table below summarizes the company’s share repurchases to date under the authorizations described above:

Shares Repurchased

(in millions)

Repurchase Program

Authorization Date Amount

(in millions) Total

Shares Retired

(in millions) Average

Per Share (1)

Date Completed Three Months Ended March 31

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

December 11, 2024 $ 3,000 0.9 $ 581.87 0.1 —

(1) Excludes brokerage commissions and other costs of execution, including taxes.

Dividends on Common Stock

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Inventoried costs, net consisted of the following:

$ in millions March 31, 2026 December 31, 2025

$ in millions June 30, 2026 December 31, 2025

Raw materials $ 309 $ 306

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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

Three Months Ended June 30 Six Months Ended June 30

$ in millions 2026 2025 2026 2025

1 unchanged sentence

Effective income tax rate 6.3 % 17.7 % 10.4 % 17.5 %

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.

Current Quarter

Second quarter 2026 income tax expense decreased $ 179 million, or 71 percent, due to a lower effective tax rate (ETR) and $ 259 million of lower earnings before income taxes.

The second quarter 2026 ETR decreased to 6.3 percent from 17.7 percent principally due to the remeasurement of uncertain tax positions (UTPs) given recent developments with the IRS towards resolving our previously filed federal income tax returns and refund claims.

The second quarter 2026 ETR includes benefits of $ 176 million for research credits, inclusive of the UTP remeasurement of $ 115 million, and $ 10 million for foreign-derived deduction-eligible income (FDDEI).

The second quarter 2025 ETR included 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.

Year to date 2026 income tax expense decreased $ 121 million, or 35 percent, due to a lower ETR, partially offset by $ 193 million of higher earnings before income taxes.

The year to date 2026 ETR decreased to 10.4 percent from 17.5 percent primarily due to the remeasurement of UTPs described above, as well as higher research credits, including a $ 19 million benefit related to the CAMT guidance discussed above.

The year to date 2026 ETR includes benefits of $ 244 million for research credits, inclusive of the UTP remeasurement, and $ 19 million for FDDEI, partially offset by $ 25 million of interest expense on unrecognized tax benefits.

The year to date 2025 ETR included 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.

We file income tax returns in the U.S.

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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.

Current unrecognized tax benefits, which are included in Other current liabilities, were $ 831 million and $ 436 million as of June 30, 2026 and December 31, 2025, respectively.

Non-current unrecognized tax benefits, which are included in Other non-current liabilities, were $ 1.2 billion and $ 1.6 billion as of June 30, 2026 and December 31, 2025, respectively.

Taxes receivable, which are included in Prepaid expenses and other current assets in the unaudited condensed consolidated statements of financial position, were $ 962 million as of June 30, 2026 and $ 924 million as of December 31, 2025.

FAIR VALUE OF FINANCIAL INSTRUMENTS

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;

A portion of these securities are held in common/collective trust funds and are measured

NORTHROP GRUMMAN CORPORATION

at fair value using net asset value (NAV) per share as a practical expedient;

therefore, they are not categorized in the fair value hierarchy table below.

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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.

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

June 30, 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 — 1 — 1 — 2 — 2

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.

During the second quarter of 2026, the company sold its investment in a public company for $ 107 million and recognized a related gain of $ 35 million.

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, 2026.

The notional value of the company’s foreign currency forward contracts at June 30, 2026 and December 31, 2025 was $ 280 million and $ 308 million, respectively.

The portion of notional value designated as a cash flow hedge at June 30, 2026 and December 31, 2025 was $ 129 million and $ 167 million, respectively.

The derivative fair values and related unrealized gains/losses at June 30, 2026 and December 31, 2025 were not material.

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

Long-term Debt

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.

The estimated fair value of the company’s long-term debt was $ 14.4 billion and $ 15.1 billion as of June 30, 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.

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Issuance of Senior Notes

During the six months ended June 30, 2026, the company issued no unsecured 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:

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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 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.

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

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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Department of Justice (DOJ) a criminal subpoena on December 9, 2022, and a civil investigative demand (CID) on February 2, 2023, both seeking information regarding financial and cost accounting and controls focused on the interest rate assumptions the company used to determine our U.S.

Government Cost Accounting Standards (CAS) pension expense, which we discuss in Note 7 below.

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.

Government Cost Accounting Standards (CAS) pension expense, which are the subject of the DCMA inquiry we discuss in Note 7 below.

On May 20, 2026, DOJ confirmed that, based on the information it has learned to date, the Criminal Division has closed its inquiry into this matter.

The company continues to engage with the government in relation to the CID and the DCMA inquiry.

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

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, 2026, 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, 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 March 31, 2026, or its annual results of operations and/or cash flows.

The company believes it has adequately accrued 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, 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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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.

On May 20, 2026, DOJ confirmed that, based on the information it has learned to date, the Criminal Division has closed its inquiry into this matter.

The company continues to engage with the government in relation to the CID and the DCMA inquiry.

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

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 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

The table below summarizes the amount of accrued and deferred costs associated with the company’s environmental remediation liabilities as of June 30, 2026 and December 31, 2025:

$ in millions June 30, 2026 December 31, 2025

Accrued costs (1)

Deferred costs (2)

(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.

(1) As of June 30, 2026, $ 215 million is recorded in Other current liabilities and $ 337 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.

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government contracts.

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.

As of June 30, 2026, $ 200 million is deferred in Prepaid expenses and other current assets and $ 308 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.

Reasonably possible future costs in excess of accrued costs were $ 402 million and $ 380 million as of June 30, 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.

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 June 30, 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 March 31, 2026, there were $ 597 million of stand-by letters of credit and guarantees and $ 271 million of surety bonds outstanding.

At June 30, 2026, there were $ 611 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 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.

At June 30, 2026, there were no commercial paper borrowings outstanding.

Credit Facilities

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

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.

At June 30, 2026, there were no borrowings outstanding under this facility.

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 June 30, 2026, 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 March 31

Three Months Ended June 30 Six Months Ended June 30

Benefits OPB Pension

$ in millions 2026 2025 2026 2025 2026 2025 2026 2025

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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 2026 2025 2026 2025

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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 2026 2025

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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 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

During the six months ended June 30, 2026, there were no CUs granted to employees.

SEGMENT INFORMATION

The company is aligned in four operating sectors, which also comprise our reportable segments:

Aeronautics Systems, Defense Systems, Mission Systems and Space Systems.

We generally organize our segments based on the nature of products and services offered.

NORTHROP GRUMMAN CORPORATION

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 2026 2025 2026 2025

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Operating costs and expenses:

Aeronautics Systems operating income (loss)

2,423 2,109 4,717 4,467

697 649 1,350 1,250

Aeronautics Systems operating income 362 321 667 138

Defense Systems

2,093 1,991 3,992 3,796

Operating costs and expenses:

1,576 1,372 2,951 2,634

312 319 606 643

Defense Systems operating income

156 253 340 432

Mission Systems

3,250 3,157 6,111 5,964

Operating costs and expenses:

1,900 1,945 3,582 3,675

453 483 872 917

396 288 723 570

Mission Systems operating income

501 441 934 802

Space Systems

2,753 2,646 5,233 5,214

Operating costs and expenses:

2,050 1,893 3,861 3,722

307 362 588 724

160 111 313 205

Space Systems operating income

236 280 471 563

Intersegment profit eliminations

2 unchanged sentences

FAS/CAS operating adjustment 7 63 14 126

Unallocated corporate expense ( 90 ) ( 58 )

Unallocated corporate (expense) income ( 69 ) 143 ( 159 ) 85

Total operating income 1,096 1,425 2,085 1,998

9 unchanged sentences

The FAS/CAS operating adjustment reflects the difference between CAS pension expense included as cost in segment operating income and the service cost component of FAS expense included in total operating income.

Unallocated Corporate Expense

Unallocated corporate expense includes the portion of corporate costs not considered allowable or allocable under applicable FAR and CAS requirements, and therefore not allocated to the segments, such as changes in deferred state income taxes and a portion of management and administration, legal, environmental, compensation, retiree benefits, advertising and other corporate unallowable costs.

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.

Unallocated Corporate (Expense) Income

Unallocated corporate (expense) income includes the portion of corporate costs not considered allowable or allocable under applicable FAR and CAS requirements, and therefore not allocated to the segments, such as changes in deferred state income taxes and a portion of management and administration, legal, environmental, compensation, retiree benefits, advertising and other corporate unallowable costs.

Unallocated corporate (expense) income 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.

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

2026 2025 2026 2025

$ 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

2026 2025 2026 2025

$ in millions $ % (1)

25 unchanged sentences

Sales by Geographic Region (1)

Three Months Ended March 31

Three Months Ended June 30 Six Months Ended June 30

2026 2025 2026 2025

$ in millions $ % (3)

4 unchanged sentences

Other geographic regions

20 1 % 17 — % 42 1 % 26 — %

Intersegment sales 41 38 75 79

21 unchanged sentences

Other geographic regions

6 — % 12 — % 10 — % 22 — %

Intersegment sales 179 125 350 230

13 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 2026 2025 2026 2025

5 unchanged sentences

Corporate (1)

113 33 142 49

Total capital expenditures $ 302 $ 231 $ 469 $ 487

5 unchanged sentences

Corporate (1)

68 64 140 123

Total depreciation and amortization $ 367 $ 350 $ 739 $ 687

7 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, 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”).

We have reviewed the accompanying condensed consolidated statement of financial position of Northrop Grumman Corporation and subsidiaries (the “Company”) as of June 30, 2026, 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, 2026 and 2025, and of cash flows for the six-month periods ended June 30, 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.

12 unchanged sentences

McLean, Virginia

April 20, 2026

July 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