Northrop Grumman Corporation reported that second quarter 2010 earnings from continuing operations increased to $711 million, or $2.34 per diluted share, from $368 million, or $1.13 per diluted share, in the second quarter of 2009. The 2010 second quarter included a tax benefit of $296 million, or $0.97 per diluted share, which was partially offset by a pre-tax charge of $113 million, or $0.24 per diluted share, related to the company's decision to consolidate its Gulf Coast shipbuilding operations. The net impact of the tax benefit and the consolidation charge increased second quarter earnings from continuing operations by $0.73 per diluted share. Second quarter 2010 sales increased 3.3 percent to $8.8 billion from $8.5 billion.

Cash provided by operations totaled $619 million in the second quarter of 2010 compared with cash provided by operations of $830 million in the second quarter of 2009. New business awards for the 2010 second quarter totaled $6.5 billion, bringing total backlog to $66 billion as of June 30, 2010.

"Overall, we're pleased with our second quarter results. Our focus on performance improvement is generating positive results across all our businesses. Aerospace, Electronics, Information Systems and Technical Services each generated solid operating income growth. Shipbuilding, before the consolidation-related adjustment, demonstrated that they are on a solid path of performance improvement. The increase in our 2010 EPS guidance reflects the strength of this quarter's results. Looking ahead, we foresee a more challenging environment, and we are proactively managing our businesses to create value for shareholders while supporting our customers' focus on affordability," said Wes Bush, chief executive officer and president.

During the second quarter of 2010 the company recognized a $113 million pre-tax charge in Shipbuilding related to its decision to consolidate its Gulf Coast operations. Despite the charge, second quarter 2010 operating income increased 17 percent to $716 million from $614 million in the prior year period, and as a percent of sales increased 90 basis points to 8.1 percent from 7.2 percent. The improvement over the prior year reflects higher segment operating income and lower net pension adjustment, partially offset by higher unallocated corporate expenses. Second quarter 2010 segment operating income increased $92 million, or 14 percent, driven by improved performance in four of the company's five businesses. As a percent of sales, second quarter 2010 segment operating income improved 70 basis points to 8.7 percent from 8 percent. Net pension adjustment declined to an expense of $8 million from an expense of $76 million in the prior year period. Unallocated corporate expenses totaled $46 million in the 2010 second quarter compared with income of $21 million in the 2009 second quarter. The quarter-over-quarter increase is due to a $64 million pre-tax gain for legal costs and provisions for litigation matters recognized in the 2009 second quarter.

About Northrop Grumman

Northrop Grumman will webcast its earnings conference call at 10:30 a.m. EDT on July 29, 2010. A live audio broadcast of the conference call along with a supplemental presentation will be available on the investor relations page of the company's Web site at http://www.northropgrumman.com/.